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Loans and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2014
Loans and Leases Receivable Disclosure [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, 2014 and 2013 is as follows:

 

(in thousands)   2014     2013  
             
Commercial, financial, and agricultural   $ 154,834     $ 141,845  
Real estate construction - residential     18,103       21,008  
Real estate construction - commercial     48,822       55,076  
Real estate mortgage - residential     247,117       225,630  
Real estate mortgage - commercial     372,321       375,686  
Installment and other consumer     20,016       20,302  
                 
Total loans   $ 861,213     $ 839,547  

 

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the communities surrounding Jefferson City, Columbia, 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, 2014, loans with a carrying value of $411.8 million, or $405.5 million fair value, 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, 2013   $ 4,837  
New loans     478  
Amounts collected     (375 )
         
Balance at December 31, 2014   $ 4,940  

 

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, 2014, 2013, and 2012:

 

(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, 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 ​ ​
Additions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Provision for loan losses
 ​ ​ ​ ​ 992 ​ ​ ​ ​ ​ 318 ​ ​ ​ ​ ​ (452) ​ ​ ​ ​ ​ 273 ​ ​ ​ ​ ​ 622 ​ ​ ​ ​ ​ 272 ​ ​ ​ ​ ​ 5 ​ ​ ​ ​ ​ 2,030 ​ ​
Deductions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Loans charged off
 ​ ​ ​ ​ 895 ​ ​ ​ ​ ​ 119 ​ ​ ​ ​ ​ 633 ​ ​ ​ ​ ​ 812 ​ ​ ​ ​ ​ 1,301 ​ ​ ​ ​ ​ 420 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 4,180 ​ ​
Less recoveries on loans
 ​ ​ ​ ​ (340) ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (5) ​ ​ ​ ​ ​ (111) ​ ​ ​ ​ ​ (368) ​ ​ ​ ​ ​ (203) ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (1,027) ​ ​
Net loans charged off
 ​ ​ ​ ​ 555 ​ ​ ​ ​ ​ 119 ​ ​ ​ ​ ​ 628 ​ ​ ​ ​ ​ 701 ​ ​ ​ ​ ​ 933 ​ ​ ​ ​ ​ 217 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 3,153 ​ ​
Balance at December 31, 2013
 ​ ​ ​ $ 2,374 ​ ​ ​ ​ $ 931 ​ ​ ​ ​ $ 631 ​ ​ ​ ​ $ 2,959 ​ ​ ​ ​ $ 6,523 ​ ​ ​ ​ $ 294 ​ ​ ​ ​ $ 7 ​ ​ ​ ​ $ 13,719 ​ ​
Additions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Provision for loan losses
 ​ ​ ​ ​ 371 ​ ​ ​ ​ ​ (592) ​ ​ ​ ​ ​ 326 ​ ​ ​ ​ ​ (226) ​ ​ ​ ​ ​ (107) ​ ​ ​ ​ ​ 195 ​ ​ ​ ​ ​ 33 ​ ​ ​ ​ ​ 0 ​ ​
Deductions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Loans charged off
 ​ ​ ​ ​ 1,285 ​ ​ ​ ​ ​ 349 ​ ​ ​ ​ ​ 491 ​ ​ ​ ​ ​ 408 ​ ​ ​ ​ ​ 2,890 ​ ​ ​ ​ ​ 405 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 5,828 ​ ​
Less recoveries on loans
 ​ ​ ​ ​ (319) ​ ​ ​ ​ ​ (181) ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (202) ​ ​ ​ ​ ​ (320) ​ ​ ​ ​ ​ (186) ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (1,208) ​ ​
Net loans charged off
 ​ ​ ​ ​ 966 ​ ​ ​ ​ ​ 168 ​ ​ ​ ​ ​ 491 ​ ​ ​ ​ ​ 206 ​ ​ ​ ​ ​ 2,570 ​ ​ ​ ​ ​ 219 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 4,620 ​ ​
Balance at December 31, 2014
 ​ ​ ​ $ 1,779 ​ ​ ​ ​ $ 171 ​ ​ ​ ​ $ 466 ​ ​ ​ ​ $ 2,527 ​ ​ ​ ​ $ 3,846 ​ ​ ​ ​ $ 270 ​ ​ ​ ​ $ 40 ​ ​ ​ ​ $ 9,099 ​ ​
​
 

 

Loans, or portions of loans, are charged off to the extent deemed uncollectible or a loss is confirmed. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. If management determines that it is probable that all amounts due on a loan will not be collected under the original terms of the loan agreement, the loan is considered to be impaired. These loans are evaluated individually for impairment, and in conjunction with current economic conditions and loss experience, specific reserves are estimated as further discussed below. Loans not individually evaluated are aggregated by risk characteristics and reserves are recorded using a consistent methodology that considers historical loan loss experience by loan type, delinquencies, current economic conditions, loan risk ratings and industry concentration.

 

The following table provides the balance in the allowance for loan losses at December 31, 2014 and 2013, and the related loan balance by impairment methodology.

 

(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
 ​ ​
Un-
allocated
 ​ ​
Total
 ​
December 31, 2014 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Individually evaluated for impairment
 ​ ​ ​ $ 134 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 1,343 ​ ​ ​ ​ $ 246 ​ ​ ​ ​ $ 26 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 1,749 ​ ​
Collectively evaluated for impairment
 ​ ​ ​ ​ 1,645 ​ ​ ​ ​ ​ 171 ​ ​ ​ ​ ​ 466 ​ ​ ​ ​ ​ 1,184 ​ ​ ​ ​ ​ 3,600 ​ ​ ​ ​ ​ 244 ​ ​ ​ ​ ​ 40 ​ ​ ​ ​ ​ 7,350 ​ ​
Total ​ ​ ​ $ 1,779 ​ ​ ​ ​ $ 171 ​ ​ ​ ​ $ 466 ​ ​ ​ ​ $ 2,527 ​ ​ ​ ​ $ 3,846 ​ ​ ​ ​ $ 270 ​ ​ ​ ​ $ 40 ​ ​ ​ ​ $ 9,099 ​ ​
Loans outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Individually evaluated for impairment
 ​ ​ ​ $ 7,541 ​ ​ ​ ​ $ 1,750 ​ ​ ​ ​ $ 2,096 ​ ​ ​ ​ $ 7,878 ​ ​ ​ ​ $ 16,464 ​ ​ ​ ​ $ 234 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 35,963 ​ ​
Collectively evaluated for impairment
 ​ ​ ​ ​ 147,293 ​ ​ ​ ​ ​ 16,353 ​ ​ ​ ​ ​ 46,726 ​ ​ ​ ​ ​ 239,239 ​ ​ ​ ​ ​ 355,857 ​ ​ ​ ​ ​ 19,782 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 825,250 ​ ​
Total ​ ​ ​ $    154,834 ​ ​ ​ ​ $     18,103 ​ ​ ​ ​ $     48,822 ​ ​ ​ ​ $  247,117 ​ ​ ​ ​ $  372,321 ​ ​ ​ ​ $  20,016 ​ ​ ​ ​ $        0 ​ ​ ​ ​ $  861,213 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
December 31, 2013 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Individually evaluated for impairment
 ​ ​ ​ $ 721 ​ ​ ​ ​ $ 392 ​ ​ ​ ​ $ 304 ​ ​ ​ ​ $ 1,374 ​ ​ ​ ​ $ 1,989 ​ ​ ​ ​ $ 16 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 4,796 ​ ​
Collectively evaluated for impairment
 ​ ​ ​ ​ 1,653 ​ ​ ​ ​ ​ 539 ​ ​ ​ ​ ​ 327 ​ ​ ​ ​ ​ 1,585 ​ ​ ​ ​ ​ 4,534 ​ ​ ​ ​ ​ 278 ​ ​ ​ ​ ​ 7 ​ ​ ​ ​ ​ 8,923 ​ ​
Total ​ ​ ​ $ 2,374 ​ ​ ​ ​ $ 931 ​ ​ ​ ​ $ 631 ​ ​ ​ ​ $ 2,959 ​ ​ ​ ​ $ 6,523 ​ ​ ​ ​ $ 294 ​ ​ ​ ​ $ 7 ​ ​ ​ ​ $ 13,719 ​ ​
Loans outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Individually evaluated for impairment
 ​ ​ ​ $ 4,015 ​ ​ ​ ​ $ 2,204 ​ ​ ​ ​ $ 6,615 ​ ​ ​ ​ $ 6,517 ​ ​ ​ ​ $ 15,422 ​ ​ ​ ​ $ 43 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 34,816 ​ ​
Collectively evaluated for impairment
 ​ ​ ​ ​ 137,830 ​ ​ ​ ​ ​ 18,804 ​ ​ ​ ​ ​ 48,461 ​ ​ ​ ​ ​ 219,113 ​ ​ ​ ​ ​ 360,264 ​ ​ ​ ​ ​ 20,259 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 804,731 ​ ​
Total ​ ​ ​ $ 141,845 ​ ​ ​ ​ $ 21,008 ​ ​ ​ ​ $ 55,076 ​ ​ ​ ​ $ 225,630 ​ ​ ​ ​ $ 375,686 ​ ​ ​ ​ $ 20,302 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 839,547 ​ ​
​
 

 

Impaired loans

 

Loans evaluated under ASC 310-10-35 include loans which are individually evaluated for impairment. All other loans are collectively evaluated for impairment under ASC 450-20. Impaired loans totaled $36.0 million and $35.1 million at December 31, 2014 and 2013, respectively, and are comprised of loans on non-accrual status and loans, which have been classified as troubled debt restructurings. Total impaired loans of $36.0 million at December 31, 2014 were individually evaluated for impairment compared to $35.1 million at December 31, 2013. The $35.1 million of total impaired loans individually evaluated for impairment as December 31, 2013, includes $34.8 million of impaired loans individually evaluated for impairment and $259,000 of non-accrual consumer loans that were collectively evaluated for impairment. Beginning in 2014, consumer non-accrual loans were included in the individually evaluated impairment calculations.

 

The net carrying value of impaired loans is generally based on the fair values of collateral obtained through independent appraisals or internal evaluations, or by discounting the total expected future cash flows. At December 31, 2014 and 2013, $15.6 million and $21.8 million, respectively, of impaired loans were evaluated based on the fair value less estimated selling costs of the loan’s collateral. Once the impairment amount is calculated, a specific reserve allocation is recorded. At December 31, 2014, $1.7 million of the Company’s allowance for loan losses was allocated to impaired loans totaling $36.0 million compared to $4.8 million of the Company's allowance for loan losses allocated to impaired loans totaling approximately $35.1 million at December 31, 2013. Management determined that $28.5 million, or 79%, of total impaired loans required no reserve allocation at December 31, 2014 compared to $18.8 million, or 54%, at December 31, 2013 primarily due to adequate collateral values, acceptable payment history and adequate cash flow ability.

 

The categories of impaired loans at December 31, 2014 and 2013 are as follows:

 

(in thousands)   2014     2013  
Non-accrual loans   $ 18,243     $ 23,680  
Troubled debt restructurings continuing to accrue interest     17,720       11,395  
Total impaired loans   $ 35,963     $ 35,075  

 

The following tables provide additional information about impaired loans at December 31, 2014 and 2013, respectively, segregated between loans for which an allowance has been provided and loans for which no allowance has been provided.

 

          Unpaid        
    Recorded     Principal     Specific  
(in thousands)   Investment     Balance     Reserves  
                   
December 31, 2014                  
With no related allowance recorded:                        
Commercial, financial and agricultural   $ 6,021     $ 6,232     $ 0  
Real estate - construction residential     1,750       2,259       0  
Real estate - construction commercial     2,096       2,319       0  
Real estate - residential     3,213       3,270       0  
Real estate - commercial     15,409       18,950       0  
Consumer     36       36       0  
Total   $ 28,525     $ 33,066     $ 0  
With an allowance recorded:                        
Commercial, financial and agricultural   $ 1,520     $ 1,528     $ 134  
Real estate - construction residential     0       0       0  
Real estate - construction commercial     0       0       0  
Real estate - residential     4,665       3,546       1,343  
Real estate - commercial     1,055       1,171       246  
Consumer     198       237       26  
Total   $ 7,438     $ 6,482     $ 1,749  
Total impaired loans   $ 35,963     $ 39,548     $ 1,749  

  

          Unpaid        
    Recorded     Principal     Specific  
(in thousands)   Investment     Balance     Reserves  
                   
December 31, 2013                        
With no related allowance recorded:                        
Commercial, financial and agricultural   $ 2,467     $ 2,593     $ 0  
Real estate - construction residential     44       80       0  
Real estate - construction commercial     6,101       7,148       0  
Real estate - residential     2,121       2,654       0  
Real estate - commercial     7,817       8,056       0  
Consumer     259       282       0  
Total   $ 18,809     $ 20,813     $ 0  
With an allowance recorded:                        
Commercial, financial and agricultural   $ 1,548     $ 1,607     $ 721  
Real estate - construction residential     2,160       2,331       392  
Real estate - construction commercial     514       514       304  
Real estate - residential     4,396       4,570       1,374  
Real estate - commercial     7,605       7,925       1,989  
Consumer     43       45       16  
Total   $ 16,266     $ 16,992     $ 4,796  
Total impaired loans   $ 35,075     $ 37,805     $ 4,796  

 

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, 2014 and 2013:

 

    2014     2013  
          Interest           Interest  
    Average     Recognized     Average     Recognized  
    Recorded     For the     Recorded     For the  
(in thousands)   Investment     Period Ended     Investment     Period Ended  
With no related allowance recorded:                                
Commercial, financial and agricultural   $ 3,141     $ 94     $ 2,693     $ 108  
Real estate - construction residential     610       2       80       0  
Real estate - construction commercial     5,950       0       7,437       6  
Real estate - residential     3,517       46       2,612       51  
Real estate - commercial     13,703       400       8,461       170  
Consumer     11       0       290       3  
Total   $ 26,932     $ 542     $ 21,573     $ 338  
With an allowance recorded:                                
Commercial, financial and agricultural   $ 1,773     $ 19     $ 1,677     $ 29  
Real estate - construction residential     1,697       0       2,409       0  
Real estate - construction commercial     42       0       514       0  
Real estate - residential     5,118       129       4,596       24  
Real estate - commercial     3,810       11       8,157       113  
Consumer     312       0       45       0  
Total   $ 12,752     $ 159     $ 17,398     $ 166  
Total impaired loans   $ 39,684     $ 701     $ 38,971     $ 504  

 

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 $542,000 and $338,000, for the years ended December 31, 2014 and 2013, respectively. The average recorded investment in impaired loans is calculated on a monthly basis during the years reported. Contractual interest lost on loans in non-accrual status was $1.1 million and $1.2 million, for the years ended December 31, 2014 and 2013, respectively.

  

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, 2014 and 2013.

 

    Current or           90 Days              
    Less Than           Past Due              
    30 Days     30 - 89 Days     And Still              
(in thousands)   Past Due     Past Due     Accruing     Non-Accrual     Total  
                               
December 31, 2014                                        
Commercial, Financial, and Agricultural   $ 149,366     $ 189     $ 0     $ 5,279     $ 154,834  
Real Estate Construction - Residential     16,352       0       0       1,751       18,103  
Real Estate Construction - Commercial     46,670       0       56       2,096       48,822  
Real Estate Mortgage - Residential     239,469       3,229       0       4,419       247,117  
Real Estate Mortgage - Commercial     366,653       1,203       0       4,465       372,321  
Installment and Other Consumer     19,551       230       2       233       20,016  
Total   $ 838,061     $ 4,851     $ 58     $ 18,243     $ 861,213  
                                         
December 31, 2013                                        
Commercial, Financial, and Agricultural   $ 139,219     $ 942     $ 0     $ 1,684     $ 141,845  
Real Estate Construction - Residential     18,738       66       0       2,204       21,008  
Real Estate Construction - Commercial     48,230       595       0       6,251       55,076  
Real Estate Mortgage - Residential     217,268       4,068       129       4,165       225,630  
Real Estate Mortgage - Commercial     365,787       725       100       9,074       375,686  
Installment and Other Consumer     19,695       291       14       302       20,302  
Total   $ 808,937     $ 6,687     $ 243     $ 23,680     $ 839,547  

 

Credit Quality

 

The Company categorizes loans into risk categories based upon an internal rating system reflecting management’s risk assessment. Loans are placed on watch status when one or more weaknesses that may result in the deterioration of the repayment exits or the Company’s credit position at some future date. 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.

  

The following table presents the risk categories by class at December 31, 2014 and 2013.

 

(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, 2014                                                        
Watch   $ 13,651     $ 1,103     $ 4,757     $ 27,172     $ 18,191     $ 199     $ 65,073  
Substandard     3,188       90       1,211       6,583       16,101       139       27,312  
Non-accrual     5,279       1,751       2,096       4,419       4,465       233       18,243  
Total   $ 22,118     $ 2,944     $ 8,064     $ 38,174     $ 38,757     $ 571     $ 110,628  
                                                         
At December 31, 2013                                                        
Watch   $ 15,016     $ 2,007     $ 6,111     $ 26,331     $ 23,662     $ 388     $ 73,515  
Substandard     7,553       92       1,403       8,579       14,510       281       32,418  
Non-accrual     1,684       2,204       6,251       4,165       9,074       302       23,680  
Total   $ 24,253     $ 4,303     $ 13,765     $ 39,075     $ 47,246     $ 971     $ 129,613  

 

Troubled Debt Restructurings

 

At December 31, 2014, loans classified as troubled debt restructurings (TDRs) totaled $19.3 million, of which $1.6 million were on non-accrual status and $17.7 million were on accrual status. At December 31, 2013, loans classified as troubled debt restructurings (TDRs) totaled $21.5 million, of which $10.1 million were on non-accrual status and $11.4 million were 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 $1.0 million and $2.2 million related to TDRs were allocated to the allowance for loan losses at December 31, 2014 and 2013, respectively.

 

The following table summarizes loans that were modified as TDRs during the years ended December 31, 2014 and 2013.

 

    2014     2013  
    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     3     $ 244     $ 208       0     $ 0     $ 0  
Real estate mortgage - residential     1       1,256       1,170       3       2,156       1,992  
Real estate mortgage - commercial     0       0       0       1       1,282       1,282  
Total     4     $ 1,500     $ 1,378       4     $ 3,438     $ 3,274  

 

(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. Four loans were modified in each of the years ending December 31, 2014 and 2013 meeting the TDR criteria. There were two loans modified as a TDR that defaulted during the year December 31, 2014, and within twelve months of their modification date compared to no loans during the year ended December 31, 2013.