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3. Loans (Tables)

9 Months Ended

Sep. 30, 2014

Loans Tables

Major classifications of loans

Major classifications of loans at September 30, 2014 and December 31, 2013 are summarized as follows:

(Dollars in thousands)
	September 30, 2014			December 31, 2013
Real estate loans
Construction and land development	$	56,959		63,742
Single-family residential		202,797		195,975
Single-family residential -
Banco de la Gente stated income		47,665		49,463
Commercial		227,183		209,287
Multifamily and farmland		10,887		11,801
Total real estate loans		545,491		530,268
Loans not secured by real estate
Commercial loans		78,139		68,047
Farm loans		10		19
Consumer loans		10,210		9,593
All other loans		16,700		13,033
Total loans		650,550		620,960
Less allowance for loan losses		12,343		13,501
Total net loans	$	638,207		607,459

Age analysis of past due loans, by loan type

The following tables present an age analysis of past due loans, by loan type, as of September 30, 2014 and December 31, 2013:

September 30, 2014
(Dollars in thousands)
	Loans 30 to 89 Days Past Due			Loans 90 or More Days Past Due		Total Past Due Loans		Total Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
Real estate loans
Construction and land development	$	231		3,546		3,777		53,182		56,959		-
Single-family residential		2,663		973		3,636		199,161		202,797		120
Single-family residential -
Banco de la Gente stated income		1,155		1,006		2,161		45,504		47,665		-
Commercial		1,864		416		2,280		224,903		227,183		-
Multifamily and farmland		-		167		167		10,720		10,887		-
Total real estate loans		5,913		6,108		12,021		533,470		545,491		120
Loans not secured by real estate
Commercial loans		444		256		700		77,439		78,139		-
Farm loans		-		-		-		10		10		-
Consumer loans		148		11		159		10,051		10,210		-
All other loans		-		-		-		16,700		16,700		-
Total loans	$	6,505		6,375		12,880		637,670		650,550		120

December 31, 2013
(Dollars in thousands)
	Loans 30 to 89 Days Past Due			Loans 90 or More  Days Past Due		Total Past Due Loans		Total Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
Real estate loans
Construction and land development	$	3,416		5,426		8,842		54,900		63,742		-
Single-family residential		4,518		1,555		6,073		189,902		195,975		-
Single-family residential -
Banco de la Gente stated income		9,833		1,952		11,785		37,678		49,463		881
Commercial		1,643		486		2,129		207,158		209,287		-
Multifamily and farmland		177		-		177		11,624		11,801		-
Total real estate loans		19,587		9,419		29,006		501,262		530,268		881
Loans not secured by real estate
Commercial loans		424		29		453		67,594		68,047		-
Farm loans		-		-		-		19		19		-
Consumer loans		181		3		184		9,409		9,593		1
All other loans		-		-		-		13,033		13,033		-
Total loans	$	20,192		9,451		29,643		591,317		620,960		882

Non-accrual loans

The following table presents the Company’s non-accrual loans as of September 30, 2014 and December 31, 2013:

(Dollars in thousands)
	September 30, 2014			December 31, 2013
Real estate loans
Construction and land development	$	3,888		6,546
Single-family residential		2,325		2,980
Single-family residential -
Banco de la Gente stated income		1,955		1,990
Commercial		1,818		2,043
Multifamily and farmland		166		-
Total real estate loans		10,152		13,559
Loans not secured by real estate
Commercial loans		421		250
Consumer loans		61		27
Total	$	10,634		13,836

Impaired loans

The following tables present the Company’s impaired loans as of September 30, 2014 and December 31, 2013:

September 30, 2014
(Dollars in thousands)
	Unpaid  Contractual Principal Balance			Recorded Investment With No Allowance		Recorded Investment With Allowance		Recorded Investment in Impaired Loans		Related Allowance		Average Outstanding  Impaired Loans
Real estate loans
Construction and land development	$	5,704		3,808		645		4,453		40		5,990
Single-family residential		6,520		941		5,360		6,301		139		7,690
Single-family residential -
Banco de la Gente stated income		21,706		-		21,129		21,129		1,210		19,998
Commercial		4,733		2,845		1,548		4,393		192		4,445
Multifamily and farmland		166		-		166		166		1		171
Total impaired real estate loans		38,829		7,594		28,848		36,442		1,582		38,294
Loans not secured by real estate
Commercial loans		760		-		659		659		13		836
Consumer loans		311		-		307		307		5		305
Total impaired loans	$	39,900		7,594		29,814		37,408		1,600		39,435

December 31, 2013
(Dollars in thousands)
	Unpaid Contractual Principal Balance			Recorded Investment With No Allowance		Recorded Investment With Allowance		Recorded Investment in Impaired Loans		Related Allowance		Average Outstanding Impaired Loans
Real estate loans
Construction and land development	$	9,861		6,293		868		7,161		53		8,289
Single-family residential		7,853		1,428		5,633		7,061		123		7,859
Single-family residential -
Banco de la Gente stated income		22,034		-		21,242		21,242		1,300		21,242
Commercial		5,079		3,045		1,489		4,534		182		4,171
Multifamily and farmland		177		-		177		177		1		184
Total impaired real estate loans		45,004		10,766		29,409		40,175		1,659		41,745
Loans not secured by real estate
Commercial loans		999		257		724		981		15		826
Consumer loans		302		264		35		299		1		247
Total impaired loans	$	46,305		11,287		30,168		41,455		1,675		42,818

Changes in the allowance for loan losses

Changes in the allowance for loan losses for the three and nine months ended September 30, 2014 and 2013 were as follows:

(Dollars in thousands)
	Real Estate Loans
	Construction and Land Development			Single- Family Residential		Single- Family Residential- Banco de la  Gente Stated Income		Commercial		Multifamily and Farmland		Commercial		Farm		Consumer and All  Other		Unallocated		Total
Nine months ended September 30, 2014
Allowance for loan losses:
Beginning balance	$	3,218		3,123		1,863		2,219		37		1,069		-		245		1,727		13,501
Charge-offs		(772	)	(223	)	(148	)	(181	)	-		(197	)	-		(399	)	-		(1,920	)
Recoveries		389		64		17		165		-		42		-		112		-		789
Provision		239		(230	)	(60	)	(435	)	(29	)	240		-		282		(34	)	(27	)
Ending balance	$	3,074		2,734		1,672		1,768		8		1,154		-		240		1,693		12,343
Three months ended September 30, 2014
Allowance for loan losses:
Beginning balance	$	3,387		2,848		1,708		1,839		7		1,081		-		253		1,552		12,675
Charge-offs		(513	)	(30	)	(7	)	(51	)	-		(4	)	-		(144	)	-		(749	)
Recoveries		107		2		-		4		-		15		-		33		-		161
Provision		93		(86	)	(29	)	(24	)	1		62		-		98		141		256
Ending balance	$	3,074		2,734		1,672		1,768		8		1,154		-		240		1,693		12,343
Allowance for loan losses at September 30, 2014:
Ending balance: individually
evaluated for impairment	$	-		67		1,164		182		-		-		-		-		-		1,413
Ending balance: collectively
evaluated for impairment		3,074		2,667		508		1,586		8		1,154		-		240		1,693		10,930
Ending balance	$	3,074		2,734		1,672		1,768		8		1,154		-		240		1,693		12,343
Loans at September 30, 2014:
Ending balance	$	56,959		202,797		47,665		227,183		10,887		78,139		10		26,910		-		650,550
Ending balance: individually
evaluated for impairment	$	3,808		2,312		19,083		3,563		-		-		-		-		-		28,766
Ending balance: collectively
evaluated for impairment	$	53,151		200,485		28,582		223,620		10,887		78,139		10		26,910		-		621,784

(Dollars in thousands)
	Real Estate Loans
	Construction and Land Development			Single- Family Residential		Single- Family Residential- Banco de la  Gente Stated Income		Commercial		Multifamily and Farmland		Commercial		Farm		Consumer and All Other		Unallocated		Total
Nine months ended September 30, 2013
Allowance for loan losses:
Beginning balance	$	4,399		3,231		1,998		2,049		28		1,088		-		245		1,385		14,423
Charge-offs		(732	)	(1,204	)	(252	)	(327	)	-		(483	)	-		(485	)	-		(3,483	)
Recoveries		374		75		101		50		-		39		-		111		-		750
Provision		99		864		67		240		8		140		-		379		367		2,164
Ending balance	$	4,140		2,966		1,914		2,012		36		784		-		250		1,752		13,854
Three months ended September 30, 2013
Allowance for loan losses:
Beginning balance	$	4,725		3,304		1,924		1,858		34		822		-		229		1,133		14,029
Charge-offs		(17	)	(569	)	(28	)	(51	)	-		(101	)	-		(204	)	-		(970	)
Recoveries		348		31		31		-		-		14		-		34		-		458
Provision		(916		200		(13	)	205		2		49		-		191		619		337
Ending balance	$	4,140		2,966		1,914		2,012		36		784		-		250		1,752		13,854
Allowance for loan losses at September 30, 2013:
Ending balance: individually
evaluated for impairment	$	1		60		1,233		-		-		-		-		-		-		1,294
Ending balance: collectively
evaluated for impairment		4,139		2,906		681		2,012		36		784		-		250		1,752		12,560
Ending balance	$	4,140		2,966		1,914		2,012		36		784		-		250		1,752		13,854
Loans at September 30, 2013:
Ending balance	$	67,870		191,338		50,035		205,911		11,541		64,957		22		25,387		-		617,061
Ending balance: individually
evaluated for impairment	$	6,790		3,079		19,803		3,100		-		-		-		272		-		33,044
Ending balance: collectively
evaluated for impairment	$	61,080		188,259		30,232		202,811		11,541		64,957		22		25,115		-		584,017

Credit risk profile of each loan type based on internally assigned risk grade

The following tables present the credit risk profile of each loan type based on internally assigned risk grades as of September 30, 2014 and December 31, 2013:

September 30, 2014
(Dollars in thousands)
	Real Estate Loans
	Construction and Land Development			Single- Family Residential		Single- Family  Residential- Banco de la  Gente Stated Income		Commercial		Multifamily and Farmland		Commercial		Farm		Consumer		All Other		Total
1- Excellent Quality	$	-		13,925		-		-		-		1,240		-		1,311		-		16,476
2- High Quality		6,926		71,916		-		37,429		251		17,708		-		3,599		1,947		139,776
3- Good Quality		23,647		74,571		21,165		145,065		6,753		46,624		10		4,598		12,558		334,991
4- Management Attention		12,867		30,167		8,134		34,165		1,026		11,442		-		576		2,195		100,572
5- Watch		6,617		6,624		6,848		6,541		2,690		388		-		42		-		29,750
6- Substandard		6,902		5,594		11,518		3,983		167		727		-		84		-		28,975
7- Doubtful		-		-		-		-		-		-		-		-		-		-
8- Loss		-		-		-		-		-		10		-		-		-		10
Total	$	56,959		202,797		47,665		227,183		10,887		78,139		10		10,210		16,700		650,550
December 31, 2013
(Dollars in thousands)
	Real Estate Loans
	Construction and Land Development			Single- Family Residential		Single- Family Residential- Banco de la  Gente Stated Income		Commercial		Multifamily and Farmland		Commercial		Farm		Consumer		All Other		Total
1- Excellent Quality	$	7		15,036		-		-		-		365		-		1,270		-		16,678
2- High Quality		7,852		60,882		-		33,340		715		8,442		-		3,519		2,139		116,889
3- Good Quality		22,899		73,118		22,255		123,604		7,882		44,353		19		4,061		8,565		306,756
4- Management Attention		14,464		34,090		8,369		42,914		286		13,704		-		358		2,329		116,514
5- Watch		8,163		6,806		8,113		5,190		2,741		320		-		50		-		31,383
6- Substandard		10,357		6,043		10,726		4,239		177		863		-		330		-		32,735
7- Doubtful		-		-		-		-		-		-		-		-		-		-
8- Loss		-		-		-		-		-		-		-		5		-		5
Total	$	63,742		195,975		49,463		209,287		11,801		68,047		19		9,593		13,033		620,960

Analysis of loan modifications

The following tables present an analysis of loan modifications during the nine months ended September 30, 2014 and 2013:

Nine months ended September 30, 2014
(Dollars in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment			Post-Modification Outstanding Recorded Investment
Real estate loans
Construction and land development	1		$	291		291
Single-family residential	2			849		849
Single-family residential -
Banco de la Gente stated income	7			594		594
Total real estate TDR loans	10			1,734		1,734
Total TDR loans	10		$	1,734		1,734
Nine months ended September 30, 2013
(Dollars in thousands)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment			Post-Modification Outstanding Recorded  Investment
Real estate loans
Construction and land development	2		$	825		825
Single-family residential	-			-		-
Single-family residential -
Banco de la Gente stated income	4			466		466
Total real estate TDR loans	6			1,291		1,291
Total TDR loans	6		$	1,291		1,291

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