| Credit Quality Of Loans And Allowance For Loan Losses |
| 4. |
CREDIT QUALITY OF LOANS AND ALLOWANCE FOR LOAN LOSSES |
During 2011, the following circumstances occurred which represent the primary factors contributing to changes in the AFLL:
| |
• |
|
The Company experienced a significant decline in the outstanding balance of construction and land development as well as commercial and industrial loans. Additionally, the overall risk grade of the remaining loans within these segments has improved. Given the significance of historical loss rates attributable to these loan segments, the declining loan balances and improved average risk grades had a substantial impact on our general reserves, effectively lowering them by approximately 41 basis points, or $1.9 million, as compared to prior year end. |
| |
• |
|
During 2011, management also conducted an impairment migration study using the Bank's historical data from the preceding two years. From this study we determined that our years to impairment AFLL model assumption should be reduced in all but two of our loan segments. Management also evaluated the AFLL model's unallocated internal and external qualitative factor percentages during 2011. In doing so, we determined that certain internal controls of the credit function had strengthened, thereby resulting in specific internal factors which have been scored to ensure they were consistent with such improved Bank policies and procedures. We further determined that increases in certain internal and external factors were warranted, primarily as a result of continued suppressed market conditions and trends in portfolio key performance indicators. Overall, our net internal and external qualitative factors increased by approximately 47 basis points, or $2.1 million, as compared to the prior year end. |
Management's migration study was supplemented by an independent study of the allowance model. During 2011, the Bank also engaged an independent specialist to perform a loss migration analysis on the Bank's loan portfolio in order to provide additional statistical data and validation for the Bank's AFLL modeling process. That analysis provided the Bank with useful data regarding its loss migration history and mean level of loss history given our credit migration, and served as an independent validation of our overall allowance position at period end. Management and the Board of Directors have evaluated the impact of these AFLL model updates and determined that the allowance represents an amount necessary to absorb estimated probable losses in the loan portfolio.
An analysis of the allowance for loan losses for the years ended December 31, 2011, 2010 and 2009 follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, |
|
| |
|
2011 |
|
|
2010 |
|
|
2009 |
|
| |
|
(Dollars in thousands) |
|
|
Beginning balance |
|
$ |
13,247 |
|
|
$ |
9,725 |
|
|
$ |
5,931 |
|
|
Provision for loan losses |
|
|
8,483 |
|
|
|
12,980 |
|
|
|
11,100 |
|
|
Recoveries |
|
|
320 |
|
|
|
287 |
|
|
|
260 |
|
|
Loans charged off |
|
|
(9,958 |
) |
|
|
(9,745 |
) |
|
|
(7,566 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance |
|
$ |
12,092 |
|
|
$ |
13,247 |
|
|
$ |
9,725 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the balances by loan category of the allowance for loan losses with changes arising from charge-offs, recoveries and provision expense for the years ending December 31, 2011 and December 31, 2010:
Allowance for Loan Losses
As of December 31, 2011
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for Credit Losses |
|
Real Estate
Construction
and Land
Development |
|
|
Real
Estate
Secured
by
Farmland |
|
|
Real
Estate
Secured by
Residential
Properties |
|
|
Real Estate
Secured by
Nonfarm
Nonresidential |
|
|
Consumer
Installment |
|
|
Credit
Cards
and
Related
Plans |
|
|
Commercial
and
Industrial |
|
|
Loans to
Finance
Agricultural
Production |
|
|
All
Other
Loans |
|
|
General
Qualitative
Portion |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Beginning balance |
|
$ |
6,168 |
|
|
$ |
28 |
|
|
$ |
3,450 |
|
|
$ |
1,007 |
|
|
$ |
12 |
|
|
$ |
21 |
|
|
$ |
882 |
|
|
$ |
18 |
|
|
$ |
139 |
|
|
$ |
1,522 |
|
|
$ |
13,247 |
|
|
Charge-offs |
|
|
(5,150 |
) |
|
|
(— |
) |
|
|
(1,985 |
) |
|
|
(1,887 |
) |
|
|
(20 |
) |
|
|
(294 |
) |
|
|
(385 |
) |
|
|
(— |
) |
|
|
(237 |
) |
|
|
(— |
) |
|
|
(9,958 |
) |
|
Recoveries |
|
|
10 |
|
|
|
— |
|
|
|
12 |
|
|
|
43 |
|
|
|
5 |
|
|
|
3 |
|
|
|
103 |
|
|
|
— |
|
|
|
144 |
|
|
|
— |
|
|
|
320 |
|
|
Provisions |
|
|
2,627 |
|
|
|
(13 |
) |
|
|
941 |
|
|
|
2,577 |
|
|
|
49 |
|
|
|
288 |
|
|
|
(45 |
) |
|
|
97 |
|
|
|
(20 |
) |
|
|
1,982 |
|
|
|
8,483 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
3,655 |
|
|
$ |
15 |
|
|
$ |
2,418 |
|
|
$ |
1,740 |
|
|
$ |
46 |
|
|
$ |
18 |
|
|
$ |
555 |
|
|
$ |
115 |
|
|
$ |
26 |
|
|
$ |
3,504 |
|
|
$ |
12,092 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
|
$ |
637 |
|
|
$ |
— |
|
|
$ |
480 |
|
|
$ |
1,181 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
165 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,463 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment |
|
$ |
3,018 |
|
|
$ |
15 |
|
|
$ |
1,938 |
|
|
$ |
559 |
|
|
$ |
46 |
|
|
$ |
18 |
|
|
$ |
390 |
|
|
$ |
115 |
|
|
$ |
26 |
|
|
$ |
3,504 |
|
|
$ |
9,629 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
67,127 |
|
|
$ |
29,890 |
|
|
$ |
110,374 |
|
|
$ |
203,063 |
|
|
$ |
6,620 |
|
|
$ |
1,661 |
|
|
$ |
45,679 |
|
|
$ |
21,539 |
|
|
$ |
10,589 |
|
|
$ |
— |
|
|
$ |
496,542 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: individually evaluated for impairment |
|
$ |
10,074 |
|
|
$ |
— |
|
|
$ |
5,514 |
|
|
$ |
14,029 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
561 |
|
|
$ |
1,111 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
31,289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: collectively evaluated for impairment |
|
$ |
57,053 |
|
|
$ |
29,890 |
|
|
$ |
104,860 |
|
|
$ |
189,034 |
|
|
$ |
6,620 |
|
|
$ |
1,661 |
|
|
$ |
45,118 |
|
|
$ |
20,428 |
|
|
$ |
10,589 |
|
|
$ |
— |
|
|
$ |
465,253 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
As of December 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for Credit Losses |
|
Real Estate
Construction
and Land
Development |
|
|
Real
Estate
Secured
by
Farmland |
|
|
Real
Estate
Secured by
Residential
Properties |
|
|
Real Estate
Secured by
Nonfarm
Nonresidential |
|
|
Consumer
Installment |
|
|
Credit
Cards
and
Related
Plans |
|
|
Commercial
and
Industrial |
|
|
Loans to
Finance
Agricultural
Production |
|
|
All
Other
Loans |
|
|
General
Qualitative
&
Quantitative
Portion |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Beginning balance |
|
$ |
4,623 |
|
|
$ |
25 |
|
|
$ |
2,383 |
|
|
$ |
541 |
|
|
$ |
23 |
|
|
$ |
13 |
|
|
$ |
523 |
|
|
$ |
16 |
|
|
$ |
169 |
|
|
$ |
1,409 |
|
|
$ |
9,725 |
|
|
Charge-offs |
|
|
(5,977 |
) |
|
|
(— |
) |
|
|
(2,022 |
) |
|
|
(213 |
) |
|
|
(54 |
) |
|
|
(11 |
) |
|
|
(1,191 |
) |
|
|
(— |
) |
|
|
(277 |
) |
|
|
(— |
) |
|
|
(9,745 |
) |
|
Recoveries |
|
|
111 |
|
|
|
— |
|
|
|
19 |
|
|
|
— |
|
|
|
7 |
|
|
|
1 |
|
|
|
19 |
|
|
|
— |
|
|
|
130 |
|
|
|
— |
|
|
|
287 |
|
|
Provisions |
|
|
7,411 |
|
|
|
3 |
|
|
|
3,070 |
|
|
|
679 |
|
|
|
36 |
|
|
|
18 |
|
|
|
1,531 |
|
|
|
2 |
|
|
|
117 |
|
|
|
113 |
|
|
|
12,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
6,168 |
|
|
$ |
28 |
|
|
$ |
3,450 |
|
|
$ |
1,007 |
|
|
$ |
12 |
|
|
$ |
21 |
|
|
$ |
882 |
|
|
$ |
18 |
|
|
$ |
139 |
|
|
$ |
1,522 |
|
|
$ |
13,247 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
|
$ |
803 |
|
|
$ |
— |
|
|
$ |
916 |
|
|
$ |
546 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
102 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,367 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collectively evaluated for impairment |
|
$ |
5,365 |
|
|
$ |
28 |
|
|
$ |
2,534 |
|
|
$ |
461 |
|
|
$ |
12 |
|
|
$ |
21 |
|
|
$ |
780 |
|
|
$ |
18 |
|
|
$ |
139 |
|
|
$ |
1,522 |
|
|
$ |
10,880 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance |
|
$ |
90,145 |
|
|
$ |
26,661 |
|
|
$ |
120,278 |
|
|
$ |
217,709 |
|
|
$ |
4,209 |
|
|
$ |
2,261 |
|
|
$ |
60,238 |
|
|
$ |
28,215 |
|
|
$ |
17,915 |
|
|
$ |
— |
|
|
$ |
567,631 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: individually evaluated for impairment |
|
$ |
15,940 |
|
|
$ |
— |
|
|
$ |
6,103 |
|
|
$ |
3,812 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
397 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,252 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance: collectively evaluated for impairment |
|
$ |
74,205 |
|
|
$ |
26,661 |
|
|
$ |
114,175 |
|
|
$ |
213,897 |
|
|
$ |
4,209 |
|
|
$ |
2,261 |
|
|
$ |
59,841 |
|
|
$ |
28,215 |
|
|
$ |
17,915 |
|
|
$ |
— |
|
|
$ |
541,379 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans are closely monitored by management for changes in quality. This monitoring includes assessing the appropriateness of the credit quality indicator in relation to the risk of the loan. Management uses the following indicators to grade the risk of each loan based on a system of eight possible ratings.
Pass: Include loans that are risk rated one through three. The primary source of repayment for pass loans is very likely to be sufficient, with secondary sources readily available; strong financial position; minimal risk; profitability, liquidity and capitalization are better than industry norms.
Weak Pass: Include loans that are risk rated four. The asset quality for weak pass assets is generally acceptable. Primary source of loan repayment is acceptable and secondary sources are likely to be realized, if needed; acceptable business credit, but borrowers operations, cash flow, or financial condition evidence more than average risk; requires above average levels of supervision and attention from Loan Officer. The source of increased risk has been identified, can be effectively managed/corrected, and the increased risk is not significant to warrant a more severe rating.
Special Mention: Include loans that are risk rated five. A special mention asset is considered to be high risk due to potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Company's credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.
Substandard: Include loans that are risk rated six through eight. Loans rated as substandard are considered to be very high risk. A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Some loans that are substandard do not meet the definition of an impaired loan and therefore are not deemed impaired.
The following tables present loans as of December 31, 2011 and December 31, 2010 classified by risk type:
Credit Quality Indicators
As of December 31, 2011
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pass |
|
|
Weak Pass |
|
|
Special
Mention |
|
|
Substandard |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Real Estate—Construction and Land Development Loans |
|
$ |
27,833 |
|
|
$ |
23,237 |
|
|
$ |
4,853 |
|
|
$ |
11,204 |
|
|
$ |
67,127 |
|
|
Real Estate—Secured by Farmland |
|
|
22,008 |
|
|
|
4,430 |
|
|
|
3,452 |
|
|
|
— |
|
|
|
29,890 |
|
|
Real Estate—Secured by Residential Properties |
|
|
60,121 |
|
|
|
31,146 |
|
|
|
12,302 |
|
|
|
6,805 |
|
|
|
110,374 |
|
|
Real Estate—Secured by Nonfarm Nonresidential |
|
|
90,099 |
|
|
|
75,384 |
|
|
|
18,663 |
|
|
|
18,917 |
|
|
|
203,063 |
|
|
Consumer Installment |
|
|
4,025 |
|
|
|
2,212 |
|
|
|
254 |
|
|
|
129 |
|
|
|
6,620 |
|
|
Credit Cards and Related Plans |
|
|
850 |
|
|
|
529 |
|
|
|
279 |
|
|
|
3 |
|
|
|
1,661 |
|
|
Commercial and Industrial |
|
|
25,133 |
|
|
|
16,146 |
|
|
|
2,686 |
|
|
|
1,714 |
|
|
|
45,679 |
|
|
Loans to Finance Agriculture Production |
|
|
16,473 |
|
|
|
3,290 |
|
|
|
584 |
|
|
|
1,192 |
|
|
|
21,539 |
|
|
All Other Loans |
|
|
3,171 |
|
|
|
7,393 |
|
|
|
25 |
|
|
|
— |
|
|
|
10,589 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
249,713 |
|
|
$ |
163,767 |
|
|
$ |
43,098 |
|
|
$ |
39,964 |
|
|
$ |
496,542 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality Indicators
As of December 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Pass |
|
|
Weak Pass |
|
|
Special
Mention |
|
|
Substandard |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Real Estate—Construction and Land Development Loans |
|
$ |
35,356 |
|
|
$ |
27,978 |
|
|
$ |
9,466 |
|
|
$ |
17,345 |
|
|
$ |
90,145 |
|
|
Real Estate—Secured by Farmland |
|
|
17,869 |
|
|
|
6,294 |
|
|
|
2,495 |
|
|
|
3 |
|
|
|
26,661 |
|
|
Real Estate—Secured by Residential Properties |
|
|
64,457 |
|
|
|
43,364 |
|
|
|
3,469 |
|
|
|
8,988 |
|
|
|
120,278 |
|
|
Real Estate—Secured by Nonfarm Nonresidential |
|
|
94,208 |
|
|
|
96,287 |
|
|
|
20,107 |
|
|
|
7,107 |
|
|
|
217,709 |
|
|
Consumer Installment |
|
|
2,466 |
|
|
|
1,460 |
|
|
|
265 |
|
|
|
18 |
|
|
|
4,209 |
|
|
Credit Cards and Related Plans |
|
|
1,211 |
|
|
|
869 |
|
|
|
89 |
|
|
|
92 |
|
|
|
2,261 |
|
|
Commercial and Industrial |
|
|
33,416 |
|
|
|
22,805 |
|
|
|
3,292 |
|
|
|
725 |
|
|
|
60,238 |
|
|
Loans to Finance Agriculture Production |
|
|
18,346 |
|
|
|
7,230 |
|
|
|
2,639 |
|
|
|
— |
|
|
|
28,215 |
|
|
All Other Loans |
|
|
8,442 |
|
|
|
9,341 |
|
|
|
119 |
|
|
|
13 |
|
|
|
17,915 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
275,771 |
|
|
$ |
215,628 |
|
|
$ |
41,941 |
|
|
$ |
34,291 |
|
|
$ |
567,631 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the past due loans by category as of December 31, 2011 and December 31, 2010:
Past Due Loans
As of December 31, 2011
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
30 -59
Days
Past
Due |
|
|
60 -89
Days
Past
Due |
|
|
Greater
than 89
Days (1) |
|
|
Total
Past Due |
|
|
Current |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Real Estate Construction and Land Development |
|
$ |
447 |
|
|
$ |
198 |
|
|
$ |
6,142 |
|
|
$ |
6,787 |
|
|
$ |
60,340 |
|
|
$ |
67,127 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29,890 |
|
|
|
29,890 |
|
|
Real Estate Secured by Residential Properties |
|
|
1,055 |
|
|
|
993 |
|
|
|
1,278 |
|
|
|
3,326 |
|
|
|
107,048 |
|
|
|
110,374 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
2,357 |
|
|
|
— |
|
|
|
4,446 |
|
|
|
6,803 |
|
|
|
196,260 |
|
|
|
203,063 |
|
|
Consumer Installment |
|
|
65 |
|
|
|
— |
|
|
|
22 |
|
|
|
87 |
|
|
|
6,533 |
|
|
|
6,620 |
|
|
Credit Cards and Related Plans |
|
|
2 |
|
|
|
2 |
|
|
|
— |
|
|
|
4 |
|
|
|
1,657 |
|
|
|
1,661 |
|
|
Commercial and Industrial |
|
|
294 |
|
|
|
— |
|
|
|
205 |
|
|
|
499 |
|
|
|
45,180 |
|
|
|
45,679 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21,539 |
|
|
|
21,539 |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,589 |
|
|
|
10,589 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,220 |
|
|
$ |
1,193 |
|
|
$ |
12,093 |
|
|
$ |
17,506 |
|
|
$ |
479,036 |
|
|
$ |
496,542 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual Loans Included in above Totals |
|
$ |
1,426 |
|
|
$ |
588 |
|
|
$ |
12,093 |
|
|
$ |
14,107 |
|
|
$ |
1,866 |
|
|
$ |
15,973 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
There were no loans outstanding that were past due ninety days or more that were still accruing at December 31, 2011. |
Past Due Loans
As of December 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
30 -59
Days
Past
Due |
|
|
60 -89
Days
Past
Due |
|
|
Greater
than 89
Days (1) |
|
|
Total
Past Due |
|
|
Current |
|
|
Total |
|
| |
|
(Dollars in thousands) |
|
|
Real Estate Construction and Land Development |
|
$ |
2,997 |
|
|
$ |
929 |
|
|
$ |
9,627 |
|
|
$ |
13,553 |
|
|
$ |
76,592 |
|
|
$ |
90,145 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,661 |
|
|
|
26,661 |
|
|
Real Estate Secured by Residential Properties |
|
|
251 |
|
|
|
389 |
|
|
|
2,526 |
|
|
|
3,166 |
|
|
|
117,112 |
|
|
|
120,278 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
545 |
|
|
|
— |
|
|
|
919 |
|
|
|
1,464 |
|
|
|
216,245 |
|
|
|
217,709 |
|
|
Consumer Installment |
|
|
35 |
|
|
|
6 |
|
|
|
5 |
|
|
|
46 |
|
|
|
4,163 |
|
|
|
4,209 |
|
|
Credit Cards and Related Plans |
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
2,258 |
|
|
|
2,261 |
|
|
Commercial and Industrial |
|
|
111 |
|
|
|
19 |
|
|
|
553 |
|
|
|
683 |
|
|
|
59,555 |
|
|
|
60,238 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28,215 |
|
|
|
28,215 |
|
|
All Other Loans |
|
|
22 |
|
|
|
4 |
|
|
|
— |
|
|
|
26 |
|
|
|
17,889 |
|
|
|
17,915 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
3,964 |
|
|
$ |
1,347 |
|
|
$ |
13,630 |
|
|
$ |
18,941 |
|
|
$ |
548,690 |
|
|
$ |
567,631 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual Loans Included in above Totals |
|
$ |
53 |
|
|
$ |
625 |
|
|
$ |
13,630 |
|
|
$ |
14,308 |
|
|
$ |
1,588 |
|
|
$ |
15,896 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
There were no loans outstanding that were past due ninety days or more that were still accruing at December 31, 2010. |
The following table presents impaired loans as of December 31, 2011 and December 31, 2010. The recorded investment balance includes the loan balance and accrued interest. The deferred fees that have yet to be recognized are not material for both periods.
Impaired Loans
As of December 31, 2011
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Recorded
Investment |
|
|
Unpaid
Principal
Balance |
|
|
Related
Allowance |
|
|
Average
Recorded
Investment |
|
|
Interest
Income
Recognized |
|
| |
|
(Dollars in thousands) |
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
$ |
6,280 |
|
|
$ |
11,137 |
|
|
$ |
— |
|
|
$ |
7,940 |
|
|
$ |
143 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real Estate Secured by Residential Properties |
|
|
2,135 |
|
|
|
2,611 |
|
|
|
— |
|
|
|
3,575 |
|
|
|
77 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
7,075 |
|
|
|
7,484 |
|
|
|
— |
|
|
|
3,209 |
|
|
|
98 |
|
|
Consumer Installment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Credit Cards and Related Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial |
|
|
379 |
|
|
|
500 |
|
|
|
— |
|
|
|
364 |
|
|
|
14 |
|
|
Loans to Finance Agricultural Production |
|
|
1,109 |
|
|
|
1,110 |
|
|
|
— |
|
|
|
93 |
|
|
|
6 |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans with no related allowance recorded |
|
$ |
16,978 |
|
|
$ |
22,842 |
|
|
$ |
— |
|
|
$ |
15,181 |
|
|
$ |
338 |
|
| |
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
$ |
3,806 |
|
|
$ |
3,794 |
|
|
$ |
637 |
|
|
$ |
6,410 |
|
|
|
116 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real Estate Secured by Residential Properties |
|
|
3,391 |
|
|
|
3,382 |
|
|
|
480 |
|
|
|
4,099 |
|
|
|
89 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
6,976 |
|
|
|
6,957 |
|
|
|
1,181 |
|
|
|
4,550 |
|
|
|
139 |
|
|
Consumer Installment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Credit Cards and Related Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
150 |
|
|
|
5 |
|
|
Commercial and Industrial |
|
|
186 |
|
|
|
186 |
|
|
|
165 |
|
|
|
625 |
|
|
|
24 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans with related allowance recorded |
|
$ |
14,359 |
|
|
$ |
14,319 |
|
|
$ |
2,463 |
|
|
$ |
15,834 |
|
|
$ |
373 |
|
| |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and Land Development |
|
$ |
10,086 |
|
|
$ |
14,931 |
|
|
$ |
637 |
|
|
$ |
14,350 |
|
|
$ |
259 |
|
|
Residential |
|
|
5,526 |
|
|
|
5,993 |
|
|
|
480 |
|
|
|
7,674 |
|
|
|
166 |
|
|
Commercial |
|
|
15,725 |
|
|
|
16,237 |
|
|
|
1,346 |
|
|
|
8,841 |
|
|
|
281 |
|
|
Consumer |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
150 |
|
|
|
5 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
|
$ |
31,337 |
|
|
$ |
37,161 |
|
|
$ |
2,463 |
|
|
$ |
31,015 |
|
|
$ |
711 |
|
Impaired Loans
As of December 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Recorded
Investment |
|
|
Unpaid
Principal
Balance |
|
|
Related
Allowance |
|
|
Average
Recorded
Investment |
|
|
Interest
Income
Recognized |
|
| |
|
(Dollars in thousands) |
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
$ |
9,212 |
|
|
$ |
13,354 |
|
|
$ |
— |
|
|
$ |
9,146 |
|
|
$ |
190 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real Estate Secured by Residential Properties |
|
|
2,700 |
|
|
|
2,972 |
|
|
|
— |
|
|
|
3,909 |
|
|
|
81 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
1,029 |
|
|
|
1,097 |
|
|
|
— |
|
|
|
5,662 |
|
|
|
117 |
|
|
Consumer Installment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Credit Cards and Related Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial |
|
|
218 |
|
|
|
217 |
|
|
|
— |
|
|
|
385 |
|
|
|
8 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans with no related allowance recorded |
|
$ |
13,159 |
|
|
$ |
17,640 |
|
|
$ |
— |
|
|
$ |
19,102 |
|
|
$ |
396 |
|
| |
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
$ |
6,771 |
|
|
$ |
9,497 |
|
|
$ |
803 |
|
|
$ |
6,571 |
|
|
|
136 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real Estate Secured by Residential Properties |
|
|
3,411 |
|
|
|
3,405 |
|
|
|
915 |
|
|
|
3,312 |
|
|
|
69 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
2,794 |
|
|
|
2,784 |
|
|
|
546 |
|
|
|
1,241 |
|
|
|
26 |
|
|
Consumer Installment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Credit Cards and Related Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial |
|
|
179 |
|
|
|
199 |
|
|
|
102 |
|
|
|
925 |
|
|
|
19 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans with related allowance recorded |
|
$ |
13,155 |
|
|
$ |
15,885 |
|
|
$ |
2,366 |
|
|
$ |
12,049 |
|
|
$ |
250 |
|
| |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and Land Development |
|
$ |
15,983 |
|
|
$ |
22,851 |
|
|
$ |
803 |
|
|
$ |
15,717 |
|
|
$ |
326 |
|
|
Residential |
|
|
6,111 |
|
|
|
6,377 |
|
|
|
915 |
|
|
|
7,221 |
|
|
|
150 |
|
|
Commercial |
|
|
4,220 |
|
|
|
4,297 |
|
|
|
648 |
|
|
|
8,213 |
|
|
|
170 |
|
|
Consumer |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans |
|
$ |
26,314 |
|
|
$ |
33,525 |
|
|
$ |
2,366 |
|
|
$ |
31,151 |
|
|
$ |
646 |
|
The following table presents nonaccrual loans as of December 31, 2011 and December 31, 2010 by loan category:
Nonaccrual Loans
| |
|
|
|
|
|
|
|
|
| |
|
December 31,
2011 |
|
|
December 31,
2010 |
|
| |
|
(Dollars in thousands) |
|
|
Real Estate Construction and Land Development |
|
$ |
6,795 |
|
|
$ |
10,839 |
|
|
Real Estate Secured by Farmland |
|
|
— |
|
|
|
— |
|
|
Real Estate Secured by Residential Properties |
|
|
2,113 |
|
|
|
3,268 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
6,767 |
|
|
|
1,231 |
|
|
Consumer Installment |
|
|
22 |
|
|
|
5 |
|
|
Credit Cards and Related Plans |
|
|
— |
|
|
|
— |
|
|
Commercial and Industrial |
|
|
276 |
|
|
|
553 |
|
|
Loans to Finance Agricultural Production |
|
|
— |
|
|
|
— |
|
|
All Other Loans |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
15,973 |
|
|
$ |
15,896 |
|
| |
|
|
|
|
|
|
|
|
Interest income not recognized due to loans being on nonaccrual status during the years ended December 31, 2011 and 2010 was approximately $850 thousand and $1.1 million, respectively.
For the year ended December 31, 2011 the following table presents a breakdown of the types of concessions made by loan class. The recorded investment balances presented are balances at the time of concessions.
Troubled Debt Restructurings
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
December 31, 2011 |
|
| |
|
Number
of
Loans |
|
|
Pre-Modification
Outstanding
Recorded
Investment |
|
|
Post-Modification
Outstanding
Recorded
Investment |
|
| |
|
(Dollars in thousands) |
|
|
Below market interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Secured by Residential Properties |
|
|
1 |
|
|
$ |
219 |
|
|
$ |
219 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
4 |
|
|
|
3,424 |
|
|
|
3,424 |
|
|
Credit Cards and Related Plans |
|
|
1 |
|
|
|
33 |
|
|
|
33 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total below market interest rate |
|
|
6 |
|
|
$ |
3,676 |
|
|
$ |
3,676 |
|
| |
|
|
|
|
Extended payment terms: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
|
2 |
|
|
$ |
258 |
|
|
$ |
258 |
|
|
Real Estate Secured by Residential Properties |
|
|
3 |
|
|
|
1,549 |
|
|
|
1,549 |
|
|
Real Estate Secured by Nonfarm Nonresidential |
|
|
3 |
|
|
|
918 |
|
|
|
918 |
|
|
Commercial and Industrial |
|
|
2 |
|
|
|
227 |
|
|
|
227 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Extended Payment Terms |
|
|
10 |
|
|
$ |
2,952 |
|
|
$ |
2,952 |
|
| |
|
|
|
|
Forgiveness of principal: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Construction and Land Development |
|
|
10 |
|
|
$ |
925 |
|
|
$ |
860 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total forgiveness of principal |
|
|
10 |
|
|
$ |
925 |
|
|
$ |
860 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
26 |
|
|
$ |
7,553 |
|
|
$ |
7,488 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents the successes and failures of the types of modifications for the year ended December 31, 2011. The recorded investment balances presented are as of December 31, 2011.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Paid in Full |
|
|
Paying as
Restructured |
|
|
Converted to
Non-accrual |
|
|
Foreclosure/Default |
|
| |
|
Number
of
Loans |
|
|
Recorded
Investment |
|
|
Number
of
Loans |
|
|
Recorded
Investment |
|
|
Number
of
Loans |
|
|
Recorded
Investment |
|
|
Number
of
Loans |
|
|
Recorded
Investment |
|
| |
|
(Dollars in thousands) |
|
|
Below market interest rate |
|
|
— |
|
|
$ |
— |
|
|
|
6 |
|
|
$ |
3,679 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Extended payment terms |
|
|
1 |
|
|
|
— |
|
|
|
8 |
|
|
|
2,750 |
|
|
|
1 |
|
|
|
161 |
|
|
|
— |
|
|
|
— |
|
|
Forgiveness of principal |
|
|
10 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
11 |
|
|
$ |
— |
|
|
|
14 |
|
|
$ |
6,429 |
|
|
|
1 |
|
|
$ |
161 |
|
|
$ |
— |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There were no loans that were restructured during the year ending on December 31, 2011 that were ninety or more past due and therefore had a payment default. As noted in the previous table there was one loan that, while the loan was not ninety days past due, was moved into nonaccrual status due to payment concerns.
Loans which management identifies as impaired generally will be nonperforming loans or restructured loans (also known as "troubled debt restructurings" or "TDRs"). As a result of adopting the amendments in ASU 2011-02, the Company reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered TDRs under the amended guidance. The Company identified no loans as TDRs which the allowance for loan losses had previously been measured under a general allowance methodology. TDRs are treated as impaired loans in determining the adequacy of the allowance for loan loss. |