Troubled Debt Restructurings

All loans deemed a troubled debt restructuring, or “TDR”, are considered impaired, and are evaluated for collateral and cash-flow sufficiency. A loan is considered a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. All of the following factors are indicators that the Bank has granted a concession (one or multiple items may be present):


•	The borrower receives a reduction of the stated interest rate to a rate less than the institution is willing to accept at the time of the restructure for a new loan with comparable risk.


•	The borrower receives an extension of the maturity date or dates at a stated interest rate lower than the current market interest rate for new debt with similar risk characteristics.


•	The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement.


•	The borrower receives a deferral of required payments (principal and/or interest).


•	The borrower receives a reduction of the accrued interest.

There were twenty (20) troubled debt restructured loans totaling $6.4 million at December 31, 2013. At December 31, 2012, there were twenty-three (23) troubled debt restructured loans totaling $8.2 million. Five loans, totaling $1.7 million, were in nonaccrual status at December 31, 2013. Two loans, totaling $311 thousand, were in nonaccrual status at December 31, 2012. There were no outstanding commitments to lend additional amounts to troubled debt restructured borrowers at December 31, 2013.

The following tables set forth information on the Company’s troubled debt restructurings by class of financing receivable occurring during the years ended December 31, 2013 and 2012:



		For the Year Ended
		December 31, 2013
		(in thousands)
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Impairment Accrued
Construction and Farmland
Commercial	2	$	1,608	$	1,608	$	54
Residential
Equity	1	184		184		—
Single family	2	338		338		—
Total	5	$	2,130	$	2,130	$	54

		For the Year Ended
		December 31, 2012
		(in thousands)
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Impairment Accrued
Commercial Real Estate
Owner Occupied	1	$	162	$	162	$	—
Construction and Farmland
Commercial	1	95		95		—
Residential
Single family	1	91		91		—
Total	3	$	348	$	348	$	—

During the twelve months ended December 31, 2013, the Company restructured five loans by granting concessions to borrowers experiencing financial difficulties. One commercial construction and farmland loan was modified by extending the term of the loan and keeping the loan on interest only payments. One commercial construction and farmland loan was modified by granting a lower interest rate. One single family residential loan was modified by changing the amortization period and granting a lower interest rate. One single family residential loan was modified by forgiving a portion of the loan balance and extending the term of the loan. One residential equity loan was modified by changing payments to interest-only in order to reduce the monthly payment for a period of time.

During the twelve months ended December 31, 2012, the Company restructured three loans by granting concessions to borrowers experiencing financial difficulties. One residential loan was modified by granting an interest rate reduction. In addition, one construction and farmland loan and one owner-occupied commercial real estate loan was modified by changing the amortization period to reduce the payment amount.

Loans by class of financing receivable modified as TDRs within the previous 12 months and for which there was a payment default during the stated periods were:



	For the Year Ended
	December 31, 2013
	(in thousands)
	Number of Contracts	Recorded Investment
Construction and Farmland:
Commercial	2	$	1,614
Total	2	$	1,614

	For the Year Ended
	December 31, 2012
	(in thousands)
	Number of Contracts	Recorded Investment
Commercial Real Estate:
Non-owner occupied	1	$	162
Construction and Farmland:
Commercial	1	87
Residential:
Single family	4	863
Total	6	$	1,112

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.