Loans and Allowance For Loan Losses

12 Months Ended

Dec. 31, 2011

Loans and Allowance For Loan Losses [Abstract]

Loans and Allowance For Loan Losses

Note 4:    Loans and Allowance for Loan Losses

Classes of loans at December 31, 2011 and 2010, included:

	2011	2010
	(In Thousands)
One- to four-family residential construction	$23,976	$29,102
Subdivision construction	61,140	86,649
Land development	68,771	95,573
Commercial construction	119,589	68,018
Owner occupied one- to four-family residential	91,994	98,099
Non-owner occupied one- to four-family residential	145,781	136,984
Commercial real estate	639,857	530,277
Other residential	243,742	210,846
Commercial business	236,384	185,865
Industrial revenue bonds	59,750	64,641
Consumer auto	59,368	48,992
Consumer other	77,540	77,331
Home equity lines of credit	47,114	46,852
FDIC-supported loans, net of discounts (TeamBank)	128,875	144,633
FDIC-supported loans, net of discounts (Vantus Bank)	123,036	160,163
FDIC-supported loans, net of discounts
(Sun Security Bank)	144,626	—
	2,271,543	1,984,025
Undisbursed portion of loans in process	(103,424)	(63,108)
Allowance for loan losses	(41,232)	(41,487)
Deferred loan fees and gains, net	(2,726)	(2,543)
	$2,124,161	$1,876,887

Classes of loans by aging were as follows:

	December 31, 2011
							Total Loans
	30-59 Days	60-89 Days	Over 90	Total Past		Total Loans	> 90 Days and
	Past Due	Past Due	Days	Due	Current	Receivable	Still Accruing
	(In Thousands)
One- to four-family
residential construction	$2,082	$342	$186	$2,610	$21,366	$23,976	$—
Subdivision construction	4,014	388	6,661	11,063	50,077	61,140	—
Land development	—	4	2,655	2,659	66,112	68,771	—
Commercial construction	—	—	—	—	119,589	119,589	—
Owner occupied one- to four-
family residential	833	—	3,888	4,721	87,273	91,994	40
Non-owner occupied one- to
four-family residential	117	—	3,425	3,542	142,239	145,781	—
Commercial real estate	6,323	535	6,204	13,062	626,795	639,857	—
Other residential	—	—	—	—	243,742	243,742	—
Commercial business	426	10	1,362	1,798	234,586	236,384	—
Industrial revenue bonds	—	—	2,110	2,110	57,640	59,750	—
Consumer auto	455	56	117	628	58,740	59,368	10
Consumer other	1,508	641	715	2,864	74,676	77,540	356
Home equity lines of credit	45	29	174	248	46,866	47,114	—
FDIC-supported loans, net of
discounts (TeamBank)	2,422	862	19,215	22,499	106,376	128,875	—
FDIC-supported loans, net of
discounts (Vantus Bank)	562	57	5,999	6,618	116,418	123,036	5
FDIC-supported loans,
net of discounts
(Sun Security Bank)	5,628	6,851	40,299	52,778	91,848	144,626	150
	24,415	9,775	93,010	127,200	2,144,343	2,271,543	561
Less FDIC-supported loans,
net of discounts	8,612	7,770	65,513	81,895	314,642	396,537	155
Total	$15,803	$2,005	$27,497	$45,305	$1,829,701	$1,875,006	$406

	December 31, 2010
							Total Loans
	30-59 Days	60-89 Days	Over 90	Total Past		Total Loans	> 90 Days and
	Past Due	Past Due	Days	Due	Current	Receivable	Still Accruing
	(In Thousands)
One- to four-family
residential construction	$261	$—	$578	$839	$28,263	$29,102	$—
Subdivision construction	281	1,015	1,860	3,156	83,493	86,649	—
Land development	2,730	—	5,668	8,398	87,175	95,573	—
Commercial construction	—	—	—	—	68,018	68,018	—
Owner occupied one- to four-
family residential	4,856	914	2,724	8,494	89,605	98,099	—
Non-owner occupied one- to
four-family residential	2,085	2,130	2,831	7,046	129,938	136,984	—
Commercial real estate	2,749	8,546	6,074	17,369	512,908	530,277	—
Other residential	—	4,011	4,202	8,213	202,633	210,846	—
Commercial business	350	355	1,642	2,347	183,518	185,865	—
Industrial revenue bonds	—	—	2,190	2,190	62,451	64,641	—
Consumer auto	427	35	94	556	48,436	48,992	22
Consumer other	1,331	318	1,417	3,066	74,265	77,331	565
Home equity lines of credit	152	160	140	452	46,400	46,852	—
FDIC-supported loans, net of
discounts (TeamBank)	2,719	3,731	13,285	19,735	124,898	144,633	—
FDIC-supported loans, net of
discounts (Vantus Bank)	2,277	1,414	9,399	13,090	147,073	160,163	—
	20,218	22,629	52,104	94,951	1,889,074	1,984,025	587
Less FDIC-supported loans,
net of discounts	4,996	5,145	22,684	32,825	271,971	304,796	—
Total	$15,222	$17,484	$29,420	$62,126	$1,617,103	$1,679,229	$587

Nonaccruing loans are summarized as follows:

	December 31,
	2011	2010
	(In Thousands)
One- to four-family residential construction	$186	$578
Subdivision construction	6,661	1,860
Land development	2,655	5,668
Commercial construction	—	—
Owner occupied one- to four-family residential	3,848	2,724
Non-owner occupied one- to four-family
residential	3,425	2,831
Commercial real estate	6,204	6,074
Other residential	—	4,202
Commercial business	1,362	1,642
Industrial revenue bonds	2,110	2,190
Consumer auto	107	72
Consumer other	359	852
Home equity lines of credit	174	140
Total	$27,091	$28,833

Transactions in the allowance for loan losses were as follows:

	2011	2010	2009
	(In Thousands)
Balance, beginning of year	$41,487	$40,101	$29,163
Provision charged to expense	35,336	35,630	35,800
Loans charged off, net of recoveries
of $5,063 for 2011, $5,804 for
2010 and $5,577 for 2009	(35,591)	(34,244)	(24,862)
Balance, end of year	$41,232	$41,487	$40,101

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ended December 31, 2011.  Also presented are the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2011:

	One- to Four-
	Family
	Residential
	and	Other	Commercial	Commercial	Commercial
	Construction	Residential	Real Estate	Construction	Business	Consumer	Total
	(In Thousands)
Allowance for loan losses
Balance January 1, 2011	$11,483	$3,866	$14,336	$5,852	$3,281	$2,669	$41,487
Provision charged to expense	7,995	5,693	17,859	1,020	1,459	1,310	35,336
Losses charged off	(8,333)	(8,018)	(13,862)	(4,103)	(2,842)	(3,496)	(40,654)
Recoveries	279	1,547	57	213	1,076	1,891	5,063
Balance December 31, 2011	$11,424	$3,088	$18,390	$2,982	$2,974	$2,374	$41,232
Ending balance:
Individually evaluated for
impairment	$4,989	$89	$3,584	$594	$736	$38	$10,030
Collectively evaluated for
impairment	$6,435	$2,999	$14,806	$2,358	$2,238	$2,336	$31,172
Loans acquired and
accounted for under ASC
310-30	$—	$—	$—	$30	$—	$—	$30
Loans
Individually evaluated for
impairment	$39,519	$20,802	$99,254	$27,592	$10,720	$839	$198,726
Collectively evaluated for
impairment	$283,371	$222,940	$600,353	$160,768	$225,665	$183,183	$1,676,280
Loans acquired and
accounted for under ASC
310-30	$109,909	$25,877	$157,805	$40,215	$28,784	$33,947	$396,537

The following table presents the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2010:

	One- to Four-
	Family
	Residential and	Other	Commercial	Commercial	Commercial
	Construction	Residential	Real Estate	Construction	Business	Consumer	Total
	(In Thousands)
Allowance for loan losses
Individually evaluated for
impairment	$4,353	$1,714	$3,089	$2,083	$784	$37	$12,060
Collectively evaluated for
impairment	$7,100	$2,152	$11,247	$3,769	$1,697	$2,632	$28,597
Loans acquired and
accounted for under ASC
310-30	$—	$—	$—	$30	$800	$—	$830
Loans
Individually evaluated for
impairment	$40,562	$25,246	$72,379	$45,334	$8,340	$622	$192,483
Collectively evaluated for
impairment	$310,272	$185,600	$522,539	$118,257	$177,525	$172,553	$1,486,746
Loans acquired and
accounted for under ASC
310-30	$75,727	$23,277	$128,704	$22,858	$15,215	$39,015	$304,796

The portfolio segments used in the preceding two tables correspond to the loan classes used in all other tables in Note 4 as follows:

·The one-to four-family residential and construction segment includes the one- to four-family residential construction, subdivision construction, owner occupied one- to four-family residential and non-owner occupied one- to four-family residential classes

·The other residential segment corresponds to the other residential class

·The commercial real estate segment includes the commercial real estate and industrial revenue bonds classes

·The commercial construction segment includes the land development and commercial construction classes

·The commercial business segment corresponds to the commercial business class

·The consumer segment includes the consumer auto, consumer other and home equity lines of credit classes

The weighted average interest rate on loans receivable at December 31, 2011 and 2010 was 5.86% and 6.03%, respectively.

Loans serviced for others are not included in the accompanying consolidated statements of financial condition.  The unpaid principal balances of loans serviced for others were $170.3 million and $207.5 million at December 31, 2011 and 2010, respectively.  In addition, available lines of credit on these loans were $11.7 million and $5.0 million at December 31, 2011 and 2010, respectively.

A loan is considered impaired, in accordance with the impairment accounting guidance (FASB ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.  Impaired loans include not only nonperforming loans but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.

The following summarizes information regarding impaired loans at and during the years ended December 31, 2011 and 2010:

				Year Ended
	December 31, 2011			December 31, 2011
				Average
		Unpaid		Investment	Interest
	Recorded	Principal	Specific	in Impaired	Income
	Balance	Balance	Allowance	Loans	Recognized
	(In Thousands)
One- to four-family residential construction	$873	$917	$12	$1,939	$39
Subdivision construction	12,999	14,730	2,953	10,154	282
Land development	7,150	7,317	594	9,983	379
Commercial construction	—	—	—	308	—
Owner occupied one- to four-family
residential	5,481	6,105	776	4,748	76
Non-owner occupied one- to four-family
residential	11,259	11,768	1,249	9,658	425
Commercial real estate	49,961	55,233	3,562	34,403	1,616
Other residential	12,102	12,102	89	9,475	454
Commercial business	4,679	5,483	736	4,173	125
Industrial revenue bonds	2,110	2,190	22	2,137	—
Consumer auto	147	168	3	192	6
Consumer other	579	680	22	544	10
Home equity lines of credit	174	184	12	227	1
Total	$107,514	$116,877	$10,030	$87,941	$3,413

				Year Ended
	December 31, 2010			December 31, 2010
				Average
		Unpaid		Investment	Interest
	Recorded	Principal	Specific	in Impaired	Income
	Balance	Balance	Allowance	Loans	Recognized
	(In Thousands)
One- to four-family residential construction	$1,947	$2,371	$258	$1,724	$83
Subdivision construction	9,894	10,560	2,326	7,850	415
Land development	17,957	21,006	1,925	18,760	534
Commercial construction	1,851	1,851	158	458	31
Owner occupied one- to four-family
residential	5,205	5,620	542	3,612	69
Non-owner occupied one- to four-family
residential	11,785	12,267	1,227	8,182	386
Commercial real estate	25,782	26,392	3,045	10,615	603
Other residential	9,768	9,869	1,714	8,123	140
Commercial business	9,722	12,495	828	2,630	114
Consumer auto	125	137	4	30	1
Consumer other	429	481	14	93	4
Home equity lines of credit	148	166	19	109	1
Total	$94,613	$103,215	$12,060	$62,186	$2,381

At December 31, 2011 and 2010, all impaired loans had specific valuation allowances.  Interest of approximately $388,000 was received on average impaired loans of approximately $23.5 million for the year ended December 31, 2009.  For impaired loans which were nonaccruing, interest of approximately $2.4 million, $2.0 million and $1.9 million would have been recognized on an accrual basis during the years ended December 31, 2011, 2010 and 2009, respectively.

Included in certain loan categories in the impaired loans are troubled debt restructurings that were classified as impaired. Troubled debt restructurings are loans that are modified by granting concessions to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.  The types of concessions made are factored into the estimation of the allowance for loan losses for troubled debt restructurings primarily using a discounted cash flows or collateral adequacy approach.

At December 31, 2011, the Company had $9.0 million of construction loans, $17.0 million of residential mortgage loans, $31.3 million of commercial real estate loans, $671,000 of commercial business loans and $156,000 of consumer loans that were modified in troubled debt restructurings and impaired.  Of the total troubled debt restructurings at December 31, 2011, $50.8 million were accruing interest and $32.2 million were classified as substandard using the Company’s internal grading system which is described below.  During the previous 12 months, one commercial business loan totaling $423,000 was modified as a troubled debt restructuring and had payment defaults subsequent to the modifications.  When loans modified as troubled debt restructuring have subsequent payment defaults, the defaults are factored in to the determination of the allowance for loan losses to ensure specific valuation allowances reflect amounts considered uncollectible. At December 31, 2010, the Company had $6.5 million of construction loans, $5.5 million of residential mortgage loans, $8.2 million of commercial real estate loans, $57,000 of other commercial loans and $150,000 of consumer loans that were modified in troubled debt restructurings and impaired.  Of the total troubled debt restructurings, $16.5 million were accruing interest at December 31, 2010. 

The Company reviews the credit quality of its loan portfolio using an internal grading system that classifies loans as “Satisfactory,” “Watch,” Special Mention” and “Substandard.”  Substandard loans are characterized by the distinct possibility that the Bank will sustain some loss if certain deficiencies are not corrected.  Special mention loans possess potential weaknesses that deserve management’s close attention but do not expose the Bank to a degree of risk that warrants substandard classification.  Loans classified as watch are being monitored because of indications of potential weaknesses or deficiencies that may require future classification as special mention or substandard.  Loans not meeting any of the criteria previously described are considered satisfactory.  The FDIC-covered loans are evaluated using this internal grading system.  However, since these loans are accounted for in pools and are currently covered through loss sharing agreements with the FDIC, all of the loan pools were considered satisfactory December 31, 2011 and 2010, respectively.  See Note 5 for further discussion of the acquired loan pools and loss sharing agreements.  The loan grading system is presented by loan class below:

		December 31, 2011
				Special
		Satisfactory	Watch	Mention	Substandard	Total
	(In Thousands)
One- to four-family residential
construction	$21,436		$2,354	$—	$186	$23,976
Subdivision construction	45,754		2,701	—	12,685	61,140
Land development	41,179		20,902	245	6,445	68,771
Commercial construction	119,589		—	—	—	119,589
Owner occupied one- to four-family
residential	86,725		1,018	—	4,251	91,994
Non-owner occupied one- to four-family
residential	129,458		5,232	249	10,842	145,781
Commercial real estate	542,712		51,757	13,384	32,004	639,857
Other residential	222,940		13,262	—	7,540	243,742
Commercial business	225,664		5,403	638	4,679	236,384
Industrial revenue bonds	57,640		—	—	2,110	59,750
Consumer auto	59,237		—	—	131	59,368
Consumer other	77,006		—	—	534	77,540
Home equity lines of credit	46,940		—	—	174	47,114
FDIC-supported loans, net of discounts
(TeamBank)	128,875		—	—	—	128,875
FDIC-supported loans, net of discounts
( Vantus Bank)	123,036		—	—	—	123,036
FDIC-supported loans, net of discounts
(Sun Security Bank)	144,626		—	—	—	144,626
Total	$2,072,817		$102,629	$14,516	$81,581	$2,271,543

		December 31, 2010
				Special
		Satisfactory	Watch	Mention	Substandard	Total
	(In Thousands)
One- to four-family residential
construction	$27,620		$549	$—	$933	$29,102
Subdivision construction	69,907		8,408	—	8,334	86,649
Land development	57,486		20,834	—	17,253	95,573
Commercial construction	60,770		5,397	—	1,851	68,018
Owner occupied one- to four-family
residential	92,385		766	—	4,948	98,099
Non-owner occupied one- to four-family
residential	120,360		6,471	—	10,153	136,984
Commercial real estate	460,088		46,805	2,574	20,810	530,277
Other residential	185,600		15,478	—	9,768	210,846
Commercial business	177,525		812	—	7,528	185,865
Industrial revenue bonds	62,451		—	—	2,190	64,641
Consumer auto	48,883		—	—	109	48,992
Consumer other	76,966		—	—	365	77,331
Home equity lines of credit	46,704		—	—	148	46,852
FDIC-supported loans, net of discounts
(TeamBank)	144,633		—	—	—	144,633
FDIC-supported loans, net of discounts
(Vantus Bank)	160,163		—	—	—	160,163
Total	$1,791,541		$105,520	$2,574	$84,390	$1,984,025

Certain of the Bank’s real estate loans are pledged as collateral for borrowings as set forth in Notes 10 and 12.

Certain directors and executive officers of the Company and the Bank are customers of and had transactions with the Bank in the ordinary course of business.  Except for the interest rates on loans secured by personal residences, in the opinion of management, all loans included in such transactions were made on substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties.  Generally, residential first mortgage loans and home equity lines of credit to all employees and directors have been granted at interest rates equal to the Bank’s cost of funds, subject to annual adjustments in the case of residential first mortgage loans and monthly adjustments in the case of home equity lines of credit.  At December 31, 2011 and 2010, loans outstanding to these directors and executive officers are summarized as follows:

	December 31,
	2011	2010
	(In Thousands)
Balance, beginning of year	$12,933	$14,892
New loans	2,607	2,293
Payments	(13,246)	(4,252)
Balance, end of year	$2,294	$12,933