Loans | 3 Months Ended |
Mar. 31, 2014 |
Receivables [Abstract] | ' |
LOANS | ' |
Note 4—Loans |
|
Loans summarized by category as of March 31, 2014, December 31, 2013 and March 31, 2013 are as follows: |
|
| | March 31, | | December 31, | | March 31, | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | 2014 | | 2013 | | 2013 | | | | | | | | | | | | | | | | | | | | |
Commercial, financial and agricultural | | $ | 34,860 | | | $ | 19,925 | | | $ | 20,981 | | | | | | | | | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 29,112 | | | | 18,933 | | | | 12,138 | | | | | | | | | | | | | | | | | | | | | |
Mortgage-residential | | | 46,810 | | | | 37,579 | | | | 38,301 | | | | | | | | | | | | | | | | | | | | | |
Mortgage-commercial | | | 292,995 | | | | 237,701 | | | | 230,644 | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 31,378 | | | | 25,659 | | | | 26,316 | | | | | | | | | | | | | | | | | | | | | |
Other | | | 8,713 | | | | 7,800 | | | | 5,340 | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 443,868 | | | $ | 347,597 | | | $ | 333,720 | | | | | | | | | | | | | | | | | | | | | |
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The detailed activity in the allowance for loan losses and the recorded investment in loans receivable as of and for the three months ended March 31, 2014 and March 31, 2013 and for the year ended December 31, 2013 is as follows: |
|
(Dollars in thousands) | | | | | | | | | | | | | | | | |
| | | | | | Real estate | | Real estate | | | | | | | | |
| | | | Real estate | | Mortgage | | Mortgage | | Consumer | | Consumer | | | | |
| | Commercial | | Construction | | Residential | | Commercial | | Home equity | | Other | | Unallocated | | Total |
31-Mar-14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 233 | | | $ | 26 | | | $ | 291 | | | $ | 1,117 | | | $ | 112 | | | $ | 80 | | | $ | 2,360 | | | $ | 4,219 | |
31-Dec-13 |
Charge-offs | | | — | | | | — | | | | 35 | | | | 187 | | | | — | | | | 8 | | | | — | | | | 230 | |
Recoveries | | | 17 | | | | — | | | | 1 | | | | — | | | | — | | | | 4 | | | | — | | | | 22 | |
Provisions | | | (7 | ) | | | 137 | | | | (1 | ) | | | 94 | | | | 2 | | | | (13 | ) | | | (62 | ) | | | 150 | |
Ending balance | | $ | 243 | | | $ | 163 | | | $ | 256 | | | $ | 1,024 | | | $ | 114 | | | $ | 63 | | | $ | 2,298 | | | $ | 4,161 | |
31-Mar-14 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | — | | | $ | — | | | $ | 4 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | | 243 | | | | 163 | | | | 252 | | | | 1,024 | | | | 114 | | | | 63 | | | | 2,298 | | | | 4,157 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance-total | | $ | 34,860 | | | $ | 29,112 | | | $ | 46,810 | | | $ | 292,995 | | | $ | 31,378 | | | $ | 8,713 | | | $ | — | | | $ | 443,868 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | | 65 | | | | — | | | | 956 | | | | 7,332 | | | | 71 | | | | 9 | | | | — | | | | 8,433 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 34,795 | | | $ | 29,112 | | | $ | 45,854 | | | $ | 285,663 | | | $ | 31,307 | | | $ | 8,704 | | | $ | — | | | $ | 435,435 | |
|
|
(Dollars in thousands) | | | | | | | | | | | | | | | | |
| | | | | | Real estate | | Real estate | | | | | | | | |
| | | | Real estate | | Mortgage | | Mortgage | | Consumer | | Consumer | | | | |
| | Commercial | | Construction | | Residential | | Commercial | | Home equity | | Other | | Unallocated | | Total |
31-Mar-13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 338 | | | $ | — | | | $ | 235 | | | $ | 1,322 | | | $ | 400 | | | $ | 17 | | | $ | 2,309 | | | $ | 4,621 | |
31-Dec-12 |
Charge-offs | | | 7 | | | | — | | | | 4 | | | | 235 | | | | 42 | | | | 26 | | | | — | | | | 314 | |
Recoveries | | | 11 | | | | — | | | | 61 | | | | — | | | | — | | | | 5 | | | | — | | | | 77 | |
Provisions | | | 67 | | | | 21 | | | | (93 | ) | | | (12 | ) | | | (122 | ) | | | 82 | | | | 207 | | | | 150 | |
Ending balance | | $ | 409 | | | $ | 21 | | | $ | 199 | | | $ | 1,075 | | | $ | 236 | | | $ | 78 | | | $ | 2,516 | | | $ | 4,534 | |
31-Mar-13 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 11 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | | 398 | | | | 21 | | | | 199 | | | | 1,075 | | | | 236 | | | | 78 | | | | 2,516 | | | | 4,523 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance-total | | $ | 20,981 | | | $ | 12,138 | | | $ | 38,301 | | | $ | 230,644 | | | $ | 26,316 | | | $ | 5,340 | | | $ | — | | | $ | 333,720 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | | 992 | | | | — | | | | 352 | | | | 4,944 | | | | — | | | | 8 | | | | — | | | | 6,296 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 19,989 | | | $ | 12,138 | | | $ | 37,949 | | | $ | 225,700 | | | $ | 26,316 | | | $ | 5,332 | | | $ | — | | | $ | 327,424 | |
|
|
(Dollars in thousands) | | | | | | | | | | | | | | | | |
| | | | | | Real estate | | Real estate | | | | | | | | |
| | | | Real estate | | Mortgage | | Mortgage | | Consumer | | Consumer | | | | |
| | Commercial | | Construction | | Residential | | Commercial | | Home equity | | Other | | Unallocated | | Total |
31-Dec-13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 338 | | | $ | — | | | $ | 235 | | | $ | 1,322 | | | $ | 400 | | | $ | 17 | | | $ | 2,309 | | | $ | 4,621 | |
Charge-offs | | | — | | | | — | | | | (47 | ) | | | (897 | ) | | | (67 | ) | | | (79 | ) | | | — | | | | (1,090 | ) |
Recoveries | | | 47 | | | | — | | | | 72 | | | | — | | | | — | | | | 41 | | | | — | | | | 160 | |
Provisions | | | (152 | ) | | | 26 | | | | 31 | | | | 692 | | | | (221 | ) | | | 101 | | | | 51 | | | | 528 | |
Ending balance | | $ | 233 | | | $ | 26 | | | $ | 291 | | | $ | 1,117 | | | $ | 112 | | | $ | 80 | | | $ | 2,360 | | | $ | 4,219 | |
31-Dec-13 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | — | | | $ | — | | | $ | 4 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 4 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | | 233 | | | | 26 | | | | 287 | | | | 1,117 | | | | 112 | | | | 80 | | | | 2,360 | | | | 4,215 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance-total | | $ | 19,925 | | | $ | 18,933 | | | $ | 37,579 | | | $ | 237,701 | | | $ | 25,659 | | | $ | 7,800 | | | $ | — | | | $ | 347,597 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | | 76 | | | | — | | | | 951 | | | | 4,834 | | | | 109 | | | | 12 | | | | — | | | | 5,982 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collectively evaluated for impairment | | $ | 19,849 | | | $ | 18,933 | | | $ | 36,628 | | | $ | 232,867 | | | $ | 25,550 | | | $ | 7,788 | | | | — | | | $ | 341,615 | |
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Loans outstanding and available lines of credit to bank directors, executive officers and their related business interests amounted to $11.1 million and $10.8 million at March 31, 2014 and March 31, 2013, respectively. Repayments on these loans during the three months ended March 31, 2014 were $517.3 thousand and loans made amounted to $977.0 thousand. During the three months ended March 31, 2013, repayments on these loans were $128.0 thousand and there were no new loans made. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and generally do not involve more than the normal risk of collectability. |
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The following table presents at March 31, 2014 and December 31, 2013 loans individually evaluated and considered impaired under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing troubled debt restructurings (“TDRs”). |
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(Dollars in thousands) | | March 31, | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans considered impaired | | $ | 8,433 | | | $ | 5,982 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans considered impaired for which there is a related allowance for loan loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding loan balance | | | 55 | | | | 55 | | | | | | | | | | | | | | | | | | | | | | | | | |
Related allowance | | | 4 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans considered impaired and previously written down to fair value | | | 8,378 | | | | 5,927 | | | | | | | | | | | | | | | | | | | | | | | | | |
Average impaired loans | | | 10,866 | | | | 7,637 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following tables are by loan category and present at March 31, 2014, March 31, 2013 and December 31, 2013 loans individually evaluated and considered impaired under FAS ASC 310 “Accounting by Creditors for Impairment of a Loan.” Impairment includes performing TDRs. |
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(Dollars in thousands) | | | | | | | | Three months ended | | | | | | | | | | | | |
| | | | Unpaid | | | | Average | | Interest | | | | | | | | | | | | |
31-Mar-14 | | Recorded | | Principal | | Related | | Recorded | | Income | | | | | | | | | | | | |
| | Investment | | Balance | | Allowance | | Investment | | Recognized | | | | | | | | | | | | |
With no allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 65 | | | $ | 69 | | | $ | — | | | $ | 135 | | | $ | — | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 901 | | | | 1,002 | | | | — | | | | 1,112 | | | | 1 | | | | | | | | | | | | | |
Mortgage-commercial | | | 7,332 | | | | 7,948 | | | | — | | | | 9,468 | | | | 9 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 71 | | | | 71 | | | | — | | | | 75 | | | | — | | | | | | | | | | | | | |
Other | | | 9 | | | | 11 | | | | — | | | | 21 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 55 | | | | 55 | | | | 4 | | | | 55 | | | | — | | | | | | | | | | | | | |
Mortgage-commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 65 | | | | 69 | | | | — | | | | 135 | | | | — | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 956 | | | | 1,057 | | | | 4 | | | | 1,167 | | | | 1 | | | | | | | | | | | | | |
Mortgage-commercial | | | 7,332 | | | | 7,948 | | | | — | | | | 9,468 | | | | 9 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 71 | | | | 71 | | | | — | | | | 75 | | | | — | | | | | | | | | | | | | |
Other | | | 9 | | | | 11 | | | | — | | | | 21 | | | | — | | | | | | | | | | | | | |
| | $ | 8,433 | | | $ | 9,156 | | | $ | 4 | | | $ | 10,866 | | | $ | 10 | | | | | | | | | | | | | |
|
(Dollars in thousands) | | | | | | | | Three months ended | | | | | | | | | | | | |
| | | | Unpaid | | | | Average | | Interest | | | | | | | | | | | | |
31-Mar-13 | | Recorded | | Principal | | Related | | Recorded | | Income | | | | | | | | | | | | |
| | Investment | | Balance | | Allowance | | Investment | | Recognized | | | | | | | | | | | | |
With no allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 627 | | | $ | 633 | | | $ | — | | | $ | 705 | | | $ | 9 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 352 | | | | 379 | | | | — | | | | 417 | | | | — | | | | | | | | | | | | | |
Mortgage-commercial | | | 4,944 | | | | 5,469 | | | | — | | | | 5,660 | | | | 7 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Other | | | 8 | | | | 8 | | | | — | | | | 20 | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 365 | | | | 365 | | | | 11 | | | | 365 | | | | 9 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 992 | | | | 998 | | | | 11 | | | | 1,070 | | | | 18 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 352 | | | | 379 | | | | — | | | | 417 | | | | — | | | | | | | | | | | | | |
Mortgage-commercial | | | 4,944 | | | | 5,469 | | | | — | | | | 5,660 | | | | 7 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Other | | | 8 | | | | 8 | | | | — | | | | 20 | | | | — | | | | | | | | | | | | | |
| | $ | 6,296 | | | $ | 6,854 | | | $ | 11 | | | $ | 7,167 | | | $ | 25 | | | | | | | | | | | | | |
|
(Dollars in thousands) | | | | | | | | Year ended | | | | | | | | | | | | |
31-Dec-13 | | | | Unpaid | | | | Average | | Interest | | | | | | | | | | | | |
| | Recorded | | Principal | | Related | | Recorded | | Income | | | | | | | | | | | | |
| | Investment | | Balance | | Allowance | | Investment | | Recognized | | | | | | | | | | | | |
With no allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | $ | 76 | | | $ | 76 | | | $ | — | | | $ | 146 | | | $ | 8 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 896 | | | | 998 | | | | — | | | | 1,096 | | | | 121 | | | | | | | | | | | | | |
Mortgage-commercial | | | 4,834 | | | | 5,447 | | | | — | | | | 6,204 | | | | 27 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 109 | | | | 109 | | | | — | | | | 109 | | | | 4 | | | | | | | | | | | | | |
Other | | | 12 | | | | 13 | | | | — | | | | 26 | | | | 1 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 55 | | | | 55 | | | | 4 | | | | 56 | | | | 9 | | | | | | | | | | | | | |
Mortgage-commercial | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Other | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 76 | | | | 76 | | | | — | | | | 146 | | | | 8 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Mortgage-residential | | | 951 | | | | 1,053 | | | | 4 | | | | 1,152 | | | | 121 | | | | | | | | | | | | | |
Mortgage-commercial | | | 4,834 | | | | 5,447 | | | | — | | | | 6,204 | | | | 36 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 109 | | | | 109 | | | | — | | | | 109 | | | | 4 | | | | | | | | | | | | | |
Other | | | 12 | | | | 13 | | | | — | | | | 26 | | | | 1 | | | | | | | | | | | | | |
| | $ | 5,982 | | | $ | 6,698 | | | $ | 4 | | | $ | 7,637 | | | $ | 170 | | | | | | | | | | | | | |
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The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a monthly basis. The Company uses the following definitions for risk ratings: |
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Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. |
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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 the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. |
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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 liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
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Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered as pass rated loans. As of March 31, 2014 and December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is shown in the table below. As of March 31, 2014 and December 31, 2013, no loans were classified as doubtful. |
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(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-14 | | | | Special | | | | | | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Total | | | | | | | | | | | | |
Commercial, financial & agricultural | | $ | 33,382 | | | $ | 1,410 | | | $ | 68 | | | $ | — | | | $ | 34,860 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 25,853 | | | | 3,259 | | | | — | | | | — | | | | 29,112 | | | | | | | | | | | | | |
Mortgage – residential | | | 44,235 | | | | 1,055 | | | | 1,520 | | | | — | | | | 46,810 | | | | | | | | | | | | | |
Mortgage – commercial | | | 272,070 | | | | 7,291 | | | | 13,634 | | | | — | | | | 292,995 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 30,536 | | | | 715 | | | | 127 | | | | — | | | | 31,378 | | | | | | | | | | | | | |
Other | | | 8,543 | | | | 161 | | | | 9 | | | | — | | | | 8,713 | | | | | | | | | | | | | |
Total | | $ | 414,619 | | | $ | 13,891 | | | $ | 15,358 | | | $ | — | | | $ | 443,868 | | | | | | | | | | | | | |
|
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | |
31-Dec-13 | | | | Special | | | | | | | | | | | | | | | | | | |
| | Pass | | Mention | | Substandard | | Doubtful | | Total | | | | | | | | | | | | |
Commercial, financial & agricultural | | $ | 19,627 | | | $ | 218 | | | $ | 80 | | | $ | — | | | $ | 19,925 | | | | | | | | | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 15,341 | | | | 3,592 | | | | — | | | | — | | | | 18,933 | | | | | | | | | | | | | |
Mortgage – residential | | | 36,614 | | | | 229 | | | | 736 | | | | — | | | | 37,579 | | | | | | | | | | | | | |
Mortgage – commercial | | | 223,110 | | | | 5,813 | | | | 8,778 | | | | — | | | | 237,701 | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home Equity | | | 23,800 | | | | 855 | | | | 1,004 | | | | — | | | | 25,659 | | | | | | | | | | | | | |
Other | | | 7,788 | | | | — | | | | 12 | | | | — | | | | 7,800 | | | | | | | | | | | | | |
Total | | $ | 326,280 | | | $ | 10,707 | | | $ | 10,610 | | | $ | — | | | $ | 347,597 | | | | | | | | | | | | | |
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At March 31, 2014 and December 31, 2013, non-accrual loans totaled $7.9 million and $5.4 million, respectively. |
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TDRs that are still accruing and included in impaired loans at March 31, 2014 and December 31, 2013 amounted to $568 thousand and $576 thousand, respectively. TDRs in nonaccrual status at March 31, 2014 and December 31, 2013 amounted to $2.2 million and $2.2 million, respectively. |
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Loans greater than ninety days delinquent and still accruing interest at March 31, 2014 and December 31, 2013 amounted to $126 thousand and $2 thousand, respectively. |
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We account for acquisitions under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. No allowance for loan losses related to the acquired loans is recorded on the acquisition date because the fair value of the loans acquired incorporates assumptions regarding credit risk. |
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Acquired credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality, found in FASB ASC Topic 310-30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality. and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are considered impaired. Loans acquired through business combinations that do not meet the specific criteria of FASB ASC Topic 310-30, but for which a discount is attributable, at least in part to credit quality, are also accounted for under this guidance. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with FASB ASC Topic 310-20, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan. |
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Purchase credit impaired (PCI) loans acquired totaled $4.2 million at estimated fair value, and acquired performing loans totaling $102.3 million at estimated fair value were not credit impaired. The gross contractual amount receivable for PCI loans and acquired performing loans was approximately $5.7 million and $116.0 million, respectively, as of the acquisition date. For the acquired performing loans, the best estimate at acquisition date of contractual cash flows not expected to be collected is $825 thousand. Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired company. |
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In conjunction with the acquisition of SRFC on February 1, 2014, the acquired PCI loan portfolio was accounted for at fair value as follows: |
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(Dollars in thousands) | | February 1, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Contractual principal and interest at acquisition | | $ | 5,717 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nonaccretable difference | | | (1,205 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expected cash flows at acquisition | | | 4,512 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield | | | (272 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basis in PCI loans at acquisition – estimated fair value | | $ | 4,240 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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A summary of changes in the accretable yield for PCI loans for the three months ended March 31, 2014 follows (in thousands): |
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| | Twelve Months | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
March 31, 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield, beginning of period | | $ | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Additions | | | 272 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion | | | (33 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reclassification of nonaccretable difference due to improvement in expected cash flows | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other changes, net | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretable yield, end of period | | $ | 239 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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The following tables are by loan category and present loans past due and on non-accrual status as of March 31, 2014 and December 31, 2013: |
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(Dollars in thousands) | | 30-59 Days | | 60-89 Days Past Due | | Greater than 90 Days and Accruing | | Nonaccrual | | Total Past Due | | Current | | Total Loans | | | | |
| Past Due | | | | |
31-Mar-14 | | | | | |
Commercial | | $ | 2 | | | $ | 462 | | | $ | — | | | $ | 65 | | | $ | 529 | | | $ | 34,331 | | | $ | 34,860 | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | 249 | | | | — | | | | — | | | | — | | | | 249 | | | | 28,863 | | | | 29,112 | | | | | |
Mortgage-residential | | | 159 | | | | 357 | | | | 35 | | | | 901 | | | | 1,452 | | | | 45,358 | | | | 46,810 | | | | | |
Mortgage-commercial | | | 682 | | | | 401 | | | | 91 | | | | 6,819 | | | | 7,993 | | | | 285,002 | | | | 292,995 | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 288 | | | | 18 | | | | — | | | | 71 | | | | 377 | | | | 31,001 | | | | 31,378 | | | | | |
Other | | | 17 | | | | 2 | | | | — | | | | 9 | | | | 28 | | | | 8,685 | | | | 8,713 | | | | | |
Total | | $ | 1,397 | | | $ | 1,240 | | | $ | 126 | | | $ | 7,865 | | | $ | 10,628 | | | $ | 433,240 | | | $ | 443,868 | | | | | |
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(Dollars in thousands) | | 30-59 Days | | 60-89 Days Past Due | | Greater than 90 Days and Accruing | | Nonaccrual | | Total Past Due | | Current | | Total Loans | | | | |
| Past Due | | | | |
31-Dec-13 | | | | | |
Commercial | | $ | — | | | $ | 8 | | | $ | 2 | | | $ | 76 | | | $ | 86 | | | $ | 19,839 | | | $ | 19,925 | | | | | |
Real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,933 | | | | 18,933 | | | | | |
Mortgage-residential | | | 331 | | | | 277 | | | | — | | | | 895 | | | | 1,503 | | | | 36,076 | | | | 37,579 | | | | | |
Mortgage-commercial | | | 54 | | | | 908 | | | | — | | | | 4,314 | | | | 5,276 | | | | 232,425 | | | | 237,701 | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity | | | 40 | | | | — | | | | — | | | | 109 | | | | 149 | | | | 25,510 | | | | 25,659 | | | | | |
Other | | | 8 | | | | — | | | | — | | | | 12 | | | | 20 | | | | 7,780 | | | | 7,800 | | | | | |
Total | | $ | 433 | | | $ | 1,193 | | | $ | 2 | | | $ | 5,406 | | | $ | 7,034 | | | $ | 340,563 | | | $ | 347,597 | | | | | |
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As a result of adopting the amendments in Accounting Standards Update (ASU) 2011-02 (Receivables-Topic 310), the Company reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered TDRs under the amended guidance. The Company identified as TDRs certain loans for which the allowance for loan losses had previously been measured under a general allowance methodology. Upon identifying those loans as TDRs, the Company identified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired. |
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As shown in the table below, one loan was determined to be a TDR during the three months ended March 31, 2013. The loan was modified to extend the terms outside the Company’s guidelines. There were no loans determined to be TDRs that were restructured during the three-month period ended March 31, 2014. |
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Troubled Debt Restructurings | | For the three months ended March 31, 2013 | | | | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number | | Pre-Modification | | Post-Modification | | | | | | | | | | | | | | | | | | | | |
of Contracts | Outstanding | Outstanding | | | | | | | | | | | | | | | | | | | | |
| Recorded | Recorded | | | | | | | | | | | | | | | | | | | | |
| Investment | Investment | | | | | | | | | | | | | | | | | | | | |
Nonaccrual | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-Commercial | | | 1 | | | $ | 257 | | | $ | 257 | | | | | | | | | | | | | | | | | | | | | |
Total nonaccrual | | | 1 | | | $ | 257 | | | $ | 257 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accrual | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-Commercial | | | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
Total Accrual | | | — | | | $ | — | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total TDRs | | | 1 | | | $ | 257 | | | $ | 257 | | | | | | | | | | | | | | | | | | | | | |
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During the three month periods ended March 31, 2014 and March 31, 2013, there were no loans determined to be TDRs in the previous twelve months that had payment defaults. Any payment that is past due greater than 30 days is considered to be a payment default. |
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In the determination of the allowance for loan losses, all TDRs are reviewed to ensure that one of the three proper valuation methods (fair market value of the collateral, present value of cash flows, or observable market price) is adhered to. All non-accrual loans are written down to their corresponding collateral value. All troubled TDR accruing loans that have a loan balance that exceeds the present value of cash flows will have a specific allocation. All nonaccrual loans are considered impaired. Under ASC 310-10, a loan is impaired when it is probable that the Company will be unable to collect all amounts due including both principal and interest according to the contractual terms of the loan agreement. |