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EX-31.3 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex31-3.htm
EX-32.3 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex32-3.htm
EX-31.1 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex31-1.htm
EX-31.2 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex31-2.htm
EX-32.1 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex32-1.htm
EX-32.2 - CERTIFICATION - HIGHLANDS BANKSHARES INC /VA/ex32-2.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q/A
(Amendment No. 1)

[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended September 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:  0-27622

HIGHLANDS BANKSHARES, INC.
(Exact name of registrant as specified in its charter)


Virginia
(State or other jurisdiction of
incorporation or organization)
54-1796693
(I.R.S. Employer
Identification No.)
 
P.O. Box 1128
Abingdon, Virginia
(Address of principal executive offices)
 
 
24212-1128
(Zip Code)

276-628-9181
(Registrant’s telephone number, including area code)

 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 smaller reporting company (See definition of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2 of the Act). Large Accelerated Filer  [  ]   Accelerated Filer  [  ]    Non-Accelerated Filer [  ]  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 stock, as of the latest practicable date.
 
7,851,780 shares of common stock, par value $0.625 per share, outstanding as of  November 14, 2014

 
 

 

EXPLANATORY NOTE

Highlands Bankshares, Inc. (the “Company”) hereby amends its Quarterly Report on Form 10-Q for the period ended September 30, 2014, as filed with the Securities and Exchange Commission on November 14, 2014 (the “Original Filing”), as set forth in this Quarterly Report on Form 10-Q/A (Amendment No. 1) (the “Amendment”).   The Amendment is being filed solely to correct a typographical error in Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” in the Original Filing. Specifically, the statement that the Company sold shares of stock at a price of $3.30 per share has been corrected to read $3.50 per share.
 
 
No other information in the Original Filing is being amended by this Amendment.  For convenience, the entire Quarterly Report on Form 10-Q for the period ended September 30, 2014 has been re-filed in this Amendment. This Amendment speaks as of the date of the Original Filing, and does not reflect subsequent events occurring after the date of the Original Filing.  Pursuant to SEC Rule 12b-15, in connection with this filing, we have filed updated Exhibits 31.1, 31.2, 31.3, 32.1, 32.2 and 32.3.

 
 

 

 
Highlands Bankshares, Inc.

FORM 10-Q
For the Quarter Ended September 30, 2014

 

 
INDEX
   
PART I. FINANCIAL INFORMATION                                                                                                                      
PAGE
   
Item 1.  Financial Statements
 
   
Consolidated Balance Sheets
  at September 30, 2014 (Unaudited) and December 31, 2013
 
3
 
 
Consolidated Statements of Income (Unaudited)
  for the Three Months and Nine Months Ended September 30, 2014 and 2013
4
   
 
Consolidated Statements of   Comprehensive Income (Unaudited)
for the Three Months and Nine Months Ended September 30, 2014 and 2013
 
5
Consolidated Statements of Cash Flows (Unaudited)
 for the Nine Months Ended September 30, 2014 and 2013
6
   
Consolidated Statements of Changes in
 Stockholders’ Equity (Unaudited) for the Three Months and Nine Months
 Ended September 30, 2014 and 2013
7-8
   
Notes to Consolidated Financial Statements (Unaudited)
9-38
   
Item 2. Management’s Discussion and Analysis of
              Financial Condition and Results of Operations
38-43
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk
44
   
Item 4.  Controls and Procedures
44
 
 
PART II.  OTHER INFORMATION
 
   
Item 1.  Legal Proceedings
  45
   
Item 1A. Risk Factors
45
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
45
   
Item 3.  Defaults Upon Senior Securities
45
   
Item 4.  Mine Safety Disclosures
45
   
Item 5.  Other Information
45
   
Item 6.  Exhibits
46
   
SIGNATURES AND CERTIFICATIONS
47


 
2

 


PART I.
FINANCIAL INFORMATION
ITEM 1.  Financial Statements
Consolidated Balance Sheets
(Amounts in thousands)
   
       (Unaudited)
September 30, 2014
 
(Note 1)
December 31, 2013
                                              ASSETS
       
Cash and due from banks
 
$     16,602
 
     $      16,965
Federal funds sold
 
      45,520
 
  67,030
         
   Total Cash and Cash Equivalents
 
      62,122
 
83,995
         
Investment securities available for sale  (amortized cost $83,687 at  September 30, 2014, $56,582 at December 31, 2013)
 
83,239
 
55,318
Other investments, at cost
 
6,757
 
4,710
Loans, net of allowance for loan losses of  $5,529 at September 30, 2014, $6,825 at December 31, 2013
 
399,055
 
396,961
Premises and equipment, net
 
20,327
 
20,188
Deferred tax assets
 
11,150
 
10,444
Interest receivable
 
2,320
 
2,171
Bank owned life Insurance
 
14,085
 
14,132
Other real estate owned
 
6,720
 
7,834
Other assets
 
       3,829
 
        2,559
         
    Total Assets
 
$   609,604
 
$    598,312
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
       
         
LIABILITIES
       
         
Deposits:
       
  Non-interest bearing
 
$    115,127
 
$      107,328
  Interest bearing
 
    372,822
 
     380,946
         
    Total Deposits
 
    487,949
 
     488,274
         
Interest, taxes and other liabilities
 
1,298
 
2,595
Other short-term borrowings
 
20,050
 
23,500
Long-term debt
 
47,764
 
47,802
Capital securities
 
        -
 
         3,150
         
    Total Other Liabilities
 
      69,112
 
       77,047
         
    Total Liabilities
 
    557,061
 
     565,321
         
STOCKHOLDERS’ EQUITY
       
         
Common stock (7,843 at September 30, 2014 and 5,011 at December 31, 2013 shares issued and outstanding)
 
4,902
 
3,132
 Preferred stock (2,048 shares issued and outstanding)
 
                   4,096
 
-
Additional paid-in capital
 
                 18,998
 
7,783
Retained earnings
 
24,843
 
22,910
Accumulated other comprehensive loss
 
   (296)
 
        (834)
  Total Stockholders’ Equity
 
      52,543
 
      32,991
         
    Total Liabilities and Stockholders’ Equity
 
$  609,604
 
$   598,312
 
See accompanying Notes to Consolidated Financial Statements

 
3

 


Consolidated Statements of Income
(Amounts in thousands, except per share data)
(Unaudited)


 
Nine Months Ended Sept.30, 2014
 
Nine Months Ended Sept.30, 2013
 
Three Months
Ended Sept.30, 2014
 
Three Months
Ended Sept. 30, 2013
 
 
INTEREST INCOME
               
Loans receivable and fees on loans
$    16,045
 
$    16,186
 
$  5,458
 
$  5,384
 
Securities available for sale:
               
  Taxable
691
 
534
 
277
 
173
 
  Exempt from taxable income
371
 
418
 
124
 
138
 
Other investment income
151
 
122
 
50
 
31
 
Federal funds sold
           110
 
           110
 
           32
 
           35
 
                 
    Total Interest Income
    17,368
 
    17,370
 
    5,941
 
    5,761
 
                 
INTEREST EXPENSE
               
Deposits
1,933
 
2,255
 
630
 
726
 
Other borrowed funds
       2,077
 
       2,178
 
      621
 
727
 
                 
    Total Interest Expense
      4,010
 
      4,433
 
      1,251
 
      1,453
 
                 
    Net Interest Income
      13,358
 
      12,937
 
      4,690
 
      4,308
 
                 
Provision for Loan Losses
       1,248
 
       1,120
 
         352
 
         552
 
                 
    Net Interest Income after Provision for Loan Losses
      12,110
 
      11,817
 
      4,338
 
      3,756
 
                 
NON-INTEREST INCOME
               
Securities gains, losses, net
-
 
(4)
 
-
 
-
 
Service charges on deposit accounts
1,431
 
1,545
 
485
 
533
 
Other service charges, commissions and fees
1,248
 
1,248
 
396
 
446
 
Other operating income
564
 
533
 
          203
 
          159
 
    Total Non-Interest Income
       3,243
 
       3,322
 
      1,084
 
         1,138
 
                 
NON-INTEREST EXPENSE
               
Salaries and employee benefits
7,424
 
7,140
 
2,451
 
2,398
 
Occupancy expense of bank premises
778
 
902
 
202
 
301
 
Furniture and equipment expense
               862
 
               910
 
290
 
295
 
Other operating expense
        4,105
 
        4,034
 
1,444
 
1,378
 
Foreclosed Assets – Write-down and operating expenses
1,234
 
2,381
 
462
 
1,632
 
    Total Non-Interest Expense
      14,403
 
      15,367
 
       4,849
 
       6,004
 
                 
    Income (Loss) Before Income Taxes
950
 
(228)
 
573
 
(1,110)
 
                 
 
Income Tax Expense (Benefit)
      (983)    
 
                              (2,314)
 
      47
 
      (452)
 
                 
    Net Income
$       1,933
 
$       2,086
 
$          526
 
$       (658)
 
                 
Basic Earnings Per Common Share – Weighted Average
$         0.29
 
$         0.42
 
$        0.07
 
$        (0.13)
 
                 
Earnings Per Common Share – Assuming Dilution
$         0.22
 
$         0.42
 
$         0.05
 
$        (0.13)
 



See accompanying Notes to Consolidated Financial Statements


 
4

 




Consolidated Statements of Comprehensive Income
(Amounts in thousands)
(Unaudited)
 


 
Nine Months Ended                  Sept.  30, 2014
 
Nine Months Ended Sept. 30, 2013
 
         
         
Net Income
$     1,933
 
$ 2,086
 
         
     Other Comprehensive Income
       
  Unrealized gains  (losses) on securities during  the period
815
 
(1,537)
 
  Less: reclassification adjustment for losses  included in net income
-
 
4
 
          Other Comprehensive Income (Loss), before tax
815
 
(1,533)
 
           Income tax expense (benefit) related to other
           comprehensive income
277
 
(519)
 
    Other Comprehensive Income (Loss)
538
 
(1,014)
 
Comprehensive Income
$     2,471
 
$     1.072
 
         


 
Three Months Ended                  Sept. 30, 2014
 
Three Months Ended Sept. 30, 2013
 
         
         
Net Income
$     526
 
$     (658)
 
         
     Other Comprehensive Income
       
  Unrealized gains  (losses) on securities during  the period
(201)
 
(156)
 
  Less: reclassification adjustment for losses  included in net income
-
 
-
 
          Other Comprehensive Income (Loss), before tax
(201)
 
(156)
 
           Income tax expense (benefit) related to other
           comprehensive income
(68)
 
(53)
 
    Other Comprehensive Income (Loss)
(133)
 
(103)
 
Comprehensive Income
$     393
 
$     (761)
 
         


See accompanying Notes to Consolidated Financial Statements












 
5

 



Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)


 
Nine Months Ended
 
Nine Months Ended
 
 
Sept. 30, 2014
 
 
Sept. 30, 2013
 
CASH FLOWS FROM OPERATING  ACTIVITIES:
       
Net income
$        1,933
 
$        2,086
 
Adjustments to reconcile net income to net cash provided by                 operating activities
       
Provision for loan losses
                        1,248
 
1,120
 
Depreciation and amortization
653
 
676
 
Net realized (gains) losses on available for sale securities
-
 
4
 
Net amortization on securities
475
 
586
 
Amortization of capital issue costs
18
 
4
 
            (Increase) decrease in interest receivable
(149)
 
2
 
Valuation adjustment of other real estate owned
386
 
1,645
 
Valuation adjustment of deferred tax assets
(1,000)
 
(2,000)
 
Increase in other assets
                     (1,270)
 
                      (213)
 
Increase (decrease)  in interest, taxes and other liabilities
    (1,210)
 
    380
 
         
Net cash provided by operating activities
              1,084
 
              4,290
 
         
CASH FLOWS FROM INVESTING ACTIVITIES:
       
Securities available for sale:
       
       Proceeds from sale of securities
 -
 
 1,321
 
Proceeds from maturities of debt and equity securities
 6,597
 
 8,366
 
Purchase of debt and equity securities
(34,177)
 
(11,765)
 
Purchases of other investments
(2,047)
 
                       220
 
Net increase in loans
(6,185)
 
(14,769)
 
Proceeds from sales of other real estate owned
3,141
 
5,514
 
Proceeds from Cash Surrender Value of Life Insurance
360
 
-
 
Premises and equipment expenditures
           (763)
 
           (848)
 
         
Net cash used in investing activities
       (33,074)
 
       (11,961)
 
         
CASH FLOWS FROM FINANCING ACTIVITIES:
       
      Issuance of Common Stock
9,912
 
-
 
      Issuance of Preferred Stock
7,168
 
-
 
Net decrease in time deposits
                    (11,110)
 
                  (16,696)
 
Net increase in demand, savings and other deposits
                   10,785
 
                   19,522
 
Increase (decrease) in short-term borrowings
(3,450)
 
3,355
 
Decrease in long-term debt
(38)
 
(3,483)
 
Redemption of Capital Securites
(3,150)
 
-
 
         
Net cash  provided by  financing activities
10,117
 
   2,698
 
         
Net decrease in cash and cash equivalents
                   (21,873)
 
                   (4,973)
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
     83,995
 
     81,208
 
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$    62,122
 
$    76,235
 
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
       
Cash paid during the year for:
       
Interest
$      5,221
 
           $      4,303
 
         
     SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
       
Transfer of loans to other real estate owned
$      2,843
 
$      3,572
 
Loans originated from sales of other real estate owned
$         561
 
$      1,751
 


 
See accompanying Notes to Consolidated Financial Statements

 
6

 



Consolidated Statements of Changes in Stockholders’ Equity
(Amounts in thousands)
(Unaudited)



 
Three Months Ended September 30
         
      Accumulated
       
         
Additional
 
Other
             Total
 
 
    Common Stock
 
    Preferred Stock
 
Paid In
 
Retained
 
Comprehensive
 
Stockholders’
 
Shares
 
 Par Value
 
Shares
 
 Par Value
 
Capital
 
Earnings
 
          Income
 
Equity
                               
 
Balance, June  30, 2013
5,011
 
$    3,132
         
$    7,783
 
$   24,172
 
$       (2,782)
 
$    32,305
                               
 
Net income
-
 
-
         
-
 
(658)
 
-
 
(658)
                               
Other comprehensive loss
-
 
-
         
-
 
-
 
(103)
 
     (103)
                               
                               
 
Balance Sept. 30, 2013
    5,011
 
$    3,132
         
$    7,783
 
$    23,514
 
$        (2,885)
 
$    31,544
                               
 
Balance, June 30, 2014
7,684
 
$    4,803
 
 
2,048
 
 
$   4,096
 
$    18,541
 
$    24,317
 
$       (163)
 
$    51,594
                               
 
Net income
-
 
-
         
-
 
526
 
-
 
526
                               
 
Common Stock Issuance
159
 
$        99
         
457
         
556
                               
 
Preferred Stock Issuance
       
 
-
 
 
-
 
-
         
-
                               
Other comprehensive income
-
 
-
         
-
 
-
 
(133)
 
(133)
                               
                               
 
Balance, Sept. 30, 2014
7,843
 
$    4,902
 
 
2,048
 
 
$4,096
 
$    18,998
 
$    24,843
 
$        (296)
 
$    52,543
                               
                               







 












 
7

 


Consolidated Statements of Changes in Stockholders’ Equity
(Amounts in thousands)
(Unaudited)




Nine  Months Ended September 30
         
Accumulated
       
         
Additional
 
Other
        Total
 
 
    Common Stock
 
    Preferred Stock
 
Paid In
 
Retained
 
Comprehensive
 
Stockholders’
 
Shares
 
 Par Value
 
Shares
 
 Par Value
 
Capital
 
Earnings
 
Income
 
Equity
                               
 
Balance, December 31,2012
5,011
 
$    3,132
         
$    7,783
 
$   21,428
 
$       (1,871)
 
$   30,472
                               
 
Net income
-
 
-
         
-
 
2,086
 
-
 
2,086
                               
Other comprehensive loss
-
 
-
         
-
 
-
 
(1,014)
 
   (1,014)
                               
                               
 
Balance Sept. 30, 2013
    5,011
 
$    3,132
         
$    7,783
 
$    23,514
 
$        (2,885)
 
$    31,544
                               
 
Balance, December 31, 2013
5,011
 
$    3,132
 
 
2,048
 
 
$   4,096
 
$  7,783
 
$    22,910
 
$       (834)
 
$    32,991
                               
 
Net income
-
 
-
         
-
 
1,933
 
-
 
1,933
                               
 
Common Stock Issuance
2,832
 
1,770
         
8,142
         
9,912
                               
 
Preferred Stock Issuance
       
 
2,048
 
 
4,096
 
3,073
         
7,169
                               
Other comprehensive income
-
 
-
         
-
 
-
 
538
 
538
                               
                               
 
Balance, Sept. 30, 2014
7,843
 
$    4,902
 
 
2,048
 
 
$4,096
 
$    18,998
 
$    24,843
 
$        (296)
 
$    52,543
                               
                               

 

See accompanying Notes to Consolidated Financial Statements








 
8

 


Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)


 
 
Note 1              General

The consolidated financial statements of Highlands Bankshares, Inc. (the “Company”) include its wholly-owned subsidiary, Highlands Union Bank (the “Bank”).  The statements also include Highlands Union Insurance Services, Inc., Highlands Union Financial Services, Inc., and Blue Ridge Hospitality, LLC, which are wholly owned subsidiaries of the Bank. Blue Ridge Hospitality, LLC, was formed in June 2014 to hold and manage certain properties acquired by the Bank through foreclosure or deed in lieu of foreclosure. The Company’s consolidated financial statements conform to United States generally accepted accounting principles and to banking industry practices. The accompanying consolidated interim financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included. All such adjustments are of a normal and recurring nature. The consolidated balance sheet as of December 31, 2013 has been extracted from the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”). The notes included herein should be read in conjunction with the notes to consolidated financial statements included in the 2013 Form 10-K. The results of operations for the three month and nine month periods ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2              Loans and Allowance for Loan Losses  (amounts in thousands)
 The composition of net loans is as follows:

 
September 30, 2014
 
December 31, 2013
Real Estate Secured:
     
Residential 1-4 family
$ 184,300
 
$   175,860
Multifamily
21,233
 
20,592
Construction and Land Loans
18,618
 
18,509
Commercial Real Estate, Owner Occupied
70,845
 
71,459
Commercial Real Estate, Non-owner occupied
31,726
 
37,117
Second mortgages
7,574
 
7,934
Equity lines of credit
            7,020
 
7,884
Farmland
8,756
 
9,322
 
350,072
 
348,677
       
Secured (other) and unsecured
     
Personal
20,352
 
20,472
Commercial
31,473
 
31,575
Agricultural
3,085
 
3,376
 
54,910
 
55,423
       
Overdrafts
242
 
304
       
 
405,224
 
404,404
Less:
     
  Allowance for loan losses
            5,529
 
            6,825
  Net deferred fees
640
 
               618
 
6,169
 
7,443
       
Loans, net
$ 399,055
 
$    396,961




 
9

 
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)





The following table is an analysis of past due loans as of September 30, 2014:
 
   
30-59 Days Past Due
 
60-89 Days Past Due
 
Greater Than 90 Days
 
Total Past Due
 
Current
 
Total Financing Receivables
 
Recorded Investment > 90 Days and Accruing
                             
Real Estate Secured
                           
Residential 1-4 family
 
 $ 2,775
 
 $    1,997
 
 $  2,730
 
 $  7,502
 
 $  176,798
 
 $  184,300
 
 $         -
Equity lines of credit
 
 16
 
 50
 
240
 
 306
 
 6,714
 
 7,020
 
-
Multifamily
 
 -
 
 -
 
 -
 
 -
 
 21,233
 
 21,233
 
-
Farmland
 
399
 
 179
 
 129
 
707
 
 8,049
 
 8,756
 
-
Construction, Land Development, Other Land Loans
 
197
 
 36
 
161
 
394
 
 18,224
 
 18,618
 
 -
Commercial Real Estate- Owner Occupied
 
 845
 
 2
 
2,702
 
 3,549
 
 67,296
 
 70,845
 
 -
Commercial Real Estate- Non Owner Occupied
 
 4
 
-
 
 1,547
 
 1,551
 
 30,175
 
 31,726
 
 -
Second Mortgages
 
 90
 
 51
 
 145
 
 286
 
 7,288
 
 7,574
 
 -
Non Real Estate Secured
                           
Personal
 
 487
 
 80
 
 216
 
 783
 
19,811
 
 20,594
 
 -
Commercial
 
 580
 
 511
 
 206
 
 1,297
 
 30,176
 
 31,473
 
 -
Agricultural
 
 9
 
 84
 
 492
 
 585
 
 2,500
 
 3,085
 
 -
                             
          Total
 
 $  5,402
 
 $    2,990
 
 $   8,568
 
 $  16,960
 
 $  388,264
 
 $  405,224
 
 $          -
                             

The following table is an analysis of past due loans as of December 31, 2013:
 
   
30-59 Days Past Due
 
60-89 Days Past Due
 
Greater Than 90 Days
 
Total Past Due
 
Current
 
Total Financing Receivables
 
Recorded Investment > 90 Days and Accruing
                             
Real Estate Secured
                           
Residential 1-4 family
 
 $    3,219
 
 $    1,805
 
 $    2,699
 
 $    7,723
 
 $  168,137
 
 $  175,860
 
 $          -
Equity lines of credit
 
 -
 
 -
 
 318
 
 318
 
 7,566
 
 7,884
 
-
Multifamily
 
 -
 
97
 
 -
 
 97
 
 20,495
 
 20,592
 
-
Farmland
 
 38
 
 -
 
 129
 
 167
 
 9,155
 
 9,322
 
-
Construction,  Land Development, Other Land Loans
 
 303
 
 117
 
 1,615
 
 2,035
 
 16,474
 
 18,509
 
 -
Commercial Real Estate- Owner Occupied
 
 665
 
 26
 
 1,610
 
 2,301
 
 69,158
 
 71,459
 
 -
Commercial Real Estate- Non Owner Occupied
 
 234
 
 2,257
 
 637
 
 3,128
 
 33,989
 
 37,117
 
 -
Second Mortgages
 
 341
 
 3
 
 56
 
 400
 
 7,534
 
 7,934
 
 -
Non Real Estate Secured
                           
Personal
 
 357
 
 177
 
146
 
 680
 
 20,096
 
 20,776
 
 2
Commercial
 
 1,344
 
 121
 
 266
 
 1,731
 
 29,844
 
 31,575
 
 -
Agricultural
 
 29
 
 -
 
 -
 
 29
 
 3,347
 
 3,376
 
 -
                             
          Total
 
 $    6,530
 
 $    4,603
 
 $   7,476
 
 $   18,609
 
 $  385,795
 
 $  404,404
 
 $          2





 










 
10

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)


Loans are considered delinquent when payments have not been made according to the terms of the contract. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection.  Credit card loans and other personal loans are typically charged off no later than 180 days past due.   In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

The following is a summary of non-accrual loans at September 30, 2014 and December 31, 2013:


 
September 30, 2014
 
December 31, 2013
 
Real Estate Secured
       
Residential 1-4 Family
                                                       $           4,201
 
 $       2,890
 
Multifamily
-
 
-
 
Construction and Land Loans
1,922
 
1,694
 
Commercial-Owner Occupied
5,617
 
3,005
 
Commercial- Non Owner Occupied
1,547
 
2,429
 
Second Mortgages
145
 
92
 
Equity Lines of Credit
240
 
318
 
Farmland
129
 
146
 
Secured (other) and Unsecured
       
Personal
215
 
144
 
Commercial
206
 
266
 
Agricultural
            493
 
             -
 
         
Total
$14,715
 
$     10,984
 







The September 30, 2014 total includes approximately $6.14 million of modified loans that are paying under the terms of their existing loan agreement but included in non-accrual per regulatory guidance.























 
11

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)


The following tables represent a summary of credit quality indicators of the Company’s loan portfolio at September 30, 2014 and December 31, 2013.  The grades are assigned and/or modified by the Company’s credit review and credit analysis departments based on the creditworthiness of the borrower and the overall strength of the loan.

Credit Risk Profile by Internally Assigned Grade as of September 30, 2014
 

 
Grade (1)
 
Residential 1-4 Family
 
Multifamily
 
Farmland
 
Construction, Land Loans
 
Commercial Real Estate- Owner Occupied
 
Commercial Real Estate Non-Owner Occupied
                         
Quality
 
 30,632
 
6
 
 476
 
 3,147
 
3,882
 
 800
Satisfactory
 
 98,771
 
 16,549
 
 1,884
 
 7,588
 
 32,417
 
 14,446
Acceptable
 
 41,489
 
 2,589
 
 4,969
 
 5,481
 
 19,916
 
 12,224
Special Mention
 
 3,319
 
 837
 
 467
 
 488
 
 3,185
 
 2,339
Substandard
 
 10,089
 
 1,252
 
 960
 
 1,914
 
 11,445
 
 1,917
Doubtful
 
 -
 
 
 
 -
 
 -
 
 -
 
 -
                         
     Total
 
$   184,300
 
$     21,233
 
$     8,756
 
$        18,618
 
$     70,845
 
$     31,726


Credit Risk Profile by Internally Assigned Grade as of December 31, 2013
 
Grade (1)
 
Residential 1-4 Family
 
Multifamily
 
Farmland
 
Construction, Land Loans
 
Commercial Real Estate- Owner Occupied
 
Commercial Real Estate Non-Owner Occupied
                         
Quality
 
 33,137
 
-
 
 823
 
 3,425
 
 5,831
 
 1,495
Satisfactory
 
 90,569
 
 15,419
 
 4,128
 
 8,123
 
 27,712
 
 15,153
Acceptable
 
 38,958
 
 3,049
 
 3,699
 
 3,733
 
 22,007
 
 11,148
Special Mention
 
 4,678
 
2,124
 
 6
 
 1,652
 
 6,823
 
 2,507
Substandard
 
 8,518
 
 -
 
 666
 
 1,576
 
 8,620
 
 6,814
Doubtful
 
 -
 
 -
 
 -
 
 -
 
 466
 
 -
                         
     Total
 
$   175,860
 
$     20,592
 
$     9,322
 
$        18,509
 
$     71,459
 
$      37,117


 
(1)  Quality--This grade is reserved for the Bank’s top quality loans. These loans have excellent sources of repayment, with no significant identifiable risk of collection.  Generally, loans assigned this rating will demonstrate the following characteristics:
 
 
·  
Conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind).
 
 
·  
Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.
 
 
·  
Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.
 
 
For existing loans, all of the requirements above apply plus all payments have been made as agreed, current financial information on all borrowers and guarantors has been obtained and analyzed, and overall business operating trends are either stable or improving.
 
 
   Satisfactory-This grade is given to performing loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this rating will demonstrate the following characteristics:
 
 
·  
General conformity to the Bank's policy requirements, product guidelines and underwriting standards.  Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors.
 
 
·  
Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.  
 

 
12

 


Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)

·  
Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor
 
 
For existing loans, all of the requirements outlined above will apply, plus all payments have been made as agreed, current financial information on all borrowers and guarantors has been obtained and analyzed, and overall business operating trends are stable with any declines considered minor and temporary.
 
 
Acceptable-This grade is given to loans that show signs of weakness in either adequate sources of repayment or collateral, but have demonstrated mitigating factors that minimize the risk of delinquency or loss.  Loans assigned this rating may demonstrate some or all of the following characteristics:
 
 
·  
Additional exceptions to the Bank's policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank.  Although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors.
 
 
·  
Unproved, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time.  Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance.
 
 
·  
Marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor.
 
 
For existing loans, payments have generally been made as agreed with only minor and isolated delinquencies.
 
 
Special Mention -This grade is given to Watch List loans that include the following characteristics:
 
 
·  
Loans with underwriting guideline tolerances and/or exceptions with no identifiable mitigating factors.
 
 
·  
Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices.
 
 
·  
Loans where adverse economic conditions that develop subsequent to the loan origination do not jeopardize liquidation of the debt, but do substantially increase the level of risk may also warrant this rating.
 
 
  Substandard-Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
 
 
 The weaknesses may include, but are not limited to:
 
 
·  
High debt to worth ratios and or declining or negative earnings trends
 
 
·  
Declining or inadequate liquidity
 
 
·  
Improper loan structure  or questionable repayment sources
 
 
·  
Lack of well-defined secondary repayment source, and
 
 
·  
Unfavorable competitive comparisons.
 
 
Such loans are no longer considered to be adequately protected due to the borrower's declining net worth, lack of earnings capacity, declining collateral margins and/or unperfected collateral positions. A possibility of loss of a portion of the loan balance cannot be ruled out. The repayment ability of the borrower is marginal or weak and the loan may have exhibited excessive overdue status or extensions and/or renewals.
 
 

 
 
 
 
13

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)


 

 
Doubtful -Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. The ability of the borrower to service the debt is extremely weak, overdue status is constant, the debt has been placed on non-accrual status, and no definite repayment schedule exists.
 
However, these loans are not yet rated as loss because certain events may occur which would salvage the debt. Among these events are:
 
 
·  
Injection of capital;
 
 
·  
Alternative financing; and/or,
 
 
·  
Liquidation of assets or the pledging of additional collateral.
 
Credit Risk Profile based on payment activity as of September 30, 2014
   
Consumer - Non Real Estate
 
Equity Line of Credit / Second Mortgages
 
Commercial - Non Real Estate
 
Agricultural - Non Real Estate
                 
Performing
 
$       20,378
 
$          14,209
 
$               31,267
 
$            2,593
Nonperforming (>90 days past due)
 
216
 
 385
 
206
 
492
                 
     Total
 
$       20,594
 
$        14,594
 
$              31,473
 
$           3,085
                 


Credit Risk Profile based on payment activity as of  December 31, 2013
   
Consumer - Non Real Estate
 
Equity Line of Credit / Second Mortgages
 
Commercial - Non Real Estate
 
Agricultural - Non Real Estate
                 
Performing
 
$       20,630
 
$          15,444
 
$               31,309
 
$            3,376
Nonperforming (>90 days past due)
 
 146
 
 374
 
 266
 
 -
                 
     Total
 
$       20,776
 
$         15,818
 
$              31,575
 
$           3,376
                 




 

















 
14

 
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)



The following tables reflect the Bank’s impaired loans at September 30, 2014:
 

 
 
September 30, 2014
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With No Related Allowance
                   
Real Estate Secured
                   
Residential 1-4 family
 
$     7,190
 
$     7,190
 
$          -
 
$     6,616
 
$       146
Equity lines of credit
 
301
 
379
 
-
 
332
 
4
Multifamily
 
1,252
 
1,252
 
-
 
626
 
48
Farmland
 
971
 
971
 
-
 
727
 
37
Construction, Land Development, Other Land Loans
 
1,726
 
1,726
 
-
 
1,710
 
32
Commercial Real Estate- Owner Occupied
 
9,561
 
9,765
 
-
 
7,477
 
196
Commercial Real Estate- Non Owner Occupied
 
-
 
-
 
-
 
3,227
 
-
Second Mortgages
 
204
 
204
 
-
 
133
 
5
Non Real Estate Secured
                   
Personal /Consumer
 
65
 
65
 
-
 
59
 
2
Commercial
 
373
 
373
 
-
 
234
 
17
Agricultural
 
492
 
547
 
-
 
246
 
-
                     
          Total
 
$    22,135
 
$    22,472
 
$          -
 
$   21,387
 
$       487



 
 
September  30, 2014
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With an Allowance Recorded
                   
Real Estate Secured
                   
Residential 1-4 family
 
$     3,377
 
$     3,377
 
$       686
 
$     3,201
 
$       95
Equity lines of credit
 
-
 
-
 
-
 
19
 
-
Multifamily
 
-
 
-
 
-
 
-
 
-
Farmland
 
-
 
-
 
-
 
100
 
-
Construction, Land Development, Other Land Loans
 
366
 
366
 
20
 
183
 
6
Commercial Real Estate- Owner Occupied
 
1,902
 
1,902
 
273
 
2,715
 
51
Commercial Real Estate- Non Owner Occupied
 
1,918
 
1,918
 
323
 
3,249
 
27
Second Mortgages
 
-
 
-
 
-
 
28
 
-
Non Real Estate Secured
                   
Personal /Consumer
 
229
 
229
 
158
 
181
 
5
Commercial
 
658
 
658
 
414
 
791
 
24
Agricultural
 
8
 
8
 
                 8
 
94
 
-
                     
          Total
 
$    8,458
 
$    8,458
 
$     1,882
 
$    10,561
 
$       208




 




 
15

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)



The following tables reflect the Bank’s impaired loans at December 31, 2013:
 

 
 
December 31, 2013
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With no Related Allowance
                   
Real Estate Secured
                   
Residential 1-4 family
 
$     6,042
 
$     6,042
 
$          -
 
$     6,300
 
$       198
Equity lines of credit
 
364
 
364
 
-
 
182
 
6
Multifamily
 
-
 
-
 
-
 
-
 
-
Farmland
 
483
 
483
 
-
 
391
 
11
Construction, Land Development, Other Land Loans
 
1,694
 
1,694
 
-
 
1,677
 
1
Commercial Real Estate- Owner Occupied
 
5,393
 
5,393
 
-
 
5,201
 
173
Commercial Real Estate- Non Owner Occupied
 
6,454
 
6,454
 
-
 
4,943
 
250
Second Mortgages
 
62
 
62
 
-
 
191
 
3
Non Real Estate Secured
                   
Personal
 
53
 
53
 
-
 
31
 
3
Commercial
 
96
 
96
 
-
 
82
 
5
Agricultural
 
-
 
-
 
-
 
10
 
-
                     
          Total
 
$    20,641
 
$    20,641
 
$          -
 
$   19,008
 
$       650


 
 
December 31, 2013
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With an Allowance Recorded
                   
Real Estate Secured
                   
Residential 1-4 family
 
$     3,026
 
$     3,026
 
$       394
 
$     3,756
 
$       145
Equity lines of credit
 
38
 
38
 
38
 
19
 
1
Multifamily
 
-
 
-
 
-
 
202
 
-
Farmland
 
200
 
200
 
25
 
201
 
8
Construction, Land Development, Other Land Loans
 
-
 
-
 
-
 
-
 
-
Commercial Real Estate- Owner Occupied
 
3,528
 
3,528
 
630
 
3,113
 
72
Commercial Real Estate- Non Owner Occupied
 
4,581
 
4,581
 
1,230
 
3,788
 
93
Second Mortgages
 
56
 
56
 
45
 
28
 
1
Non Real Estate Secured
                   
Personal
 
133
 
133
 
84
 
77
 
6
Commercial
 
924
 
924
 
695
 
791
 
34
Agricultural
 
181
 
181
 
56
 
448
 
4
                     
          Total
 
$    12,667
 
$    12,667
 
$     3,197
 
$    12,423
 
$       364



 





 
16

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)


The following tables present the balance in the allowance for loan losses and the recorded investment in loans by loan category and is segregated by impairment evaluation method as of September 30, 2014 and September 30, 2013.


Nine  months ended September  30, 2013
Residential
1-4 Family
Multifamily
Construction and Land Loans
Commercial Owner Occupied
Commercial Non-Owner Occupied
Second Mortgages
Equity Line of Credit
Farmland
Personal and  Overdrafts
Commercial and Agricultural
Unallocated
Total
Allowance for Credit Losses:
                       
Beginning Balance December 31,  2012
$   1,242
$   280
$   823
$   1,039
$   1,075
$   161
$   30
$    97
$   486
$1,530
$  686
7,449
Provision for Credit Losses
329
(102)
(404)
161
376
150
1
17
348
(275)
519
1,120
Charge-offs
333
-
127
408
52
134
3
41
331
193
-
1,622
Recoveries
6
-
3
-
-
-
-
-
39
30
-
78
Net Charge-offs
327
-
124
408
52
134
3
41
292
163
-
1,544
Ending Balance
September  30, 2013
1,244
178
295
792
1,399
177
28
73
542
1,092
1,205
7,025
Ending Balance: Individually evaluated for impairment
615
-
-
339
1,185
38
13
9
116
637
-
2,952
Ending Balance:  Collectively Evaluated for Impairment
629
178
295
453
214
139
15
64
426
455
1,205
4,073
Loans:
                       
Ending Balance: Individually Evaluated for Impairment
10,357
-
1,625
8,921
12,114
261
234
432
239
2,015
-
36,198
Ending Balance: Collectively Evaluated for Impairment
  164,614
19,768
  15,995
  58,758
  25,215
  7,939
7,933
  10,296
  21,608
  32,403
-
364,529
Ending Balance: September  30, 2013
$174,971
$19,768
$17,620
$67,679
$37,329
$8,200
$8,167
$10,728
$21,847
$34,418
-
$400,727


























 
 

 
17

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)




Nine  months ended Sept. 30, 2014
Residential
1-4 Family
Multifamily
Construction and Land Loans
Commercial  R./E Owner Occupied
Commercial R/E Non-Owner Occupied
Second Mortgages
Equity Line of Credit
Farmland
Personal and  Overdrafts
Commercial and Agricultural
Unallocated
Total
Allowance for Credit Losses:
                       
Beginning Balance December 31,  2013
$  975
$   143
$   230
$  1,029
$   1,415
$   153
$   50
$   65
$   483
$   1,264
$   1,018
$   6,825
Provision for Credit Losses
353
(102)
(103)
(218)
982
(52)
125
(51)
599
23
(308)
1,248
Charge-offs
188
-
18
345
1,239
25
100
-
471
387
-
2,773
Recoveries
(1)
-
(6)
(132)
-
-
-
-
(54)
(36)
-
(229)
Net Charge-offs
187
            -
12
213
1,239
25
100
-
417
351
-
2,544
Ending Balance
 Sept. 30, 2014
1,141
41
115
598
1,158
76
75
14
665
936
710
5,529
Ending Balance: Individually evaluated for impairment
686
-
20
273
323
-
-
-
158
422
-
1,882
Ending Balance:  Collectively Evaluated for Impairment
455
41
95
325
835
76
75
14
507
514
710
3,647
Loans:
                       
Ending Balance: Individually Evaluated for Impairment
10,567
1,252
2,092
11,463
1,918
204
301
971
294
1,531
-
30,593
Ending Balance: Collectively Evaluated for Impairment
173,733
19,981
16,526
59,382
29,808
7,370
6,719
7,785
20,300
33,027
-
374,631
Ending Balance: Sept.  30, 2014
$184,300
$21,233
$18,618
$70,845
$31,726
$7,574
$7,020
$8,756
$20,594
$34,558
-
$405,224



























 
18

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)




A loan is considered impaired and an allowance for loan losses is established on loans for which it is probable that the full collection of principal and interest is in doubt. Once a loan is identified as individually impaired, management measures impairment using one of several methods, including collateral value based on recent appraisal and /or tax assessment value, liquidation value and/or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At September 30, 2014 and December 31, 2013, all of the total impaired loans were evaluated based on the fair value of the collateral. On a quarterly basis, the ALLL methodology begins with the determination of individually impaired loans. All loans that are rated “7” (Doubtful) are assessed as impaired based on the expectation that the full collection of principal and interest is in doubt. All loans that are rated “6” (Substandard) or are expected to be downgraded to “6”, require additional analysis to determine whether they may be impaired. All loans that are rated “5” (Special Mention) are presumed not to be impaired. However, “5” rated loans with the following characteristics warrant further analysis before completing an assessment of impairment:

•  
A loan is 60 days or more delinquent on scheduled principal or interest;
•  
A loan is presently in an unapproved over advanced position;
•  
A loan is newly modified; or
•  
A loan is expected to be modified.


The Company’s credit administration personnel and senior financial officers are responsible for tracking, coding, and monitoring loans that become Troubled Debt Restructurings  (“TDRs”). Concessions are made to existing borrowers in the form of modified interest rates and / or payment terms. The loans are segregated for regulatory and external reporting. Each specific TDR is reviewed to determine if the accrual of interest should be discontinued and also reviewed for impairment. The Company’s senior credit administration officer performs this analysis on a quarterly basis in addition to determining any other loans that are impaired within the loan portfolio. The Company had a total of $12,161 and $17,810 of loans categorized as troubled debt restructurings as of September 30, 2014 and December 31, 2013, respectively. Interest is accrued on TDRs if the loan is otherwise not impaired and the full collection of principal and interest under the modified terms is still deemed probable.

In the determination of the allowance for loan losses, management considers troubled debt restructurings and subsequent defaults in these restructurings by adjusting the loan grades of such loans. Defaults resulting in charge-offs affect the historical loss experience ratios which are a component of the allowance calculation. Additionally, specific reserves may be established on restructured loans evaluated individually.

The following tables summarize the troubled debt restructurings during the nine months ended September 30, 2014 and 2013.


















 
19

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)




Troubled Debt Restructurings –Nine months ended September 30, 2014
Interest only
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
         Real Estate Secured
     
Residential 1-4 family
     
Equity lines of credit
     
Multifamily
1
1,252
1,252
Farmland
     
Construction, Land Development,
Other Land Loans
     
Commercial Real Estate-  Owner Occupied
1
1,395
1,395
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
     
Agricultural
     
       
Total
2
2,647
2,647

Troubled Debt Restructurings
Below Market Rate
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
        Real Estate Secured
     
Residential 1-4 family
1
879
879
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development,
Other Land Loans
     
Commercial Real Estate-  Owner Occupied
1
707
707
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
     
Agricultural
     
       
Total
2
1,586
1,586



 
 

 




 
20

 
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)



Troubled Debt Restructurings
Loan term extension
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
                Real Estate Secured
     
Residential 1-4 family
6
1,217
1,217
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development,
Other Land Loans
     
Commercial Real Estate-  Owner Occupied
1
2,114
2,114
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Business Commercial
     
Agricultural
1
129
129
       
Total
8
3,460
3,460
 
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
Total Restructurings
12
7,693
7,693

Troubled Debt Restructurings
That subsequently defaulted
Number of Contracts
 
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
                 Real Estate Secured
     
Residential 1-4 family
     
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development, Other Land Loans
     
Commercial Real Estate-  Owner Occupied
     
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
     
Agricultural
     
       
Total
-
-
-




 

 




 
21

 

Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)




Troubled Debt Restructurings – Nine months ended September  30, 2013
 
Interest only
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
             Real Estate Secured
     
Residential 1-4 family
     
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development,
Other Land Loans
     
Commercial Real Estate-  Owner Occupied
1
1,395
1,395
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
     
Agricultural
     
       
Total
1
1,395
1,395
       


Troubled Debt Restructurings
Below Market Rate
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
                 Real Estate Secured
     
Residential 1-4 family
2
1,264
1,264
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development,
Other Land Loans
     
Commercial Real Estate-  Owner Occupied
     
Commercial Real Estate-  Non Owner Occupied
5
8,687
8,687
Second Mortgages
     
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
     
Agricultural
     
       
Total
7
9,951
9,951




 




 
22

 
Notes to Consolidated Financial Statements
(Unaudited)
(in thousands, except share, per share and percentage data)




Troubled Debt Restructurings
Loan term extension
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
       Real Estate Secured
     
Residential 1-4 family
3
500
500
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development,
Other Land Loans
1
55
55
Commercial Real Estate-  Owner Occupied
     
Commercial Real Estate-  Non Owner Occupied
     
Second Mortgages
1
36
36
Non Real Estate Secured
     
Personal / Consumer
     
Commercial
1
71
71
Agricultural
3
755
755
       
Total
9
1,417
1,417
Troubled Debt Restructurings
All
Number of Contracts
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
Total Restructurings
17
12,763
12,763

Troubled Debt Restructurings
That subsequently defaulted
Number of Contracts
 
Pre- Modification  Outstanding Recorded Investment
Post - Modification Recorded Investment
         Real Estate Secured
     
Residential 1-4 family
     
Equity lines of credit
     
Multifamily
     
Farmland
     
Construction, Land Development, Other Land Loans
     
Commercial Real Estate-  Owner Occupied
     
Commercial Real Estate-  Non Owner Occupied