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Loans and Allowance for Loan Losses (Tables)
 12 Months Ended
Dec. 31, 2013
Receivables [Abstract]  
Summary of Loans
Loans are stated at the principal amount outstanding net of unearned discounts, unearned income and allowance for loan losses.  Unearned income includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method.  Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at December 31, 2013 and 2012 follows (in thousands):
 
2013
 
2012
Construction and land development
$
25,321

 
$
31,341

Farm loans
109,376

 
86,256

1-4 Family residential properties
184,158

 
186,205

Multifamily residential properties
50,174

 
44,863

Commercial real estate
357,726

 
317,321

Loans secured by real estate
726,755

 
665,986

Agricultural loans
64,055

 
60,948

Commercial and industrial loans
168,227

 
160,193

Consumer loans
14,579

 
16,264

All other loans
9,094

 
8,206

Gross loans
982,710

 
911,597

Less:
 

 
 

Net deferred loan fees, premiums and discounts
420

 
744

Allowance for loan losses
13,249

 
11,776

Net loans
$
969,041

 
$
899,077
Allowance for Loan Losses and Recorded Investment in Loans
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2013, 2012 and 2011 (in thousands):
 
 
Commercial/ Commercial Real Estate
 
Agricultural/ Agricultural Real Estate
 
Residential  Real Estate
 
Consumer
 
Unallocated
 
Total
2013
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
9,301

 
$
558

 
$
726

 
$
403

 
$
788

 
$
11,776

Provision charged to expense
1,861

 
(30
)
 
171

 
57

 
134

 
2,193

Losses charged off
(764
)
 
—

 
(141
)
 
(223
)
 
—

 
(1,128
)
Recoveries
248

 
5

 
15

 
140

 
—

 
408

Balance, end of period
$
10,646

 
$
533

 
$
771

 
$
377

 
$
922

 
$
13,249

Ending balance:
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
604

 
$
—

 
$
—

 
$
—

 
$
—

 
$
604

Collectively evaluated for impairment
$
10,042

 
$
533

 
$
771

 
$
377

 
$
922

 
$
12,645

Loans:
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
607,062

 
$
172,979

 
$
187,796

 
$
14,967

 
$
—

 
$
982,804

Ending balance:
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
5,145

 
$
—

 
$
—

 
$
—

 
$
—

 
$
5,145

Collectively evaluated for impairment
$
601,917

 
$
172,979

 
$
187,796

 
$
14,967

 
$
—

 
$
977,659


 

 
Commercial/ Commercial Real Estate
 
Agricultural/ Agricultural Real Estate
 
Residential  Real Estate
 
Consumer
 
Unallocated
 
Total
2012
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of year
$
8,791

 
$
546

 
$
636

 
$
378

 
$
769

 
$
11,120

Provision charged to expense
1,979

 
(47
)
 
580

 
116

 
19

 
2,647

Losses charged off
(1,586
)
 
(12
)
 
(524
)
 
(249
)
 
—

 
(2,371
)
Recoveries
117

 
71

 
34

 
158

 
—

 
380

Balance, end of period
$
9,301

 
$
558

 
$
726

 
$
403

 
$
788

 
$
11,776

Ending balance:
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
$
457

 
$
54

 
$
—

 
$
—

 
$
—

 
$
511

Collectively evaluated for impairment
$
8,844

 
$
504

 
$
726

 
$
403

 
$
788

 
$
11,265

Loans:
 

 
 

 
 

 
 

 
 

 
 

Ending balance
$
569,717

 
$
145,695

 
$
179,309

 
$
16,066

 
$
278

 
$
911,065

Ending balance:
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
$
5,334

 
$
1,230

 
$
—

 
$
—

 
$
—

 
$
6,564

Collectively evaluated for impairment
$
564,383

 
$
144,465

 
$
179,309

 
$
16,066

 
$
278

 
$
904,501

2011
 

 
 

 
 

 
 

 
 

 
 

Allowance for loan losses:
 

 
 

 
 

 
 

 
 

 
 

Balance, beginning of year
$
8,307

 
$
404

 
$
440

 
$
392

 
$
850

 
$
10,393

Provision charged to expense
2,309

 
205

 
546

 
122

 
(81
)
 
3,101

Losses charged off
(3,077
)
 
(66
)
 
(363
)
 
(254
)
 
—

 
(3,760
)
Recoveries
1,252

 
3

 
13

 
118

 
—

 
1,386

Balance, end of year
$
8,791

 
$
546

 
$
636

 
$
378

 
$
769

 
$
11,120

Ending balance:
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
$
575

 
$
—

 
$
—

 
$
—

 
$
—

 
$
575

Collectively evaluated for impairment
$
8,216

 
$
546

 
$
636

 
$
378

 
$
769

 
$
10,545

Loans:
 

 
 

 
 

 
 

 
 

 
 

Ending balance
$
505,693

 
$
130,595

 
$
185,151

 
$
16,270

 
$
22,365

 
$
860,074

Ending balance:
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
$
4,719

 
$
1,149

 
$
—

 
$
—

 
$
—

 
$
5,868

Collectively evaluated for impairment
$
500,974

 
$
129,446

 
$
185,151

 
$
16,270

 
$
22,365

 
$
854,206
Credit Risk Profile of the Company's Loan Portfolio
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of December 31, 2013 and 2012 (in thousands):

 
Construction &
Land Development
 
Farm Loans
 
1-4 Family Residential
Properties
 
Multifamily Residential
Properties
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Pass
$
23,839

 
$
27,217

 
$
108,262

 
$
82,516

 
$
182,593

 
$
183,880

 
$
50,174

 
$
44,863

Watch
—

 
2,135

 
231

 
2,662

 
637

 
424

 
—

 
—

Substandard
1,482

 
1,989

 
912

 
1,093

 
1,531

 
2,194

 
—

 
—

Doubtful
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total
$
25,321

 
$
31,341

 
$
109,405

 
$
86,271

 
$
184,761

 
$
186,498

 
$
50,174

 
$
44,863


 
Commercial Real Estate (Nonfarm/Nonresidential)
 
Agricultural Loans
 
Commercial & Industrial Loans
 
Consumer Loans
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Pass
$
335,284

 
$
287,794

 
$
62,439

 
$
56,899

 
$
158,107

 
$
157,461

 
$
14,558

 
$
16,236

Watch
17,998

 
24,213

 
193

 
958

 
3,515

 
1,588

 
—

 
14

Substandard
3,717

 
4,315

 
1,496

 
3,157

 
6,731

 
1,250

 
21

 
14

Doubtful
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Total
$
356,999

 
$
316,322

 
$
64,128

 
$
61,014

 
$
168,353

 
$
160,299

 
$
14,579

 
$
16,264


 
All Other Loans
 
Total Loans
 
2013
 
2012
 
2013
 
2012
Pass
$
9,084

 
$
8,193

 
$
944,340

 
$
865,059

Watch
—

 
—

 
22,574

 
31,994

Substandard
—

 
—

 
15,890

 
14,012

Doubtful
—

 
—

 
—

 
—

Total
$
9,084

 
$
8,193

 
$
982,804

 
$
911,065
Loan Portfolio Aging Analysis
The following table presents the Company’s loan portfolio aging analysis at December 31, 2013 and 2012 (in thousands):
 
30-59 days Past Due
 
60-89 days Past Due
 
90 Days
or More Past Due
 
Total
Past Due
 
Current
 
Total Loans Receivable
 
Total Loans > 90 days & Accruing
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
$
—

 
$
—

 
$
—

 
$
—

 
$
25,321

 
$
25,321

 
$
—

Farm loans
299

 
—

 
—

 
299

 
109,106

 
109,405

 
—

1-4 Family residential properties
326

 
146

 
371

 
843

 
183,918

 
184,761

 
—

Multifamily residential properties
—

 
—

 
—

 
—

 
50,174

 
50,174

 
—

Commercial real estate
568

 
1,030

 
145

 
1,743

 
355,256

 
356,999

 
—

Loans secured by real estate
1,193

 
1,176

 
516

 
2,885

 
723,775

 
726,660

 
—

Agricultural loans
122

 
49

 
—

 
171

 
63,957

 
64,128

 
—

Commercial and industrial loans
113

 
88

 
62

 
263

 
168,090

 
168,353

 
—

Consumer loans
83

 
25

 
4

 
112

 
14,467

 
14,579

 
—

All other loans
—

 
—

 
—

 
—

 
9,084

 
9,084

 
—

Total loans
$
1,511

 
$
1,338

 
$
582

 
$
3,431

 
$
979,373

 
$
982,804

 
$
—

December 31, 2012
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
—

 
$
53

 
$
—

 
$
53

 
$
31,288

 
$
31,341

 
$
—

Farm loans
592

 
—

 
293

 
885

 
85,386

 
86,271

 
—

1-4 Family residential properties
1,351

 
40

 
944

 
2,335

 
184,163

 
186,498

 
—

Multifamily residential properties
—

 
—

 
—

 
—

 
44,863

 
44,863

 
—

Commercial real estate
262

 
911

 
255

 
1,428

 
314,894

 
316,322

 
—

Loans secured by real estate
2,205

 
1,004

 
1,492

 
4,701

 
660,594

 
665,295

 
—

Agricultural loans
—

 
—

 
620

 
620

 
60,394

 
61,014

 
—

Commercial and industrial loans
413

 
275

 
53

 
741

 
159,558

 
160,299

 
—

Consumer loans
119

 
24

 
39

 
182

 
16,082

 
16,264

 
—

All other loans
—

 
—

 
—

 
—

 
8,193

 
8,193

 
—

Total loans
$
2,737

 
$
1,303

 
$
2,204

 
$
6,244

 
$
904,821

 
$
911,065

 
$
—
Impaired Loans
The following tables present impaired loans as of December 31, 2013 and 2012 (in thousands):

 
2013
 
2012
 
Recorded
Balance
 
Unpaid Principal Balance
 
Specific Allowance
 
Recorded
Balance
 
Unpaid Principal Balance
 
Specific Allowance
Loans with a specific allowance:
 
 
 
 
 
 
 
 
 
 
 
Construction and land development
$
614

 
$
614

 
$
76

 
$
1,114

 
$
1,529

 
$
295

Farm loans
—

 
—

 
—

 
—

 
—

 
—

1-4 Family residential properties
—

 
—

 
—

 
636

 
723

 
162

Multifamily residential properties
—

 
—

 
—

 
—

 
—

 
—

Commercial real estate
1,096

 
1,096

 
301

 
—

 
—

 
—

Loans secured by real estate
1,710

 
1,710

 
377

 
1,750

 
2,252

 
457

Agricultural loans
—

 
—

 
—

 
310

 
310

 
54

Commercial and industrial loans
275

 
275

 
227

 
—

 
—

 
—

Consumer loans
—

 
—

 
—

 
—

 
—

 
—

All other loans
—

 
—

 
—

 
—

 
—

 
—

Total loans
$
1,985

 
$
1,985

 
$
604

 
$
2,060

 
$
2,562

 
$
511

Loans without a specific allowance:
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
869

 
$
1,727

 
$
—

 
$
408

 
$
694

 
$
—

Farm loans
105

 
113

 
—

 
418

 
429

 
—

1-4 Family residential properties
1,110

 
1,558

 
—

 
1,269

 
1,792

 
—

Multifamily residential properties
—

 
—

 
—

 
—

 
—

 
—

Commercial real estate
1,750

 
1,778

 
—

 
2,063

 
2,253

 
—

Loans secured by real estate
3,834

 
5,176

 
—

 
4,158

 
5,168

 
—

Agricultural loans
—

 
—

 
—

 
620

 
1,568

 
—

Commercial and industrial loans
613

 
946

 
—

 
704

 
—

 
—

Consumer loans
37

 
51

 
—

 
51

 
58

 
—

All other loans
—

 
—

 
—

 
—

 
—

 
—

Total loans
$
4,484

 
$
6,173

 
$
—

 
$
5,533

 
$
6,794

 
$
—

Total loans:
 

 
 

 
 

 
 

 
 

 
 

Construction and land development
$
1,483

 
$
2,341

 
$
76

 
$
1,522

 
$
2,223

 
$
295

Farm loans
105

 
113

 
—

 
418

 
429

 
—

1-4 Family residential properties
1,110

 
1,558

 
—

 
1,905

 
2,515

 
162

Multifamily residential properties
—

 
—

 
—

 
—

 
—

 
—

Commercial real estate
2,846

 
2,874

 
301

 
2,063

 
2,253

 
—

Loans secured by real estate
5,544

 
6,886

 
377

 
5,908

 
7,420

 
457

Agricultural loans
—

 
—

 
—

 
930

 
1,878

 
54

Commercial and industrial loans
888

 
1,221

 
227

 
704

 
—

 
—

Consumer loans
37

 
51

 
—

 
51

 
58

 
—

All other loans
—

 
—

 
—

 
—

 
—

 
—

Total loans
$
6,469

 
$
8,158

 
$
604

 
$
7,593

 
$
9,356

 
$
511
Impaired loans by portfolio class
The following tables present average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2013, 2012 and 2011 (in thousands):
 
2013
 
2012
 
2011
 
Average Investment
in Impaired Loans
 
Interest Income Recognized
 
Average Investment
in Impaired Loans
 
Interest Income Recognized
 
Average Investment
in Impaired Loans
 
Interest Income Recognized
Construction and land development
$
1,565

 
$
—

 
$
1,520

 
$
—

 
$
841

 
$
—

Farm loans
107

 
—

 
421

 
—

 
532

 
—

1-4 Family residential properties
1,248

 
5

 
1,948

 
7

 
1,755

 
—

Multifamily residential properties
—

 
—

 
—

 
—

 
—

 
—

Commercial real estate
2,895

 
3

 
2,100

 
—

 
2,688

 
22

Loans secured by real estate
5,815

 
8

 
5,989

 
7

 
5,816

 
22

Agricultural loans
16

 
1

 
1,071

 
—

 
673

 
—

Commercial and industrial loans
1,240

 
10

 
755

 
—

 
1,199

 
14

Consumer loans
47

 
12

 
56

 
15

 
10

 
—

All other loans
—

 
—

 
—

 
—

 
—

 
—

Total loans
$
7,118

 
$
31

 
$
7,871

 
$
22

 
$
7,698

 
$
36



The amount of interest income recognized by the Company within the periods stated above was due to loans modified in a troubled debt restructuring that remained on accrual status.  The balance of loans modified in a troubled debt restructuring included in the impaired loans stated above that were still accruing was $101,000 of 1-4 Family residential properties, $39,000 of commercial real estate, $182,000 of commercial and industrial and $26,000 of consumer loans at December 31, 2013 and $6,000 of 1-4 Family residential properties and $14,000 of consumer loans at December 31, 2012. For the years ended December 31, 2013, 2012 and 2011, the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material.
Nonaccrual Loans
The following table presents the Company’s recorded balance of nonaccrual loans at December 31, 2013 and December 31, 2012 (in thousands). This table excludes purchased impaired loans and performing troubled debt restructurings.
 
2013
 
2012
Construction and land development
$
1,483

 
$
1,522

Farm loans
105

 
418

1-4 Family residential properties
1,009

 
1,899

Multifamily residential properties
—

 
—

Commercial real estate
2,807

 
2,063

Loans secured by real estate
5,404

 
5,902

Agricultural loans
—

 
930

Commercial and industrial loans
706

 
704

Consumer loans
11

 
37

All other loans
—

 
—

Total loans
$
6,121

 
$
7,573
Recorded Balance of Troubled Debt Restructurings
The following table presents the Company’s recorded balance of troubled debt restructurings at December 31, 2013 and 2012 (in thousands).
Troubled debt restructurings:
2013
 
2012
Construction and land development
$
1,482

 
$
1,522

1-4 Family residential properties
306

 
445

Commercial real estate
899

 
950

Loans secured by real estate
2,687

 
2,917

Commercial and industrial loans
487

 
408

 Consumer Loans
26

 
14

Total
$
3,200

 
$
3,339

Performing troubled debt restructurings:
 

 
 

1-4 Family residential properties
$
101

 
$
6

Commercial real estate
39

 
—

Loans secured by real estate
140

 
6

Commercial and industrial loans
182

 
—

 Consumer Loans
26

 
14

Total
$
348

 
$
20