XML 29 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900
Loans and Allowance for Loan Losses
 12 Months Ended
Dec. 31, 2015
Loans and Leases Receivable Disclosure [Abstract]  
Loans and Allowance for Loan Losses
(2) Loans and Allowance for Loan Losses

 

Loans

 

A summary of loans, by major class within the Company’s loan portfolio, at December 31, 2015 and 2014 is as follows:

 

(in thousands)   2015     2014  
Commercial, financial, and agricultural   $ 149,091     $ 154,834  
Real estate construction - residential     16,895       18,103  
Real estate construction - commercial     33,943       48,822  
Real estate mortgage - residential     256,086       247,117  
Real estate mortgage - commercial     385,869       372,321  
Installment and other consumer     23,196       20,016  
Total loans   $ 865,080     $ 861,213  

 

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the communities surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, Branson and the greater Kansas City metropolitan area. As such, the Bank is susceptible to changes in the economic environment in these communities. The Bank does not have a concentration of credit in any one economic sector. Installment and other consumer loans consist primarily of the financing of vehicles. At December 31, 2015, loans with a carrying value of $421.8 million, or $350.5 million fair value, were pledged to the Federal Home Loan Bank as collateral for borrowings and letters of credit.
 
The following is a summary of loans to directors and executive officers or to entities in which such individuals had a beneficial interest of the Company, are summarized as follows:
 
(in thousands)      
Balance at December 31, 2014   $ 4,940  
New loans     286  
Amounts collected     (499 )
Balance at December 31, 2015   $ 4,727  

 

Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the same time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present unfavorable features. 
 

Allowance for loan losses

 

The following is a summary of the allowance for loan losses for the years ended December 31, 2015, 2014, and 2013:

 

    Commercial,     Real Estate     Real Estate     Real Estate     Real Estate     Installment              
    Financial, &     Construction -     Construction -     Mortgage -     Mortgage -     Loans to     Un-        
(in thousands)   Agricultural     Residential     Commercial     Residential     Commercial     Individuals     allocated     Total  
Balance at December 31, 2012   $ 1,937     $ 732     $ 1,711     $ 3,387     $ 6,834     $ 239     $ 2     $ 14,842  
Additions:                                                                
Provision for loan losses     992       318       (452 )     273       622       272       5       2,030  
Deductions:                                                                
Loans charged off     895       119       633       812       1,301       420       0       4,180  
Less recoveries on loans     (340 )     0       (5 )     (111 )     (368 )     (203 )     0       (1,027 )
Net loans charged off     555       119       628       701       933       217       0       3,153  
Balance at December 31, 2013   $ 2,374     $ 931     $ 631     $ 2,959     $ 6,523     $ 294     $ 7     $ 13,719  
Additions:                                                                
Provision for loan losses     371       (592 )     326       (226 )     (107 )     195       33       0  
Deductions:                                                                
Loans charged off     1,285       349       491       408       2,890       405       0       5,828  
Less recoveries on loans     (319 )     (181 )     0       (202 )     (320 )     (186 )     0       (1,208 )
Net loans charged off     966       168       491       206       2,570       219       0       4,620  
Balance at December 31, 2014   $ 1,779     $ 171     $ 466     $ 2,527     $ 3,846     $ 270     $ 40     $ 9,099  
Additions:                                                                
Provision for loan losses     833       (434 )     193       153       (713 )     157       61       250  
Deductions:                                                                
Loans charged off     1,131       0       15       379       363       302       0       2,190  
Less recoveries on loans     (672 )     (322 )     0       (138 )     (165 )     (148 )     0       (1,445 )
Net loans charged off     459       (322 )     15       241       198       154       0       745  
Balance at December 31, 2015   $ 2,153     $ 59     $ 644     $ 2,439     $ 2,935     $ 273     $ 101     $ 8,604  

 

Loans, or portions of loans, are charged off to the extent deemed uncollectible or a loss is confirmed. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. If management determines that it is probable that all amounts due on a loan will not be collected under the original terms of the loan agreement, the loan is considered to be impaired. These loans are evaluated individually for impairment, and in conjunction with current economic conditions and loss experience, specific reserves are estimated as further discussed below. Loans not individually evaluated are aggregated by risk characteristics and reserves are recorded using a consistent methodology that considers historical loan loss experience by loan type, delinquencies, current economic conditions, loan risk ratings and industry concentration. 
 

The following table provides the balance in the allowance for loan losses at December 31, 2015 and 2014, and the related loan balance by impairment methodology.

 

    Commercial,     Real Estate     Real Estate     Real Estate     Real Estate     Installment              
    Financial, and     Construction -     Construction -     Mortgage -     Mortgage -     Loans to     Un-        
(in thousands)   Agricultural     Residential     Commercial     Residential     Commercial     Individuals     allocated     Total  
                                                 
December 31, 2015                                                                
                                                                 
Allowance for loan losses:                                                                
Individually evaluated for impairment   $ 285     $ 0     $ 15     $ 955     $ 266     $ 19     $ 0     $ 1,540  
Collectively evaluated for impairment     1,868       59       629       1,484       2,669       254       101       7,064  
Total   $ 2,153     $ 59     $ 644     $ 2,439     $ 2,935     $ 273     $ 101     $ 8,604  
Loans outstanding:                                                                
Individually evaluated for impairment   $ 1,005     $ 0     $ 102     $ 5,936     $ 3,081     $ 144     $ 0     $ 10,268  
Collectively evaluated for impairment     148,086       16,895       33,841       250,150       382,788       23,052       0       854,812  
Total   $ 149,091     $ 16,895     $ 33,943     $ 256,086     $ 385,869     $ 23,196     $ 0     $ 865,080  
                                                                 
December 31, 2014                                                                
                                                                 
Allowance for loan losses:                                                                
Individually evaluated for impairment   $ 134     $ 0     $ 0     $ 1,343     $ 246     $ 26     $ 0     $ 1,749  
Collectively evaluated for impairment     1,645       171       466       1,184       3,600       244       40       7,350  
Total   $ 1,779     $ 171     $ 466     $ 2,527     $ 3,846     $ 270     $ 40     $ 9,099  
Loans outstanding:                                                                
Individually evaluated for impairment   $ 7,541     $ 1,750     $ 2,096     $ 7,878     $ 16,464     $ 234     $ 0     $ 35,963  
Collectively evaluated for impairment     147,293       16,353       46,726       239,239       355,857       19,782       0       825,250  
Total   $ 154,834     $ 18,103     $ 48,822     $ 247,117     $ 372,321     $ 20,016     $ 0     $ 861,213  

 

Impaired loans

 

Loans evaluated under ASC 310-10-35 include loans which are individually evaluated for impairment. All other loans are collectively evaluated for impairment under ASC 450-20. Impaired loans individually evaluated for impairment totaled $10.3 million and $36.0 million at December 31, 2015 and 2014, respectively, and are comprised of loans on non-accrual status and loans which have been classified as troubled debt restructurings (TDRs).

 

The net carrying value of impaired loans is based on the fair values of collateral obtained through independent appraisals or internal evaluations, or by discounting the total expected future cash flows. At December 31, 2015 and 2014, $6.4 million and $15.6 million, respectively, of impaired loans were evaluated based on the fair value less estimated selling costs of the loan’s collateral. Once the impairment amount is calculated, a specific reserve allocation is recorded. At December 31, 2015, $1.5 million of the Company’s allowance for loan losses was allocated to impaired loans totaling $10.3 million compared to $1.7 million of the Company's allowance for loan losses allocated to impaired loans totaling approximately $36.0 million at December 31, 2014. Management determined that $4.5 million, or 44%, of total impaired loans required no reserve allocation at December 31, 2015 compared to $28.5 million, or 79%, at December 31, 2014 primarily due to adequate collateral values, acceptable payment history and adequate cash flow ability.

 

The categories of impaired loans at December 31, 2015 and 2014 are as follows:

 

(in thousands)   2015     2014  
Non-accrual loans   $ 4,418     $ 18,243  
Performing TDRs     5,850       17,720  
Total impaired loans   $ 10,268     $ 35,963  

 

The following tables provide additional information about impaired loans at December 31, 2015 and 2014, respectively, segregated between loans for which an allowance has been provided and loans for which no allowance has been provided.

 

          Unpaid        
    Recorded     Principal     Specific  
(in thousands)   Investment     Balance     Reserves  
                   
December 31, 2015                        
With no related allowance recorded:                        
Commercial, financial and agricultural   $ 448     $ 450     $ 0  
Real estate - residential     1,645       1,712       0  
Real estate - commercial     2,446       2,572       0  
Total   $ 4,539     $ 4,734     $ 0  
With an allowance recorded:                        
Commercial, financial and agricultural   $ 557     $ 572     $ 285  
Real estate - construction commercial     102       115       15  
Real estate - residential     4,291       4,320       955  
Real estate - commercial     635       884       266  
Consumer     144       182       19  
Total   $ 5,729     $ 6,073     $ 1,540  
Total impaired loans   $ 10,268     $ 10,807     $ 1,540  

 

          Unpaid        
    Recorded     Principal     Specific  
(in thousands)   Investment     Balance     Reserves  
                   
December 31, 2014                        
With no related allowance recorded:                        
Commercial, financial and agricultural   $ 6,021     $ 6,232     $ 0  
Real estate - construction residential     1,750       2,259       0  
Real estate - construction commercial     2,096       2,319       0  
Real estate - residential     3,213       3,270       0  
Real estate - commercial     15,409       18,950       0  
Consumer     36       36       0  
Total   $ 28,525     $ 33,066     $ 0  
With an allowance recorded:                        
Commercial, financial and agricultural   $ 1,520     $ 1,528     $ 134  
Real estate - residential     4,665       3,546       1,343  
Real estate - commercial     1,055       1,171       246  
Consumer     198       237       26  
Total   $ 7,438     $ 6,482     $ 1,749  
Total impaired loans   $ 35,963     $ 39,548     $ 1,749  
 

The following table presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2015 and 2014:

 

    2015     2014  
          Interest           Interest  
    Average     Recognized     Average     Recognized  
    Recorded     For the     Recorded     For the  
(in thousands)   Investment     Period Ended     Investment     Period Ended  
With no related allowance recorded:                                
Commercial, financial and agricultural   $ 2,949     $ 39     $ 3,141     $ 94  
Real estate - construction residential     536       0       610       2  
Real estate - construction commercial     1,105       0       5,950       0  
Real estate - residential     2,331       37       3,517       46  
Real estate - commercial     5,169       119       13,703       400  
Consumer     7       1       11       0  
Total   $ 12,097     $ 196     $ 26,932     $ 542  
With an allowance recorded:                                
Commercial, financial and agricultural   $ 1,356     $ 22     $ 1,773     $ 19  
Real estate - construction residential     0       0       1,697       0  
Real estate - construction commercial     52       0       42       0  
Real estate - residential     4,625       110       5,118       129  
Real estate - commercial     1,161       0       3,810       11  
Consumer     183       0       312       0  
Total   $ 7,377     $ 132     $ 12,752     $ 159  
Total impaired loans   $ 19,474     $ 328     $ 39,684     $ 701  

 

The recorded investment varies from the unpaid principal balance primarily due to partial charge-offs taken resulting from current appraisals received. The amount recognized as interest income on impaired loans continuing to accrue interest, primarily related to troubled debt restructurings, was $328,000 and $701,000, for the years ended December 31, 2015 and 2014, respectively. The average recorded investment in impaired loans is calculated on a monthly basis during the years reported.

 

Delinquent and Non-Accrual Loans

 

The delinquency status of loans is determined based on the contractual terms of the notes. Borrowers are generally classified as delinquent once payments become 30 days or more past due. The Company’s policy is to discontinue the accrual of interest income on any loan when, in the opinion of management, the ultimate collectibility of interest or principal is no longer probable. In general, loans are placed on non-accrual when they become 90 days or more past due. However, management considers many factors before placing a loan on non-accrual, including the delinquency status of the loan, the overall financial condition of the borrower, the progress of management’s collection efforts and the value of the underlying collateral. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial condition of the borrower indicates that the timely collectibility of interest and principal is probable and the borrower demonstrates the ability to pay under the terms of the note through a sustained period of repayment performance, which is generally six months.
 

The following table provides aging information for the Company’s past due and non-accrual loans at December 31, 2015 and 2014.

 
(in thousands)
 ​ ​
Current or 
Less Than 
30 Days 
Past Due
 ​ ​
30-89 Days 
Past Due
 ​ ​
90 Days 
Past Due 
And Still 
Accruing
 ​ ​
Non-Accrual
 ​ ​
Total
 ​
December 31, 2015 ​ ​ ​ ​ ​ ​
Commercial, Financial, and Agricultural
 ​ ​ ​ $ 148,597 ​ ​ ​ ​ $ 185 ​ ​ ​ ​ $ 1 ​ ​ ​ ​ $ 308 ​ ​ ​ ​ $ 149,091 ​ ​
Real Estate Construction - Residential ​ ​ ​ ​ 16,830 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 16,830 ​ ​
Real Estate Construction - Commercial
 ​ ​ ​ ​ 33,472 ​ ​ ​ ​ ​ 65 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 102 ​ ​ ​ ​ ​ 33,639 ​ ​
Real Estate Mortgage - Residential ​ ​ ​ ​ 251,253 ​ ​ ​ ​ ​ 2,511 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 2,322 ​ ​ ​ ​ ​ 256,086 ​ ​
Real Estate Mortgage - Commercial ​ ​ ​ ​ 384,053 ​ ​ ​ ​ ​ 643 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 1,542 ​ ​ ​ ​ ​ 386,238 ​ ​
Installment and Other Consumer ​ ​ ​ ​ 22,840 ​ ​ ​ ​ ​ 207 ​ ​ ​ ​ ​ 5 ​ ​ ​ ​ ​ 144 ​ ​ ​ ​ ​ 23,196 ​ ​
Total
 ​ ​ ​ $ 857,045 ​ ​ ​ ​ $ 3,611 ​ ​ ​ ​ $ 6 ​ ​ ​ ​ $ 4,418 ​ ​ ​ ​ $ 865,080 ​ ​
December 31, 2014 ​ ​ ​ ​ ​ ​
Commercial, Financial, and Agricultural
 ​ ​ ​ $ 149,366 ​ ​ ​ ​ $ 189 ​ ​ ​ ​ $ 0 ​ ​ ​ ​ $ 5,279 ​ ​ ​ ​ $ 154,834 ​ ​
Real Estate Construction - Residential ​ ​ ​ ​ 16,352 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 1,751 ​ ​ ​ ​ ​ 18,103 ​ ​
Real Estate Construction - Commercial
 ​ ​ ​ ​ 46,670 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 56 ​ ​ ​ ​ ​ 2,096 ​ ​ ​ ​ ​ 48,822 ​ ​
Real Estate Mortgage - Residential ​ ​ ​ ​ 239,469 ​ ​ ​ ​ ​ 3,229 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 4,419 ​ ​ ​ ​ ​ 247,117 ​ ​
Real Estate Mortgage - Commercial ​ ​ ​ ​ 366,653 ​ ​ ​ ​ ​ 1,203 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 4,465 ​ ​ ​ ​ ​ 372,321 ​ ​
Installment and Other Consumer ​ ​ ​ ​ 19,551 ​ ​ ​ ​ ​ 230 ​ ​ ​ ​ ​ 2 ​ ​ ​ ​ ​ 233 ​ ​ ​ ​ ​ 20,016 ​ ​
Total
 ​ ​ ​ $ 838,061 ​ ​ ​ ​ $ 4,851 ​ ​ ​ ​ $ 58 ​ ​ ​ ​ $ 18,243 ​ ​ ​ ​ $ 861,213 ​ ​
​

 

Credit Quality

 

The Company categorizes loans into risk categories based upon an internal rating system reflecting management’s risk assessment. Loans are placed on watch status when one or more weaknesses that may result in the deterioration of the repayment exits or the Company’s credit position at some future date. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified may have a well defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. A loan is classified as a troubled debt restructuring (TDR) when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs which are accruing interest are classified as performing TDRs. Loans classified as TDRs which are not accruing interest are classified as nonperforming TDRs and are included with all other nonaccrual loans for presentation purposes. It is the Company’s policy to discontinue the accrual of interest income on loans when management believes that the collection of interest or principal is doubtful. Loans are placed on non-accrual status when (1) deterioration in the financial condition of the borrower exists for which payment of full principal and interest is not expected, or (2) payment of principal or interest has been in default for a period of 90 days or more and the asset is not both well secured and in the process of collection. Subsequent interest payments received on such loans are applied to principal if any doubt exists as to the collectability of such principal; otherwise, such receipts are recorded as interest income on a cash basis.

 

The following table presents the risk categories by class at December 31, 2015 and 2014.

 

(in thousands)  

Commercial,

Financial, &

Agricultural

    

Real Estate

Construction -

Residential

    

Real Estate

Construction -

Commercial

    

Real Estate

Mortgage -

Residential

    

Real Estate

Mortgage -

Commercial

    

Installment

and other

Consumer

     Total  
                                           
At December 31, 2015                                                        
Watch   $ 8,663     $ 1,267     $ 1,296     $ 22,191     $ 24,303     $ 186     $ 57,906  
Substandard     421       0       37       3,737       1,485       36       5,716  
Performing TDRs     697       0       0       3,615       1,538       0       5,850  
Non-accrual     308       0       102       2,322       1,542       144       4,418  
Total   $ 10,089     $ 1,267     $ 1,435     $ 31,865     $ 28,868     $ 366     $ 73,890  
                                                         
At December 31, 2014                                                        
Watch   $ 13,651     $ 1,103     $ 4,757     $ 27,172     $ 18,191     $ 199     $ 65,073  
Substandard     926       90       1,211       3,124       4,102       139       9,592  
Performing TDRs     2,262       0       0       3,459       11,999       0       17,720  
Non-accrual     5,279       1,751       2,096       4,419       4,465       233       18,243  
Total   $ 22,118     $ 2,944     $ 8,064     $ 38,174     $ 38,757     $ 571     $ 110,628  

 

Troubled Debt Restructurings

 

At December 31, 2015, loans classified as TDRs totaled $6.4 million, of which $527,000 were classified as nonperforming TDRs and included in non-accrual loans and $5.9 million were classified as performing TDRs. At December 31, 2014, TDRs totaled $19.3 million, of which $1.6 million were classified as nonperforming TDRs included in non-accrual loans and $17.7 million were classified as performing TDRs. Both performing and nonperforming TDRs are considered impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. Accordingly, specific reserves of $1.0 million related to TDRs were allocated to the allowance for loan losses at December 31, 2015 and 2014.

 

The following table summarizes loans that were modified as TDRs during the years ended December 31, 2015 and 2014.

 

    2015     2014  
    Recorded Investment (1)     Recorded Investment (1)  
(in thousands)  

Number of

Contracts

    

Pre-

Modification

    

Post-

Modification

    

Number of

Contracts

    

Pre-

Modification

    

Post-

Modification

  
Troubled Debt Restructurings                                                
Commercial, financial and agricultural     2     $ 250     $ 229       3     $ 244     $ 208  
Real estate mortgage - residential     1       519       374       1       1,256       1,170  
Real estate mortgage - commercial     4       1,273       1,249       0       0       0  
Total     7     $ 2,042     $ 1,852       4     $ 1,500     $ 1,378  

 

(1) The amounts reported post-modification are inclusive of all partial pay-downs and charge-offs, and no portion of the debt was forgiven. Loans modified as a TDR that were fully paid down, charged-off, or foreclosed upon during the period ended are not reported.

 

The Company’s portfolio of loans classified as TDRs include concessions for the borrower due to deteriorated financial condition such as interest rates below the current market rate, deferring principal payments, and extending maturity dates. During the year ended December 31, 2015, seven loans meeting the TDR criteria were modified compared to four loans during the year ended December 31, 2014. 
 
Upon default of a TDR, which is considered to be 90 days or more past due under the modified terms, impairment is measured based on the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses, provided for as a specific reserve within the allowance for loan losses, or in the process of foreclosure. There were no TDRs that defaulted within twelve months of its modification date during the year ended December 31, 2015 and two loans modified as a TDR that defaulted during the year December 31, 2014.