Loans and the Allowance for Credit Losses | 3 Months Ended |
Mar. 31, 2015 |
Receivables [Abstract] | |
Loans and the Allowance for Credit Losses | NOTE 5. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES |
The recorded investment in loans is presented in the Consolidated Balance Sheets net of deferred loan fees and costs of $2.2 million and $2.4 million at March 31, 2015 and December 31, 2014, respectively. |
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(unaudited, in thousands) | | March 31, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 288,075 | | | $ | 262,643 | | | | | | | | | | | | | | | | | | | | | | | | | |
Improved property | | | 1,908,869 | | | | 1,682,817 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total commercial real estate | | | 2,196,944 | | | | 1,945,460 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Commercial and industrial | | | 709,621 | | | | 638,410 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 1,239,163 | | | | 928,770 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 362,163 | | | | 330,031 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 365,830 | | | | 244,095 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total portfolio loans | | | 4,873,721 | | | | 4,086,766 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Loans held for sale | | | 6,064 | | | | 5,865 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans | | $ | 4,879,785 | | | $ | 4,092,631 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following tables summarize changes in the allowance for credit losses applicable to each category of the loan portfolio: |
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| | Allowance for Credit Losses By Category | |
For the Three Months Ended March 31, 2015 and 2014 |
(unaudited, in thousands) | | Commercial | | | Commercial | | | Commercial | | | Residential | | | Home | | | Consumer | | | Deposit | | | Total | |
Real Estate- | Real Estate- | & Industrial | Real Estate | Equity | Overdraft |
Land and | Improved | | | | |
Construction | Property | | | | |
Balance at December 31, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 5,654 | | | $ | 17,573 | | | $ | 9,063 | | | $ | 5,382 | | | $ | 2,329 | | | $ | 4,078 | | | $ | 575 | | | $ | 44,654 | |
Allowance for loan commitments | | | 194 | | | | 10 | | | | 112 | | | | 9 | | | | 90 | | | | 40 | | | | — | | | | 455 | |
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Total beginning allowance for credit losses | | | 5,848 | | | | 17,583 | | | | 9,175 | | | | 5,391 | | | | 2,419 | | | | 4,118 | | | | 575 | | | | 45,109 | |
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Provision for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | | (323 | ) | | | 903 | | | | (44 | ) | | | (208 | ) | | | 747 | | | | 133 | | | | 58 | | | | 1,266 | |
Provision for loan commitments | | | (16 | ) | | | 8 | | | | 8 | | | | 4 | | | | 17 | | | | 2 | | | | — | | | | 23 | |
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Total provision for credit losses | | | (339 | ) | | | 911 | | | | (36 | ) | | | (204 | ) | | | 764 | | | | 135 | | | | 58 | | | | 1,289 | |
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Charge-offs | | | — | | | | (577 | ) | | | (122 | ) | | | (358 | ) | | | (589 | ) | | | (717 | ) | | | (154 | ) | | | (2,517 | ) |
Recoveries | | | — | | | | 136 | | | | 114 | | | | 218 | | | | 10 | | | | 229 | | | | 63 | | | | 770 | |
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Net charge-offs | | | — | | | | (441 | ) | | | (8 | ) | | | (140 | ) | | | (579 | ) | | | (488 | ) | | | (91 | ) | | | (1,747 | ) |
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Balance at March 31, 2015: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | 5,331 | | | | 18,035 | | | | 9,011 | | | | 5,034 | | | | 2,497 | | | | 3,723 | | | | 542 | | | | 44,173 | |
Allowance for loan commitments | | | 178 | | | | 18 | | | | 120 | | | | 13 | | | | 107 | | | | 42 | | | | — | | | | 478 | |
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Total ending allowance for credit losses | | $ | 5,509 | | | $ | 18,053 | | | $ | 9,131 | | | $ | 5,047 | | | $ | 2,604 | | | $ | 3,765 | | | $ | 542 | | | $ | 44,651 | |
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Balance at December 31, 2013: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 6,056 | | | $ | 18,157 | | | $ | 9,925 | | | $ | 5,673 | | | $ | 2,017 | | | $ | 5,020 | | | $ | 520 | | | $ | 47,368 | |
Allowance for loan commitments | | | 301 | | | | 62 | | | | 130 | | | | 5 | | | | 85 | | | | 19 | | | | — | | | | 602 | |
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Total beginning allowance for credit losses | | | 6,357 | | | | 18,219 | | | | 10,055 | | | | 5,678 | | | | 2,102 | | | | 5,039 | | | | 520 | | | | 47,970 | |
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Provision for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | | (1,051 | ) | | | (509 | ) | | | 2,128 | | | | 869 | | | | 153 | | | | 305 | | | | 361 | | | | 2,256 | |
Provision for loan commitments | | | (8 | ) | | | (53 | ) | | | 3 | | | | — | | | | 1 | | | | — | | | | — | | | | (57 | ) |
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Total provision for credit losses | | | (1,059 | ) | | | (562 | ) | | | 2,131 | | | | 869 | | | | 154 | | | | 305 | | | | 361 | | | | 2,199 | |
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Charge-offs | | | — | | | | (493 | ) | | | (2,276 | ) | | | (879 | ) | | | (155 | ) | | | (752 | ) | | | (180 | ) | | | (4,735 | ) |
Recoveries | | | — | | | | 120 | | | | 65 | | | | 109 | | | | 11 | | | | 227 | | | | 62 | | | | 594 | |
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Net charge-offs | | | — | | | | (373 | ) | | | (2,211 | ) | | | (770 | ) | | | (144 | ) | | | (525 | ) | | | (118 | ) | | | (4,141 | ) |
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Balance at March 31, 2014: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | 5,005 | | | | 17,275 | | | | 9,842 | | | | 5,772 | | | | 2,026 | | | | 4,800 | | | | 763 | | | | 45,483 | |
Allowance for loan commitments | | | 293 | | | | 9 | | | | 133 | | | | 5 | | | | 86 | | | | 19 | | | | — | | | | 545 | |
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Total ending allowance for credit losses | | $ | 5,298 | | | $ | 17,284 | | | $ | 9,975 | | | $ | 5,777 | | | $ | 2,112 | | | $ | 4,819 | | | $ | 763 | | | $ | 46,028 | |
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The following tables present the allowance for credit losses and recorded investments in loans by category: |
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| | Allowance for Credit Losses and Recorded Investment in Loans | |
(unaudited, in thousands) | | Commercial | | | Commercial | | | Commercial | | | Residential | | | Home | | | Consumer | | | Over-draft | | | Total | |
Real Estate- | Real Estate- | and Industrial | Real Estate | Equity |
Land and | Improved | | | |
Construction | Property | | | |
March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loans individually evaluated for impairment | | $ | — | | | $ | 2,828 | | | $ | 873 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3,701 | |
Allowance for loans collectively evaluated for impairment | | | 5,331 | | | | 15,207 | | | | 8,138 | | | | 5,034 | | | | 2,497 | | | | 3,723 | | | | 542 | | | | 40,472 | |
Allowance for loan commitments | | | 178 | | | | 18 | | | | 120 | | | | 13 | | | | 107 | | | | 42 | | | | — | | | | 478 | |
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Total allowance for credit losses | | $ | 5,509 | | | $ | 18,053 | | | $ | 9,131 | | | $ | 5,047 | | | $ | 2,604 | | | $ | 3,765 | | | $ | 542 | | | $ | 44,651 | |
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Portfolio loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment (1) | | $ | — | | | $ | 9,822 | | | $ | 2,722 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 12,544 | |
Collectively evaluated for impairment | | | 288,075 | | | | 1,899,047 | | | | 706,899 | | | | 1,239,163 | | | | 362,163 | | | | 365,830 | | | | — | | | | 4,861,177 | |
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Total portfolio loans | | $ | 288,075 | | | $ | 1,908,869 | | | $ | 709,621 | | | $ | 1,239,163 | | | $ | 362,163 | | | $ | 365,830 | | | $ | — | | | $ | 4,873,721 | |
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December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loans individually evaluated for impairment | | $ | — | | | $ | 2,765 | | | $ | 1,033 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 3,798 | |
Allowance for loans collectively evaluated for impairment | | | 5,654 | | | | 14,808 | | | | 8,030 | | | | 5,382 | | | | 2,329 | | | | 4,078 | | | | 575 | | | | 40,856 | |
Allowance for loan commitments | | | 194 | | | | 10 | | | | 112 | | | | 9 | | | | 90 | | | | 40 | | | | — | | | | 455 | |
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Total allowance for credit losses | | $ | 5,848 | | | $ | 17,583 | | | $ | 9,175 | | | $ | 5,391 | | | $ | 2,419 | | | $ | 4,118 | | | $ | 575 | | | $ | 45,109 | |
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Portfolio loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment (1) | | $ | — | | | $ | 11,469 | | | $ | 2,844 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,313 | |
Collectively evaluated for impairment | | | 262,643 | | | | 1,671,348 | | | | 635,566 | | | | 928,770 | | | | 330,031 | | | | 244,095 | | | | — | | | | 4,072,453 | |
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Total portfolio loans | | $ | 262,643 | | | $ | 1,682,817 | | | $ | 638,410 | | | $ | 928,770 | | | $ | 330,031 | | | $ | 244,095 | | | $ | — | | | $ | 4,086,766 | |
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(1) | Commercial loans greater than $1 million that are reported as non-accrual or as a troubled debt restructuring (“TDR”) are individually evaluated for impairment. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
WesBanco maintains an internal loan grading system to reflect the credit quality of commercial loans. Commercial loan risk grades are determined based on an evaluation of the relevant characteristics of each loan, assigned at the inception of each loan and adjusted thereafter at any time to reflect changes in the risk profile throughout the life of each loan. The primary factors used to determine the risk grade are the reliability and sustainability of the primary source of repayment and overall financial strength of the borrower. This includes an analysis of cash flow available to repay debt, profitability, liquidity, leverage, and overall financial trends. Other factors include management, industry or property type risks, an assessment of secondary sources of repayment such as collateral or guarantees, other terms and conditions of the loan that may increase or reduce its risk, and economic conditions and other external factors that may influence repayment capacity and financial condition. |
Commercial real estate — land and construction consists of loans to finance investments in vacant land, land development, construction of residential housing, and construction of commercial buildings. Commercial real estate – improved property consists of loans for the purchase or refinance of all types of improved owner-occupied and investment properties. Factors that are considered in assigning the risk grade vary depending on the type of property financed. The risk grade assigned to construction and development loans is based on the overall viability of the project, the experience and financial capacity of the developer or builder to successfully complete the project, project specific and market absorption rates and comparable property values, and the amount of pre-sales for residential housing construction or pre-leases for commercial investment property. The risk grade assigned to commercial investment property loans is based primarily on the adequacy of net rental income generated by the property to service the debt, the type, quality, industry and mix of tenants, and the terms of leases, but also considers the overall financial capacity of the investors and their experience in owning and managing investment property. The risk grade assigned to owner-occupied commercial real estate and commercial and industrial loans is based primarily on historical and projected earnings, the adequacy of operating cash flow to service all of the business’ debt, and the capital resources, liquidity and leverage of the business, but also considers the industry in which the business operates, the business’ specific competitive advantages or disadvantages, the quality and experience of management, and external influences on the business such as economic conditions. Other factors that are considered for commercial and industrial loans include the type, quality and marketability of non-real estate collateral and whether the structure of the loan increases or reduces its risk. The type, age, condition, location and any environmental risks associated with a property are also considered for all types of commercial real estate. The overall financial condition and repayment capacity of any guarantors is also evaluated to determine the extent to which they mitigate other risks of the loan. The following descriptions of risk grades apply to commercial real estate and commercial and industrial loans: |
Pass loans are those that exhibit a history of positive financial results that are at least comparable to the average for their industry or type of real estate. The primary source of repayment is acceptable and these loans are expected to perform satisfactorily during most economic cycles. Pass loans typically have no significant external factors that are expected to adversely affect these borrowers more than others in the same industry or property type. Any minor unfavorable characteristics of these loans are outweighed or mitigated by other positive factors including but not limited to adequate secondary or tertiary sources of repayment. |
Criticized or compromised loans are currently protected but have weaknesses, which, if not corrected, may inadequately protect the Bank at some future date. These loans represent an unwarranted credit risk and would generally not be extended in the normal course of lending. Specific issues which may warrant this grade include declining financial results, increased reliance on secondary sources of repayment or guarantor support and adverse external influences that may negatively impact the business or property. |
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Substandard and doubtful loans are equivalent to the classifications used by banking regulators. Substandard loans are inadequately protected by the current repayment capacity and equity of the borrower or collateral pledged, if any. Substandard loans have one or more well-defined weaknesses that jeopardize their repayment or collection in full. These loans may or may not be reported as non-accrual. Doubtful loans have all the weaknesses inherent to a substandard loan with the added characteristic that full repayment is highly questionable or improbable on the basis of currently existing facts, conditions and collateral values. However, recognition of loss may be deferred if there are reasonably specific pending factors that will reduce the risk if they occur. |
The following tables summarize commercial loans by their assigned risk grade: |
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| | Commerical Loans by Internally Assigned Risk Grade | | | | | | | | | | | | | | | | | |
(unaudited, in thousands) | | Commercial | | | Commercial | | | Commercial | | | Total | | | | | | | | | | | | | | | | | |
Real Estate- | Real Estate- | & Industrial | Commercial | | | | | | | | | | | | | | | | |
Land and | Improved | | Loans | | | | | | | | | | | | | | | | |
Construction | Property | | | | | | | | | | | | | | | | | | |
As of March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 281,730 | | | $ | 1,848,655 | | | $ | 683,226 | | | $ | 2,813,611 | | | | | | | | | | | | | | | | | |
Criticized - compromised | | | 3,653 | | | | 18,049 | | | | 18,957 | | | | 40,659 | | | | | | | | | | | | | | | | | |
Classified - substandard | | | 2,692 | | | | 42,165 | | | | 7,438 | | | | 52,295 | | | | | | | | | | | | | | | | | |
Classified - doubtful | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
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Total | | $ | 288,075 | | | $ | 1,908,869 | | | $ | 709,621 | | | $ | 2,906,565 | | | | | | | | | | | | | | | | | |
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As of December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 257,218 | | | $ | 1,627,771 | | | $ | 617,742 | | | $ | 2,502,731 | | | | | | | | | | | | | | | | | |
Criticized - compromised | | | 3,645 | | | | 17,873 | | | | 12,770 | | | | 34,288 | | | | | | | | | | | | | | | | | |
Classified - substandard | | | 1,780 | | | | 37,173 | | | | 7,898 | | | | 46,851 | | | | | | | | | | | | | | | | | |
Classified - doubtful | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
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Total | | $ | 262,643 | | | $ | 1,682,817 | | | $ | 638,410 | | | $ | 2,583,870 | | | | | | | | | | | | | | | | | |
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Residential real estate, home equity and consumer loans are not assigned internal risk grades other than as required by regulatory guidelines that are based primarily on the age of past due loans. WesBanco primarily evaluates the credit quality of residential real estate, home equity and consumer loans based on repayment performance and historical loss rates. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard in accordance with regulatory guidelines were $15.5 million at March 31, 2015 and $15.2 million at December 31, 2014, of which $1.5 and $2.2 million were accruing, for each period, respectively. The aggregate amount of residential real estate, home equity and consumer loans classified as substandard are not included in the tables above. |
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Acquired Loans — Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value in accordance with ASC 805, Business Combinations, with no carryover of related allowance for credit losses. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment. |
Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (ASC 310-30), and therefore impaired if, at acquisition, the loans have evidence of credit quality deterioration since origination and it is probable that all contractually required payments will not be collected. At acquisition, WesBanco considers several factors as indicators that an acquired loan has evidence of deterioration in credit quality. These factors include loans 90 days or more past due, loans with an internal risk grade of substandard or below, loans classified as non-accrual by the acquired institution, and loans that have been previously modified as a TDR. |
Acquired loans that were not individually determined to be impaired are considered performing and are accounted for in accordance with ASC 310-20, Nonrefundable Fees and Other Costs (ASC 310-20), whereby the premium or discount derived from the fair market value adjustment, on a loan-by-loan or pooled basis, is recognized into interest income on a level yield over the remaining expected life of the loan or pool. |
Under the ASC 310-30 model, the excess of cash flows expected to be collected at acquisition over recorded fair value is referred to as the accretable yield and is the interest component of expected cash flow. The accretable yield is recognized into income over the remaining life of the loan if the timing and/or amount of cash flows expected to be collected can be reasonably estimated. If the timing or amount of cash flows expected to be collected cannot be reasonably estimated, the cost recovery method of income recognition is used. The difference between the loan’s total scheduled principal and interest payments over all cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the non-accretable difference. The non-accretable difference represents contractually required principal and interest payments which WesBanco does not expect to collect. |
Over the life of the loan, management continues to estimate cash flows expected to be collected. Decreases in expected cash flows are recognized as impairments through a charge to the provision for loan losses resulting in an increase in the allowance for loan losses. Subsequent improvements in cash flows result in first, reversal of existing valuation allowances recognized subsequent to acquisition, if any, and next, an increase in the amount of accretable yield to be subsequently recognized in interest income on a prospective basis over the loan’s remaining life. |
In conjunction with the ESB acquisition, WesBanco acquired loans with a book value of $716.1 million. These loans were recorded at their fair value of $700.8 million, with $691.1 million categorized as performing. The fair market value adjustment on performing loans of $9.0 million at acquisition date is expected to be recognized into interest income on a level yield over the remaining expected life of the performing loans. Loans acquired with deteriorated credit quality with a book value of $16.0 million were recorded at their estimated fair value of $9.7 million. The accretable yield on the acquired impaired loans is estimated at $2.4 million, while the non-accretable difference is estimated at $3.9 million. The balance of these loans acquired with deteriorated credit quality at March 31, 2015, was $9.3 million, of which $3.6 million were categorized as non-accrual and $5.7 million were categorized as accruing TDRs. |
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The following tables summarize the age analysis of all categories of loans: |
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| | Age Analysis of Loans | | | | | |
(unaudited, in thousands) | | Current | | | 30-59 | | | 60-89 | | | 90 Days | | | Total | | | Total Loans | | | 90 Days or | | | | | |
Days | Days | or More | Past Due | More | | | | |
Past Due | Past Due | Past Due | | Past Due and | | | | |
| | | | Accruing (1) | | | | |
As of March 31, 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 286,883 | | | $ | — | | | $ | — | | | $ | 1,192 | | | $ | 1,192 | | | $ | 288,075 | | | $ | — | | | | | |
Improved property | | | 1,889,451 | | | | 1,093 | | | | 1,435 | | | | 16,890 | | | | 19,418 | | | | 1,908,869 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 2,176,334 | | | | 1,093 | | | | 1,435 | | | | 18,082 | | | | 20,610 | | | | 2,196,944 | | | | — | | | | | |
Commercial and industrial | | | 705,380 | | | | 916 | | | | 1,518 | | | | 1,807 | | | | 4,241 | | | | 709,621 | | | | 3 | | | | | |
Residential real estate | | | 1,226,131 | | | | 4,981 | | | | 1,673 | | | | 6,378 | | | | 13,032 | | | | 1,239,163 | | | | 74 | | | | | |
Home equity | | | 357,545 | | | | 1,982 | | | | 508 | | | | 2,128 | | | | 4,618 | | | | 362,163 | | | | 684 | | | | | |
Consumer | | | 362,338 | | | | 2,117 | | | | 868 | | | | 507 | | | | 3,492 | | | | 365,830 | | | | 270 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | | 4,827,728 | | | | 11,089 | | | | 6,002 | | | | 28,902 | | | | 45,993 | | | | 4,873,721 | | | | 1,031 | | | | | |
Loans held for sale | | | 6,064 | | | | — | | | | — | | | | — | | | | — | | | | 6,064 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 4,833,792 | | | $ | 11,089 | | | $ | 6,002 | | | $ | 28,902 | | | $ | 45,993 | | | $ | 4,879,785 | | | $ | 1,031 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Impaired loans included above are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-accrual loans | | $ | 9,209 | | | $ | 2,008 | | | $ | 2,319 | | | $ | 27,838 | | | $ | 32,165 | | | $ | 41,374 | | | | | | | | | |
TDRs accruing interest (1) | | | 16,536 | | | | 582 | | | | 179 | | | | 33 | | | | 794 | | | | 17,330 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired | | $ | 25,745 | | | $ | 2,590 | | | $ | 2,498 | | | $ | 27,871 | | | $ | 32,959 | | | $ | 58,704 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
As of December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 261,356 | | | $ | 20 | | | $ | — | | | $ | 1,267 | | | $ | 1,287 | | | $ | 262,643 | | | $ | 71 | | | | | |
Improved property | | | 1,665,363 | | | | 961 | | | | 4,772 | | | | 11,721 | | | | 17,454 | | | | 1,682,817 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 1,926,719 | | | | 981 | | | | 4,772 | | | | 12,988 | | | | 18,741 | | | | 1,945,460 | | | | 71 | | | | | |
Commercial and industrial | | | 634,482 | | | | 1,834 | | | | 240 | | | | 1,854 | | | | 3,928 | | | | 638,410 | | | | 22 | | | | | |
Residential real estate | | | 915,968 | | | | 1,237 | | | | 3,384 | | | | 8,181 | | | | 12,802 | | | | 928,770 | | | | 1,306 | | | | | |
Home equity | | | 325,291 | | | | 1,877 | | | | 895 | | | | 1,968 | | | | 4,740 | | | | 330,031 | | | | 570 | | | | | |
Consumer | | | 240,365 | | | | 2,571 | | | | 685 | | | | 474 | | | | 3,730 | | | | 244,095 | | | | 319 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | | | 4,042,825 | | | | 8,500 | | | | 9,976 | | | | 25,465 | | | | 43,941 | | | | 4,086,766 | | | | 2,288 | | | | | |
Loans held for sale | | | 5,865 | | | | — | | | | — | | | | — | | | | — | | | | 5,865 | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 4,048,690 | | | $ | 8,500 | | | $ | 9,976 | | | $ | 25,465 | | | $ | 43,941 | | | $ | 4,092,631 | | | $ | 2,288 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Impaired loans included above are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-accrual loans | | $ | 7,562 | | | $ | 2,884 | | | $ | 5,552 | | | $ | 22,820 | | | $ | 31,256 | | | $ | 38,818 | | | | | | | | | |
TDRs accruing interest (1) | | | 11,016 | | | | 151 | | | | 542 | | | | 357 | | | | 1,050 | | | | 12,066 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired | | $ | 18,578 | | | $ | 3,035 | | | $ | 6,094 | | | $ | 23,177 | | | $ | 32,306 | | | $ | 50,884 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | Loans 90 days or more past due and accruing interest exclude TDRs 90 days or more past due and accruing interest. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired Loans — A loan is considered impaired, based on current information and events, if it is probable that WesBanco will be unable to collect the payments of principal and interest when due according to the contractual terms of the loan agreement. Impaired loans generally included all non-accrual loans and TDRs. |
Loans are generally placed on non-accrual when they are 90 days past due unless the loan is well-secured and in the process of collection. Loans may also be placed on non-accrual when full collection of principal is in doubt even if payments on such loans remain current, or may remain on non-accrual if they were past due but subsequently brought current. |
Loans are categorized as TDRs when the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. |
Acquired loans that have experienced a deterioration of credit quality from origination to acquisition for which it is probable that WesBanco will be unable to collect all contractually required payments receivable, including both principal and interest, are considered impaired. |
|
The following tables summarize impaired loans: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Impaired Loans | | | | | | | | | |
| | March 31, 2015 | | | December 31, 2014 | | | | | | | | | |
(unaudited, in thousands) | | Unpaid | | | Recorded | | | Related | | | Unpaid | | | Recorded | | | Related | | | | | | | | | |
Principal | Investment | Allowance | Principal | Investment | Allowance | | | | | | | | |
Balance (1) | | | Balance (1) | | | | | | | | | | |
With no related specific allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 3,101 | | | $ | 2,476 | | | $ | — | | | $ | 1,588 | | | $ | 1,488 | | | $ | — | | | | | | | | | |
Improved property | | | 30,138 | | | | 22,481 | | | | — | | | | 16,480 | | | | 14,684 | | | | — | | | | | | | | | |
Commercial and industrial | | | 3,094 | | | | 2,432 | | | | — | | | | 3,152 | | | | 2,597 | | | | — | | | | | | | | | |
Residential real estate | | | 20,943 | | | | 19,132 | | | | — | | | | 20,077 | | | | 18,544 | | | | — | | | | | | | | | |
Home equity | | | 2,824 | | | | 2,617 | | | | — | | | | 2,890 | | | | 2,663 | | | | — | | | | | | | | | |
Consumer | | | 1,659 | | | | 1,332 | | | | — | | | | 1,287 | | | | 1,086 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans without a specific allowance | | | 61,759 | | | | 50,470 | | | | — | | | | 45,474 | | | | 41,062 | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With a specific allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Improved property | | | 6,466 | | | | 6,466 | | | | 2,828 | | | | 7,980 | | | | 7,980 | | | | 2,765 | | | | | | | | | |
Commercial and industrial | | | 1,768 | | | | 1,768 | | | | 873 | | | | 1,842 | | | | 1,842 | | | | 1,033 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with a specific allowance | | | 8,234 | | | | 8,234 | | | | 3,701 | | | | 9,822 | | | | 9,822 | | | | 3,798 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 69,993 | | | $ | 58,704 | | | $ | 3,701 | | | $ | 55,296 | | | $ | 50,884 | | | $ | 3,798 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off and fair market value adjustments on acquired impaired loans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Impaired Loans | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | For the Three Months Ended | | | | | | | | | | | | | | | | | |
March 31, 2015 | March 31, 2014 | | | | | | | | | | | | | | | | |
(unaudited, in thousands) | | Average | | | Interest | | | Average | | | Interest | | | | | | | | | | | | | | | | | |
Recorded | Income | Recorded | Income | | | | | | | | | | | | | | | | |
Investment | Recognized | Investment | Recognized | | | | | | | | | | | | | | | | |
With no related specific allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 2,128 | | | $ | 16 | | | $ | 2,450 | | | $ | 2 | | | | | | | | | | | | | | | | | |
Improved property | | | 18,932 | | | | 223 | | | | 19,158 | | | | 20 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 2,513 | | | | 13 | | | | 3,532 | | | | 32 | | | | | | | | | | | | | | | | | |
Residential real estate | | | 18,715 | | | | 230 | | | | 19,463 | | | | 182 | | | | | | | | | | | | | | | | | |
Home equity | | | 2,641 | | | | 20 | | | | 2,367 | | | | 19 | | | | | | | | | | | | | | | | | |
Consumer | | | 1,194 | | | | 20 | | | | 1,174 | | | | 28 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans without a specific allowance | | | 46,123 | | | | 522 | | | | 48,144 | | | | 283 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With a specific allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Improved property | | | 7,223 | | | | — | | | | 729 | | | | 1 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 1,805 | | | | 19 | | | | 2,329 | | | | 12 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans with a specific allowance | | | 9,028 | | | | 19 | | | | 3,058 | | | | 13 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 55,151 | | | $ | 541 | | | $ | 51,202 | | | $ | 296 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following tables present the recorded investment in non-accrual loans and TDRs: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Non-accrual Loans (1) | | | | | | | | | | | | | | | | | | | | | | | | | |
(unaudited, in thousands) | | March 31, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 1,463 | | | $ | 1,488 | | | | | | | | | | | | | | | | | | | | | | | | | |
Improved property | | | 22,143 | | | | 20,227 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 23,606 | | | | 21,715 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 3,849 | | | | 4,110 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 11,249 | | | | 10,329 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 1,899 | | | | 1,923 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 771 | | | | 741 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 41,374 | | | $ | 38,818 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) | Total non-accrual loans include loans that are also restructured. Such loans are also set forth in the following table as non-accrual TDRs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TDRs | | | | | | | | | |
| | March 31, 2015 | | | December 31, 2014 | | | | | | | | | |
(unaudited, in thousands) | | Accruing | | | Non-Accrual | | | Total | | | Accruing | | | Non-Accrual | | | Total | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | $ | 1,013 | | | $ | 504 | | | $ | 1,517 | | | $ | — | | | $ | 464 | | | $ | 464 | | | | | | | | | |
Improved property | | | 6,804 | | | | 5,399 | | | | 12,203 | | | | 2,437 | | | | 1,850 | | | | 4,287 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 7,817 | | | | 5,903 | | | | 13,720 | | | | 2,437 | | | | 2,314 | | | | 4,751 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 351 | | | | 376 | | | | 727 | | | | 329 | | | | 478 | | | | 807 | | | | | | | | | |
Residential real estate | | | 7,883 | | | | 2,386 | | | | 10,269 | | | | 8,215 | | | | 2,074 | | | | 10,289 | | | | | | | | | |
Home equity | | | 718 | | | | 285 | | | | 1,003 | | | | 740 | | | | 245 | | | | 985 | | | | | | | | | |
Consumer | | | 561 | | | | 274 | | | | 835 | | | | 345 | | | | 309 | | | | 654 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 17,330 | | | $ | 9,224 | | | $ | 26,554 | | | $ | 12,066 | | | $ | 5,420 | | | $ | 17,486 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of March 31, 2015, there were three TDRs greater than $1.0 million. The concessions granted in the majority of loans reported as accruing and non-accrual TDRs are extensions of the maturity date or the amortization period, reductions in the interest rate below the prevailing market rate for loans with comparable characteristics, and/or permitting interest-only payments for longer than three months. |
The following table presents details related to loans identified as TDRs during the three months ended March 31, 2015 and 2014, respectively: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | New TDRs (1) | | | | | | | | | |
For the Three Months Ended | | | | | | | | |
| | March 31, 2015 | | | March 31, 2014 | | | | | | | | | |
(unaudited, dollars in thousands) | | Number of | | | Pre- | | | Post- | | | Number of | | | Pre- | | | Post- | | | | | | | | | |
Modifications | Modification | Modification | Modifications | Modification | Modification | | | | | | | | |
| Outstanding | Outstanding | | Outstanding | Outstanding | | | | | | | | |
| Recorded | Recorded | | Recorded | Recorded | | | | | | | | |
| Investment | Investment | | Investment | Investment | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | | 11 | | | $ | 1,414 | | | $ | 1,056 | | | | — | | | $ | — | | | $ | — | | | | | | | | | |
Improved Property | | | 7 | | | | 8,568 | | | | 8,289 | | | | 1 | | | | 91 | | | | 90 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | 18 | | | | 9,982 | | | | 9,345 | | | | 1 | | | | 91 | | | | 90 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 2 | | | | 42 | | | | 57 | | | | — | | | | — | | | | — | | | | | | | | | |
Residential real estate | | | 7 | | | | 424 | | | | 421 | | | | 4 | | | | 121 | | | | 118 | | | | | | | | | |
Home equity | | | 1 | | | | 7 | | | | 6 | | | | — | | | | — | | | | — | | | | | | | | | |
Consumer | | | 21 | | | | 269 | | | | 303 | | | | 2 | | | | 33 | | | | 31 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 49 | | | $ | 10,724 | | | $ | 10,132 | | | | 7 | | | $ | 245 | | | $ | 239 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) | Excludes loans that were either paid off or charged-off by period end. The pre-modification balance represents the balance outstanding at the beginning of the period. The post-modification balance represents the outstanding balance at period end. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following table summarizes TDRs which defaulted (defined as past due 90 days) during the three months ended March 31, 2015 and 2014, respectively, that were restructured within the last twelve months prior to March 31, 2015 and 2014, respectively: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Defaulted TDRs (1) | | | Defaulted TDRs (1) | | | | | | | | | | | | | | | | | |
For the Three Months Ended | For the Three Months Ended | | | | | | | | | | | | | | | | |
| | March 31, 2015 | | | March 31, 2014 | | | | | | | | | | | | | | | | | |
(unaudited, dollars in thousands) | | Number of | | | Recorded | | | Number of | | | Recorded | | | | | | | | | | | | | | | | | |
Defaults | Investment | Defaults | Investment | | | | | | | | | | | | | | | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Land and construction | | | — | | | $ | — | | | | — | | | $ | — | | | | | | | | | | | | | | | | | |
Improved property | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial real estate | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
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Commercial and industrial | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Residential real estate | | | — | | | | — | | | | 8 | | | | 481 | | | | | | | | | | | | | | | | | |
Home equity | | | 1 | | | | 42 | | | | 1 | | | | 3 | | | | | | | | | | | | | | | | | |
Consumer | | | 1 | | | | 27 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
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Total | | | 2 | | | $ | 69 | | | | 9 | | | $ | 484 | | | | | | | | | | | | | | | | | |
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(1) | Excludes loans that were either charged-off or cured by period end. The recorded investment is as of March 31, 2014 and 2013, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
TDRs that defaulted during the three month period that were restructured within the last twelve months represented 0.3% of the total TDR balance at March 31, 2015. These loans are placed on non-accrual status unless they are both well-secured and in the process of collection. At March 31, 2015, none of the loans in the table above were accruing interest. |
The following table summarizes other real estate owned and repossessed assets included in other assets: |
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(unaudited, in thousands) | | March 31, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | 2014 | | | | | | | | | | | | | | | | | | | | | | | | |
Other real estate owned | | $ | 5,886 | | | $ | 4,920 | | | | | | | | | | | | | | | | | | | | | | | | | |
Repossessed assets | | | 340 | | | | 162 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total other real estate owned and repossessed assets | | $ | 6,226 | | | $ | 5,082 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Residential real estate included in other real estate owned at March 31, 2015 and December 31, 2014 was $0.8 million and $0.6 million, respectively. At March 31, 2015, formal foreclosure proceedings were in process on residential real estate loans totaling $4.3 million. |