IMPAIRED LOANS AND ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2015

Loans and Leases Receivable, Allowance [Abstract]

Impaired Loans and Allowance for Loan Losses [Text Block]

NOTE F — IMPAIRED LOANS AND ALLOWANCE FOR LOAN LOSSES

During the three months ending March 31, 2015 and 2014, newly identified troubled debt restructurings (“TDRs”) totaled $1.0 million and $0.4 million, respectively. Loans that are modified, but where full collection under the modified terms is doubtful are classified as nonaccrual loans from the date of modification.

The Company’s TDR concessions granted generally do not include forgiveness of principal balances. Loan modifications are not reported in calendar years after modification if the loans were modified at an interest rate equal to the yields of new loan originations with comparable risk and the loans are performing based on the terms of the restructuring agreements.

When a loan is modified as a TDR, there is not a direct, material impact on the loans within the Consolidated Balance Sheet, as principal balances are generally not forgiven. Most loans prior to modification were classified as an impaired loan and the allowance for loan losses is determined in accordance with Company policy.

The following table presents loans that were modified within the three months ending March 31, 2015:

			Pre-		Post-
			Modification		Modification
	Number		Outstanding		Outstanding		Specific		Valuation
	of		Recorded		Recorded		Reserve		Allowance
(Dollars in thousands)	Contracts		Investment		Investment		Recorded		Recorded
Commercial real estate		2	$	911	$	859	$	0	$	52
		2	$	911	$	859	$	0	$	52

No accruing loans that were restructured within the twelve months preceding March 31, 2015 and March 31, 2014, defaulted during the three months ended March 31, 2015 and 2014, respectively. The Company considers a loan to have defaulted when it becomes 60 days or more delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to other real estate owned. A defaulted TDR is generally placed on nonaccrual and specific allowance for loan loss is assigned in accordance with the Company’s policy. 

As of March 31, 2015 and December 31, 2014, the Company’s recorded investment in impaired loans and the related valuation allowance were as follows:

	March 31, 2015
			Unpaid		Related
	Recorded		Principal		Valuation
(Dollars in thousands)	Investment		Balance		Allowance
Impaired Loans with No Related Allowance Recorded:
Construction and land development	$	1,876	$	2,292	$	0
Commercial real estate		2,696		4,266		0
Residential real estate		11,183		15,438		0
Commercial and financial		117		117		0
Consumer		133		188		0
Impaired Loans with an Allowance Recorded:
Construction and land development		772		822		136
Commercial real estate		7,611		7,680		467
Residential real estate		15,984		16,859		2,569
Commercial and financial		0		0		0
Consumer		515		521		151
Total:
Construction and land development		2,648		3,114		136
Commercial real estate		10,307		11,946		467
Residential real estate		27,167		32,297		2,569
Commercial and financial		117		117		0
Consumer		648		709		151
	$	40,887	$	48,183	$	3,323

	December 31, 2014
			Unpaid		Related
	Recorded		Principal		Valuation
(Dollars in thousands)	Investment		Balance		Allowance
Impaired Loans with No Related Allowance Recorded:
Construction and land development	$	1,824	$	2,239	$	0
Commercial real estate		3,087		4,600		0
Residential real estate		11,898		16,562		0
Commercial and financial		120		120		0
Consumer		65		93		0
Impaired Loans with an Allowance Recorded:
Construction and land development		886		931		159
Commercial real estate		8,359		8,469		529
Residential real estate		16,804		17,693		2,741
Consumer		534		562		112
Total:
Construction and land development		2,710		3,170		159
Commercial real estate		11,446		13,069		529
Residential real estate		28,702		34,255		2,741
Commercial and financial		120		120		0
Consumer		599		655		112
	$	43,577	$	51,269	$	3,541

For the three months ended March 31, 2015 and 2014, the Company’s average recorded investments in impaired loans and related interest income were as follows:

	Three Months Ended				Three Months Ended
	March 31, 2015				March 31, 2014
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
Impaired Loans with No Related Allowance Recorded:
Construction & land development	$	1,841	$	18	$	2,357	$	27
Commercial real estate		2,957		4		3,240		21
Residential real estate		11,660		35		12,605		127
Commercial and financial		119		2		102		0
Consumer		87		0		387		5
Impaired Loans with an Allowance Recorded:
Construction & land development		848		5		1,256		13
Commercial real estate		8,110		74		8,753		151
Residential real estate		16,530		99		22,925		213
Commercial and financial		0		0		63		2
Consumer		528		6		544		9
Total:
Construction & land development		2,689		23		3,613		40
Commercial real estate		11,067		78		11,993		172
Residential real estate		28,190		134		35,530		340
Commercial and financial		119		2		165		2
Consumer		615		6		931		14
	$	42,680	$	243	$	52,232	$	568

Impaired loans also include loans that have been modified in troubled debt restructurings where concessions to borrowers who experienced financial difficulties have been granted. At March 31, 2015 and December 31, 2014, accruing TDRs totaled $23.8 million and $25.0 million, respectively.

Interest payments received on impaired loans are recorded as interest income unless collection of the remaining recorded investment is doubtful at which time payments received are recorded as reductions to principal. For the three months ended March 31, 2015 and 2014, the Company recorded $243,000 and $568,000, respectively, in interest income on impaired loans.

For impaired loans whose impairment is measured based on the present value of expected future cash flows, a total of $72,000 and $65,000, respectively, was included in interest income for the three months ended March 31, 2015 and 2014, and represents the change in present value attributable to the passage of time.

Activity in the allowance for loan losses (excluding PCI loans) for the three-month periods ended March 31, 2015 and 2014 is summarized as follows:

	Allowance for Loan Losses for the Three Months Ended March 31, 2015
			Provision						Net
	Beginning		for Loan		Charge-				(Charge-Offs)		Ending
(Dollars in thousands)	Balance		Losses		Offs		Recoveries		Recoveries		Balance
Construction & land development	$	722	$	120	$	(47)	$	47	$	0	$	842
Commercial real estate		4,528		230		(156)		225		69		4,827
Residential real estate		9,784		(367)		(167)		416		249		9,666
Commercial and financial		1,179		124		(19)		90		71		1,374
Consumer		794		297		(194)		22		(172)		919
	$	17,007	$	404	$	(583)	$	800	$	217	$	17,628

	Allowance for Loan Losses for the Three Months Ended March 31, 2014
			Provision						Net
	Beginning		for Loan		Charge-				(Charge-Offs)		Ending
(Dollars in thousands)	Balance		Losses		Offs		Recoveries		Recoveries		Balance
Construction & land development	$	808	$	(36)	$	(3)	$	27	$	24	$	796
Commercial real estate		6,160		441		(84)		236		152		6,753
Residential real estate		11,659		(1,378)		(112)		189		77		10,358
Commercial and financial		710		220		(108)		31		(77)		853
Consumer		731		18		(57)		20		(37)		712
	$	20,068	$	(735)	$	(364)	$	503	$	139	$	19,472

The allowance for loan losses is composed of specific allowances for certain impaired loans and general allowances grouped into loan pools based on similar characteristics. The Company’s loan portfolio (excluding PCI loans) and related allowance at March 31, 2015 and December 31, 2014 is shown in the following tables: 

	At March 31, 2015
	Individually Evaluated for				Collectively Evaluated for
	Impairment				Impairment				Total
	Carrying		Associated		Carrying		Associated		Carrying		Associated
(Dollars in thousands)	Value		Allowance		Value		Allowance		Value		Allowance
Construction & land development	$	2,648	$	136	$	96,221	$	706	$	98,869	$	842
Commercial real estate		10,307		467		834,933		4,360		845,240		4,827
Residential real estate		27,167		2,569		655,732		7,097		682,899		9,666
Commercial and financial		117		0		162,670		1,374		162,787		1,374
Consumer		648		151		56,925		768		57,573		919
	$	40,887	$	3,323	$	1,806,481	$	14,305	$	1,847,368	$	17,628

	At December 31, 2014
	Individually Evaluated for				Collectively Evaluated for
	Impairment				Impairment				Total
	Carrying		Associated		Carrying		Associated		Carrying		Associated
(Dollars in thousands)	Value		Allowance		Value		Allowance		Value		Allowance
Construction & land development	$	2,710	$	159	$	82,769	$	563	$	85,479	$	722
Commercial real estate		11,446		529		821,609		3,999		833,055		4,528
Residential real estate		28,702		2,741		657,344		7,043		686,046		9,784
Commercial and financial		120		0		155,964		1,179		156,084		1,179
Consumer		599		112		52,808		682		53,407		794
	$	43,577	$	3,541	$	1,770,494	$	13,466	$	1,814,071	$	17,007

Loans collectively evaluated for impairment at March 31, 2015 and December 31, 2014 included loans acquired from BANKshares on October 1, 2014 that are not PCI loans. These loans are performing loans recorded at estimated fair value at the acquisition date. The fair value adjustment represents the total fair value discount of each PUL, is accreted into interest income over the remaining lives of the related loans on a level yield basis, and remained adequate at March 31, 2015.

The table below summarizes PCI loans that were individually evaluated for impairment based on expected cash flows at March 31, 2015 and December 31, 2014:

	PCI Loans Individually Evaluated for Impairment
	March 31, 2015				December 31, 2014
	Carrying		Associated		Carrying		Associated
(Dollars in thousands)	Value		Allowance		Value		Allowance
Construction & land development	$	1,472	$	81	$	1,557	$	43
Commercial real estate		3,684		5		4,092		3
Residential real estate		699		5		851		18
Commercial and financial		1,263		2		1,312		0
Consumer		1		0		2		0
	$	7,119	$	93	$	7,814	$	64