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LOANS AND PAYMENT PLAN RECEIVABLES (Tables)
 12 Months Ended
Dec. 31, 2013
LOANS AND PAYMENT PLAN RECEIVABLES [Abstract]  
Loan portfolios
Our loan portfolios at December 31 follow:

 
 
2013
  
2012
 
 
 
(In thousands)
 
Real estate(1)
 
  
 
Residential first mortgages
 
$
431,812
  
$
468,636
 
Residential home equity and other junior mortgages
  
113,703
   
121,235
 
Construction and land development
  
50,290
   
56,183
 
Other(2)
  
440,348
   
434,336
 
Commercial
  
146,954
   
132,904
 
Consumer
  
126,443
   
117,077
 
Payment plan receivables
  
60,638
   
84,692
 
Agricultural
  
4,382
   
4,076
 
Total loans
 
$
1,374,570
  
$
1,419,139
 
 
(1) Includes both residential and non-residential commercial loans secured by real estate.
(2) Includes loans secured by multi-family residential and non-farm, non-residential property.
Analysis of allowance for loan losses by portfolio segment
An analysis of the allowance for loan losses by portfolio segment for the years ended December 31 follows:

 
 
Commercial
  
Mortgage
  
Installment
  
Payment
Plan
Receivables
  
Unallocated
  
Total
 
 
 
(In thousands)
 
2013
 
  
  
  
  
  
 
Balance at beginning of period
 
$
11,402
  
$
21,447
  
$
3,378
  
$
144
  
$
7,904
  
$
44,275
 
Additions (deductions)
                        
Provision for loan losses
  
(2,336
)
  
71
   
314
   
(93
)
  
(1,944
)
  
(3,988
)
Recoveries credited to allowance
  
5,119
   
1,996
   
1,074
   
81
   
-
   
8,270
 
Loans charged against the allowance
  
(7,358
)
  
(6,319
)
  
(2,520
)
  
(35
)
  
-
   
(16,232
)
Balance at end of period
 
$
6,827
  
$
17,195
  
$
2,246
  
$
97
  
$
5,960
  
$
32,325
 
 
                        
2012
                        
Balance at beginning of period
 
$
18,183
  
$
22,885
  
$
6,146
  
$
197
  
$
11,473
  
$
58,884
 
Additions (deductions)
                        
Provision for loan losses
  
2,351
   
7,778
   
15
   
(3
)
  
(3,254
)
  
6,887
 
Recoveries credited to allowance
  
3,610
   
1,581
   
1,311
   
20
   
-
   
6,522
 
Loans charged against the allowance
  
(12,588
)
  
(10,741
)
  
(4,009
)
  
(70
)
  
-
   
(27,408
)
Reclassification to loans held for sale
  
(154
)
  
(56
)
  
(85
)
  
-
   
(315
)
  
(610
)
Balance at end of period
 
$
11,402
  
$
21,447
  
$
3,378
  
$
144
  
$
7,904
  
$
44,275
 
 
                        
2011
                        
Balance at beginning of period
 
$
23,836
  
$
22,642
  
$
6,769
  
$
389
  
$
14,279
  
$
67,915
 
Additions (deductions)
                        
Provision for loan losses
  
12,988
   
14,410
   
3,365
   
(11
)
  
(2,806
)
  
27,946
 
Recoveries credited to allowance
  
1,850
   
1,441
   
1,451
   
5
   
-
   
4,747
 
Loans charged against the allowance
  
(20,491
)
  
(15,608
)
  
(5,439
)
  
(186
)
  
-
   
(41,724
)
Balance at end of period
 
$
18,183
  
$
22,885
  
$
6,146
  
$
197
  
$
11,473
  
$
58,884
 
Allowance for loan losses and recorded investment in loans by portfolio segment
Allowance for loan losses and recorded investment in loans by portfolio segment at December 31 follows:

 
 
Commercial
  
Mortgage
  
Installment
  
Payment
Plan
Receivables
  
Unallocated
  
Total
 
 
 
(In thousands)
 
2013
 
  
  
  
  
  
 
Allowance for loan losses:
 
  
  
  
  
  
 
Individually evaluated for impairment
 
$
3,878
  
$
10,488
  
$
792
  
$
-
  
$
-
  
$
15,158
 
Collectively evaluated for impairment
  
2,949
   
6,707
   
1,454
   
97
   
5,960
   
17,167
 
Total ending allowance balance
 
$
6,827
  
$
17,195
  
$
2,246
  
$
97
  
$
5,960
  
$
32,325
 
 
                        
Loans
                        
Individually evaluated for impairment
 
$
40,623
  
$
78,022
  
$
7,068
  
$
-
      
$
125,713
 
Collectively evaluated for impairment
  
596,235
   
410,887
   
185,676
   
60,638
       
1,253,436
 
Total loans recorded investment
  
636,858
   
488,909
   
192,744
   
60,638
       
1,379,149
 
Accrued interest included in recorded investment
  
1,624
   
2,276
   
679
   
-
       
4,579
 
Total loans
 
$
635,234
  
$
486,633
  
$
192,065
  
$
60,638
      
$
1,374,570
 
 
                        
2012
                        
Allowance for loan losses:
                        
Individually evaluated for impairment
 
$
6,558
  
$
12,869
  
$
1,582
  
$
-
  
$
-
  
$
21,009
 
Collectively evaluated for impairment
  
4,844
   
8,578
   
1,796
   
144
   
7,904
   
23,266
 
Total ending allowance balance
 
$
11,402
  
$
21,447
  
$
3,378
  
$
144
  
$
7,904
  
$
44,275
 
 
                        
Loans
                        
Individually evaluated for impairment
 
$
55,634
  
$
88,028
  
$
7,505
  
$
-
      
$
151,167
 
Collectively evaluated for impairment
  
563,316
   
441,703
   
183,090
   
84,692
       
1,272,801
 
Total loans recorded investment
  
618,950
   
529,731
   
190,595
   
84,692
       
1,423,968
 
Accrued interest included in recorded
investment
  
1,692
   
2,391
   
746
   
-
       
4,829
 
Total loans
 
$
617,258
  
$
527,340
  
$
189,849
  
$
84,692
      
$
1,419,139
 
Non-performing loans
Non-performing loans at December 31 follows:

 
2013
2012
 
(In thousands)
Non-accrual loans
 
$
17,905
  
$
32,929
 
Loans 90 days or more past due and still accruing interest
  
-
   
7
 
Total non-performing loans
 
$
17,905
  
$
32,936
 
 
Loans on non-accrual status and past due more than 90 days
Non performing loans by class as of December 31 follows:

 
 
90+ and
Still
Accruing
  
Non-
Accrual
  
Total Non-
Performing
Loans
 
 
 
(In thousands)
 
2013
 
  
  
 
Commercial
 
  
  
 
Income producing - real estate
 
$
-
  
$
1,899
  
$
1,899
 
Land, land development and construction - real estate
  
-
   
1,036
   
1,036
 
Commercial and industrial
  
-
   
2,434
   
2,434
 
Mortgage
            
1-4 family
  
-
   
6,594
   
6,594
 
Resort lending
  
-
   
2,668
   
2,668
 
Home equity - 1st lien
  
-
   
415
   
415
 
Home equity - 2nd lien
  
-
   
689
   
689
 
Installment
            
Home equity - 1st lien
  
-
   
938
   
938
 
Home equity - 2nd lien
  
-
   
571
   
571
 
Loans not secured by real estate
  
-
   
638
   
638
 
Other
  
-
   
-
   
-
 
Payment plan receivables
            
Full refund
  
-
   
20
   
20
 
Partial refund
  
-
   
3
   
3
 
Other
  
-
   
-
   
-
 
Total recorded investment
 
$
-
  
$
17,905
  
$
17,905
 
Accrued interest included in recorded investment
 
$
-
  
$
-
  
$
-
 
2012
            
Commercial
            
Income producing - real estate
 
$
-
  
$
5,611
  
$
5,611
 
Land, land development and construction - real estate
  
-
   
4,062
   
4,062
 
Commercial and industrial
  
-
   
5,080
   
5,080
 
Mortgage
            
1-4 family
  
7
   
9,654
   
9,661
 
Resort lending
  
-
   
4,861
   
4,861
 
Home equity - 1st lien
  
-
   
529
   
529
 
Home equity - 2nd lien
  
-
   
685
   
685
 
Installment
            
Home equity - 1st lien
  
-
   
1,278
   
1,278
 
Home equity - 2nd lien
  
-
   
675
   
675
 
Loans not secured by real estate
  
-
   
390
   
390
 
Other
  
-
   
-
   
-
 
Payment plan receivables
            
Full refund
  
-
   
57
   
57
 
Partial refund
  
-
   
38
   
38
 
Other
  
-
   
9
   
9
 
Total recorded investment
 
$
7
  
$
32,929
  
$
32,936
 
Accrued interest included in recorded investment
 
$
-
  
$
-
  
$
-
 
 
Aging analysis of loans by class
An aging analysis of loans by class at December 31 follows:

 
 
Loans Past Due
  
  
 
 
 
30-59 days
  
60-89 days
  
90+ days
  
Total
  
Loans not
Past Due
  
Total
Loans
 
 
 
(In thousands)
 
2013
 
  
  
  
  
  
 
Commercial
 
  
  
  
  
  
 
Income producing - real estate
 
$
1,014
  
$
428
  
$
878
  
$
2,320
  
$
249,313
  
$
251,633
 
Land, land development and construction - real estate
  
781
   
129
   
256
   
1,166
   
30,670
   
31,836
 
Commercial and industrial
  
1,155
   
1,665
   
318
   
3,138
   
350,251
   
353,389
 
Mortgage
                        
1-4 family
  
3,750
   
224
   
6,594
   
10,568
   
270,855
   
281,423
 
Resort lending
  
698
   
234
   
2,668
   
3,600
   
142,356
   
145,956
 
Home equity - 1st lien
  
172
   
-
   
415
   
587
   
18,214
   
18,801
 
Home equity - 2nd lien
  
663
   
73
   
689
   
1,425
   
41,304
   
42,729
 
Installment
                        
Home equity - 1st lien
  
557
   
134
   
938
   
1,629
   
25,513
   
27,142
 
Home equity - 2nd lien
  
536
   
136
   
571
   
1,243
   
36,701
   
37,944
 
Loans not secured by real
estate
  
833
   
281
   
638
   
1,752
   
123,295
   
125,047
 
Other
  
22
   
12
   
-
   
34
   
2,577
   
2,611
 
Payment plan receivables
                        
Full refund
  
1,364
   
349
   
20
   
1,733
   
46,344
   
48,077
 
Partial refund
  
190
   
20
   
3
   
213
   
4,840
   
5,053
 
Other
  
122
   
4
   
-
   
126
   
7,382
   
7,508
 
Total recorded investment
 
$
11,857
  
$
3,689
  
$
13,988
  
$
29,534
  
$
1,349,615
  
$
1,379,149
 
Accrued interest included in recorded investment
 
$
100
  
$
26
  
$
-
  
$
126
  
$
4,453
  
$
4,579
 
 
                        
2012
                        
Commercial
                        
Income producing - real estate
 
$
3,734
  
$
609
  
$
2,826
  
$
7,169
  
$
215,623
  
$
222,792
 
Land, land development and construction - real estate
  
336
   
-
   
1,176
   
1,512
   
41,750
   
43,262
 
Commercial and industrial
  
2,522
   
654
   
1,913
   
5,089
   
347,807
   
352,896
 
Mortgage
                        
1-4 family
  
4,429
   
1,115
   
9,661
   
15,205
   
279,132
   
294,337
 
Resort lending
  
748
   
370
   
4,861
   
5,979
   
164,414
   
170,393
 
Home equity - 1st lien
  
453
   
51
   
529
   
1,033
   
18,003
   
19,036
 
Home equity - 2nd lien
  
442
   
32
   
685
   
1,159
   
44,806
   
45,965
 
Installment
                        
Home equity - 1st lien
  
599
   
140
   
1,278
   
2,017
   
30,368
   
32,385
 
Home equity - 2nd lien
  
430
   
125
   
675
   
1,230
   
38,956
   
40,186
 
Loans not secured by real
estate
  
899
   
259
   
390
   
1,548
   
113,751
   
115,299
 
Other
  
24
   
12
   
-
   
36
   
2,689
   
2,725
 
Payment plan receivables
                        
Full refund
  
2,249
   
552
   
57
   
2,858
   
77,335
   
80,193
 
Partial refund
  
112
   
46
   
38
   
196
   
4,119
   
4,315
 
Other
  
3
   
6
   
9
   
18
   
166
   
184
 
Total recorded investment
 
$
16,980
  
$
3,971
  
$
24,098
  
$
45,049
  
$
1,378,919
  
$
1,423,968
 
Accrued interest included in recorded investment
 
$
146
  
$
43
  
$
-
  
$
189
  
$
4,640
  
$
4,829
 
 
Impaired loans
Impaired loans are as follows :

 
 
2013
  
2012
 
 
 
(In thousands)
 
Impaired loans with no allocated allowance
 
  
 
TDR
 
$
13,006
  
$
14,435
 
Non - TDR
  
334
   
418
 
Impaired loans with an allocated allowance
        
TDR - allowance based on collateral
  
10,085
   
16,231
 
TDR - allowance based on present value cash flow
  
101,131
   
112,997
 
Non - TDR - allowance based on collateral
  
688
   
6,580
 
Non - TDR - allowance based on present value cash flow
  
-
   
-
 
Total impaired loans
 
$
125,244
  
$
150,661
 
 
        
Amount of allowance for loan losses allocated
        
TDR - allowance based on collateral
 
$
3,127
  
$
5,060
 
TDR - allowance based on present value cash flow
  
11,777
   
14,462
 
Non - TDR - allowance based on collateral
  
254
   
1,487
 
Non - TDR - allowance based on present value cash flow
      
-
 
Total amount of allowance for loan losses allocated
 
$
15,158
  
$
21,009
 

Impaired loans by class as of December 31 are as follows (1):

 
 
2013
  
2012
 
 
 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
 
With no related allowance recorded:
 
(In thousands)
 
Commercial
 
  
  
  
  
  
 
Income producing - real estate
 
$
7,042
  
$
7,178
  
$
-
  
$
4,050
  
$
4,672
  
$
-
 
Land, land development & construction-real estate
  
2,185
   
3,217
   
-
   
3,304
   
3,294
   
-
 
Commercial and industrial
  
4,110
   
4,087
   
-
   
2,611
   
2,592
   
-
 
Mortgage
                        
1-4 family
  
8
   
8
   
-
   
-
   
-
   
-
 
Resort lending
  
35
   
163
   
-
   
-
   
-
   
-
 
Home equity - 1st lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Installment
                        
Home equity - 1st lien
  
-
   
-
   
-
   
2,027
   
2,219
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
   
2,278
   
2,278
   
-
 
Loans not secured by real estate
  
-
   
-
   
-
   
610
   
681
   
-
 
Other
  
-
   
-
   
-
   
20
   
20
   
-
 
 
  
13,380
   
14,653
   
-
   
14,900
   
15,756
   
-
 
With an allowance recorded:
                        
Commercial
                        
Income producing - real estate
  
14,538
   
15,631
   
1,161
   
20,628
   
24,250
   
1,822
 
Land, land development & construction-real estate
  
3,366
   
4,130
   
686
   
8,808
   
11,971
   
1,986
 
Commercial and industrial
  
9,382
   
9,529
   
2,031
   
16,233
   
18,564
   
2,750
 
Mortgage
                        
1-4 family
  
57,612
   
60,768
   
7,236
   
64,160
   
68,418
   
8,518
 
Resort lending
  
20,171
   
20,608
   
3,221
   
23,763
   
24,160
   
4,321
 
Home equity - 1st lien
  
154
   
164
   
11
   
62
   
77
   
30
 
Home equity - 2nd lien
  
42
   
118
   
20
   
43
   
118
   
-
 
Installment
                        
Home equity - 1st lien
  
2,959
   
3,115
   
254
   
1,215
   
1,240
   
610
 
Home equity - 2nd lien
  
3,352
   
3,347
   
462
   
1,161
   
1,174
   
930
 
Loans not secured by real estate
  
741
   
902
   
75
   
194
   
194
   
42
 
Other
  
16
   
16
   
1
   
-
   
-
   
-
 
 
  
112,333
   
118,328
   
15,158
   
136,267
   
150,166
   
21,009
 
Total
                        
Commercial
                        
Income producing - real estate
  
21,580
   
22,809
   
1,161
   
24,678
   
28,922
   
1,822
 
Land, land development & construction-real estate
  
5,551
   
7,347
   
686
   
12,112
   
15,265
   
1,986
 
Commercial and industrial
  
13,492
   
13,616
   
2,031
   
18,844
   
21,156
   
2,750
 
Mortgage
                        
1-4 family
  
57,620
   
60,776
   
7,236
   
64,160
   
68,418
   
8,518
 
Resort lending
  
20,206
   
20,771
   
3,221
   
23,763
   
24,160
   
4,321
 
Home equity - 1st lien
  
154
   
164
   
11
   
62
   
77
   
30
 
Home equity - 2nd lien
  
42
   
118
   
20
   
43
   
118
   
-
 
Installment
                        
Home equity - 1st lien
  
2,959
   
3,115
   
254
   
3,242
   
3,459
   
610
 
Home equity - 2nd lien
  
3,352
   
3,347
   
462
   
3,439
   
3,452
   
930
 
Loans not secured by real estate
  
741
   
902
   
75
   
804
   
875
   
42
 
Other
  
16
   
16
   
1
   
20
   
20
   
-
 
Total
 
$
125,713
  
$
132,981
  
$
15,158
  
$
151,167
  
$
165,922
  
$
21,009
 
 
                        
Accrued interest included in recorded investment
 
$
469
          
$
506
         
 
(1) There were no impaired payment plan receivables at December 31, 2013 or 2012.
 
Sales of certain commercial watch, substandard and non-performing loans
During the second quarter of 2013 we sold certain commercial watch, substandard and non-performing loans as follows:

 
 
(In thousands)
 
Income producing - real estate
 
$
4,570
 
Land, land development and construction - real estate
  
401
 
Commercial and industrial
  
3,630
 
Total
 
$
8,601
 
 
Average recorded investment in and interest income earned on impaired loans by class
Average recorded investment in and interest income earned on impaired loans by class for the years ended December 31 follows (1):

 
 
2013
  
2012
  
2011
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
 
(In thousands)
 
Commercial
 
  
  
  
  
  
 
Income producing - real estate
 
$
5,765
  
$
340
  
$
2,981
  
$
166
  
$
3,170
  
$
170
 
Land, land development & construction-real estate
  
3,092
   
240
   
2,549
   
150
   
613
   
35
 
Commercial and industrial
  
3,980
   
226
   
3,526
   
246
   
2,874
   
70
 
Mortgage
                        
1-4 family  
  
5
   
11
   
290
   
-
   
35
   
-
 
Resort lending  
  
28
   
-
   
222
   
-
   
166
   
-
 
Home equity - 1st lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
   
-
   
-
   
-
 
Installment
                        
Home equity - 1st lien
  
1,604
   
83
   
1,961
   
97
   
1,955
   
96
 
Home equity - 2nd lien
  
1,841
   
96
   
2,093
   
111
   
2,014
   
93
 
Loans not secured by real estate
  
470
   
23
   
549
   
30
   
598
   
31
 
Other  
  
15
   
1
   
22
   
2
   
15
   
2
 
 
  
16,800
   
1,020
   
14,193
   
802
   
11,440
   
497
 
With an allowance recorded:
                        
Commercial
                        
Income producing - real estate
  
18,164
   
587
   
23,508
   
571
   
18,812
   
117
 
Land, land development & construction-real estate
  
6,186
   
149
   
10,305
   
183
   
9,828
   
114
 
Commercial and industrial
  
11,795
   
457
   
17,828
   
467
   
11,501
   
352
 
Mortgage
                        
1-4 family  
  
60,858
   
2,622
   
66,195
   
2,852
   
71,342
   
2,991
 
Resort lending  
  
21,708
   
836
   
24,286
   
1,000
   
29,335
   
1,064
 
Home equity - 1st lien
  
136
   
4
   
65
   
2
   
32
   
2
 
Home equity - 2nd lien
  
42
   
2
   
81
   
3
   
127
   
4
 
Installment
                        
Home equity - 1st lien
  
1,448
   
85
   
1,432
   
50
   
1,408
   
60
 
Home equity - 2nd lien
  
1,546
   
86
   
1,325
   
51
   
1,466
   
66
 
Loans not secured by real estate
  
314
   
17
   
221
   
10
   
168
   
6
 
Other  
  
3
   
1
   
-
   
-
   
-
   
-
 
 
  
122,200
   
4,846
   
145,246
   
5,189
   
144,019
   
4,776
 
Total
                        
Commercial
                        
Income producing - real estate
  
23,929
   
927
   
26,489
   
737
   
21,982
   
287
 
Land, land development & construction-real estate
  
9,278
   
389
   
12,854
   
333
   
10,441
   
149
 
Commercial and industrial
  
15,775
   
683
   
21,354
   
713
   
14,375
   
422
 
Mortgage
                        
1-4 family  
  
60,863
   
2,633
   
66,485
   
2,852
   
71,377
   
2,991
 
Resort lending  
  
21,736
   
836
   
24,508
   
1,000
   
29,501
   
1,064
 
Home equity - 1st lien
  
136
   
4
   
65
   
2
   
32
   
2
 
Home equity - 2nd lien
  
42
   
2
   
81
   
3
   
127
   
4
 
Installment
                        
Home equity - 1st lien
  
3,052
   
168
   
3,393
   
147
   
3,363
   
156
 
Home equity - 2nd lien
  
3,387
   
182
   
3,418
   
162
   
3,480
   
159
 
Loans not secured by real estate
  
784
   
40
   
770
   
40
   
766
   
37
 
Other  
  
18
   
2
   
22
   
2
   
15
   
2
 
Total  
 
$
139,000
  
$
5,866
  
$
159,439
  
$
5,991
  
$
155,459
  
$
5,273
 
 
(1)There were no impaired payment plan receivables during the years ending December 31, 2013, 2012 and 2011.
 
Troubled debt restructurings
Troubled debt restructurings at December 31 follow:

  
2013
 
  
Commercial
  
Retail
  
Total
 
  
(In thousands)
 
Performing TDR’s  
 
$
35,134
  
$
79,753
  
$
114,887
 
Non-performing TDR’s(1)  
  
4,347
   
4,988
(2) 
  
9,335
 
Total  
 
$
39,481
  
$
84,741
  
$
124,222
 
 
            
  2012 
  
Commercial
  
Retail
  
Total
 
  
(In thousands)
 
Performing TDR’s  
 
$
40,753
  
$
85,977
  
$
126,730
 
Non-performing TDR’s(1)  
  
7,756
   
9,177
(2) 
  
16,933
 
Total  
 
$
48,509
  
$
95,154
  
$
143,663
 
 
(1)Included in non-performing loans table.
(2)Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.
Troubled debt restructuring during the period
Loans that have been classified as troubled debt restructurings during the years ended December 31 follows:

 
 
Number of
Contracts
  
Pre-modification
Recorded
Balance
  
Post-modification
Recorded
Balance
 
 
 
(Dollars in thousands)
 
2013
 
  
  
 
Commercial
 
  
  
 
Income producing - real estate
  
6
  
$
4,798
  
$
3,869
 
Land, land development & construction-real estate
  
1
   
16
   
-
 
Commercial and industrial
  
23
   
2,522
   
1,901
 
Mortgage
            
1-4 family
  
20
   
1,968
   
1,995
 
Resort lending
  
5
   
1,240
   
1,231
 
Home equity - 1st lien
  
1
   
95
   
97
 
Home equity - 2nd lien
  
-
   
-
   
-
 
Installment
            
Home equity - 1st lien
  
25
   
659
   
657
 
Home equity - 2nd lien
  
16
   
508
   
508
 
Loans not secured by real estate
  
5
   
149
   
110
 
Other
  
-
   
-
   
-
 
Total
  
102
  
$
11,955
  
$
10,368
 
 
            
2012
            
Commercial
            
Income producing - real estate
  
20
  
$
9,464
  
$
8,568
 
Land, land development & construction-real estate
  
9
   
4,800
   
4,858
 
Commercial and industrial
  
50
   
9,951
   
7,905
 
Mortgage
            
1-4 family
  
66
   
8,900
   
8,488
 
Resort lending
  
31
   
7,750
   
7,514
 
Home equity - 1st lien
  
1
   
15
   
-
 
Home equity - 2nd lien
  
-
   
-
   
-
 
Installment
            
Home equity - 1st lien
  
18
   
666
   
632
 
Home equity - 2nd lien
  
24
   
784
   
768
 
Loans not secured by real estate
  
13
   
325
   
304
 
Other
  
-
   
-
   
-
 
Total
  
232
  
$
42,655
  
$
39,037
 
 
            
2011
            
Commercial
            
Income producing - real estate
  
42
  
$
21,061
  
$
17,679
 
Land, land development & construction-real estate
  
20
   
10,801
   
7,464
 
Commercial and industrial
  
64
   
11,133
   
10,649
 
Mortgage
            
1-4 family
  
73
   
9,933
   
9,423
 
Resort lending
  
33
   
8,893
   
8,749
 
Home equity - 1st lien
  
2
   
69
   
64
 
Home equity - 2nd lien
  
1
   
23
   
18
 
Installment
            
Home equity - 1st lien
  
21
   
678
   
618
 
Home equity - 2nd lien
  
16
   
535
   
514
 
Loans not secured by real estate
  
26
   
455
   
442
 
Other
  
-
   
-
   
-
 
Total
  
298
  
$
63,581
  
$
55,620
 
 
Troubled debt restructuring during the past twelve months that subsequently defaulted
Loans that have been classified as troubled debt restructured during the past twelve months and that have subsequently defaulted during the years ended December 31 follows:

 
 
Number of
Contracts
  
Recorded
Balance
 
 
 
(Dollars in thousands)
 
2013
 
  
 
Commercial
 
  
 
Income producing - real estate
  
1
  
$
693
 
Land, land development & construction-real estate
  
1
   
334
 
Commercial and industrial
  
2
   
143
 
Mortgage
        
1-4 family
  
1
   
106
 
Resort lending
  
1
   
156
 
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Installment
        
Home equity - 1st lien
  
2
   
32
 
Home equity - 2nd lien
  
1
   
22
 
Loans not secured by real estate
  
-
   
-
 
Other
  
-
   
-
 
Total
  
9
  
$
1,486
 
 
        
2012
        
Commercial
        
Income producing - real estate
  
2
  
$
827
 
Land, land development & construction-real estate
  
-
   
-
 
Commercial and industrial
  
5
   
230
 
Mortgage
        
1-4 family
  
2
   
148
 
Resort lending
  
4
   
887
 
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Installment
        
Home equity - 1st lien
  
2
   
234
 
Home equity - 2nd lien
  
1
   
20
 
Loans not secured by real estate
  
-
   
-
 
Other
  
-
   
-
 
Total
  
16
  
$
2,346
 
 
        
2011
        
Commercial
        
Income producing - real estate
  
7
  
$
3,604
 
Land, land development & construction-real estate
  
4
   
3,036
 
Commercial and industrial
  
2
   
492
 
Mortgage
        
1-4 family
  
10
   
1,191
 
Resort lending
  
6
   
1,311
 
Home equity - 1st lien
  
-
   
-
 
Home equity - 2nd lien
  
-
   
-
 
Installment
        
Home equity - 1st lien
  
1
   
19
 
Home equity - 2nd lien
  
5
   
301
 
Loans not secured by real estate
  
-
   
-
 
Other
  
-
   
-
 
Total
  
35
  
$
9,954
 
 
Summary of loan ratings by loan class
The following table summarizes loan ratings by loan class for our commercial loan segment at December 31:

 
 Commercial 
 
 
Non-watch
1-6
  
Watch
7-8
  
Substandard
Accrual
9
  
Non
Accrual
10-11
  
Total
 
 
 
  
  
(In thousands)
  
  
 
2013
 
  
  
  
  
 
Income producing - real estate
 
$
227,957
  
$
17,882
  
$
3,895
  
$
1,899
  
$
251,633
 
Land, land development and construction - real estate
  
25,654
   
4,829
   
317
   
1,036
   
31,836
 
Commercial and industrial
  
318,183
   
26,303
   
6,469
   
2,434
   
353,389
 
Total
 
$
571,794
  
$
49,014
  
$
10,681
  
$
5,369
  
$
636,858
 
Accrued interest included in total
 
$
1,433
  
$
147
  
$
44
  
$
-
  
$
1,624
 
 
                    
2012
                    
Income producing - real estate
 
$
183,530
  
$
27,096
  
$
6,555
  
$
5,611
  
$
222,792
 
Land, land development and construction - real estate
  
32,784
   
3,457
   
2,959
   
4,062
   
43,262
 
Commercial and industrial
  
307,566
   
26,954
   
13,296
   
5,080
   
352,896
 
Total
 
$
523,880
  
$
57,507
  
$
22,810
  
$
14,753
  
$
618,950
 
Accrued interest included in total
 
$
1,417
  
$
163
  
$
112
  
$
-
  
$
1,692
 
 
For each of our mortgage and installment segment classes we generally monitor credit quality based on the credit scores of the borrowers. These credit scores are generally updated at least annually. The following tables summarize credit scores by loan class for our mortgage and installment loan segments at December 31:

  Mortgage (1) 
  
1-4 Family
  
Resort
Lending
  
Home
Equity
1st Lien
  
Home
Equity
2nd Lien
  
Total
 
  
  
  
(In thousands)
  
  
 
2013
  
  
  
  
  
 
800 and above
  
$
23,924
  
$
13,487
  
$
3,650
  
$
5,354
  
$
46,415
 
750-799
   
60,728
   
56,880
   
4,560
   
11,809
   
133,977
 
700-749
   
58,269
   
35,767
   
3,289
   
8,628
   
105,953
 
650-699
   
49,771
   
21,696
   
2,316
   
7,145
   
80,928
 
600-649
   
34,991
   
8,555
   
2,621
   
5,141
   
51,308
 
550-599
   
24,616
   
3,261
   
1,165
   
2,485
   
31,527
 
500-549
   
14,823
   
2,271
   
644
   
1,560
   
19,298
 
Under 500
   
9,492
   
1,160
   
323
   
360
   
11,335
 
Unknown
   
4,809
   
2,879
   
233
   
247
   
8,168
 
Total
  
$
281,423
  
$
145,956
  
$
18,801
  
$
42,729
  
$
488,909
 
Accrued interest included in total
  
$
1,300
  
$
650
  
$
97
  
$
229
  
$
2,276
 
                      
2012
                     
800 and above
  
$
19,638
  
$
15,430
  
$
3,031
  
$
5,515
  
$
43,614
 
750-799
   
62,419
   
67,094
   
4,758
   
12,783
   
147,054
 
700-749
   
59,594
   
41,860
   
3,293
   
9,177
   
113,924
 
650-699
   
57,584
   
17,685
   
2,309
   
7,987
   
85,565
 
600-649
   
31,465
   
12,317
   
3,311
   
4,775
   
51,868
 
550-599
   
27,739
   
7,887
   
964
   
2,754
   
39,344
 
500-549
   
20,243
   
1,212
   
656
   
1,997
   
24,108
 
Under 500
   
9,470
   
1,637
   
456
   
789
   
12,352
 
Unknown
   
6,185
   
5,271
   
258
   
188
   
11,902
 
Total
  
$
294,337
  
$
170,393
  
$
19,036
  
$
45,965
  
$
529,731
 
Accrued interest included in total
  
$
1,319
  
$
750
  
$
91
  
$
231
  
$
2,391
 
 
(1) Credit scores have been updated within the last twelve months.
  Installment(1) 
  
Home
Equity
1st Lien
  
Home
Equity
2nd Lien
  
Loans not
Secured by
Real Estate
  
Other
  
Total
 
  
  
  
(In thousands)
  
  
 
2013
  
  
  
  
  
 
800 and above
  
$
2,977
  
$
3,062
  
$
23,649
  
$
53
  
$
29,741
 
750-799
   
6,585
   
11,197
   
48,585
   
557
   
66,924
 
700-749
   
4,353
   
9,487
   
25,343
   
683
   
39,866
 
650-699
   
4,815
   
6,832
   
15,256
   
646
   
27,549
 
600-649
   
3,173
   
2,824
   
5,289
   
258
   
11,544
 
550-599
   
2,843
   
2,084
   
2,785
   
213
   
7,925
 
500-549
   
1,483
   
1,715
   
1,732
   
130
   
5,060
 
Under 500
   
751
   
663
   
516
   
29
   
1,959
 
Unknown
   
162
   
80
   
1,892
   
42
   
2,176
 
Total
  
$
27,142
  
$
37,944
  
$
125,047
  
$
2,611
  
$
192,744
 
Accrued interest included in total
  
$
114
  
$
144
  
$
399
  
$
22
  
$
679
 
                      
2012
                     
800 and above
  
$
3,909
  
$
3,265
  
$
19,293
  
$
38
  
$
26,505
 
750-799
   
7,394
   
11,300
   
43,740
   
462
   
62,896
 
700-749
   
4,884
   
8,826
   
24,267
   
786
   
38,763
 
650-699
   
5,925
   
7,164
   
13,758
   
710
   
27,557
 
600-649
   
4,360
   
4,214
   
6,442
   
367
   
15,383
 
550-599
   
3,226
   
2,716
   
3,428
   
188
   
9,558
 
500-549
   
1,722
   
1,403
   
2,154
   
114
   
5,393
 
Under 500
   
760
   
1,195
   
895
   
42
   
2,892
 
Unknown
   
205
   
103
   
1,322
   
18
   
1,648
 
Total
  
$
32,385
  
$
40,186
  
$
115,299
  
$
2,725
  
$
190,595
 
Accrued interest included in total
  
$
137
  
$
157
  
$
429
  
$
23
  
$
746
 
 
(1) Credit scores have been updated within the last twelve months.

Mepco is a wholly-owned subsidiary of our Bank that operates a vehicle service contract payment plan business throughout the United States. See note #11 for more information about Mepco’s business. As of December 31, 2013, approximately 79.3% of Mepco’s outstanding payment plan receivables relate to programs in which a third party insurer or risk retention group is obligated to pay Mepco the full refund owing upon cancellation of the related service contract (including with respect to both the portion funded to the service contract seller and the portion funded to the administrator). These receivables are shown as “Full Refund” in the table below. Another approximately 8.3% of Mepco’s outstanding payment plan receivables as of December 31, 2013, relate to programs in which a third party insurer or risk retention group is obligated to pay Mepco the refund owing upon cancellation only with respect to the unearned portion previously funded by Mepco to the administrator (but not to the service contract seller). These receivables are shown as “Partial Refund” in the table below. The balance of Mepco’s outstanding payment plan receivables relate to programs in which there is no insurer or risk retention group that has any contractual liability to Mepco for any portion of the refund amount. These receivables are shown as “Other” in the table below. For each class of our payment plan receivables we monitor credit ratings of the counterparties as we evaluate the credit quality of this portfolio.

Although Mepco has contractual recourse against various counterparties for refunds owing upon cancellation of vehicle service contracts, please see note #11 regarding certain risks and difficulties associated with collecting these refunds.
 
The following table summarizes credit ratings by class of payment plan receivable at December 31:

  
Payment Plan Receivables
 
  
Full
Refund
  
Partial
Refund
  
Other
  
Total
 
  
  
(In thousands)
  
 
2013
  
  
  
  
 
AM Best rating
  
  
  
  
 
A+
 
 
$
-
  
$
-
  
$
-
  
$
-
 
A 
 
  
20,203
   
4,221
   
-
   
24,424
 
A-
   
4,058
   
832
   
7,496
   
12,386
 
B+
 
  
-
   
-
   
-
   
-
 
B
 
  
-
   
-
   
-
   
-
 
Not rated
   
23,816
   
-
   
12
   
23,828
 
Total
  
$
48,077
  
$
5,053
  
$
7,508
  
$
60,638
 
                   
2012                 
AM Best rating
                 
A+
 
 
$
-
  
$
-
  
$
110
  
$
110
 
A
 
  
24,825
   
3,916
   
-
   
28,741
 
A-
   
19,310
   
399
   
-
   
19,709
 
B+
 
  
56
   
-
   
-
   
56
 
B
 
  
-
   
-
   
-
   
-
 
Not rated
   
36,002
   
-
   
74
   
36,076
 
Total
  
$
80,193
  
$
4,315
  
$
184
  
$
84,692
 
Other mortgage loans service's principal balances
Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year end are as follows:

 
 
2013
  
2012
 
 
 
(In thousands)
 
Mortgage loans serviced for :
 
  
 
Fannie Mae
 
$
981,031
  
$
948,588
 
Freddie Mac
  
753,143
   
805,447
 
Other
  
111
   
123
 
Total
 
$
1,734,285
  
$
1,754,158
 
Schedule of capitalized mortgage loan servicing rights
An analysis of capitalized mortgage loan servicing rights for the years ended December 31 follows:
 
 
 
2013
  
2012
  
2011
 
 
 
(In thousands)
 
Balance at beginning of year
 
$
11,013
  
$
11,229
  
$
14,661
 
Originated servicing rights capitalized
  
3,210
   
4,006
   
2,967
 
Amortization
  
(3,745
)
  
(4,679
)
  
(3,065
)
Change in valuation allowance
  
3,232
   
457
   
(3,334
)
Balance at end of year
 
$
13,710
  
$
11,013
  
$
11,229
 
Valuation allowance
 
$
2,855
  
$
6,087
  
$
6,544
 
Loans sold and serviced that have had servicing rights capitalized
 
$
1,732,476
  
$
1,751,960
  
$
1,774,952