Loan and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2014

Loans And Leases Receivable Disclosure

Loans and leases receivable disclosure [Text Block]

NOTE 5: LOANS AND ALLOWANCE FOR LOAN LOSSES

				June 30,		December 31,
(In thousands)				2014		2013
Commercial and industrial			$	52,054	$	57,780
Construction and land development				32,461		36,479
Commercial real estate:
	Owner occupied			52,571		56,102
	Other			134,670		118,818
		Total commercial real estate		187,241		174,920
Residential real estate:
	Consumer mortgage			59,257		57,871
	Investment property			43,664		43,835
		Total residential real estate		102,921		101,706
Consumer installment				11,686		12,893
		Total loans		386,363		383,778
Less: unearned income				(537)		(439)
		Loans, net of unearned income	$	385,826	$	383,339

Loans secured by real estate were approximately 83.5% of the Company’s total loan portfolio at June 30, 2014. At June 30, 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 risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included 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 credit 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 source 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 business 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 borrower, 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 professional 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 underwriting 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 property.

Consumer mortgage – primarily includes 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 policies 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 residential 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 financial 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 June 30, 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
June 30, 2014:
Commercial and industrial			$	51,725	277	—	52,002	52	$	52,054
Construction and land development				31,306	192	—	31,498	963		32,461
Commercial real estate:
	Owner occupied			52,295	—	—	52,295	276		52,571
	Other			134,460	—	—	134,460	210		134,670
		Total commercial real estate		186,755	—	—	186,755	486		187,241
Residential real estate:
	Consumer mortgage			57,582	715	71	58,368	889		59,257
	Investment property			43,133	117	—	43,250	414		43,664
		Total residential real estate		100,715	832	71	101,618	1,303		102,921
Consumer installment				11,576	110	—	11,686	—		11,686
		Total	$	382,077	1,411	71	383,559	2,804	$	386,363


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 portfolio, 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 cash 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 unable 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 assessing 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 quality 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 loan.

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 installment 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 estimates 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 experience 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 June 30, 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 calculation. 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 concentration 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 the 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 2014 and 2013, the Company implemented certain refinements to its allowance for loan losses methodology, specifically the way that historical loss factors are calculated. Beginning with the quarter ended June 30, 2014, the Company calculated average losses for all loan segments using a rolling 20 quarter historical period in order to better capture the effects of the most recent economic cycle on the Company’s loan loss experience. Beginning with the quarter ended June 30, 2013, the Company calculated average losses for all loan segments using a rolling 8 quarter historical period (except for the commercial real estate loan segment, which used a 6 quarter historical period) and continued this methodology through March 31, 2014. Prior to June 30, 2013, the Company calculated average losses for all loan segments using a rolling 6 quarter historical period.

If the Company continued to calculate average losses for all loan segments other than commercial real estate using a rolling 8 quarter historical period and for the commercial real estate segment using a rolling 6 quarter historical period, the Company’s calculated allowance for loan loss allocation would have decreased by approximately $1.0 million at June 30, 2014. Other than the changes discussed above, the Company has not made any changes to its calculation of historical loss periods that would impact the calculation 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 segment for the respective periods.

			June 30, 2014
(In thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	482	214	2,493	1,256	266	$	4,711
Charge-offs			(46)	—	—	(41)	(8)		(95)
Recoveries			32	1	—	74	5		112
	Net (charge-offs) recoveries		(14)	1	—	33	(3)		17
Provision for loan losses			171	692	(580)	(194)	(89)		—
Ending balance		$	639	907	1,913	1,095	174	$	4,728

Six months ended:
Beginning balance		$	386	366	3,186	1,114	216	$	5,268
Charge-offs			(46)	(236)	—	(72)	(44)		(398)
Recoveries			36	3	118	91	10		258
	Net (charge-offs) recoveries		(10)	(233)	118	19	(34)		(140)
Provision for loan losses			263	774	(1,391)	(38)	(8)		(400)
Ending balance		$	639	907	1,913	1,095	174	$	4,728

			June 30, 2013
(In thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	569	1,619	3,571	885	125		6,769
Charge-offs			—	—	(118)	(189)	(45)	$	(352)
Recoveries			5	2	—	28	5	$	40
	Net recoveries (charge-offs)		5	2	(118)	(161)	(40)		(312)
Provision for loan losses			101	(167)	(342)	401	7	$	—
Ending balance		$	675	1,454	3,111	1,125	92	$	6,457

Six months ended:
Beginning balance		$	812	1,545	3,137	1,126	103	$	6,723
Charge-offs			(68)	(39)	(118)	(455)	(62)		(742)
Recoveries			17	3	4	41	11		76
	Net charge-offs		(51)	(36)	(114)	(414)	(51)		(666)
Provision for loan losses			(86)	(55)	88	413	40		400
Ending balance		$	675	1,454	3,111	1,125	92	$	6,457

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 June 30, 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
June 30, 2014:
Commercial and industrial		$	639	51,959	—	95	639	52,054
Construction and land development			907	31,498	—	963	907	32,461
Commercial real estate			1,744	185,302	169	1,939	1,913	187,241
Residential real estate			1,095	102,040	—	881	1,095	102,921
Consumer installment			174	11,686	—	—	174	11,686
	Total	$	4,559	382,485	169	3,878	4,728	386,363

June 30, 2013:
Commercial and industrial		$	675	55,882	—	148	675	56,030
Construction and land development			1,347	44,285	107	1,601	1,454	45,886
Commercial real estate			2,991	174,922	120	2,369	3,111	177,291
Residential real estate			1,069	97,732	56	1,289	1,125	99,021
Consumer installment			92	12,747	—	—	92	12,747
	Total	$	6,174	385,568	283	5,407	6,457	390,975

(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 corrected, 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 not corrected

Nonaccrual – includes loans where management has determined that full payment of principal and interest is not expected.

(In thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
June 30, 2014:
Commercial and industrial			$	47,157	4,448	397	52	$	52,054
Construction and land development				30,285	638	575	963		32,461
Commercial real estate:
	Owner occupied			50,904	1,206	185	276		52,571
	Other			133,581	89	790	210		134,670
		Total commercial real estate		184,485	1,295	975	486		187,241
Residential real estate:
	Consumer mortgage			51,424	3,426	3,518	889		59,257
	Investment property			40,702	1,312	1,236	414		43,664
		Total residential real estate		92,126	4,738	4,754	1,303		102,921
Consumer installment				11,547	28	111	—		11,686
		Total	$	365,600	11,147	6,812	2,804	$	386,363

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 June 30, 2014 and December 31, 2013.


				June 30, 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			$	95	—	95
Construction and land development				2,960	(1,997)	963
Commercial real estate:
	Owner occupied			337	(61)	276
	Other			300	(90)	210
		Total commercial real estate		637	(151)	486
Residential real estate:
	Consumer mortgages			941	(224)	717
	Investment property			206	(42)	164
		Total residential real estate		1,147	(266)	881
		Total	$	4,839	(2,414)	2,425
With allowance recorded:
Commercial real estate:
	Owner occupied			861	—	861		117
	Other			592	—	592		52
		Total commercial real estate		1,453	—	1,453		169
		Total	$	1,453	—	1,453	$	169
		Total impaired loans	$	6,292	(2,414)	3,878	$	169

(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 June 30, 2014		Six months ended June 30, 2014
				Average	Total interest	Average	Total interest
				recorded	income	recorded	income
(In thousands)				investment	recognized	investment	recognized
Impaired loans:
Commercial and industrial			$	103	2	111	4
Construction and land development				1,098	—	1,343	—
Commercial real estate:
	Owner occupied			1,142	9	1,468	21
	Other			949	8	994	17
		Total commercial real estate		2,091	17	2,462	38
Residential real estate:
	Consumer mortgages			724	—	736	—
	Investment property			165	—	168	—
		Total residential real estate		889	—	904	—
		Total	$	4,181	19	4,820	42

				Quarter ended June 30, 2013		Six months ended June 30, 2013
				Average	Total interest	Average	Total interest
				recorded	income	recorded	income
(In thousands)				investment	recognized	investment	recognized
Impaired loans:
Commercial and industrial			$	150	2	158	5
Construction and land development				1,607	—	1,614	—
Commercial real estate:
	Owner occupied			1,984	14	2,019	29
	Other			430	—	1,902	—
		Total commercial real estate		2,414	14	3,921	29
Residential real estate:
	Consumer mortgages			789	—	801	—
	Investment property			348	—	323	—
		Total residential real estate		1,137	—	1,124	—
		Total	$	5,308	16	6,817	34

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 amount 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 measured 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 investment 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 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 portfolio segment and class as of June 30, 2014, and December 31, 2013.

				TDRs
								Related
(In thousands)				Accruing	Nonaccrual	Total		Allowance
June 30, 2014
Commercial and industrial			$	95	—	95	$	—
Construction and land development				—	963	963		—
Commercial real estate:
	Owner occupied			861	276	1,137		117
	Other			592	210	802		52
		Total commercial real estate		1,453	486	1,939		169
Residential real estate:
	Consumer mortgages			—	717	717		—
	Investment property			—	164	164		—
		Total residential real estate		—	881	881		—
		Total	$	1,548	2,330	3,878	$	169

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 June 30, 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.

			Quarter ended June 30,				Six months ended June 30,
					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
2013:
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

There were no loans modified in a TDR during the six months ended June 30, 2014. The majority of the loans modified in a TDR during the six months ended June 30, 2013 included 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 past due) during the respective periods. There were no loans modified in a TDR which had a payment default during the six months ended June 30, 2014.

		Quarter ended June 30,			Six months Ended June 30,
		Number of		Recorded	Number of		Recorded
(Dollars in thousands)		Contracts		investment⁽¹⁾	Contracts		investment⁽¹⁾
2013:
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.