Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2014 |
Receivables [Abstract] | ' |
Loans and Allowance for Loan Losses | ' |
Note 4: Loans and Allowance for Loan Losses |
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Categories of loans include (thousands): | | March 31, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 34,483 | | | $ | 36,792 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial real estate | | | 193,626 | | | | 189,660 | | | | | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 24,719 | | | | 35,160 | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate | | | 130,822 | | | | 131,032 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 6,232 | | | | 6,766 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total loans | | | 389,882 | | | | 399,410 | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: Net deferred loan (fees) costs, premiums and discounts | | | (15 | ) | | | 86 | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (4,010 | ) | | | (4,053 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
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Net loans | | $ | 385,857 | | | $ | 395,443 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The risk characteristics of each significant loan portfolio segment are as follows: |
Commercial & Industrial Loans |
Commercial and industrial loans are primarily underwritten on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. |
Commercial Real Estate |
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s commercial real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner-occupied commercial real estate versus non-owner-occupied loans. |
Agricultural |
Agricultural loans are viewed primarily as cash flow loans where repayment comes from sales of crops and secondarily as loans secured by real estate, farm equipment or livestock. Repayment of these loans is generally dependent on the successful operation of the farming operation and is highly dependent on weather conditions. |
Residential real estate and Consumer |
Residential and consumer loans consist of two segments—residential mortgage loans and personal loans. For residential mortgage loans that are secured by 1-4 family residences and are generally owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer personal loans are secured by consumer personal assets, such as automobiles or recreational vehicles. Some consumer personal loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. |
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. |
For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan. |
For all loan classes, the accrual of interest is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. For all loan classes, the entire balance of the loan is considered past due if the minimum payment contractually required to be paid is not received by the contractual due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. |
Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. |
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For all loan portfolio segments except residential and consumer loans, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. |
The Company charges off residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due and charge-down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. |
For all classes, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. Generally, most impaired loans, except for certain troubled debt restructurings, are on nonaccrual. |
Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms, no principal reduction has been granted and the loan has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at least six months. |
The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. |
Allowance for Loan Losses |
The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The current methodology involves the use of a calculation model, which allows management to analyze key loan –level data for both impaired and non-impaired loans and apply risk factors to the general reserves based on a loan’s past due status and risk rating. In addition, the model uses the borrower’s address and applies unemployment rate risk factors based on the state of residence. |
The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are 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. The general component covers non-impaired loans and is based on two principal factors: (1) the one- and three-year rolling average charge-off percentage applied to the current outstanding balance by portfolio type; and (2) estimated losses attributable to loan risk ratings and current unemployment rates. Management believes the one-to-three year historical loss experience methodology is appropriate in the current economic environment. Other adjustments (qualitative/environmental considerations) for each segment may be added to the allowance for each loan segment after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. |
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial, commercial real estate and agricultural loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes the discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense. |
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The fair values of collateral dependent impaired loans are based on independent appraisals of the collateral. In general, the Company acquires an updated appraisal upon identification of impairment and periodically thereafter for commercial, commercial real estate and multi-family loans. After determining the collateral value as described, the fair value is calculated based on the determined collateral value less selling expenses. The potential for outdated appraisal values is considered in our determination of the allowance for loan losses through our analysis of various trends and conditions, including the local economy, trends in charge-offs and delinquencies, etc., and the related qualitative adjustments assigned by the Company. |
Segments of loans with similar risk characteristics are collectively evaluated for impairment based on the segment’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. |
In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In this scenario, the Company attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. Any loans that are modified are reviewed by the Company to identify if a troubled debt restructuring (“TDR”) has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status, and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. If such efforts by the Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work out a satisfactory payment plan. |
It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until six months of satisfactory borrower performance, at which time management would consider its return to accrual status. If a loan was accruing at the time of restructuring, the Company reviews the loan to determine if it is appropriate to continue the accrual of interest on the restructured loan. |
With regard to determination of the amount of the allowance for credit losses, troubled debt restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously. |
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The following tables present the allowance for loan losses for the three-month periods ended March 31, 2014 and 2013 (thousands): |
Three Months Ended March 31, 2014 |
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| | Commercial | | | Commercial | | | Agricultural | | | Residential | | | Residential | | | Consumer | | | Total | | | | | |
Real Estate | 1-4 Family | Home | | | | |
| | Equity | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,457 | | | $ | 1,962 | | | $ | 69 | | | $ | 357 | | | $ | 205 | | | $ | 3 | | | $ | 4,053 | | | | | |
Charge-offs | | | (73 | ) | | | (294 | ) | | | 0 | | | | (19 | ) | | | 0 | | | | (7 | ) | | | (393 | ) | | | | |
Recoveries | | | 34 | | | | 29 | | | | 0 | | | | 2 | | | | 1 | | | | 9 | | | | 75 | | | | | |
Provision | | | (78 | ) | | | 343 | | | | (14 | ) | | | 60 | | | | (37 | ) | | | 1 | | | | 275 | | | | | |
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Ending Balance | | $ | 1,340 | | | $ | 2,040 | | | $ | 55 | | | $ | 400 | | | $ | 169 | | | $ | 6 | | | $ | 4,010 | | | | | |
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Three Months Ended March 31, 2013 |
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| | Commercial | | | Commercial | | | Agricultural | | | Residential | | | Residential | | | Consumer | | | Total | | | | | |
Real Estate | 1-4 Family | Home | | | | |
| | Equity | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 1,697 | | | $ | 2,284 | | | $ | 85 | | | $ | 460 | | | $ | 199 | | | $ | 35 | | | $ | 4,760 | | | | | |
Charge-offs | | | (22 | ) | | | (185 | ) | | | 0 | | | | (76 | ) | | | (25 | ) | | | (13 | ) | | | (321 | ) | | | | |
Recoveries | | | 1 | | | | 73 | | | | 1 | | | | 2 | | | | 1 | | | | 13 | | | | 91 | | | | | |
Provision | | | (199 | ) | | | 298 | | | | (16 | ) | | | 114 | | | | (30 | ) | | | (27 | ) | | | 140 | | | | | |
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Ending Balance | | $ | 1,477 | | | $ | 2,470 | | | $ | 70 | | | $ | 500 | | | $ | 145 | | | $ | 8 | | | $ | 4,670 | | | | | |
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The following tables present the balance in the allowance for loan losses and the recorded investment in financing receivables based on portfolio segment and impairment method as of March 31, 2014 and December 31, 2013 (thousands): |
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| | Evaluated for Impairment | | | | | | | | | | | | | | | | | | | | | | | | |
| | Individually | | | Collectively | | | Total | | | | | | | | | | | | | | | | | | | | | |
March 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 39 | | | $ | 1,301 | | | $ | 1,340 | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 584 | | | | 1,456 | | | | 2,040 | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 0 | | | | 55 | | | | 55 | | | | | | | | | | | | | | | | | | | | | |
Residential-1-4 Family | | | 0 | | | | 400 | | | | 400 | | | | | | | | | | | | | | | | | | | | | |
Residential-Home equity | | | 0 | | | | 169 | | | | 169 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 0 | | | | 6 | | | | 6 | | | | | | | | | | | | | | | | | | | | | |
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Total | | $ | 623 | | | $ | 3,387 | | | $ | 4,010 | | | | | | | | | | | | | | | | | | | | | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 652 | | | $ | 33,831 | | | $ | 34,483 | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 4,869 | | | | 188,757 | | | | 193,626 | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 63 | | | | 24,656 | | | | 24,719 | | | | | | | | | | | | | | | | | | | | | |
Residential-1-4 Family | | | 939 | | | | 101,594 | | | | 102,533 | | | | | | | | | | | | | | | | | | | | | |
Residential-Home equity | | | 41 | | | | 28,248 | | | | 28,289 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 6 | | | | 6,226 | | | | 6,232 | | | | | | | | | | | | | | | | | | | | | |
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Total | | $ | 6,570 | | | $ | 383,312 | | | $ | 389,882 | | | | | | | | | | | | | | | | | | | | | |
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December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 108 | | | $ | 1,349 | | | $ | 1,457 | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 418 | | | | 1,544 | | | | 1,962 | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 0 | | | | 69 | | | | 69 | | | | | | | | | | | | | | | | | | | | | |
Residential-1-4 Family | | | 0 | | | | 357 | | | | 357 | | | | | | | | | | | | | | | | | | | | | |
Residential-Home equity | | | 0 | | | | 205 | | | | 205 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 0 | | | | 3 | | | | 3 | | | | | | | | | | | | | | | | | | | | | |
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Total | | $ | 526 | | | $ | 3,527 | | | $ | 4,053 | | | | | | | | | | | | | | | | | | | | | |
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Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 902 | | | $ | 35,890 | | | $ | 36,792 | | | | | | | | | | | | | | | | | | | | | |
Commercial Real Estate | | | 5,364 | | | | 184,296 | | | | 189,660 | | | | | | | | | | | | | | | | | | | | | |
Agricultural | | | 38 | | | | 35,122 | | | | 35,160 | | | | | | | | | | | | | | | | | | | | | |
Residential-1-4 Family | | | 952 | | | | 101,829 | | | | 102,781 | | | | | | | | | | | | | | | | | | | | | |
Residential-Home equity | | | 44 | | | | 28,207 | | | | 28,251 | | | | | | | | | | | | | | | | | | | | | |
Consumer | | | 9 | | | | 6,757 | | | | 6,766 | | | | | | | | | | | | | | | | | | | | | |
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Total | | $ | 7,309 | | | $ | 392,101 | | | $ | 399,410 | | | | | | | | | | | | | | | | | | | | | |
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The following table presents the Company’s corporate and consumer credit exposure by category and standard regulatory classification as of March 31, 2014 and December 31, 2013 (thousands): |
Corporate Credit Exposure |
Credit Risk Profile by Creditworthiness Category: |
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| | Commercial | | | Commercial Real Estate | | | Agricultural | | | | | | | | | |
| | March 31, | | | December 31, | | | March 31, | | | December 31, | | | March 31, | | | December 31, | | | | | | | | | |
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | | | | | | | | |
Pass | | $ | 31,275 | | | $ | 32,436 | | | $ | 177,680 | | | $ | 173,630 | | | $ | 24,656 | | | $ | 35,122 | | | | | | | | | |
Other Assets Especially Mentioned | | | 1,014 | | | | 1,800 | | | | 3,830 | | | | 3,377 | | | | 0 | | | | 0 | | | | | | | | | |
Substandard | | | 2,048 | | | | 2,410 | | | | 12,116 | | | | 12,653 | | | | 63 | | | | 38 | | | | | | | | | |
Doubtful | | | 146 | | | | 146 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Loss | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Non-rated | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
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Total | | $ | 34,483 | | | $ | 36,792 | | | $ | 193,626 | | | $ | 189,660 | | | $ | 24,719 | | | $ | 35,160 | | | | | | | | | |
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Consumer Credit Exposure |
Credit Risk Profile by Internally Assigned Grade |
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| | Residential-1 to 4 Family | | | Residential Home Equity | | | Consumer | | | | | | | | | |
| | March 31, | | | December 31, | | | March 31, | | | December 31, | | | March 31, | | | December 31, | | | | | | | | | |
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | | | | | | | | |
Pass | | $ | 100,255 | | | $ | 100,362 | | | $ | 28,165 | | | $ | 28,072 | | | $ | 6,176 | | | $ | 6,696 | | | | | | | | | |
Substandard | | | 2,278 | | | | 2,419 | | | | 124 | | | | 179 | | | | 56 | | | | 70 | | | | | | | | | |
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Total | | $ | 102,533 | | | $ | 102,781 | | | $ | 28,289 | | | $ | 28,251 | | | $ | 6,232 | | | $ | 6,766 | | | | | | | | | |
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For purposes of monitoring the credit quality and risk characteristics of its commercial portfolio segment, the Company disaggregates the segment into the following classes: commercial and industrial, commercial real estate and agricultural. |
To facilitate the monitoring of credit quality within the commercial portfolio segment, and for purposes of analyzing historical loss rates used in the determination of the allowance for loan losses for the commercial portfolio segment, the Company utilizes the following categories of credit grades: pass, other assets especially mentioned, substandard, doubtful or loss. The five categories, which are derived from standard regulatory rating definitions, are assigned upon initial approval of credit to borrowers and updated periodically thereafter. |
Pass ratings, which are assigned to those borrowers that do not have identified potential or well defined weaknesses and for which there is a high likelihood of orderly repayment, are updated periodically based on the size and credit characteristics of the borrower. All other categories are updated on a quarterly basis. |
The Company assigns an Other Assets Especially Mentioned rating to loans and leases that have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the loan or the Company’s credit position. |
The Company assigns a substandard rating to loans that are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged. Substandard loans have well defined weaknesses or weaknesses that could jeopardize the orderly repayment of the debt. Loans in this grade also are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies noted are not addressed and corrected. |
The Company assigns a doubtful rating to loans that have all the attributes of a substandard rating with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to the advantage of and strengthen the credit quality of the loan or lease, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceeding, capital injection, perfecting liens on additional collateral or refinancing plans. Loans rated as loss are loans with advances in excess of calculated current fair value which are considered uncollectible. |
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For purposes of monitoring the credit quality and risk characteristics of its consumer portfolio segment, the Company disaggregates the segment into the following classes: residential mortgage, home equity and other consumer. The Company considers repayment performance as the best indicator of credit quality for residential mortgage and consumer loans. Consumer loans that have principal and interest payments that have become past due ninety days are classified as substandard unless such loans are both well secured and in the process of collection. All other loans are classified as pass. Well secured loans are collateralized by perfected security interests in real and/or personal property for which the Company estimates proceeds from sale would be sufficient to recover the outstanding principal and accrued interest balance of the loan and pay all costs to sell the collateral. The Company considers a loan in the process of collection if collection efforts or legal action is proceeding and the Company expects to collect funds sufficient to bring the loan current or recover the entire outstanding principal and accrued interest balance. |
Generally, all classes of loans are placed on non-accrual status at ninety days past due and interest is considered a loss, unless the loan is well-secured and in the process of collection. Most impaired loans are on non-accrual status. Past due status is based on the contractual terms of the loan. Payments made while a loan is on nonaccrual are treated as reductions of principal. Typically, loans are not returned to accrual status until all loan payments have been current for at least six months. The following tables present the Company’s past due and nonaccrual loans as of March 31, 2014 and December 31, 2013 (thousands): |
March 31, 2014: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Past Due Days | | | | | | Total | | | 90+ Days | | | Non- | |
Financing | & |
| | 30-59 | | | 60-89 | | | 90+ | | | Total | | | Current | | | Receivables | | | Accruing | | | accrual | |
Commercial | | $ | 16 | | | | 0 | | | $ | 324 | | | $ | 340 | | | $ | 34,143 | | | $ | 34,483 | | | $ | 19 | | | $ | 621 | |
Commercial Real Estate | | | 150 | | | | 0 | | | | 2,340 | | | | 2,490 | | | | 191,136 | | | | 193,626 | | | | 0 | | | | 2,928 | |
Agricultural | | | 4 | | | | 12 | | | | 53 | | | | 69 | | | | 24,650 | | | | 24,719 | | | | 0 | | | | 63 | |
Residential 1-4 Family | | | 279 | | | | 0 | | | | 535 | | | | 814 | | | | 101,719 | | | | 102,533 | | | | 0 | | | | 895 | |
Residential Home Equity | | | 0 | | | | 0 | | | | 82 | | | | 82 | | | | 28,207 | | | | 28,289 | | | | 0 | | | | 110 | |
Consumer | | | 10 | | | | 0 | | | | 23 | | | | 33 | | | | 6,199 | | | | 6,232 | | | | 0 | | | | 23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 459 | | | $ | 12 | | | $ | 3,357 | | | $ | 3,828 | | | $ | 386,054 | | | $ | 389,882 | | | $ | 19 | | | $ | 4,640 | |
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December 31, 2013: |
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| | Past Due Days | | | | | | Total | | | 90+ Days | | | Non- | |
Financing | & |
| | 30-59 | | | 60-89 | | | 90+ | | | Total | | | Current | | | Receivables | | | Accruing | | | accrual | |
Commercial | | $ | 309 | | | $ | 22 | | | $ | 432 | | | $ | 763 | | | $ | 36,029 | | | $ | 36,792 | | | $ | 32 | | | $ | 890 | |
Commercial Real Estate | | | 212 | | | | 0 | | | | 2,789 | | | | 3,001 | | | | 186,659 | | | | 189,660 | | | | 0 | | | | 3,402 | |
Agricultural | | | 0 | | | | 25 | | | | 28 | | | | 53 | | | | 35,107 | | | | 35,160 | | | | 0 | | | | 38 | |
Residential 1-4 Family | | | 0 | | | | 150 | | | | 502 | | | | 652 | | | | 102,129 | | | | 102,781 | | | | 0 | | | | 1,175 | |
Residential Home Equity | | | 40 | | | | 32 | | | | 100 | | | | 172 | | | | 28,079 | | | | 28,251 | | | | 0 | | | | 164 | |
Consumer | | | 10 | | | | 1 | | | | 24 | | | | 35 | | | | 6,731 | | | | 6,766 | | | | 0 | | | | 65 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 571 | | | $ | 230 | | | $ | 3,875 | | | $ | 4,676 | | | $ | 394,734 | | | $ | 399,410 | | | $ | 32 | | | $ | 5,734 | |
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The following tables present impaired loan information at March 31, 2014 and December 31, 2013 and for the periods ended March 31, 2014 and March 31, 2013 and the related allowance for loan losses (thousands). |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 31, 2014 | | | For the three months | | | | | | | | | | | | | |
ended | | | | | | | | | | | | |
March 31, 2014 | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | | | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 193 | | | $ | 273 | | | $ | 0 | | | $ | 268 | | | $ | 28 | | | | | | | | | | | | | |
Commercial real estate | | | 3,016 | | | | 3,286 | | | | 0 | | | | 3,146 | | | | 186 | | | | | | | | | | | | | |
Agricultural | | | 63 | | | | 77 | | | | 0 | | | | 51 | | | | 0 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 939 | | | | 77 | | | | 0 | | | | 946 | | | | 3 | | | | | | | | | | | | | |
Residential-Home equity | | | 27 | | | | 38 | | | | 0 | | | | 28 | | | | 1 | | | | | | | | | | | | | |
Consumer | | | 6 | | | | 6 | | | | 0 | | | | 8 | | | | 0 | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 459 | | | $ | 477 | | | $ | 39 | | | $ | 519 | | | $ | 0 | | | | | | | | | | | | | |
Commercial real estate | | | 1,853 | | | | 1,877 | | | | 584 | | | | 1,983 | | | | 0 | | | | | | | | | | | | | |
Agricultural | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 0 | | | | 1,000 | | | | 0 | | | | 500 | | | | 0 | | | | | | | | | | | | | |
Residential-Home equity | | | 14 | | | | 14 | | | | 0 | | | | 15 | | | | 0 | | | | | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 652 | | | $ | 750 | | | $ | 39 | | | $ | 787 | | | $ | 28 | | | | | | | | | | | | | |
Commercial real estate | | | 4,869 | | | | 5,163 | | | | 584 | | | | 5,129 | | | | 186 | | | | | | | | | | | | | |
Agricultural | | | 63 | | | | 77 | | | | 0 | | | | 51 | | | | 0 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 939 | | | | 1,077 | | | | 0 | | | | 1,446 | | | | 3 | | | | | | | | | | | | | |
Residential-Home equity | | | 41 | | | | 52 | | | | 0 | | | | 43 | | | | 1 | | | | | | | | | | | | | |
Consumer | | | 6 | | | | 6 | | | | 0 | | | | 8 | | | | 0 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 6,570 | | | $ | 7,125 | | | $ | 623 | | | $ | 7,464 | | | $ | 218 | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As of December 31, 2013 | | | For the three months | | | | | | | | | | | | | |
ended | | | | | | | | | | | | |
March 31, 2013 | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Average | | | Interest | | | | | | | | | | | | | |
Investment | Principal | Allowance | Recorded | Income | | | | | | | | | | | | |
| Balance | | Investment | Recognized | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 342 | | | $ | 497 | | | $ | 0 | | | $ | 1,022 | | | $ | 12 | | | | | | | | | | | | | |
Commercial real estate | | | 3,275 | | | | 3,727 | | | | 0 | | | | 3,398 | | | | 58 | | | | | | | | | | | | | |
Agricultural | | | 38 | | | | 52 | | | | 0 | | | | 57 | | | | 3 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 952 | | | | 1,086 | | | | 0 | | | | 1,001 | | | | 5 | | | | | | | | | | | | | |
Residential-Home equity | | | 29 | | | | 39 | | | | 0 | | | | 35 | | | | 0 | | | | | | | | | | | | | |
Consumer | | | 9 | | | | 10 | | | | 0 | | | | 15 | | | | 0 | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 560 | | | $ | 569 | | | $ | 108 | | | $ | 3,286 | | | $ | 0 | | | | | | | | | | | | | |
Commercial real estate | | | 2,089 | | | | 2,174 | | | | 418 | | | | 2,088 | | | | 0 | | | | | | | | | | | | | |
Agricultural | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Residential-Home equity | | | 15 | | | | 14 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 902 | | | $ | 1,066 | | | $ | 108 | | | $ | 4,308 | | | $ | 12 | | | | | | | | | | | | | |
Commercial real estate | | | 5,364 | | | | 5,901 | | | | 418 | | | | 5,486 | | | | 58 | | | | | | | | | | | | | |
Agricultural | | | 38 | | | | 52 | | | | 0 | | | | 57 | | | | 3 | | | | | | | | | | | | | |
Residential-1 to 4 Family | | | 952 | | | | 1,086 | | | | 0 | | | | 1,001 | | | | 5 | | | | | | | | | | | | | |
Residential-Home equity | | | 44 | | | | 53 | | | | 0 | | | | 35 | | | | 0 | | | | | | | | | | | | | |
Consumer | | | 9 | | | | 10 | | | | 0 | | | | 15 | | | | 0 | | | | | | | | | | | | | |
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| | $ | 7,309 | | | $ | 8,168 | | | $ | 526 | | | $ | 10,902 | | | $ | 78 | | | | | | | | | | | | | |
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Interest income recognized is not materially different from cash basis interest. |
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The following tables present information regarding troubled debt restructurings (“TDRs”) by segment: (thousands): |
Newly classified troubled debt restructurings: |
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| | Three Months Ended March 31, 2014 | | | Three Months Ended March 31, 2013 | | | | | | | | | |
| | Outstanding Recorded Investment | | | Outstanding Recorded Investment | | | | | | | | | |
| | Number | | | Pre- | | | Post- | | | Number | | | Pre-Modification | | | Post- | | | | | | | | | |
of | Modification | Modification | of | Modification | | | | | | | | |
Contracts | | | Contracts | | | | | | | | | |
Commercial | | | 1 | | | $ | 15 | | | $ | 15 | | | | 0 | | | $ | 0 | | | $ | 0 | | | | | | | | | |
Commercial real estate | | | 0 | | | | 0 | | | | 0 | | | | 1 | | | | 447 | | | | 446 | | | | | | | | | |
Residential | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
Consumer | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | |
The following table provides information on how restructured loans were modified during the three-month periods ended March 31, 2014 and 2013 (thousands): |
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| | Three Months Ended | | | | | | | | | | | | | | | | | |
| | March 31, 2014 | | | March 31, 2013 | | | | | | | | | | | | | | | | | |
| | Recorded | | | Amount | | | Recorded | | | Amount | | | | | | | | | | | | | | | | | |
Investment | charged off | Investment | charged off | | | | | | | | | | | | | | | | |
Extended Maturities | | $ | 15 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | |
Lowered interest rate and extended term | | | 0 | | | | 0 | | | | 447 | | | | 0 | | | | | | | | | | | | | | | | | |
The allowance for loan losses was not increased for any of the above restructured loans. |
All TDRs are considered impaired loans. The Company considers TDRs that become 30 days or more past due under the modified terms as subsequently defaulted. The Company had noTDR’s modified in the past twelve months that subsequently defaulted during the year-to-date period. |