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Note 7: Loans and Allowance For Loan Losses | 3 Months Ended
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Jun. 30, 2013
Notes |
Note 7: Loans and Allowance For Loan Losses | NOTE 7: LOANS AND ALLOWANCE FOR LOAN LOSSES
| June 30, |  | December 31,
| 2013 |  | 2012
(In Thousands) |  |  |
One- to four-family residential construction | $37,447 |  | $29,071
Subdivision construction | 35,635 |  | 35,805
Land development | 63,756 |  | 62,559
Commercial construction | 170,841 |  | 150,515
Owner occupied one- to four-family residential | 83,445 |  | 83,859
Non-owner occupied one- to four-family residential | 145,570 |  | 145,458
Commercial real estate | 723,234 |  | 692,377
Other residential | 259,800 |  | 267,518
Commercial business | 279,220 |  | 264,631
Industrial revenue bonds | 40,854 |  | 43,762
Consumer auto | 104,215 |  | 82,610
Consumer other | 83,774 |  | 83,815
Home equity lines of credit | 54,209 |  | 54,225
FDIC-supported loans, net of discounts (TeamBank) | 59,711 |  | 77,615
FDIC-supported loans, net of discounts (Vantus Bank) | 76,380 |  | 95,483
FDIC-supported loans, net of discounts (Sun Security Bank) | 75,556 |  | 91,519
FDIC-supported loans, net of discounts (InterBank) | 230,568 |  | 259,232
| 2,524,215 |  | 2,520,054
Undisbursed portion of loans in process | (155,265) |  | (157,574)
Allowance for loan losses | (40,185) |  | (40,649)
Deferred loan fees and gains, net | (2,888) |  | (2,193)
| $2,325,877 |  | $2,319,638
Weighted average interest rate | 5.20% |  | 5.39%
Classes of loans by aging were as follows:
| June 30, 2013
|  |  |  |  |  |  | Total Loans
| 30-59 Days | 60-89 Days | Over 90 | Total Past |  | Total Loans | > 90 Days and
| Past Due | Past Due | Days | Due | Current | Receivable | Still Accruing
(In Thousands) |  |  |  |  |  |  |
One- to four-family |  |  |  |  |  |  |
residential construction | $-- | $-- | $-- | $-- | $37,447 | $37,447 | $--
Subdivision construction | 183 | -- | 1,289 | 1,472 | 34,163 | 35,635 | --
Land development | 818 | -- | 243 | 1,061 | 62,696 | 63,756 | --
Commercial construction | -- | -- | -- | -- | 170,841 | 170,841 | --
Owner occupied one- to four- |  |  |  |  |  |  |
family residential | 114 | 134 | 1,920 | 2,168 | 81,277 | 83,445 | 41
Non-owner occupied one- to |  |  |  |  |  |  |
four-family residential | 791 | 106 | 1,384 | 2,281 | 143,289 | 145,570 | --
Commercial real estate | 1,739 | 513 | 11,168 | 13,420 | 709,814 | 723,234 | --
Other residential | -- | -- | -- | -- | 259,800 | 259,800 | --
Commercial business | 107 | 31 | 7,801 | 7,939 | 271,282 | 279,220 | --
Industrial revenue bonds | -- | -- | -- | -- | 40,854 | 40,854 | --
Consumer auto | 568 | 117 | 66 | 751 | 103,464 | 104,215 | --
Consumer other | 991 | 379 | 644 | 2,014 | 81,760 | 83,774 | 265
Home equity lines of credit | 387 | 61 | 185 | 633 | 53,576 | 54,209 | --
FDIC-supported loans, net of |  |  |  |  |  |  |
discounts (TeamBank) | 536 | 315 | 4,758 | 5,609 | 54,102 | 59,711 | --
FDIC-supported loans, net of |  |  |  |  |  |  |
discounts (Vantus Bank) | 864 | 811 | 3,004 | 4,679 | 71,701 | 76,380 | --
FDIC-supported loans, |  |  |  |  |  |  |
net of discounts |  |  |  |  |  |  |
(Sun Security Bank) | 999 | 361 | 9,865 | 11,225 | 64,331 | 75,556 | --
FDIC-supported loans, |  |  |  |  |  |  |
net of discounts |  |  |  |  |  |  |
(InterBank) | 2,916 | 1,749 | 20,891 | 25,556 | 205,012 | 230,568 | --
| 11,013 | 4,577 | 63,218 | 78,808 | 2,445,407 | 2,524,215 | 306
Less FDIC-supported loans, |  |  |  |  |  |  |
net of discounts | 5,315 | 3,236 | 38,518 | 47,069 | 395,146 | 442,215 | --
Total | $5,698 | $1,341 | $24,700 | $31,739 | $2,050,261 | $2,082,000 | $306
| December 31, 2012
|  |  |  |  |  |  | Total Loans
| 30-59 Days | 60-89 Days | Over 90 | Total Past |  | Total Loans | > 90 Days and
| Past Due | Past Due | Days | Due | Current | Receivable | Still Accruing
(In Thousands) |  |  |  |  |  |  |
One- to four-family |  |  |  |  |  |  |
residential construction | $178 | $-- | $-- | $178 | $28,893 | $29,071 | $--
Subdivision construction | 478 | -- | 3 | 481 | 35,324 | 35,805 | --
Land development | -- | -- | 2,471 | 2,471 | 60,088 | 62,559 | --
Commercial construction | -- | -- | -- | -- | 150,515 | 150,515 | --
Owner occupied one- to four- |  |  |  |  |  |  |
family residential | 3,305 | 263 | 2,352 | 5,920 | 77,939 | 83,859 | 237
Non-owner occupied one- to |  |  |  |  |  |  |
four-family residential | 2,600 | -- | 1,905 | 4,505 | 140,953 | 145,458 | --
Commercial real estate | 1,346 | 726 | 8,324 | 10,396 | 681,981 | 692,377 | --
Other residential | 3,741 | -- | -- | 3,741 | 263,777 | 267,518 | --
Commercial business | 2,094 | 153 | 4,139 | 6,386 | 258,245 | 264,631 | --
Industrial revenue bonds | -- | -- | 2,110 | 2,110 | 41,652 | 43,762 | --
Consumer auto | 690 | 73 | 120 | 883 | 81,727 | 82,610 | 26
Consumer other | 1,522 | 242 | 834 | 2,598 | 81,217 | 83,815 | 449
Home equity lines of credit | 185 | 146 | 220 | 551 | 53,674 | 54,225 | --
FDIC-supported loans, net of |  |  |  |  |  |  |
discounts (TeamBank) | 1,608 | 2,077 | 8,020 | 11,705 | 65,910 | 77,615 | 173
FDIC-supported loans, net of |  |  |  |  |  |  |
discounts (Vantus Bank) | 1,545 | 669 | 5,641 | 7,855 | 87,628 | 95,483 | --
FDIC-supported loans, |  |  |  |  |  |  |
net of discounts |  |  |  |  |  |  |
(Sun Security Bank) | 1,539 | 384 | 21,342 | 23,265 | 68,254 | 91,519 | 1,274
FDIC-supported loans, net of |  |  |  |  |  |  |
discounts (InterBank) | 10,212 | 4,662 | 33,928 | 48,802 | 210,430 | 259,232 | 347
| 31,043 | 9,395 | 91,409 | 131,847 | 2,388,207 | 2,520,054 | 2,506
Less FDIC-supported loans, |  |  |  |  |  |  |
net of discounts | 14,904 | 7,792 | 68,931 | 91,627 | 432,222 | 523,849 | 1,794
Total | $16,139 | $1,603 | $22,478 | $40,220 | $1,955,985 | $1,996,205 | $712
Nonaccruing loans (excluding FDIC-supported loans, net of discount) are summarized as follows:
| June 30, |  | December 31,
| 2013 |  | 2012
| (In Thousands)
One- to four-family residential construction | $-- |  | $--
Subdivision construction | 1,289 |  | 3
Land development | 243 |  | 2,471
Commercial construction | -- |  | --
Owner occupied one- to four-family residential | 1,879 |  | 2,115
Non-owner occupied one- to four-family residential | 1,384 |  | 1,905
Commercial real estate | 11,168 |  | 8,324
Other residential | -- |  | --
Commercial business | 7,801 |  | 6,249
Consumer auto | 66 |  | 94
Consumer other | 379 |  | 385
Home equity lines of credit | 185 |  | 220
Total | $24,394 |  | $21,766
The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2013. Also presented are the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of June 30, 2013:
| One- to Four- |  |  |  |  |  |
| Family |  |  |  |  |  |
| Residential and | Other | Commercial | Commercial | Commercial |  |
| Construction | Residential | Real Estate | Construction | Business | Consumer | Total
(In Thousands) |  |  |  |  |  |  |
Allowance for loan losses |  |  |  |  |  |  |
Balance April 1, 2013 | $5,575 | $4,482 | $16,812 | $5,130 | $5,838 | $2,711 | $40,548
Provision (benefit) charged to expense | 864 | (329) | 1,671 | 882 | 135 | 448 | 3,671
Losses charged off | (322) | (791) | (2,187) | (276) | (352) | (752) | (4,680)
Recoveries | 8 | 11 | 123 | 53 | 43 | 408 | 646
Balance June 30, 2013 | $6,125 | $3,373 | $16,419 | $5,789 | $5,664 | $2,815 | $40,185
Balance January 1, 2013 | $6,822 | $4,327 | $17,441 | $3,938 | $5,096 | $3,025 | $40,649
Provision charged to expense | 526 | 1,702 | 5,262 | 2,122 | 1,870 | 414 | 11,896
Losses charged off | (1,240) | (2,686) | (6,530) | (329) | (1,370) | (1,669) | (13,824)
Recoveries | 17 | 30 | 246 | 58 | 68 | 1,045 | 1,464
Balance June 30, 2013 | $6,125 | $3,373 | $16,419 | $5,789 | $5,664 | $2,815 | $40,185
Ending balance: |  |  |  |  |  |  |
Individually evaluated for |  |  |  |  |  |  |
impairment | $2,042 | $265 | $2,420 | $1,134 | $3,373 | $161 | $9,395
Collectively evaluated for |  |  |  |  |  |  |
impairment | $4,084 | $3,108 | $13,879 | $4,652 | $2,290 | $2,653 | $30,666
Loans acquired and |  |  |  |  |  |  |
accounted for under ASC |  |  |  |  |  |  |
310-30 | $-- | $-- | $119 | $2 | $1 | $2 | $124
Loans |  |  |  |  |  |  |
Individually evaluated for |  |  |  |  |  |  |
impairment | $15,210 | $11,598 | $41,101 | $15,610 | $10,007 | $1,004 | $94,530
Collectively evaluated for |  |  |  |  |  |  |
impairment | $286,887 | $248,202 | $722,986 | $218,987 | $269,213 | $241,195 | $1,987,470
Loans acquired and |  |  |  |  |  |  |
accounted for under ASC |  |  |  |  |  |  |
310-30 | $251,122 | $42,379 | $101,446 | $5,370 | $9,409 | $32,489 | $442,215
The following table presents the activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2012:
| One- to Four- |  |  |  |  |  |
| Family |  |  |  |  |  |
| Residential and | Other | Commercial | Commercial | Commercial |  |
| Construction | Residential | Real Estate | Construction | Business | Consumer | Total
(In Thousands) |  |  |  |  |  |  |
Allowance for loan losses |  |  |  |  |  |  |
Balance April 1, 2012 | $9,413 | $4,023 | $20,109 | $3,155 | $3,059 | $1,773 | $41,532
Provision charged to expense | 598 | 2,924 | 3,191 | 8,689 | 680 | 1,518 | 17,600
Losses charged off | (2,135) | (3,252) | (7,795) | (5,132) | (512) | (727) | (19,553)
Recoveries | 23 | 317 | 87 | 217 | 114 | 385 | 1,143
Balance June 30, 2012 | $7,899 | $4,012 | $15,592 | $6,929 | $3,341 | $2,949 | $40,722
Balance January 1, 2012 | $11,424 | $3,088 | $18,390 | $2,982 | $2,974 | $2,374 | $41,232
Provision (benefit) charged to expense | (1,106) | 3,857 | 9,316 | 13,298 | 1,246 | 1,066 | 27,677
Losses charged off | (2,494) | (3,252) | (12,205) | (9,592) | (1,053) | (962) | (29,558)
Recoveries | 75 | 319 | 91 | 241 | 174 | 471 | 1,371
Balance June 30, 2012 | $7,899 | $4,012 | $15,592 | $6,929 | $3,341 | $2,949 | $40,722
The following table presents the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2012:
| One- to Four- |  |  |  |  |  |
| Family |  |  |  |  |  |
| Residential and | Other | Commercial | Commercial | Commercial |  |
| Construction | Residential | Real Estate | Construction | Business | Consumer | Total
(In Thousands) |  |  |  |  |  |  |
Allowance for loan losses |  |  |  |  |  |  |
Individually evaluated for |  |  |  |  |  |  |
impairment | $2,288 | $1,089 | $4,990 | $96 | $2,778 | $156 | $11,397
Collectively evaluated for |  |  |  |  |  |  |
impairment | $4,532 | $3,239 | $12,443 | $3,842 | $2,315 | $2,864 | $29,235
Loans acquired and |  |  |  |  |  |  |
accounted for under ASC |  |  |  |  |  |  |
310-30 | $1 | $-- | $9 | $-- | $4 | $3 | $17
Loans |  |  |  |  |  |  |
Individually evaluated for |  |  |  |  |  |  |
impairment | $14,691 | $16,405 | $48,476 | $12,009 | $10,064 | $980 | $102,625
Collectively evaluated for |  |  |  |  |  |  |
impairment | $279,502 | $251,113 | $687,663 | $201,065 | $254,567 | $219,670 | $1,893,580
Loans acquired and |  |  |  |  |  |  |
accounted for under ASC |  |  |  |  |  |  |
310-30 | $278,889 | $53,280 | $129,128 | $7,997 | $14,939 | $39,616 | $523,849
The portfolio segments used in the preceding two tables correspond to the loan classes used in all other tables in Note 7 as follows: · The one-to four-family residential and construction segment includes the one- to four-family residential construction, subdivision construction, owner occupied one- to four-family residential and non-owner occupied one- to four-family residential classes · The other residential segment corresponds to the other residential class · The commercial real estate segment includes the commercial real estate and industrial revenue bonds classes · The commercial construction segment includes the land development and commercial construction classes · The commercial business segment corresponds to the commercial business class · The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes Impaired loans (excluding FDIC-supported loans, net of discount) are summarized as follows:
| June 30, 2013
|  | Unpaid |
| Recorded | Principal | Specific
| Balance | Balance | Allowance
(In Thousands) |  |  |
One- to four-family residential construction | $286 | $286 | $--
Subdivision construction | 4,683 | 4,687 | 729
Land development | 15,610 | 16,010 | 1,135
Commercial construction | -- | -- | --
Owner occupied one- to four-family residential | 4,612 | 4,962 | 408
Non-owner occupied one- to four-family residential | 5,629 | 5,778 | 905
Commercial real estate | 41,102 | 43,490 | 2,420
Other residential | 11,597 | 11,598 | 265
Commercial business | 7,309 | 8,795 | 3,373
Industrial revenue bonds | 2,698 | 2,778 | --
Consumer auto | 99 | 115 | 15
Consumer other | 639 | 721 | 95
Home equity lines of credit | 266 | 278 | 50
Total | $94,530 | $99,498 | $9,395
| June 30, 2012
|  | Unpaid |
| Recorded | Principal | Specific
| Balance | Balance | Allowance
(In Thousands) |  |  |
One- to four-family residential construction | $687 | $687 | $251
Subdivision construction | 3,810 | 5,486 | 262
Land development | 19,233 | 20,710 | 3,842
Commercial construction | 1,530 | 1,530 | 134
Owner occupied one- to four-family residential | 4,856 | 5,309 | 488
Non-owner occupied one- to four-family residential | 10,965 | 11,402 | 1,028
Commercial real estate | 39,634 | 41,887 | 1,045
Other residential | 17,335 | 18,600 | 246
Commercial business | 3,447 | 4,365 | 517
Industrial revenue bonds | 3,508 | 3,588 | 98
Consumer auto | 158 | 180 | 25
Consumer other | 669 | 774 | 99
Home equity lines of credit | 90 | 98 | 23
Total | $105,922 | $114,616 | $8,058
| Three Months Ended |  | Six Months Ended
| June 30, 2013 |  | June 30, 2013
| Average |  |  | Average |
| Investment | Interest |  | Investment | Interest
| in Impaired | Income |  | in Impaired | Income
| Loans | Recognized |  | Loans | Recognized
(In Thousands) |  |  |  |  |
One- to four-family residential construction | $95 | $5 |  | $48 | $5
Subdivision construction | 3,087 | 76 |  | 2,778 | 106
Land development | 12,495 | 240 |  | 11,752 | 366
Commercial construction | -- | -- |  | -- | --
Owner occupied one- to four-family residential | 4,704 | 63 |  | 4,831 | 116
Non-owner occupied one- to four-family residential | 4,662 | 100 |  | 5,251 | 161
Commercial real estate | 46,102 | 364 |  | 46,164 | 740
Other residential | 14,836 | 113 |  | 16,620 | 217
Commercial business | 7,528 | 16 |  | 7,473 | 75
Industrial revenue bonds | 2,702 | 14 |  | 2,703 | 14
Consumer auto | 105 | 2 |  | 119 | 4
Consumer other | 648 | 21 |  | 662 | 32
Home equity lines of credit | 278 | 2 |  | 308 | 10
Total | $97,242 | $1,016 |  | $98,709 | $1,846
| Three Months Ended |  | Six Months Ended
| June 30, 2012 |  | June 30, 2012
| Average |  |  | Average |
| Investment | Interest |  | Investment | Interest
| in Impaired | Income |  | in Impaired | Income
| Loans | Recognized |  | Loans | Recognized
(In Thousands) |  |  |  |  |
One- to four-family residential construction | $687 | $11 |  | $801 | $22
Subdivision construction | 10,206 | 107 |  | 13,743 | 287
Land development | 13,206 | 389 |  | 10,516 | 481
Commercial construction | 510 | 35 |  | 255 | 35
Owner occupied one- to four-family residential | 5,088 | 115 |  | 5,156 | 162
Non-owner occupied one- to four-family residential | 11,579 | 293 |  | 11,087 | 454
Commercial real estate | 38,718 | 988 |  | 45,031 | 1,524
Other residential | 22,419 | 463 |  | 17,252 | 581
Commercial business | 3,742 | 84 |  | 4,245 | 160
Industrial revenue bonds | 3,508 | -- |  | 3,042 | --
Consumer auto | 158 | 8 |  | 167 | 12
Consumer other | 688 | 40 |  | 655 | 62
Home equity lines of credit | 111 | 3 |  | 137 | 6
Total | $110,620 | $2,536 |  | $112,087 | $3,786
| At or for the Year Ended December 31, 2012
| Recorded Balance | Unpaid Principal Balance | Specific Allowance | Average Investment in Impaired Loans | Interest Income Recognized
(In Thousands) |  |  |  |  |
One- to four-family residential construction | $410 | $410 | $239 | $679 | $22
Subdivision construction | 2,577 | 2,580 | 688 | 8,399 | 143
Land development | 12,009 | 13,204 | 96 | 12,614 | 656
Commercial construction | -- | -- | -- | 383 | --
Owner occupied one- to four-family residential | 5,627 | 6,037 | 550 | 5,174 | 295
Non-owner occupied one- to four-family residential | 6,077 | 6,290 | 811 | 10,045 | 330
Commercial real estate | 48,476 | 49,779 | 4,990 | 45,181 | 2,176
Other residential | 16,405 | 16,405 | 1,089 | 16,951 | 836
Commercial business | 7,279 | 8,615 | 2,778 | 4,851 | 329
Industrial revenue bonds | 2,785 | 2,865 | -- | 3,034 | 5
Consumer auto | 143 | 170 | 22 | 157 | 17
Consumer other | 602 | 682 | 89 | 654 | 65
Home equity lines of credit | 235 | 248 | 45 | 162 | 15
Total | $102,625 | $107,285 | $11,397 | $108,284 | $4,889
At June 30, 2013, $30.6 million of impaired loans had specific valuation allowances totaling $9.4 million. At December 31, 2012, $43.4 million of impaired loans had specific valuation allowances totaling $11.4 million. Included in certain loan categories in the impaired loans are troubled debt restructurings that were classified as impaired. Troubled debt restructurings are loans that are modified by granting concessions to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The types of concessions made are factored into the estimation of the allowance for loan losses for troubled debt restructurings primarily using a discounted cash flows or collateral adequacy approach. The following table presents newly restructured loans during the three and six months ended June 30, 2013 by type of modification:
| Three Months Ended June 30, 2013
|  |  |  | Total
| Interest Only | Term | Combination | Modification
(In Thousands) |  |
Mortgage loans on real estate: |  |  |  |
One- to four-family |  |  |  |
residential construction | $-- | $286 | $-- | $286
Subdivision construction | -- | 1,816 | -- | 1,816
Land development | -- | 62 | -- | 62
Residential-one-to four-family | -- | 1,087 | -- | 1,087
Consumer | -- | 3 | -- | 3
Total | $-- | $3,254 | $-- | $3,254
| Six Months Ended June 30, 2013
|  |  |  | Total
| Interest Only | Term | Combination | Modification
(In Thousands) |  |
Mortgage loans on real estate: |  |  |  |
One- to four-family |  |  |  |
residential construction | $-- | $286 | $-- | $286
Subdivision construction | -- | 1,816 | -- | 1,816
Land development | -- | 62 | -- | 62
Residential-one-to four-family | -- | 1,423 | -- | 1,423
Other residential | -- | 1,874 | -- | 1,874
Consumer | -- | 169 | -- | 169
Total | $-- | $5,630 | $-- | $5,630
At June 30, 2013, the Company had $46.7 million of loans that were modified in troubled debt restructurings and impaired, as follows: $5.1 million of construction and land development loans, $16.5 million of single family and multi-family residential mortgage loans, $22.9 million of commercial real estate loans, $1.8 million of commercial business loans and $269,000 of consumer loans. Of the total troubled debt restructurings at June 30, 2013, $43.1 million were accruing interest and $9.4 million were classified as substandard and $1.0 million were classified as doubtful using the Company’s internal grading system, which is described below. The Company had troubled debt restructurings which were modified in the previous 12 months and subsequently defaulted during the six months ended June 30, 2013 of approximately $1.2 million, including three commercial real estate loans totaling $912,000, three non-owner occupied residential mortgage loan totaling $260,000, two consumer loans totaling $38,000, and one commercial business loan totaling $13,000. When loans modified as troubled debt restructuring have subsequent payment defaults, the defaults are factored into the determination of the allowance for loan losses to ensure specific valuation allowances reflect amounts considered uncollectible. At December 31, 2012, the Company had $2.8 million of construction loans, $15.0 million of single family and multi-family residential mortgage loans, $26.9 million of commercial real estate loans, $1.9 million of commercial business loans and $167,000 of consumer loans that were modified in troubled debt restructurings and impaired. Of the total troubled debt restructurings at December 31, 2012, $38.1 million were accruing interest and $14.6 million were classified as substandard and $1.0 million were classified as doubtful using the Company’s internal grading system. During the three months ended June 30, 2013, borrowers with loans designated as troubled debt restructurings totaling $1.8 million met the criteria for placement back on accrual status. The $1.8 million was made up of $1.7 million of residential mortgage loans, $92,000 of commercial real estate loans and $4,000 of consumer loans. This criteria is a minimum of six months of payment performance under existing or modified terms. During the six months ended June 30, 2013, borrowers with loans designated as troubled debt restructurings totaling $2.2 million met the criteria for placement back on accrual status. The $2.2 million was made up of $2.1 million of residential mortgage loans, $92,000 of commercial real estate loans and $4,000 of consumer loans. The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as “Satisfactory,” “Watch,” “Special Mention,” “Substandard” and “Doubtful.” Substandard loans are characterized by the distinct possibility that the Bank will sustain some loss if certain deficiencies are not corrected. Doubtful loans are those having all the weaknesses inherent to those classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Special mention loans possess potential weaknesses that deserve management’s close attention but do not expose the Bank to a degree of risk that warrants substandard classification. Loans classified as watch are being monitored because of indications of potential weaknesses or deficiencies that may require future classification as special mention or substandard. Loans not meeting any of the criteria previously described are considered satisfactory. The FDIC-covered loans are evaluated using this internal grading system. These loans are accounted for in pools and are currently substantially covered through loss sharing agreements with the FDIC. Minimal adverse classification in the loan pools was identified as of June 30, 2013 and December 31, 2012, respectively. See Note 8 for further discussion of the acquired loan pools and loss sharing agreements. The loan grading system is presented by loan class below:
|  | June 30, 2013
|  |  | Special |  |  |
| Satisfactory | Watch | Mention | Substandard | Doubtful | Total
(In Thousands) |  |  |  |  |  |
One- to four-family residential |  |  |  |  |  |
construction | $37,447 | $-- | $-- | $-- | $-- | $37,447
Subdivision construction | 30,636 | 2,860 | -- | 2,139 | -- | 35,635
Land development | 47,801 | 1,899 | -- | 14,056 | -- | 63,756
Commercial construction | 170,841 | -- | -- | -- | -- | 170,841
Owner occupied one- to four- |  |  |  |  |  |
family residential | 80,571 | 499 | -- | 2,375 | -- | 83,445
Non-owner occupied one- to four- |  |  |  |  |  |
family residential | 138,080 | 3,420 | -- | 4,070 | -- | 145,570
Commercial real estate | 666,427 | 33,319 | -- | 23,488 | -- | 723,234
Other residential | 242,057 | 15,570 | -- | 2,173 | -- | 259,800
Commercial business | 271,073 | 3,546 | -- | 3,601 | 1,000 | 279,220
Industrial revenue bonds | 38,156 | 675 | -- | 2,023 | -- | 40,854
Consumer auto | 104,123 | -- | -- | 92 | -- | 104,215
Consumer other | 83,257 | -- | -- | 517 | -- | 83,774
Home equity lines of credit | 52,175 | -- | 1,768 | 266 | -- | 54,209
FDIC-supported loans, net of |  |  |  |  |  |
Discounts (TeamBank) | 59,707 | -- | -- | 4 | -- | 59,711
FDIC-supported loans, net of |  |  |  |  |  |
discounts (Vantus Bank) | 76,311 | -- | -- | 69 | -- | 76,380
FDIC-supported loans, net of |  |  |  |  |  |
discounts (Sun Security Bank) | 75,058 | -- | -- | 498 | -- | 75,556
FDIC-supported loans, net of |  |  |  |  |  |
discounts (InterBank) | 230,568 | -- | -- | -- | -- | 230,568
Total | $2,404,288 | $61,788 | $1,768 | $55,371 | $1,000 | $2,524,215
|  | December 31, 2012
|  |  | Special |  |  |
| Satisfactory | Watch | Mention | Substandard | Doubtful | Total
(In Thousands) |  |  |  |  |  |
One- to four-family residential |  |  |  |  |  |
construction | $28,662 | $-- | $-- | $409 | $-- | $29,071
Subdivision construction | 31,156 | 2,993 | -- | 1,656 | -- | 35,805
Land development | 47,388 | 3,887 | -- | 11,284 | -- | 62,559
Commercial construction | 150,515 | -- | -- | -- | -- | 150,515
Owner occupied one- to four- |  |  |  |  |  |
family residential | 79,411 | 792 | -- | 3,656 | -- | 83,859
Non-owner occupied one- to four- |  |  |  |  |  |
family residential | 132,073 | 7,884 | -- | 5,501 | -- | 145,458
Commercial real estate | 619,387 | 42,753 | -- | 30,237 | -- | 692,377
Other residential | 252,238 | 6,793 | -- | 8,487 | -- | 267,518
Commercial business | 253,165 | 4,286 | -- | 6,180 | 1,000 | 264,631
Industrial revenue bonds | 40,977 | 675 | -- | 2,110 | -- | 43,762
Consumer auto | 82,467 | -- | -- | 143 | -- | 82,610
Consumer other | 83,250 | -- | -- | 565 | -- | 83,815
Home equity lines of credit | 52,076 | -- | 1,913 | 236 | -- | 54,225
FDIC-supported loans, net of |  |  |  |  |  |
Discounts (TeamBank) | 77,568 | -- | -- | 47 | -- | 77,615
FDIC-supported loans, net of |  |  |  |  |  |
discounts (Vantus Bank) | 95,281 | -- | -- | 202 | -- | 95,483
FDIC-supported loans, net of |  |  |  |  |  |
discounts (Sun Security Bank) | 91,519 | -- | -- | -- | -- | 91,519
FDIC-supported loans, net of |  |  |  |  |  |
discounts (InterBank) | 259,210 | -- | -- | 22 | -- | 259,232
Total | $2,376,343 | $70,063 | $1,913 | $70,735 | $1,000 | $2,520,054

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