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Loans and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2012
Loans and Allowance for Loan Losses [Abstract]  
Loans and Allowance for Loan Losses
(2) Loans and Allowance for Loan Losses

Loans

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

 

                 

(in thousands)

   2012     2011  

Commercial, financial, and agricultural

   $ 130,040     $ 128,555  

Real estate construction—residential

     22,177       30,201  

Real estate construction—commercial

     43,486       47,697  

Real estate mortgage—residential

     221,223       203,454  

Real estate mortgage—commercial

     405,092       402,960  

Installment and other consumer

     24,966       30,063  
   

 

 

    

 

 

  

Total loans

   $ 846,984     $ 842,930  
   

 

 

    

 

 

  

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 December 31, 2012, loans with a carrying value of $457,000,000 were pledged to the Federal Home Loan Bank as collateral for borrowings and letters of credit.

 

The following is a summary of loans to directors and executive officers or to entities in which such individuals had a beneficial interest of the Company, are summarized as follows:

 

         

(in thousands)

      

Balance at December 31, 2011

   $ 3,161  

New loans

     9,791  

Amounts collected

     (1,937 ) 
   

 

 

  

Balance at December 31, 2012

   $ 11,015  
   

 

 

  

Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the same time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present unfavorable features.

 

Allowance for loan losses

The following is a summary of the allowance for loan losses for the years ended December 31, 2012, 2011, and 2010:

 

                                                                 

(in thousands)

   Commercial,
Financial, &
Agricultural		     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real Estate
Mortgage -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
Loans to
Individuals		     Un -
allocated		     Total  

Balance at December 31, 2009

   $ 2,773     $ 348     $ 1,740     $ 3,488     $ 4,693     $ 380     $ 1,375     $ 14,797  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Additions:

                                                                

Provision for loan losses

     1,908       2,622       4,133       4,740       2,577       32       (758 )      15,254  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deductions:

                                                                

Loans charged off

     1,903       933       4,556       4,534       3,841       422       0       16,189  

Less recoveries on loans

     (153 )      (30 )      (22 )      (228 )      (29 )      (241 )      0       (703 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans charged off

     1,750       903       4,534       4,306       3,812       181       0       15,486  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2010

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Additions:

                                                                

Provision for loan losses

     837       914       485       1,104       8,593       204       (614 )      11,523  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deductions:

                                                                

Loans charged off

     2,157       1,858       512       1,883       6,420       376       0       13,206  

Less recoveries on loans

     (193 )      (65 )      (250 )      (108 )      (103 )      (208 )      0       (927 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans charged off

     1,964       1,793       262       1,775       6,317       168       0       12,279  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2011

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Additions:

                                                                

Provision for loan losses

     1,732       (523 )      126       955       6,318       293       (1 )      8,900  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Deductions:

                                                                

Loans charged off

     1,760       0       0       977       5,466       586       0       8,789  

Less recoveries on loans

     (161 )      (67 )      (23 )      (158 )      (248 )      (265 )      0       (922 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans charged off

     1,599       (67 )      (23 )      819       5,218       321       0       7,867  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at December 31, 2012

   $ 1,937     $ 732     $ 1,711     $ 3,387     $ 6,834     $ 239     $ 2     $ 14,842  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table provides the balance in the allowance for loan losses at December 31, 2012 and 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  

December 31, 2012

                                                                

Allowance for loan losses:

                                                                

Individually evaluated for impairment

   $ 213     $ 125     $ 542     $ 1,069     $ 2,071     $ 0     $ 0     $ 4,020  

Collectively evaluated for impairment

     1,724       607       1,169       2,318       4,763       239       2       10,822  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 1,937     $ 732     $ 1,711     $ 3,387     $ 6,834     $ 239     $ 2     $ 14,842  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans outstanding:

                                                                

Individually evaluated for impairment

   $ 4,157     $ 2,496     $ 7,762     $ 5,771     $ 18,959     $ 44     $ 0     $ 39,189  

Collectively evaluated for impairment

     125,883       19,681       35,724       215,452       386,133       24,922       0       807,795  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 130,040     $ 22,177     $ 43,486     $ 221,223     $ 405,092     $ 24,966     $ 0     $ 846,984  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2011

                                                                

Allowance for loan losses:

                                                                

Individually evaluated for impairment

   $ 239     $ 167     $ 380     $ 653     $ 2,309     $ 0     $ 0     $ 3,748  

Collectively evaluated for impairment

     1,565       1,021       1,182       2,598       3,425       267       3       10,061  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans outstanding:

                                                                

Individually evaluated for impairment

   $ 4,428     $ 1,147     $ 7,867     $ 6,569     $ 33,440     $ 0     $ 0     $ 53,451  

Collectively evaluated for impairment

     124,127       29,054       39,830       196,885       369,520       30,063       0       789,479  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 128,555     $ 30,201     $ 47,697     $ 203,454     $ 402,960     $ 30,063     $ 0     $ 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 $39,363,000 and $53,620,000 at December 31, 2012 and 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 December 31, 2012 and 2011 are as follows:

 

                 

(in thousands)

   2012     2011  

Non-accrual loans

   $ 31,081     $ 46,403  

Troubled debt restructurings continuing to accrue interest

     8,282       7,217  
   

 

 

    

 

 

  

Total impaired loans

   $ 39,363     $ 53,620  
   

 

 

    

 

 

  

 

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

 

                         

(in thousands)

   Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		  

At December 31, 2012

                        

With no related allowance recorded:

                        

Commercial, financial and agricultural

   $ 3,272     $ 4,009     $ 0  

Real estate—construction residential

     2,307       2,339       0  

Real estate—construction commercial

     1,879       2,102       0  

Real estate—residential

     1,939       2,393       0  

Real estate—commercial

     5,162       5,565       0  

Consumer

     174       186       0  
   

 

 

    

 

 

    

 

 

  

Total

   $ 14,733     $ 16,594     $ 0  
   

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                        

Commercial, financial and agricultural

   $ 885     $ 898     $ 213  

Real estate—construction residential

     189       189       125  

Real estate—construction commercial

     5,883       6,011       542  

Real estate—residential

     3,832       3,999       1,069  

Real estate—commercial

     13,797       14,167       2,071  

Consumer

     44       44       0  
   

 

 

    

 

 

    

 

 

  

Total

   $ 24,630     $ 25,308     $ 4,020  
   

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 39,363     $ 41,902     $ 4,020  
   

 

 

    

 

 

    

 

 

  

At December 31, 2011

                        

With no related allowance recorded:

                        

Commercial, financial and agricultural

   $ 3,546     $ 3,625     $ 0  

Real estate—construction residential

     584       788       0  

Real estate—construction commercial

     1,459       1,756       0  

Real estate—residential

     2,315       2,654       0  

Real estate—commercial

     15,151       21,190       0  

Consumer

     168       177       0  
   

 

 

    

 

 

    

 

 

  

Total

   $ 23,223     $ 30,190     $ 0  
   

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                        

Commercial, financial and agricultural

   $ 882     $ 904     $ 239  

Real estate—construction residential

     563       563       167  

Real estate—construction commercial

     6,409       6,448       380  

Real estate—residential

     4,254       4,265       653  

Real estate—commercial

     18,289       18,780       2,309  
   

 

 

    

 

 

    

 

 

  

Total

   $ 30,397     $ 30,960     $ 3,748  
   

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 53,620     $ 61,150     $ 3,748  
   

 

 

    

 

 

    

 

 

  

 

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

 

                                 
    2012     2011  

(in thousands)

   Average
Recorded
Investment		     Interest
Recognized
For the
Period Ended		     Average
Recorded
Investment		     Interest
Recognized
For the
Period Ended		  

With no related allowance recorded:

                                

Commercial, financial and agricultural

   $ 4,157     $ 93     $ 3,510     $ 52  

Real estate—construction residential

     1,137       7       1,273       0  

Real estate—construction commercial

     1,692       0       3,568       0  

Real estate—residential

     3,169       50       3,596       26  

Real estate—commercial

     12,198       124       18,270       73  

Consumer

     170       1       190       4  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 22,523     $ 275     $ 30,407     $ 155  
   

 

 

    

 

 

    

 

 

    

 

 

  

With an allowance recorded:

                                

Commercial, financial and agricultural

   $ 776     $ 29     $ 655     $ 17  

Real estate—construction residential

     189       0       47       0  

Real estate—construction commercial

     6,087       0       5,805       0  

Real estate—residential

     2,604       11       3,203       113  

Real estate—commercial

     11,271       99       12,724       0  

Consumer

     2       0       0       0  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 20,929     $ 139     $ 22,434     $ 130  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total impaired loans

   $ 43,452     $ 414     $ 52,841     $ 285  
   

 

 

    

 

 

    

 

 

    

 

 

  

The specific reserve component of the Company’s allowance for loan losses at December 31, 2012 and 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 $275,000 and $155,000, for the years ended December 31, 2012 and 2011, respectively. The average recorded investment in impaired loans is calculated on a monthly basis during the periods reported. Contractual interest due on loans in non-accrual status was $1,198,000 at December 31, 2012 compared to $1,952,000 at December 31, 2011. Interest income recognized on loans in non-accrual status was $11,000 for the year ended December 31, 2011. During the year ended December 31, 2012 there was no significant interest recognized on loans in non-accrual status.

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 the Company’s past due and non-accrual loans at December 31, 2012 and 2011.

 

                                         

(in thousands)

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

December 31, 2012

                                        

Commercial, Financial, and Agricultural

   $ 126,884     $ 1,821     $ 0     $ 1,335     $ 130,040  

Real Estate Construction—Residential

     19,390       290       0       2,497       22,177  

Real Estate Construction—Commercial

     35,117       607       0       7,762       43,486  

Real Estate Mortgage—Residential

     213,694       2,199       0       5,330       221,223  

Real Estate Mortgage—Commercial

     390,032       1,122       0       13,938       405,092  

Installment and Other Consumer

     24,221       520       6       219       24,966  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 809,338     $ 6,559     $ 6     $ 31,081     $ 846,984  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2011

                                        

Commercial, Financial, and Agricultural

   $ 126,244     $ 243     $ 0     $ 2,068     $ 128,555  

Real Estate Construction—Residential

     29,054       0       0       1,147       30,201  

Real Estate Construction—Commercial

     39,822       0       8       7,867       47,697  

Real Estate Mortgage—Residential

     195,779       3,513       9       4,153       203,454  

Real Estate Mortgage—Commercial

     371,000       924       36       31,000       402,960  

Installment and Other Consumer

     29,282       612       1       168       30,063  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 791,181     $ 5,292     $ 54     $ 46,403     $ 842,930  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Credit Quality

The following table provides information about the credit quality of the loan portfolio using the Company’s internal rating system reflecting management’s risk assessment. Loans are placed on watch status when (1) one or more weaknesses that 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 the Company may sustain some loss if the deficiencies are not corrected. It is the 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.

 

 

                                                         

(in thousands)

   Commercial,
Financial, &
Agricultural		     Real Estate
Construction -
Residential		     Real Estate
Construction -
Commercial		     Real Estate
Mortgage  -
Residential		     Real Estate
Mortgage -
Commercial		     Installment
and other
Consumer		     Total  

At December 31, 2012

                                                        

Watch

   $ 14,814     $ 4,580     $ 6,459     $ 26,063     $ 29,753     $ 672     $ 82,341  

Substandard

     6,485       396       2,035       5,472       11,027       423       25,838  

Non-accrual

     1,335       2,497       7,762       5,330       13,938       219       31,081  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 22,634     $ 7,473     $ 16,256     $ 36,865     $ 54,718     $ 1,314     $ 139,260  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

At December 31, 2011

                                                        

Watch

   $ 22,206     $ 9,644     $ 9,338     $ 13,231     $ 24,392     $ 557     $ 79,368  

Substandard

     4,142       842       1,189       4,269       8,004       444       18,890  

Non-accrual

     2,068       1,147       7,867       4,153       31,000       168       46,403  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 28,416     $ 11,633     $ 18,394     $ 21,653     $ 63,396     $ 1,169     $ 144,661  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Troubled Debt Restructurings

At December 31, 2012, loans classified as troubled debt restructurings (TDRs) totaled $22,363,000, of which $14,081,000 was on non-accrual status and $8,282,000 was on accrual status. At December 31, 2011, loans classified as TDRs totaled $32,165,000, of which $24,948,000 was on non-accrual status and $7,217,000 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 $1,544,000 and $1,522,000 were allocated to the allowance for loan losses at December 31, 2012 and 2011, respectively.

The following table summarizes loans that were modified as TDRs during the years ended December 31, 2012 and 2011:

 

                                                 
    2012     2011  
    Recorded Investment (1)     Recorded Investment (1)  

(in thousands)

   Number of
Contracts		     Pre -
Modification		     Post -
Modification		     Number of
Contracts		     Pre -
Modification		     Post -
Modification		  

Troubled Debt Restructurings

                                                

Commercial, financial and agricultural

     4     $ 637     $ 613       9     $ 3,500     $ 3,486  

Real estate construction—commercial

     1       43       41       8       6,616       6,227  

Real estate mortgage—residential

     5       657       657       7       1,157       1,010  

Real estate mortgage—commercial

     2       645       644       9       9,553       9,215  

Consumer

     2       44       44       0       0       0  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     14     $ 2,026     $ 1,999       33     $ 20,826     $ 19,938  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(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.

The 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. The 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 year ended December 31, 2012, fourteen loans meeting the TDR criteria were modified. There was one loan modified as a TDR that defaulted during the year ended December 31, 2012, and within twelve months of their modification date. No loans modified as a TDR during the year ended December 31, 2011 defaulted.