XML 31 R11.htm IDEA: XBRL DOCUMENT v3.6.0.2
LOANS
 12 Months Ended
Dec. 31, 2016
Receivables [Abstract]  
LOANS
LOANS
 
The loan portfolio consisted of the following (in thousands):
 
 
December 31,
 
 
2016
 
2015
Commercial, financial and agricultural
 
$
459,574

 
$
454,028

Real estate – construction
 
100,959

 
74,952

Real estate – commercial
 
481,155

 
471,141

Real estate – residential
 
157,872

 
149,064

Installment loans to individuals
 
82,660

 
111,009

Lease financing receivable
 
1,095

 
1,968

Other
 
767

 
1,483

 
 
1,284,082

 
1,263,645

Less allowance for loan losses
 
(24,372
)
 
(19,011
)
 
 
$
1,259,710

 
$
1,244,634


 
The amounts reported in other loans at December 31, 2016 and 2015 includes the overdrawn demand deposit accounts and loans primarily made to non-profit entities reported for each period.
 
An analysis of the activity in the allowance for loan losses is as follows (in thousands):
 
 
December 31,
 
 
2016
 
2015
 
2014
Balance, beginning of year
 
$
19,011

 
$
11,226

 
$
8,779

Provision for loan losses
 
10,600

 
13,900

 
5,625

Recoveries
 
776

 
459

 
738

Loans charged-off
 
(6,015
)
 
(6,574
)
 
(3,916
)
Balance, end of year
 
$
24,372

 
$
19,011

 
$
11,226



The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment.  At December 31, 2016, one industry segment concentration, the oil and gas industry, aggregates more than 10% of the loan portfolio.  The Company’s exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $237.4 million, or 18.5% of total loans.  Of the $237.4 million loans to borrowers in the oil and gas industry, $31.9 million or 13.4% were on nonaccrual status at December 31, 2016. Additionally, the Company’s exposure to CRE loans.  At December 31, 2016, CRE loans (including commercial construction and multifamily loans) totaled approximately $559.4 million, 48% of which are secured by owner-occupied commercial properties.  Of the $559.4 million in loans secured by commercial real estate, $28.7 million or 5.1% were on nonaccrual status at December 31, 2016.

A rollforward of the activity within the allowance for loan losses by loan type and recorded investment in loans for the years ended December 31, 2016 and 2015 is as follows (in thousands):
 
 
December 31, 2016
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
Coml, fin, and agric
 
Construction
 
Commercial
 
Residential
 
Installment loans to individuals
 
Lease financing receivable
 
Other
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
11,268

 
$
819

 
$
4,614

 
$
816

 
$
1,468

 
$
14

 
$
12

 
$
19,011

Charge-offs
 
(4,366
)
 
—

 
(218
)
 
(24
)
 
(1,407
)
 
—

 
—

 
(6,015
)
Recoveries
 
459

 
—

 
123

 
5

 
189

 
—

 
—

 
776

Provision
 
8,696

 
(234
)
 
865

 
143

 
1,145

 
(9
)
 
(6
)
 
10,600

Ending balance
 
$
16,057

 
$
585

 
$
5,384

 
$
940

 
$
1,395

 
$
5

 
$
6

 
$
24,372

Ending balance: individually evaluated for impairment
 
$
4,369

 
$
—

 
$
2,216

 
$
260

 
$
308

 
$
—

 
$
—

 
$
7,153

Ending balance: collectively evaluated for impairment
 
$
11,688

 
$
585

 
$
3,168

 
$
680

 
$
1,087

 
$
5

 
$
6

 
$
17,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
459,574

 
$
100,959

 
$
481,155

 
$
157,872

 
$
82,660

 
$
1,095

 
$
767

 
$
1,284,082

Ending balance: individually evaluated for impairment
 
$
31,473

 
$
9

 
$
28,689

 
$
1,826

 
$
541

 
$
—

 
$
—

 
$
62,538

Ending balance: collectively evaluated for impairment
 
$
428,101

 
$
100,950

 
$
451,887

 
$
155,975

 
$
82,119

 
$
1,095

 
$
767

 
$
1,220,894

Ending balance: loans acquired with deteriorated credit quality
 
$
—

 
$
—

 
$
579

 
$
71

 
$
—

 
$
—

 
$
—

 
$
650

 
 
December 31, 2015
 
 
 
 
Real Estate
 
 
 
 
 
 
 
 
 
 
Coml, fin, and agric
 
Construction
 
Commercial
 
Residential
 
Installment loans to individuals
 
Lease financing receivable
 
Other
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
5,729

 
$
954

 
$
2,402

 
$
810

 
$
1,311

 
$
16

 
$
4

 
$
11,226

Charge-offs
 
(4,936
)
 
(105
)
 
(183
)
 
(87
)
 
(1,263
)
 
—

 
—

 
(6,574
)
Recoveries
 
235

 
3

 
26

 
12

 
183

 
—

 
—

 
459

Provision
 
10,240

 
(33
)
 
2,369

 
81

 
1,237

 
(2
)
 
8

 
13,900

Ending balance
 
$
11,268

 
$
819

 
$
4,614

 
$
816

 
$
1,468

 
$
14

 
$
12

 
$
19,011

Ending balance: individually evaluated for impairment
 
$
961

 
$
—

 
$
1,585

 
$
160

 
$
221

 
$
—

 
$
—

 
$
2,927

Ending balance: collectively evaluated for impairment
 
$
10,307

 
$
819

 
$
3,029

 
$
656

 
$
1,247

 
$
14

 
$
12

 
$
16,084

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending balance
 
$
454,028

 
$
74,952

 
$
471,141

 
$
149,064

 
$
111,009

 
$
1,968

 
$
1,483

 
$
1,263,645

Ending balance: individually evaluated for impairment
 
$
27,718

 
$
37

 
$
19,890

 
$
1,903

 
$
404

 
$
—

 
$
—

 
$
49,952

Ending balance: collectively evaluated for impairment
 
$
426,310

 
$
74,915

 
$
450,631

 
$
147,080

 
$
110,605

 
$
1,968

 
$
1,483

 
$
1,212,992

Ending balance: loans acquired with deteriorated credit quality
 
$
—

 
$
—

 
$
620

 
$
81

 
$
—

 
$
—

 
$
—

 
$
701



An aging analysis of past due loans (including both accruing and non-accruing loans) is as follows (in thousands):
 
 
December 31, 2016
 
 
30-59 Days Past Due
 
60-89 Days Past Due
 
Greater than 90 Days Past Due
 
Total Past Due
 
Current
 
Total Loans
 
Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural
 
$
2,297

 
$
902

 
$
31,425

 
$
34,624

 
$
424,950

 
459,574

 
$
96

Real estate - construction
 
2,613

 
399

 
9

 
3,021

 
97,938

 
100,959

 
—

Real estate - commercial
 
5,159

 
1,931

 
25,408

 
32,498

 
448,657

 
481,155

 
140

Real estate - residential
 
1,956

 
207

 
1,553

 
3,716

 
154,156

 
157,872

 
16

Installment loans to individuals
 
756

 
36

 
538

 
1,330

 
81,330

 
82,660

 
16

Lease financing receivable
 
—

 
—

 
—

 
—

 
1,095

 
1,095

 
—

Other
 
89

 
5

 
—

 
94

 
673

 
767

 
—

 
 
$
12,870

 
$
3,480

 
$
58,933

 
$
75,283

 
$
1,208,799

 
$
1,284,082

 
$
268

 
 
 
December 31, 2015
 
 
30-59 Days Past Due
 
60-89 Days Past Due
 
Greater than 90 Days Past Due
 
Total Past Due
 
Current
 
Total Loans
 
Recorded Investment > 90 days and Accruing
Commercial, financial, and agricultural
 
$
1,362

 
$
2,317

 
$
25,696

 
$
29,375

 
$
424,653

 
$
454,028

 
$
59

Real estate - construction
 
1,047

 
—

 
12

 
1,059

 
73,893

 
74,952

 
—

Real estate - commercial
 
1,164

 
514

 
19,512

 
21,190

 
449,951

 
471,141

 
—

Real estate - residential
 
1,703

 
367

 
1,563

 
3,633

 
145,431

 
149,064

 
19

Installment loans to individuals
 
1,022

 
244

 
409

 
1,675

 
109,334

 
111,009

 
69

Lease financing receivable
 
—

 
—

 
—

 
—

 
1,968

 
1,968

 
—

Other
 
101

 
4

 
—

 
105

 
1,378

 
1,483

 
—

 
 
$
6,399

 
$
3,446

 
$
47,192

 
$
57,037

 
$
1,206,608

 
$
1,263,645

 
$
147



Non-accrual loans are as follows (in thousands): 
 
 
December 31,
 
 
2016
 
2015
Commercial, financial and agricultural
 
$
31,461

 
$
27,705

Real estate - construction
 
9

 
37

Real estate - commercial
 
28,688

 
19,907

Real estate - residential
 
1,881

 
1,998

Installment loans to individuals
 
541

 
404

Lease financing receivable
 
—

 
—

Other
 
—

 
—

 
 
$
62,580

 
$
50,051


 
The amount of interest that would have been recorded on nonaccrual loans, had the loans not been classified as nonaccrual, totaled approximately $3.4 million, $2.0 million, and $594,000 for the years ended December 31, 2016, 2015, and 2014.  Interest actually received on nonaccrual loans at December 31, 2016, 2015, and 2014 was $168,000, $47,000, and $105,000, respectively.
 
Loans that are individually evaluated for impairment are as follows (in thousands):
 
 
December 31, 2016
 
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
 
$
15,101

 
$
15,428

 
$
—

 
$
18,815

 
$
191

Real estate - construction
 
9

 
9

 
—

 
23

 
—

Real estate - commercial
 
12,710

 
12,710

 
—

 
9,297

 
64

Real estate - residential
 
903

 
903

 
—

 
1,134

 
—

Installment loans to individuals
 
73

 
87

 
—

 
54

 
1

Subtotal:
 
28,796

 
29,137

 
—

 
29,323

 
256

With an allowance recorded:
 
 

 
 

 
 

 
 

 
 

Commercial, financial, and agricultural
 
16,372

 
16,470

 
4,369

 
10,781

 
42

Real estate - commercial
 
15,979

 
15,979

 
2,216

 
14,992

 
28

Real estate - residential
 
923

 
923

 
260

 
730

 
—

Installment loans to individuals
 
468

 
478

 
308

 
419

 
11

Subtotal:
 
33,742

 
33,850

 
7,153

 
26,922

 
81

Totals:
 
 

 
 

 
 

 
 

 
 

Commercial
 
60,162

 
60,587

 
6,585

 
53,885

 
325

Construction
 
9

 
9

 
—

 
23

 
—

Residential
 
1,826

 
1,826

 
260

 
1,864

 
—

Consumer
 
541

 
565

 
308

 
473

 
12

Grand total:
 
$
62,538

 
$
62,987

 
$
7,153

 
$
56,245

 
$
337

 
 
December 31, 2015
 
 
Recorded Investment
 
Unpaid Principal Balance
 
Related Allowance
 
Average Recorded Investment
 
Interest Income Recognized
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
 
$
22,529

 
$
22,793

 
$
—

 
$
11,484

 
$
745

Real estate - construction
 
37

 
37

 
—

 
45

 
—

Real estate - commercial
 
5,886

 
5,886

 
—

 
3,903

 
97

Real estate - residential
 
1,365

 
1,385

 
—

 
954

 
17

Installment loans to individuals
 
34

 
34

 
—

 
56

 
—

Subtotal:
 
29,851

 
30,135

 
—

 
16,442

 
859

With an allowance recorded:
 
 

 
 

 
 

 
 

 
 

Commercial, financial, and agricultural
 
5,189

 
6,373

 
961

 
3,704

 
138

Real estate - commercial
 
14,004

 
14,004

 
1,585

 
9,236

 
161

Real estate - residential
 
538

 
538

 
160

 
533

 
7

Installment loans to individuals
 
370

 
384

 
221

 
334

 
8

Subtotal:
 
20,101

 
21,299

 
2,927

 
13,807

 
314

Totals:
 
 

 
 

 
 

 
 

 
 

Commercial
 
47,608

 
49,056

 
2,546

 
28,327

 
1,141

Construction
 
37

 
37

 
—

 
45

 
—

Residential
 
1,903

 
1,923

 
160

 
1,487

 
24

Consumer
 
404

 
418

 
221

 
390

 
8

Grand total:
 
$
49,952

 
$
51,434

 
$
2,927

 
$
30,249

 
$
1,173



Loans are categorized into risk categories based on relevant information about the ability of borrowers to serve their debt, such as: current financial information, historical payment experience, credit documentation, public information, current economic trends, and other factors. Loans are analyzed individually and classified according to their credit risk. This analysis is performed on a continuous basis. The following definitions are used for risk ratings:

Special Mention: Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status, and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.

Substandard: Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. Currently the borrower maintains the capacity to service the debt. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.

Doubtful: Specific weaknesses characterized as Substandard exist that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as Doubtful will usually be placed on non-accrual status. The probability of some loss is extremely high but because of certain important and reasonably specific factors, the amount of loss cannot be determined.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be Pass rated loans.







































The following tables present the classes of loans by risk rating (in thousands):
 
 
December 31, 2016
Commercial Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
 
Real estate - commercial
 
Total
 
Percentage of Total
Pass
 
$
346,246

 
$
420,970

 
$
767,216

 
81.56
%
Special mention
 
22,611

 
23,085

 
45,696

 
4.86
%
Substandard
 
90,300

 
37,100

 
127,400

 
13.54
%
Doubtful
 
417

 
—

 
417

 
0.04
%
 
 
$
459,574

 
$
481,155

 
$
940,729

 
100.00
%
 
Construction Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate - construction
 
Percentage of Total
Pass
 
 
 
 
 
$
100,775

 
99.82
%
Special mention
 
 
 
 
 
—

 
—
%
Substandard
 
 
 
 
 
184

 
0.18
%
 
 

 

 
$
100,959

 
100.00
%

Residential Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate - Residential
 
Percentage of Total
Pass
 

 

 
$
153,403

 
97.17
%
Special mention
 

 

 
1,181

 
0.75
%
Substandard
 

 

 
3,288

 
2.08
%
 
 

 

 
$
157,872

 
100.00
%
 
Consumer and Commercial Credit Exposure
 
 
 
 
 
 
 
 
 
 
Credit Risk Profile Based on Payment Activity
 
 
 
 
 
 
 
 
 
 
 
 
Installment loans to individuals
 
Lease financing receivable
 
Other
 
Total
 
Percentage of Total
Performing
 
$
82,103

 
$
1,095

 
$
767

 
$
83,965

 
99.34
%
Nonperforming
 
557

 
—

 
—

 
557

 
0.66
%
 
 
$
82,660

 
$
1,095

 
$
767

 
$
84,522

 
100.00
%

 
 
December 31, 2015
Commercial Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
Commercial, financial, and agricultural
 
Real estate - commercial
 
Total
 
Percentage of Total
Pass
 
$
383,897

 
$
412,141

 
$
796,038

 
86.04
%
Special mention
 
32,506

 
28,217

 
60,723

 
6.55
%
Substandard
 
37,353

 
30,783

 
68,136

 
7.36
%
Doubtful
 
272

 
—

 
272

 
0.03
%
 
 
$
454,028

 
$
471,141

 
$
925,169

 
100.00
%
 
Construction Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate - construction
 
Percentage of Total
Pass
 
 
 
 
 
$
74,794

 
99.79
%
Special mention
 
 
 
 
 
34

 
0.04
%
Substandard
 
 
 
 
 
124

 
0.17
%
 
 
 
 
 
 
$
74,952

 
100.00
%

Residential Credit Exposure
 
 
 
 
 
 
 
 
Credit Risk Profile by Creditworthiness Category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate - Residential
 
Percentage of Total
Pass
 
 
 
 
 
$
144,704

 
97.08
%
Special mention
 
 
 
 
 
1,225

 
0.82
%
Substandard
 
 
 
 
 
3,135

 
2.10
%
 
 
 
 
 
 
$
149,064

 
100.00
%
 
Consumer and Commercial Credit Exposure
 
 
 
 
 
 
 
 
 
 
Credit Risk Profile Based on Payment Activity
 
 
 
 
 
 
 
 
 
 
 
 
Installment loans to individuals
 
Lease financing receivable
 
Other
 
Total
 
Percentage of Total
Performing
 
$
110,536

 
$
1,968

 
$
1,483

 
$
113,987

 
99.59
%
Nonperforming
 
473

 
—

 
—

 
473

 
0.41
%
 
 
$
111,009

 
$
1,968

 
$
1,483

 
$
114,460

 
100.00
%

Troubled Debt Restructurings
 
A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise consider.  The Company grants the concession in an attempt to protect as much of its investment as possible.
 
Information about the Company’s TDRs is as follows (in thousands):
 
 
 
December 31, 2016
 
 
Current
 
Past Due Greater Than 30 Days
 
Nonaccrual TDRs
 
Total TDRs
Commercial, financial and agricultural
 
$
12

 
$
—

 
$
24,331

 
$
24,343

Real estate - commercial
 
—

 
140

 
808

 
948

 
 
$
12

 
$
140

 
$
25,139

 
$
25,291

 
 
December 31, 2015
 
 
Current
 
Past Due Greater Than 30 Days
 
Nonaccrual TDRs
 
Total TDRs
Commercial, financial and agricultural
 
$
16

 
$
—

 
$
20,865

 
$
20,881

Real estate - commercial
 
—

 
148

 
—

 
148

 
 
$
16

 
$
148

 
$
20,865

 
$
21,029


 
During the year ended December 31, 2016, there was one loan relationship with a pre-modification balance of $5.5 million identified as a TDR after conversion of the loans to interest only for a limited amount of time.  This one TDR subsequently defaulted on the modified terms and totaled $5.5 million at December 31, 2016.  During the year ended December 31, 2015, there was one loan relationship with a pre-modification balance of $21.4 million identified as a TDR after conversion of the loans to interest only for a limited amount of time. This one TDR subsequently defaulted on the modified terms and totaled $20.3 million at December 31, 2015.  For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result, the loan is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans.  As of December 31, 2016, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs.
 
In the opinion of management, all transactions entered into between the Company and such related parties have been and are made in the ordinary course of business, on substantially the same terms and conditions, including interest rates and collateral, as similar transactions with unaffiliated persons and do not involve more than the normal risk of collection.
 
An analysis of the 2016 activity with respect to these related party loans and commitments to extend credit is as follows (in thousands):
Balance, beginning of year
$
1,840

New loans
671

Repayments and adjustments
(560
)
Balance, end of year
$
1,951