| Loans and Allowance for Loan Losses | Note 6 — Loans and Allowance for Loan Losses
The following is a summary of non-acquired loans:
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development
$
$
$
Commercial non-owner occupied
Total commercial non-owner occupied real estate
Consumer real estate:
Consumer owner occupied
Home equity loans
Total consumer real estate
Commercial owner occupied real estate
Commercial and industrial
Other income producing property
Consumer
Other loans
Total non-acquired loans
Less allowance for loan losses
)
)
)
Non-acquired loans, net
$
$
$
The following is a summary of acquired non-credit impaired loans accounted for under FASB ASC Topic 310-20, net of related discount:
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
FASB ASC Topic 310-20 acquired loans:
Commercial non-owner occupied real estate:
Construction and land development
$
$
$
Commercial non-owner occupied
Total commercial non-owner occupied real estate
Consumer real estate:
Consumer owner occupied
Home equity loans
Total consumer real estate
Commercial owner occupied real estate
Commercial and industrial
Other income producing property
Consumer
Total FASB ASC Topic 310-20 acquired loans
$
$
$
The unamortized discount related to the acquired non-credit impaired loans totaled $20.2 million, $23.5 million, and $31.6 million at June 30, 2015, December 31, 2014, and June 30, 2014, respectively.
In accordance with FASB ASC Topic 310-30, the Company aggregated acquired loans that have common risk characteristics into pools of loan categories as described in the table below. The following is a summary of acquired credit impaired loans accounted for under FASB ASC Topic 310-30 (identified as credit impaired at the time of acquisition), net of related discount:
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
FASB ASC Topic 310-30 acquired loans:
Commercial loans greater than or equal to $1 million-CBT
$
$
$
Commercial real estate
Commercial real estate—construction and development
Residential real estate
Consumer
Commercial and industrial
Single pay
Total FASB ASC Topic 310-30 acquired loans
Less allowance for loan losses
)
)
)
FASB ASC Topic 310-30 acquired loans, net
$
$
$
Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting carrying values of acquired credit impaired loans as of June 30, 2015, December 31, 2014 and June 30, 2014 are as follows:
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Contractual principal and interest
$
$
$
Non-accretable difference
)
)
)
Cash flows expected to be collected
Accretable yield
)
)
)
Carrying value
$
$
$
Allowance for acquired loan losses
$
)
$
)
$
)
Income on acquired credit impaired loans that are not impaired at the acquisition date is recognized in the same manner as loans impaired at the acquisition date. A portion of the fair value discount on acquired non-impaired loans has been ascribed as an accretable difference that is accreted into interest income over the estimated remaining life of the loans. The remaining nonaccretable difference represents cash flows not expected to be collected.
The following are changes in the carrying value of acquired credit impaired loans:
Six Months Ended June 30,
(Dollars in thousands)
2015
2014
Balance at beginning of period
$
$
Net reductions for payments, foreclosures, and accretion
)
)
Change in the allowance for loan losses on acquired loans
Balance at end of period, net of allowance for loan losses on acquired loans
$
$
The table below reflects refined accretable yield balance for acquired credit impaired loans:
Six Months Ended June 30,
(Dollars in thousands)
2015
2014
Balance at beginning of period
$
$
Accretion
)
)
Reclass of nonaccretable difference due to improvement in expected cash flows
Other changes, net
)
)
Balance at end of period
$
$
In the second quarter of 2015, the accretable yield balance declined by $25.5 million as loan accretion (income) was recognized. This was partially offset by improved expected cash flows of $9.5 million.
During the recast in the first quarter of 2015, the accretable yield balance declined significantly by $64.1 million. This decline was primarily the result of an increase in the assumed prepayment speed of certain acquired loan pools from the FFHI acquisition. The actual cash flows were faster than what had been previously expected (assumed) and required an adjustment in the assumed prepayment speed used to forecast expected cash flows. The result was a decrease in the accretable yield balance, however, there was no impairment since this changed the timing and amount of the receipt of future cash on these pools of loans (the Company anticipates receiving the cash sooner than previously expected).
Our loan loss policy adheres to generally accepted accounting principles in the United States as well as interagency guidance. The allowance for loan losses is based upon estimates made by management. We maintain an allowance for loan losses at a level that we believe is appropriate to cover estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses inherent in the remainder of our loan portfolio. Arriving at the allowance involves a high degree of management’s judgment and results in a range of estimated losses. We regularly evaluate the adequacy of the allowance through our internal risk rating system, outside credit review, and regulatory agency examinations to assess the quality of the loan portfolio and identify problem loans. The evaluation process also includes our analysis of current economic conditions, composition of the loan portfolio, past due and nonaccrual loans, concentrations of credit, lending policies and procedures, and historical loan loss experience. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other factors, changes in economic conditions in our markets. In addition, regulatory agencies, as an integral part of their examination process, periodically review our allowances for losses on loans. These agencies may require management to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these and other factors, it is possible that the allowances for losses on loans may change. The provision for loan losses is charged to expense in an amount necessary to maintain the allowance at an appropriate level.
The allowance for loan losses on non-acquired loans consists of general and specific reserves. The general reserves are determined by applying loss percentages to the portfolio that are based on historical loss experience for each class of loans and management’s evaluation and “risk grading” of the loan portfolio. Additionally, the general economic and business conditions affecting key lending areas, credit quality trends, collateral values, loan volumes and concentrations, seasoning of the loan portfolio, the findings of internal and external credit reviews and results from external bank regulatory examinations are included in this evaluation. Currently, these adjustments are applied to the non-acquired loan portfolio when estimating the level of reserve required. The specific reserves are determined on a loan-by-loan basis based on management’s evaluation of our exposure for each credit, given the current payment status of the loan and the value of any underlying collateral. These are loans classified by management as doubtful or substandard. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. Generally, the need for specific reserve is evaluated on impaired loans, and once a specific reserve is established for a loan, a charge off of that amount occurs in the quarter subsequent to the establishment of the specific reserve. Loans that are determined to be impaired are provided a specific reserve, if necessary, and are excluded from the calculation of the general reserves.
With the FFHI acquisition, the Company segregated the loan portfolio into performing loans (“non-credit impaired”) and acquired credit impaired loans. The performing loans and revolving type loans are accounted for under FASB ASC 310-20, with each loan being accounted for individually. The allowance for loan losses on these loans will be measured and recorded consistent with non-acquired loans. The acquired credit impaired loans will follow the description in the next paragraph.
In determining the acquisition date fair value of acquired credit impaired loans, and in subsequent accounting, the Company generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are reclassified from the non-accretable difference to accretable yield and recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an allowance for loan losses. Management analyzes the acquired loan pools using various assessments of risk to determine an expected loss. The expected loss is derived based upon a loss given default based upon the collateral type and/or detailed review by loan officers and the probability of default that is determined based upon historical data at the loan level. Trends are reviewed in terms of accrual status, past due status, and weighted-average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the mark is assessed to correlate the directional consistency of the expected loss for each pool. Offsetting the impact of the provision established for acquired loans covered under FDIC loss share agreements, the receivable from the FDIC is adjusted to reflect the indemnified portion of the post-acquisition exposure with a corresponding credit to the provision for loan losses.
An aggregated analysis of the changes in allowance for loan losses is as follows:
Acquired
Acquired
Non-acquired
Non-credit
Credit Impaired
(Dollars in thousands)
Loans
Impaired Loans
Loans
Total
Three months ended June 30, 2015:
Balance at beginning of period
$
$
—
$
$
Loans charged-off
)
)
—
)
Recoveries of loans previously charged off
—
Net charge-offs
)
)
—
)
Provision (benefit) for loan losses
Benefit attributable to FDIC loss share agreements
—
—
—
—
Total provision for loan losses charged to operations
Provision for loan losses recorded through the FDIC loss share receivable
—
—
—
—
Reduction due to loan removals
—
—
)
)
Balance at end of period
$
$
—
$
$
Three months ended June 30, 2014:
Balance at beginning of period
$
$
—
$
$
Loans charged-off
)
—
—
)
Recoveries of loans previously charged off
—
—
Net charge-offs
)
—
—
)
Provision for loan losses
—
)
Benefit attributable to FDIC loss share agreements
—
—
Total provision for loan losses charged to operations
—
Provision for loan losses recorded through the FDIC loss share receivable
—
—
)
)
Reduction due to loan removals
—
—
)
)
Balance at end of period
$
$
—
$
$
Six months ended June 30, 2015:
Balance at beginning of period
$
$
—
$
$
Loans charged-off
)
)
—
)
Recoveries of loans previously charged off
—
Net charge-offs
)
)
—
)
Provision (benefit) for loan losses
Benefit attributable to FDIC loss share agreements
—
—
Total provision for loan losses charged to operations
Provision for loan losses recorded through the FDIC loss share receivable
—
—
)
)
Reduction due to loan removals
—
—
)
)
Balance at end of period
$
$
—
$
$
Six months ended June 30, 2014:
Balance at beginning of period
$
$
—
$
$
Loans charged-off
)
—
—
)
Recoveries of loans previously charged off
—
—
Net charge-offs
)
—
—
)
Provision for loan losses
—
)
Benefit attributable to FDIC loss share agreements
—
—
Total provision for loan losses charged to operations
—
Provision for loan losses recorded through the FDIC loss share receivable
—
—
)
)
Reduction due to loan removals
—
—
)
)
Balance at end of period
$
$
—
$
$
The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans:
Construction
Commercial
Commercial
Consumer
Other Income
& Land
Non-owner
Owner
Owner
Home
Commercial
Producing
Other
(Dollars in thousands)
Development
Occupied
Occupied
Occupied
Equity
& Industrial
Property
Consumer
Loans
Total
Three months ended June 30, 2015
Allowance for loan losses:
Balance, March 31, 2015
$
$
$
$
$
$
$
$
$
$
Charge-offs
)
)
)
)
)
)
)
)
—
)
Recoveries
—
Provision (benefit)
)
)
)
Balance, June 30, 2015
$
$
$
$
$
$
$
$
$
$
Loans individually evaluated for impairment
$
$
$
$
$
$
$
$
$
—
$
Loans collectively evaluated for impairment
$
$
$
$
$
$
$
$
$
$
Loans:
Loans individually evaluated for impairment
$
$
$
$
$
$
$
$
$
—
$
Loans collectively evaluated for impairment
Total non-acquired loans
$
$
$
$
$
$
$
$
$
$
Three months ended June 30, 2014
Allowance for loan losses:
Balance, March 31, 2014
$
$
$
$
$
$
$
$
$
$
Charge-offs
)
)
)
)
)
)
)
)
—
)
Recoveries
—
Provision (benefit)
)
)
Balance, June 30, 2014
$
$
$
$
$
$
$
$
$
$
Loans individually evaluated for impairment
$
$
$
$
$
—
$
$
$
$
—
$
Loans collectively evaluated for impairment
$
$
$
$
$
$
$
$
$
$
Loans:
Loans individually evaluated for impairment
$
$
$
$
$
—
$
$
$
$
—
$
Loans collectively evaluated for impairment
Total non-acquired loans
$
$
$
$
$
$
$
$
$
$
The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans:
Construction
Commercial
Commercial
Consumer
Other Income
& Land
Non-owner
Owner
Owner
Home
Commercial
Producing
Other
(Dollars in thousands)
Development
Occupied
Occupied
Occupied
Equity
& Industrial
Property
Consumer
Loans
Total
Six months ended June 30, 2015
Allowance for loan losses:
Balance, December 31, 2014
$
$
$
$
$
$
$
$
$
$
Charge-offs
)
)
)
)
)
)
)
)
—
)
Recoveries
—
Provision
)
)
)
Balance, June 30, 2015
$
$
$
$
$
$
$
$
$
$
Six months ended June 30, 2014
Allowance for loan losses:
Balance, December 31, 2013
$
$
$
$
$
$
$
$
$
$
Charge-offs
)
)
)
)
)
)
)
)
—
)
Recoveries
—
Provision
)
)
Balance, June 30, 2014
$
$
$
$
$
$
$
$
$
$
The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired non-credit impaired loans:
Construction
Commercial
Commercial
Consumer
Other Income
& Land
Non-owner
Owner
Owner
Home
Commercial
Producing
(Dollars in thousands)
Development
Occupied
Occupied
Occupied
Equity
& Industrial
Property
Consumer
Total
Three months ended June 30, 2015
Allowance for loan losses:
Balance, March 31, 2015
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Charge-offs
—
—
—
)
)
)
—
)
)
Recoveries
—
—
—
—
—
Provision (benefit)
)
—
—
—
—
Balance, June 30, 2015
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans:
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
Total non-acquired loans
$
$
$
$
$
$
$
$
$
As of June 30, 2014, the Company had not recorded an allowance for loan losses for acquired non-credit impaired loans.
Construction
Commercial
Commercial
Consumer
Other Income
& Land
Non-owner
Owner
Owner
Home
Commercial
Producing
(Dollars in thousands)
Development
Occupied
Occupied
Occupied
Equity
& Industrial
Property
Consumer
Total
Six months ended June 30, 2015
Allowance for loan losses:
Balance, December 31, 2014
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Charge-offs
—
—
—
)
)
)
)
)
)
Recoveries
—
—
Provision (benefit)
)
—
—
Balance, June 30, 2015
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans:
Commercial
Commercial
Loans Greater
Real Estate-
Than or Equal
Commercial
Construction and
Residential
Commercial
(Dollars in thousands)
to $1 Million-CBT
Real Estate
Development
Real Estate
Consumer
and Industrial
Single Pay
Total
Three months ended June 30, 2015
Allowance for loan losses:
Balance, March 31, 2015
$
)
$
$
$
$
$
$
$
Provision for loan losses before benefit attributable to FDIC loss share agreements
—
—
—
—
Benefit attributable to FDIC loss share agreements
—
—
—
—
—
—
—
—
Total provision for loan losses charged to operations
—
—
—
—
Provision for loan losses recorded through the FDIC loss share receivable
—
—
—
—
—
—
—
—
Reduction due to loan removals
)
)
)
)
)
)
—
)
Balance, June 30, 2015
$
)
$
$
$
$
$
$
$
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
$
)
$
$
$
$
$
$
$
Loans:*
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
Total acquired loans
$
$
$
$
$
$
$
$
Three months ended June 30, 2014
Allowance for loan losses:
Balance, March 31, 2014
$
$
$
$
$
$
$
$
Provision for loan losses before benefit attributable to FDIC loss share agreements
)
)
)
)
)
—
)
Benefit attributable to FDIC loss share agreements
—
Total provision for loan losses charged to operations
)
Provision for loan losses recorded through the FDIC loss share receivable
)
)
)
)
—
)
)
)
Reduction due to loan removals
—
)
)
)
)
)
)
Balance, June 30, 2014
$
$
$
$
$
$
$
$
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
$
$
$
$
$
$
$
$
Loans:*
Loans individually evaluated for impairment
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Loans collectively evaluated for impairment
Total acquired loans
$
$
$
$
$
$
$
$
*—The carrying value of acquired credit impaired loans includes a non-accretable difference which is primarily associated with the assessment of credit quality of acquired loans.
The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired credit impaired loans:
Commercial
Commercial
Loans Greater
Real Estate-
Than or Equal
Commercial
Construction and
Residential
Commercial
(Dollars in thousands)
to $1 Million-CBT
Real Estate
Development
Real Estate
Consumer
and Industrial
Single Pay
Total
Six months ended June 30, 2015
Allowance for loan losses:
Balance, December 31, 2014
$
$
$
$
$
$
$
$
Provision for loan losses before benefit attributable to FDIC loss share agreements
—
)
)
Benefit attributable to FDIC loss share agreements
—
—
—
—
)
Total provision for loan losses charged to operations
—
—
Provision for loan losses recorded through the FDIC loss share receivable
—
—
—
—
)
)
)
Reduction due to loan removals
)
)
)
)
)
)
)
)
Balance, June 30, 2015
$
)
$
$
$
$
$
$
$
Six months ended June 30, 2014
Allowance for loan losses:
Balance, December 31, 2013
$
$
$
$
$
$
$
$
Provision for loan losses before benefit attributable to FDIC loss share agreements
)
)
)
)
)
)
Benefit attributable to FDIC loss share agreements
)
)
Total provision for loan losses charged to operations
)
)
Provision for loan losses recorded through the FDIC loss share receivable
)
)
)
)
)
)
Reduction due to loan removals
)
)
)
)
)
)
)
Balance, June 30, 2014
$
$
$
$
$
$
$
$
As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators, including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below), and (iv) the general economic conditions of the markets that we serve.
The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows:
·
Pass—These loans range from minimal credit risk to average, however, still acceptable credit risk.
·
Special mention—A special mention loan 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 loan or the institution’s credit position at some future date.
·
Substandard—A substandard loan is 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 may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
·
Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.
The following table presents the credit risk profile by risk grade of commercial loans for non-acquired loans:
Construction & Development
Commercial Non-owner Occupied
Commercial Owner Occupied
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Commercial & Industrial
Other Income Producing Property
Commercial Total
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
The following table presents the credit risk profile by risk grade of consumer loans for non-acquired loans:
Consumer Owner Occupied
Home Equity
Consumer
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Other
Consumer Total
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
Special mention
—
—
Substandard
—
—
—
Doubtful
—
—
—
$
$
$
$
$
$
The following table presents the credit risk profile by risk grade of total non-acquired loans:
Total Non-acquired Loans
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Pass
$
$
$
Special mention
Substandard
Doubtful
$
$
$
The following table presents the credit risk profile by risk grade of commercial loans for acquired non-credit impaired loans:
Construction & Development
Commercial Non-owner Occupied
Commercial Owner Occupied
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Commercial & Industrial
Other Income Producing Property
Commercial Total
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
The following table presents the credit risk profile by risk grade of consumer loans for acquired non-credit impaired loans:
Consumer Owner Occupied
Home Equity
Consumer
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Consumer Total
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Pass
$
$
$
Special mention
Substandard
Doubtful
—
—
—
$
$
$
The following table presents the credit risk profile by risk grade of total acquired non-credit impaired loans:
Total Acquired Non-credit Impaired Loans
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Pass
$
$
$
Special mention
Substandard
Doubtful
—
—
—
$
$
$
The following table presents the credit risk profile by risk grade of acquired credit impaired loans (identified as credit-impaired at the time of acquisition), net of the related discount (this table should be read in conjunction with the allowance for acquired credit impaired loan losses table found on page 18):
Commercial Loans Greater Than
Commercial Real Estate—
or Equal to $1 million-CBT
Commercial Real Estate
Construction and Development
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Residential Real Estate
Consumer
Commercial & Industrial
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
2015
2014
2014
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
$
$
$
Special mention
Substandard
Doubtful
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
$
Single Pay
Total Acquired Credit Impaired Loans
June 30,
December 31,
June 30,
June 30,
December 31,
June 30,
2015
2014
2014
2015
2014
2014
Pass
$
$
$
$
$
$
Special mention
—
—
—
Substandard
Doubtful
—
—
—
—
—
—
$
$
$
$
$
$
The risk grading of acquired credit impaired loans is determined utilizing a loan’s contractual balance, while the amount recorded in the financial statements and reflected above is the carrying value. In an FDIC-assisted acquisition, covered acquired loans are initially recorded at their fair value, including a credit discount due to the high concentration of substandard and doubtful loans. In addition to the credit discount and the allowance for loan losses on covered acquired loans, the Company’s risk of loss is mitigated by the FDIC loss share arrangement.
The following table presents an aging analysis of past due loans, segregated by class for non-acquired loans:
Total
30-59 Days
60-89 Days
90+ Days
Past
Total
(Dollars in thousands)
Past Due
Past Due
Past Due
Due
Current
Loans
June 30, 2015
Commercial real estate:
Construction and land development
$
$
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
Other income producing property
Consumer
Other loans
$
$
$
$
$
$
December 31, 2014
Commercial real estate:
Construction and land development
$
$
$
$
$
$
Commercial non-owner occupied
—
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
Other income producing property
Consumer
Other loans
$
$
$
$
$
$
June 30, 2014
Commercial real estate:
Construction and land development
$
$
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
Other income producing property
Consumer
Other loans
$
$
$
$
$
$
The following table presents an aging analysis of past due loans, segregated by class for acquired non-credit impaired loans:
Total
30-59 Days
60-89 Days
90+ Days
Past
Total
(Dollars in thousands)
Past Due
Past Due
Past Due
Due
Current
Loans
June 30, 2015
Commercial real estate:
Construction and land development
$
$
$
—
$
$
$
Commercial non-owner occupied
—
—
—
—
Commercial owner occupied
—
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
—
Other income producing property
—
Consumer
$
$
$
$
$
$
December 31, 2014
Commercial real estate:
Construction and land development
$
$
—
$
$
$
$
Commercial non-owner occupied
—
—
—
—
Commercial owner occupied
—
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
Other income producing property
—
Consumer
$
$
$
$
$
$
June 30, 2014
Commercial real estate:
Construction and land development
$
—
$
—
$
$
$
$
Commercial non-owner occupied
—
—
—
—
Commercial owner occupied
—
—
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
—
Other income producing property
—
—
Consumer
$
$
$
$
$
$
The following table presents an aging analysis of past due loans, segregated by class for acquired credit impaired loans:
Total
30-59 Days
60-89 Days
90+ Days
Past
Total
(Dollars in thousands)
Past Due
Past Due
Past Due
Due
Current
Loans
June 30, 2015
Commercial loans greater than or equal to $1 million-CBT
$
—
$
—
$
$
$
$
Commercial real estate
Commercial real estate—construction and development
Residential real estate
Consumer
Commercial and industrial
Single pay
—
—
—
—
$
$
$
$
$
$
December 31, 2014
Commercial loans greater than or equal to $1 million-CBT
$
—
$
—
$
$
$
$
Commercial real estate
Commercial real estate—construction and development
Residential real estate
Consumer
Commercial and industrial
Single pay
—
—
—
—
$
$
$
$
$
$
June 30, 2014
Commercial loans greater than or equal to $1 million-CBT
$
$
—
$
$
$
$
Commercial real estate
Commercial real estate—construction and development
Residential real estate
Consumer
Commercial and industrial
Single pay
—
—
—
—
$
$
$
$
$
$
The following is a summary of information pertaining to impaired non-acquired and acquired loans accounted for under FASB ASC Topic 310-20:
Gross
Unpaid
Recorded
Recorded
Contractual
Investment
Investment
Total
Principal
With No
With
Recorded
Related
(Dollars in thousands)
Balance
Allowance
Allowance
Investment
Allowance
June 30, 2015
Commercial real estate:
Construction and land development
$
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
Commercial and industrial
Other income producing property
Consumer
—
Other loans
—
—
—
—
—
Total impaired loans
$
$
$
$
$
December 31, 2014
Commercial real estate:
Construction and land development
$
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
—
Home equity loans
—
Commercial and industrial
Other income producing property
Consumer
—
Other loans
—
—
—
—
—
Total impaired loans
$
$
$
$
$
June 30, 2014
Commercial real estate:
Construction and land development
$
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
—
Home equity loans
—
—
—
—
—
Commercial and industrial
Other income producing property
Consumer
—
Other loans
—
—
—
—
—
Total impaired loans
$
$
$
$
$
Acquired credit impaired loans are accounted for in pools as shown on page 12 rather than being individually evaluated for impairment; therefore, the table above excludes acquired credit impaired loans.
The following summarizes the average investment in impaired loans, non-acquired and acquired loans accounted for under FASB ASC Topic 310-20, and interest income recognized on these loans:
Three Months Ended June 30,
2015
2014
Average
Average
Investment in
Interest Income
Investment in
Interest Income
(Dollars in thousands)
Impaired Loans
Recognized
Impaired Loans
Recognized
Commercial real estate:
Construction and land development
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
—
Commercial and industrial
—
Other income producing property
Consumer
—
Other loans
—
—
—
—
Total Impaired Loans
$
$
$
$
Six Months Ended June 30,
2015
2014
Average
Average
Investment in
Interest Income
Investment in
Interest Income
(Dollars in thousands)
Impaired Loans
Recognized
Impaired Loans
Recognized
Commercial real estate:
Construction and land development
$
$
$
$
Commercial non-owner occupied
Commercial owner occupied
Consumer real estate:
Consumer owner occupied
Home equity loans
—
—
Commercial and industrial
Other income producing property
Consumer
Other loans
—
—
—
—
Total Impaired Loans
$
$
$
$
The following is a summary of information pertaining to non-acquired nonaccrual loans by class, including restructured loans:
June 30,
December 31,
June 30,
(Dollars in thousands)
2015
2014
2014
Commercial non-owner occupied real estate:
Const |
