Loans | 9 Months Ended |
Sep. 30, 2013 |
Loans [Abstract] | ' |
Loans | ' |
The following tables present the allowance for loan losses and the carrying amount of loans based on management's overall assessment of probable incurred losses (in $1,000s), and should not be interpreted as an indication of future charge-offs: |
|
| 30-Sep-13 | |
| Secured by Real Estate | | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total | |
(including | Land | and Other | |
multi- | Development | Business- | |
family) | and Other | Purpose | |
| Land | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 4,570 | | $ | 1,917 | | $ | 873 | | $ | 1,328 | | $ | 3 | | | | | | | | $ | 8,691 | |
Collectively evaluated for probable incurred losses | | 7,301 | | | 4,363 | | | 694 | | | 1,746 | | | 213 | | $ | 187 | | $ | 9,070 | | | 23,574 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | $ | 11,871 | | $ | 6,280 | | $ | 1,567 | | $ | 3,074 | | $ | 216 | | $ | 187 | | $ | 9,070 | | $ | 32,265 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 71,684 | | $ | 17,436 | | $ | 8,253 | | $ | 6,849 | | $ | 28 | | | | | | | | $ | 104,250 | |
Collectively evaluated for probable incurred losses | | 380,318 | | | 129,199 | | | 22,249 | | | 61,176 | | | 5,586 | | $ | 1,950 | | | | | | 600,478 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | $ | 452,002 | | $ | 146,635 | | $ | 30,502 | | $ | 68,025 | | $ | 5,614 | | $ | 1,950 | | | | | $ | 704,728 | |
|
|
| December 31, 2012 (As Adjusted – Note C) |
| Secured by Real Estate | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total |
(including | Land | and Other |
multi- | Development | Business- |
family) | and Other | Purpose |
| Land | Loans |
| | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 6,214 | | $ | 2,153 | | $ | 881 | | $ | 1,022 | | $ | 8 | | | | | | | | $ | 10,278 |
Collectively evaluated for probable incurred losses | | 8,721 | | | 6,241 | | | 1,063 | | | 3,441 | | | 866 | | $ | 3 | | $ | 20,895 | | | 41,230 |
| | | | | | | | | | | | | | | | | | | | | | | |
Total allowance for loan losses | $ | 14,935 | | $ | 8,394 | | $ | 1,944 | | $ | 4,463 | | $ | 874 | | $ | 3 | | $ | 20,895 | | $ | 51,508 |
| | | | | | | | | | | | | | | | | | | | | | | |
Portfolio loans: | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 89,964 | | $ | 29,314 | | $ | 10,447 | | $ | 10,071 | | $ | 22 | | | | | | | | $ | 139,818 |
Collectively evaluated for probable incurred losses | | 482,512 | | | 178,027 | | | 29,730 | | | 92,574 | | | 6,671 | | $ | 1,993 | | | | | | 791,507 |
| | | | | | | | | | | | | | | | | | | | | | | |
Total portfolio loans | $ | 572,476 | | $ | 207,341 | | $ | 40,177 | | $ | 102,645 | | $ | 6,693 | | $ | 1,993 | | | | | $ | 931,325 |
|
The allowance for loan losses is maintained at a level believed adequate by management to absorb potential losses inherent in the loan portfolio at the balance sheet date. Management's determination of the adequacy of the allowance is an estimate based on evaluation of the portfolio (including potential impairment of individual loans and concentrations of credit), past loss experience, current economic conditions, volume, amount and composition of the loan portfolio and other factors. The allowance is increased by provisions for loan losses charged to operations and reduced by net charge-offs. |
|
The tables below summarize activity in the allowance for loan losses for the three and nine months ended September 30, 2013 and 2012 (in $1,000s) by loan type: |
|
| Three Months Ended September 30, 2013 | |
| Secured by Real Estate | | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total | |
(including | Land | and Other | |
multi- | Development | Business- | |
family) | and Other | Purpose | |
| Land | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 11,444 | | $ | 6,443 | | $ | 1,936 | | $ | 2,615 | | $ | 303 | | $ | 391 | | $ | 9,378 | | $ | 32,510 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | -1,453 | | | -800 | | | -234 | | | -411 | | | -2 | | | - | | | | | | -2,900 | |
Recoveries | | 1,509 | | | 470 | | | 334 | | | 259 | | | 80 | | | - | | | | | | 2,652 | |
Net charge-offs | | 56 | | | -330 | | | 100 | | | -152 | | | 78 | | | - | | | | | | -248 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | 173 | | | 103 | | | -482 | | | 581 | | | -167 | | | -205 | | | - | | | 3 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net change in unallocated allowance | | 198 | | | 64 | | | 13 | | | 30 | | | 2 | | | 1 | | | -308 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 11,871 | | $ | 6,280 | | $ | 1,567 | | $ | 3,074 | | $ | 216 | | $ | 187 | | $ | 9,070 | | $ | 32,265 | |
|
|
| Nine Months Ended September 30, 2013 | |
| Secured by Real Estate | | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total | |
(including | Land | and Other | |
multi- | Development | Business- | |
family) | and Other | Purpose | |
| Land | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 14,935 | | $ | 8,394 | | $ | 1,944 | | $ | 4,463 | | $ | 874 | | $ | 3 | | $ | 20,895 | | $ | 51,508 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less allowance for deconsolidated subsidiary – Note H | | -765 | | | -869 | | | -53 | | | -422 | | | -48 | | | | | | | | | -2,157 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | -6,435 | | | -3,237 | | | -2,906 | | | -980 | | | -318 | | | -7 | | | | | | -13,883 | |
Recoveries | | 3,631 | | | 1,602 | | | 2,254 | | | 1,338 | | | 155 | | | - | | | | | | 8,980 | |
Net charge-offs | | -2,804 | | | -1,635 | | | -652 | | | 358 | | | -163 | | | -7 | | | | | | -4,903 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | 746 | | | 468 | | | 344 | | | -1,289 | | | -444 | | | 192 | | | -12,200 | | | -12,183 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net change in unallocated allowance | | -241 | | | -78 | | | -16 | | | -36 | | | -3 | | | -1 | | | 375 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 11,871 | | $ | 6,280 | | $ | 1,567 | | $ | 3,074 | | $ | 216 | | $ | 187 | | $ | 9,070 | | $ | 32,265 | |
|
|
| Three Months Ended September 30, 2012 | |
| Secured by Real Estate | | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total | |
(including | Land | and Other | |
multi- | Development | Business- | |
family) | and Other | Purpose | |
| Land | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 22,642 | | $ | 10,014 | | $ | 3,192 | | $ | 8,760 | | $ | 228 | | $ | 368 | | $ | 13,114 | | $ | 58,318 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | -4,533 | | | -2,985 | | | -657 | | | -472 | | | -171 | | | 23 | | | | | | -8,795 | |
Recoveries | | 614 | | | 359 | | | 312 | | | 876 | | | 276 | | | 63 | | | | | | 2,500 | |
Net charge-offs | | -3,919 | | | -2,626 | | | -345 | | | 404 | | | 105 | | | 86 | | | | | | -6,295 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | 2,466 | | | 1,595 | | | -703 | | | -2,556 | | | -97 | | | -428 | | | | | | 277 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net change in unallocated allowance | | -3,338 | | | -1,107 | | | -273 | | | -554 | | | -43 | | | -12 | | | 5,327 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 17,851 | | $ | 7,876 | | $ | 1,871 | | $ | 6,054 | | $ | 193 | | $ | 14 | | $ | 18,441 | | $ | 52,300 | |
|
| Nine Months Ended September 30, 2012 | |
| Secured by Real Estate | | | | | | | | | | | |
| Commercial | | Residential | | Construction, | | Commercial | | Consumer | | Other | | Unallocated | | Total | |
(including | Land | and Other | |
multi- | Development | Business- | |
family) | and Other | Purpose | |
| Land | Loans | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 26,576 | | $ | 15,854 | | $ | 6,739 | | $ | 11,057 | | $ | 533 | | $ | 12 | | $ | 4,447 | | $ | 65,218 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Charge-offs | | -11,141 | | | -7,857 | | | -2,503 | | | -6,125 | | | -373 | | | -656 | | | | | | -28,655 | |
Recoveries | | 4,193 | | | 3,907 | | | 1,320 | | | 5,046 | | | 410 | | | 70 | | | | | | 14,946 | |
Net charge-offs | | -6,948 | | | -3,950 | | | -1,183 | | | -1,079 | | | 37 | | | -586 | | | | | | -13,709 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Provision for loan losses | | 6,992 | | | -1,120 | | | -2,968 | | | -2,468 | | | -266 | | | 621 | | | | | | 791 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net change in unallocated allowance | | -8,769 | | | -2,908 | | | -717 | | | -1,456 | | | -111 | | | -33 | | | 13,994 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 17,851 | | $ | 7,876 | | $ | 1,871 | | $ | 6,054 | | $ | 193 | | $ | 14 | | $ | 18,441 | | $ | 52,300 | |
|
|
Average total portfolio loans for the nine months ended September 30, 2013 and 2012 were $785.8 million and $1.1 billion, respectively. The ratio of net charge-offs (annualized) to average portfolio loans outstanding was 0.68 % and 1.71% for the nine months ended September 30, 2013 and 2012, respectively. |
|
Nonperforming loans (i.e., loans which are 90 days or more past due and still accruing interest and loans on nonaccrual status) and other nonperforming assets are summarized below (in $1,000s): |
|
| 30-Sep-13 | | 30-Jun-13 | | 31-Mar-13 | | 31-Dec-12 | | | | | | | | | | | | | |
| | | | | | | | | As Adjusted | | | | | | | | | | | | | |
(Note C) | | | | | | | | | | | | | |
Nonaccrual loans: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 46,944 | | $ | 55,172 | | $ | 60,045 | | $ | 65,443 | | | | | | | | | | | | | |
Residential (including multi-family) | | 12,242 | | | 15,847 | | | 18,063 | | | 21,049 | | | | | | | | | | | | | |
Construction, land development and other land | | 5,292 | | | 5,937 | | | 6,161 | | | 5,667 | | | | | | | | | | | | | |
Total loans secured by real estate | | 64,478 | | | 76,956 | | | 84,269 | | | 92,159 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 4,680 | | | 5,238 | | | 6,021 | | | 8,159 | | | | | | | | | | | | | |
Consumer | | 133 | | | 139 | | | 328 | | | 189 | | | | | | | | | | | | | |
Total nonaccrual loans | | 69,291 | | | 82,333 | | | 90,618 | | | 100,507 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Past due (>90 days) loans and accruing interest: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | - | | | - | | | 1,017 | | | 515 | | | | | | | | | | | | | |
Residential (including multi-family) | | - | | | - | | | - | | | 85 | | | | | | | | | | | | | |
Total loans secured by real estate | | - | | | - | | | 1,017 | | | 600 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | - | | | - | | | - | | | 70 | | | | | | | | | | | | | |
Total past due loans | | - | | | - | | | 1,017 | | | 670 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total nonperforming loans | $ | 69,291 | | $ | 82,333 | | $ | 91,635 | | | 101,177 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Real estate owned and other repossessed assets | | 47,815 | | | 46,775 | | | 54,887 | | | 63,306 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | $ | 117,106 | | $ | 129,108 | | $ | 146,522 | | | 164,483 | | | | | | | | | | | | | |
|
Impaired loans which do not have an allowance requirement include collateral-dependent loans for which direct write-downs have been made to the carrying amount of such loans and, accordingly, no additional allowance requirement or allocation is generally necessary. |
|
Impaired loans are summarized in the following table (in $1,000s), based on loans which either have an allowance for loan losses recorded or no such allowance as of September 30, 2013: |
|
| Carrying | | Unpaid | | Related | | | | | | | | | | | | | | | | |
Value | Principal | Allowance | | | | | | | | | | | | | | | | |
| Balance | for Loan | | | | | | | | | | | | | | | | |
| | Losses | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 46,502 | | $ | 59,377 | | $ | 5,276 | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 14,770 | | | 26,603 | | | 3,382 | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 5,536 | | | 9,293 | | | 919 | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 66,808 | | | 95,273 | | | 9,577 | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 5,096 | | | 11,986 | | | 1,217 | | | | | | | | | | | | | | | | |
Consumer | | 199 | | | 449 | | | 31 | | | | | | | | | | | | | | | | |
| | 72,103 | | | 107,708 | | | 10,825 | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | 57,782 | | | 75,745 | | | | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 11,524 | | | 12,391 | | | | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 4,470 | | | 5,882 | | | | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 73,776 | | | 94,018 | | | | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 3,123 | | | 3,761 | | | | | | | | | | | | | | | | | | | |
Consumer | | 51 | | | 51 | | | | | | | | | | | | | | | | | | | |
| | 76,950 | | | 97,830 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 149,053 | | $ | 205,538 | | $ | 10,825 | | | | | | | | | | | | | | | | |
|
Included in total impaired loans as of September 30, 2013 is $119.9 million of loans modified and reported as troubled debt restructurings (see further discussion under the Troubled Debt Restructurings section of this Note), along with $5.1 million of loans modified as troubled debt restructurings which are no longer reported as troubled debt restructurings due to the loans being in compliance with their modified terms and having an interest rate consistent with market rates. |
|
Interest income is recorded on impaired loans if not on nonaccrual status, or may be recorded on a cash basis in some circumstances, if such payments are not credited to principal. For the three and nine months ended September 30, 2013 and 2012, the average recorded investment in impaired loans and interest income recorded on impaired loans were as follows (in $1,000s): |
|
| Three Months Ended | | Nine Months Ended | | | | | | | | | | | | | |
| 30-Sep-13 | | 30-Sep-13 | | | | | | | | | | | | | |
| Average | | Interest | | Average | | Interest | | | | | | | | | | | | | |
Recorded | Income | Recorded | Income | | | | | | | | | | | | | |
Investment | Recorded | Investment | Recorded | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 111,720 | | $ | 2,003 | | $ | 117,185 | | $ | 5,472 | | | | | | | | | | | | | |
Residential (including multi-family) | | 32,733 | | | 380 | | | 38,059 | | | 1,057 | | | | | | | | | | | | | |
Construction, land development and other land | | 14,504 | | | 60 | | | 18,582 | | | 229 | | | | | | | | | | | | | |
Total loans secured by real estate | | 158,957 | | | 2,443 | | | 173,826 | | | 6,758 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 11,243 | | | 100 | | | 13,937 | | | 410 | | | | | | | | | | | | | |
Consumer | | 236 | | | 7 | | | 196 | | | 7 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 170,436 | | $ | 2,550 | | $ | 187,959 | | $ | 7,175 | | | | | | | | | | | | | |
|
|
| Three Months Ended | | Nine Months Ended | | | | | | | | | | | | | |
| 30-Sep-12 | | 30-Sep-12 | | | | | | | | | | | | | |
| Average | | Interest | | Average | | Interest | | | | | | | | | | | | | |
Recorded | Income | Recorded | Income | | | | | | | | | | | | | |
Investment | Recorded | Investment | Recorded | | | | | | | | | | | | | |
| As Adjusted | | | | As Adjusted | | | | | | | | | | | | | | | | |
(Note C) | (Note C) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 126,443 | | $ | 1,715 | | $ | 128,941 | | $ | 3,717 | | | | | | | | | | | | | |
Residential (including multi-family) | | 49,098 | | | 596 | | | 48,687 | | | 1,722 | | | | | | | | | | | | | |
Construction, land development and other land | | 25,137 | | | 30 | | | 25,510 | | | 540 | | | | | | | | | | | | | |
Total loans secured by real estate | | 200,678 | | | 2,341 | | | 203,138 | | | 5,979 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 18,315 | | | 61 | | | 18,661 | | | 671 | | | | | | | | | | | | | |
Consumer | | 180 | | | - | | | 172 | | | 7 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 219,173 | | $ | 2,402 | | $ | 221,971 | | $ | 6,657 | | | | | | | | | | | | | |
|
Impaired loans are summarized in the following table (in $1,000s), based on loans which either have an allowance for loan losses recorded or no such allowance as of December 31, 2012: |
|
| Carrying | | Unpaid | | Related | | | | | | | | | | | | | | | | |
Value | Principal | Allowance | | | | | | | | | | | | | | | | |
| Balance | for Loan | | | | | | | | | | | | | | | | |
| | Losses | | | | | | | | | | | | | | | | |
| As Adjusted | | As Adjusted | | | | | | | | | | | | | | | | | | |
(Note C) | (Note C) | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 61,640 | | $ | 75,459 | | $ | 7,563 | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 17,776 | | | 31,470 | | | 2,706 | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 7,150 | | | 11,562 | | | 1,036 | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 86,566 | | | 118,491 | | | 11,305 | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 7,609 | | | 17,134 | | | 1,574 | | | | | | | | | | | | | | | | |
Consumer | | 207 | | | 1,351 | | | 57 | | | | | | | | | | | | | | | | |
| | 94,382 | | | 136,976 | | | 12,936 | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | 53,108 | | | 81,579 | | | | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 18,690 | | | 21,791 | | | | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 5,982 | | | 9,136 | | | | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 77,780 | | | 112,506 | | | | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 6,246 | | | 8,112 | | | | | | | | | | | | | | | | | | | |
Consumer | | 9 | | | 9 | | | | | | | | | | | | | | | | | | | |
| | 84,035 | | | 120,627 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 178,417 | | $ | 257,603 | | $ | 12,936 | | | | | | | | | | | | | | | | |
|
Included in impaired loans as of December 31, 2012 is $138.9 million of loans modified and reported as troubled debt restructurings (see further discussion under the Troubled Debt Restructurings section of this Note). |
|
The following tables summarize the aging and amounts of past due loans (in $1,000s): |
|
| 30-Sep-13 | | | | | | | |
| Past Due Loans | | Total | | | | | | | | | | | |
(based on payment due dates) | Amount of | | | | | | | |
| More Than | | More Than | | Loans on | | Loans More | | Loans Either | | Total | | | | | | | |
29 Days, | 89 Days | Nonaccrual | Than 29 Days | Current or | Portfolio | | | | | | | |
and Less Than | (Accruing) | Status | Past Due or on | Less Than | Loans | | | | | | | |
90 Days | | (Generally, 90 | Nonaccrual | 30 Days | | | | | | | | |
| | Days or More) | Status | Past Due | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 4,798 | | $ | - | | $ | 46,944 | | $ | 51,742 | | $ | 400,260 | | $ | 452,002 | | | | | | | |
Residential (including multi-family) | | 1,582 | | | | | | 12,242 | | | 13,824 | | | 132,811 | | | 146,635 | | | | | | | |
Construction, land development and other land | | 697 | | | | | | 5,292 | | | 5,989 | | | 24,513 | | | 30,502 | | | | | | | |
Total loans secured by real estate | | 7,077 | | | - | | | 64,478 | | | 71,555 | | | 557,584 | | | 629,139 | | | | | | | |
Commercial and other business-purpose loans | | 772 | | | | | | 4,680 | | | 5,452 | | | 62,573 | | | 68,025 | | | | | | | |
Consumer | | 382 | | | | | | 133 | | | 515 | | | 5,099 | | | 5,614 | | | | | | | |
Other | | - | | | | | | | | | - | | | 1,950 | | | 1,950 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 8,231 | | $ | - | | $ | 69,291 | | $ | 77,522 | | $ | 627,206 | | $ | 704,728 | | | | | | | |
|
|
| December 31, 2012 (As Adjusted – Note C) | | | | | | | |
| Past Due Loans | | Total | | | | | | | | | | | |
(based on payment due dates) | Amount of | | | | | | | |
| More Than | | More Than | | Loans on | | Loans More | | Loans Either | | Total | | | | | | | |
29 Days, | 89 Days | Nonaccrual | Than 29 Days | Current or | Portfolio | | | | | | | |
and Less Than | (Accruing) | Status | Past Due or on | Less Than | Loans | | | | | | | |
90 Days | | (Generally, 90 | Nonaccrual | 30 Days | | | | | | | | |
| | Days or More) | Status | Past Due | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | |
Commercial | $ | 12,534 | | $ | 515 | | $ | 65,443 | | $ | 78,492 | | $ | 493,984 | | $ | 572,476 | | | | | | | |
Residential (including multi-family) | | 5,364 | | | 85 | | | 21,049 | | | 26,498 | | | 180,843 | | | 207,341 | | | | | | | |
Construction, land development and other land | | 4,242 | | | | | | 5,667 | | | 9,909 | | | 30,268 | | | 40,177 | | | | | | | |
Total loans secured by real estate | | 22,140 | | | 600 | | | 92,159 | | | 114,899 | | | 705,095 | | | 819,994 | | | | | | | |
Commercial and other business-purpose loans | | 2,933 | | | 70 | | | 8,159 | | | 11,162 | | | 91,483 | | | 102,645 | | | | | | | |
Consumer | | 280 | | | - | | | 189 | | | 469 | | | 6,224 | | | 6,693 | | | | | | | |
Other | | | | | | | | | | | | | | 1,993 | | | 1,993 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 25,353 | | $ | 670 | | $ | 100,507 | | $ | 126,530 | | $ | 804,795 | | $ | 931,325 | | | | | | | |
|
Capitol categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt obligations based on current financial information, aging analysis, historical payment experience, credit documentation and public information, among other factors. Capitol analyzes loans individually by classifying the loans as to credit risk. This analysis generally includes all loans and is generally performed at least quarterly. The following loan risk rating definitions are used: |
|
Pass. Loans classified with a pass rating have been deemed to have acceptable credit quality by bank management. |
|
Watch. Loans classified as watch have potential weaknesses that deserve management's close attention. If not improved, those potential weaknesses may result in deterioration of the repayment prospects for the loan in the future. |
|
Substandard. Loans classified as substandard have a well-defined weakness or weaknesses that could jeopardize the liquidation of the debt obligation by the borrower. These loans are characterized by the reasonable possibility that some loss will be sustained if the deficiencies are not favorably resolved. |
|
Based on management's most recent analysis, the risk categories of loans are summarized as follows (in $1,000s): |
|
| 30-Sep-13 | | | | | | | | | | | | | |
| Pass | | Watch | | Substandard | | Total | | | | | | | | | | | | | |
Portfolio | | | | | | | | | | | | | |
Loans | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 315,889 | | $ | 52,327 | | $ | 83,786 | | $ | 452,002 | | | | | | | | | | | | | |
Residential (including multi-family) | | 106,607 | | | 17,576 | | | 22,452 | | | 146,635 | | | | | | | | | | | | | |
Construction, land development and other land | | 17,129 | | | 4,123 | | | 9,250 | | | 30,502 | | | | | | | | | | | | | |
Total loans secured by real estate | | 439,625 | | | 74,026 | | | 115,488 | | | 629,139 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 52,603 | | | 6,188 | | | 9,234 | | | 68,025 | | | | | | | | | | | | | |
Consumer | | 4,953 | | | 174 | | | 487 | | | 5,614 | | | | | | | | | | | | | |
Other | | 1,950 | | | | | | - | | | 1,950 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 499,131 | | $ | 80,388 | | $ | 125,209 | | $ | 704,728 | | | | | | | | | | | | | |
|
|
| December 31, 2012 (As adjusted – Note C) | | | | | | | | | | | | | |
| Pass | | Watch | | Substandard | | Total | | | | | | | | | | | | | |
Portfolio | | | | | | | | | | | | | |
Loans | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 408,689 | | $ | 60,929 | | $ | 102,858 | | $ | 572,476 | | | | | | | | | | | | | |
Residential (including multi-family) | | 150,861 | | | 18,951 | | | 37,529 | | | 207,341 | | | | | | | | | | | | | |
Construction, land development and other land | | 21,773 | | | 7,394 | | | 11,010 | | | 40,177 | | | | | | | | | | | | | |
Total loans secured by real estate | | 581,323 | | | 87,274 | | | 151,397 | | | 819,994 | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 82,931 | | | 4,894 | | | 14,820 | | | 102,645 | | | | | | | | | | | | | |
Consumer | | 4,533 | | | 1,765 | | | 395 | | | 6,693 | | | | | | | | | | | | | |
Other | | 1,993 | | | | | | | | | 1,993 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 670,780 | | $ | 93,933 | | $ | 166,612 | | $ | 931,325 | | | | | | | | | | | | | |
|
Troubled Debt Restructurings |
|
Loan modifications or restructurings are accounted for as troubled debt restructurings if, for economic or legal reasons, it has been determined that a borrower is experiencing financial difficulties and the bank grants a "concession" to the borrower that it would not otherwise consider. For all classes of loans, a troubled debt restructuring may involve a modification of terms such as a reduction of the stated interest rate or loan balance, a reduction of the accrued interest, an extension of the maturity date at an interest rate lower than a current market rate for a new loan with similar risk, or some combination thereof involving a concession to the borrower to facilitate repayment. |
|
The Corporation has designated a troubled debt restructuring as a loan that has been modified because the borrower is experiencing financial difficulty and has been granted one or more of the following concessions: |
|
| 1 | An extension or renewal of a substandard rated loan with no change in rate or terms, and the terms provided are not representative of current market rates for credits with similar risk characteristics; | | | | | | | | | | | | | | | | | | | | | | |
| 2 | Modification of the interest rate in order to allow the borrower to repay the debt, based on current cash flow sources; | | | | | | | | | | | | | | | | | | | | | | |
| 3 | A modification to an "interest only" structure for a period of time that should result in the loan being paid off, returned to the contracted terms or refinanced; or | | | | | | | | | | | | | | | | | | | | | | |
| 4 | A modification of a loan into an A/B note structure, where the A note is at market rate terms and conditions, and the B note has been charged off. | | | | | | | | | | | | | | | | | | | | | | |
|
Loans modified and classified as troubled debt restructurings are impaired loans. Each loan that is designated as a troubled debt restructuring is individually evaluated for impairment to determine the specific reserve to be established or the charge-off, if any, to be taken. The specific reserve or charge-off amount is determined using the discounted cash flow method, the collateral dependency method or, when available, the observable market price method. |
|
The loan portfolios contain generally three categories of troubled debt restructurings, (1) loans for which the rate, amount of the note or terms have been modified, (2) substandard loans for which the rate or terms have not been modified but the loan was extended or renewed at rates or terms deemed below current rate and terms for credits with comparable risk factors, and (3) loans that have been modified with interest only terms. The following are the factors that enter into the determination of the specific reserve or charge-off amount for each of these categories: |
|
Loans for which the rate or terms have been modified: The specific reserve or charge-off amount, for which the repayment ability is based on the cash flows of the borrower, is generally determined using a discounted cash flow analysis, adjusted for a probability-of-default factor. The discount period used is based on when the bank believes, depending on cash flows from the borrower or project, that the loan will be paid in full or refinanced. If an event for pay down or an expected refinance cannot be documented, a discount period that will result in the cash flows (after being adjusted for a probability of default), reducing the loan balance down to the collateral value is considered, or as an alternative, the remaining amortization period is generally used. If the loan is deemed collateral dependent, either due to the estimated cash flows not being supported by reasonable and supportable projections, or signifcant uncertainty exists on the borrower's ability to refinance or repay the debt at maturity, the reserve or charge-off will be determined using the collateral dependency method. |
|
Loans for which there has been no rate or term modification: If there has been no change in the rate and term, a discounted cash flow analysis, adjusted for a probability of default, is calculated to determine the specific reserve, or if deemed to be collateral dependent, the amount of charge-off required.. |
|
Loans that have interest only terms: Unless there is a specific event that can be documented which will result in the loan being paid-off, returned to the original contract terms or refinanced, these loans are generally treated as collateral-dependent and the specific reserve is based on the net value of the collateral held. |
|
The following table summarizes loans modified as troubled debt restructurings during the three and nine months ended September 30, 2013 and 2012 (in $1,000s): |
|
| Three Months Ended September 30, 2013 | | | | | | | | | | | | | | |
| Number of | | Pre-restructuring | | Post-restructuring | | Post- | | | | | | | | | | | | | | |
Contracts | Outstanding | Outstanding | restructuring | | | | | | | | | | | | | | |
| Recorded | Recorded | Loan Loss | | | | | | | | | | | | | | |
| Investment | Investment | Reserve | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | 7 | | $ | 6,941 | | $ | 6,211 | | $ | 749 | | | | | | | | | | | | | | |
Residential | 10 | | | 848 | | | 787 | | | 35 | | | | | | | | | | | | | | |
Construction, land development and other land | - | | | - | | | - | | | - | | | | | | | | | | | | | | |
Total loans secured by real estate | 17 | | | 7,789 | | | 6,998 | | | 784 | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | 2 | | | 129 | | | 129 | | | - | | | | | | | | | | | | | | |
Consumer | 3 | | | 102 | | | 102 | | | 1 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 22 | | $ | 8,020 | | $ | 7,229 | | $ | 785 | | | | | | | | | | | | | | |
|
|
| Nine Months Ended September 30, 2013 | | | | | | | | | | | | | | |
| Number of | | Pre-restructuring | | Post-restructuring | | Post- | | | | | | | | | | | | | | |
Contracts | Outstanding | Outstanding | restructuring | | | | | | | | | | | | | | |
| Recorded | Recorded | Loan Loss | | | | | | | | | | | | | | |
| Investment | Investment | Reserve | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | 31 | | $ | 17,200 | | $ | 13,916 | | $ | 1,066 | | | | | | | | | | | | | | |
Residential | 41 | | | 3,957 | | | 3,399 | | | 230 | | | | | | | | | | | | | | |
Construction, land development and other land | 2 | | | 94 | | | 91 | | | 12 | | | | | | | | | | | | | | |
Total loans secured by real estate | 74 | | | 21,251 | | | 17,406 | | | 1,308 | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | 20 | | | 1,774 | | | 985 | | | 297 | | | | | | | | | | | | | | |
Consumer | 3 | | | 102 | | | 102 | | | 1 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 97 | | $ | 23,127 | | $ | 18,493 | | $ | 1,606 | | | | | | | | | | | | | | |
|
|
|
| Three Months Ended September 30, 2012 | | | | | | | | | | | | | | |
| Number of | | Pre-restructuring | | Post-restructuring | | Post- | | | | | | | | | | | | | | |
Contracts | Outstanding | Outstanding | restructuring | | | | | | | | | | | | | | |
| Recorded | Recorded | Loan Loss | | | | | | | | | | | | | | |
| Investment | Investment | Reserve | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | 17 | | $ | 11,325 | | $ | 8,522 | | $ | 404 | | | | | | | | | | | | | | |
Residential | 15 | | | 2,427 | | | 2,195 | | | 154 | | | | | | | | | | | | | | |
Construction, land development and other land | 3 | | | 913 | | | 913 | | | 33 | | | | | | | | | | | | | | |
Total loans secured by real estate | 35 | | | 14,665 | | | 11,630 | | | 591 | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | 10 | | | 760 | | | 764 | | | 65 | | | | | | | | | | | | | | |
Consumer | - | | | - | | | - | | | - | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 45 | | $ | 15,425 | | $ | 12,394 | | $ | 656 | | | | | | | | | | | | | | |
|
| Nine Months Ended September 30, 2012 | | | | | | | | | | | | | | |
| Number of | | Pre-restructuring | | Post-restructuring | | Post- | | | | | | | | | | | | | | |
Contracts | Outstanding | Outstanding | restructuring | | | | | | | | | | | | | | |
| Recorded | Recorded | Loan Loss | | | | | | | | | | | | | | |
| Investment | Investment | Reserve | | | | | | | | | | | | | | |
Troubled debt restructurings: | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | 82 | | $ | 30,669 | | $ | 25,620 | | $ | 1,746 | | | | | | | | | | | | | | |
Residential | 67 | | | 8,398 | | | 7,838 | | | 489 | | | | | | | | | | | | | | |
Construction, land development and other land | 12 | | | 1,968 | | | 1,837 | | | 57 | | | | | | | | | | | | | | |
Total loans secured by real estate | 161 | | | 41,035 | | | 35,295 | | | 2,292 | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | 25 | | | 1,784 | | | 1,644 | | | 90 | | | | | | | | | | | | | | |
Consumer | 1 | | | 2 | | | 1 | | | - | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 187 | | $ | 42,821 | | $ | 36,940 | | $ | 2,382 | | | | | | | | | | | | | | |
|
Of the amounts in the table above for the nine months ended September 30, 2013, approximately $8.4 million, or 45%, and 52 contracts, or 54%, and for the nine months ended September 30, 2012, approximately $15.6 million, or 42%, and 71 contracts, or 38%, are substandard rated loans that were extended or renewed with no change in rate or terms, and the terms provided were not representative of current market rates for loans with similar risk characteristics. The remainder of the troubled debt restructuring pool constitutes loans where repayment terms and/or interest rates were modified, or the loan was modified to an "interest only" structure. |
|
The following table summarizes loans modified as troubled debt restructurings in the last twelve months for which there was a payment default (i.e., when a loan becomes 90 days or more past due) during the three and nine months ended September 30, 2013 and 2012 (in $1,000s): |
|
| Three Months Ended | | Nine Months Ended | | | | | | | | | | | | | | | |
30-Sep-13 | 30-Sep-13 | | | | | | | | | | | | | | | |
| Number of | | Recorded | | Number of | | Recorded | | | | | | | | | | | | | | | |
Contracts | Investment | Contracts | Investment | | | | | | | | | | | | | | | |
Troubled debt restructurings that subsequently defaulted: | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | 5 | | $ | 2,570 | | 12 | | $ | 4,874 | | | | | | | | | | | | | | | |
Residential | 3 | | | 294 | | 19 | | | 1,990 | | | | | | | | | | | | | | | |
Construction, land development and other land | - | | | - | | 4 | | | 1,427 | | | | | | | | | | | | | | | |
Total loans secured by real estate | 8 | | | 2,864 | | 35 | | | 8,291 | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | - | | | - | | 1 | | | - | | | | | | | | | | | | | | | |
Consumer | - | | | - | | - | | | - | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 8 | | $ | 2,864 | | 36 | | $ | 8,291 | | | | | | | | | | | | | | | |
|
|
| Three Months Ended | | Nine Months Ended | | | | | | | | | | | | | | | |
30-Sep-12 | 30-Sep-12 | | | | | | | | | | | | | | | |
| Number of | | Recorded | | Number of | | Recorded | | | | | | | | | | | | | | | |
Contracts | Investment | Contracts | Investment | | | | | | | | | | | | | | | |
Troubled debt restructurings that subsequently defaulted: | | | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | | |
Commercial | 13 | | $ | 4,574 | | 28 | | $ | 6,073 | | | | | | | | | | | | | | | |
Residential | 8 | | | 549 | | 21 | | | 1,761 | | | | | | | | | | | | | | | |
Construction, land development and other land | 6 | | | 1,081 | | 11 | | | 1,306 | | | | | | | | | | | | | | | |
Total loans secured by real estate | 27 | | | 6,204 | | 60 | | | 9,140 | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | 4 | | | 215 | | 10 | | | 441 | | | | | | | | | | | | | | | |
Consumer | 1 | | | 47 | | 2 | | | 48 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | 32 | | $ | 6,466 | | 72 | | $ | 9,629 | | | | | | | | | | | | | | | |
|
The total amount of troubled debt restructurings as of September 30, 2013 and December 31, 2012 is detailed in the following tables by loan type and accrual status (in $1,000s): |
|
| Troubled Debt Restructurings | | | | | | | | | | | | | | | | |
at September 30, 2013 | | | | | | | | | | | | | | | | |
| On | | On Accrual | | Total | | | | | | | | | | | | | | | | |
Non-Accrual | Status | | | | | | | | | | | | | | | | |
Status | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 31,670 | | $ | 53,394 | | $ | 85,064 | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 7,651 | | | 13,694 | | | 21,345 | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 3,230 | | | 4,086 | | | 7,316 | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 42,551 | | | 71,174 | | | 113,725 | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 2,666 | | | 3,409 | | | 6,075 | | | | | | | | | | | | | | | | |
Consumer | | | | | 117 | | | 117 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 45,217 | | $ | 74,700 | | $ | 119,917 | | | | | | | | | | | | | | | | |
|
| Troubled Debt Restructurings | | | | | | | | | | | | | | | | |
at December 31, 2012 | | | | | | | | | | | | | | | | |
| On | | On Accrual | | Total | | | | | | | | | | | | | | | | |
Non-Accrual | Status | | | | | | | | | | | | | | | | |
Status | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Loans secured by real estate: | | | | | | | | | | | | | | | | | | | | | |
Commercial | $ | 41,350 | | $ | 49,305 | | $ | 90,655 | | | | | | | | | | | | | | | | |
Residential (including multi-family) | | 12,902 | | | 15,417 | | | 28,319 | | | | | | | | | | | | | | | | |
Construction, land development and other land | | 2,797 | | | 7,465 | | | 10,262 | | | | | | | | | | | | | | | | |
Total loans secured by real estate | | 57,049 | | | 72,187 | | | 129,236 | | | | | | | | | | | | | | | | |
Commercial and other business-purpose loans | | 3,965 | | | 5,695 | | | 9,660 | | | | | | | | | | | | | | | | |
Consumer | | | | | 27 | | | 27 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | $ | 61,014 | | $ | 77,909 | | $ | 138,923 | | | | | | | | | | | | | | | | |