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ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY
9 Months Ended
Sep. 30, 2016
Loans [Abstract]  
ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY
NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables present the activity in the allowance for loan losses by portfolio segment for the three-month periods ended September 30, 2016 and 2015:


 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multifamily
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
Three Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, July 1
 $20,935
 
 $12,637
 
 $3,047
 
 $365
 
 $2,934
 
 $333
 
 $2,996
 
 $43,247
  Provision for loan losses
(715)
 
650
 
56
 
18
 
72
 
70
 
(151)
 
0
  Loans charged-off
(168)
 
(331)
 
0
 
0
 
(224)
 
(50)
 
0
 
(773)
   Recoveries
268
 
17
 
5
 
0
 
69
 
20
 
0
 
379
    Net loans charged-off
100
 
(314)
 
5
 
0
 
(155)
 
(30)
 
0
 
(394)
Ending balance
 $20,320
 
 $12,973
 
 $3,108
 
 $383
 
 $2,851
 
 $373
 
 $2,845
 
 $42,853


 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multifamily
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, July 1
 $22,360
 
 $13,112
 
 $1,881
 
 $358
 
 $3,473
 
 $392
 
 $3,240
 
 $44,816
  Provision for loan losses
(88)
 
(235)
 
103
 
11
 
14
 
(13)
 
208
 
0
  Loans charged-off
(2)
 
0
 
0
 
0
 
(152)
 
(74)
 
0
 
(228)
  Recoveries
43
 
14
 
5
 
0
 
21
 
23
 
0
 
106
    Net loans charged-off
41
 
14
 
5
 
0
 
(131)
 
(51)
 
0
 
(122)
Ending balance
 $22,313
 
 $12,891
 
 $1,989
 
 $369
 
 $3,356
 
 $328
 
 $3,448
 
 $44,694

The following tables present the activity in the allowance for loan losses by portfolio segment for the nine-month periods ended September 30, 2016 and 2015:


 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multifamily
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, January 1
 $21,564
 
 $12,473
 
 $2,445
 
 $574
 
 $3,395
 
 $319
 
 $2,840
 
 $43,610
  Provision for loan losses
(1,057)
 
771
 
649
 
(191)
 
(295)
 
118
 
5
 
0
  Loans charged-off
(542)
 
(499)
 
0
 
0
 
(354)
 
(140)
 
0
 
(1,535)
   Recoveries
355
 
228
 
14
 
0
 
105
 
76
 
0
 
778
    Net loans charged-off
(187)
 
(271)
 
14
 
0
 
(249)
 
(64)
 
0
 
(757)
Ending balance
 $20,320
 
 $12,973
 
 $3,108
 
 $383
 
 $2,851
 
 $373
 
 $2,845
 
 $42,853


 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multifamily
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, January 1
 $22,785
 
 $14,153
 
 $1,790
 
 $276
 
 $3,459
 
 $483
 
 $3,316
 
 $46,262
  Provision for loan losses
240
 
(856)
 
184
 
215
 
149
 
(64)
 
132
 
0
  Loans charged-off
(878)
 
(459)
 
0
 
(122)
 
(292)
 
(180)
 
0
 
(1,931)
  Recoveries
166
 
53
 
15
 
0
 
40
 
89
 
0
 
363
    Net loans charged-off
(712)
 
(406)
 
15
 
(122)
 
(252)
 
(91)
 
0
 
(1,568)
Ending balance
 $22,313
 
 $12,891
 
 $1,989
 
 $369
 
 $3,356
 
 $328
 
 $3,448
 
 $44,694


The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2016 and December 31, 2015:
 
 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multifamily
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Individually evaluated for impairment
 $2,770
 
 $272
 
 $0
 
 $0
 
 $331
 
 $50
 
 $0
 
 $3,423
    Collectively evaluated for impairment
17,550
 
12,701
 
3,108
 
383
 
2,520
 
323
 
2,845
 
39,430
Total ending allowance balance
 $20,320
 
 $12,973
 
 $3,108
 
 $383
 
 $2,851
 
 $373
 
 $2,845
 
 $42,853
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Loans individually evaluated for impairment
 $8,095
 
 $8,633
 
 $283
 
 $12
 
 $1,523
 
 $56
 
 $0
 
 $18,602
  Loans collectively evaluated for impairment
1,242,900
 
1,216,429
 
309,280
 
89,835
 
344,335
 
58,780
 
0
 
3,261,559
Total ending loans balance
 $1,250,995
 
 $1,225,062
 
 $309,563
 
 $89,847
 
 $345,858
 
 $58,836
 
 $0
 
 $3,280,161


 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
and
 
Agri-business
 
 
 
Consumer
 
 
 
 
 
 
 
and
 
Multi-family
 
and
 
Other
 
1-4 Family
 
Other
 
 
 
 
(dollars in thousands)
Industrial
 
Residential
 
Agricultural
 
Commercial
 
Mortgage
 
Consumer
 
Unallocated
 
Total
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Individually evaluated for impairment
 $2,781
 
 $465
 
 $0
 
 $5
 
 $358
 
 $50
 
 $0
 
 $3,659
    Collectively evaluated for impairment
18,783
 
12,008
 
2,445
 
569
 
3,037
 
269
 
2,840
 
39,951
Total ending allowance balance
 $21,564
 
 $12,473
 
 $2,445
 
 $574
 
 $3,395
 
 $319
 
 $2,840
 
 $43,610
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Loans individually evaluated for impairment
 $8,286
 
 $9,823
 
 $471
 
 $12
 
 $1,927
 
 $60
 
 $0
 
 $20,579
  Loans collectively evaluated for impairment
1,171,407
 
1,119,150
 
305,707
 
85,059
 
330,072
 
48,955
 
0
 
3,060,350
Total ending loans balance
 $1,179,693
 
 $1,128,973
 
 $306,178
 
 $85,071
 
 $331,999
 
 $49,015
 
 $0
 
 $3,080,929
 
The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2016:


 
Unpaid
 
 
 
Allowance for
 
Principal
 
Recorded
 
Loan Losses
(dollars in thousands)
Balance
 
Investment
 
Allocated
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $540
 
 $385
 
 $0
    Non-working capital loans
3,526
 
1,477
 
0
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
146
 
146
 
0
    Owner occupied loans
2,635
 
2,454
 
0
    Nonowner occupied loans
4,674
 
4,677
 
0
    Multifamily loans
381
 
50
 
0
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
603
 
283
 
0
  Other commercial loans
12
 
12
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
143
 
105
 
0
    Open end and junior lien loans
369
 
156
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,311
 
1,310
 
414
    Non-working capital loans
4,925
 
4,923
 
2,356
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
164
 
164
 
1
    Owner occupied loans
1,143
 
1,142
 
271
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
1,329
 
1,262
 
331
  Other consumer loans
56
 
56
 
50
Total
 $21,957
 
 $18,602
 
 $3,423

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2015:


 
Unpaid
 
 
 
Allowance for
 
Principal
 
Recorded
 
Loan Losses
(dollars in thousands)
Balance
 
Investment
 
Allocated
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $20
 
 $20
 
 $0
    Non-working capital loans
2,390
 
623
 
0
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Owner occupied loans
3,762
 
3,223
 
0
    Nonowner occupied loans
4,894
 
4,898
 
0
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
969
 
471
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
45
 
45
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,318
 
1,318
 
535
    Non-working capital loans
8,617
 
6,325
 
2,246
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
364
 
364
 
71
    Owner occupied loans
949
 
949
 
232
    Multifamily loans
389
 
389
 
162
  Other commercial loans
12
 
12
 
5
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
1,695
 
1,629
 
331
    Open end and junior lien loans
253
 
253
 
27
  Other consumer loans
60
 
60
 
50
Total
 $25,737
 
 $20,579
 
 $3,659

The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended September 30, 2016:




 
 
 
 
 
Cash Basis
 
Average
 
Interest
 
Interest
 
Recorded
 
Income
 
Income
(dollars in thousands)
Investment
 
Recognized
 
Recognized
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $387
 
 $8
 
 $0
    Non-working capital loans
1,473
 
8
 
5
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
275
 
0
 
0
    Owner occupied loans
2,475
 
2
 
2
    Nonowner occupied loans
4,690
 
88
 
88
    Multifamily loans
17
 
0
 
0
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
346
 
0
 
0
    Loans for ag production
676
 
0
 
0
  Other commercial loans
4
 
0
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
82
 
0
 
0
    Open end and junior lien loans
52
 
0
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,336
 
11
 
11
    Non-working capital loans
4,538
 
35
 
33
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
55
 
1
 
3
    Owner occupied loans
1,150
 
0
 
0
    Multifamily loans
254
 
2
 
1
  Other commercial loans
8
 
0
 
1
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
1,378
 
5
 
4
    Open end and junior lien loans
247
 
0
 
0
  Other consumer loans
57
 
1
 
1
Total
 $19,500
 
 $161
 
 $149
 
The following table presents loans individually evaluated for impairment by class of loans as of and for the three-month period ended September 30, 2015:


 
 
 
 
 
Cash Basis
 
Average
 
Interest
 
Interest
 
Recorded
 
Income
 
Income
(dollars in thousands)
Investment
 
Recognized
 
Recognized
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $20
 
 $0
 
 $0
    Non-working capital loans
709
 
1
 
1
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Owner occupied loans
2,442
 
0
 
0
    Nonowner occupied loans
5,404
 
26
 
27
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
474
 
0
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
415
 
0
 
0
    Open end and junior lien loans
130
 
0
 
0
  Other consumer loans
5
 
0
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,202
 
3
 
4
    Non-working capital loans
6,092
 
47
 
43
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
351
 
4
 
2
    Owner occupied loans
2,682
 
0
 
0
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
2,125
 
15
 
14
  Other consumer loans
99
 
1
 
2
Total
 $22,150
 
 $97
 
 $93

 
The following table presents loans individually evaluated for impairment by class of loans as of and for the nine-month period ended September 30, 2016:

 
 
 
 
 
Cash Basis
 
Average
 
Interest
 
Interest
 
Recorded
 
Income
 
Income
(dollars in thousands)
Investment
 
Recognized
 
Recognized
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $300
 
 $8
 
 $8
    Non-working capital loans
901
 
8
 
5
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
92
 
0
 
0
    Owner occupied loans
2,578
 
2
 
2
    Nonowner occupied loans
4,760
 
205
 
200
    Multifamily loans
6
 
0
 
0
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
429
 
0
 
0
    Loans for ag production
902
 
5
 
4
  Other commercial loans
1
 
0
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
93
 
0
 
0
    Open end and junior lien loans
17
 
0
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,176
 
21
 
21
    Non-working capital loans
4,417
 
103
 
101
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
230
 
8
 
8
    Owner occupied loans
1,023
 
0
 
0
    Nonowner occupied loans
26
 
0
 
0
    Multifamily loans
341
 
12
 
11
  Other commercial loans
10
 
0
 
1
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
1,456
 
31
 
29
    Open end and junior lien loans
221
 
0
 
0
  Other consumer loans
58
 
3
 
3
Total
 $19,037
 
 $406
 
 $393

The following table presents loans individually evaluated for impairment by class of loans as of and for the nine-month period ended September 30, 2015:


 
 
 
 
 
Cash Basis
 
Average
 
Interest
 
Interest
 
Recorded
 
Income
 
Income
(dollars in thousands)
Investment
 
Recognized
 
Recognized
With no related allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
 $21
 
 $0
 
 $0
    Non-working capital loans
613
 
2
 
2
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
175
 
0
 
0
    Owner occupied loans
1,950
 
0
 
0
    Nonowner occupied loans
4,504
 
80
 
83
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
412
 
0
 
0
  Consumer 1-4 family loans:
 
 
 
 
 
    Closed end first mortgage loans
301
 
0
 
0
    Open end and junior lien loans
238
 
0
 
0
    Residential construction loans
14
 
0
 
0
  Other consumer loans
3
 
0
 
0
With an allowance recorded:
 
 
 
 
 
  Commercial and industrial loans:
 
 
 
 
 
    Working capital lines of credit loans
1,069
 
19
 
18
    Non-working capital loans
9,443
 
281
 
290
  Commercial real estate and multi-family residential loans:
 
 
 
 
 
    Construction and land development loans
391
 
12
 
11
    Owner occupied loans
3,695
 
21
 
22
    Nonowner occupied loans
1,090
 
0
 
0
  Agri-business and agricultural loans:
 
 
 
 
 
    Loans secured by farmland
67
 
0
 
0
  Other commercial loans
3
 
0
 
0
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
    Closed end first mortgage loans
2,608
 
48
 
44
    Open end and junior lien loans
23
 
0
 
0
  Other consumer loans
110
 
3
 
4
Total
 $26,730
 
 $466
 
 $474

The following table presents the aging of the recorded investment in past due loans as of September 30, 2016 by class of loans:


 
 
 
30-89
 
Greater than
 
 
 
 
 
 
 
Loans Not
 
Days
 
90 Days
 
 
 
Total
 
 
(dollars in thousands)
Past Due
 
Past Due
 
Past Due
 
Nonaccrual
 
Past Due
 
Total
  Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
 
    Working capital lines of credit loans
 $608,946
 
 $0
 
 $0
 
 $441
 
 $441
 
 $609,387
    Non-working capital loans
639,328
 
0
 
0
 
2,280
 
2,280
 
641,608
  Commercial real estate and multi-family
 
 
 
 
 
 
 
 
 
 
 
  residential loans:
 
 
 
 
 
 
 
 
 
 
 
    Construction and land development loans
220,695
 
0
 
0
 
146
 
146
 
220,841
    Owner occupied loans
464,521
 
242
 
0
 
3,513
 
3,755
 
468,276
    Nonowner occupied loans
408,150
 
0
 
0
 
129
 
129
 
408,279
    Multifamily loans
127,616
 
0
 
0
 
50
 
50
 
127,666
  Agri-business and agricultural loans:
 
 
 
 
 
 
 
 
 
 
 
    Loans secured by farmland
152,447
 
0
 
0
 
283
 
283
 
152,730
    Loans for agricultural production
156,833
 
0
 
0
 
0
 
0
 
156,833
  Other commercial loans
89,835
 
0
 
0
 
12
 
12
 
89,847
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
 
 
 
 
 
 
    Closed end first mortgage loans
160,080
 
1,280
 
6
 
242
 
1,528
 
161,608
    Open end and junior lien loans
171,171
 
153
 
0
 
156
 
309
 
171,480
    Residential construction loans
12,770
 
0
 
0
 
0
 
0
 
12,770
  Other consumer loans
58,773
 
63
 
0
 
0
 
63
 
58,836
Total
 $3,271,165
 
 $1,738
 
 $6
 
 $7,252
 
 $8,996
 
 $3,280,161

The following table presents the aging of the recorded investment in past due loans as of December 31, 2015 by class of loans:


 
 
 
30-89
 
Greater than
 
 
 
 
 
 
 
Loans Not
 
Days
 
90 Days
 
 
 
Total
 
 
(dollars in thousands)
Past Due
 
Past Due
 
Past Due
 
Nonaccrual
 
Past Due
 
Total
  Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
 
    Working capital lines of credit loans
 $579,081
 
 $350
 
 $0
 
 $913
 
 $1,263
 
 $580,344
    Non-working capital loans
595,154
 
0
 
0
 
4,195
 
4,195
 
599,349
  Commercial real estate and multi-family
 
 
 
 
 
 
 
 
 
 
 
  residential loans:
 
 
 
 
 
 
 
 
 
 
 
    Construction and land development loans
230,336
 
0
 
0
 
0
 
0
 
230,336
    Owner occupied loans
407,229
 
310
 
0
 
4,172
 
4,482
 
411,711
    Nonowner occupied loans
404,146
 
423
 
0
 
3,000
 
3,423
 
407,569
    Multi-family loans
79,357
 
0
 
0
 
0
 
0
 
79,357
  Agri-business and agricultural loans:
 
 
 
 
 
 
 
 
 
 
 
    Loans secured by farmland
163,911
 
0
 
0
 
471
 
471
 
164,382
    Loans for agricultural production
141,706
 
90
 
0
 
0
 
90
 
141,796
  Other commercial loans
85,071
 
0
 
0
 
0
 
0
 
85,071
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
 
 
 
 
 
 
    Closed end first mortgage loans
156,525
 
1,187
 
0
 
49
 
1,236
 
157,761
    Open end and junior lien loans
164,582
 
83
 
0
 
253
 
336
 
164,918
    Residential construction loans
9,320
 
0
 
0
 
0
 
0
 
9,320
  Other consumer loans
48,687
 
328
 
0
 
0
 
328
 
49,015
Total
 $3,065,105
 
 $2,771
 
 $0
 
 $13,053
 
 $15,824
 
 $3,080,929


Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $2.9 million and $2.3 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2016 and December 31, 2015. The Company is not committed to lend additional funds to debtors whose loans have been modified in a troubled debt restructuring.


 
September 30
 
December 31
(dollars in thousands)
2016
 
2015
Accruing troubled debt restructured loans
 $10,579
 
 $6,260
Nonaccrual troubled debt restructured loans
 5,885
 
 10,914
Total troubled debt restructured loans
 $16,464
 
 $17,174

During the period ended September 30, 2016, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

During the three months ending September 30, 2016, there were renewal terms, which are considered additional concessions, offered to six borrowers under financial duress with previously identified troubled debt restructured loans which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing a similar risk profile. In these instances, it was determined that a concession had been granted. The loans to five of the borrowers were for commercial real estate buildings where the collateral value and cash flows from the companies occupying the buildings do not support the loans with recorded investments of $2,309,000.  The loan to the other borrower was a commercial and industrial non-working capital loan with a recorded investment of $36,000.  These concessions are not included in the table below.

During the three months ended June 30, 2016, there were renewal terms, which are considered additional concessions, offered to three borrowers under financial duress with previously identified troubled debt restructured loans which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing a similar risk profile. In these instances, it was determined that a concession had been granted. The loan to one of the borrowers was for a commercial real estate building where the collateral value and cash flows from the company occupying the building does not support the loan with a recorded investment of $374,000.  The loans to the other two borrowers are for commercial and industrial non-working capital loans with recorded investments of $574,000.  These concessions are not included in the table below.

Additional concessions were granted to borrowers with previously identified troubled debt restructured loans during the three-months ended March 31, 2016.  The loans to two of the borrowers are for commercial real estate buildings where the collateral value and cash flows from the companies occupying the buildings do not support the loans with recorded investments of $542,000.  The other loans were to a borrower engaged in land development, where the aggregate recorded investment totaled $484,000.  These concessions are not included in the table below.

The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended September 30, 2016:


 
 
 
 
Modified Repayment Terms
 
 
 
Pre-Modification
 
Post-Modification
 
 
 
 
Extension
 
 
 
Outstanding
 
Outstanding
 
 
 
 
Period or
 
Number of
 
Recorded
 
Recorded
 
 
Number of
 
Range
(dollars in thousands)
Loans
 
Investment
 
Investment
 
 
Loans
 
(in months)
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
 
Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
  Non-working capital loans
2
 
 $1,066
 
 $1,066
 
 
2
 
60-356
Total
2
 
 $1,066
 
 $1,066
 
 
2
 
60-356
 
The following table presents loans by class modified as new troubled debt restructurings that occurred during the nine months ended September 30, 2016:


 
 
 
 
Modified Repayment Terms
 
 
 
Pre-Modification
 
Post-Modification
 
 
 
 
Extension
 
 
 
Outstanding
 
Outstanding
 
 
 
 
Period or
 
Number of
 
Recorded
 
Recorded
 
 
Number of
 
Range
(dollars in thousands)
Loans
 
Investment
 
Investment
 
 
Loans
 
(in months)
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
 
Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
  Non-working capital loans
5
 
 $1,841
 
 $1,842
 
 
5
 
9-356
Commercial real estate and multi-
 
 
 
 
 
 
 
 
 
 
  family residential loans:
 
 
 
 
 
 
 
 
 
 
  Owner occupied loans
2
 
 640
 
 640
 
 
2
 
13-15
 Total
 7
 
 $2,481
 
 $2,482
 
 
 7
 
 9-356

For the three month period ended September 30, 2016, the commercial and industrial troubled debt restructurings described above decreased the allowance for loan losses by $342,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $111,000.  For the nine month period ended September 30, 2016, the commercial and industrial troubled debt restructurings described above decreased the allowance for loan losses by $221,000 and the commercial real estate and multi-family residential loan troubled debt restructuring described above increased the allowance for loan losses by $126,000.

No charge-offs resulted from any troubled debt restructurings described above during the three or nine month periods ended September 30, 2016.

During the quarter ended September 30, 2015, there were renewal terms offered to one borrower under financial duress with a previously identified troubled debt restructured loan which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for a loan bearing a similar risk profile. In this instance, it was determined that a concession had been granted. The loan to the borrower is for a commercial and industrial working capital loan with a recorded investment of $2.5 million.  This concession is not included in the table below.

During the quarter ended June 30, 2015, certain loans were modified as troubled debt restructurings. The modified terms of these loans include one or a combination of the following: inadequate compensation for the terms of the restructure or renewal; a modification of the repayment terms which delays principal repayment for some period; or renewal terms offered to borrowers in financial distress where no additional credit enhancements were obtained at the time of renewal.

There were renewal terms offered to two borrowers under financial duress which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing similar risk profiles. In these instances, it was determined that a concession had been granted. It is difficult to quantify the concessions granted due to an absence of readily available market terms to be used for comparison. These loans were both commercial and industrial working capital loans with recorded investments of $379,000 and $185,000, respectively.

During the quarter ended March 31, 2015 one loan was modified as a troubled debt restructuring.  There were renewal terms offered to one borrower under financial duress which did not require additional compensation or consideration, and the terms offered would not have been readily available in the marketplace for loans bearing similar risk profiles. In this instance, it was determined that a concession had been granted. It is difficult to quantify the concession granted due to an absence of readily available market terms to be used for comparison. The loan to the borrower is for a commercial real estate building where the collateral value and cash flows from the company occupying the building did not support the loan with a recorded investment of $788,000.
 
The following table presents loans by class modified as new troubled debt restructurings that occurred during the three months ended September 30, 2015:


 
 
 
Modified Repayment Terms
 
 
 
Pre-Modification
 
Post-Modification
 
 
 
Extension
 
 
 
Outstanding
 
Outstanding
 
 
 
Period or
 
Number of
 
Recorded
 
Recorded
 
Number of
 
Range
(dollars in thousands)
Loans
 
Investment
 
Investment
 
Loans
 
(in months)
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
Consumer 1-4 family loans:
 
 
 
 
 
 
 
 
 
  Closed end first mortgage loans
 1
 
 $65
 
 $65
 
 1
 
 208
Total
1
 
 $65
 
 $65
 
1
 
208

The following table presents loans by class modified as new troubled debt restructurings that occurred during the nine months ended September 30, 2015:


 
 
 
 
Modified Repayment Terms
 
 
 
Pre-Modification
 
Post-Modification
 
 
 
 
Extension
 
 
 
Outstanding
 
Outstanding
 
 
 
 
Period or
 
Number of
 
Recorded
 
Recorded
 
 
Number of
 
Range
(dollars in thousands)
Loans
 
Investment
 
Investment
 
 
Loans
 
(in months)
Troubled Debt Restructurings
 
 
 
 
 
 
 
 
 
 
Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
  Working capital lines of credit loans
 2
 
 $564
 
 $564
 
 
 
 
 
  Non-working capital loans
 1
 
 783
 
 783
 
 
 1
 
12
Commercial real estate and multi-
 
 
 
 
 
 
 
 
 
 
  family residential loans:
 
 
 
 
 
 
 
 
 
 
  Owner occupied loans
 2
 
 855
 
 855
 
 
 1
 
6
 Consumer 1-4 family loans:
 
 
 
 
 
 
 
 
 
 
  Closed end first mortgage loans
 1
 
 65
 
 78
 
 
 1
 
 208
 Total
 6
 
 $2,267
 
 $2,280
 
 
 3
 
 6-208

For the three month period ended September 30, 2015, the commercial and industrial troubled debt restructurings described above decreased the allowance for loan losses by $68,000, the commercial real estate and multi-family residential loan troubled debt restructurings increased the allowance for loan losses by $9,000 and the consumer 1-4 family loan troubled debt restructuring described above increased the allowance by $13,000.  For the nine month period ended September 30, 2015, the commercial and industrial troubled debt restructurings described above increased the allowance for loan losses by $102,000, the commercial real estate and multi-family residential loan troubled debt restructurings decreased the allowance for loan losses by $13,000 and the consumer 1-4 family loan troubled debt restructuring increased the allowance by $11,000.

No charge-offs resulted from any troubled debt restructurings described above during the three and nine month period ended September 30, 2015.

There were no troubled debt restructurings that had payment defaults within the twelve months following modification during the three or nine month periods ended September 30, 2016 and 2015.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $150,000.
 

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize 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.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with Not Rated loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of September 30, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:


 
 
 
Special
 
 
 
 
 
Not
 
 
(dollars in thousands)
Pass
 
Mention
 
Substandard
 
Doubtful
 
Rated
 
Total
  Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
 
    Working capital lines of credit loans
 $558,233
 
 $25,740
 
 $25,397
 
 $0
 
 $17
 
 $609,387
    Non-working capital loans
578,091
 
35,026
 
24,826
 
0
 
3,665
 
641,608
  Commercial real estate and multi-
 
 
 
 
 
 
 
 
 
 
 
    family residential loans:
 
 
 
 
 
 
 
 
 
 
 
    Construction and land development loans
219,668
 
1,027
 
146
 
0
 
0
 
220,841
    Owner occupied loans
442,334
 
10,656
 
15,286
 
0
 
0
 
468,276
    Nonowner occupied loans
403,450
 
2,723
 
2,106
 
0
 
0
 
408,279
    Multifamily loans
127,615
 
0
 
51
 
0
 
0
 
127,666
  Agri-business and agricultural loans:
 
 
 
 
 
 
 
 
 
 
 
    Loans secured by farmland
149,446
 
3,001
 
283
 
0
 
0
 
152,730
    Loans for agricultural production
153,679
 
3,154
 
0
 
0
 
0
 
156,833
  Other commercial loans
89,830
 
0
 
12
 
0
 
5
 
89,847
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
 
 
 
 
 
 
    Closed end first mortgage loans
48,575
 
126
 
1,367
 
0
 
111,540
 
161,608
    Open end and junior lien loans
6,542
 
0
 
0
 
0
 
164,938
 
171,480
    Residential construction loans
0
 
0
 
0
 
0
 
12,770
 
12,770
  Other consumer loans
15,176
 
0
 
56
 
0
 
43,604
 
58,836
Total
 $2,792,639
 
 $81,453
 
 $69,530
 
 $0
 
 $336,539
 
 $3,280,161
 
As of December 31, 2015, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 
 
 
Special
 
 
 
 
 
Not
 
 
(dollars in thousands)
Pass
 
Mention
 
Substandard
 
Doubtful
 
Rated
 
Total
  Commercial and industrial loans:
 
 
 
 
 
 
 
 
 
 
 
    Working capital lines of credit loans
 $538,899
 
 $32,601
 
 $8,844
 
 $0
 
 $0
 
 $580,344
    Non-working capital loans
549,771
 
35,910
 
10,566
 
0
 
3,102
 
599,349
  Commercial real estate and multi-
 
 
 
 
 
 
 
 
 
 
 
    family residential loans:
 
 
 
 
 
 
 
 
 
 
 
    Construction and land
 
 
 
 
 
 
 
 
 
 
 
      development loans
227,996
 
2,340
 
0
 
0
 
0
 
230,336
    Owner occupied loans
378,847
 
23,522
 
9,342
 
0
 
0
 
411,711
    Nonowner occupied loans
394,387
 
10,953
 
2,229
 
0
 
0
 
407,569
    Multi-family loans
78,968
 
0
 
389
 
0
 
0
 
79,357
  Agri-business and agricultural loans:
 
 
 
 
 
 
 
 
 
 
 
    Loans secured by farmland
163,911
 
0
 
471
 
0
 
0
 
164,382
    Loans for agricultural production
141,796
 
0
 
0
 
0
 
0
 
141,796
  Other commercial loans
85,056
 
0
 
12
 
0
 
3
 
85,071
  Consumer 1-4 family mortgage loans:
 
 
 
 
 
 
 
 
 
 
    Closed end first mortgage loans
43,231
 
126
 
1,769
 
0
 
112,635
 
157,761
    Open end and junior lien loans
8,373
 
0
 
1,616
 
0
 
154,929
 
164,918
    Residential construction loans
0
 
0
 
0
 
0
 
9,320
 
9,320
  Other consumer loans
13,940
 
0
 
60
 
0
 
35,015
 
49,015
Total
 $2,625,175
 
 $105,452
 
 $35,298
 
 $0
 
 $315,004
 
 $3,080,929