| Troubled Debt Restructures |
Note 5 -
Troubled Debt Restructures
A
modification of a loan constitutes a troubled debt restructuring
(“TDR”) when a borrower is experiencing financial
difficulty and the modification involves providing a concession to
the existing loan contract. The Company offers various types of
concessions when modifying loans to troubled borrowers, however,
forgiveness of principal is rarely granted. Concessions offered are
term extensions, capitalizing accrued interest, reducing interest
rates to below current market rates or a combination of any of
these. Combinations from time to time may include allowing a
customer to be placed on interest-only payments. The presentations
below in the “other” category are TDR’s with a
combination of concessions. At the time of a TDR, additional
collateral or a guarantor may be requested.
Loans
modified as TDRs are typically already on nonaccrual status and in
some cases, partial chargeoffs may have already been taken against
the outstanding loan balance. The Company classifies TDR loans as
impaired loans and evaluates the need for an allowance for loan
loss on a loan-by-loan basis. An allowance is based on either the
present value of expected future cash flows discounted at the
loan’s effective interest rate, the loan’s observable
market price or the estimated fair value of the underlying
collateral less any selling costs, if the loan is deemed to be
collateral dependent.
For the
twelve months ended December 31, 2014, 2013 and 2012, the
following table presents a breakdown of the types of concessions
made by loan class:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended
December 31, 2014 |
|
| |
|
|
|
|
Pre-Modification |
|
|
Post-Modification |
|
| |
|
Number |
|
|
Outstanding Recorded |
|
|
Outstanding Recorded |
|
| |
|
of Contracts |
|
|
Investment |
|
|
Investment |
|
| |
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
Extend payment
terms:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
1 |
|
|
|
32 |
|
|
|
32 |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
$ |
32 |
|
|
$ |
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
3 |
|
|
|
424 |
|
|
|
424 |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
6 |
|
|
|
870 |
|
|
|
870 |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 |
|
|
$ |
1,294 |
|
|
$ |
1,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10 |
|
|
$ |
1,326 |
|
|
$ |
1,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended
December 31, 2013 |
|
| |
|
|
|
|
Pre-Modification |
|
|
Post-Modification |
|
| |
|
Number |
|
|
Outstanding Recorded |
|
|
Outstanding Recorded |
|
| |
|
of Contracts |
|
|
Investment |
|
|
Investment |
|
| |
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
Extend payment
terms:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
1 |
|
|
|
356 |
|
|
|
341 |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
8 |
|
|
|
895 |
|
|
|
875 |
|
|
Home equity
|
|
|
1 |
|
|
|
18 |
|
|
|
18 |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
$ |
1,269 |
|
|
$ |
1,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10 |
|
|
$ |
1,269 |
|
|
$ |
1,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended
December 31, 2012 |
|
| |
|
|
|
|
Pre-Modification |
|
|
Post-Modification |
|
| |
|
Number |
|
|
Outstanding Recorded |
|
|
Outstanding Recorded |
|
| |
|
of Contracts |
|
|
Investment |
|
|
Investment |
|
| |
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
Extend payment
terms:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1 |
|
|
$ |
33 |
|
|
$ |
32 |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
1 |
|
|
|
49 |
|
|
|
49 |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
2 |
|
|
|
30 |
|
|
|
30 |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
1 |
|
|
|
45 |
|
|
|
42 |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
$ |
157 |
|
|
$ |
153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1 |
|
|
$ |
68 |
|
|
$ |
68 |
|
|
Real estate –
commercial
|
|
|
1 |
|
|
|
116 |
|
|
|
112 |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
1 |
|
|
|
32 |
|
|
|
31 |
|
|
Real estate –
residential
|
|
|
6 |
|
|
|
939 |
|
|
|
933 |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
1 |
|
|
|
17 |
|
|
|
17 |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
$ |
1,172 |
|
|
$ |
1,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
15 |
|
|
$ |
1,329 |
|
|
$ |
1,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table presents loans that were modified as troubled debt
restructurings within the previous twelve months and for which
there was a payment default during the twelve months ended
December 31, 2014, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended |
|
|
Year ended |
|
| |
|
December 31,
2014 |
|
|
December 31,
2013 |
|
| |
|
Number |
|
|
Recorded |
|
|
Number |
|
|
Recorded |
|
| |
|
of Loans |
|
|
Investment |
|
|
of Loans |
|
|
Income |
|
|
Extend payment
terms:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended
December 31,
2014 |
|
|
Year ended
December 31,
2013 |
|
| |
|
Number
of Loans |
|
|
Recorded
Investment |
|
|
Number
of Loans |
|
|
Recorded
Income |
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year ended
December 31,
2012 |
|
| |
|
Number
of Loans |
|
|
Recorded
Investment |
|
|
Extend payment
terms:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1 |
|
|
$ |
31 |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
1 |
|
|
|
49 |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
2 |
|
|
|
30 |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
— |
|
|
|
— |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
4 |
|
|
$ |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
— |
|
|
$ |
— |
|
|
Real estate –
commercial
|
|
|
— |
|
|
|
— |
|
|
Other real estate
construction
|
|
|
— |
|
|
|
— |
|
|
Real estate 1-4 family
construction
|
|
|
— |
|
|
|
— |
|
|
Real estate –
residential
|
|
|
1 |
|
|
|
238 |
|
|
Home equity
|
|
|
— |
|
|
|
— |
|
|
Consumer loans
|
|
|
1 |
|
|
|
17 |
|
|
Other loans
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2 |
|
|
$ |
255 |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
6 |
|
|
$ |
365 |
|
|
|
|
|
|
|
|
|
|
A default on
a troubled debt restructure is defined as being past due 90 days or
being out of compliance with the modification agreement. As
previously mentioned, the Company considers TDRs to be impaired
loans and has $373,000 in the allowance for loan loss as of
December 31, 2014, as a direct result of these TDRs. At
December 31, 2013 there was $420,000 in the allowance for loan
loss related to TDRs.
The following
table presents the successes and failures of the types of
modifications within the previous twelve months as of
December 31, 2014, 2013 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Paid In Full |
|
|
Paying as
restructured |
|
|
Converted to nonaccrual |
|
|
Foreclosure/
Default |
|
| |
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
| |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
December 31,
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended payment
terms
|
|
|
— |
|
|
$ |
— |
|
|
|
1 |
|
|
$ |
32 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Other
|
|
|
1 |
|
|
|
112 |
|
|
|
8 |
|
|
|
1,182 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1 |
|
|
$ |
112 |
|
|
|
9 |
|
|
$ |
1,214 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Paid In Full |
|
|
Paying as
restructured |
|
|
Converted to nonaccrual |
|
|
Foreclosure/
Default |
|
| |
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
|
Number of
Loans |
|
|
Recorded
Investments |
|
| |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended payment
terms
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
Other
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
1,234 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
— |
|
|
$ |
— |
|
|
|
10 |
|
|
$ |
1,234 |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Paid In Full |
|
|
Paying as
restructured |
|
|
Converted to
nonaccrual |
|
|
Foreclosure/
Default |
|
| |
|
Number of |
|
|
Recorded |
|
|
Number of |
|
|
Recorded |
|
|
Number of |
|
|
Recorded |
|
|
Number of |
|
|
Recorded |
|
| |
|
Loans |
|
|
Investments |
|
|
Loans |
|
|
Investments |
|
|
Loans |
|
|
Investments |
|
|
Loans |
|
|
Investments |
|
| |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
| December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extended payment
terms
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
4 |
|
|
$ |
110 |
|
|
Other
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
949 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
— |
|
|
$ |
— |
|
|
|
9 |
|
|
$ |
949 |
|
|
|
— |
|
|
$ |
— |
|
|
|
6 |
|
|
$ |
365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|