Loans

12 Months Ended

Dec. 31, 2012

Loans By Type Disclosure [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 4
Loans

The Company originates commercial, industrial and real estate loans to businesses and churches throughout the metropolitan St. Louis, Missouri area, Orange County, California and other selected cities in the United States. The Company does not have any particular concentration of credit in any one economic sector; however, a substantial portion of the commercial and industrial loans are extended to privately-held commercial companies in these market areas, and are generally secured by the assets of the business. The Company also has a substantial portion of real estate loans secured by mortgages that are extended to churches in its market area and selected cities in the United States.

A summary of loan categories is as follows:

	December 31,
(In thousands)	2012		2011
Commercial and industrial	$	160,862	$	136,916
Real estate
Commercial:
Mortgage		134,843		140,848
Construction		7,025		9,067
Church, church-related:
Mortgage		368,118		347,726
Construction		16,450		36,497
Other		435		511
Total loans	$	687,733	$	671,565

The following table presents the aging of loans by loan categories at December 31, 2012:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non		Total
(In thousands)	Current		Days		Days		Over		Accrual		Loans
Commercial and industrial	$	159,423	$	—	$	—	$	—	$	1,439	$	160,862
Real estate
Commercial:
Mortgage		129,884				—		—		4,959		134,843
Construction		7,025		—		—		—		—		7,025
Church, church-related:
Mortgage		367,944				—		—		174		368,118
Construction		16,450		—		—		—		—		16,450
Other		435		—		—		—		—		435
Total	$	681,161	$	—	$	—	$	—	$	6,572	$	687,733

The following table presents the aging of loans by loan categories at December 31, 2011:

	Performing						Nonperforming
							90 Days
			30-59		60-89		and		Non		Total
(In thousands)	Current		Days		Days		Over		Accrual		Loans
Commercial and industrial	$	136,850	$	—	$	10	$	—	$	56	$	136,916
Real estate
Commercial:
Mortgage		139,249		137		—		29		1,433		140,848
Construction		9,067		—		—		—		—		9,067
Church, church-related:
Mortgage		347,506		—		—		—		220		347,726
Construction		36,497		—		—		—		—		36,497
Other		511		—		—		—		—		511
Total	$	669,680	$	137	$	10	$	29	$	1,709	$	671,565

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of December 31, 2012:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject
	Normal		Special		to Special
(In thousands)	Monitoring1		Monitoring2		Monitoring2			Total Loans
Commercial and industrial	$	155,838	$	3,585	$	1,439		$	160,862
Real estate
Commercial:
Mortgage		123,315		6,569		4,959	*		134,843
Construction		7,025		—		—			7,025
Church, church-related:
Mortgage		366,366		1,578		174			368,118
Construction		16,450		—		—			16,450
Other		435		—		—			435
Total	$	669,429	$	11,732	$	6,572		$	687,733

*	In February 2013, a payment of $4,115,000 was received for one nonaccrual loan with a balance of $4,198,000. $83,000 was charged off.
1	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligation.
2	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of December 31, 2011:

	Loans		Performing		Nonperforming
	Subject to		Loans Subject to		Loans Subject to
	Normal		Special		Special		Total
(In thousands)	Monitoring1		Monitoring2		Monitoring2		Loans
Commercial and industrial	$	132,475	$	4,385	$	56	$	136,916
Real estate
Commercial:
Mortgage		125,850		13,536		1,462		140,848
Construction		9,067		—		—		9,067
Church, church-related:
Mortgage		336,727		10,779		220		347,726
Construction		36,497		—		—		36,497
Other		511		—		—		511
Total	$	641,127	$	28,700	$	1,738	$	671,565

1	Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligation.
2	Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest and troubled debt restructurings, both performing and non-performing. Troubled debt restructuring involves the granting of a concession to a borrower experiencing financial difficulty resulting in the modification of terms of the loan, such as changes in payment schedule or interest rate. The allowance for loan losses related to impaired loans was $1,404,000 and $1,066,000 at December 31, 2012 and 2011, respectively. There were no impaired loans without a valuation allowance at December 31, 2012 or 2011. Nonaccrual loans were $6,572,000 and $1,709,000 at December 31, 2012 and 2011, respectively. Loans delinquent 90 days or more and still accruing interest were $0 and $29,000 at December 31, 2012 and 2011, respectively. At December 31, 2011, there were two loans totaling $4,479,000 classified as troubled debt restructuring, with a total pre-modification loan balance of $4,486,000. During 2012, both loans were in compliance with their modified terms and as of December 31, 2012 no longer reported as troubled debt restructurings. The average balances of impaired loans during 2012, 2011 and 2010 were $5,451,000, $5,276,000 and $1,130,000, respectively. Income that would have been recognized on non-accrual loans under the original terms of the contract was $381,000, $107,00 and $83,000 for 2012, 2011 and 2010, respectively. Income that was recognized on nonaccrual loans was $141,000, $102,000 and $35,000 for 2012, 2011 and 2010 respectively. There are two foreclosed loans with a book value of $1,322,000 which have been reclassified as other real estate owned (included in other assets) as of December 31, 2012.

The following table presents the recorded investment and unpaid principal balance for impaired loans at December 31, 2012:

							Related
				Unpaid			Allowance
	Recorded			Principal			for Loan
(In thousands)	Investment			Balance			Losses
Commercial and industrial:
Nonaccrual	$	1,439		$	1,439		$	657
Troubled debt restructurings still accruing		—			—			—
Real estate
Commercial – Mortgage:
Nonaccrual		4,959	*		4,959	*		660
Church – Mortgage:
Nonaccrual		174			174			87
Total impaired loans	$	6,572		$	6,572		$	1,404

* In February 2013, a payment of $4,115,000 was received for one nonaccrual loan with a balance of $4,198,000. $83,000 was charged off.

The following table presents the recorded investment and unpaid principal balance for impaired loans at December 31, 2011:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
Commercial and industrial:
Nonaccrual	$	56	$	56	$	28
Troubled debt restructurings still accruing		83		83		8
Real estate
Commercial – Mortgage:
Nonaccrual		1,433		1,433		149
Past due 90 days or more and still accruing		29		29		—
Troubled debt restructurings still accruing		4,396		4,396		766
Church – Mortgage:
Nonaccrual		220		220		115
Total impaired loans	$	6,217	$	6,217	$	1,066

The Company does not record loans at fair value on a recurring basis. Once a loan is identified as impaired, management measures impairment in accordance with FASB ASC 310, “Allowance for Credit Losses”. At December 31, 2012, all impaired loans were evaluated based on the fair value of the collateral. The fair value of the collateral is based upon an observable market price or current appraised value and therefore, the Company classifies these assets as nonrecurring Level 3. The total principal balance of impaired loans measured at fair value at December 31, 2012 and 2011 was $5,168,000 and $5,151,000.

A summary of the activity in the allowance for loan losses is as follows:

	December 31,		Charge-							December 31,
(In thousands)	2011		Offs		Recoveries		Provision			2012
Commercial and industrial	$	2,594	$	1,546	$	111	$	2,033		$	3,192
Real estate
Commercial:
Mortgage		4,776		1,542		—		550			3,784
Construction		167		—		—		(30	)		137
Church, church-related:
Mortgage		4,797		20		—		126			4,903
Construction		616		—		—		(283	)		333
Other		4		—		—		4			8
Total	$	12,954	$	3,108	$	111	$	2,400		$	12,357

Loan transactions involving executive officers and directors of the Company and its subsidiaries and loans to affiliates of executive officers and directors decreased during 2012 by $19,000 in payments, from an aggregate balance of $578,000 on January 1, 2012 to $559,000 at December 31, 2012. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other persons, and did not involve more than the normal risk of collectability.