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Loans and Allowance for Credit Losses | 3 Months Ended
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Mar. 31, 2014
Receivables [Abstract] |
Allowance For Credit Losses | ce for credit losses (the “allowance”) is an estimate of probable incurred credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance-sheet date. The allowance is established through a provision for credit losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off credits is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired. For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. The following table shows the summary of activities for the allowance for credit losses as of and for the three months ended March 31, 2014 and 2013 by portfolio segment (in thousands):
|  | Commercial |  | Real Estate |  | Consumer |  | Unallocated |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, January 1, 2014 |  | $ | 2,444 |  |  | $ | 5,174 |  |  | $ | 1,168 |  |  | $ | 422 |  |  | $ | 9,208 |
Provision charged to operations |  | 449 |  |  | (510 | ) |  | 237 |  |  | (176 | ) |  | — |
Losses charged to allowance |  | (929 | ) |  | — |  |  | (85 | ) |  | — |  |  | (1,014 | )
Recoveries |  | 48 |  |  | 8 |  |  | 71 |  |  | — |  |  | 127 |
Ending balance, March 31, 2014 |  | $ | 2,012 |  |  | $ | 4,672 |  |  | $ | 1,391 |  |  | $ | 246 |  |  | $ | 8,321 |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance, January 1, 2013 |  | $ | 2,676 |  |  | $ | 5,877 |  |  | $ | 1,541 |  |  | $ | 39 |  |  | $ | 10,133 |
Provision charged to operations |  | 241 |  |  | (341 | ) |  | (238 | ) |  | 338 |  |  | — |
Losses charged to allowance |  | (698 | ) |  | — |  |  | (17 | ) |  | — |  |  | (715 | )
Recoveries |  | 42 |  |  | — |  |  | 29 |  |  | — |  |  | 71 |
Ending balance, March 31, 2013 |  | $ | 2,261 |  |  | $ | 5,536 |  |  | $ | 1,315 |  |  | $ | 377 |  |  | $ | 9,489 |
The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of March 31, 2014 and December 31, 2013 (in thousands).
|  | Commercial |  | Real Estate |  | Consumer |  | Unallocated |  | Total
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, March 31, 2014 |  | $ | 2,012 |  |  | $ | 4,672 |  |  | 1,391 |  |  | $ | 246 |  |  | $ | 8,321 |
Ending balance: individually evaluated for impairment |  | $ | — |  |  | $ | 308 |  |  | 30 |  |  | $ | — |  |  | $ | 338 |
Ending balance: collectively evaluated for impairment |  | $ | 2,012 |  |  | $ | 4,364 |  |  | 1,361 |  |  | $ | 246 |  |  | $ | 7,983 |
Ending balance, December 31, 2013 |  | $ | 2,444 |  |  | $ | 5,174 |  |  | $ | 1,168 |  |  | $ | 422 |  |  | $ | 9,208 |
Ending balance: individually evaluated for impairment |  | $ | 469 |  |  | $ | 465 |  |  | $ | 73 |  |  | $ | — |  |  | $ | 1,007 |
Ending balance: collectively evaluated for impairment |  | $ | 1,975 |  |  | $ | 4,709 |  |  | $ | 1,095 |  |  | $ | 422 |  |  | $ | 8,201 |
The table above excludes ending balance of loans acquired with deteriorated quality of $428,000 and $2,465,000 with no allowance at March 31, 2014 and December 31, 2013, respectively. The following table shows the ending balances of loans as of March 31, 2014 and December 31, 2013 by portfolio segment and by impairment methodology (in thousands):
|  | Commercial |  | Real Estate |  | Consumer |  | Total
Loans: |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, March 31, 2014 |  | $ | 112,322 |  |  | $ | 343,845 |  |  | $ | 58,370 |  |  | $ | 514,537 |
Ending balance: individually evaluated for impairment |  | $ | 290 |  |  | $ | 8,314 |  |  | $ | 1,954 |  |  | $ | 10,558 |
Ending balance: collectively evaluated for impairment |  | $ | 112,032 |  |  | $ | 335,531 |  |  | $ | 56,416 |  |  | $ | 503,979 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |
Ending balance, December 31, 2013 |  | $ | 118,731 |  |  | $ | 333,939 |  |  | $ | 59,846 |  |  | $ | 512,516 |
Ending balance: individually evaluated for impairment |  | $ | 1,527 |  |  | $ | 9,540 |  |  | $ | 2,290 |  |  | $ | 13,357 |
Ending balance: collectively evaluated for impairment |  | $ | 117,204 |  |  | $ | 324,399 |  |  | $ | 57,556 |  |  | $ | 499,159 |
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at March 31, 2014 (in thousands):
|  | Pass |  | Special Mention |  | Sub-Standard |  | Doubtful |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 80,920 |  |  | $ | 3,177 |  |  | $ | 3,256 |  |  | $ | — |  |  | $ | 87,353 |
Agricultural land and production |  | 24,969 |  |  | — |  |  | — |  |  | — |  |  | 24,969 |
Real Estate: |  |  |  |  |  |  |  |  |  |
Owner occupied |  | 146,483 |  |  | 5,151 |  |  | 7,709 |  |  | — |  |  | 159,343 |
Real estate construction and other land loans |  | 27,796 |  |  | 2,090 |  |  | 7,195 |  |  | — |  |  | 37,081 |
Commercial real estate |  | 79,350 |  |  | 3,910 |  |  | 7,534 |  |  | — |  |  | 90,794 |
Agricultural real estate |  | 50,126 |  |  | 1,981 |  |  | — |  |  | — |  |  | 52,107 |
Other real estate |  | 4,520 |  |  | — |  |  | — |  |  | — |  |  | 4,520 |
Consumer: |  |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 40,458 |  |  | 2,081 |  |  | 4,671 |  |  | — |  |  | 47,210 |
Consumer and installment |  | 10,868 |  |  | 39 |  |  | 253 |  |  | — |  |  | 11,160 |
Total |  | $ | 465,490 |  |  | $ | 18,429 |  |  | $ | 30,618 |  |  | $ | — |  |  | $ | 514,537 |
The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2013 (in thousands):
|  | Pass |  | Special Mention |  | Sub-Standard |  | Doubtful |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 81,732 |  |  | $ | 2,244 |  |  | $ | 3,106 |  |  | $ | — |  |  | $ | 87,082 |
Agricultural land and production |  | 31,649 |  |  | — |  |  | — |  |  | — |  |  | 31,649 |
Real Estate: |  |  |  |  |  |  |  |  |  |
Owner occupied |  | 144,082 |  |  | 5,229 |  |  | 7,470 |  |  | — |  |  | 156,781 |
Real estate construction and other land loans |  | 31,776 |  |  | 3,959 |  |  | 6,594 |  |  | — |  |  | 42,329 |
Commercial real estate |  | 77,589 |  |  | 3,718 |  |  | 4,810 |  |  | — |  |  | 86,117 |
Agricultural real estate |  | 42,151 |  |  | 2,013 |  |  | — |  |  | — |  |  | 44,164 |
Other real estate |  | 4,548 |  |  | — |  |  | — |  |  | — |  |  | 4,548 |
Consumer: |  |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 41,999 |  |  | 2,400 |  |  | 4,195 |  |  | — |  |  | 48,594 |
Consumer and installment |  | 10,946 |  |  | 46 |  |  | 260 |  |  | — |  |  | 11,252 |
Total |  | $ | 466,472 |  |  | $ | 19,609 |  |  | $ | 26,435 |  |  | $ | — |  |  | $ | 512,516 |
The following table shows an aging analysis of the loan portfolio by class and the time past due at March 31, 2014 (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 |  | $ | 8 |  |  | $ | 200 |  |  | $ | — |  |  | $ | 208 |  |  | $ | 87,145 |  |  | $ | 87,353 |  |  | $ | — |  |  | $ | 291 |
Agricultural land and production |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,969 |  |  | 24,969 |  |  | — |  |  | — |
Real estate: |  | — |  |  |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  |  |  |  |
Owner occupied |  | 379 |  |  | 482 |  |  | — |  |  | 861 |  |  | 158,482 |  |  | 159,343 |  |  | — |  |  | 1,191 |
Real estate construction and other land loans |  | — |  |  | — |  |  | — |  |  | — |  |  | 37,081 |  |  | 37,081 |  |  | — |  |  | 1,401 |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 90,794 |  |  | 90,794 |  |  | — |  |  | 149 |
Agricultural real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 52,107 |  |  | 52,107 |  |  | — |  |  | — |
Other real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,520 |  |  | 4,520 |  |  | — |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  |  |  |  |
Equity loans and lines of credit |  | 377 |  |  | 10 |  |  | — |  |  | 387 |  |  | 46,823 |  |  | 47,210 |  |  | — |  |  | 1,950 |
Consumer and installment |  | 72 |  |  | 5 |  |  | — |  |  | 77 |  |  | 11,083 |  |  | 11,160 |  |  | — |  |  | — |
Total |  | $ | 836 |  |  | $ | 697 |  |  | $ | — |  |  | $ | 1,533 |  |  | $ | 513,004 |  |  | $ | 514,537 |  |  | $ | — |  |  | $ | 4,982 |
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2013 (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 |  | $ | 274 |  |  | $ | 236 |  |  | $ | — |  |  | $ | 510 |  |  | $ | 86,572 |  |  | $ | 87,082 |  |  | $ | — |  |  | $ | 1,527 |
Agricultural land and production |  | — |  |  | — |  |  | — |  |  | — |  |  | 31,649 |  |  | 31,649 |  |  | — |  |  | — |
Real estate: |  | — |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | 1,272 |  |  | 134 |  |  | 418 |  |  | 1,824 |  |  | 154,957 |  |  | 156,781 |  |  | — |  |  | 2,161 |
Real estate construction and other land loans |  | — |  |  | — |  |  | — |  |  | — |  |  | 42,329 |  |  | 42,329 |  |  | — |  |  | 1,450 |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 86,117 |  |  | 86,117 |  |  | — |  |  | 158 |
Agricultural real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 44,164 |  |  | 44,164 |  |  | — |  |  | — |
Other real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,548 |  |  | 4,548 |  |  | — |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 10 |  |  | 147 |  |  | 252 |  |  | 409 |  |  | 48,185 |  |  | 48,594 |  |  | — |  |  | 2,286 |
Consumer and installment |  | 86 |  |  | — |  |  | — |  |  | 86 |  |  | 11,166 |  |  | 11,252 |  |  | — |  |  | 4 |
Total |  | $ | 1,642 |  |  | $ | 517 |  |  | $ | 670 |  |  | $ | 2,829 |  |  | $ | 509,687 |  |  | $ | 512,516 |  |  | $ | — |  |  | $ | 7,586 |
The following table shows information related to impaired loans by class at March 31, 2014 (in thousands):
|  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 290 |  |  | $ | 1,332 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |
Owner occupied |  | 2,561 |  |  | 3,054 |  |  | — |
Real estate construction and other land loans |  | 1,401 |  |  | 2,128 |  |  | — |
Commercial real estate |  | 491 |  |  | 890 |  |  | — |
Total real estate |  | 4,453 |  |  | 6,072 |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 1,774 |  |  | 2,417 |  |  | — |
Consumer and installment |  | 4 |  |  | 5 |  |  | — |
Total consumer |  | 1,778 |  |  | 2,422 |  |  | — |
Total with no related allowance recorded |  | 6,521 |  |  | 9,826 |  |  | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |
Real estate construction and other land loans |  | 3,861 |  |  | 3,861 |  |  | 308 |
Consumer: |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 176 |  |  | 180 |  |  | 30 |
Total with an allowance recorded |  | 4,037 |  |  | 4,041 |  |  | 338 |
Total |  | $ | 10,558 |  |  | $ | 13,867 |  |  | $ | 338 |
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following table shows information related to impaired loans by class at December 31, 2013 (in thousands):
|  | Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 350 |  |  | $ | 385 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |
Owner occupied |  | 3,160 |  |  | 4,159 |  |  | — |
Real estate construction and other land loans |  | 1,449 |  |  | 2,136 |  |  | — |
Commercial real estate |  | 502 |  |  | 891 |  |  | — |
Total real estate |  | 5,111 |  |  | 7,186 |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 2,029 |  |  | 2,826 |  |  | — |
Consumer and installment |  | 4 |  |  | 5 |  |  | — |
Total consumer |  | 2,033 |  |  | 2,831 |  |  | — |
Total with no related allowance recorded |  | 7,494 |  |  | 10,402 |  |  | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |
Commercial and industrial |  | 1,177 |  |  | 1,222 |  |  | 469 |
Real estate: |  |  |  |  |  |  |  |  |
Owner occupied |  | 385 |  |  | 425 |  |  | 3 |
Real estate construction and other land loans |  | 4,044 |  |  | 4,044 |  |  | 462 |
Total real estate |  | 4,429 |  |  | 4,469 |  |  | 465 |
Consumer: |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 257 |  |  | 264 |  |  | 73 |
Total with an allowance recorded |  | 5,863 |  |  | 5,955 |  |  | 1,007 |
Total |  | $ | 13,357 |  |  | $ | 16,357 |  |  | $ | 1,007 |
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality. The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2014 and 2013.
|  | Three Months Ended March 31, 2014 |  | Three Months Ended March 31, 2013
|  | Average Recorded Investment |  | Interest Income Recognized |  | Average Recorded Investment |  | Interest Income Recognized
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 329 |  |  | $ | — |  |  | $ | 558 |  |  | $ | — |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | 3,195 |  |  | 20 |  |  | 835 |  |  | — |
Real estate construction and other land loans |  | 1,427 |  |  | — |  |  | 5,007 |  |  | — |
Commercial real estate |  | 496 |  |  | — |  |  | 26 |  |  | — |
Total real estate |  | 5,118 |  |  | 20 |  |  | 5,868 |  |  | — |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 1,943 |  |  | — |  |  | 1,691 |  |  | — |
Consumer and installment |  | 4 |  |  | — |  |  | — |  |  | — |
Total consumer |  | 1,947 |  |  | — |  |  | 1,691 |  |  | — |
Total with no related allowance recorded |  | 7,394 |  |  | 20 |  |  | 8,117 |  |  | — |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | 872 |  |  | — |  |  | 1,821 |  |  | 33 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | 96 |  |  | — |  |  | 747 |  |  | — |
Real estate construction and other land loans |  | 3,988 |  |  | 70 |  |  | 6,480 |  |  | 86 |
Total real estate |  | 4,084 |  |  | 70 |  |  | 7,227 |  |  | 86 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Equity loans and lines of credit |  | 236 |  |  | — |  |  | 223 |  |  | — |
Total with an allowance recorded |  | 5,192 |  |  | 70 |  |  | 9,288 |  |  | 119 |
Total |  | $ | 12,586 |  |  | $ | 90 |  |  | $ | 17,405 |  |  | $ | 119 |
Foregone interest on nonaccrual loans totaled $164,000 and $176,000 for the three month periods ended March 31, 2014 and 2013, respectively. Troubled Debt Restructurings: As of March 31, 2014 and December 31, 2013, the Company has a recorded investment in troubled debt restructurings of $9,094,000 and $10,366,000, respectively. The Company has allocated $308,000 and 946,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2014 and December 31, 2013, respectively. The Company has committed to lend no additional amounts as of March 31, 2014 to customers with outstanding loans that are classified as troubled debt restructurings. During the three month periods ended March 31, 2014 and 2013 no loans were modified as troubled debt restructurings. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the quarter ended March 31, 2014 and March 31, 2013.

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