Credit Quality of Loans and Allowance for Loan Losses | 9 Months Ended |
Sep. 30, 2014 |
Receivables [Abstract] | ' |
Credit Quality of Loans and Allowance for Loan Losses | ' |
Note 4. | Credit Quality of Loans and Allowance for Loan Losses | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Company policies, consistent with regulatory guidelines, provide for the classification of loans that are considered to be of lesser quality as substandard, doubtful, or loss. A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those loans characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans (or portions of loans) classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Loans that do not expose us to risk sufficient to warrant classification in one of the aforementioned categories, but which possess potential weaknesses that deserve our close attention, are required to be designated as special mention. |
The Company maintains an allowance for loan losses at an amount estimated to equal all credit losses incurred in our loan portfolio that are both probable and reasonable to estimate at a balance sheet date. Our determination as to the classification of our assets is subject to review by the Maryland Commissioner of Financial Regulation and the FDIC. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations. |
The Company provides for loan losses based upon the consistent application of our documented allowance for loan loss methodology. All loan losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. We regularly review the loan portfolio and make provisions for loan losses in order to maintain the allowance for loan losses in accordance with GAAP. The allowance for loan losses consists primarily of two components: |
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| 1) | specific allowances are established for loans classified as impaired. For impaired loans, an allowance is established when the net realizable value (collateral value less costs to sell) of the loan is lower than the carrying amount of the loan. The amount of impairment provided for as a specific allowance is represented by the deficiency, if any, between the underlying collateral value and the carrying value of the loan. Impaired loans for which the estimated fair value of the loan, or the loan’s observable market price or the fair value of the underlying collateral, if the loan is collateral dependent, exceeds the carrying value of the loan are not considered in establishing specific allowances for loan losses; and | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| 2) | general allowances are established for loan losses on a segment basis for loans that do not meet the definition of impaired loans. The segments are grouped into similar risk characteristics, primarily loan type and regulatory classification. We apply an estimated loss rate to each loan segment. The loss rates applied are based upon our loss experience adjusted, as appropriate, for the qualitative factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions. | | | | | | | | | | | | | | | | | | | | | | | | | | |
The allowance for loan losses is maintained at a level to provide for losses that are probable and can be reasonably estimated. Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan loss experience, known and inherent losses in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change, including the amounts and timing of future cash flows expected to be received on impaired loans. |
The adjustments to historical loss experience are based on our evaluation of several qualitative factors, including: |
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| • | | changes in the types of loans in the loan portfolio and the size of the segment to the entire loan portfolio; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in the levels of concentration of credit; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in the number and amount of non-accrual loans, classified loans, past due loans and troubled debt restructurings and other loan modifications; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in the experience, ability and depth of lending personnel; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in the quality of the loan review system and the degree of Board oversight; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in lending policies and procedures; | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in national, state and local economic trends and business conditions; and | | | | | | | | | | | | | | | | | | | | | | | | | |
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| • | | changes in external factors such as competition and legal and regulatory oversight. | | | | | | | | | | | | | | | | | | | | | | | | | |
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A loan is considered past due or delinquent when a contractual payment is not paid on the day it is due. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is determined on a loan by loan basis for all loans secured by real estate. |
The Bank’s charge-off policy states after all collection efforts have been exhausted, the loan is deemed to be a loss and the loss amount has been determined, the loss amount will be charged to the established allowance for loan losses. Loans secured by real estate, either residential or commercial, are evaluated for loss potential at the 60 day past due threshold. At no later than 90 days past due the loan is placed on nonaccrual status and a specific reserve is established if the net realizable value in less than the principal value of the loan balance(s). Once the actual loss value has been determined, a charge-off to the allowance for loan losses for the amount of the loss is taken. Each loss is evaluated on its specific facts regarding the appropriate timing to recognize the loss. Unsecured loans are charged-off to the allowance for loan losses at the 90 day past due threshold or when an actual loss has been determined whichever is earlier. |
We evaluate the allowance for loan losses based upon the combined total of the specific and general components. Generally when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses than would be the case without the increase. Generally when the loan portfolio decreases, absent other factors, the allowance for loan loss methodology results in a lower dollar amount of estimated probable losses than would be the case without the decrease. |
Commercial real estate loans generally have greater credit risks compared to one- to four-family residential mortgage loans, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related business and thus may be subject to a greater extent to adverse conditions in the real estate market and in the general economy. Therefore, we expect that the percentage of the allowance for loan losses as a percentage of the loan portfolio will increase going forward as we continue our focus on the origination of commercial real estate loans. |
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The following tables summarize the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2014 and 2013. |
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| | For the Three Months Ended September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 239,485 | | | $ | 25,946 | | | $ | 70,257 | | | $ | 82,757 | | | $ | 280,555 | | | $ | — | | | $ | 699,000 | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Recoveries | | | 4,619 | | | | — | | | | 2,848 | | | | — | | | | — | | | | — | | | | 7,467 | |
Provision | | | (12,466 | ) | | | 180 | | | | (2,748 | ) | | | (748 | ) | | | 19,315 | | | | — | | | | 3,533 | |
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Ending Balance | | $ | 231,638 | | | $ | 26,126 | | | $ | 70,357 | | | $ | 82,009 | | | $ | 299,870 | | | $ | — | | | $ | 710,000 | |
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| | For the Three Months Ended September 30, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 253,831 | | | $ | 26,465 | | | $ | 88,372 | | | $ | 70,349 | | | $ | 254,983 | | | $ | — | | | $ | 694,000 | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Recoveries | | | 64 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 64 | |
Provision | | | 3,113 | | | | (260 | ) | | | (6,553 | ) | | | 1,232 | | | | 3,404 | | | | — | | | | 936 | |
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Ending Balance | | $ | 257,008 | | | $ | 26,205 | | | $ | 81,819 | | | $ | 71,581 | | | $ | 258,387 | | | $ | — | | | $ | 695,000 | |
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| | For the Nine Months Ended September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 244,288 | | | $ | 26,704 | | | $ | 70,334 | | | $ | 72,751 | | | $ | 267,923 | | | $ | — | | | $ | 682,000 | |
Charge-offs | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Recoveries | | | 10,303 | | | | — | | | | 3,248 | | | | — | | | | — | | | | — | | | | 13,551 | |
Provision | | | (22,953 | ) | | | (578 | ) | | | (3,225 | ) | | | 9,258 | | | | 31,947 | | | | — | | | | 14,449 | |
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Ending Balance | | $ | 231,638 | | | $ | 26,126 | | | $ | 70,357 | | | $ | 82,009 | | | $ | 299,870 | | | $ | — | | | $ | 710,000 | |
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| | For the Nine Months Ended September 30, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 310,865 | | | $ | 25,152 | | | $ | 235,381 | | | $ | 69,436 | | | $ | 218,166 | | | $ | — | | | $ | 859,000 | |
Charge-offs | | | 247,804 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 247,804 | |
Recoveries | | | 64 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 64 | |
Provision | | | 193,883 | | | | 1,053 | | | | (153,562 | ) | | | 2,145 | | | | 40,221 | | | | — | | | | 83,740 | |
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Ending Balance | | $ | 257,008 | | | $ | 26,205 | | | $ | 81,819 | | | $ | 71,581 | | | $ | 258,387 | | | $ | — | | | $ | 695,000 | |
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The following tables set forth the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually at September 30, 2014 and December 31, 2013: |
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| | At September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 231,638 | | | $ | 26,126 | | | $ | 70,357 | | | $ | 82,009 | | | $ | 299,870 | | | $ | — | | | $ | 710,000 | |
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Ending balance: individually evaluated for impairment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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Ending balance: collectively evaluated for impairment | | $ | 231,638 | | | $ | 26,126 | | | $ | 70,357 | | | $ | 82,009 | | | $ | 299,870 | | | $ | — | | | $ | 710,000 | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 36,133,676 | | | $ | 5,532,906 | | | $ | 8,937,816 | | | $ | 10,251,161 | | | $ | 28,510,451 | | | $ | 421,319 | | | $ | 89,787,329 | |
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Ending balance: individually evaluated for impairment | | $ | 472,192 | | | $ | 9,417 | | | $ | 117,370 | | | $ | — | | | $ | — | | | $ | — | | | $ | 598,979 | |
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Ending balance: collectively evaluated for impairment | | $ | 35,661,484 | | | $ | 5,523,489 | | | $ | 8,820,446 | | | $ | 10,251,161 | | | $ | 28,510,451 | | | $ | 421,319 | | | $ | 89,188,350 | |
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| | At December 31, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 244,288 | | | $ | 26,704 | | | $ | 70,334 | | | $ | 72,751 | | | $ | 267,923 | | | $ | — | | | $ | 682,000 | |
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Ending balance: individually evaluated for impairment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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Ending balance: collectively evaluated for impairment | | $ | 244,288 | | | $ | 26,704 | | | $ | 70,334 | | | $ | 72,751 | | | $ | 267,923 | | | $ | — | | | $ | 682,000 | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | | $ | 37,954,506 | | | $ | 5,703,159 | | | $ | 8,400,861 | | | $ | 8,479,176 | | | $ | 23,279,588 | | | $ | 207,757 | | | $ | 84,025,047 | |
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Ending balance: individually evaluated for impairment | | $ | 181,186 | | | $ | 9,417 | | | $ | 125,206 | | | $ | — | | | $ | 733,229 | | | $ | — | | | $ | 1,049,038 | |
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Ending balance: collectively evaluated for impairment | | $ | 37,773,320 | | | $ | 5,693,742 | | | $ | 8,275,655 | | | $ | 8,479,176 | | | $ | 22,546,359 | | | $ | 207,757 | | | $ | 82,976,009 | |
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The allowance for loan losses allocated to each portfolio segment is not necessarily indicative of future losses in any particular portfolio segment and does not restrict the use of the allowance to absorb losses in other portfolio segments. |
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The following tables are a summary of the loan portfolio quality indicators by portfolio segment at September 30, 2014 and December 31, 2013: |
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| | At September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Pass | | $ | 35,661,484 | | | $ | 5,523,489 | | | $ | 8,321,480 | | | $ | 10,251,161 | | | $ | 28,140,419 | | | $ | 421,319 | | | $ | 88,319,352 | |
Special Mention | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Substandard | | | 472,192 | | | | 9,417 | | | | 616,336 | | | | — | | | | 370,032 | | | | — | | | | 1,467,977 | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
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Total | | $ | 36,133,676 | | | $ | 5,532,906 | | | $ | 8,937,816 | | | $ | 10,251,161 | | | $ | 28,510,451 | | | $ | 421,319 | | | $ | 89,787,329 | |
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| | At December 31, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Pass | | $ | 37,773,320 | | | $ | 5,693,742 | | | $ | 7,789,131 | | | $ | 8,479,176 | | | $ | 22,546,359 | | | $ | 207,757 | | | $ | 82,489,485 | |
Special Mention | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Substandard | | | 181,186 | | | | 9,417 | | | | 611,730 | | | | — | | | | 733,229 | | | | — | | | | 1,535,562 | |
Doubtful | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
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Total | | $ | 37,954,506 | | | $ | 5,703,159 | | | $ | 8,400,861 | | | $ | 8,479,176 | | | $ | 23,279,588 | | | $ | 207,757 | | | $ | 84,025,047 | |
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Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized and are aggregated as a “Pass” rating. |
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• | | Pass (risk ratings 1-6) – risk ratings one to four are deemed “acceptable”. Risk rating five is “acceptable with care” and risk rating six is a “watch credit”. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | | Special mention (risk rating 7) - a special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | | Substandard (risk rating 8) - substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | | Doubtful (risk rating 9) - loans classified as doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. | | | | | | | | | | | | | | | | | | | | | | | | | | |
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• | | Loss (risk rating 10) - loans classified as loss are considered uncollectible and of such little value that their continuance as assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may occur in the future. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans classified special mention, substandard, doubtful or loss are reviewed at least quarterly to determine their appropriate classification. Non-classified commercial loan relationships greater than $50,000 are reviewed annually. Non-classified residential mortgage loans and consumer loans are not evaluated unless a specific event occurs to raise the awareness of possible credit deterioration. |
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The following tables set forth certain information with respect to our loan delinquencies by portfolio segment at September 30, 2014 and December 31, 2013: |
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| | At September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Current | | $ | 35,549,879 | | | $ | 5,523,489 | | | $ | 8,937,816 | | | $ | 10,251,161 | | | $ | 28,510,451 | | | $ | 421,319 | | | $ | 89,194,115 | |
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30-59 days past due | | | 111,605 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 111,605 | |
60-89 days past due | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Greater than 90 days past due | | | 472,192 | | | | 9,417 | | | | — | | | | — | | | | — | | | | — | | | | 481,609 | |
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Total past due | | | 583,797 | | | | 9,417 | | | | — | | | | — | | | | — | | | | — | | | | 593,214 | |
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Total | | $ | 36,133,676 | | | $ | 5,532,906 | | | $ | 8,937,816 | | | $ | 10,251,161 | | | $ | 28,510,451 | | | $ | 421,319 | | | $ | 89,787,329 | |
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| | At December 31, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
Current | | $ | 37,290,317 | | | $ | 5,693,742 | | | $ | 8,400,861 | | | $ | 8,479,176 | | | $ | 23,279,588 | | | $ | 207,757 | | | $ | 83,351,441 | |
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30-59 days past due | | | 396,903 | | | | 9,417 | | | | — | | | | — | | | | — | | | | — | | | | 406,320 | |
60-89 days past due | | | 266,280 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 266,280 | |
Greater than 90 days past due | | | 1,006 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,006 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total past due | | | 664,189 | | | | 9,417 | | | | — | | | | — | | | | — | | | | — | | | | 673,606 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 37,954,506 | | | $ | 5,703,159 | | | $ | 8,400,861 | | | $ | 8,479,176 | | | $ | 23,279,588 | | | $ | 207,757 | | | $ | 84,025,047 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables are a summary of impaired loans by portfolio segment at September 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | 472,192 | | | $ | 9,417 | | | $ | 117,370 | | | $ | — | | | $ | — | | | $ | — | | | $ | 598,979 | |
Unpaid Principal Balance | | | 472,192 | | | | 9,417 | | | | 117,370 | | | | — | | | | — | | | | — | | | | 598,979 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Unpaid Principal Balance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Related Allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | 472,192 | | | $ | 9,417 | | | $ | 117,370 | | | $ | — | | | $ | — | | | $ | — | | | $ | 598,979 | |
Unpaid Principal Balance | | | 472,192 | | | | 9,417 | | | | 117,370 | | | | — | | | | — | | | | — | | | | 598,979 | |
Related Allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At December 31, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | 181,186 | | | $ | 9,417 | | | $ | 125,206 | | | $ | — | | | $ | 733,229 | | | $ | — | | | $ | 1,049,038 | |
Unpaid Principal Balance | | | 181,186 | | | | 9,417 | | | | 125,206 | | | | — | | | | 733,229 | | | | — | | | | 1,049,038 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Unpaid Principal Balance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Related Allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recorded Investment | | $ | 181,186 | | | $ | 9,417 | | | $ | 125,206 | | | $ | — | | | $ | 733,229 | | | $ | — | | | $ | 1,049,038 | |
Unpaid Principal Balance | | | 181,186 | | | | 9,417 | | | | 125,206 | | | | — | | | | 733,229 | | | | — | | | | 1,049,038 | |
Related Allowance | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
|
The following tables present by portfolio segment, information related to the average recorded investment and the interest income foregone and recognized on impaired loans for the three and nine months ended September 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 326,186 | | | $ | 9,417 | | | $ | 118,852 | | | $ | — | | | $ | — | | | $ | — | | | $ | 454,455 | |
Interest income that would have been recognized | | | 13,725 | | | | 101 | | | | — | | | | — | | | | — | | | | — | | | | 13,826 | |
Interest income recognized (cash basis) | | | 5,984 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,984 | |
Interest income foregone (recovered) | | | 7,741 | | | | 101 | | | | — | | | | — | | | | — | | | | — | | | | 7,842 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Interest income that would have been recognized | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income recognized (cash basis) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income foregone (recovered) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 326,186 | | | $ | 9,417 | | | $ | 118,852 | | | $ | — | | | $ | — | | | $ | — | | | $ | 454,455 | |
Interest income that would have been recognized | | | 13,725 | | | | 101 | | | | — | | | | — | | | | — | | | | — | | | | 13,826 | |
Interest income recognized (cash basis) | | | 5,984 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,984 | |
Interest income foregone (recovered) | | | 7,741 | | | | 101 | | | | — | | | | — | | | | — | | | | — | | | | 7,842 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 431,098 | | | $ | 4,733 | | | $ | 127,669 | | | $ | — | | | $ | — | | | $ | — | | | $ | 563,500 | |
Interest income that would have been recognized | | | 4,085 | | | | 44 | | | | 982 | | | | — | | | | — | | | | — | | | | 5,111 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | 982 | | | | — | | | | — | | | | — | | | | 982 | |
Interest income foregone (recovered) | | | 4,085 | | | | 44 | | | | — | | | | — | | | | — | | | | — | | | | 4,129 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | — | | | $ | — | | | $ | 90,211 | | | $ | — | | | $ | — | | | $ | — | | | $ | 90,211 | |
Interest income that would have been recognized | | | — | | | | — | | | | 1,657 | | | | — | | | | — | | | | — | | | | 1,657 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income foregone (recovered) | | | — | | | | — | | | | 1,657 | | | | — | | | | — | | | | — | | | | 1,657 | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 431,098 | | | $ | 4,733 | | | $ | 217,880 | | | $ | — | | | $ | — | | | $ | — | | | $ | 653,711 | |
Interest income that would have been recognized | | | 4,085 | | | | 44 | | | | 2,639 | | | | — | | | | — | | | | — | | | | 6,768 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | 982 | | | | — | | | | — | | | | — | | | | 982 | |
Interest income foregone (recovered) | | | 4,085 | | | | 44 | | | | 1,657 | | | | — | | | | — | | | | — | | | | 5,786 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2014 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 253,503 | | | $ | 9,417 | | | $ | 121,340 | | | $ | — | | | $ | 183,307 | | | $ | — | | | $ | 567,567 | |
Interest income that would have been recognized | | | 17,279 | | | | 298 | | | | — | | | | — | | | | 4,934 | | | | — | | | | 22,511 | |
Interest income recognized (cash basis) | | | 5,984 | | | | — | | | | — | | | | — | | | | 7,805 | | | | — | | | | 13,789 | |
Interest income foregone (recovered) | | | 11,295 | | | | 298 | | | | — | | | | — | | | | (2,871 | ) | | | — | | | | 8,722 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Interest income that would have been recognized | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income recognized (cash basis) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income foregone (recovered) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 253,503 | | | $ | 9,417 | | | $ | 121,340 | | | $ | — | | | $ | 183,307 | | | $ | — | | | $ | 567,567 | |
Interest income that would have been recognized | | | 17,279 | | | | 298 | | | | — | | | | — | | | | 4,934 | | | | — | | | | 22,511 | |
Interest income recognized (cash basis) | | | 5,984 | | | | — | | | | — | | | | — | | | | 7,805 | | | | — | | | | 13,789 | |
Interest income foregone (recovered) | | | 11,295 | | | | 298 | | | | — | | | | — | | | | (2,871 | ) | | | — | | | | 8,722 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2013 | |
| | Residential | | | Residential | | | Residential | | | Commercial | | | Other | | | Consumer | | | Total | |
owner | owner | non-owner | owner | commercial | loans |
occupied - | occupied - | occupied | occupied | loans | |
first lien | junior lien | (investor) | | | |
| | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 349,510 | | | $ | 2,366 | | | $ | 96,500 | | | $ | — | | | $ | — | | | $ | — | | | $ | 448,376 | |
Interest income that would have been recognized | | | 18,987 | | | | 44 | | | | 1,947 | | | | — | | | | — | | | | — | | | | 20,978 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | 1,947 | | | | — | | | | — | | | | — | | | | 1,947 | |
Interest income foregone (recovered) | | | 18,987 | | | | 44 | | | | — | | | | — | | | | — | | | | — | | | | 19,031 | |
| | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 183,402 | | | $ | — | | | $ | 45,106 | | | $ | — | | | $ | — | | | $ | — | | | $ | 228,508 | |
Interest income that would have been recognized | | | 5,390 | | | | — | | | | 3,947 | | | | — | | | | — | | | | — | | | | 9,337 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Interest income foregone (recovered) | | | 5,390 | | | | — | | | | 3,947 | | | | — | | | | — | | | | — | | | | 9,337 | |
| | | | | | | |
Total impaired loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Average recorded investment | | $ | 532,912 | | | $ | 2,366 | | | $ | 141,606 | | | $ | — | | | $ | — | | | $ | — | | | $ | 676,884 | |
Interest income that would have been recognized | | | 24,377 | | | | 44 | | | | 5,894 | | | | — | | | | — | | | | — | | | | 30,315 | |
Interest income recognized (cash basis) | | | — | | | | — | | | | 1,947 | | | | — | | | | — | | | | — | | | | 1,947 | |
Interest income foregone (recovered) | | | 24,377 | | | | 44 | | | | 3,947 | | | | — | | | | — | | | | — | | | | 28,368 | |
|
The following table is a summary of performing and nonperforming impaired loans by portfolio segment at September 30, 2014 and December 31, 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | At September 30, | | | At December 31, | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | |
Performing loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired performing loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - first lien | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - junior lien | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Commercial owner occupied | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Other commercial loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Consumer loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - first lien | | | — | | | | 78,601 | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - junior lien | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | 117,370 | | | | — | | | | | | | | | | | | | | | | | | | | | |
Commercial owner occupied | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Other commercial loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Consumer loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired performing loans | | | 117,370 | | | | 78,601 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Nonperforming loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired nonperforming loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - first lien | | | 472,192 | | | | 181,186 | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - junior lien | | | 9,417 | | | | 9,417 | | | | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Commercial owner occupied | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Other commercial loans | | | — | | | | 733,229 | | | | | | | | | | | | | | | | | | | | | |
Consumer loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - first lien | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Residential owner occupied - junior lien | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | | 125,206 | | | | | | | | | | | | | | | | | | | | | |
Commercial owner occupied | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Other commercial loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
Consumer loans | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired nonperforming loans: | | | 481,609 | | | | 1,049,038 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 598,979 | | | $ | 1,127,639 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Troubled debt restructurings. Loans may be periodically modified in a troubled debt restructuring (“TDR”) to make concessions to help a borrower remain current on the loan and/or to avoid foreclosure. Generally we do not forgive principal or interest on a loan or modify the interest rate to below market rates. When we modify loans in a TDR, we evaluate any possible impairment similar to any other impaired loans. If we determine that the value of the restructured loan is less than the recorded investment in the loan, impairment is recognized through a specific allowance estimate or a charge-off to the allowance. |
If a restructured loan was nonperforming prior to the restructuring, the restructured loan will remain a nonperforming loan. After a period of six months and if the restructured loan is in compliance with its modified terms, the loan will become a performing loan. If a restructured loan was performing prior to the restructuring, the restructured loan will remain a performing loan. A performing TDR will no longer be reported as a TDR in calendar years after the year of the restructuring if the effective interest rate is equal or greater than the market rate for credits with comparable risk. |
The Company has no commitments to loan additional funds to borrowers whose loans have been restructured. |
|
The following table is a summary of impaired loans that were modified pursuant to a TDR during the three and nine months ended September 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loan Type | | Number of | | | Pre- | | | Post- | | | | | | | | | | | | | | | | | |
Contracts | Modification | Modification | | | | | | | | | | | | | | | | |
| Outstanding | Outstanding | | | | | | | | | | | | | | | | |
| Recorded | Recorded | | | | | | | | | | | | | | | | |
| Investment | Investment | | | | | | | | | | | | | | | | |
| | During the Three Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | During the Three Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | During the Nine Months Ended September 30, 2014 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | During the Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Residential non-owner occupied (investor) | | | 1 | | | $ | 127,675 | | | $ | 130,664 | | | | | | | | | | | | | | | | | |
There were no defaults on any TDRs (that were restructured within the previous twelve months) during the nine months ending September 30, 2014 or September 30, 2013. |