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Loan and Allowance for Loan Losses | 3 Months Ended
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Mar. 31, 2014
Loans And Leases Receivable Disclosure |
Loans and leases receivable disclosure [Text Block] | NOTE 5: LOANS AND ALLOWANCE FOR LOAN LOSSES
|  |  |  |  |  |  | March 31, |  |  | December 31,
(In thousands) |  |  | 2014 |  |  | 2013
Commercial and industrial |  | $ | 54,632 |  | $ | 57,780
Construction and land development |  |  | 31,275 |  |  | 36,479
Commercial real estate: |  |  |  |  |  |
| Owner occupied |  |  | 53,973 |  |  | 56,102
| Other |  |  | 124,748 |  |  | 118,818
|  | Total commercial real estate |  |  | 178,721 |  |  | 174,920
Residential real estate: |  |  |  |  |  |
| Consumer mortgage |  |  | 58,449 |  |  | 57,871
| Investment property |  |  | 42,984 |  |  | 43,835
|  | Total residential real estate |  |  | 101,433 |  |  | 101,706
Consumer installment |  |  | 11,766 |  |  | 12,893
|  | Total loans |  |  | 377,827 |  |  | 383,778
Less: unearned income |  |  | (477) |  |  | (439)
|  | Loans, net of unearned income |  | $ | 377,350 |  | $ | 383,339
Loans secured by real estate were approximately 82.4% of the Company’s total loan portfolio at March 31, 2014. At March 31, 2014, the Company’s geographic loan distribution was concentrated primarily in Lee County, Alabama and surrounding areas. In accordance with ASC 310, a portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for loan losses. As part of the Company’s quarterly assessment of the allowance, the loan portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land development, commercial real estate, residential real estate and consumer installment. Where appropriate, the Company’s loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity’s method for monitoring and determining credit risk. The following describe the r isk characteristics relevant to each of the portfolio segments and classes. Commercial and i ndustrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also includ ed in this category are loans to finance agricultural production. Generally the primary source of repayment is the cash flow from business operations and activities of the borrower. Construction and land development (“C&D”) — includes both loans and cred it lines for the purpose of purchasing, carrying and developing land into commercial developments or residential subdivisions. Also included are loans and lines for construction of residential, multi-family and commercial buildings. Generally the primary s ource of repayment is dependent upon the sale or refinance of the real estate collateral. Commercial real estate (“CRE”) — includes loans disaggregated into two classes: (1) owner occupied and (2) other. Owner occupied – includes loans secured by busin ess facilities to finance business operations, equipment and owner-occupied facilities primarily for small and medium-sized commercial customers. Generally the primary source of repayment is the cash flow from business operations and activities of the bor rower, who owns the property. Other – primarily includes loans to finance income-producing commercial and multi-family properties that are not owner occupied. Loans in this class include loans for neighborhood retail centers, hotels, medical and professio nal offices, single retail stores, industrial buildings, warehouses and apartments leased generally to local businesses and residents. Generally the primary source of repayment is dependent upon income generated from the real estate collateral. The underwr iting of these loans takes into consideration the occupancy and rental rates, as well as the financial health of the borrower. Residential real estate (“RRE”) — includes loans disaggregated into two classes: (1) consumer mortgage and (2) investment prope rty. Consumer mortgage – primarily include s first or second lien mortgages and home equity lines of credit to consumers that are secured by a primary residence or second home. These loans are underwritten in accordance with the Bank’s general loan polic ies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history and property value. Investment property – primarily includes loans to finance income-producing 1-4 family resid ential properties. Generally the primary source of repayment is dependent upon income generated from leasing the property securing the loan. The underwriting of these loans takes into consideration the rental rates and property value, as well as the financ ial health of the borrower. Consumer installment — includes loans to individuals both secured by personal property and unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank’s general loan policies and procedures which require, among other things, proper documentation of each borrower’s financial condition, satisfactory credit history, and if applicable, property value. The following is a summary of current, accruing past due and nonaccrual loans by portfolio segment and class as of March 31, 2014, and December 31, 2013
|  |  |  |  |  |  |  |  | Accruing | Accruing | Total |  |  |  |
|  |  |  |  |  |  |  |  | 30-89 Days | Greater than | Accruing | Non- |  |  | Total
(In thousands) |  | Current | Past Due | 90 days | Loans | Accrual |  |  | Loans
March 31, 2014: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 54,270 | 191 | 117 | 54,578 | 54 |  | $ | 54,632
Construction and land development |  |  | 29,747 | 157 | — | 29,904 | 1,371 |  |  | 31,275
Commercial real estate: |  |  |  |  |  |  |  |  |  |
| Owner occupied |  |  | 53,417 | 275 | — | 53,692 | 281 |  |  | 53,973
| Other |  |  | 124,133 | 186 | — | 124,319 | 429 |  |  | 124,748
|  | Total commercial real estate |  |  | 177,550 | 461 | — | 178,011 | 710 |  |  | 178,721
Residential real estate: |  |  |  |  |  |  |  |  |  |
| Consumer mortgage |  |  | 56,358 | 1,340 | — | 57,698 | 751 |  |  | 58,449
| Investment property |  |  | 42,195 | 494 | — | 42,689 | 295 |  |  | 42,984
|  | Total residential real estate |  |  | 98,553 | 1,834 | — | 100,387 | 1,046 |  |  | 101,433
Consumer installment |  |  | 11,659 | 86 | 14 | 11,759 | 7 |  |  | 11,766
|  | Total |  | $ | 371,779 | 2,729 | 131 | 374,639 | 3,188 |  | $ | 377,827
December 31, 2013: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 57,558 | 167 | — | 57,725 | 55 |  | $ | 57,780
Construction and land development |  |  | 34,883 | 14 | — | 34,897 | 1,582 |  |  | 36,479
Commercial real estate: |  |  |  |  |  |  |  |  |  |
| Owner occupied |  |  | 54,214 | 861 | — | 55,075 | 1,027 |  |  | 56,102
| Other |  |  | 118,389 | — | — | 118,389 | 429 |  |  | 118,818
|  | Total commercial real estate |  |  | 172,603 | 861 | — | 173,464 | 1,456 |  |  | 174,920
Residential real estate: |  |  |  |  |  |  |  |  |  |
| Consumer mortgage |  |  | 56,191 | 745 | 69 | 57,005 | 866 |  |  | 57,871
| Investment property |  |  | 42,935 | 598 | — | 43,533 | 302 |  |  | 43,835
|  | Total residential real estate |  |  | 99,126 | 1,343 | 69 | 100,538 | 1,168 |  |  | 101,706
Consumer installment |  |  | 12,789 | 100 | 4 | 12,893 | — |  |  | 12,893
|  | Total |  | $ | 376,959 | 2,485 | 73 | 379,517 | 4,261 |  | $ | 383,778
Allowance for Loan Losses The Company assesses the adequacy of its allowance for loan losses prior to the end of each calendar quarter. The level of the allowance is based upon management’s evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect a borrower’s ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan po rtfolio, economic conditions, industry and peer bank loan loss rates and other pertinent factors, including regulatory recommendations. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future ca sh flows expected to be received on impaired loans that may be susceptible to significant change. Loans are charged off, in whole or in part, when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a “confirming event” has occurred which serves to validate that full repayment pursuant to the terms of the loan is unlikely. The Company deems loans impaired when, based on current information and events, it is probable that the Company will be u nable to collect all amounts due according to the contractual terms of the loan agreement. Collection of all amounts due according to the contractual terms means that both the interest and principal payments of a loan will be collected as scheduled in the loan agreement. An impairment allowance is recognized if the fair value of the loan is less than the recorded investment in the loan. The impairment is recognized through the allowance. Loans that are impaired are recorded at the present value of expected future cash flows discounted at the loan’s effective interest rate, or if the loan is collateral dependent, impairment measurement is based on the fair value of the collateral, less estimated disposal costs. The level of allowance maintained is believed by management to be adequate to absorb probable losses inherent in the portfolio at the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off. In a ssessing the adequacy of the allowance, the Company also considers the results of its ongoing internal and independent loan review processes. The Company’s loan review process assists in determining whether there are loans in the portfolio whose credit qua lity has weakened over time and evaluating the risk characteristics of the entire loan portfolio. The Company’s loan review process includes the judgment of management, the input from our independent loan reviewers, and reviews that may have been conducted by bank regulatory agencies as part of their examination process. The Company incorporates loan review results in the determination of whether or not it is probable that it will be able to collect all amounts due according to the contractual terms of a lo an. As part of the Company’s quarterly assessment of the allowance, management divides the loan portfolio into five segments: commercial and industrial, construction and land development, commercial real estate, residential real estate, and consumer insta llment loans. The Company analyzes each segment and estimates an allowance allocation for each loan segment. The allocation of the allowance for loan losses begins with a process of estimating the probable losses inherent for these types of loans. The est imates for these loans are established by category and based on the Company’s internal system of credit risk ratings and historical loss data. The estimated loan loss allocation rate for the Company’s internal system of credit risk grades is based on its e xperience with similarly graded loans. For loan segments where the Company believes it does not have sufficient historical loss data, the Company may make adjustments based, in part, on loss rates of peer bank groups. At March 31, 2014 and December 31, 2013, and for the periods then ended, the Company adjusted its historical loss rates for the commercial real estate portfolio segment based, in part, on loss rates of peer bank groups. The estimated loan loss allocation for all five loan portfolio segments is then adjusted for management’s estimate of probable losses for several “qualitative and environmental” factors. The allocation for qualitative and environmental factors is particularly subjective and does not lend itself to exact mathematical c alculation. This amount represents estimated probable inherent credit losses which exist, but have not yet been identified, as of the balance sheet date, and are based upon quarterly trend assessments in delinquent and nonaccrual loans, credit concentratio n changes, prevailing economic conditions, changes in lending personnel experience, changes in lending policies or procedures and other influencing factors. These qualitative and environmental factors are considered for each of the five loan segments and t he allowance allocation, as determined by the processes noted above, is increased or decreased based on the incremental assessment of these factors. The Company regularly re-evaluates its practices in determining the allowance for loan losses. During 2013, the Company implemented certain refinements to its allowance for loan losses methodology, specifically the way that historical loss factors are calculated. Prior to June 30, 2013, the Company calculated average losses for all loan segments using a rollin g 6 quarter historical period. Beginning with the quarter ended June 30, 2013, the Company calculated average losses for all loan segments (except for the commercial real estate loan segment) using a rolling 8 quarter historical period in order to better c apture the effects of the current economic cycle on the Company’s loan loss experience, and continued this methodology through March 31, 201 4. Based upon management’s review of charge-off trends for each loan segment, the Company continues to calculate ave rage losses for the commercial real estate loan segment using a rolling 6 quarter historical period. Other than the changes discussed above, the Company has not made any changes to its calculation of historical loss periods that would impact the calculatio n of the allowance for loan losses or provision for loan losses for the periods included in the accompanying consolidated balance sheets and statements of earnings. The following table details the changes in the allowance for loan losses by portfolio segm ent for the respective periods.
|  |  | March 31, 2014
(In thousands) | Commercial and industrial |  | Construction and land development |  | Commercial real estate |  | Residential real estate |  | Consumer installment |  |  |  | Total
Quarter ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 386 |  | 366 |  | 3,186 |  | 1,114 |  | 216 |  |  | $ | 5,268
Charge-offs |  | — |  | (236) |  | — |  | (31) |  | (36) |  |  |  | (303)
Recoveries |  | 4 |  | 2 |  | 118 |  | 16 |  | 6 |  |  |  | 146
| Net (charge-offs) recoveries |  | 4 |  | (234) |  | 118 |  | (15) |  | (30) |  |  |  | (157)
Provision |  | 92 |  | 82 |  | (811) |  | 157 |  | 80 |  |  |  | (400)
Ending balance | $ | 482 |  | 214 |  | 2,493 |  | 1,256 |  | 266 |  |  | $ | 4,711
|  |  | March 31, 2013
(In thousands) | Commercial and industrial |  | Construction and land development |  | Commercial real estate |  | Residential real estate |  | Consumer installment |  |  |  | Total
Quarter ended: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 812 |  | 1,545 |  | 3,137 |  | 1,126 |  | 103 |  |  |  | 6,723
Charge-offs |  | (68) |  | (39) |  | — |  | (266) |  | (17) |  |  | $ | (390)
Recoveries |  | 12 |  | — |  | 5 |  | 13 |  | 6 |  |  | $ | 36
| Net (charge-offs) recoveries |  | (56) |  | (39) |  | 5 |  | (253) |  | (11) |  |  |  | (354)
Provision |  | (187) |  | 113 |  | 429 |  | 12 |  | 33 |  |  | $ | 400
Ending balance | $ | 569 |  | 1,619 |  | 3,571 |  | 885 |  | 125 |  |  | $ | 6,769
The following table presents an analysis of the allowance for loan losses and recorded investment in loans by portfolio segment and impairment methodology as of March 31, 2014 and 2013.
|  |  |  |  |  |  | Collectively evaluated (1) |  | Individually evaluated (2) |  | Total
|  |  |  |  |  |  | Allowance | Recorded |  | Allowance | Recorded |  | Allowance | Recorded
|  |  |  |  |  |  | for loan | investment |  | for loan | investment |  | for loan | investment
(In thousands) |  | losses | in loans |  | losses | in loans |  | losses | in loans
March 31, 2014: |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 482 | 54,520 |  | — | 112 |  | 482 | 54,632
Construction and land development |  | 214 | 29,904 |  | — | 1,371 |  | 214 | 31,275
Commercial real estate |  | 2,314 | 176,548 |  | 179 | 2,173 |  | 2,493 | 178,721
Residential real estate |  | 1,256 | 100,529 |  | — | 904 |  | 1,256 | 101,433
Consumer installment |  | 266 | 11,766 |  | — | — |  | 266 | 11,766
|  | Total | $ | 4,532 | 373,267 |  | 179 | 4,560 |  | 4,711 | 377,827
March 31, 2013: |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 569 | 55,576 |  | — | 160 |  | 569 | 55,736
Construction and land development |  | 1,498 | 39,489 |  | 121 | 1,615 |  | 1,619 | 41,104
Commercial real estate |  | 3,327 | 176,492 |  | 244 | 2,501 |  | 3,571 | 178,993
Residential real estate |  | 801 | 101,861 |  | 84 | 1,117 |  | 885 | 102,978
Consumer installment |  | 125 | 12,026 |  | — | — |  | 125 | 12,026
|  | Total | $ | 6,320 | 385,444 |  | 449 | 5,393 |  | 6,769 | 390,837
(1) | Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and
| pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.
(2) | Represents loans individually evaluated for impairment in accordance with ASC 310-30, Receivables (formerly FAS 114), and
| pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.
Credit Quality Indicators The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan portfolio segments and classes. These categories are utilized to develop the associated allowance for loan losses using historical losses adjusted for qualitative and environmental factors and are defined as follows: Pass – loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral. Special Mention – loans with potential weakness that may, if not reversed or c orrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification. Substandard Accruing – loans that exhibit a well-defined weakness which presently jeopardizes debt repayment, even though they are currently performing. These loans are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are n ot corrected Nonaccrual – includes loans where management has determined that full payment of principal and i nterest is not expected.
(In thousands) |  | Pass |  | Special Mention |  | Substandard Accruing |  | Nonaccrual |  |  | Total loans
March 31, 2014: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 49,947 |  | 4,182 |  | 449 |  | 54 |  | $ | 54,632
Construction and land development |  | 28,593 |  | 633 |  | 678 |  | 1,371 |  |  | 31,275
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |
| Owner occupied |  | 52,058 |  | 1,218 |  | 416 |  | 281 |  |  | 53,973
| Other |  | 123,434 |  | 90 |  | 795 |  | 429 |  |  | 124,748
|  | Total commercial real estate |  | 175,492 |  | 1,308 |  | 1,211 |  | 710 |  |  | 178,721
Residential real estate: |  |  |  |  |  |  |  |  |  |  |
| Consumer mortgage |  | 50,436 |  | 2,724 |  | 4,538 |  | 751 |  |  | 58,449
| Investment property |  | 39,971 |  | 1,343 |  | 1,375 |  | 295 |  |  | 42,984
|  | Total residential real estate |  | 90,407 |  | 4,067 |  | 5,913 |  | 1,046 |  |  | 101,433
Consumer installment |  | 11,621 |  | 32 |  | 106 |  | 7 |  |  | 11,766
|  | Total | $ | 356,060 |  | 10,222 |  | 8,357 |  | 3,188 |  | $ | 377,827
December 31, 2013: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 53,060 |  | 4,183 |  | 482 |  | 55 |  | $ | 57,780
Construction and land development |  | 33,616 |  | 180 |  | 1,101 |  | 1,582 |  |  | 36,479
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |
| Owner occupied |  | 53,430 |  | 770 |  | 875 |  | 1,027 |  |  | 56,102
| Other |  | 117,490 |  | 91 |  | 808 |  | 429 |  |  | 118,818
|  | Total commercial real estate |  | 170,920 |  | 861 |  | 1,683 |  | 1,456 |  |  | 174,920
Residential real estate: |  |  |  |  |  |  |  |  |  |  |
| Consumer mortgage |  | 50,392 |  | 1,137 |  | 5,476 |  | 866 |  |  | 57,871
| Investment property |  | 40,517 |  | 1,310 |  | 1,706 |  | 302 |  |  | 43,835
|  | Total residential real estate |  | 90,909 |  | 2,447 |  | 7,182 |  | 1,168 |  |  | 101,706
Consumer installment |  | 12,713 |  | 34 |  | 146 |  | — |  |  | 12,893
|  | Total | $ | 361,218 |  | 7,705 |  | 10,594 |  | 4,261 |  | $ | 383,778
Impaired loans The following tables present details related to the Company’s impaired loans. Loans which have been fully charged-off do not appear in the following table. The related allowance generally represents the following components which correspond to impaired loans: Individually evaluated impaired loans equal to or greater than $500,000 secured by real estate (nonaccrual construction and land development, commercial real estate, and residential real estate loans). Individually evaluated impaired loans equal to or greater than $250,000 not secured by real estate (nonaccrual commercial and industrial and consumer installment loans). The following tables set forth certain information regarding the Company’s impaired loans that were individually evaluated for impairment at March 31, 2014 and December 31, 2013.
|  |  |  |  |  |  | March 31, 2014
(In thousands) |  | Unpaid principal balance (1) | Charge-offs and payments applied (2) | Recorded investment (3) |  |  | Related allowance
With no allowance recorded:
Commercial and industrial | $ | 112 | — | 112 |  |  |
Construction and land development |  | 3,326 | (1,955) | 1,371 |  |  |
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 340 | (59) | 281 |  |  |
| Other |  | 519 | (90) | 429 |  |  |
|  | Total commercial real estate |  | 859 | (149) | 710 |  |  |
Residential real estate: |  |  |  |  |  |  |
| Consumer mortgages |  | 947 | (211) | 736 |  |  |
| Investment property |  | 207 | (39) | 168 |  |  |
|  | Total residential real estate |  | 1,154 | (250) | 904 |  |  |
|  | Total | $ | 5,451 | (2,354) | 3,097 |
With allowance recorded: |
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 868 | — | 868 |  |  | 124
| Other |  | 595 | — | 595 |  |  | 55
|  | Total commercial real estate |  | 1,463 | — | 1,463 |  |  | 179
|  | Total | $ | 1,463 | — | 1,463 |  | $ | 179
|  | Total impaired loans | $ | 6,914 | (2,354) | 4,560 |  | $ | 179
(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
| applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
| any related allowance for loan losses.
|  |  |  |  |  |  | December 31, 2013
(In thousands) |  | Unpaid principal balance (1) | Charge-offs and payments applied (2) | Recorded investment (3) |  |  | Related allowance
With no allowance recorded:
Commercial and industrial | $ | 124 | — | 124 |  |  |
Construction and land development |  | 2,879 | (1,682) | 1,197 |  |  |
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 1,217 | (190) | 1,027 |  |  |
| Other |  | 518 | (89) | 429 |  |  |
|  | Total commercial real estate |  | 1,735 | (279) | 1,456 |  |  |
Residential real estate: |  |  |  |  |  |  |
| Consumer mortgages |  | 952 | (198) | 754 |  |  |
| Investment property |  | 207 | (35) | 172 |  |  |
|  | Total residential real estate |  | 1,159 | (233) | 926 |  |  |
|  | Total | $ | 5,897 | (2,194) | 3,703 |
With allowance recorded: |
Construction and land development |  | 452 | (67) | 385 |  |  | 88
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 875 | — | 875 |  |  | 110
| Other |  | 602 | — | 602 |  |  | 62
|  | Total commercial real estate |  | 1,477 | — | 1,477 |  |  | 172
|  | Total | $ | 1,929 | (67) | 1,862 |  | $ | 260
|  | Total impaired loans | $ | 7,826 | (2,261) | 5,565 |  | $ | 260
(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
| applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
| any related allowance for loan losses.
The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class during the respective periods.
|  |  |  |  |  |  | Quarter ended March 31, 2014 |  |  | Quarter ended March 31, 2013
|  |  |  |  |  |  |  | Average |  | Total interest |  |  |  | Average |  | Total interest
|  |  |  |  |  |  |  | recorded |  | income |  |  |  | recorded |  | income
(In thousands) |  |  | investment |  | recognized |  |  |  | investment |  | recognized
Impaired loans: |  |  |  |  |  |  |
Commercial and industrial |  | $ | 116 |  | $ | 2 |  |  | $ | 164 |  | $ | 3
Construction and land development |  |  | 1,508 |  |  | — |  |  |  | 1,619 |  |  | —
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
| Owner occupied |  |  | 1,648 |  |  | 12 |  |  |  | 2,044 |  |  | 14
| Other |  |  | 1,026 |  |  | 9 |  |  |  | 3,004 |  |  | —
|  | Total commercial real estate |  |  | 2,674 |  |  | 21 |  |  |  | 5,048 |  |  | 14
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |
| Consumer mortgages |  |  | 742 |  |  | — |  |  |  | 811 |  |  | —
| Investment property |  |  | 170 |  |  | — |  |  |  | 305 |  |  | —
|  | Total residential real estate |  |  | 912 |  |  | — |  |  |  | 1,116 |  |  | —
|  | Total |  | $ | 5,210 |  | $ | 23 |  |  | $ | 7,947 |  | $ | 17
Troubled Debt Restructurings Impaired loans also include troubled debt restructurings (“TDRs”). In the normal course of business, management may grant concessions to borrowers that are experiencing financial difficulty. A concession may include, but is not limited to, delays in required payments of principal and interest for a specified period, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount or maturity am ount of the debt. A concession has been granted when, as a result of the restructuring, the Bank does not expect to collect all amounts due, including interest at the original stated rate. A concession may have also been granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company’s determination of whether a loan modification is a TDR, the Company considers the individual facts and circumstances surrounding each modification. As part of the credit approval process, the restructured loans are evaluated for adequate collateral protection in determining the appropriate accrual status at the time of restructure. Similar to other impaired loans, TDRs are measu red for impairment based on the present value of expected payments using the loan’s original effective interest rate as the discount rate, or the fair value of the collateral, less selling costs if the loan is collateral dependent. If the recorded investme nt in the loan exceeds the measure of fair value, impairment is recognized by establishing a valuation allowance as part of the allowance for loan losses or a charge-off to the allowance for loan losses. In periods subsequent to the modification, all TDRs are individually evaluated, including those that have payment defaults, for possible impairment. The following is a summary of accruing and nonaccrual TDRs, which are included in impaired loan totals, and the related allowance for loan losses, by portfol io segment and class as of March 31, 2014, and December 31, 2013.
|  |  |  |  |  |  | TDRs
|  |  |  |  |  |  |  |  |  |  |  | Related
(In thousands) |  | Accruing | Nonaccrual | Total |  |  | Allowance
March 31, 2014 |  |  |  |  |  |  |
Commercial and industrial | $ | 112 | — | 112 |  | $ | —
Construction and land development |  | — | 1,371 | 1,371 |  |  | —
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 868 | 281 | 1,149 |  |  | 124
| Other |  | 595 | 429 | 1,024 |  |  | 55
|  | Total commercial real estate |  | 1,463 | 710 | 2,173 |  |  | 179
Residential real estate: |  |  |  |  |  |  |
| Consumer mortgages |  | — | 736 | 736 |  |  | —
| Investment property |  | — | 168 | 168 |  |  | —
|  | Total residential real estate |  | — | 904 | 904 |  |  | —
|  | Total | $ | 1,575 | 2,985 | 4,560 |  | $ | 179
December 31, 2013 |  |
Commercial and industrial | $ | 124 | — | 124 |  | $ | —
Construction and land development |  | — | 1,582 | 1,582 |  |  | 88
Commercial real estate: |  |  |  |  |  |  |
| Owner occupied |  | 875 | 285 | 1,160 |  |  | 110
| Other |  | 602 | 429 | 1,031 |  |  | 62
|  | Total commercial real estate |  | 1,477 | 714 | 2,191 |  |  | 172
Residential real estate: |  |  |  |  |  |  |
| Consumer mortgages |  | — | 754 | 754 |  |  | —
| Investment property |  | — | 172 | 172 |  |  | —
|  | Total residential real estate |  | — | 926 | 926 |  |  | —
|  | Total | $ | 1,601 | 3,222 | 4,823 |  | $ | 260
At March 31, 2014, there were no significant outstanding commitments to advance additional funds to customers whose loans had been restructured. The following table summarizes loans modified in a TDR during the respective periods both before and after their modification.
|  |  |  |  |  | March 31, 2014 |  |  | Marh 31, 2013
|  |  |  |  |  |  |  |  | Pre- |  | Post - |  |  |  |  |  | Pre- |  | Post -
|  |  |  |  |  |  |  |  | modification |  | modification |  |  |  |  |  | modification |  | modification
|  |  |  |  |  | Number |  |  | outstanding |  | outstanding |  |  | Number |  |  | outstanding |  | outstanding
|  |  |  |  |  | of |  |  | recorded |  | recorded |  |  | of |  |  | recorded |  | recorded
(Dollars in thousands) | contracts |  |  | investment |  | investment |  |  | contracts |  |  | investment |  | investment
TDRs: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Other | — |  | $ | — |  | — |  |  | 1 |  | $ | 431 |  | 431
|  | Total commercial real estate | — |  |  | — |  | — |  |  | 1 |  |  | 431 |  | 431
Residential real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Consumer mortgages | — |  |  | — |  | — |  |  | 1 |  |  | 131 |  | 131
|  | Total residential real estate | — |  |  | — |  | — |  |  | 1 |  |  | 131 |  | 131
|  | Total | — |  | $ | — |  | — |  |  | 2 |  | $ | 562 |  | 562
The majority of the loans modified in a TDR during the quarter ended March 31, 2013 inc luded permitting delays in required payments of principal and/or interest or where the only concession granted by the Company was that the interest rate at renewal was considered to be less than a market rate. The following table summarizes the recorded investment in loans modified in a TDR within the previous 12 months for which there was a payment default (defined as 90 days or more pas t due) during the respective periods.
|  |  |  |  |  | Quarter ended March 31, 2014 |  |  | Quarter ended March 31, 2013
|  |  |  |  |  | Number of |  |  | Recorded |  |  |  | Number of |  |  | Recorded |
(Dollars in thousands) | Contracts |  |  | investment(1) |  |  |  | Contracts |  |  | investment(1) |
TDRs: |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development | — |  | $ | — |  |  |  | 1 |  | $ | 1,197 |
|  | Total | — |  | $ | — |  |  |  | 1 |  | $ | 1,197 |
(1) Amount as of applicable month end during the respective period for which there was a payment default. |

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