LOANS | 9 Months Ended |
Sep. 30, 2014 |
Receivables [Abstract] | ' |
LOANS | ' |
NOTE 4. LOANS |
The Company’s loan portfolio, excluding loans held for sale, consists of the following categories of loans as of the dates presented (dollars in thousands): |
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| 30-Sep-14 | | | 31-Dec-13 | | | | | | | | | | | | | | | | | | | | | |
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Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction and development | $ | 62,342 | | | $ | 63,170 | | | | | | | | | | | | | | | | | | | | | |
1-4 Family | | 131,953 | | | | 104,685 | | | | | | | | | | | | | | | | | | | | | |
Multifamily | | 16,665 | | | | 14,286 | | | | | | | | | | | | | | | | | | | | | |
Farmland | | 2,249 | | | | 830 | | | | | | | | | | | | | | | | | | | | | |
Nonfarm, nonresidential | | 208,868 | | | | 157,363 | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 44,299 | | | | 32,665 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | 115,065 | | | | 131,096 | | | | | | | | | | | | | | | | | | | | | |
Total loans | $ | 581,441 | | | $ | 504,095 | | | | | | | | | | | | | | | | | | | | | |
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The following table provides an analysis of the aging of loans as of the dates presented (dollars in thousands): |
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| 30-Sep-14 | |
| Past Due and Accruing | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Total Past | | | | | | | | | |
| | | | | | | | | 90 or more | | | | | | | Due & | | | | | | | | | |
| 30-59 days | | | 60-89 days | | | days | | | Nonaccrual | | | Nonaccrual | | | Current | | | Total Loans | |
Construction and development | $ | 177 | | | $ | - | | | $ | - | | | $ | 453 | | | $ | 630 | | | $ | 61,712 | | | $ | 62,342 | |
1-4 Family | | 27 | | | | - | | | | - | | | | 517 | | | | 544 | | | | 131,409 | | | | 131,953 | |
Multifamily | | - | | | | - | | | | - | | | | - | | | | - | | | | 16,665 | | | | 16,665 | |
Farmland | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,249 | | | | 2,249 | |
Nonfarm, nonresidential | | - | | | | - | | | | - | | | | 114 | | | | 114 | | | | 208,754 | | | | 208,868 | |
Total mortgage loans on real estate | | 204 | | | | - | | | | - | | | | 1,084 | | | | 1,288 | | | | 420,789 | | | | 422,077 | |
Commercial and industrial | | 34 | | | | - | | | | - | | | | 182 | | | | 216 | | | | 44,083 | | | | 44,299 | |
Consumer | | 96 | | | | 95 | | | | - | | | | 196 | | | | 387 | | | | 114,678 | | | | 115,065 | |
Total loans | $ | 334 | | | $ | 95 | | | $ | - | | | $ | 1,462 | | | $ | 1,891 | | | $ | 579,550 | | | $ | 581,441 | |
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| 31-Dec-13 | |
| Past Due and Accruing | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Total Past | | | | | | | | | |
| | | | | | | | | 90 or more | | | | | | | Due & | | | | | | | | | |
| 30-59 days | | | 60-89 days | | | days | | | Nonaccrual | | | Nonaccrual | | | Current | | | Total Loans | |
Construction and development | $ | 62 | | | $ | 34 | | | $ | - | | | $ | 891 | | | $ | 987 | | | $ | 62,183 | | | $ | 63,170 | |
1-4 Family | | 81 | | | | - | | | | - | | | | 141 | | | | 222 | | | | 104,463 | | | | 104,685 | |
Multifamily | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,286 | | | | 14,286 | |
Farmland | | - | | | | - | | | | - | | | | - | | | | - | | | | 830 | | | | 830 | |
Nonfarm, nonresidential | | 122 | | | | - | | | | - | | | | 187 | | | | 309 | | | | 157,054 | | | | 157,363 | |
Total mortgage loans on real estate | | 265 | | | | 34 | | | | - | | | | 1,219 | | | | 1,518 | | | | 338,816 | | | | 340,334 | |
Commercial and industrial | | - | | | | - | | | | - | | | | 119 | | | | 119 | | | | 32,546 | | | | 32,665 | |
Consumer | | 120 | | | | 27 | | | | - | | | | 151 | | | | 298 | | | | 130,798 | | | | 131,096 | |
Total loans | $ | 385 | | | $ | 61 | | | $ | - | | | $ | 1,489 | | | $ | 1,935 | | | $ | 502,160 | | | $ | 504,095 | |
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On October 1, 2011, the Bank acquired South Louisiana Business Bank (“SLBB”), a full service commercial bank headquartered in Prairieville, Louisiana. On May 1, 2013, the Bank acquired First Community Bank (“FCB”), a full service commercial bank headquartered in Hammond, Louisiana. |
Total loans at September 30, 2014 include approximately $48.5 million of loans acquired in the FCB and SLBB acquisitions that were recorded at fair value as of the acquisition dates. Included in the acquired loan balances at September 30, 2014 were approximately $0.2 million in loans 30-59 days outstanding and $0.7 million in nonaccrual loans. There were no acquired loans 60-89 or 90 or more days outstanding at September 30, 2014. |
Total loans at December 31, 2013 include approximately $64.8 million of loans acquired in the FCB and SLBB acquisitions that were recorded at fair value as of the acquisition dates. Included in the acquired loan balances as December 31, 2013 were approximately $0.2 million in loans 30-59 days outstanding, $34,000 in loans 60-89 days outstanding, and $1.2 million in nonaccrual loans. There were no acquired loans 90 or more days outstanding at December 31, 2013. |
Credit Quality Indicators |
Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The following definitions are utilized for risk ratings, which are consistent with the definitions used in supervisory guidance: |
Pass – Loans not meeting the criteria below are considered pass. These loans have the highest credit characteristics and financial strength. Borrowers possess characteristics that are highly profitable, with low to negligible leverage and demonstrate significant net worth and liquidity. |
Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. |
Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. |
Doubtful – 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 existing facts, conditions, and values, highly questionable and improbable. |
Loss – Loans classified as loss are considered uncollectible and of such little value that their continuance as recorded assets is not warranted. This classification does not mean that the assets have absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off these assets. |
The following table presents a breakdown of the Company’s loan portfolio by credit quality indicators as of the dates presented (dollars in thousands): |
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| 30-Sep-14 | | | | | | | | | | | | | |
| | | | | Special | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | Mention | | | Substandard | | | Total | | | | | | | | | | | | | |
Construction and development | $ | 60,597 | | | $ | 345 | | | $ | 1,400 | | | $ | 62,342 | | | | | | | | | | | | | |
1-4 Family | | 130,319 | | | | - | | | | 1,634 | | | | 131,953 | | | | | | | | | | | | | |
Multifamily | | 15,607 | | | | - | | | | 1,058 | | | | 16,665 | | | | | | | | | | | | | |
Farmland | | 2,249 | | | | - | | | | - | | | | 2,249 | | | | | | | | | | | | | |
Nonfarm, nonresidential | | 208,608 | | | | - | | | | 260 | | | | 208,868 | | | | | | | | | | | | | |
Total mortgage loans on real estate | | 417,380 | | | | 345 | | | | 4,352 | | | | 422,077 | | | | | | | | | | | | | |
Commercial and industrial | | 44,110 | | | | - | | | | 189 | | | | 44,299 | | | | | | | | | | | | | |
Consumer | | 114,537 | | | | 223 | | | | 305 | | | | 115,065 | | | | | | | | | | | | | |
Total loans | $ | 576,027 | | | $ | 568 | | | $ | 4,846 | | | $ | 581,441 | | | | | | | | | | | | | |
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| 31-Dec-13 | | | | | | | | | | | | | |
| | | | | Special | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | Mention | | | Substandard | | | Total | | | | | | | | | | | | | |
Construction and development | $ | 61,399 | | | $ | 362 | | | $ | 1,409 | | | $ | 63,170 | | | | | | | | | | | | | |
1-4 Family | | 103,408 | | | | 259 | | | | 1,018 | | | | 104,685 | | | | | | | | | | | | | |
Multifamily | | 13,319 | | | | - | | | | 967 | | | | 14,286 | | | | | | | | | | | | | |
Farmland | | 830 | | | | - | | | | - | | | | 830 | | | | | | | | | | | | | |
Nonfarm, nonresidential | | 156,448 | | | | 370 | | | | 545 | | | | 157,363 | | | | | | | | | | | | | |
Total mortgage loans on real estate | | 335,404 | | | | 991 | | | | 3,939 | | | | 340,334 | | | | | | | | | | | | | |
Commercial and industrial | | 32,538 | | | | 5 | | | | 122 | | | | 32,665 | | | | | | | | | | | | | |
Consumer | | 130,717 | | | | 228 | | | | 151 | | | | 131,096 | | | | | | | | | | | | | |
Total loans | $ | 498,659 | | | $ | 1,224 | | | $ | 4,212 | | | $ | 504,095 | | | | | | | | | | | | | |
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The Company had no loans that were classified as doubtful or loss as of September 30, 2014 or December 31, 2013. |
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Loan participations and whole loans sold to and serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were approximately $181.0 million and $59.8 million as of September 30, 2014 and December 31, 2013, respectively. |
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In the ordinary course of business, the Company makes loans to its executive officers, principal stockholders, directors and to companies in which these borrowers are principal owners. Loans outstanding to such borrowers (including companies in which they are principal owners) amounted to approximately $13.4 million and $11.8 million as of September 30, 2014 and December 31, 2013, respectively. These loans are all current and performing according to the original terms. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company or the Bank and did not involve more than normal risk of collectability or present other unfavorable features. |
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The aggregate amount of loans to such related parties is as follows as of the dates presented (dollars in thousands): |
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| 30-Sep-14 | | | 31-Dec-13 | | | | | | | | | | | | | | | | | | | | | |
Balance, beginning of period | $ | 11,781 | | | $ | 10,969 | | | | | | | | | | | | | | | | | | | | | |
Acquired loans | | - | | | | 159 | | | | | | | | | | | | | | | | | | | | | |
New loans | | 2,945 | | | | 3,179 | | | | | | | | | | | | | | | | | | | | | |
Repayments | | (1,294 | ) | | | (2,526 | ) | | | | | | | | | | | | | | | | | | | | |
Balance, end of period | $ | 13,432 | | | $ | 11,781 | | | | | | | | | | | | | | | | | | | | | |
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The Company elected to account for certain loans acquired in the FCB acquisition as acquired impaired loans under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”), due to evidence of credit deterioration at acquisition and the probability that the Company will be unable to collect all contractually required payments. |
The following table presents the fair value of loans acquired with deteriorated credit quality as of the date of the FCB acquisition (dollars in thousands): |
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| 1-May-13 | | | | | | | | | | | | | | | | | | | | | | | | | |
Contractually required principal and interest | $ | 7,470 | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonaccretable difference | | (2,102 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Cash flows expected to be collected | | 5,368 | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield | | (468 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value of loans at acquisition | $ | 4,900 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans acquired in the FCB acquisition included $72.6 million of performing loans not accounted for under ASC 310-30. |
The following table presents changes in the carrying value, net of allowance for loan losses, of the acquired impaired loans for the periods presented (dollars in thousands): |
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| Acquired | | | | | | | | | | | | | | | | | | | | | | | | | |
| Impaired | | | | | | | | | | | | | | | | | | | | | | | | | |
Carrying value, net at December 31, 2012 | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans acquired | | 4,900 | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion to interest income | | 150 | | | | | | | | | | | | | | | | | | | | | | | | | |
Net transfers from (to) nonaccretable difference to (from) accretable yield | | 420 | | | | | | | | | | | | | | | | | | | | | | | | | |
Payments received, net | | (619 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Transfers to real estate owned | | (819 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Carrying value, net at December 31, 2013 | $ | 4,032 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans acquired | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion to interest income | | 120 | | | | | | | | | | | | | | | | | | | | | | | | | |
Net transfers from (to) nonaccretable difference to (from) accretable yield | | 254 | | | | | | | | | | | | | | | | | | | | | | | | | |
Payments received, net | | (626 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | (58 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Transfers to real estate owned | | (628 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Carrying value, net at September 30, 2014 | $ | 3,094 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Accretable yield on acquired impaired loans at September 30, 2014 and December 31, 2013 is as follows (dollars in thousands): |
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| Acquired | | | | | | | | | | | | | | | | | | | | | | | | | |
| Impaired | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, period ended December 31, 2012 | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Net transfers from (to) nonaccretable difference to (from) accretable yield | | 420 | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion | | (150 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, period ended December 31, 2013 | $ | 270 | | | | | | | | | | | | | | | | | | | | | | | | | |
Net transfers from (to) nonaccretable difference to (from) accretable yield | | 254 | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion | | (120 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, period ended September 30, 2014 | $ | 404 | | | | | | | | | | | | | | | | | | | | | | | | | |
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