XML 30 R11.htm IDEA: XBRL DOCUMENT v2.3.0.15
Allowance for Credit Losses
9 Months Ended
Sep. 30, 2011
Allowance for Credit Losses 
Allowance for Credit Losses

 

 

Note 7.  Allowance for Credit Losses

 

The following table shows the allocation of the allowance for loan losses as of and for the three months ended September 30, 2011 by class of loan and by impairment methodology (in thousands):

 

 

 

Commercial

 

Real Estate

 

Consumer

 

Unallocated

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, July 1, 2011

 

$

2,926

 

$

5,508

 

$

1,296

 

$

1,305

 

$

11,035

 

Charge-offs

 

(38

)

(286

)

(401

)

—

 

(725

)

Recoveries

 

69

 

178

 

74

 

—

 

321

 

Provision

 

(179

)

1,155

 

500

 

(1,076

)

400

 

Ending balance, September 30, 2011

 

$

2,778

 

$

6,555

 

$

1,469

 

$

229

 

$

11,031

 

 

The following table shows the allocation of the allowance for loan losses as of and for the nine-month period ended September 30, 2011 by class of loan and by impairment methodology (in thousands):

 

 

 

Commercial

 

Real Estate

 

Consumer

 

Unallocated

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, January 1, 2011

 

$

2,599

 

$

6,998

 

$

1,179

 

$

238

 

$

11,014

 

Charge-offs

 

(254

)

(312

)

(900

)

—

 

(1,466

)

Recoveries

 

219

 

257

 

257

 

—

 

733

 

Provision

 

214

 

(388

)

933

 

(9

)

750

 

Ending balance, September 30, 2011

 

$

2,778

 

$

6,555

 

$

1,469

 

$

229

 

$

11,031

 

Ending balance: individually evaluated for impairment

 

$

226

 

$

1,855

 

$

233

 

$

—

 

$

2,314

 

Ending balance: collectively evaluated for impairment

 

$

2,552

 

$

4,700

 

$

1,236

 

$

229

 

$

8,717

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

105,079

 

$

272,084

 

$

49,251

 

$

—

 

$

426,414

 

Ending balance: individually evaluated for impairment

 

$

3,820

 

$

21,444

 

$

612

 

$

—

 

$

25,876

 

Ending balance: collectively evaluated for impairment

 

$

101,259

 

$

250,640

 

$

48,639

 

$

—

 

$

400,538

 

 

The following table shows the allocation of the allowance for loan losses at December 31, 2010 by class of loan and by impairment methodology (in thousands):

 

 

 

Commercial

 

Real Estate

 

Consumer

 

Unallocated

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

2,599

 

$

6,998

 

$

1,179

 

$

238

 

$

11,014

 

Ending balance: individually evaluated for impairment

 

$

226

 

$

1,898

 

$

—

 

$

—

 

$

2,124

 

Ending balance: collectively evaluated for impairment

 

$

2,373

 

$

5,100

 

$

1,179

 

$

238

 

$

8,890

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

Ending balance

 

$

105,173

 

$

283,909

 

$

43,014

 

$

—

 

$

432,096

 

Ending balance: individually evaluated for impairment

 

$

2,356

 

$

15,717

 

$

488

 

$

—

 

$

18,561

 

Ending balance: collectively evaluated for impairment

 

$

102,817

 

$

268,192

 

$

42,526

 

$

—

 

$

413,535

 

 

Changes in the allowance for credit losses were as follows (in thousands):

 

 

 

For the Three
Months Ended
September 30, 2010

 

For the Nine
Months Ended
September 30, 2010

 

 

 

 

 

 

 

Balance, beginning of period

 

$

11,468

 

$

10,200

 

Provision charged to operations

 

1,300

 

2,900

 

Losses charged to allowance

 

(1,904

)

(2,574

)

Recoveries

 

242

 

580

 

Balance, end of period

 

$

11,106

 

$

11,106

 

 

The following table shows the loan portfolio allocated by management’s internal risk ratings at September 30, 2011 (in thousands):

 

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

 

 

 

Commercial
and Industrial

 

Agricultural
Production

 

Owner
Occupied

 

Real Estate
Construction
and Other
Land Loans

 

Commercial Real
Estate

 

Agricultural
Real Estate

 

Other Real
Estate

 

Grade:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

65,557

 

$

30,774

 

$

102,106

 

$

11,937

 

$

46,114

 

$

43,822

 

$

17,621

 

Special Mention

 

3,388

 

—

 

2,837

 

6,900

 

6,396

 

2,186

 

1,263

 

Substandard

 

5,360

 

—

 

6,095

 

13,400

 

9,726

 

—

 

1,681

 

Doubtful

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Total

 

$

74,305

 

$

30,774

 

$

111,038

 

$

32,237

 

$

62,236

 

$

46,008

 

$

20,565

 

 

Consumer Credit Exposure

Credit Risk Profile by Internally Assigned Grade

 

 

 

Equity Loans and
Lines of Credit

 

Consumer and
Installment

 

Grade:

 

 

 

 

 

Pass

 

$

37,683

 

$

8,465

 

Special mention

 

580

 

—

 

Substandard

 

1,390

 

130

 

Doubtful

 

—

 

—

 

Total

 

$

39,653

 

$

8,595

 

 

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

 

 

 

Credit Cards

 

 

 

Grade:

 

 

 

 

 

Performing

 

$

1,003

 

 

 

Non-Performing

 

—

 

 

 

Total

 

$

1,003

 

 

 

 

The following table shows the loan portfolio allocated by management’s internal risk ratings at December 31, 2010 (in thousands):

 

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

 

 

 

Commercial
and Industrial

 

Agricultural
Land
& Production

 

Owner
Occupied

 

Real Estate
Construction
and Other
Land Loans

 

Commercial
Real Estate

 

Agricultural
Real Estate

 

Other Real
Estate

 

Grade:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

75,478

 

$

16,437

 

$

100,280

 

$

11,096

 

$

49,224

 

$

39,599

 

$

27,571

 

Special Mention

 

4,415

 

4

 

6,336

 

6,330

 

3,118

 

1,903

 

1,308

 

Substandard

 

7,735

 

1,104

 

5,274

 

15,422

 

11,215

 

2,703

 

2,530

 

Doubtful

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Total

 

$

87,628

 

$

17,545

 

$

111,890

 

$

32,848

 

$

63,557

 

$

44,205

 

$

31,409

 

 

Consumer Credit Exposure

Credit Risk Profile by Internally Assigned Grade

 

 

 

Equity
Loans and
Lines of
Credit

 

Consumer
and
Installment

 

Grade:

 

 

 

 

 

Pass

 

$

33,228

 

$

7,269

 

Special mention

 

—

 

—

 

Substandard

 

1,293

 

135

 

Doubtful

 

—

 

—

 

Total

 

$

34,521

 

$

7,404

 

 

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

 

 

 

Credit
Cards

 

Grade:

 

 

 

Performing

 

$

1,089

 

Non-Performing

 

—

 

Total

 

$

1,089

 

 

The following table shows an aging analysis of the loan portfolio by the time past due at September 30, 2011 (in thousands):

 

 

 

30-59 Days
Past Due

 

60-89
Days Past
Due

 

Greater
Than
90 Days
Past Due

 

Total Past
Due

 

Current

 

Total
Loans

 

Recorded
Investment
> 90 Days
Accruing

 

Non-accrual

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

—

 

$

179

 

$

149

 

$

328

 

$

73,977

 

$

74,305

 

$

—

 

$

361

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

30,774

 

30,774

 

—

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

224

 

—

 

122

 

346

 

110,692

 

111,038

 

—

 

2,137

 

Real estate construction and other land loans

 

—

 

—

 

—

 

—

 

32,237

 

32,237

 

—

 

6,929

 

Commercial real estate

 

1,585

 

1,903

 

—

 

3,488

 

58,748

 

62,236

 

—

 

5,074

 

Agricultural real estate

 

—

 

—

 

—

 

—

 

46,008

 

46,008

 

—

 

—

 

Other

 

—

 

—

 

—

 

—

 

20,565

 

20,565

 

—

 

1,681

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

—

 

—

 

—

 

—

 

39,653

 

39,653

 

—

 

—

 

Consumer and installment

 

49

 

—

 

97

 

146

 

9,452

 

9,598

 

—

 

612

 

Total

 

$

1,858

 

$

2,082

 

$

368

 

$

4,308

 

$

422,106

 

$

426,414

 

$

—

 

$

16,794

 

 

Of the $16,794,000 in non-accrual loans, only $368,000 are over 90 days past due.

 

The following table shows an aging analysis of the loan portfolio by the time past due at December 31, 2010 (in thousands):

 

 

 

30-59 Days
Past Due

 

60-89
Days Past
Due

 

Greater
Than
90 Days
Past Due

 

Total Past
Due

 

Current

 

Total
Loans

 

Recorded
Investment
> 90 Days
Accruing

 

Non-
accrual

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

164

 

$

—

 

$

180

 

$

344

 

$

87,284

 

$

87,628

 

$

—

 

$

2,355

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

17,545

 

17,545

 

—

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

863

 

—

 

—

 

863

 

111,027

 

111,890

 

—

 

3,777

 

Real estate construction and other land loans

 

—

 

—

 

5,634

 

5,634

 

27,214

 

32,848

 

—

 

7,827

 

Commercial real estate

 

2,316

 

—

 

726

 

3,042

 

60,515

 

63,557

 

—

 

1,828

 

Agricultural real estate

 

—

 

—

 

—

 

—

 

44,205

 

44,205

 

 

 

—

 

Other

 

—

 

—

 

—

 

—

 

31,409

 

31,409

 

—

 

2,286

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

—

 

—

 

—

 

—

 

34,521

 

34,521

 

—

 

—

 

Consumer and installment

 

78

 

—

 

—

 

78

 

8,415

 

8,493

 

—

 

488

 

Total

 

$

3,421

 

$

—

 

$

6,540

 

$

9,961

 

$

422,135

 

$

432,096

 

$

—

 

$

18,561

 

 

The following table shows information related to impaired loans at and for the nine months ended September 30, 2011 (in thousands):

 

 

 

 

 

Unpaid

 

 

 

Average

 

Interest

 

 

 

Recorded

 

Principal

 

Related

 

Recorded

 

Income

 

 

 

Investment

 

Balance

 

Allowance

 

Investment

 

Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,943

 

$

1,943

 

$

—

 

$

1,404

 

$

—

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

—

 

Total commercial

 

1,943

 

1,943

 

—

 

1,404

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

704

 

773

 

—

 

840

 

—

 

Real estate construction and other land loans

 

6,860

 

7,203

 

—

 

3,491

 

—

 

Commercial real estate

 

2,277

 

2,369

 

—

 

1,914

 

—

 

Agricultural real estate

 

—

 

—

 

—

 

—

 

—

 

Other

 

—

 

—

 

—

 

221

 

—

 

Total real estate

 

9,841

 

10,345

 

—

 

6,466

 

—

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

—

 

—

 

—

 

347

 

—

 

Consumer and installment

 

—

 

—

 

—

 

—

 

—

 

Total consumer

 

—

 

—

 

—

 

347

 

—

 

Total with no related allowance recorded

 

$

11,784

 

$

12,288

 

$

—

 

$

8,217

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,877

 

$

1,897

 

$

226

 

$

721

 

$

—

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

—

 

Total commercial

 

1,877

 

1,897

 

226

 

721

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

1,433

 

1,501

 

407

 

1,182

 

—

 

Real estate construction and other land loans

 

5,693

 

6,196

 

821

 

5,751

 

—

 

Commercial real estate

 

2,796

 

2,796

 

627

 

932

 

—

 

Agricultural real estate

 

—

 

—

 

—

 

—

 

—

 

Other

 

1,681

 

1,850

 

—

 

2,037

 

—

 

Total real estate

 

11,603

 

12,343

 

1,855

 

9,902

 

—

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

612

 

632

 

233

 

219

 

—

 

Consumer and installment

 

—

 

—

 

—

 

27

 

—

 

Total consumer

 

612

 

632

 

233

 

246

 

—

 

Total with an allowance recorded

 

$

14,092

 

$

14,872

 

$

2,314

 

$

10,869

 

$

—

 

Total

 

$

25,876

 

$

27,160

 

$

2,314

 

$

19,086

 

$

—

 

 

The following table shows information related to impaired loans at and for the year ended December 31, 2010 (in thousands):

 

 

 

 

 

Unpaid

 

 

 

Average

 

Interest

 

 

 

Recorded

 

Principal

 

Related

 

Recorded

 

Income

 

 

 

Investment

 

Balance

 

Allowance

 

Investment

 

Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,150

 

$

1,174

 

$

—

 

$

865

 

$

—

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

—

 

Total commercial

 

1,150

 

1,174

 

—

 

865

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

1,775

 

2,147

 

—

 

1,125

 

—

 

Real estate construction and other land loans

 

1,885

 

2,056

 

—

 

2,653

 

 

 

Commercial real estate

 

1,828

 

1,834

 

—

 

1,520

 

—

 

Other

 

—

 

—

 

—

 

—

 

—

 

Total real estate

 

5,488

 

6,037

 

—

 

5,298

 

—

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

488

 

506

 

—

 

284

 

 

 

Consumer and installment

 

—

 

—

 

—

 

—

 

—

 

Total consumer

 

488

 

506

 

—

 

284

 

—

 

Total with no related allowance recorded

 

$

7,126

 

$

7,717

 

$

—

 

$

6,447

 

$

—

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,206

 

$

1,299

 

$

227

 

$

1,664

 

$

—

 

Agricultural land and production

 

—

 

—

 

—

 

—

 

—

 

Total commercial

 

1,206

 

1,299

 

227

 

1,664

 

—

 

Real estate

 

 

 

 

 

 

 

 

 

—

 

Owner occupied

 

1,276

 

1,284

 

260

 

1,672

 

 

 

Real estate construction and other land loans

 

5,942

 

6,290

 

1,170

 

5,995

 

—

 

Commercial real estate

 

726

 

824

 

47

 

243

 

—

 

Other

 

2,285

 

2,300

 

420

 

1,165

 

—

 

Total real estate

 

10,229

 

10,698

 

1,897

 

9,075

 

—

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

Equity loans and lines of credit

 

—

 

—

 

—

 

214

 

—

 

Consumer and installment

 

—

 

—

 

—

 

251

 

—

 

Total consumer

 

—

 

—

 

—

 

465

 

—

 

Total with an allowance recorded

 

$

11,435

 

$

11,997

 

$

2,124

 

$

11,204

 

$

—

 

Total

 

$

18,561

 

$

19,714

 

$

2,124

 

$

17,651

 

$

—

 

 

Nonaccrual loans totaled $16,794,000 and $18,561,000 at September 30, 2011 and December 31, 2010, respectively.  Foregone interest on nonaccrual loans totaled $749,000 and $897,000 for the nine month periods ended September 30, 2011 and 2010, respectively.  For the three month periods ended September 30, 2011 and 2010, foregone interest on nonaccrual loans totaled $281,000 and $376,000, respectively. There were no accruing loans past due 90 days or more at September 30, 2011 and December 31, 2010.

 

Included in the impaired and nonaccrual loans above at September 30, 2011 are 12 loans considered troubled debt restructurings totaling $25,876,000.  Included in the impaired and nonaccrual loans above are seven loans in the amount of $6,180,000 that were considered to be troubled debt restructurings at December 31, 2010.

 

Troubled Debt Restructurings:

 

The Company has allocated $1,463,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2011.   The Company has committed to lend additional amounts totaling up to $490,000 as of September 30, 2011 to customers with outstanding loans that are classified as troubled debt restructurings.

 

During the nine month period ending September 30, 2011, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.  During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower were forgiven.

 

Modifications involving a reduction of the stated interest rate occurred on one loan which will mature the first quarter of 2012.  Modifications involving an extension of the maturity date were for periods ranging from one month to three years.

 

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2011 (in thousands):

 

 

 

Number of
Loans

 

Pre-Modification
Outstanding Recorded
Investment

 

Post-Modification
Outstanding Recorded
Investment

 

Troubled Debt Restructurings:

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

Commercial and Industrial

 

2

 

$

3,089

 

$

3,089

 

 

 

 

 

 

 

 

 

Total commercial

 

2

 

3,089

 

3,089

 

Real Estate:

 

 

 

 

 

 

 

Owner occupied

 

1

 

1,074

 

1,074

 

Real estate-construction and other land loans

 

3

 

11,094

 

11,094

 

Commercial real estate

 

1

 

1,211

 

1,211

 

Other

 

1

 

2,271

 

2,271

 

Total real estate

 

6

 

15,650

 

15,650

 

Total

 

8

 

$

18,739

 

$

18,739

 

 

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the nine months ended September 30, 2011 (in thousands):

 

 

 

Number of
Loans

 

Recorded
Investment

 

Troubled Debt Restructurings That Subsequently Defaulted

 

 

 

 

 

Real Estate:

 

 

 

 

 

Commercial real estate

 

1

 

$

1,211

 

Total real estate

 

1

 

1,211

 

Total

 

1

 

$

1,211

 

 

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

 

The troubled debt restructurings described above resulted in an increase to the specific reserves added to the allowance for credit losses of $427,000 and resulted in no charge offs during the nine months ending September 30, 2011.

 

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ending September 30, 2011 (in thousands):

 

 

 

 

 

Pre-Modification
Outstanding Recorded

 

Post-Modification
Outstanding Recorded

 

 

 

Number of Loans

 

Investment

 

Investment

 

Troubled Debt Restructurings:

 

 

 

 

 

 

 

Commercial:

 

 

 

 

 

 

 

Commercial and Industrial

 

2

 

$

3,089

 

$

3,089

 

Total commercial

 

2

 

3,089

 

3,089

 

Real Estate:

 

 

 

 

 

 

 

Owner occupied

 

 

 

 

 

 

 

Real estate-construction and other land loans

 

3

 

11,094

 

11,094

 

Commercial real estate

 

1

 

1,211

 

1,211

 

Total real estate

 

4

 

12,305

 

12,305

 

Total

 

6

 

$

15,394

 

$

15,394

 

 

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the three months ending September 30, 2011 (in thousands):

 

 

 

Number of
Loans

 

Recorded
Investment

 

Troubled Debt Restructurings That Subsequently Defaulted

 

 

 

 

 

Real Estate:

 

 

 

 

 

Commercial real estate

 

1

 

$

1,211

 

Total real estate

 

1

 

1,211

 

Total

 

1

 

$

1,211

 

 

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

 

The troubled debt restructurings described above resulted in an increase to the specific reserves added to the allowance for credit losses of $427,000 and resulted in no charge offs during the three month period ending September 30, 2011.