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Loans and Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2012
Loans and Allowance for Loan Losses [Abstract]  
Loans and Allowance for Loan Losses

(2)   Loans and Allowance for Loan Losses

A summary of loans, by major class within our Company’s loan portfolio, at March 31, 2012 and December 31, 2011 are as follows:

 

                 
    March 31,     December 31,  
    2012     2011  

Commercial, financial, and agricultural

   $ 128,455,783     $ 128,555,173  

Real estate construction—residential

     19,192,216       30,201,198  

Real estate construction—commercial

     41,000,720       47,696,759  

Real estate mortgage—residential

     216,746,331       203,454,204  

Real estate mortgage—commercial

     406,044,821       402,960,327  

Installment and other consumer

     28,294,440       29,883,986  

Unamortized loan origination fees and costs, net

     205,061       178,901  
   

 

 

    

 

 

  

Total loans

   $ 839,939,372     $ 842,930,548  
   

 

 

    

 

 

  

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the communities surrounding Jefferson City, Clinton, Warsaw, Springfield, Branson and Lee’s Summit, Missouri. As such, the Bank is susceptible to changes in the economic environment in these communities. The Bank does not have a concentration of credit in any one economic sector. Installment and other consumer loans consist primarily of the financing of vehicles. At March 31, 2012, loans with a carrying value of $428,144,000 were pledged to Federal Home Loan Bank as collateral for borrowings and letters of credit.

Allowance for loan losses

The following is a summary of the allowance for loan losses for the three months ended March 31, 2012 and 2011:

 

                                                                 
(in thousands)   Commercial,
Financial, and
Agricultural		     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real Estate
Mortgage -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
Loans to
Individuals		     Unallocated     Total  

Balance at January 1, 2012

   $ 1,804     $ 1,188     $ 1,562     $ 3,251     $ 5,734     $ 267     $ 3     $ 13,809  

Additions:

                                                                

Provision for loan losses

     867       (493 )      (152 )      415       1,027       34       2       1,700  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deductions:

                                                                

Loans charged off

     35       —         —         155       862       139       —         1,191  

Less recoveries on loans

     (86 )      (32 )      —         (52 )     (77 )     (75 )     —         (322 )
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans charged off

     (51 )      (32 )      —         103       785       64       —         869  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at March 31, 2012

   $ 2,722     $ 727     $ 1,410     $ 3,563     $ 5,976     $ 237     $ 5     $ 14,640  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                                 
(in thousands)   Commercial,
Financial, and
Agricultural		     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real Estate
Mortgage -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
Loans to
Individuals		     Unallocated     Total  

Balance at January 1, 2011

   $ 2,931     $ 2,067     $ 1,339     $ 3,922     $ 3,458     $ 231     $ 617     $ 14,565  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Additions:

                                                                

Provision for loan losses

     93       410       17       227       827       45       131       1,750  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deductions:

                                                                

Loans charged off

     828       1,547       —         1,073       581       109       —         4,138  

Less recoveries on loans

     (61 )      (61 )      —         (42 )     (5 )     (56 )     —         (225 )
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans charged off

     767       1,486       —         1,031       576       53       —         3,913  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at March 31, 2011

   $ 2,257     $ 991     $ 1,356     $ 3,118     $ 3,709     $ 223     $ 748     $ 12,402  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table provides the balance in the allowance for loan losses at March 31, 2012 and December 31, 2011, and the related loan balance by impairment methodology. Loans evaluated under ASC 310-10-35 include loans on non-accrual status, which are individually evaluated for impairment, troubled debt restructurings, and other impaired loans deemed to have similar risk characteristics. All other loans are collectively evaluated for impairment under ASC 450-20. Although the allowance for loan losses is comprised of specific and general allocations, the entire allowance is available to absorb credit losses.

 

                                                                 
(in thousands)   Commercial,
Financial, and
Agricultural		     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real
Estate
Mortgage -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
Loans to
Individuals		     Unallocated     Total  

March 31, 2012

                                                                

Allowance for loan losses:

                                                                

Individually evaluated for impairment

   $ 1,258     $ 59     $ 424     $ 909     $ 2,173     $ —       $ —       $ 4,823  

Collectively evaluated for impairment

     1,464       668       986       2,654       3,803       237       5       9,817  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 2,722     $ 727     $ 1,410     $ 3,563     $ 5,976     $ 237     $ 5     $ 14,640  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans outstanding:

                                                                

Individually evaluated for

   $ 6,525     $ 286     $ 7,652     $ 6,569     $ 28,539     $ —       $ —       $ 49,571  

impairment

                                                                

Collectively evaluated for impairment

     121,931       18,906       33,349       210,177       377,505       28,500       —         790,368  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 128,456     $ 19,192     $ 41,001     $ 216,746     $ 406,044     $ 28,500     $ —       $ 839,939  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2011

                                                                

Allowance for loan losses:

                                                                

Individually evaluated for impairment

   $ 239     $ 166     $ 380     $ 653     $ 2,309     $ —       $ —       $ 3,747  

Collectively evaluated for impairment

     1,565       1,022       1,182       2,598       3,425       267       3       10,062  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 1,804     $ 1,188     $ 1,562     $ 3,251     $ 5,734     $ 267     $ 3     $ 13,809  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans outstanding:

                                                                

Individually evaluated for

   $ 4,428     $ 1,147     $ 7,867     $ 6,569     $ 33,440     $ —       $ —       $ 53,451  

impairment

                                                                

Collectively evaluated for impairment

     124,127       29,054       39,830       196,885       369,520       30,063       —         789,479  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 128,555     $ 30,201     $ 47,697     $ 203,454     $ 402,960     $ 30,063     $ —       $ 842,930  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans, or portions of loans, are charged off to the extent deemed uncollectible. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. Once the fair value for a collateral dependent loan has been determined, any impaired amount is typically charged off unless the loan has other income streams to support repayment. For impaired loans which have other income streams to support repayment, a specific reserve is established for the amount determined to be impaired.

 

Impaired loans

Impaired loans totaled $49,718,355 and $53,619,534 at March 31, 2012 and December 31, 2011 respectively, and are comprised of loans on non-accrual status and loans which have been classified as troubled debt restructurings.

The categories of impaired loans at March 31, 2012 and December 31, 2011 are as follows:

 

                 
    March 31,
2012		     December 31,
2011		  

Non-accrual loans

   $ 42,493,173     $ 46,402,747  

Troubled debt restructurings continuing to accrue interest

     7,225,182       7,216,787  
   

 

 

    

 

 

  

Total impaired loans

   $ 49,718,355     $ 53,619,534  
   

 

 

    

 

 

  

 

The following table provides additional information about impaired loans at March 31, 2012 and December 31, 2011, respectively, segregated between loans for which an allowance has been provided and loans for which no allowance has been provided:

 

                         
          Unpaid        
    Recorded     Principal     Related  
    Investment     Balance     Allowance  

At March 31, 2012

                        

With no related allowance recorded:

                        

Commercial, financial and

                        

Agricultural

   $ 3,551,263     $ 3,667,662     $ —    

Real estate—construction residential

     96,838       140,364       —    

Real estate—construction commercial

     1,427,285       1,724,295       —    

Real estate—residential

     1,810,433       2,130,471       —    

Real estate—commercial

     11,773,484       17,802,009       —    

Consumer

     147,272       156,245       —    
   

 

 

    

 

 

    

 

 

  

Total

   $ 18,806,575     $ 25,621,046     $ —    
   

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                        

Commercial, financial and

                        

Agricultural

   $ 2,973,554     $ 3,002,756     $ 1,258,280  

Real estate—construction residential

     189,473       189,473       59,493  

Real estate—construction commercial

     6,224,351       6,280,892       423,595  

Real estate—residential

     4,758,358       4,862,097       909,000  

Real estate—commercial

     16,766,044       17,815,485       2,172,734  
   

 

 

    

 

 

    

 

 

  

Total

   $ 30,911,780     $ 32,150,703     $ 4,823,102  
   

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 49,718,355     $ 57,771,749     $ 4,823,102  
   

 

 

    

 

 

    

 

 

  

At December 31, 2011

                        

With no related allowance recorded:

                        

Commercial, financial and

                        

Agricultural

   $ 3,546,088     $ 3,625,113     $ —    

Real estate—construction residential

     584,034       788,152       —    

Real estate—construction commercial

     1,458,346       1,755,248       —    

Real estate—residential

     2,315,344       2,653,979       —    

Real estate—commercial

     15,150,920       21,189,966       —    

Consumer

     168,257       177,332       —    
   

 

 

    

 

 

    

 

 

  

Total

   $ 23,222,989     $ 30,189,790     $ —    
   

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                        

Commercial, financial and

                        

Agricultural

   $ 881,585     $ 904,168     $ 238,840  

Real estate—construction residential

     562,760       562,760       166,300  

Real estate—construction commercial

     6,408,713       6,448,100       379,921  

Real estate—residential

     4,254,023       4,265,660       653,279  

Real estate—commercial

     18,289,464       18,779,725       2,309,226  
   

 

 

    

 

 

    

 

 

  

Total

   $ 30,396,545     $ 30,960,413     $ 3,747,566  
   

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 53,619,534     $ 61,150,203     $ 3,747,566  
   

 

 

    

 

 

    

 

 

  

 

The following table presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2012 and 2011:

 

                                 
    For the Three Months     For the Three Months  
    Ended March 31, 2012     Ended March 31, 2011  
          Interest           Interest  
    Average     Recognized     Average     Recognized  
    Recorded     For the     Recorded     For the  
    Investment     Period Ended     Investment     Period Ended  

With no related allowance recorded:

                                

Commercial, financial and

                                

Agricultural

   $ 3,593,956     $ 21,612     $ 1,734,723     $ —    

Real estate—construction residential

     416,444       6,755       2,764,408       —    

Real estate—construction commercial

     1,440,234       —         8,220,718       —    

Real estate—residential

     2,348,681       2,333       3,718,693       4,684  

Real estate—commercial

     11,918,312       31,642       11,499,818       —    

Consumer

     160,124       311       207,991       —    
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 19,877,751     $ 62,653     $ 28,146,351     $ 4,684  
   

 

 

    

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                                

Commercial, financial and

                                

Agricultural

   $ 1,752,103     $ 7,220     $ 1,871,362     $ 2,192  

Real estate—construction residential

     189,473       —         172,649       —    

Real estate—construction commercial

     6,330,462       —         1,794,542       —    

Real estate—residential

     4,728,459       29,651       3,933,353       27,332  

Real estate—commercial

     16,574,992       —         14,828,936       1,641  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 29,575,489     $ 36,871     $ 22,600,842     $ 31,165  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 49,453,240     $ 99,524     $ 50,747,193     $ 35,849  
   

 

 

    

 

 

    

 

 

    

 

 

  

Interest income recognized on loans in non-accrual status and contractual interest that would have been recorded had the loans performed in accordance with their original contractual terms is as follows:

 

                 
    Three Months Endec March 31,  
    2012     2011  

Contractual interest due on non-accrual loans

   $ 626,229     $ 606,436  

Interest income recognized on loans in non-accrual status

     46       38  
   

 

 

    

 

 

  

Net reduction in interest income

   $ 626,183     $ 606,398  
   

 

 

    

 

 

  

The specific reserve component of our Company’s allowance for loan losses at March 31, 2012 and December 31, 2011 was determined by using fair values of the underlying collateral obtained through independent appraisals and internal evaluations, or by discounting the total expected future cash flows. The recorded investment varies from the unpaid principal balance primarily due to partial charge-offs taken resulting from current appraisals received. The amount recognized as interest income on impaired loans continuing to accrue interest, primarily related to troubled debt restructurings, was $99,524 and $35,849, for the three months ended March 31, 2012 and 2011, respectively. The average recorded investment in impaired loans is calculated on a monthly basis during the periods reported.

Delinquent and Non-Accrual Loans

The delinquency status of loans is determined based on the contractual terms of the notes. Borrowers are generally classified as delinquent once payments become 30 days or more past due. The following table provides aging information for our Company’s past due and non-accrual loans at March 31, 2012 and December 31, 2011.

 

                                         
    Current or           90 Days              
    Less Than           Past Due              
    30 Days     30 - 89 Days     And Still              
    Past Due     Past Due     Accruing     Non-Accrual     Total  

March 31, 2012

                                        

Commercial, Financial, and Agricultural

   $ 123,768,432     $ 716,544     $ —       $ 3,970,807     $ 128,455,783  

Real Estate Construction—Residential

     18,905,905       —         —         286,311       19,192,216  

Real Estate Construction—Commercial

     33,349,084       —         —         7,651,636       41,000,720  

Real Estate Mortgage—Residential

     208,086,550       4,321,510       —         4,338,271       216,746,331  

Real Estate Mortgage—Commercial

     375,985,041       3,960,904       —         26,098,876       406,044,821  

Installment and Other Consumer

     28,038,283       313,946       —         147,272       28,499,501  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 788,133,295     $ 9,312,904     $ —       $ 42,493,173     $ 839,939,372  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2011

                                        

Commercial, Financial, and Agricultural

   $ 126,244,521     $ 242,672     $ —       $ 2,067,980     $ 128,555,173  

Real Estate Construction—Residential

     29,054,404       —         —         1,146,794       30,201,198  

Real Estate Construction—Commercial

     39,821,946       —         7,754       7,867,059       47,696,759  

Real Estate Mortgage—Residential

     195,779,337       3,513,373       8,566       4,152,928       203,454,204  

Real Estate Mortgage—Commercial

     371,000,415       923,704       36,479       30,999,729       402,960,327  

Installment and Other Consumer

     29,281,191       612,461       978       168,257       30,062,887  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 791,181,814     $ 5,292,210     $ 53,777     $ 46,402,747     $ 842,930,548  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Credit Quality

The following table provides information about the credit quality of the loan portfolio using our Company’s internal rating system reflecting management’s risk assessment. Recent reviews by our Company’s chief credit officer identified areas of concern that resulted in heightened attention being given to reducing concentrations of credit and, in particular, to strengthening credit quality and administration. Loans are placed on watch status when (1) one or more weaknesses which could jeopardize timely liquidation exits; or (2) the margin or liquidity of an asset is sufficiently tenuous that adverse trends could result in a collection problem. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified may have a well defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that our Company may sustain some loss if the deficiencies are not corrected. It is our Company’s policy to discontinue the accrual of interest income on loans when management believes that the collection of interest or principal is doubtful. Loans are placed on non-accrual status when (1) deterioration in the financial condition of the borrower exists for which payment of full principal and interest is not expected, or (2) payment of principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection. Subsequent interest payments received on such loans are applied to principal if any doubt exists as to the collectability of such principal; otherwise, such receipts are recorded as interest income on a cash basis.

 

                                                         
    Commercial     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real Estate
Mortgage -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
and other
Consumer		     Total  

At March 31, 2012

                                                        

Watch

   $ 20,306,887     $ 4,955,369     $ 7,461,473     $ 20,067,531     $ 30,057,617     $ 565,586     $ 83,414,463  

Substandard

     5,232,294       443,495       1,191,297       5,727,189       9,293,570       475,152       22,362,997  

Non-accrual

     3,970,807       286,311       7,651,636       4,338,271       26,098,876       147,272       42,493,173  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 29,509,988     $ 5,685,175     $ 16,304,406     $ 30,132,991     $ 65,450,063     $ 1,188,010     $ 148,270,633  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

At December 31, 2011

                                                        

Watch

   $ 22,206,456     $ 9,644,326     $ 9,337,768     $ 13,231,006     $ 24,392,448     $ 557,278     $ 79,369,282  

Substandard

     4,141,582       842,063       1,189,122       4,268,914       8,003,868       444,003       18,889,552  

Non-accrual

     2,067,980       1,146,794       7,867,059       4,152,928       30,999,729       168,257       46,402,747  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 28,416,018     $ 11,633,183     $ 18,393,949     $ 21,652,848     $ 63,396,045     $ 1,169,538     $ 144,661,581  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Troubled Debt Restructurings

At March 31, 2012, loans classified as troubled debt restructurings (TDRs) totaled $30,507,936, of which $23,282,754 was on non-accrual status and $7,225,182 was on accrual status. At December 31, 2011, loans classified as TDRs totaled $32,165,238, of which $24,948,451 was on non-accrual status and $7,216,787 was on accrual status. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. Accordingly, specific reserves of $1,612,460 and $1,522,422 were allocated to the allowance for loan losses at March 31, 2012 and December 31, 2011, respectively.

The following table summarizes loans that were modified as TDRs during the three months ended March 31, 2012:

 

                         
    The Three Months Ended March 31, 2012  
    Recorded Investment (1)  
    Number
of
Contracts		     Pre-
Modification		     Post-
Modification		  

Troubled Debt Restructurings

                        

Commercial, financial and agricultural

     1     $ 196,061     $ 196,061  

Real estate construction - commercial

     1       43,379       43,379  

Total

     2     $ 239,440     $ 239,440  

 

  (1) The amounts reported post-modification are inclusive of all partial pay-downs and charge-offs, and no portion of the debt was forgiven. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon during the period ended are not reported.

According to guidance provided in ASC subtopic 310-40, Troubled Debt Restructurings by Creditors, a loan restructuring or modification of terms is a TDR if the creditor, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. Our Company’s portfolio of loans classified as TDRs include concessions such as interest rates below the current market rate, deferring principal payments, and extending maturity dates. Once a loan becomes a TDR, it will continue to be reported as a TDR until it is ultimately repaid in full, charged-off, or the collateral for the loan is foreclosed and sold. Our Company considers a loan in TDR status in default when the borrower’s payment according to the modified terms is at least 90 days past due or has defaulted due to expiration of the loan’s maturity date. During the three months ended March 31, 2012, two loans meeting the TDR criteria were modified. There were no loans modified as a TDR that defaulted during the three months ended March 31, 2012, and within twelve months of their modification date.