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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2014

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to ______

 

 

 

Commission file number: 0-50765

 

VILLAGE BANK AND TRUST FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

Virginia 16-1694602
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

 

15521 Midlothian Turnpike, Midlothian, Virginia 23113
(Address of principal executive offices) (Zip code)

 

804-897-3900

(Registrant’s telephone number, including area code)

 

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ¨ Accelerated Filer ¨
Non-Accelerated Filer ¨  (Do not check if smaller reporting company) Smaller Reporting Company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

5,338,295 shares of common stock, $4.00 par value, outstanding as of July 21, 2014

 

 
 

  

Village Bank and Trust Financial Corp.

Form 10-Q

 

TABLE OF CONTENTS

 

Part I – Financial Information  
   
Item 1.  Financial Statements  
   
Consolidated Balance Sheets  
June 30, 2014 (unaudited) and December 31, 2013 3
   
Consolidated Statements of Operations  
For the Three and Six Months Ended  
June 30, 2014 and 2013 (unaudited) 4
   
Consolidated Statements of Changes in Comprehensive Income (Loss)  
For the Three and Six Months Ended  
June 30, 2014 and 2013 (unaudited) 5
   
Consolidated Statements of Stockholders’ Equity  
For the Six Months Ended  
June 30, 2014 and 2013 (unaudited) 6
   
Consolidated Statements of Cash Flows  
For the Six Months Ended  
June 30, 2014 and 2013 (unaudited) 7
   
Notes to Condensed Consolidated Financial Statements (unaudited) 8
   
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 38
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 61
   
Item 4. Controls and Procedures 61
   
Part II – Other Information  
   
Item 1.  Legal Proceedings 62
   
Item 1A. Risk Factors 62
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 62
   
Item 3.  Defaults Upon Senior Securities 62
   
Item 4.  Mine Safety Disclosures 62
   
Item 5.  Other Information 62
   
Item 6.  Exhibits 62
   
Signatures 63

 

2
 

 

Part I – Financial Information

 

ITEM 1 – FINANCIAL STATEMENTS

 

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Balance Sheets
June 30, 2014 (Unaudited) and December 31, 2013
(dollar amounts in thousands, except per share amounts)

 

   June 30,   December 31, 
   2014   2013 
Assets          
Cash and due from banks  $11,094   $15,221 
Federal funds sold   46,244    24,988 
Total cash and cash equivalents   57,338    40,209 
Investment securities available for sale   57,486    57,748 
Loans held for sale   12,189    8,371 
Loans          
Outstanding   263,171    286,563 
Allowance for loan losses   (5,681)   (7,239)
Deferred fees and costs   694    683 
    258,184    280,007 
Other real estate owned, net of valuation allowance   15,670    16,742 
Assets held for sale   13,403    13,359 
Premises and equipment, net   12,968    12,409 
Bank owned life insurance   6,856    6,765 
Accrued interest receivable   1,340    1,486 
Other assets   6,622    7,077 
           
   $442,056   $444,173 
           
Liabilities and Stockholders' Equity          
Liabilities          
Deposits          
Noninterest bearing demand  $63,695   $57,244 
Interest bearing   325,582    333,384 
Total deposits   389,277    390,628 
Federal Home Loan Bank advances   15,000    18,000 
Long-term debt - trust preferred securities   8,764    8,764 
Other borrowings   1,987    2,713 
Accrued interest payable   1,337    1,093 
Other liabilities   6,642    4,731 
Total liabilities   423,007    425,929 
           
Stockholders' equity          
Preferred stock, $4 par value, $1,000 liquidation preference, 1,000,000 shares authorized, 14,738 shares issued and outstanding   59    59 
Common stock, $4 par value, 10,000,000 shares authorized; 5,338,295 shares issued and outstanding at June 30, 2014 5,338,295 shares issued and outstanding at December 31, 2013   21,353    21,353 
Additional paid-in capital   38,078    38,054 
Accumulated deficit   (39,417)   (38,066)
Common stock warrant   732    732 
Discount on preferred stock   -    (50)
Stock in directors rabbi trust   (878)   (878)
Directors deferred fees obligation   878    878 
Accumulated other comprehensive loss   (1,756)   (3,838)
Total stockholders' equity   19,049    18,244 
           
   $442,056   $444,173 

 

See accompanying notes to consolidated financial statements.

 

3
 

 

 

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Operations
Three and Six Months Ended June 30 2014, and 2013
(dollar amounts in thousands, except per share amounts) (Unaudited)

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2014   2013   2014   2013 
Interest income                    
Loans  $3,795   $4,622   $7,766   $9,765 
Investment securities   322    239    654    427 
Federal funds sold   25    28    44    53 
Total interest income   4,142    4,889    8,464    10,245 
                     
Interest expense                    
Deposits   767    950    1,553    1,993 
Borrowed funds   190    219    444    443 
Total interest expense   957    1,169    1,997    2,436 
                     
Net interest income   3,185    3,720    6,467    7,809 
Provision for loan losses   -    -    100    823 
Net interest income after provision for loan losses   3,185    3,720    6,367    6,986 
                     
Noninterest income                    
Service charges and fees   601    634    1,084    1,145 
Gain on sale of loans   1,352    2,372    2,163    4,328 
Gain on sale of assets   3    -    3    598 
Gain on sale of investment securities   1    127    1    217 
Rental income   250    214    506    427 
Other   112    111    236    297 
Total noninterest income   2,319    3,458    3,993    7,012 
                     
Noninterest expense                    
Salaries and benefits   2,679    2,973    5,449    5,926 
Commissions   347    546    569    1,033 
Occupancy   393    513    875    1,070 
Equipment   174    179    380    357 
Supplies   78    119    166    224 
Professional and outside services   642    637    1,281    1,324 
Advertising and marketing   56    79    139    142 
Expenses related to foreclosed real estate   404    752    687    2,274 
Other operating expenses   816    790    1,648    1,570 
Total noninterest expense   5,589    6,588    11,194    13,920 
                     
Net income (loss) before income tax expense (benefit)   (85)   590    (834)   78 
Income tax expense (benefit)   -    -    -    - 
                     
Net income (loss)   (85)   590    (834)   78 
                     
Preferred stock dividends and amortization of discount   295    221    517    442 
                     
Net income (loss) available to common shareholders  $(380)  $369   $(1,351)  $(364)
                     
Earnings (loss) per share, basic  $(0.07)  $0.09   $(0.25)  $(0.09)
Earnings (loss) per share, diluted  $(0.07)  $0.09   $(0.25)  $(0.09)

 

See accompanying notes to consolidated financial statements.

 

4
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Changes in Comprehensive Income (Loss)
Three and Six Months Ended June 30, 2014 and 2013
(dollar amounts in thousands) (Unaudited)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2014   2013   2014   2013 
                 
Net income (loss)  $(85)  $590   $(834)  $78 
Other comprehensive income (loss)                    
Unrealized holding gains (losses) arising during the period   1,323    (3,726)   3,149    (3,705)
Tax effect   450    (1,267)   1,070    (1,260)
Net change in unrealized holding gains (losses) on securities available for sale, net of tax   873    (2,459)   2,079    (2,445)
                     
Reclassification adjustment                    
Reclassification adjustment for gains realized in income (loss)   (1)   (127)   (1)   (217)
Tax effect   -    (43)   -    (74)
Reclassification for gains included in net income (loss), net of tax   (1)   (84)   (1)   (143)
                     
Minimum pension adjustment   3    3    6    6 
Tax effect   1    1    2    2 
Minimum pension adjustment, net of tax   2    2    4    4 
Total other comprehensive income (loss)   874    (2,541)   2,082    (2,584)
                     
 Total comprehensive income (loss)  $789   $(1,951)  $1,248   $(2,506)

 

See accompanying notes to consolidated financial statements.

 

5
 

 

 

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 2014 and 2013
(dollar amounts in thousands) (Unaudited)

 

                               Directors         
           Additional           Discount on   Stock in   Deferred   Accumulated     
   Preferred   Common   Paid-in   Accumulated       Preferred   Directors   Fees   Other     
   Stock   Stock   Capital   Deficit   Warrant   Stock   Rabbi Trust   Obligation   loss   Total 
                                         
Balance, December 31, 2013  $59   $21,353   $38,054   $(38,066)  $732   $(50)  $(878)  $878   $(3,838)  $18,244 
Amortization of preferred stock discount   -    -    -    (50)   -    50    -    -         - 
Preferred stock dividend   -    -    -    (467)   -    -    -    -    -    (467)
Stock based compensation   -    -    24    -    -    -    -    -         24 
Minimum pension adjustment   -         -                                    
(net of income taxes of $2)   -    -    -    -    -    -    -    -    4    4 
Net loss   -    -         (834)   -    -         -    -    (834)
Change in unrealized gain (loss) on investment securities available-for-sale, net of reclassification and tax effect   -    -    -    -    -    -    -    -    2,078    2,078 
                                                   
Balance, June 30, 2014  $59   $21,353   $38,078   $(39,417)  $732   $-   $(878)  $878   $(1,756)  $19,049 
                                                   
Balance, December 31, 2012  $59   $17,007   $40,705   $(33,174)  $732   $(199)  $-   $-   $(166)  $24,964 
Amortization of preferred stock discount   -              (74)   -    74    -    -    -    - 
Preferred stock dividend   -    -         (368)   -    -    -    -    -    (368)
Stock based compensation             1                                  1 
Minimum pension adjustment                                                  
(net of income taxes of $2)   -    -    -    -    -    -    -    -    4    4 
Net income   -    -    -    78    -    -    -    -    -    78 
Change in unrealized gain (loss) on investment securities available-for-sale, net of reclassification and tax effect   -    -    -    -    -    -    -    -    (2,588)   (2,588)
                                                   
Balance, June 30, 2013  $59   $17,007   $40,706   $(33,538)  $732   $(125)  $-   $-   $(2,750)  $22,091 

 

See accompanying notes to consolidated financial statements.

 

6
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2014 and 2013
(dollar amounts in thousands) (Unaudited)

 

   2014   2013 
         
Cash Flows from Operating Activities          
Net income (loss)  $(834)  $78 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation and amortization   325    656 
Deferred income taxes   (308)   (39)
Valuation allowance deferred income taxes   308    - 
Provision for loan losses   100    823 
Write-down of other real estate owned   369    646 
Valuation allowance other real estate owned   (429)   - 
Gain on securities sold   (1)   (217)
Gain on loans sold   (2,163)   (4,328)
Gain on sale of premises and equipment   (3)   (598)
Gain (Loss) on sale of other real estate owned   (234)   235 
Stock compensation expense   24    - 
Proceeds from sale of mortgage loans   79,367    150,970 
Origination of mortgage loans for sale   (81,022)   (142,213)
Amortization of premiums and accretion of discounts on securities, net   205    187 
Decrease (increase) in interest receivable   146    (120)
Increase in bank owned life insurance   (91)   (96)
Decrease (increase) in other assets   (656)   2,571 
Increase in interest payable   244    121 
Increase (decrease) in other liabilities   1,444    (966)
Net cash provided by (used in) operating activities   (3,209)   7,710 
           
Cash Flows from Investing Activities          
Purchases of available for sale securities   -    (52,134)
Proceeds from the sale or calls of available for sale securities   3,207    15,330 
Net decrease in loans   17,426    42,992 
Proceeds from sale of other real estate owned   5,663    2,211 
Purchases of premises and equipment   (898)   (201)
Proceeds from sale of premises and equipment   17    1,681 
Net cash provided by investing activities   25,415    9,879 
           
Cash Flows from Financing Activities          
Net decrease in deposits   (1,351)   (17,328)
Net decrease in Federal Home Loan Bank Advances   (3,000)   (5,000)
Net decrease in other borrowings   (726)   (426)
Net cash used in financing activities   (5,077)   (22,754)
           
Net increase in cash and cash equivalents   17,129    (5,165)
Cash and cash equivalents, beginning of period   40,209    53,131 
           
Cash and cash equivalents, end of period  $57,338   $47,966 
           
Supplemental Disclsoure of Cash Flow Information          
Cash payments for interest  $1,496   $2,166 
           
Supplemental Schedule of Non Cash Activities          
Real estate owned assets acquired in settlement of loans  $4,297   $4,931 
Dividends on preferred stock accrued  $467   $368 

 

See accompanying notes to consolidated financial statements.

 

7
 

  

Village Bank and Trust Financial Corp. and Subsidiary

Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended June 30, 2014 and 2013

(Unaudited)

 

Note 1 - Principles of presentation

 

Village Bank and Trust Financial Corp. (the “Company”) is the holding company of Village Bank (the “Bank”). The consolidated financial statements include the accounts of the Company, the Bank and the Bank’s subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.

 

In the opinion of management, the accompanying condensed consolidated financial statements of the Company have been prepared on the accrual basis in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, all adjustments that are, in the opinion of management, necessary for a fair presentation have been included. The results of operations for the three and six month periods ended June 30, 2014 are not necessarily indicative of the results to be expected for the full year ending December 31, 2014. The unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements that are presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission.

 

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of June 30, 2014 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

 

Note 2 - Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheets and statements of operations for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan losses and its related provision, and the estimate of the fair value of assets held for sale.

 

8
 

  

Note 3 - Earnings (loss) per common share

 

The following table presents the basic and diluted earnings (loss) per common share computation (in thousands, except per share data):

 

   Three Months Ended June 30,   Six Months Ended June 30, 
   2014   2013   2014   2013 
Numerator                    
Net income (loss) - basic and diluted  $(85)  $590   $(834)  $78 
Preferred stock dividend and accretion   295    221    517    442 
Net income (loss) available to common shareholders  $(380)  $369   $(1,351)  $(364)
                     
Denominator                    
Weighted average shares outstanding - basic   5,338    4,252    5,338    4,252 
Dilutive effect of common stock options and restricted stock awards   -    2    -    - 
                     
Weighted average shares outstanding - diluted   5,338    4,254    5,338    4,252 
                     
Earnings (loss) per share - basic and diluted                    
Earnings (loss) per share - basic  $(0.07)  $0.09   $(0.25)  $(0.09)
Effect of dilutive common stock options   -    -    -    - 
                     
Earnings (loss) per share - diluted  $(0.07)  $0.09   $(0.25)  $(0.09)

 

Outstanding options and warrants to purchase common stock were considered in the computation of diluted earnings per share for the periods presented. Stock options for 104,302 and 247,630 shares of common stock were not included in computing diluted earnings per share for the three and six months ended June 30, 2014 and 2013, respectively, because their effects were anti-dilutive. Warrants for 499,029 shares of common stock were not included in computing earnings per share in 2014 and 2013 because their effects were also anti-dilutive.

 

Note 4 – Investment securities available for sale

 

At June 30, 2014 and December 31, 2013, all of our securities were classified as available-for-sale. The following table presents the composition of our investment portfolio at the dates indicated (dollars in thousands):

 

9
 

  

           Gross   Gross   Estimated     
   Par   Amortized   Unrealized   Unrealized   Fair   Average 
   Value   Cost   Gains   Losses   Value   Yield 
June 30, 2014                              
US Tresuries                              
Five to ten years  $8,000   $7,833   $-   $(255)  $7,578    2.13%
US Government Agencies                              
One to Five years   4,000    4,174    -    (93)   4,081    0.89%
Five to ten years   31,625    33,407    -    (1,428)   31,979    1.82%
    35,625    37,581    -    (1,521)   36,060    1.71%
Mortgage-backed securities                              
More than ten years   635    655    2    (2)   655    2.43%
Municipals                              
Five to ten years   6,155    6,642    -    (331)   6,311    2.85%
More than ten years   5,780    7,312    -    (430)   6,882    3.35%
    11,935    13,954    -    (761)   13,193    3.12%
                               
Total investment securities  $56,195   $60,023   $2   $(2,539)  $57,486    2.10%
                               
December 31, 2013                              
US Tresuries                              
Five to ten years  $8,000   $7,825   $-   $(615)  $7,210    2.13%
US Government Agencies                              
One to Five years   4,000    4,194    -    (166)   4,028    0.89%
Five to ten years   31,625    33,510    -    (3,187)   30,323    1.82%
    35,625    37,704    -    (3,353)   34,351    1.71%
Mortgage-backed securities                              
More than ten years   2,782    2,792    10    (50)   2,752    2.43%
Municipals                              
Five to ten years   6,155    6,684    -    (678)   6,006    2.85%
More than ten years   6,780    8,428    -    (999)   7,429    3.34%
Total   12,935    15,112    -    (1,677)   13,435    3.12%
                               
Total investment securities  $59,342   $63,433   $10   $(5,695)  $57,748    2.13%

 

Investment securities available for sale that have an unrealized loss position at June 30, 2014 and December 31, 2013 are detailed below (in thousands):

 

   Securities in a loss   Securities in a loss         
   position for less than   position for more than         
   12 Months   12 Months   Total 
   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
   Value   Losses   Value   Losses   Value   Losses 
June 30, 2014    
US Treasuries   -    -    7,578    (255)   7,578    (255)
US Government Agencies  $-   $-   $36,060   $(1,521)  $36,060   $(1,521)
Municipals   -    -    13,193    (761)   13,193    (761)
Mortgage-backed securities   525    (2)   -    -    525    (2)
                               
Total  $525   $(2)  $56,831   $(2,537)  $57,356   $(2,539)
                               
December 31, 2013                              
US Treasuries  $7,210   $(615)  $-   $-   $7,210   $(615)
US Government Agencies  $34,350   $(3,353)  $-   $-   $34,350   $(3,353)
Municipals   10,864    (1,471)   2,571    (206)   13,435    (1,677)
Mortgage-backed securities   1,861    (50)   -    -    1,861    (50)
                               
Total  $54,285   $(5,489)  $2,571   $(206)  $56,856   $(5,695)

 

10
 

  

Management does not believe that any individual unrealized loss as of June 30, 2014 and December 31, 2013 is other than a temporary impairment. These unrealized losses are primarily attributable to changes in interest rates. As of June 30, 2014, management does not have the intent to sell any of the securities classified as available for sale and management believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. Approximately $22 million of these securities are pledged against current and potential fundings.

 

Note 5 – Loans and allowance for loan losses

 

The following table presents the composition of our loan portfolio (excluding mortgage loans held for sale) at the dates indicated (dollars in thousands):

 

   June 30, 2014   December 31, 2013 
   Amount   %   Amount   % 
Construction and land development                    
Residential  $5,669    2.15%  $2,931    1.02%
Commercial   25,352    9.64%   28,179    9.84%
    31,021    11.79%   31,110    10.86%
Commercial real estate                    
Owner occupied   59,974    22.78%   73,584    25.68%
Non-owner occupied   41,578    15.80%   43,868    15.31%
Multifamily   10,140    3.85%   11,560    4.03%
Farmland   1,353    0.51%   1,463    0.51%
    113,045    42.94%   130,475    45.53%
Consumer real estate                    
Home equity lines   20,832    7.92%   21,246    7.41%
Secured by 1-4 family residential,                    
First deed of trust   65,377    24.84%   66,873    23.34%
Second deed of trust   7,937    3.02%   8,675    3.03%
    94,146    35.78%   96,794    33.78%
Commercial and industrial loans                    
(except those secured by real estate)   23,304    8.86%   26,254    9.16%
Consumer and other   1,655    0.63%   1,930    0.67%
                     
Total loans   263,171    100.0%   286,563    100.0%
Deferred loan cost, net   694         683      
Less: allowance for loan losses   (5,681)        (7,239)     
                     
   $258,184        $280,007      

 

The Company assigns risk rating classifications to its loans. These risk ratings are divided into the following groups:

 

·Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating. 1-4 assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;
·Risk rated 5 loans are defined as having potential weaknesses that deserve management’s close attention;
·Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any; and,

 

11
 

  

·Risk rated 7 loans have all the weaknesses inherent in substandard loans, 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 rated 6 or 7 are considered “Classified” loans for regulatory classification purposes.

 

The following tables provide information on the risk rating of loans at the dates indicated (in thousands):

 

   Risk Rated   Risk Rated   Risk Rated   Risk Rated   Total 
   1-4   5   6   7   Loans 
June 30, 2014                         
Construction and land development                         
Residential  $5,125   $269   $275   $-   $5,669 
Commercial   18,970    1,824    4,558         25,352 
    24,095    2,093    4,833    -    31,021 
Commercial real estate                         
Owner occupied   46,947    6,620    6,407    -    59,974 
Non-owner occupied   34,585    1,462    5,531    -    41,578 
Multifamily   9,398    742         -    10,140 
Farmland   1,332         21    -    1,353 
    92,262    8,824    11,959    -    113,045 
Consumer real estate                         
Home equity lines   18,240    467    2,125    -    20,832 
Secured by 1-4 family residential                         
First deed of trust   51,901    6,219    7,257    -    65,377 
Second deed of trust   6,445    121    1,371    -    7,937 
    76,586    6,807    10,753    -    94,146 
Commercial and industrial loans                         
(except those secured by real estate)   17,550    3,188    2,566    -    23,304 
Consumer and other   1,547    80    28    -    1,655 
                          
Total loans  $212,040   $20,992   $30,139   $-   $263,171 
                          
December 31, 2013                         
Construction and land development                         
Residential  $2,715   $-   $216   $-   $2,931 
Commercial   18,265    2,711    7,203    -    28,179 
    20,980    2,711    7,419    -    31,110 
Commercial real estate                         
Owner occupied   51,810    13,214    8,560    -    73,584 
Non-owner occupied   31,990    3,454    8,424    -    43,868 
Multifamily   10,804    756    -    -    11,560 
Farmland   1,346    -    117    -    1,463 
    95,950    17,424    17,101    -    130,475 
Consumer real estate                         
Home equity lines   17,610    727    2,909    -    21,246 
Secured by 1-4 family residential                         
First deed of trust   49,843    6,646    10,384    -    66,873 
Second deed of trust   6,598    212    1,865    -    8,675 
    74,051    7,585    15,158    -    96,794 
Commercial and industrial loans                         
(except those secured by real estate)   22,786    1,042    2,426    -    26,254 
Consumer and other   1,739    131    60    -    1,930 
                          
Total loans  $215,506   $28,893   $42,164   $-   $286,563 

 

12
 

  

The following table presents the aging of the recorded investment in past due loans and leases as of the dates indicated (in thousands):

 

                           Recorded 
           Greater               Investment > 
   30-59 Days   60-89 Days   Than   Total Past       Total   90 Days and 
   Past Due   Past Due   90 Days   Due   Current   Loans   Accruing 
June 30, 2014                                   
Construction and land development                                   
Residential  $-   $-   $-   $-   $5,669   $5,669   $- 
Commercial   179    -    -    179    25,173    25,352    - 
    179    -    -    179    30,842    31,021    - 
Commercial real estate                                   
Owner occupied   -    -    -    -    59,974    59,974    - 
Non-owner occupied   -    -    -    -    41,578    41,578    - 
Multifamily   -    -    -    -    10,140    10,140    - 
Farmland   -    -    -    -    1,353    1,353    - 
    -    -    -    -    113,045    113,045    - 
Consumer real estate                                   
Home equity lines   98    50    -    148    20,684    20,832    - 
Secured by 1-4 family residential                                   
First deed of trust   -    281    -    281    65,096    65,377    - 
Second deed of trust   -    -    -    -    7,937    7,937    - 
    98    331    -    429    93,717    94,146    - 
Commercial and industrial loans                                   
(except those secured by real estate)   29    -    -    29    23,275    23,304    - 
Consumer and other   19    -    -    19    1,636    1,655    - 
                                    
Total loans  $325   $331   $-   $656   $262,515   $263,171   $- 
                                    
December 31, 2013                                   
Construction and land development                                   
Residential  $-   $-   $-   $-   $2,931   $2,931   $- 
Commercial   -    116    -    116    28,063    28,179    - 
    -    116    -    116    30,994    31,110    - 
Commercial real estate                                   
Owner occupied   199    -    -    199    73,385    73,584    - 
Non-owner occupied   -    346    -    346    43,522    43,868    - 
Multifamily   221    -    -    221    11,339    11,560    - 
Farmland   194    -    -    194    1,269    1,463    - 
    614    346    -    960    129,515    130,475    - 
Consumer real estate                                   
Home equity lines   98    403    -    501    20,745    21,246    - 
Secured by 1-4 family residential                                   
First deed of trust   555    362    -    917    65,956    66,873    - 
Second deed of trust   -    24    -    24    8,651    8,675    - 
    653    789    -    1,442    95,352    96,794    - 
Commercial and industrial loans                                   
(except those secured by real estate)   25    122    60    207    26,047    26,254    60 
Consumer and other   6    15    -    21    1,909    1,930    - 
                                    
Total loans  $1,298   $1,388   $60   $2,746   $283,817   $286,563   $60 

 

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Loans evaluated individually for impairment include non-performing loans, such as loans on non-accrual, loans past due by 90 days or more, restructured loans and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans are set forth in the following table as of the dates indicated (in thousands):

 

13
 

  

   June 30, 2014 
       Unpaid     
   Recorded   Principal   Related 
   Investment   Balance   Allowance 
With no related allowance recorded               
Construction and land development               
Residential  $275   $275   $- 
Commercial   3,811    3,811    - 
    4,086    4,086    - 
Commercial real estate               
Owner occupied   2,320    2,320      
Non-owner occupied   8,884    8,884    - 
Multifamily   2,348    2,348    - 
Farmland   21    450    - 
    13,573    14,002    - 
Consumer real estate               
Home equity lines   1,022    1,230    - 
Secured by 1-4 family residential               
First deed of trust   7,225    7,303    - 
Second deed of trust   1,086    1,197    - 
    9,333    9,730    - 
Commercial and industrial loans               
(except those secured by real estate)   750    855    - 
Consumer and other   18    18    - 
    27,760    28,691    - 
                
With an allowance recorded               
Construction and land development               
Commercial   601    601    26 
Commercial real estate               
Owner occupied   4,084    4,099    226 
Non-Owner occupied   1,288    1,288    336 
    5,372    5,387    562 
Consumer real estate               
Secured by 1-4 family residential               
First deed of trust   1,881    2,623    363 
Second deed of trust   107    107    41 
    1,988    2,730    404 
Commercial and industrial loans               
(except those secured by real estate)   115    115    11 
    8,076    8,833    1,003 
                
Total               
Construction and land development               
Residential   275    275      
Commercial   4,412    4,412    26 
    4,687    4,687    26 
Commercial real estate               
Owner occupied   6,404    6,419    226 
Non-owner occupied   10,172    10,172    336 
Multifamily   2,348    2,348    - 
Farmland   21    450    - 
    18,945    19,389    562 
Consumer real estate               
Home equity lines   1,022    1,230    - 
Secured by 1-4 family residential,               
First deed of trust   9,106    9,926    363 
Second deed of trust   1,193    1,304    41 
    11,321    12,460    404 
Commercial and industrial loans               
(except those secured by real estate)   865    970    11 
Consumer and other   18    18    - 
   $35,836   $37,524   $1,003 

 

14
 

  

   December 31, 2013 
       Unpaid     
   Recorded   Principal   Related 
   Investment   Balance   Allowance 
With no related allowance recorded               
Construction and land development               
Residential  $216   $216   $- 
Commercial   3,452    3,497    - 
    3,668    3,713    - 
Commercial real estate               
Owner occupied   1,919    1,969      
Non-owner occupied   11,769    11,928    - 
Multifamily   2,373    2,373    - 
Farmland   117    450    - 
    16,178    16,720    - 
Consumer real estate               
Home equity lines   1,630    1,685    - 
Secured by 1-4 family residential               
First deed of trust   8,177    8,319    - 
Second deed of trust   1,125    1,249    - 
    10,932    11,253    - 
Commercial and industrial loans               
(except those secured by real estate)   809    983    - 
Consumer and other   34    34    - 
    31,621    32,703    - 
                
With an allowance recorded               
Construction and land development               
Commercial   1,753    1,753    220 
Commercial real estate               
Owner occupied   9,794    9,948    680 
Non-Owner occupied   1,297    1,297    371 
    11,091    11,245    1,051 
Consumer real estate               
Secured by 1-4 family residential               
First deed of trust   2,184    2,870    484 
Second deed of trust   132    132    32 
    2,316    3,002    516 
Commercial and industrial loans               
(except those secured by real estate)   151    151    43 
    15,311    16,151    1,830 
                
Total               
Construction and land development               
Residential   216    216    - 
Commercial   5,205    5,250    220 
    5,421    5,466    220 
Commercial real estate               
Owner occupied   11,713    11,917    680 
Non-owner occupied   13,066    13,225    371 
Multifamily   2,373    2,373    - 
Farmland   117    450    - 
    27,269    27,965    1,051 
Consumer real estate               
Home equity lines   1,630    1,685    - 
Secured by 1-4 family residential,               
First deed of trust   10,361    11,189    484 
Second deed of trust   1,257    1,381    32 
    13,248    14,255    516 
Commercial and industrial loans               
(except those secured by real estate)   960    1,134    43 
Consumer and other   34    34    - 
   $46,932   $48,854   $1,830 

 

15
 

  

The following is a summary of average recorded investment in impaired loans with and without a valuation allowance and interest income recognized on those loans for the periods indicated (in thousands):

 

   For the Three Months   For the Six Months 
   Ended June 30, 2014   Ended June 30, 2014 
   Average   Interest   Average   Interest 
   Recorded   Income   Recorded   Income 
   Investment   Recognized   Investment   Recognized 
With no related allowance recorded                    
Construction and land development                    
Residential  $182   $-    284    2 
Commercial   3,951    42    3,960    98 
    4,133    42    4,244    100 
Commercial real estate                    
Owner occupied   2,970    38    2,345    65 
Non-owner occupied   9,957    82    8,949    215 
Multifamily   2,352    36    2,359    71 
Farmland   21    -    21    - 
    15,300    156    13,674    351 
Consumer real estate                    
Home equity lines   1,398    2    1,026    16 
Secured by 1-4 family residential                    
First deed of trust   7,990    108    7,649    193 
Second deed of trust   1,224    19    1,090    33 
    10,612    129    9,765    242 
Commercial and industrial loans                    
(except those secured by real estate)   821    10    758    23 
Consumer and other   26    1    20    1 
   $30,892   $338   $28,461   $717 
                     
With an allowance recorded                    
Construction and land development                    
Commercial   602    7    606    15 
Commercial real estate                    
Owner occupied   4,459    -    1,298    92 
Non-Owner occupied   1,288    -    4,108    - 
    5,747    -    5,406    92 
Consumer real estate                    
Secured by 1-4 family residential                    
First deed of trust   1,848    2    1,951    2 
Second deed of trust   107    3    108    3 
    1,955    5    2,059    5 
Commercial and industrial loans                    
(except those secured by real estate)   115    -    116    - 
    8,419    12   $8,187   $112 
                     
Total                    
Construction and land development                    
Residential   182    -    284    2 
Commercial   4,553    49    4,566    113 
    4,735    49    4,850    115 
Commercial real estate                    
Owner occupied   7,429    38    3,643    65 
Non-owner occupied   11,245    82    13,057    307 
Multifamily   2,352    36    2,359    71 
Farmland   21    -    21    - 
    21,047    156    19,080    443 
Consumer real estate                    
Home equity lines   1,398    2    1,026    16 
Secured by 1-4 family residential,                    
First deed of trust   9,838    110    9,600    195 
Second deed of trust   1,331    22    1,198    36 
    12,567    134    11,824    247 
Commercial and industrial loans                    
(except those secured by real estate)   936    10    874    23 
Consumer and other   26    1    20    1 
   $39,311   $350   $36,648   $829 

 

16
 

  

   For the Three Months   For the Six Months 
   Ended June 30, 2013   Ended June 30, 2013 
   Average   Interest   Average   Interest 
   Recorded   Income   Recorded   Income 
   Investment   Recognized   Investment   Recognized 
With no related allowance recorded                    
Construction and land development                    
Commercial  $5,505   $46   $5,859   $106 
    5,505    46    5,859    106 
Commercial real estate                    
Owner occupied   1,639         1,896    49 
Non-owner occupied   14,749    207    14,837    414 
Multifamily   778         775    39 
Farmland   -         -      
    17,166    207    17,508    502 
Consumer real estate                    
Home equity lines   1,632    23    1,257    23 
Secured by 1-4 family residential                    
First deed of trust   10,627    114    10,419    262 
Second deed of trust   962    24    1,034    30 
    13,221    161    12,710    315 
Commercial and industrial loans                    
(except those secured by real estate)   692    6    664    15 
Consumer and other   247    4    523    5 
   $36,831   $424   $37,264   $943 
                     
With an allowance recorded                    
Construction and land development                    
Commercial   2,023    50    3,277    52 
Commercial real estate                    
Owner occupied   7,316    156    8,023    256 
Non-Owner occupied   1,783    59    2,260    60 
Farmland   694    -    1,044    1 
    9,793    215    11,327    317 
Consumer real estate                    
Home equity lines   269    -    269    7 
Secured by 1-4 family residential                    
First deed of trust   1,483    8    1,482    14 
Second deed of trust   44    4    136    4 
    1,796    12    1,887    25 
Commercial and industrial loans                    
(except those secured by real estate)   98    3    159    4 
    13,710    280   $16,650   $398 
                     
Total                    
Construction and land development                    
Commercial   7,528    96    9,136    158 
    7,528    96    9,136    158 
Commercial real estate                    
Owner occupied   8,955    -    9,919    49 
Non-owner occupied   16,532    363    17,097    670 
Multifamily   778    59    775    99 
Farmland   694    -    1,044    1 
    26,959    422    28,835    819 
Consumer real estate                    
Home equity lines   1,901    23    1,526    30 
Secured by 1-4 family residential,                    
First deed of trust   12,110    122    11,901    276 
Second deed of trust   1,006    28    1,170    34 
    15,017    173    14,597    340 
Commercial and industrial loans                    
(except those secured by real estate)   790    9    823    19 
Consumer and other   247    4    523    5 
   $50,541   $704   $53,914   $1,341 

 

17
 

  

Included in impaired loans are loans classified as troubled debt restructurings (“TDRs”). A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. For loans classified as impaired TDRs, the Company further evaluates the loans as performing or nonperforming. If, at the time of restructure, the loan is not considered nonaccrual, it will be classified as performing. TDRs originally classified as nonperforming are able to be reclassified as performing if, subsequent to restructure, they experience six months of payment performance according to the restructured terms. The following is a summary of performing and nonaccrual TDRs and the related specific valuation allowance by portfolio segment as of the dates indicated (dollars in thousands):

 

               Specific 
               Valuation 
   Total   Performing   Nonaccrual   Allowance 
June 30, 2014                    
Construction and land development                    
Residential  $145   $-   $145   $- 
Commercial   4,263    4,106    157    - 
    4,408    4,106    302    - 
Commercial real estate                    
Owner occupied   6,404    5,806    598    - 
Non-owner occupied   9,100    8,699    401    - 
Multifamily   2,348    2,348    -    - 
    17,852    16,853    999    - 
Consumer real estate                    
Home equity lines   160    -    160    - 
Secured by 1-4 family residential                    
First deeds of trust   7,022    4,155    2,867    247 
Second deeds of trust   635    572    63    - 
    7,817    4,727    3,090    247 
Commercial and industrial loans                    
(except those secured by real estate)   251    -    251    - 
Consumer and other   18    -    18    - 
   $30,346   $25,686   $4,660   $247 
                     
Number of loans   110    64    46    13 

 

18
 

 

               Specific 
               Valuation 
   Total   Performing   Nonaccrual   Allowance 
December 31, 2013                    
Construction and land development                    
Residential  $216   $216   $-   $- 
Commercial   4,922    3,393    1,528    211 
    5,138    3,609    1,528    211 
Commercial real estate                    
Owner occupied   10,377    9,010    1,367    374 
Non-owner occupied   9,973    9,568    404    137 
Multifamily   2,373    2,373    -    - 
    22,723    20,951    1,771    511 
Consumer real estate                    
Home equity lines   160    -    160    - 
Secured by 1-4 family residential                    
First deeds of trust   7,296    3,230    4,066    383 
Second deeds of trust   691    324    367    - 
    8,147    3,554    4,593    383 
Commercial and industrial loans                    
(except those secured by real estate)   256    121    135    9 
Consumer and other   21    -    21    - 
   $36,285   $28,235   $8,048   $1,114 
                     
Number of loans   115    62    53    23 

 

The following table provides information about TDRs identified during the indicated periods (dollars in thousands):

 

   Six Months Ended June 30, 2014   Six Months Ended June 30, 2013 
       Pre-   Post-       Pre-   Post- 
       Modification   Modification       Modification   Modification 
   Number of   Recorded   Recorded   Number of   Recorded   Recorded 
   Loans   Balance   Balance   Loans   Balance   Balance 
                         
Construction and land development Commercial   1    45    45    6    3,025    3,025 
    1    45    45    6    3,025    3,025 
Commercial real estate                              
Owner occupied   1    344    344    4    274    274 
Non-owner occupied   1    412    412    -    -    - 
    2    756    756    4    274    274 
Consumer real estate                              
Home equity lines   -    -    -    -    -    - 
Secured by 1-4 family residential                              
First deed of trust   2    182    182    4    435    435 
Second deed of trust   -    -    -    -    -    - 
    2    182    182    4    435    435 
                               
Consumer and other   -    -    -    1    383    383 
    5   $983   $983    15   $4,117   $4,117 

 

19
 

  

   Three Months Ended June 30, 2014   Three Months Ended June 30, 2013 
       Pre-   Post-       Pre-   Post- 
       Modification   Modification       Modification   Modification 
   Number of   Recorded   Recorded   Number of   Recorded   Recorded 
   Loans   Balance   Balance   Loans   Balance   Balance 
                         
Construction and land development Commercial   -   $-   $-    5   $2,821   $2,821 
    -    -    -    5    2,821    2,821 
Commercial real estate                              
Owner occupied   1    344    344    -    -    - 
    1    344    344    -    -    - 
Consumer real estate                              
Secured by 1-4 family residential                              
First deed of trust   2    182    182    -    -    - 
    2    182    182    -    -    - 
Commercial and industrial                              
(except those secured by real estate)   -    -    -    1    383    383 
    3   $526   $526    6   $3,204   $3,204 

 

The following table summarizes defaults on TDRs identified for the three and six months ended June 30, 2014 (dollars in thousands):

 

   Three Months Ended June 30, 2014   Six Months Ended June 30, 2014 
   Number of   Recorded   Number of   Recorded 
   Loans   Balance   Loans   Balance 
                 
Cosntruction and land development                    
Residential   2   $145    2   $145 
Commercial   4    140    4    140 
    6    285    6    285 
Commercial real estate                    
Owner occupied             1    344 
    -    -    1    344 
Consumer real estate:                    
Home equity lines             1    160 
Secured by 1-4 family residential                    
First deed of trust   3    368    10    1,058 
Second deed of trust   1    318    1    318 
    4    686    12    1,536 
Commercial and industrial loans                    
(except those secured by real estate)   -    -    2    251 
                     
Total   10   $971    21   $2,416 

 

20
 

  

Activity in the allowance for loan losses is as follows for the periods indicated (dollars in thousands):

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Three Months Ended June 30, 2014                         
Construction and land development                         
Residential  $140   $-   $-   $1   $141 
Commercial   849    -    (79)   -    770 
    989    -    (79)   1    911 
Commercial real estate                         
Owner occupied   1,852    -    (607)   -    1,245 
Non-owner occupied   -    -    (38)   23    (15)
Multifamily   17    -    -    -    17 
Farmland   409    -    -    -    409 
    2,278    -    (645)   23    1,656 
Consumer real estate                         
Home equity lines   466    -    (243)   2    225 
Secured by 1-4 family residential                         
First deed of trust   1,755    -    (53)   42    1,744 
Second deed of trust   329    -    1    110    440 
    2,550    -    (295)   154    2,409 
Commercial and industrial loans                         
(except those secured by real estate)   761    -    (136)   53    678 
Consumer and other   22    -    (2)   7    27 
                          
   $6,600   $-   $(1,157)  $238   $5,681 

 

21
 

  

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Three Months Ended June 30, 2013                         
Construction and land development                         
Residential  $495   $-   $-   $101   $596 
Commercial   4,542    -    (11)   246    4,777 
    5,037    -    (11)   347    5,373 
Commercial real estate                         
Owner occupied   1,222    -    (138)   43    1,127 
Non-owner occupied   561    -    (254)   -    307 
Multifamily   23    -    -    -    23 
Farmland   808    -    -    -    808 
    2,614    -    (392)   43    2,265 
Consumer real estate                         
Home equity lines   604    -    (190)   -    414 
Secured by 1-4 family residential                         
First deed of trust   1,023    -    (532)   13    504 
Second deed of trust   12    -    -    2    14 
    1,639    -    (722)   15    932 
Commercial and industrial loans                         
(except those secured by real estate)   929    -    (62)   80    947 
Consumer and other   101    -    (10)   2    93 
                          
   $10,320   $-   $(1,197)  $487   $9,610 

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Six Months Ended June 30, 2014                         
Construction and land development                         
Residential  $135   $5   $-   $1   $141 
Commercial   1,274    (421)   (100)   17    770 
    1,409    (416)   (100)   18    911 
Commercial real estate                         
Owner occupied   1,200    653    (608)   -    1,245 
Non-owner occupied   670    (470)   (238)   23    (15)
Multifamily   19    (2)   -    -    17 
Farmland   337    168    (96)   -    409 
    2,226    349    (942)   23    1,656 
Consumer real estate                         
Home equity lines   424    223    (424)   2    225 
Secured by 1-4 family residential                         
First deed of trust   1,992    (65)   (238)   55    1,744 
Second deed of trust   394    12    (76)   110    440 
    2,810    170    (738)   167    2,409 
Commercial and industrial loans                         
(except those secured by real estate)   724    45    (168)   77    678 
Consumer and other   70    (48)   (5)   10    27 
                          
   $7,239   $100   $(1,953)  $295   $5,681 

 

22
 

  

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Six Months Ended June 30, 2013                         
Construction and land development                         
Residential  $495   $-   $-   $101   $596 
Commercial   4,611    15    (95)   246    4,777 
    5,106    15    (95)   347    5,373 
Commercial real estate                         
Owner occupied   1,359    -    (275)   43    1,127 
Non-owner occupied   817    -    (510)   -    307 
Multifamily   23    -    -    -    23 
Farmland   -    808    -    -    808 
    2,199    808    (785)   43    2,265 
Consumer real estate                         
Home equity lines   658    -    (244)   -    414 
Secured by 1-4 family residential                         
First deed of trust   1,358    -    (875)   21    504 
Second deed of trust   224    -    (215)   5    14 
    2,240    -    (1,334)   26    932 
Commercial and industrial loans                         
(except those secured by real estate)   1,162    -    (351)   136    947 
Consumer and other   101    -    (14)   6    93 
                          
   $10,808   $823   $(2,579)  $558   $9,610 

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
Year Ended December 31, 2013                         
Construction and land development                         
Residential  $495   $(462)  $-   $102   $135 
Commercial   4,611    (3,482)   (279)   424    1,274 
    5,106    (3,944)   (279)   526    1,409 
Commercial real estate                         
Owner occupied   1,359    252    (454)   43    1,200 
Non-owner occupied   817    452    (619)   20    670 
Multifamily   23    (4)   -    -    19 
Farmland   -    1,233    (896)   -    337 
    2,199    1,933    (1,969)   63    2,226 
Consumer real estate                         
Home equity lines   658    23    (266)   9    424 
Secured by 1-4 family residential                         
First deed of trust   1,358    2,493    (1,953)   94    1,992 
Second deed of trust   224    498    (367)   39    394 
    2,240    3,014    (2,586)   142    2,810 
Commercial and industrial loans                         
(except those secured by real estate)   1,162    145    (760)   177    724 
Consumer and other   101    25    (65)   9    70 
                          
   $10,808   $1,173   $(5,659)  $917   $7,239 

 

23
 

  

Loans were evaluated for impairment as follows for the periods indicated (dollars in thousands):

 

   Loans Evaluated for Impairment 
   Individually   Collectively   Total 
             
Six Months Ended June 30, 2014               
Construction and land development               
Residential  $1,254   $4,415   $5,669 
Commercial   14,604    10,748    25,352 
                
Commercial real estate               
Owner occupied   40,210    19,764    59,974 
Non-owner occupied   30,952    10,626    41,578 
Multifamily   8,382    1,758    10,140 
Farmland   771    582    1,353 
                
Consumer real estate               
Home equity lines   2,063    18,769    20,832 
Secured by 1-4 family residential               
First deed of trust   8,335    57,042    65,377 
Second deed of trust   520    7,417    7,937 
                
Commercial and industrial loans               
(except those secured by real estate)   8,133    15,171    23,304 
Consumer and other   -    1,655    1,655 
                
   $115,224   $147,947   $263,171 
                
Year Ended December 31, 2013               
Construction and land development               
Residential  $576   $2,355   $2,931 
Commercial   15,592    12,587    28,179