Loans | 12 Months Ended |
Dec. 31, 2013 |
Loans | ' |
Loans | ' |
(5) Loans |
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The composition of loans by primary loan portfolio segment follows: |
|
| | December 31, | | | | | | | | | | | | | | | | |
(In thousands) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 510,739 | | $ | 426,930 | | | | | | | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 91,719 | | 85,456 | | | | | | | | | | | | | | | | |
Undeveloped land | | 37,871 | | 45,797 | | | | | | | | | | | | | | | | |
Real estate mortgage | | 1,046,823 | | 989,631 | | | | | | | | | | | | | | | | |
Consumer | | 34,198 | | 36,780 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 1,721,350 | | $ | 1,584,594 | | | | | | | | | | | | | | | | |
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Loan balances include deferred loan origination fees, net of deferred loan costs. At December 31, 2013, net deferred loan costs exceeded deferred loan fees, resulting in net balances of ($139,000), compared to $47,000 at December 31, 2012. During 2013, deferred loan origination costs exceeded deferred fees for new loans, resulting in the net balance decrease. |
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Bancorp’s credit exposure is diversified with secured and unsecured loans to individuals and businesses. No specific industry concentration exceeds ten percent of loans. While Bancorp has a diversified loan portfolio, a customer’s ability to honor contracts is somewhat dependent upon the economic stability and/or industry in which that customer does business. Loans outstanding and related unfunded commitments are primarily concentrated within Bancorp’s current market areas, which encompass the Louisville, Indianapolis and Cincinnati metropolitan markets. |
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Bancorp occasionally enters into loan participation agreements with other banks in the ordinary course of business to diversify credit risk. For most sold participation loans, Bancorp has retained effective control of the loans, typically by restricting the participating institutions from pledging or selling their share of the loan without permission from Bancorp. US GAAP requires the participated portion of these loans to be recorded as secured borrowings. The participated portions of these loans are included in the commercial and industrial loan totals above, and a corresponding liability is reflected in other liabilities. At December 31, 2013 and 2012, the total participated portions of loans of this nature were $9,449,000 and $7,658,000 respectively. |
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Loans to directors and their associates, including loans to companies for which directors are principal owners, and executive officers are presented in the following table. |
|
(in thousands) | | Year ended December 31, | | | | | | | | | | | | | | | | |
Loans to directors and executive officers | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
Balance as of January 1 | | $ | 6,099 | | $ | 622 | | | | | | | | | | | | | | | | |
New loans and advances on lines of credit | | 10,006 | | 6,691 | | | | | | | | | | | | | | | | |
Repayments on loans and lines of credit | | 7,438 | | 1,214 | | | | | | | | | | | | | | | | |
Balance as of December 31 | | $ | 8,667 | | $ | 6,099 | | | | | | | | | | | | | | | | |
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The higher amounts of advances and repayments in 2013 are primarily attributable to the utilization of daily sweep features on a working capital line of credit. |
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The following table presents the balance in the recorded investment in loans and allowance for loan losses by portfolio segment and based on impairment method as of December 31, 2013, 2012 and 2011. |
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| | Type of loan | | | | | | |
| | | | Construction | | | | | | | | | | | | |
| | | | and development | | | | | | | | | | | | |
| | Commercial | | excluding | | | | | | | | | | | | |
(in thousands) | | and | | undeveloped | | Undeveloped | | Real estate | | | | | | | | |
December 31, 2013 | | industrial | | land | | land | | mortgage | | Consumer | | | | Total | | |
| | | | | | | | | | | | | | | | |
Loans | | $ | 510,739 | | $ | 91,719 | | $ | 37,871 | | $ | 1,046,823 | | $ | 34,198 | | | | $ | 1,721,350 | | |
| | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | | $ | 7,579 | | $ | 26 | | $ | 7,340 | | $ | 7,478 | | $ | 84 | | | | $ | 22,507 | | |
| | | | | | | | | | | | | | | | |
Loans collectively evaluated for impairment | | $ | 502,535 | | $ | 90,428 | | $ | 30,531 | | $ | 1,038,824 | | $ | 34,095 | | | | $ | 1,696,413 | | |
| | | | | | | | | | | | | | | | |
Balance: loans acquired with deteriorated credit quality | | $ | 625 | | $ | 1,265 | | $ | — | | $ | 521 | | $ | 19 | | | | $ | 2,430 | | |
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| | | | Construction | | | | | | | | | | | |
| | | | and development | | | | | | | | | | | |
| | Commercial | | excluding | | | | | | | | | | | |
| | and | | undeveloped | | Undeveloped | | Real estate | | | | | | | |
| | industrial | | land | | land | | mortgage | | Consumer | | Unallocated | | Total | |
Allowance for loan losses | | | | | | | | | | | | | | | |
At December 31, 2012 | | $ | 5,949 | | $ | 4,536 | | $ | — | | $ | 14,288 | | $ | 362 | | $ | 6,746 | | $ | 31,881 | |
Provision | | 1,583 | | (2,119 | ) | 13,256 | | 490 | | 86 | | (6,746 | ) | 6,550 | |
Charge-offs | | (457 | ) | (25 | ) | (7,961 | ) | (2,758 | ) | (763 | ) | — | | (11,964 | ) |
Recoveries | | 569 | | 163 | | 81 | | 584 | | 658 | | — | | 2,055 | |
At December 31, 2013 | | $ | 7,644 | | $ | 2,555 | | $ | 5,376 | | $ | 12,604 | | $ | 343 | | $ | — | | $ | 28,522 | |
| | | | | | | | | | | | | | | |
Allowance for loans individually evaluated for impairment | | $ | 762 | | $ | — | | $ | — | | $ | 606 | | $ | 84 | | | | $ | 1,452 | |
| | | | | | | | | | | | | | | |
Allowance for loans collectively evaluated for impairment | | $ | 6,882 | | $ | 2,555 | | $ | 5,376 | | $ | 11,998 | | $ | 259 | | $ | — | | $ | 27,070 | |
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| | Type of loan | | | | | | | | | |
(in thousands) | | Commercial | | Construction | | Real estate | | | | | | | | | | | |
December 31, 2012 | | and industrial | | and development | | mortgage | | Consumer | | | | Total | | | | | |
| | | | | | | | | | | | | | | | | |
Loans | | $ | 426,930 | | $ | 131,253 | | $ | 989,631 | | $ | 36,780 | | | | $ | 1,584,594 | | | | | |
| | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | | $ | 8,667 | | $ | 10,863 | | $ | 9,795 | | $ | 4 | | | | $ | 29,329 | | | | | |
| | | | | | | | | | | | | | | | | |
Loans collectively evaluated for impairment | | $ | 418,263 | | $ | 120,390 | | $ | 979,836 | | $ | 36,776 | | | | $ | 1,555,265 | | | | | |
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| | Commercial | | Construction | | Real estate | | | | | | | | | | |
| | and industrial | | and development | | mortgage | | Consumer | | Unallocated | | Total | | | | |
Allowance for loan losses | | | | | | | | | | | | | | | | |
At December 31, 2011 | | $ | 7,364 | | $ | 3,546 | | $ | 11,182 | | $ | 540 | | $ | 7,113 | | $ | 29,745 | | | | |
Provision | | 3,024 | | 2,716 | | 6,308 | | (181 | ) | (367 | ) | 11,500 | | | | |
Charge-offs | | (4,523 | ) | (1,726 | ) | (3,451 | ) | (798 | ) | — | | (10,498 | ) | | | |
Recoveries | | 84 | | — | | 249 | | 801 | | — | | 1,134 | | | | |
At December 31, 2012 | | $ | 5,949 | | $ | 4,536 | | $ | 14,288 | | $ | 362 | | $ | 6,746 | | $ | 31,881 | | | | |
| | | | | | | | | | | | | | | | |
Allowance for loans individually evaluated for impairment | | $ | 156 | | $ | 2,898 | | $ | 563 | | $ | — | | | | $ | 3,617 | | | | |
| | | | | | | | | | | | | | | | |
Allowance for loans collectively evaluated for impairment | | $ | 5,793 | | $ | 1,638 | | $ | 13,725 | | $ | 362 | | $ | 6,746 | | $ | 28,264 | | | | |
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| | Type of loan | | | | | | | | | |
| | Commercial | | Construction | | Real estate | | | | | | | | | | | |
December 31, 2011 | | and industrial | | and development | | mortgage | | Consumer | | | | Total | | | | | |
(in thousands) | | | | | | | | | | | | | | | | | |
Loans | | $ | 393,729 | | $ | 147,637 | | $ | 966,665 | | $ | 36,814 | | | | $ | 1,544,845 | | | | | |
| | | | | | | | | | | | | | | | | |
Loans individually evaluated for impairment | | $ | 5,459 | | $ | 2,416 | | $ | 14,170 | | $ | 94 | | | | $ | 22,139 | | | | | |
| | | | | | | | | | | | | | | | | |
Loans collectively evaluated for impairment | | $ | 388,270 | | $ | 145,221 | | $ | 952,495 | | $ | 36,720 | | | | $ | 1,522,706 | | | | | |
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| | Commercial | | Construction | | Real estate | | | | | | | | | | |
| | and industrial | | and development | | mortgage | | Consumer | | Unallocated | | Total | | | | |
Allowance for loan losses | | | | | | | | | | | | | | | | |
At December 31, 2010 | | $ | 2,796 | | $ | 2,280 | | $ | 12,272 | | $ | 623 | | $ | 7,572 | | $ | 25,543 | | | | |
Provision | | 5,475 | | 2,859 | | 4,592 | | 133 | | (459 | ) | 12,600 | | | | |
Charge-offs | | (1,015 | ) | (1,593 | ) | (5,840 | ) | (673 | ) | — | | (9,121 | ) | | | |
Recoveries | | 108 | | — | | 158 | | 457 | | — | | 723 | | | | |
At December 31, 2011 | | $ | 7,364 | | $ | 3,546 | | $ | 11,182 | | $ | 540 | | $ | 7,113 | | $ | 29,745 | | | | |
| | | | | | | | | | | | | | | | |
Allowance for loans individually evaluated for impairment | | $ | 954 | | $ | 10 | | $ | 1,597 | | $ | — | | | | $ | 2,561 | | | | |
| | | | | | | | | | | | | | | | |
Allowance for loans collectively evaluated for impairment | | $ | 6,410 | | $ | 3,536 | | $ | 9,585 | | $ | 540 | | $ | 7,113 | | $ | 27,184 | | | | |
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Prior to the third quarter of 2013, management measured the appropriateness of the allowance for loan losses in its entirety using (a) quantitative (historical loss rates) and qualitative factors (management adjustment factors); (b) specific allocations on impaired loans, and (c) an unallocated amount. The unallocated amount was evaluated on the loan portfolio in its entirety and was based on additional factors, such as national and local economic trends and conditions, changes in volume and severity of past due loans, volume of non-accrual loans, volume and severity of adversely classified or graded loans and other factors and trends that affect specific loans and categories of loans, such as a heightened risk in the commercial and industrial loan portfolios. |
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During the third quarter of 2013, Bancorp refined its allowance calculation whereby it “allocated” the portion of the allowance that was previously deemed to be unallocated allowance based on management’s determination of the appropriate qualitative adjustments. This refined allowance calculation includes specific allowance allocations to loan portfolio segments at December 31, 2013 for qualitative factors including, among other factors, (i) national and local economic and business conditions, (ii) the quality and experience of lending staff and management, (iii) changes in lending policies and procedures, (iv) changes in volume and severity of past due loans, classified loans and non-performing loans, (v) potential impact of any concentrations of credit, (vi) changes in the nature and terms of loans such as growth rates and utilization rates, (vii) changes in the value of underlying collateral for collateral-dependent loans, considering Bancorp’s disposition bias, and (viii) the effect of other external factors such as the legal and regulatory environment. Bancorp may also consider other qualitative factors in future periods for additional allowance allocations, including, among other factors, changes in Bancorp’s loan review process. Because Bancorp has refined its allowance calculation during 2013 such that it no longer maintains unallocated allowance at December 31, 2013, Bancorp’s allocation of its allowance at December 31, 2013 is not comparable with prior periods. |
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Management uses the following portfolio segments of loans when assessing and monitoring the risk and performance of the loan portfolio: |
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· Commercial and industrial |
· Construction and development, excluding undeveloped land |
· Undeveloped land |
· Real estate mortgage |
· Consumer |
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In the fourth quarter of 2013, as a result of analyses of non-performing loan metrics, Bancorp expanded the classifications for loans to include undeveloped land, which was previously recorded within construction and development loans. |
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Bancorp did not have any acquired loans with deteriorated credit quality at December 31, 2012. Bancorp has loans that were acquired in the Oldham acquisition in the second quarter of 2013, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is included in the balance sheet amounts of loans at December 31, 2013. |
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The changes in accretable discount related to credit impaired acquired loans are as follows: |
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(in thousands) | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2012 | | $ | — | | | | | | | | | | | | | | | | | | | |
Additions due to Oldham acquisition | | 174 | | | | | | | | | | | | | | | | | | | |
Accretion | | (37 | ) | | | | | | | | | | | | | | | | | | |
Reclassifications from (to) non-accretable difference | | — | | | | | | | | | | | | | | | | | | | |
Disposals | | — | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2013 | | $ | 137 | | | | | | | | | | | | | | | | | | | |
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The following table presents loans individually evaluated for impairment as of December 31, 2013 and 2012. |
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| | | | Unpaid | | | | Average | | | | | | | | | | |
(in thousands) | | Recorded | | principal | | Related | | recorded | | | | | | | | | | |
December 31, 2013 | | investment | | balance | | allowance | | investment | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans with no related allowance recorded | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 830 | | $ | 974 | | $ | — | | $ | 4,499 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 26 | | 151 | | — | | 54 | | | | | | | | | | |
Undeveloped land | | 7,340 | | 9,932 | | — | | 3,272 | | | | | | | | | | |
Real estate mortgage | | 3,731 | | 5,069 | | — | | 5,559 | | | | | | | | | | |
Consumer | | — | | — | | — | | 3 | | | | | | | | | | |
Subtotal | | 11,927 | | 16,126 | | — | | 13,387 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans with an allowance recorded | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 6,749 | | $ | 6,749 | | $ | 762 | | $ | 3,806 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | — | | — | | — | | 259 | | | | | | | | | | |
Undeveloped land | | — | | — | | — | | 7,152 | | | | | | | | | | |
Real estate mortgage | | 3,747 | | 4,065 | | 606 | | 3,705 | | | | | | | | | | |
Consumer | | 84 | | 84 | | 84 | | 34 | | | | | | | | | | |
Subtotal | | 10,580 | | 10,898 | | 1,452 | | 14,956 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 7,579 | | $ | 7,723 | | $ | 762 | | $ | 8,305 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 26 | | 151 | | — | | 313 | | | | | | | | | | |
Undeveloped land | | 7,340 | | 9,932 | | — | | 10,424 | | | | | | | | | | |
Real estate mortgage | | 7,478 | | 9,134 | | 606 | | 9,264 | | | | | | | | | | |
Consumer | | 84 | | 84 | | 84 | | 37 | | | | | | | | | | |
Total | | $ | 22,507 | | $ | 27,024 | | $ | 1,452 | | $ | 28,343 | | | | | | | | | | |
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| | | | Unpaid | | | | Average | | | | | | | | | | |
(in thousands) | | Recorded | | principal | | Related | | recorded | | | | | | | | | | |
December 31, 2012 | | investment | | balance | | allowance | | investment | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans with no related allowance recorded | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 6,735 | | $ | 7,591 | | $ | — | | $ | 6,226 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 118 | | 381 | | — | | 158 | | | | | | | | | | |
Undeveloped land | | 234 | | 1,806 | | — | | 886 | | | | | | | | | | |
Real estate mortgage | | 6,996 | | 7,752 | | — | | 6,451 | | | | | | | | | | |
Consumer | | 4 | | 25 | | — | | 21 | | | | | | | | | | |
Subtotal | | 14,087 | | 17,555 | | — | | 13,742 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans with an allowance recorded | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | 1,932 | | 5,103 | | 156 | | 3,294 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 433 | | 433 | | — | | 260 | | | | | | | | | | |
Undeveloped land | | 10,078 | | 10,702 | | 2,898 | | 7,232 | | | | | | | | | | |
Real estate mortgage | | 2,799 | | 2,948 | | 563 | | 4,583 | | | | | | | | | | |
Consumer | | — | | — | | — | | — | | | | | | | | | | |
Subtotal | | 15,242 | | 19,186 | | 3,617 | | 15,369 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 8,667 | | $ | 12,694 | | $ | 156 | | $ | 9,520 | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 551 | | 814 | | — | | 418 | | | | | | | | | | |
Undeveloped land | | 10,312 | | 12,508 | | 2,898 | | 8,118 | | | | | | | | | | |
Real estate mortgage | | 9,795 | | 10,700 | | 563 | | 11,034 | | | | | | | | | | |
Consumer | | 4 | | 25 | | — | | 21 | | | | | | | | | | |
Total | | $ | 29,329 | | $ | 36,741 | | $ | 3,617 | | $ | 29,111 | | | | | | | | | | |
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Differences between recorded investment amounts and unpaid principal balance amounts are due to fair value adjustments recorded for loans acquired and partial charge-offs which have occurred over the life of loans. |
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Interest income on impaired or non-accrual loans (cash basis) was $185,000, $157,000 and $391,000 in 2013, 2012, and 2011, respectively. Interest income that would have been recorded if non-accrual loans were on a current basis in accordance with their original terms was $1,248,000, $1,167,000 and $1,104,000 in 2013, 2012 and 2011, respectively. |
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Impaired loans include non-accrual loans and loans accounted for as troubled debt restructurings (TDRs), which continue to accrue interest. Non-performing loans include the balance of impaired loans plus any loans over 90 days past due and still accruing interest. Loans past due more than 90 days or more and still accruing interest amounted to $437,000 and $719,000 at December 31, 2013 and 2012, respectively. |
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The following table presents the recorded investment in non-accrual loans as of December 31, 2013 and 2012. |
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(In thousands) | | 2013 | | 2012 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 846 | | $ | 1,554 | | | | | | | | | | | | | | | | |
Construction and development, excluding undeveloped land | | 26 | | 551 | | | | | | | | | | | | | | | | |
Undeveloped land | | 7,340 | | 10,312 | | | | | | | | | | | | | | | | |
Real estate mortgage | | 7,046 | | 5,939 | | | | | | | | | | | | | | | | |
Consumer | | — | | 4 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 15,258 | | $ | 18,360 | | | | | | | | | | | | | | | | |
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On December 31, 2013 and 2012, Bancorp had $7.2 million and $11.0 million of loans classified as TDR, respectively. The following table presents the recorded investment in loans modified and classified as TDR during the years ended December 31, 2013 and 2012. |
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| | | | Pre-modification | | Post-modification | | | | | | | | | | | | | | |
(dollars in thousands) | | Number of | | outstanding recorded | | outstanding recorded | | | | | | | | | | | | | | |
December 31, 2013 | | contracts | | investment | | investment | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | 1 | | $ | 796 | | $ | 796 | | | | | | | | | | | | | | |
Real estate mortgage | | 1 | | 85 | | 85 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total | | 2 | | $ | 881 | | $ | 881 | | | | | | | | | | | | | | |
|
| | | | Pre-modification | | Post-modification | | | | | | | | | | | | | | |
(dollars in thousands) | | Number of | | outstanding recorded | | outstanding recorded | | | | | | | | | | | | | | |
December 31, 2012 | | contracts | | investment | | investment | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | 3 | | $ | 5,752 | | $ | 5,752 | | | | | | | | | | | | | | |
Real estate mortgage | | 5 | | 3,862 | | 3,862 | | | | | | | | | | | | | | |
Total | | 8 | | $ | 9,614 | | $ | 9,614 | | | | | | | | | | | | | | |
|
The following table presents the recorded investment in loans accounted for as TDR that were restructured and experienced a payment default during the year ending December 31, 2013 and 2012. |
|
(dollars in thousands) | | Number of | | | | | | | | | | | | | | | | | | | |
December 31, 2013 | | Contracts | | Recorded investment | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | 1 | | $ | 790 | | | | | | | | | | | | | | | | | |
Real estate mortgage | | 2 | | 2,425 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | 3 | | $ | 3,215 | | | | | | | | | | | | | | | | | |
|
(dollars in thousands) | | Number of | | | | | | | | | | | | | | | | | | | |
December 31, 2012 | | Contracts | | Recorded investment | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Commercial & industrial | | 1 | | $ | 627 | | | | | | | | | | | | | | | | | |
Real estate mortgage | | 1 | | 295 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | 2 | | $ | 922 | | | | | | | | | | | | | | | | | |
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At December 31, 2013, loans accounted for as TDR included modifications from original terms due to bankruptcy proceedings, modifications of amortization periods or temporary suspension of principal payments due to customer financial difficulties, and limited forgiveness of principal. Loans accounted for as TDR, which have not defaulted, are individually evaluated for impairment and, at December 31, 2013, had a total allowance allocation of $942,000, compared to $295,000 at December 31, 2012. |
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At December 31, 2013 and 2012, Bancorp had outstanding commitments to lend additional funds totaling $262,000 and $187,000, respectively, to borrowers whose loans have been modified as TDR. |
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The following table presents the aging of the recorded investment in past due loans as of December 31, 2013 and 2012. |
|
| | | | | | Greater | | | | | | | | | |
| | | | | | than | | | | | | | | Recorded | |
| | | | | | 90 days | | | | | | | | investment | |
| | | | | | past due | | | | | | | | > 90 days | |
| | 30-59 days | | 60-89 days | | (includes | | Total | | | | Total | | and | |
(in thousands) | | past due | | past due | | non-accrual) | | past due | | Current | | loans | | accruing | |
| | | | | | | | | | | | | | | |
December 31, 2013 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 808 | | $ | 201 | | $ | 1,268 | | $ | 2,277 | | $ | 508,462 | | $ | 510,739 | | $ | 421 | |
Construction and development, excluding undeveloped land | | 429 | | — | | 26 | | 455 | | 91,264 | | 91,719 | | — | |
Undeveloped land | | — | | — | | 7,340 | | 7,340 | | 30,531 | | 37,871 | | — | |
Real estate mortgage | | 4,529 | | 1,180 | | 7,062 | | 12,771 | | 1,034,052 | | 1,046,823 | | 16 | |
Consumer | | 110 | | — | | — | | 110 | | 34,088 | | 34,198 | | — | |
Total | | $ | 5,876 | | $ | 1,381 | | $ | 15,696 | | $ | 22,953 | | $ | 1,698,397 | | $ | 1,721,350 | | $ | 437 | |
| | | | | | | | | | | | | | | |
December 31, 2012 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 212 | | $ | 42 | | $ | 1,554 | | $ | 1,808 | | $ | 425,122 | | $ | 426,930 | | $ | — | |
Construction and development, excluding undeveloped land | | — | | — | | 551 | | 551 | | 84,905 | | 85,456 | | — | |
Undeveloped land | | — | | 4,284 | | 10,312 | | 14,596 | | 31,201 | | 45,797 | | | |
Real estate mortgage | | 3,771 | | 1,952 | | 6,424 | | 12,147 | | 977,484 | | 989,631 | | 485 | |
Consumer | | 79 | | — | | 238 | | 317 | | 36,463 | | 36,780 | | 234 | |
Total | | $ | 4,062 | | $ | 6,278 | | $ | 19,079 | | $ | 29,419 | | $ | 1,555,175 | | $ | 1,584,594 | | $ | 719 | |
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Bancorp categorizes loans into credit risk categories based on relevant information about ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends. Pass-rated loans included all risk-rated loans other than those classified as special mention, substandard, and doubtful, which are defined below: |
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· Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. These potential weaknesses may result in deterioration of repayment prospects for the loan or of Bancorp’s credit position at some future date. |
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· Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize repayment of the debt. They are characterized by the distinct possibility that Bancorp will sustain some loss if the deficiencies are not corrected. |
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· Substandard non-performing: Loans classified as substandard non-performing have all the characteristics of substandard loans and have been placed on non-accrual status or have been accounted for as troubled debt restructurings. |
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· 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 repayment in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. |
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As of December 31, 2013 and 2012, balances in risk categories of loans were as follows: |
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Credit risk profile by internally assigned grade |
|
(in thousands) | | Commercial | | Construction | | Undeveloped | | Real estate | | Consumer | | Total | | | | |
and industrial | and | land | mortgage | | | |
| development, | | | | | |
| excluding | | | | | |
| undeveloped | | | | | |
| land | | | | | |
December 31, 2013 | | | | | | | | | | | | | | | | |
Grade | | | | | | | | | | | | | | | | |
Pass | | $ | 486,140 | | $ | 79,896 | | $ | 30,366 | | $ | 1,014,216 | | $ | 34,028 | | $ | 1,644,646 | | | | |
Special mention | | 12,983 | | 7,091 | | — | | 17,916 | | 86 | | 38,076 | | | | |
Substandard | | 3,616 | | 4,706 | | 165 | | 7,197 | | — | | 15,684 | | | | |
Substandard non- performing | | 8,000 | | 26 | | 7,340 | | 7,494 | | 84 | | 22,944 | | | | |
Doubtful | | — | | — | | — | | — | | — | | — | | | | |
Total | | $ | 510,739 | | $ | 91,719 | | $ | 37,871 | | $ | 1,046,823 | | $ | 34,198 | | $ | 1,721,350 | | | | |
| | | | | | | | | | | | | | | | |
31-Dec-12 | | | | | | | | | | | | | | | | |
Grade | | | | | | | | | | | | | | | | |
Pass | | $ | 404,045 | | $ | 78,621 | | $ | 34,388 | | $ | 925,674 | | $ | 36,542 | | $ | 1,479,270 | | | | |
Special mention | | 11,097 | | 6,284 | | 547 | | 26,770 | | — | | 44,698 | | | | |
Substandard | | 4,482 | | — | | 550 | | 26,901 | | — | | 31,933 | | | | |
Substandard non- performing | | 7,306 | | 551 | | 10,312 | | 10,286 | | 238 | | 28,693 | | | | |
Doubtful | | — | | — | | — | | — | | — | | — | | | | |
Total | | $ | 426,930 | | $ | 85,456 | | $ | 45,797 | | $ | 989,631 | | $ | 36,780 | | $ | 1,584,594 | | | | |