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Loans | 12 Months Ended
--- | ---
Dec. 31, 2013
Loans [Abstract] |
Loans |
(4) | Loans
The following table presents the composition of loans, segregated by class of loans, as of December 31:
|  | 2013 |  |  | 2012 |
Commercial and Agricultural |  |  |  |  |  |
Commercial |  | $ | 48,107,448 |  |  | $ | 55,684,492 |
Agricultural |  |  | 10,665,938 |  |  |  | 6,210,953 |
Real Estate |  |  |  |  |  |  |  |
Commercial Construction |  |  | 52,738,783 |  |  |  | 53,808,056 |
Residential Construction |  |  | 6,549,260 |  |  |  | 5,852,238 |
Commercial |  |  | 341,783,538 |  |  |  | 334,386,177 |
Residential |  |  | 206,257,927 |  |  |  | 203,844,522 |
Farmland |  |  | 47,034,426 |  |  |  | 49,056,861 |
Consumer and Other |  |  |  |  |  |  |  |
Consumer |  |  | 25,675,560 |  |  |  | 29,777,776 |
Other |  |  | 12,405,582 |  |  |  | 8,428,936 |
Total Loans |  | $ | 751,218,462 |  |  | $ | 747,050,011 |
Commercial and agricultural loans are extended to a diverse group of businesses within the Company’s market area. These loans are often underwritten based on the borrower’s ability to service the debt from income from the business. Real estate construction loans often require loan funds to be advanced prior to completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer loans are originated at the bank level. These loans are generally smaller loan amounts spread across many individual borrowers to help minimize risk. Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets. The Company uses a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 8. A description of the general characteristics of the grades is as follows:
| · | Grades 1 and 2 - Borrowers with these assigned grades range in risk from virtual absence of risk to minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds. Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans. Loans in this category fall into the “pass” classification.
| · | Grades 3 and 4 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average.
| · | Grade 5 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.
| · | Grade 6 - This grade includes “substandard” loans in accordance with regulatory guidelines. This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms. Loans considered to be impaired are assigned this grade, and these loans often have assigned loss allocations as part of the allowance for loan and lease losses. Generally, loans on which interest accrual has been stopped would be included in this grade.
| · | Grades 7 and 8 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively. In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades. Management manages the Company’s problem loans in such a way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 6.
The following tables present the loan portfolio by credit quality indicator (risk grade) as of December 31. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in the pass column for presentation purposes.
2013 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Total Loans |
Commercial and Agricultural |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 41,759,281 |  |  | $ | 2,770,284 |  |  | $ | 3,577,883 |  |  | $ | 48,107,448 |
Agricultural |  |  | 10,637,705 |  |  |  | 16,830 |  |  |  | 11,403 |  |  |  | 10,665,938 |
Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Construction |  |  | 42,668,320 |  |  |  | 1,512,301 |  |  |  | 8,558,162 |  |  |  | 52,738,783 |
Residential Construction |  |  | 6,341,530 |  |  |  | 207,730 |  |  |  | - |  |  |  | 6,549,260 |
Commercial |  |  | 317,567,749 |  |  |  | 10,759,954 |  |  |  | 13,455,835 |  |  |  | 341,783,538 |
Residential |  |  | 182,977,361 |  |  |  | 13,523,478 |  |  |  | 9,757,088 |  |  |  | 206,257,927 |
Farmland |  |  | 44,776,355 |  |  |  | 507,122 |  |  |  | 1,750,949 |  |  |  | 47,034,426 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer |  |  | 24,608,175 |  |  |  | 320,473 |  |  |  | 746,912 |  |  |  | 25,675,560 |
Other |  |  | 12,356,116 |  |  |  | 711 |  |  |  | 48,755 |  |  |  | 12,405,582 |
Total Loans |  | $ | 683,692,592 |  |  | $ | 29,618,883 |  |  | $ | 37,906,987 |  |  | $ | 751,218,462 |
2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 49,947,552 |  |  | $ | 1,417,735 |  |  | $ | 4,319,205 |  |  | $ | 55,684,492 |
Agricultural |  |  | 6,155,864 |  |  |  | - |  |  |  | 55,089 |  |  |  | 6,210,953 |
Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Construction |  |  | 37,256,301 |  |  |  | 1,663,588 |  |  |  | 14,888,167 |  |  |  | 53,808,056 |
Residential Construction |  |  | 5,748,829 |  |  |  | 103,409 |  |  |  | - |  |  |  | 5,852,238 |
Commercial |  |  | 298,222,139 |  |  |  | 9,759,473 |  |  |  | 26,404,565 |  |  |  | 334,386,177 |
Residential |  |  | 183,222,020 |  |  |  | 11,412,973 |  |  |  | 9,209,529 |  |  |  | 203,844,522 |
Farmland |  |  | 45,495,038 |  |  |  | 913,487 |  |  |  | 2,648,336 |  |  |  | 49,056,861 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer |  |  | 28,839,058 |  |  |  | 293,467 |  |  |  | 645,251 |  |  |  | 29,777,776 |
Other |  |  | 8,350,772 |  |  |  | 8,907 |  |  |  | 69,257 |  |  |  | 8,428,936 |
Total Loans |  | $ | 663,237,573 |  |  | $ | 25,573,039 |  |  | $ | 58,239,399 |  |  | $ | 747,050,011 |
A loan’s risk grade is assigned at the inception of the loan and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to reassessment at various times throughout the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of 6 or below and an outstanding balance of $250,000 or more are reassessed on a quarterly basis. During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired. In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas. The unemployment rates are reviewed on a quarterly basis as part of the allowance for loan loss determination. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provision. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of December 31:
|  | Accruing Loans |  |  |  |  |  |  |  |  |  |
2013 |  | 30-89 Days Past Due |  |  | 90 Days or More Past Due |  |  | Total Accruing Loans Past Due |  |  | Nonaccrual Loans |  |  | Current Loans |  |  | Total Loans |
Commercial and Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 581,281 |  |  | $ | - |  |  | $ | 581,281 |  |  | $ | 1,646,418 |  |  | $ | 45,879,749 |  |  | $ | 48,107,448 |
Agricultural |  |  | 81,036 |  |  |  | - |  |  |  | 81,036 |  |  |  | - |  |  |  | 10,584,902 |  |  |  | 10,665,938 |
Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Construction |  |  | 139,826 |  |  |  | - |  |  |  | 139,826 |  |  |  | 8,221,745 |  |  |  | 44,377,212 |  |  |  | 52,738,783 |
Residential Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,549,260 |  |  |  | 6,549,260 |
Commercial |  |  | 2,287,341 |  |  |  | - |  |  |  | 2,287,341 |  |  |  | 7,366,703 |  |  |  | 332,129,494 |  |  |  | 341,783,538 |
Residential |  |  | 5,273,586 |  |  |  | - |  |  |  | 5,273,586 |  |  |  | 4,933,420 |  |  |  | 196,050,921 |  |  |  | 206,257,927 |
Farmland |  |  | 350,718 |  |  |  | - |  |  |  | 350,718 |  |  |  | 1,629,611 |  |  |  | 45,054,097 |  |  |  | 47,034,426 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer |  |  | 453,580 |  |  |  | 3,991 |  |  |  | 457,571 |  |  |  | 307,456 |  |  |  | 24,910,533 |  |  |  | 25,675,560 |
Other |  |  | 198,451 |  |  |  | - |  |  |  | 198,451 |  |  |  | 9,146 |  |  |  | 12,197,985 |  |  |  | 12,405,582 |
Total Loans |  | $ | 9,365,819 |  |  | $ | 3,991 |  |  | $ | 9,369,810 |  |  | $ | 24,114,499 |  |  | $ | 717,734,153 |  |  | $ | 751,218,462 |
2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 797,612 |  |  | $ | - |  |  | $ | 797,612 |  |  | $ | 1,033,371 |  |  | $ | 53,853,509 |  |  | $ | 55,684,492 |
Agricultural |  |  | 28,228 |  |  |  | - |  |  |  | 28,228 |  |  |  | 39,213 |  |  |  | 6,143,512 |  |  |  | 6,210,953 |
Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial Construction |  |  | 1,309,618 |  |  |  | - |  |  |  | 1,309,618 |  |  |  | 14,032,580 |  |  |  | 38,465,858 |  |  |  | 53,808,056 |
Residential Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,852,238 |  |  |  | 5,852,238 |
Commercial |  |  | 3,771,106 |  |  |  | - |  |  |  | 3,771,106 |  |  |  | 6,629,789 |  |  |  | 323,985,282 |  |  |  | 334,386,177 |
Residential |  |  | 8,223,174 |  |  |  | - |  |  |  | 8,223,174 |  |  |  | 5,429,971 |  |  |  | 190,191,377 |  |  |  | 203,844,522 |
Farmland |  |  | 140,095 |  |  |  | - |  |  |  | 140,095 |  |  |  | 2,413,104 |  |  |  | 46,503,662 |  |  |  | 49,056,861 |
Consumer and Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer |  |  | 636,888 |  |  |  | 4,355 |  |  |  | 641,243 |  |  |  | 255,216 |  |  |  | 28,881,317 |  |  |  | 29,777,776 |
Other |  |  | 4,557 |  |  |  | - |  |  |  | 4,557 |  |  |  | 17,491 |  |  |  | 8,406,888 |  |  |  | 8,428,936 |
Total Loans |  | $ | 14,911,278 |  |  | $ | 4,355 |  |  | $ | 14,915,633 |  |  | $ | 29,850,735 |  |  | $ | 702,283,643 |  |  | $ | 747,050,011 |
During its review of impaired loans, the Company determined the majority of its exposures on these loans were known losses. As a result, the exposures were charged off, reducing the specific allowances on impaired loans. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $968,700, $1,634,600 and $1,639,800 for the years ended December 31, 2013, 2012 and 2011, respectively. The following table details impaired loan data as of December 31, 2013:
|  | Unpaid Contractual Principal Balance |  |  | Impaired Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Interest Income Collected |
With No Related Allowance Recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 305,272 |  |  | $ | 305,272 |  |  | $ | - |  |  | $ | 216,057 |  |  | $ | 24,494 |  |  | $ | 25,193 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,803 |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 7,856,411 |  |  |  | 4,750,157 |  |  |  | - |  |  |  | 4,105,370 |  |  |  | 34,908 |  |  |  | 41,164 |
Commercial Real Estate |  |  | 20,120,403 |  |  |  | 19,252,946 |  |  |  | - |  |  |  | 13,198,988 |  |  |  | 493,940 |  |  |  | 503,392 |
Residential Real Estate |  |  | 7,836,718 |  |  |  | 6,361,592 |  |  |  | - |  |  |  | 4,564,666 |  |  |  | 224,439 |  |  |  | 209,330 |
Farmland |  |  | 302,629 |  |  |  | 302,629 |  |  |  | - |  |  |  | 1,858,654 |  |  |  | 803 |  |  |  | 869 |
Consumer |  |  | 313,194 |  |  |  | 307,456 |  |  |  | - |  |  |  | 252,944 |  |  |  | 18,469 |  |  |  | 21,109 |
Other |  |  | 9,146 |  |  |  | 9,146 |  |  |  | - |  |  |  | 2,287 |  |  |  | 556 |  |  |  | 575 |
|  |  | 36,743,773 |  |  |  | 31,289,198 |  |  |  | - |  |  |  | 24,208,769 |  |  |  | 797,609 |  |  |  | 801,632 |
With An Allowance Recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 1,452,798 |  |  |  | 1,452,798 |  |  |  | 433,714 |  |  |  | 1,689,125 |  |  |  | 14,845 |  |  |  | 20,748 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 5,922,674 |  |  |  | 3,471,587 |  |  |  | 830,546 |  |  |  | 5,025,176 |  |  |  | (159 | ) |  |  | - |
Commercial Real Estate |  |  | 5,874,473 |  |  |  | 5,874,473 |  |  |  | 423,685 |  |  |  | 11,072,314 |  |  |  | 157,536 |  |  |  | 148,495 |
Residential Real Estate |  |  | 1,949,301 |  |  |  | 1,849,301 |  |  |  | 526,005 |  |  |  | 3,661,706 |  |  |  | 25,739 |  |  |  | 24,414 |
Farmland |  |  | 1,326,982 |  |  |  | 1,326,982 |  |  |  | 85,500 |  |  |  | 663,903 |  |  |  | 44,638 |  |  |  | 46,930 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 16,526,228 |  |  |  | 13,975,141 |  |  |  | 2,299,450 |  |  |  | 22,112,224 |  |  |  | 242,599 |  |  |  | 240,587 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 1,758,070 |  |  |  | 1,758,070 |  |  |  | 433,714 |  |  |  | 1,905,182 |  |  |  | 39,339 |  |  |  | 45,941 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,803 |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 13,779,085 |  |  |  | 8,221,744 |  |  |  | 830,546 |  |  |  | 9,130,546 |  |  |  | 34,749 |  |  |  | 41,164 |
Commercial Real Estate |  |  | 25,994,876 |  |  |  | 25,127,419 |  |  |  | 423,685 |  |  |  | 24,271,302 |  |  |  | 651,476 |  |  |  | 651,887 |
Residential Real Estate |  |  | 9,786,019 |  |  |  | 8,210,893 |  |  |  | 526,005 |  |  |  | 8,226,372 |  |  |  | 250,178 |  |  |  | 233,744 |
Farmland |  |  | 1,629,611 |  |  |  | 1,629,611 |  |  |  | 85,500 |  |  |  | 2,522,557 |  |  |  | 45,441 |  |  |  | 47,799 |
Consumer |  |  | 313,194 |  |  |  | 307,456 |  |  |  | - |  |  |  | 252,944 |  |  |  | 18,469 |  |  |  | 21,109 |
Other |  |  | 9,146 |  |  |  | 9,146 |  |  |  | - |  |  |  | 2,287 |  |  |  | 556 |  |  |  | 575 |
|  | $ | 53,270,001 |  |  | $ | 45,264,339 |  |  | $ | 2,299,450 |  |  | $ | 46,320,993 |  |  | $ | 1,040,208 |  |  | $ | 1,042,219 |
The following table details impaired loan data as of December 31, 2012:
|  | Unpaid Contractual Principal Balance |  |  | Impaired Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Interest Income Collected |
With No Related Allowance Recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 1,508,236 |  |  | $ | 1,041,938 |  |  | $ | - |  |  | $ | 1,052,916 |  |  | $ | 27,407 |  |  | $ | 28,410 |
Agricultural |  |  | 39,213 |  |  |  | 39,213 |  |  |  | - |  |  |  | 58,056 |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 10,624,917 |  |  |  | 6,414,986 |  |  |  | - |  |  |  | 9,194,360 |  |  |  | 27,377 |  |  |  | 51,820 |
Commercial Real Estate |  |  | 16,565,971 |  |  |  | 15,505,907 |  |  |  | - |  |  |  | 26,482,274 |  |  |  | 430,339 |  |  |  | 420,549 |
Residential Real Estate |  |  | 4,450,128 |  |  |  | 4,131,707 |  |  |  | - |  |  |  | 3,096,151 |  |  |  | 89,139 |  |  |  | 123,101 |
Farmland |  |  | 2,828,539 |  |  |  | 2,413,103 |  |  |  | - |  |  |  | 2,326,180 |  |  |  | 42,588 |  |  |  | 55,258 |
Consumer |  |  | 297,356 |  |  |  | 255,216 |  |  |  | - |  |  |  | 228,181 |  |  |  | 10,441 |  |  |  | 12,920 |
Other |  |  | 17,491 |  |  |  | 17,491 |  |  |  | - |  |  |  | 24,414 |  |  |  | 1,191 |  |  |  | 1,291 |
|  |  | 36,331,851 |  |  |  | 29,819,561 |  |  |  | - |  |  |  | 42,462,532 |  |  |  | 628,482 |  |  |  | 693,349 |
With An Allowance Recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 1,493,432 |  |  |  | 1,493,432 |  |  |  | 462,555 |  |  |  | 942,673 |  |  |  | 91,888 |  |  |  | 87,611 |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 8,266,649 |  |  |  | 7,617,594 |  |  |  | 1,732,534 |  |  |  | 10,533,468 |  |  |  | - |  |  |  | - |
Commercial Real Estate |  |  | 12,758,884 |  |  |  | 12,745,422 |  |  |  | 1,236,526 |  |  |  | 6,398,364 |  |  |  | 383,356 |  |  |  | 366,423 |
Residential Real Estate |  |  | 5,514,994 |  |  |  | 4,421,809 |  |  |  | 840,492 |  |  |  | 4,288,062 |  |  |  | 144,661 |  |  |  | 117,266 |
Farmland |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 64,862 |  |  |  | - |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 28,033,959 |  |  |  | 26,278,257 |  |  |  | 4,272,107 |  |  |  | 22,227,429 |  |  |  | 619,905 |  |  |  | 571,300 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 3,001,668 |  |  |  | 2,535,370 |  |  |  | 462,555 |  |  |  | 1,995,589 |  |  |  | 119,295 |  |  |  | 116,021 |
Agricultural |  |  | 39,213 |  |  |  | 39,213 |  |  |  | - |  |  |  | 58,056 |  |  |  | - |  |  |  | - |
Commercial Construction |  |  | 18,891,566 |  |  |  | 14,032,580 |  |  |  | 1,732,534 |  |  |  | 19,727,828 |  |  |  | 27,377 |  |  |  | 51,820 |
Commercial Real Estate |  |  | 29,324,855 |  |  |  | 28,251,329 |  |  |  | 1,236,526 |  |  |  | 32,880,638 |  |  |  | 813,695 |  |  |  | 786,972 |
Residential Real Estate |  |  | 9,965,122 |  |  |  | 8,553,516 |  |  |  | 840,492 |  |  |  | 7,384,213 |  |  |  | 233,800 |  |  |  | 240,367 |
Farmland |  |  | 2,828,539 |  |  |  | 2,413,103 |  |  |  | - |  |  |  | 2,391,042 |  |  |  | 42,588 |  |  |  | 55,258 |
Consumer |  |  | 297,356 |  |  |  | 255,216 |  |  |  | - |  |  |  | 228,181 |  |  |  | 10,441 |  |  |  | 12,920 |
Other |  |  | 17,491 |  |  |  | 17,491 |  |  |  | - |  |  |  | 24,414 |  |  |  | 1,191 |  |  |  | 1,291 |
|  | $ | 64,365,810 |  |  | $ | 56,097,818 |  |  | $ | 4,272,107 |  |  | $ | 64,689,961 |  |  | $ | 1,248,387 |  |  | $ | 1,264,649 |
Troubled Debt Restructurings (TDRs) are troubled loans on which the original terms of the loan have been modified in favor of the borrower due to deterioration in the borrower’s financial condition. Each potential loan modification is reviewed individually and the terms of the loan are modified to meet the borrower’s specific circumstances at a point in time. Not all loan modifications are TDRs. Loan modifications are reviewed and approved by the Company’s senior lending staff, who then determine whether the loan meets the criteria for a TDR. Generally, the types of concessions granted to borrowers that are evaluated in determining whether a loan is classified as a TDR include:
| · | Interest rate reductions - Occur when the stated interest rate is reduced to a nonmarket rate or a rate the borrower would not be able to obtain elsewhere under similar circumstances.
| · | Amortization or maturity date changes - Result when the amortization period of the loan is extended beyond what is considered a normal amortization period for loans of similar type with similar collateral.
| · | Principal reductions - These are often the result of commercial real estate loan workouts where two new notes are created. The primary note is underwritten based upon our normal underwriting standards and is structured so that the projected cash flows are sufficient to repay the contractual principal and interest of the newly restructured note. The terms of the secondary note vary by situation and often involve that note being charged off, or the principal and interest payments being deferred until after the primary note has been repaid. In situations where a portion of the note is charged off during modification, there is often no specific reserve allocated to those loans. This is due to the fact that the amount of the charge-off usually represents the excess of the original loan balance over the collateral value and the Company has determined there is no additional exposure on those loans.
As discussed in Note 1, Summary of Significant Accounting Policies, once a loan is identified as a TDR, it is accounted for as an impaired loan. The Company had no unfunded commitments to lend to a customer that has a troubled debt restructured loan as of December 31, 2013. The following tables present the number of loan contracts restructured during the 12 months ended December 31, 2013 and the pre- and post-modification recorded investment as well as the number of contracts and the recorded investment for those TDRs modified during the previous 12 months which subsequently defaulted during the period. Loans modified in a troubled debt restructuring are considered to be in default once the loan becomes 90 days past due. Troubled Debt Restructurings
2013 |  | # of Contracts |  |  | Pre-Modification |  |  | Post-Modification |
Commercial |  |  | 1 |  |  | $ | 83,748 |  |  | $ | 81,277 |
Commercial Construction |  |  | 2 |  |  |  | 228,633 |  |  |  | 225,959 |
Commercial Real Estate |  |  | 1 |  |  |  | 225,852 |  |  |  | 225,852 |
Residential Real Estate |  |  | 4 |  |  |  | 1,885,700 |  |  |  | 1,764,399 |
Total Loans |  |  | 8 |  |  | $ | 2,423,933 |  |  | $ | 2,297,487 |
2012 |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 1 |  |  | $ | 107,749 |  |  | $ | 107,749 |
Commercial Real Estate |  |  | 1 |  |  |  | 56,835 |  |  |  | 56,835 |
Residential Real Estate |  |  | 5 |  |  |  | 1,082,585 |  |  |  | 1,079,614 |
Total Loans |  |  | 7 |  |  | $ | 1,247,169 |  |  | $ | 1,244,198 |
2011 |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | 3 |  |  | $ | 3,240,469 |  |  | $ | 1,541,882 |
Commercial Construction |  |  | 3 |  |  |  | 1,430,147 |  |  |  | 1,430,101 |
Commercial Real Estate |  |  | 9 |  |  |  | 20,827,349 |  |  |  | 15,906,547 |
Residential Real Estate |  |  | 8 |  |  |  | 1,505,356 |  |  |  | 1,456,878 |
Total Loans |  |  | 23 |  |  | $ | 27,003,321 |  |  | $ | 20,335,408 |
Troubled debt restructurings that subsequently defaulted as of December 31 are as follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | # of Contracts |  |  | Recorded Investment |  |  | # of Contracts |  |  | Recorded Investment |  |  | # of Contracts |  |  | Recorded Investment |
Commercial |  |  | 1 |  |  | $ | 81,277 |  |  |  | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 1,175,922 |
Commercial Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | 4,475,473 |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 203,291 |  |  |  | 3 |  |  |  | 2,322,361 |
Residential Real Estate |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 10,000 |  |  |  | - |  |  |  | - |
Total Loans |  |  | 1 |  |  | $ | 81,277 |  |  |  | 2 |  |  | $ | 213,291 |  |  |  | 7 |  |  | $ | 7,973,756 |
At December 31, 2013, 2012 and 2011, all restructured loans were performing as agreed. However, two restructured loans totaling $81,277 and $10,000 at December 31, 2013 and 2012 failed to continue to perform as agreed and, as a result, the loans were charged off in August 2013 and January 2012, respectively. At December 31, 2011, two restructured loans totaling $999,133 and $51,998 failed to continue to perform as agreed and, as a result, the loans were charged off in March 2011 and December 2011, respectively.

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