Note 5 - Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2015 |
Receivables [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 5 – Loans and Allowance for Loan Losses |
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The Company’s loan portfolio was comprised of the following at: |
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| | 31-Mar-15 | | | 31-Dec-14 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PCI loans | | | All other loans | | | Total | | | PCI loans | | | All other loans | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 5,429 | | | $ | 180,866 | | | $ | 186,295 | | | $ | 5,552 | | | $ | 168,234 | | | $ | 173,786 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate (CRE) - owner-occupied | | | 28,543 | | | | 309,196 | | | | 337,739 | | | | 30,554 | | | | 303,228 | | | | 333,782 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 40,452 | | | | 430,103 | | | | 470,555 | | | | 43,866 | | | | 426,781 | | | | 470,647 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | 476 | | | | 28,174 | | | | 28,650 | | | | 514 | | | | 28,887 | | | | 29,401 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 9,317 | | | | 41,055 | | | | 50,372 | | | | 13,660 | | | | 41,783 | | | | 55,443 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | 110 | | | | 84,006 | | | | 84,116 | | | | 112 | | | | 71,478 | | | | 71,590 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 967 | | | | 4,964 | | | | 5,931 | | | | 1,187 | | | | 3,858 | | | | 5,045 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 85,294 | | | | 1,078,364 | | | | 1,163,658 | | | | 95,445 | | | | 1,044,249 | | | | 1,139,694 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 26,738 | | | | 182,646 | | | | 209,384 | | | | 28,730 | | | | 176,420 | | | | 205,150 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit (HELOC) | | | 1,712 | | | | 152,703 | | | | 154,415 | | | | 1,734 | | | | 153,563 | | | | 155,297 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 5,509 | | | | 53,724 | | | | 59,233 | | | | 6,574 | | | | 49,308 | | | | 55,882 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 690 | | | | 25,155 | | | | 25,845 | | | | 758 | | | | 21,828 | | | | 22,586 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 34,649 | | | | 414,228 | | | | 448,877 | | | | 37,796 | | | | 401,119 | | | | 438,915 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 119,943 | | | | 1,492,592 | | | | 1,612,535 | | | | 133,241 | | | | 1,445,368 | | | | 1,578,609 | | | | | | | | | | | | | | | | | | | | | | | | | |
Deferred costs | | | - | | | | 2,317 | | | | 2,317 | | | | - | | | | 2,084 | | | | 2,084 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans, net of deferred costs | | $ | 119,943 | | | $ | 1,494,909 | | | $ | 1,614,852 | | | $ | 133,241 | | | $ | 1,447,452 | | | $ | 1,580,693 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Included in the March 31, 2015 and December 31, 2014 loan totals are $38.1 million and $42.3 million, respectively, of covered loans pursuant to Federal Deposit Insurance Corporation (“FDIC”) loss share agreements. Of these amounts, at March 31, 2015, approximately $35.7 million is included in PCI loans and $2.4 million is included in all other loans. Our loss share agreement related to Bank of Hiawassee’s non-single family assets expired on March 31, 2015, and on April 1, 2015, the remaining balance of $19.6 million associated with the Bank of Hiawassee non-single family loans was transferred from the covered portfolio to the non-covered portfolio. Therefore, after March 31, 2015, the Company will bear all future losses on that portfolio of loans and foreclosed properties. At December 31, 2014, $39.8 million is included in PCI loans and $2.5 million is included in all other loans. |
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At March 31, 2015 and December 31, 2014, the Company had sold participations in loans aggregating $16.5 million and $6.5 million, respectively, to other financial institutions on a nonrecourse basis. During the quarter ended March 31, 2015, a participation was sold on one large relationship in the amount of $11.4 million. Collections on loan participations and remittances to participating institutions conform to customary banking practices. |
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The Bank accepts residential mortgage loan applications and funds loans of qualified borrowers. Funded loans are sold with limited recourse to investors under the terms of pre-existing commitments. The Bank executes all of its loan sales agreements under best efforts contracts with investors. From time to time, the Company may choose to hold certain mortgage loans on balance sheet. In addition, as a result of the Provident Community merger, the Company serviced $3.3 million and $3.7 million of residential mortgage loans for the benefit of others as of March 31, 2015 and December 31, 2014, respectively. |
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Loans sold with limited recourse are 1-4 family residential mortgages originated by the Company and sold to various other financial institutions. Various recourse agreements exist, ranging from thirty days to twelve months. The Company’s exposure to credit loss in the event of nonperformance by the other party to the loan is represented by the contractual notional amount of the loan. Since none of the loans has ever been returned to the Company, the amount of total loans sold with limited recourse does not necessarily represent future cash requirements. Total loans sold with limited recourse in the three months ended March 31, 2015 were $25.6 million. Total loans sold with limited recourse in the three months ended March 31, 2014 were $8.3 million. |
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At March 31, 2015, the carrying value of loans pledged as collateral to the FHLB on borrowings and to the Federal Reserve totaled $623.9 million. At December 31, 2014, the carrying value of loans pledged as collateral to the FHLB and the Federal Reserve totaled $560.4 million. |
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Concentrations of Credit - Loans are primarily made within the Company’s operating footprint of North Carolina, South Carolina, Virginia and Georgia. Real estate loans can be affected by the condition of the local real estate market. Commercial and industrial loans can be affected by the local economic conditions. The commercial loan portfolio has concentrations in business loans secured by real estate and real estate development loans. Primary concentrations in the consumer loan portfolio include home equity lines of credit and residential mortgages. At March 31, 2015 and December 31, 2014, the Company had no loans outstanding with foreign entities. |
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Allowance for Loan Losses -The following table presents, by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2015 and 2014. |
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| | Commercial and industrial | | | CRE - owner-occupied | | | CRE - investor income producing | | | AC&D - 1-4 family construction | | | AC&D - lots, land & development | | | AC&D - CRE | | | Other commercial | | | Residential mortgage | | | HELOC | | | Residential construction | | | Other loans to individuals | | | Total | |
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For the three months ended March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 1,563 | | | $ | 721 | | | $ | 1,751 | | | $ | 458 | | | $ | 591 | | | $ | 395 | | | $ | 32 | | | $ | 443 | | | $ | 1,651 | | | $ | 542 | | | $ | 115 | | | $ | 8,262 | |
Provision for loan losses | | | 519 | | | | 59 | | | | 38 | | | | (317 | ) | | | (536 | ) | | | 80 | | | | 6 | | | | 151 | | | | 193 | | | | (10 | ) | | | (3 | ) | | | 180 | |
Charge-offs | | | (87 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (71 | ) | | | (13 | ) | | | (75 | ) | | | (19 | ) | | | (265 | ) |
Recoveries | | | 50 | | | | 1 | | | | 199 | | | | - | | | | 124 | | | | - | | | | - | | | | 8 | | | | 12 | | | | 1 | | | | 18 | | | | 413 | |
Net (charge-offs) recoveries | | | (37 | ) | | | 1 | | | | 199 | | | | - | | | | 124 | | | | - | | | | - | | | | (63 | ) | | | (1 | ) | | | (74 | ) | | | (1 | ) | | | 148 | |
Balance, end of period | | $ | 2,045 | | | $ | 781 | | | $ | 1,988 | | | $ | 141 | | | $ | 179 | | | $ | 475 | | | $ | 38 | | | $ | 531 | | | $ | 1,843 | | | $ | 458 | | | $ | 111 | | | $ | 8,590 | |
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PCI Impairment Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
PCI Impairment charge-offs | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
PCI impairment recoveries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Net PCI impairment charge-offs | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
PCI provision for loan losses | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Benefit attributable to FDIC loss share agreements | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total provision for loan losses charged to operations | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Provision for loan losses recorded through FDIC loss share receivable | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Balance, end of period | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
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Total Allowance for Loan Losses | | $ | 2,045 | | | $ | 781 | | | $ | 1,988 | | | $ | 141 | | | $ | 179 | | | $ | 475 | | | $ | 38 | | | $ | 531 | | | $ | 1,843 | | | $ | 458 | | | $ | 111 | | | $ | 8,590 | |
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| | Commercial and industrial | | | CRE - owner-occupied | | | CRE - investor income producing | | | AC&D - 1-4 family construction | | | AC&D - lots, land & development | | | AC&D - CRE | | | Other commercial | | | Residential mortgage | | | HELOC | | | Residential construction | | | Other loans to individuals | | | Total | |
For the three months ended March 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | 1,491 | | | $ | 399 | | | $ | 1,797 | | | $ | 839 | | | $ | 1,751 | | | $ | 299 | | | $ | 25 | | | $ | 358 | | | $ | 1,050 | | | $ | 390 | | | $ | 72 | | | $ | 8,471 | |
Provision for loan losses | | | (87 | ) | | | 30 | | | | (50 | ) | | | (85 | ) | | | (979 | ) | | | (77 | ) | | | 1 | | | | 216 | | | | 413 | | | | (12 | ) | | | 14 | | | | (616 | ) |
Charge-offs | | | - | | | | - | | | | (273 | ) | | | - | | | | (4 | ) | | | - | | | | - | | | | (11 | ) | | | (66 | ) | | | (7 | ) | | | (10 | ) | | | (371 | ) |
Recoveries | | | 143 | | | | 2 | | | | 76 | | | | - | | | | 812 | | | | - | | | | - | | | | 10 | | | | 11 | | | | 11 | | | | 4 | | | | 1,069 | |
Net (charge-offs) recoveries | | | 143 | | | | 2 | | | | (197 | ) | | | - | | | | 808 | | | | - | | | | - | | | | (1 | ) | | | (55 | ) | | | 4 | | | | (6 | ) | | | 698 | |
Balance, end of period | | $ | 1,547 | | | $ | 431 | | | $ | 1,550 | | | $ | 754 | | | $ | 1,580 | | | $ | 222 | | | $ | 26 | | | $ | 573 | | | $ | 1,408 | | | $ | 382 | | | $ | 80 | | | $ | 8,553 | |
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PCI Impairment Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | | $ | - | | | $ | - | | | $ | 360 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 360 | |
PCI Impairment charge-offs | | | - | | | | - | | | | (5 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (144 | ) | | | - | | | | - | | | | (149 | ) |
PCI impairment recoveries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Net PCI impairment charge-offs | | | - | | | | - | | | | (5 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (144 | ) | | | - | | | | - | | | | (149 | ) |
PCI provision for loan losses | | | - | | | | - | | | | 163 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 145 | | | | 1 | | | | 3 | | | | 312 | |
Benefit attributable to FDIC loss share agreements | | | - | | | | - | | | | 287 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 287 | |
Total provision for loan losses charged to operations | | | - | | | | - | | | | 450 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 145 | | | | 1 | | | | 3 | | | | 599 | |
Provision for loan losses recorded through FDIC loss share receivable | | | - | | | | - | | | | (287 | ) | | | | | | | | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (287 | ) |
Balance, end of period | | $ | - | | | $ | - | | | $ | 518 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 1 | | | $ | 1 | | | $ | 3 | | | $ | 523 | |
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Total Allowance for Loan Losses | | $ | 1,547 | | | $ | 431 | | | $ | 2,068 | | | $ | 754 | | | $ | 1,580 | | | $ | 222 | | | $ | 26 | | | $ | 573 | | | $ | 1,409 | | | $ | 383 | | | $ | 83 | | | $ | 9,076 | |
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The following table presents, by portfolio segment, the balance in the allowance for loan losses disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans at March 31, 2015 and December 31, 2014. |
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| | Commercial and industrial | | | CRE - owner-occupied | | | CRE - investor income producing | | | AC&D - 1-4 family construction | | | AC&D - lots, land & development | | | AC&D - CRE | | | Other commercial | | | Residential mortgage | | | HELOC | | | Residential construction | | | Other loans to individuals | | | Total | |
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At March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 32 | | | $ | - | | | $ | 67 | | | $ | - | | | $ | 11 | | | $ | - | | | $ | 19 | | | $ | 147 | | | $ | 398 | | | $ | 29 | | | $ | 11 | | | $ | 714 | |
Collectively evaluated for impairment | | | 2,013 | | | | 781 | | | | 1,921 | | | | 141 | | | | 168 | | | | 475 | | | | 19 | | | | 384 | | | | 1,445 | | | | 429 | | | | 100 | | | | 7,876 | |
| | | 2,045 | | | | 781 | | | | 1,988 | | | | 141 | | | | 179 | | | | 475 | | | | 38 | | | | 531 | | | | 1,843 | | | | 458 | | | | 111 | | | | 8,590 | |
Purchased credit-impaired | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total | | $ | 2,045 | | | $ | 781 | | | $ | 1,988 | | | $ | 141 | | | $ | 179 | | | $ | 475 | | | $ | 38 | | | $ | 531 | | | $ | 1,843 | | | $ | 458 | | | $ | 111 | | | $ | 8,590 | |
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Recorded Investment in Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 287 | | | $ | 2,210 | | | $ | 1,253 | | | $ | - | | | $ | 1,049 | | | $ | - | | | $ | 140 | | | $ | 2,751 | | | $ | 2,576 | | | $ | 459 | | | $ | 83 | | | $ | 10,808 | |
Collectively evaluated for impairment | | | 180,579 | | | | 306,986 | | | | 428,850 | | | | 28,174 | | | | 40,006 | | | | 84,006 | | | | 4,824 | | | | 179,895 | | | | 150,127 | | | | 53,265 | | | | 25,072 | | | | 1,481,784 | |
| | | 180,866 | | | | 309,196 | | | | 430,103 | | | | 28,174 | | | | 41,055 | | | | 84,006 | | | | 4,964 | | | | 182,646 | | | | 152,703 | | | | 53,724 | | | | 25,155 | | | | 1,492,592 | |
Purchased credit-impaired | | | 5,429 | | | | 28,543 | | | | 40,452 | | | | 476 | | | | 9,317 | | | | 110 | | | | 967 | | | | 26,738 | | | | 1,712 | | | | 5,509 | | | | 690 | | | | 119,943 | |
Total | | $ | 186,295 | | | $ | 337,739 | | | $ | 470,555 | | | $ | 28,650 | | | $ | 50,372 | | | $ | 84,116 | | | $ | 5,931 | | | $ | 209,384 | | | $ | 154,415 | | | $ | 59,233 | | | $ | 25,845 | | | $ | 1,612,535 | |
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At December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for Loan Losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 44 | | | $ | 18 | | | $ | 57 | | | $ | - | | | $ | 11 | | | $ | - | | | $ | 19 | | | $ | 138 | | | $ | 382 | | | $ | 4 | | | $ | 12 | | | $ | 685 | |
Collectively evaluated for impairment | | | 1,519 | | | | 703 | | | | 1,694 | | | | 458 | | | | 580 | | | | 395 | | | | 13 | | | | 305 | | | | 1,269 | | | | 538 | | | | 103 | | | | 7,577 | |
| | | 1,563 | | | | 721 | | | | 1,751 | | | | 458 | | | | 591 | | | | 395 | | | | 32 | | | | 443 | | | | 1,651 | | | | 542 | | | | 115 | | | | 8,262 | |
Purchased credit-impaired | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Total | | $ | 1,563 | | | $ | 721 | | | $ | 1,751 | | | $ | 458 | | | $ | 591 | | | $ | 395 | | | $ | 32 | | | $ | 443 | | | $ | 1,651 | | | $ | 542 | | | $ | 115 | | | $ | 8,262 | |
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Recorded Investment in Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 376 | | | $ | 2,889 | | | $ | 1,271 | | | $ | - | | | $ | 1,073 | | | $ | - | | | $ | 143 | | | $ | 2,525 | | | $ | 2,481 | | | $ | 369 | | | $ | 90 | | | $ | 11,217 | |
Collectively evaluated for impairment | | | 167,858 | | | | 300,339 | | | | 425,510 | | | | 28,887 | | | | 40,710 | | | | 71,478 | | | | 3,715 | | | | 173,895 | | | | 151,082 | | | | 48,939 | | | | 21,738 | | | | 1,434,151 | |
| | | 168,234 | | | | 303,228 | | | | 426,781 | | | | 28,887 | | | | 41,783 | | | | 71,478 | | | | 3,858 | | | | 176,420 | | | | 153,563 | | | | 49,308 | | | | 21,828 | | | | 1,445,368 | |
Purchased credit-impaired | | | 5,552 | | | | 30,554 | | | | 43,866 | | | | 514 | | | | 13,660 | | | | 112 | | | | 1,187 | | | | 28,730 | | | | 1,734 | | | | 6,574 | | | | 758 | | | | 133,241 | |
Total | | $ | 173,786 | | | $ | 333,782 | | | $ | 470,647 | | | $ | 29,401 | | | $ | 55,443 | | | $ | 71,590 | | | $ | 5,045 | | | $ | 205,150 | | | $ | 155,297 | | | $ | 55,882 | | | $ | 22,586 | | | $ | 1,578,609 | |
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The Company’s loan loss allowance methodology includes four components, as described below: |
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1) Specific Reserve Component. Specific reserves represent the current impairment estimate on specific loans, for which it is probable that the Company will be unable to collect all amounts due according to contractual terms based on current information and events. Impairment measurement reflects only a deterioration of credit quality and not changes in market rates that may cause a change in the fair value of the impaired loan. The amount of impairment may be measured in one of three ways, including (i) calculating the present value of expected future cash flows, discounted at the loan’s interest rate implicit in the original document and deducting estimated selling costs, if any; (ii) observing quoted market prices for identical or similar instruments traded in active markets, or employing model-based valuation techniques for which all significant assumptions are observable in the market; and (iii) determining the fair value of collateral, which is utilized for both collateral dependent loans and for loans when foreclosure is probable. |
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Impaired loans with a balance less than or equal to $150 thousand are viewed in two groups: those which have experienced charge-offs and those recorded at legal balance. Those loans which have experienced charge-offs have no additional reserve applied unless specifically calculated at a point in time when the loan balance exceeded $150 thousand. Those loans recorded at their legal balance have a reserved applied based on a pooled probability of default and loss given default calculation. |
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2) Quantitative Reserve Component. Quantitative reserves represent the current loss contingency estimate on pools of loans, which is an estimate of the amount for which it is probable that the Company will be unable to collect all amounts due on homogeneous groups of loans according to contractual terms should one or more events occur, excluding those loans specifically identified above. |
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The historical loss experience of the Company is collected quarterly by evaluating internal loss data. The estimated historical loss rates are grouped by loan product type. The Company utilizes average historical losses to represent management’s estimate of losses inherent in a particular portfolio. The historical look back period is estimated by loan type, and the Company applies the appropriate historical loss period which best reflects the inherent loss in the applicable portfolio considering prevailing market conditions. The look back periods utilized by management in determining the quantitative reserve component was 15 periods for all loan product types at both March 31, 2015 and December 31, 2014. |
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In the past, the Company has recorded a minimum reserve as part of the quantitative component. A minimum reserve is utilized when the Company has insufficient internal loss history or when internal loss history falls below the minimum reserve percentage. Minimums are determined by analyzing Federal Reserve Bank charge-off data for all insured federal- and state-chartered commercial banks. During 2014, the Company determined that it would use the calculated average historical loss rates and adjust to the minimum reserve amounts in its qualitative component. This change represented a reclassification between components of the allowance and had no impact on the calculation in total. |
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The Company also performs a quantitative calculation on the acquired purchased performing loan portfolio. There is no allowance for loan losses established at the acquisition date for purchased performing loans. The historical loss experience discussed above is applied to the acquired purchased performing loan portfolio and the result is compared to the remaining fair value mark on this portfolio. A provision for loan losses is recorded for any further deterioration in these loans subsequent to the acquisition. At March 31, 2015 and December 31, 2014, this analysis indicated a need for $125 thousand and $117 thousand of provision for loan losses for the acquired purchased performing portfolio, respectively. The remaining mark on the acquired purchased performing loan portfolio was $2.7 million and $3.0 million at March 31, 2015 and December 31, 2014, respectively. |
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3) Qualitative Reserve Component. Qualitative reserves represent an estimate of the amount for which it is probable that environmental or other relevant factors will cause the aforementioned loss contingency estimate to differ from the Company’s historical loss experience or other assumptions. These factors include portfolio trends, portfolio concentrations, economic and market conditions, changes in lending practices and other factors. In 2014, the Company introduced two new factors: changes in loan review systems and geographic considerations. Management believes these refinements simplify application of the qualitative component of the allowance methodology. Each of the factors, except other factors, can range from 0.00% (not applicable) to 0.15% (very high). Other factors are reviewed on a situational basis and are adjusted in 5 basis point increments, up or down, with a maximum of 0.50%. Details of the seven environmental factors for inclusion in the allowance methodology are as follows: |
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| i. | Portfolio trends, which may relate to such factors as type or level of loan origination activity, changes in asset quality (i.e., past due, special mention, non-performing) and/or changes in collateral values; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| ii. | Portfolio concentrations, which may relate to individual borrowers and/or guarantors, geographic regions, industry sectors, loan types and/or other factors; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| iii. | Economic and market trends, which may relate to trends and/or levels of gross domestic production, unemployment, bankruptcies, foreclosures, housing starts, housing prices, equity prices, competitor activities and/or other factors; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| iv. | Changes in lending practices, which may relate to changes in credit policies, procedures, systems or staff; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| v. | Changes in loan review system, which may introduce variation in loan grading, collateral adequacy and valuation and impairment classification; | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| vi. | Geographical considerations, which may relate to economic and/or environmental issues unique to a geographical area including but not limited to elimination of a major employer, natural disaster, or long-term states of emergency; and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| vii. | Other factors, which is intended to capture the incremental adjustment, by loan type, to internally calculated minimum reserves (as discussed above) as well as environmental factors not specifically identified above. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | In addition, qualitative reserves on purchased performing loans are based on the Company’s judgment around the timing difference expected to occur between accretion of the fair market value credit adjustment and realization of actual loan losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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4) Reserve on Purchased-Credit Impaired Loans. In determining the acquisition date fair value of PCI loans, and in subsequent accounting, the Company generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, significant increases in cash flows over those expected at the acquisition date are recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an allowance for loan losses. In pools where impairment has already been recognized, an increase in cash flows will result in a reversal of prior impairment. Management analyzes these acquired loan pools using various assessments of risk to determine and calculate an expected loss. The expected loss is derived using an estimate of a loss given default based upon the collateral type and/or specific review by loan officers of loans generally greater than $1.0 million, and the probability of default that was determined based upon management’s review of the loan portfolio. Trends are reviewed in terms of traditional credit metrics such as accrual status, past due status, and weighted-average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the fair value mark is assessed to correlate the directional consistency of the expected loss for each pool. |
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This analysis did not result in any net impairment for the three months ended March 31, 2015. During the three months ended March 31, 2014, a net impairment of $312 thousand was recorded. See Note 6 – FDIC Loss Share Agreements for further discussion. A full breakdown of the net impairment or recovery is detailed in the allowance by segment table above for the three months ended March 31, 2015 and 2014. |
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The allowance for loan losses is increased by provisions charged to operations and reduced by loans charged off, net of recoveries. The increase in the allowance for loan losses from December 31, 2014 to March 31, 2015 was a function of the following: |
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| -1 | a decrease of $480 thousand in the quantitative component of the allowance due to a decrease in historical loss rates applied to the portfolio as significant charge-offs from 2011 are replaced with net recovery periods in 2015. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| -2 | An increase of $779 thousand in the qualitative component of the allowance primarily due to new application of minimum loss rates to AC&D 1-4 family, AC&D Lots & Land and Residential Construction pools as well as addition provision recorded for the acquired purchased performing pools.. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| -3 | An increase of $29 thousand in specific reserves which change periodically as loans move through or out of the impairment process. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Company evaluates and estimates off-balance sheet credit exposure at the same time it estimates credit losses for loans by a similar process. These estimated credit losses are not recorded as part of the allowance for loan losses, but are recorded to a separate liability account by a charge to income, if material. Loan commitments, unused lines of credit and standby letters of credit make up the off-balance sheet items reviewed for potential credit losses. At March 31, 2015 and December 31, 2014, $125 thousand was recorded as an other liability for off-balance sheet credit exposure. |
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Credit Quality Indicators -The Company uses several credit quality indicators to manage credit risk in an ongoing manner. The Company's primary credit quality indicator is an internal credit risk rating system that categorizes loans into pass, special mention, or classified categories. Credit risk ratings are applied individually to those classes of loans that have significant or unique credit characteristics that benefit from a case-by-case evaluation. These are typically loans to businesses or individuals in the classes that comprise the commercial portfolio segment. Groups of loans that are underwritten and structured using standardized criteria and characteristics, such as statistical models (e.g., credit scoring or payment performance), are typically risk rated and monitored collectively. These are typically loans to individuals in the classes that comprise the consumer portfolio segment. |
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The following are the definitions of the Company's credit quality indicators: |
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| Pass: | | Loans in classes that comprise the commercial and consumer portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. PCI loans that were recorded at estimated fair value on the acquisition date are generally assigned a “pass” loan grade because their net financial statement value is based on the present value of expected cash flows. Management believes there is a low likelihood of loss related to those loans that are considered pass. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Special Mention: | | Loans in classes that comprise the commercial and consumer portfolio segments that have potential weaknesses that deserve management's close attention. If not addressed, these potential weaknesses may result in deterioration of the repayment prospects for the loan. Management believes there is a moderate likelihood of some loss related to those loans that are considered special mention. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Classified: | | Loans in the classes that comprise the commercial and consumer portfolio segments that are inadequately protected by the sound worth and paying capacity of the borrower or of the collateral pledged, if any. Management believes that there is a distinct possibility that the Company will sustain some loss if the deficiencies related to classified loans are not corrected in a timely manner. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Company's credit quality indicators are periodically updated on a case-by-case basis. The following tables present the recorded investment in the Company's loans as of March 31, 2015 and December 31, 2014, by loan class and by credit quality indicator. |
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| | As of March 31, 2015 | | | | | | | | | | | | | | | | | |
| | Commercial and industrial | | | CRE - owner-occupied | | | CRE - investor income producing | | | AC&D - 1-4 family construction | | | AC&D - lots, land & development | | | AC&D - CRE | | | Other commercial | | | Total Commercial | | | | | | | | | | | | | | | | | |
Pass | | $ | 185,685 | | | $ | 330,968 | | | $ | 462,870 | | | $ | 28,650 | | | $ | 47,587 | | | $ | 84,116 | | | $ | 5,791 | | | $ | 1,145,667 | | | | | | | | | | | | | | | | | |
Special mention | | | 368 | | | | 3,435 | | | | 5,814 | | | | - | | | | 1,289 | | | | - | | | | - | | | | 10,906 | | | | | | | | | | | | | | | | | |
Classified | | | 242 | | | | 3,336 | | | | 1,871 | | | | - | | | | 1,496 | | | | - | | | | 140 | | | | 7,085 | | | | | | | | | | | | | | | | | |
Total | | $ | 186,295 | | | $ | 337,739 | | | $ | 470,555 | | | $ | 28,650 | | | $ | 50,372 | | | $ | 84,116 | | | $ | 5,931 | | | $ | 1,163,658 | | | | | | | | | | | | | | | | | |
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Total Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | - | | | | | | | | | | | | | | | | | |
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| | Residential mortgage | | | HELOC | | | Residential construction | | | Other loans to individuals | | | | | | | | | | | | | | | Total Consumer | | | | | | | | | | | | | | | | | |
Pass | | $ | 205,254 | | | $ | 147,638 | | | $ | 58,556 | | | $ | 25,774 | | | | | | | | | | | | | | | $ | 437,222 | | | | | | | | | | | | | | | | | |
Special mention | | | 1,849 | | | | 5,444 | | | | 221 | | | | 30 | | | | | | | | | | | | | | | | 7,544 | | | | | | | | | | | | | | | | | |
Classified | | | 2,281 | | | | 1,333 | | | | 456 | | | | 41 | | | | | | | | | | | | | | | | 4,111 | | | | | | | | | | | | | | | | | |
Total | | $ | 209,384 | | | $ | 154,415 | | | $ | 59,233 | | | $ | 25,845 | | | | | | | | | | | | | | | $ | 448,877 | | | | | | | | | | | | | | | | | |
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Total Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,612,535 | | | | | | | | | | | | | | | | | |
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| | As of December 31, 2014 | | | | | | | | | | | | | | | | | |
| | Commercial and industrial | | | CRE - owner-occupied | | | CRE - investor income producing | | | AC&D - 1-4 family construction | | | AC&D - lots, land & development | | | AC&D - CRE | | | Other commercial | | | Total Commercial | | | | | | | | | | | | | | | | | |
Pass | | $ | 172,638 | | | $ | 328,712 | | | $ | 461,955 | | | $ | 29,401 | | | $ | 52,568 | | | $ | 71,590 | | | $ | 4,902 | | | $ | 1,121,766 | | | | | | | | | | | | | | | | | |
Special mention | | | 493 | | | | 1,925 | | | | 6,934 | | | | - | | | | 1,335 | | | | - | | | | - | | | | 10,687 | | | | | | | | | | | | | | | | | |
Classified | | | 655 | | | | 3,145 | | | | 1,758 | | | | - | | | | 1,540 | | | | - | | | | 143 | | | | 7,241 | | | | | | | | | | | | | | | | | |
Total | | $ | 173,786 | | | $ | 333,782 | | | $ | 470,647 | | | $ | 29,401 | | | $ | 55,443 | | | $ | 71,590 | | | $ | 5,045 | | | $ | 1,139,694 | | | | | | | | | | | | | | | | | |
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Total Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | - | | | | | | | | | | | | | | | | | |
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| | Residential mortgage | | | HELOC | | | Residential construction | | | Other loans to individuals | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | |
Consumer | | | | | | | | | | | | | | | | |
Pass | | $ | 202,214 | | | $ | 147,893 | | | $ | 55,290 | | | $ | 22,445 | | | | | | | | | | | | | | | $ | 427,842 | | | | | | | | | | | | | | | | | |
Special mention | | | 1,802 | | | | 6,122 | | | | 227 | | | | 99 | | | | | | | | | | | | | | | | 8,250 | | | | | | | | | | | | | | | | | |
Classified | | | 1,134 | | | | 1,282 | | | | 365 | | | | 42 | | | | | | | | | | | | | | | | 2,823 | | | | | | | | | | | | | | | | | |
Total | | $ | 205,150 | | | $ | 155,297 | | | $ | 55,882 | | | $ | 22,586 | | | | | | | | | | | | | | | $ | 438,915 | | | | | | | | | | | | | | | | | |
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Total Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,578,609 | | | | | | | | | | | | | | | | | |
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Aging Analysis of Accruing and Non-Accruing Loans – The Company considers a loan to be past due or delinquent when the terms of the contractual obligation are not met by the borrower. PCI loans are included as a single category in the table below as management believes, regardless of their age, there is a lower likelihood of aggregate loss related to these loan pools. Additionally, PCI loans are discounted to allow for the accretion of income on a level yield basis over the life of the loan based on expected cash flows. Regardless of accruing status, the associated discount on these loan pools results in income recognition. The following presents, by class, an aging analysis of the Company’s accruing and non-accruing loans as of March 31, 2015 and December 31, 2014. |
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| | 30-59 | | | 60-89 | | | Past Due | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Days | | | Days | | | 90 Days | | | PCI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Past Due | | | Past Due | | | or More | | | Loans | | | Current | | | Total Loans | | | | | | | | | | | | | | | | | | | | | | | | | |
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As of March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 458 | | | $ | - | | | $ | 55 | | | $ | 5,429 | | | $ | 180,353 | | | $ | 186,295 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 1,123 | | | | 314 | | | | 1,617 | | | | 28,543 | | | | 306,142 | | | | 337,739 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | - | | | | 71 | | | | 449 | | | | 40,452 | | | | 429,583 | | | | 470,555 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | 476 | | | | 28,174 | | | | 28,650 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | - | | | | - | | | | - | | | | 9,317 | | | | 41,055 | | | | 50,372 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | 110 | | | | 84,006 | | | | 84,116 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | - | | | | - | | | | - | | | | 967 | | | | 4,964 | | | | 5,931 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 1,581 | | | | 385 | | | | 2,121 | | | | 85,294 | | | | 1,074,277 | | | | 1,163,658 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 110 | | | | 251 | | | | 339 | | | | 26,738 | | | | 181,946 | | | | 209,384 | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | - | | | | 49 | | | | 180 | | | | 1,712 | | | | 152,474 | | | | 154,415 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | - | | | | 95 | | | | 247 | | | | 5,509 | | | | 53,382 | | | | 59,233 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 80 | | | | 52 | | | | 4 | | | | 690 | | | | 25,019 | | | | 25,845 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 190 | | | | 447 | | | | 770 | | | | 34,649 | | | | 412,821 | | | | 448,877 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 1,771 | | | $ | 832 | | | $ | 2,891 | | | $ | 119,943 | | | $ | 1,487,098 | | | $ | 1,612,535 | | | | | | | | | | | | | | | | | | | | | | | | | |
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As of December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 123 | | | $ | 18 | | | $ | 73 | | | $ | 5,552 | | | $ | 168,020 | | | $ | 173,786 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | - | | | | - | | | | 1,616 | | | | 30,554 | | | | 301,612 | | | | 333,782 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | - | | | | - | | | | 571 | | | | 43,866 | | | | 426,210 | | | | 470,647 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | 514 | | | | 28,887 | | | | 29,401 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | - | | | | - | | | | - | | | | 13,660 | | | | 41,783 | | | | 55,443 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | 112 | | | | 71,478 | | | | 71,590 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 40 | | | | 143 | | | | - | | | | 1,187 | | | | 3,675 | | | | 5,045 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 163 | | | | 161 | | | | 2,260 | | | | 95,445 | | | | 1,041,665 | | | | 1,139,694 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 57 | | | | 68 | | | | 1,058 | | | | 28,730 | | | | 175,237 | | | | 205,150 | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 343 | | | | 60 | | | | 228 | | | | 1,734 | | | | 152,932 | | | | 155,297 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 157 | | | | - | | | | 341 | | | | 6,574 | | | | 48,810 | | | | 55,882 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 29 | | | | 1 | | | | 41 | | | | 758 | | | | 21,757 | | | | 22,586 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 586 | | | | 129 | | | | 1,668 | | | | 37,796 | | | | 398,736 | | | | 438,915 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 749 | | | $ | 290 | | | $ | 3,928 | | | $ | 133,241 | | | $ | 1,440,401 | | | $ | 1,578,609 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Impaired Loans - All classes of loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impaired loans may include all classes of nonaccrual loans and loans modified in a troubled debt restructuring (“TDR”). If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the rate implicit in the original loan agreement or at the fair value of collateral if repayment is expected solely from the collateral. Additionally, a portion of the Company’s qualitative factors accounts for potential impairment on loans generally less than $150 thousand. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. |
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The Company’s quarterly cash flow analyses of PCI loan pools did not indicate any net impairment during the quarter ended March 31, 2015. A net impairment of $672 thousand was recognized during the first quarter of 2014 in a single consumer real estate loan pool. This amount is not included in the tables below. |
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The table below presents impaired loans, by class, and the corresponding allowance for loan losses at March 31, 2015 and December 31, 2014: |
|
| | 31-Mar-15 | | | 31-Dec-14 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Unpaid | | | Related | | | | | | | Unpaid | | | Related | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Principal | | | Allowance For | | | Recorded | | | Principal | | | Allowance For | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Investment | | | Balance | | | Loan Losses | | | Investment | | | Balance | | | Loan Losses | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans with No Related Allowance Recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 47 | | | $ | 126 | | | $ | - | | | $ | 47 | | | $ | 126 | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 2,210 | | | | 2,280 | | | | - | | | | 2,753 | | | | 2,841 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 745 | | | | 745 | | | | - | | | | 844 | | | | 915 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 861 | | | | 951 | | | | | | | | 881 | | | | 970 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 3,863 | | | | 4,102 | | | | - | | | | 4,525 | | | | 4,852 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1,267 | | | | 1,382 | | | | - | | | | 1,135 | | | | 1,222 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 738 | | | | 1,134 | | | | - | | | | 756 | | | | 1,256 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 247 | | | | 376 | | | | - | | | | 341 | | | | 415 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 2,252 | | | | 2,892 | | | | - | | | | 2,232 | | | | 2,893 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with no related allowance recorded | | $ | 6,115 | | | $ | 6,994 | | | $ | - | | | $ | 6,757 | | | $ | 7,745 | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans with an Allowance Recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 240 | | | $ | 259 | | | $ | 32 | | | $ | 329 | | | $ | 348 | | | $ | 44 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | - | | | | - | | | | - | | | | 136 | | | | 141 | | | | 18 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 508 | | | | 597 | | | | 67 | | | | 427 | | | | 442 | | | | 57 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 188 | | | | 214 | | | | 11 | | | | 192 | | | | 217 | | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 140 | | | | 157 | | | | 19 | | | | 143 | | | | 159 | | | | 19 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 1,076 | | | | 1,227 | | | | 129 | | | | 1,227 | | | | 1,307 | | | | 149 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1,484 | | | | 1,512 | | | | 147 | | | | 1,390 | | | | 1,439 | | | | 138 | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 1,838 | | | | 1,902 | | | | 398 | | | | 1,725 | | | | 1,777 | | | | 382 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 212 | | | | 225 | | | | 29 | | | | 28 | | | | 33 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 83 | | | | 84 | | | | 11 | | | | 90 | | | | 90 | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 3,617 | | | | 3,723 | | | | 585 | | | | 3,233 | | | | 3,339 | | | | 536 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with an allowance recorded | | $ | 4,693 | | | $ | 4,950 | | | $ | 714 | | | $ | 4,460 | | | $ | 4,646 | | | $ | 685 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Impaired Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 287 | | | $ | 385 | | | $ | 32 | | | $ | 376 | | | $ | 474 | | | $ | 44 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 2,210 | | | | 2,280 | | | | - | | | | 2,889 | | | | 2,982 | | | | 18 | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 1,253 | | | | 1,342 | | | | 67 | | | | 1,271 | | | | 1,357 | | | | 57 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 1,049 | | | | 1,165 | | | | 11 | | | | 1,073 | | | | 1,187 | | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 140 | | | | 157 | | | | 19 | | | | 143 | | | | 159 | | | | 19 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 4,939 | | | | 5,329 | | | | 129 | | | | 5,752 | | | | 6,159 | | | | 149 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 2,751 | | | | 2,894 | | | | 147 | | | | 2,525 | | | | 2,661 | | | | 138 | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 2,576 | | | | 3,036 | | | | 398 | | | | 2,481 | | | | 3,033 | | | | 382 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 459 | | | | 601 | | | | 29 | | | | 369 | | | | 448 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 83 | | | | 84 | | | | 11 | | | | 90 | | | | 90 | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 5,869 | | | | 6,615 | | | | 585 | | | | 5,465 | | | | 6,232 | | | | 536 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 10,808 | | | $ | 11,944 | | | $ | 714 | | | $ | 11,217 | | | $ | 12,391 | | | $ | 685 | | | | | | | | | | | | | | | | | | | | | | | | | |
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During the three months ended March 31, 2015 and 2014, the Company recognized $56 thousand and $134 thousand, respectively, of interest income with respect to impaired loans, specifically accruing TDRs, within the period the loans were impaired. The average recorded investment and interest income recognized on impaired loans, by class, for the three months ended March 31, 2015 and March 31, 2014 are shown in the table below. |
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| | Three Months Ended March 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average | | | Interest | | | Average | | | Interest | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Income | | | Recorded | | | Income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Investment | | | Recognized | | | Investment | | | Recognized | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans with No Related Allowance Recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 47 | | | $ | 1 | | | $ | 334 | | | $ | 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 2,482 | | | | - | | | | 2,217 | | | | 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 795 | | | | 8 | | | | 322 | | | | 10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 871 | | | | 12 | | | | 2,229 | | | | 44 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | - | | | | - | | | | 154 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 4,195 | | | | 21 | | | | 5,256 | | | | 97 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1,201 | | | | - | | | | 2,778 | | | | 15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 747 | | | | 3 | | | | 1,499 | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 294 | | | | - | | | | 9 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | - | | | | - | | | | 61 | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 2,242 | | | | 3 | | | | 4,347 | | | | 22 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with no related allowance recorded | | $ | 6,437 | | | $ | 24 | | | $ | 9,603 | | | $ | 119 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans with an Allowance Recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 285 | | | $ | - | | | $ | 470 | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 68 | | | | - | | | | 77 | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 468 | | | | 2 | | | | 2,843 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | 19 | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 190 | | | | 3 | | | | 60 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 142 | | | | 4 | | | | 45 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 1,153 | | | | 9 | | | | 3,514 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1,437 | | | | 8 | | | | 1,352 | | | | 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 1,782 | | | | 13 | | | | 1,151 | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 120 | | | | 1 | | | | 30 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 87 | | | | 1 | | | | 2 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 3,425 | | | | 23 | | | | 2,535 | | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with an allowance recorded | | $ | 4,578 | | | $ | 32 | | | $ | 6,049 | | | $ | 15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Impaired Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 332 | | | $ | 1 | | | $ | 804 | | | $ | 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 2,550 | | | | - | | | | 2,294 | | | | 33 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 1,263 | | | | 10 | | | | 3,165 | | | | 10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - 1-4 family construction | | | - | | | | - | | | | 19 | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 1,061 | | | | 15 | | | | 2,289 | | | | 44 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - CRE | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other commercial | | | 142 | | | | 4 | | | | 199 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 5,348 | | | | 30 | | | | 8,770 | | | | 101 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 2,638 | | | | 8 | | | | 4,130 | | | | 24 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 2,529 | | | | 16 | | | | 2,650 | | | | 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 414 | | | | 1 | | | | 39 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 87 | | | | 1 | | | | 63 | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 5,667 | | | | 26 | | | | 6,882 | | | | 33 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 11,015 | | | $ | 56 | | | $ | 15,652 | | | $ | 134 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Nonaccrual and Past Due Loans - It is the general policy of the Company to place a loan on nonaccrual status when there is probable loss or when there is reasonable doubt that all principal will be collected, or when it is over 90 days past due. At March 31, 2015, there was $10 thousand in loans past due 90 days or more and accruing interest. At December 31, 2014, there was $30 thousand in loans past due 90 days or more and accruing interest. These loans were considered fully collectible at March 31, 2015 and December 31, 2014. The recorded investment in nonaccrual loans at March 31, 2015 and December 31, 2014 was as follows: |
|
| | March 31, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 240 | | | $ | 329 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 2,210 | | | | 1,616 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 672 | | | | 680 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
AC&D - lots, land & development | | | 7 | | | | 7 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial loans | | | 3,129 | | | | 2,632 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1,853 | | | | 1,549 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 948 | | | | 1,022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential construction | | | 432 | | | | 341 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans to individuals | | | 35 | | | | 41 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer loans | | | 3,268 | | | | 2,953 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total nonaccrual loans | | $ | 6,397 | | | $ | 5,585 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Purchased Credit-Impaired Loans – PCI loans had an unpaid principal balance of $149.5 million and $165.7 million and a carrying value of $119.9 million and $133.2 million at March 31, 2015 and December 31, 2014, respectively. PCI loans represented 5.0% and 5.6% of total assets at March 31, 2015 and December 31, 2014, respectively. Determining the fair value of the PCI loans at the time of acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carryover of previously established allowance for loan losses from acquired companies. |
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A summary of changes in the accretable yield for PCI loans for the three months ended March 31, 2015 and 2014 follows: |
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| | Three Months Ended March 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2015 | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield, beginning of period | | $ | 40,540 | | | $ | 39,249 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income | | | (3,351 | ) | | | (3,692 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification of nonaccretable difference due to improvement in expected cash flows | | | 1,155 | | | | 4,504 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other changes, net | | | 121 | | | | 1,023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield, end of period | | $ | 38,465 | | | $ | 41,084 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Troubled Debt Restructuring - In situations where, for economic or legal reasons related to a borrower's financial difficulties, management may grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a TDR. Management strives to identify borrowers in financial difficulty early and work with them to modify to more affordable terms. These modified terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. All loan modifications are made on a case-by-case basis. |
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As of March 31, 2015, the Company had 14 TDR loans totaling $4.4 million, of which $1.1 million are nonaccrual loans. As of December 31, 2014, the Company had 18 TDR loans totaling $4.1 million, of which $841 thousand are nonaccrual loans. The Company had allocated $385 thousand and $373 thousand, respectively, of specific reserves to customers whose loan terms have been modified in a TDR as of March 31, 2015 and December 31, 2014. |
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The following tables represent a breakdown of the types of concessions made by loan class for the three months ended March 31, 2015 and 2014. |
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| | Three months ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of loans | | | Pre-Modification Outstanding Recorded Investment | | | Post-Modification Outstanding Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended payment terms | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - owner-occupied | | | 1 | | | $ | 88 | | | $ | 88 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 1 | | | | 212 | | | | 212 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage | | | 1 | | | | 12 | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3 | | | $ | 312 | | | $ | 312 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Three months ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of loans | | | Pre-Modification Outstanding Recorded Investment | | | Post-Modification Outstanding Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Below market interest rate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Commercial | | | 1 | | | $ | 165 | | | $ | 165 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
HELOC | | | 2 | | | | 1,549 | | | | 1,549 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 3 | | | $ | 1,714 | | | $ | 1,714 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial TDRs - Commercial TDRs (including commercial and industrial, commercial real estate, AC&D and other commercial loans) often result from a workout where an existing commercial loan is restructured and a concession is given. These workouts may involve lengthening the amortization period of the amortized principal beyond market terms, or reducing the interest rate below market terms for the original remaining life of the loan. In the case of extended amortization, this concession reduces the minimum monthly payment and increases the balloon payment at the end of the term of the loan. Other concessions can potentially involve forgiveness of principal, collateral concessions, or reduction of accrued interest. The impact of the TDR on the allowance for loan losses is based on the changes in borrower payment performance rather than just the TDR classification. All TDRs are designated as impaired loans. TDRs, like other impaired loans, are measured based on discounted cash flows, comparing the modified loan to pre-modified terms or, if the loan is deemed to be collateral dependent, collateral value less anticipated selling costs. TDRs having a book balance of less than $150,000, along with other impaired loans of similar size, are measured in a pooled approach utilizing loss given default and probability of default parameters. TDRs may remain in accruing status if the borrower remains less than 90 days past due per the restructured loan terms and no loss is expected. A borrower may be considered for removal from TDR status if it is no longer experiencing financial difficulties and can qualify for new loan terms which do not represent a concession, subject to the normal underwriting standards and processes for similar extensions of credit. As of March 31, 2015, the Company has outstanding one commercial TDR with a reduced interest rate and six commercial TDRs where an extension of maturity was granted. As of March 31, 2015, one of the commercial TDRs is not paying in accordance with the terms of the modification. |
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Consumer TDRs - Consumer TDRs (including residential mortgage, HELOC, residential construction and other consumer loans) often result from a workout where an existing loan is modified and a concession is given. These workouts typically lengthen the amortization period of the amortized principal beyond market terms or reduce the interest rate below market terms. The impact of the TDR on the allowance for loan losses is based on the changes in borrower payment performance rather than the TDR classification. TDRs like other impaired loans are measured based on discounted cash flows or collateral value, less anticipated selling costs, of the modified loan using pre-modified interest rates. As of March 31, 2015, the Company has outstanding two consumer TDRs with a reduced interest rate and five consumer TDRs where an extension of maturity was granted. All consumer TDRs are paying according to the terms of the modification as of March 31, 2015. |
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There was one loan that was modified as a commercial TDR within the 12 months ended March 31, 2015 for which there was a payment default during the three months ended March 31, 2015. There were no loans that were modified as TDRs within the 12 months ended March 31, 2014 for which there was a payment default during the three months ended March 31, 2014. |
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| | Three months ended | | | Three months ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-15 | 31-Mar-14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of loans | | | Recorded Investment | | | Number of loans | | | Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended payment terms | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CRE - investor income producing | | | 1 | | | $ | 88 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 1 | | | $ | 88 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The Company does not deem a TDR to be successful until it has been re-established as an accruing loan. The following table presents the successes and failures of the types of modifications indicated within the 12 months ended March 31, 2015 and 2014: |
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| | | Twelve Months Ended March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Paid in full | | | Paying as restructured | | | Foreclosure/Default | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of loans | | | Recorded Investment | | | Number of loans | | | Recorded Investment | | | Number of loans | | | Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Below market interest rate | | | - | | | $ | - | | | | 1 | | | $ | 182 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended payment terms | | | - | | | | - | | | | 4 | | | | 867 | | | | 1 | | | $ | 88 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | - | | | $ | - | | | | 5 | | | $ | 1,049 | | | | 1 | | | $ | 88 | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | Twelve Months Ended March 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Paid in full | | | Paying as restructured | | | Foreclosure/Default | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of loans | | | Recorded Investment | | | Number of loans | | | Recorded Investment | | | Number of loans | | | Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Below market interest rate | | | - | | | $ | - | | | | 3 | | | $ | 2,037 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Extended payment terms | | | - | | | | - | | | | 8 | | | | 2,954 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | - | | | $ | - | | | | 11 | | | $ | 4,991 | | | | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
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As of March 31, 2015, the Company has $1.5 million of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. |