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EX-3.1 - EXHIBIT 3.1 - Village Bank & Trust Financial Corp.v392836_ex3-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

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: 0-50765

 

VILLAGE BANK AND TRUST FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

Virginia   16-1694602
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

15521 Midlothian Turnpike, Midlothian, Virginia 23113
(Address of principal executive offices) (Zip code)

 

804-897-3900

(Registrant’s telephone number, including area code)

 

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ¨ Accelerated Filer ¨
Non-Accelerated Filer ¨  (Do not check if smaller reporting company) 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 equity, as of the latest practicable date.

 

334,294 shares of common stock, $4.00 par value, outstanding as of October 21, 2014

 

 
 

  

Village Bank and Trust Financial Corp.

Form 10-Q

 

TABLE OF CONTENTS

 

Part I – Financial Information  
   
Item 1.  Financial Statements  
   
Consolidated Balance Sheets September 30, 2014 (unaudited) and December 31, 2013 3
   
Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2014 and 2013 (unaudited) 4
   
Consolidated Statements of Changes in Comprehensive Income (Loss) For the Three and Nine Months Ended September 30, 2014 and 2013 (unaudited) 5
   
Consolidated Statements of Stockholders’ Equity For the Nine Months Ended September 30, 2014 and 2013 (unaudited) 6
   
Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2014 and 2013 (unaudited) 7
   
Notes to Consolidated Financial Statements (unaudited) 8
   
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 40
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 62
   
Item 4. Controls and Procedures 62
   
Part II – Other Information  
   
Item 1.  Legal Proceedings 63
   
Item 1A. Risk Factors 63
   
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 63
   
Item 3.  Defaults Upon Senior Securities 63
   
Item 4.  Mine Safety Disclosures 63
   
Item 5.  Other Information 63
   
Item 6.  Exhibits 63
   
Signatures 65

 

2
 

 

Part I – Financial Information

 

ITEM 1 – FINANCIAL STATEMENTS

 

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Balance Sheets
September 30, 2014 (Unaudited) and December 31, 2013
(dollar amounts in thousands, except per share amounts)

 

   September 30,   December 31, 
   2014   2013 
Assets          
Cash and due from banks  $13,895   $15,221 
Federal funds sold   30,937    24,988 
Total cash and cash equivalents   44,832    40,209 
Investment securities available for sale   55,515    57,748 
Loans held for sale   7,298    8,371 
Loans          
Outstandings   275,123    286,563 
Allowance for loan losses   (5,658)   (7,239)
Deferred fees and costs   666    683 
    270,131    280,007 
Other real estate owned, net of valuation allowance   14,003    16,742 
Assets held for sale   13,438    13,359 
Premises and equipment, net   13,621    12,409 
Bank owned life insurance   6,902    6,765 
Accrued interest receivable   1,567    1,486 
Other assets   5,698    7,077 
           
   $433,005   $444,173 
           
Liabilities and Stockholders' Equity          
Liabilities          
Deposits          
Noninterest bearing demand  $65,218   $57,244 
Interest bearing   315,446    333,384 
Total deposits   380,664    390,628 
Federal Home Loan Bank advances   14,000    18,000 
Long-term debt - trust preferred securities   8,764    8,764 
Other borrowings   1,835    2,713 
Accrued interest payable   1,120    1,093 
Other liabilities   7,887    4,731 
Total liabilities   414,270    425,929 
           
Stockholders' equity          
Preferred stock, $4 par value, $1,000 liquidation preference, 1,000,000 shares authorized, 14,738 shares issued and outstanding   59    59 
Common stock, $4 par value, 10,000,000 shares authorized; 334,294 shares issued and outstanding at September 30, 2014 333,644 shares issued and outstanding at December 31, 2013   1,337    21,353 
Additional paid-in capital   58,124    38,054 
Accumulated deficit   (39,829)   (38,066)
Common stock warrant   732    732 
Discount on preferred stock   -    (50)
Stock in directors rabbi trust   (878)   (878)
Directors deferred fees obligation   878    878 
Accumulated other comprehensive loss   (1,688)   (3,838)
Total stockholders' equity   18,735    18,244 
           
   $433,005   $444,173 

 

See accompanying notes to consolidated financial statements.

 

3
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)
(dollar amounts in thousands, except per share amounts)

 

   Three Months Ended   None Months Ended 
   September 30,   September 30, 
   2014   2013   2014   2013 
Interest income                    
Loans  $3,814   $4,459   $11,579   $14,224 
Investment securities   304    324    958    751 
Federal funds sold   19    18    64    71 
Total interest income   4,137    4,801    12,601    15,046 
                     
Interest expense                    
Deposits   751    850    2,304    2,843 
Borrowed funds   (22)   167    423    610 
Total interest expense   729    1,017    2,727    3,453 
                     
Net interest income   3,408    3,784    9,874    11,593 
Provision for loan losses   -    -    100    823 
Net interest income after provision for loan losses   3,408    3,784    9,774    10,770 
                     
Noninterest income                    
Service charges and fees   589    646    1,673    1,791 
Gain on sale of loans   1,290    2,126    3,453    6,454 
Gain on sale of assets   -    -    3    598 
Gain (loss) on sale of investment securities   (14)   -    (14)   217 
Rental income   226    214    732    657 
Other   99    99    338    396 
Total noninterest income   2,190    3,085    6,185    10,113 
                     
Noninterest expense                    
Salaries and benefits   2,659    3,054    8,108    8,980 
Commissions   338    580    907    1,612 
Occupancy   397    502    1,272    1,589 
Equipment   146    166    529    523 
Supplies   77    100    243    324 
Professional and outside services   615    500    1,896    1,823 
Advertising and marketing   81    50    220    192 
Expenses related to foreclosed real estate   364    1,301    1,051    3,576 
Other operating expenses   787    883    2,434    2,453 
Total noninterest expense   5,464    7,136    16,660    21,072 
                     
Income (loss) before income tax expense (benefit)   134    (267)   (701)   (189)
Income tax expense (benefit)   -    -    -    - 
                     
Net income (loss)   134    (267)   (701)   (189)
                     
Preferred stock dividends and amortization of discount   545    221    1,062    664 
                     
Net loss available to common shareholders  $(411)  $(488)  $(1,763)  $(853)
                     
Loss per share, basic and diluted (1)  $(1.23)  $(1.84)  $(5.28)  $(3.21)

 

See accompanying notes to consolidated financial statements.

 

(1) Earnings per share have been affected for reverse stock split

 

4
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Changes in Comprehensive Income (Loss)
Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)
(dollar amounts in thousands)

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2014   2013   2014   2013 
                 
Net income (loss)  $134   $(267)  $(701)  $(189)
Other comprehensive income (loss)                    
Unrealized holding gains (losses) arising during the period   84    (597)   3,234    (4,302)
Tax effect   28    (203)   1,099    (1,463)
Net change in unrealized holding gains (losses) on securities available for sale, net of tax   56    (394)   2,135    (2,839)
                     
Reclassification adjustment                    
Reclassification adjustment for (gains) losses  realized in income (loss)   14    -    14    (217)
Tax effect   5    -    5    (74)
Reclassification for (gains) losses included in net income (loss), net of tax   9    -    9    (143)
                     
Minimum pension adjustment   3    3    9    9 
Tax effect   1    1    3    3 
Minimum pension adjustment, net of tax   2    2    6    6 
                     
Total other comprehensive income (loss)   67    (392)   2,150    (2,976)
                     
Total comprehensive income (loss)  $201   $(659)  $1,449   $(3,165)

 

See accompanying notes to consolidated financial statements.

 

5
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 2014 and 2013
(Unaudited)
(dollar amounts in thousands)

 

                               Directors   Accumulated     
           Additional           Discount on   Stock in   Deferred   Other     
   Preferred   Common   Paid-in   Accumulated       Preferred   Directors   Fees   Comprehensive     
   Stock   Stock   Capital   Deficit   Warrant   Stock   Rabbi Trust   Obligation   loss   Total 
                                         
Balance, December 31, 2013  $59   $21,353   $38,054   $(38,066)  $732   $(50)  $(878)  $878   $(3,838)  $18,244 
Amortization of preferred stock discount   -    -    -    (50)   -    50    -    -         - 
Preferred stock dividend   -    -    -    (1,012)   -    -    -    -    -    (1,012)
Reverse stock split   -    (20,019)   20,019                                  - 
Issuance of common stock        3    (11)                                 (8)
Stock based compensation   -    -    62    -    -    -    -    -         62 
Minimum pension adjustment   -         -                                    
(net of income taxes of $3)   -    -    -    -    -    -    -    -    6    6 
Net loss   -    -         (701)   -    -         -    -    (701)
Change in unrealized gain (loss) on investment securities available-for-sale, net of reclassification and tax effect   -    -    -    -    -    -    -    -    2,144    2,144 
                                                   
Balance, September 30, 2014  $59   $1,337   $58,124   $(39,829)  $732   $-   $(878)  $878   $(1,688)  $18,735 
                                                   
Balance, December 31, 2012  $59   $17,007   $40,705   $(33,173)  $732   $(199)  $-   $-   $(166)  $24,965 
Amortization of preferred stock discount   -              (112)   -    112    -    -    -    - 
Preferred stock dividend   -    -         (552)   -    -    -    -    -    (552)
Stock based compensation   -    -    6                                  6 
Minimum pension adjustment                                                  
(net of income taxes of $3)   -    -    -    -    -    -    -    -    6    6 
Net loss   -    -    -    (189)   -    -    -    -    -    (189)
Change in unrealized gain (loss) on investment securities available-for-sale, net of reclassification and tax effect   -    -    -    -    -    -    -    -    (2,982)   (2,982)
                                                   
Balance, September 30, 2013  $59   $17,007   $40,711   $(34,026)  $732   $(87)  $-   $-   $(3,142)  $21,254 

  

See accompanying notes to consolidated financial statements.

 

6
 

  

Village Bank and Trust Financial Corp. and Subsidiary
Consolidated Statements of Cash Flows
NIne Months Ended September 30, 2014 and 2013
(Unaudited)
(dollar amounts in thousands)

 

   2014   2013 
         
Cash Flows from Operating Activities          
Net loss  $(701)  $(189)
Adjustments to reconcile net loss to net cash provided by operating activities:          
Depreciation and amortization   482    981 
Deferred income taxes   (324)   (41)
Valuation allowance deferred income taxes   324    - 
Provision for loan losses   100    823 
Write-down of other real estate owned   751    1,282 
Valuation allowance other real estate owned   (495)   - 
(Gain) Loss on securities sold   14    (217)
Gain on loans sold   (3,453)   (6,454)
Gain on sale of premises and equipment   (3)   (598)
(Gain) Loss on sale of other real estate owned   (199)   326 
Stock compensation expense   62    6 
Proceeds from sale of mortgage loans   128,465    235,276 
Origination of mortgage loans for sale   (123,939)   (219,160)
Amortization of premiums and accretion of discounts on securities, net   304    313 
Decrease (increase) in interest receivable   (81)   159 
Increase in bank owned life insurance   (137)   (144)
Decrease in other assets   205    4,356 
Increase in interest payable   27    142 
Increase (decrease) in other liabilities   2,142    (1,062)
Net cash provided by operating activities   3,544    15,799 
           
Cash Flows from Investing Activities          
Purchases of available for sale securities   -    (54,106)
Proceeds from the sale or calls of available for sale securities   5,162    15,534 
Net decrease in loans   4,401    44,420 
Proceeds from sale of other real estate owned   8,057    4,125 
Purchases of premises and equipment   (1,708)   (520)
Proceeds from sale of premises and equipment   17    1,681 
Net cash provided by investing activities   15,929    11,134 
           
Cash Flows from Financing Activities          
Issuance of common stock   (8)   - 
Net decrease in deposits   (9,964)   (34,727)
Net decrease in Federal Home Loan Bank Advances   (4,000)   (10,000)
Net decrease in other borrowings   (878)   (1,562)
Net cash used in financing activities   (14,850)   (46,289)
           
Net increase (decrease) in cash and cash equivalents   4,623    (19,356)
Cash and cash equivalents, beginning of period   40,209    53,131 
           
Cash and cash equivalents, end of period  $44,832   $33,775 
           
Supplemental Disclsoure of Cash Flow Information          
Cash payments for interest  $2,536   $3,117 
Supplemental Schedule of Non Cash Activities          
Real estate owned assets acquired in settlement of loans  $5,375   $5,181 
Dividends on preferred stock accrued  $1,012   $552 

 

See accompanying notes to consolidated financial statements.

 

7
 

 

Village Bank and Trust Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements

Three and Nine Months Ended September 30, 2014 and 2013

(Unaudited)

 

Note 1 - Principles of presentation

 

Village Bank and Trust Financial Corp. (the “Company”) is the holding company of Village Bank (the “Bank”). The consolidated financial statements include the accounts of the Company, the Bank and the Bank’s subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.

 

On August 6, 2014, the Company filed Articles of Amendment to its Articles of Incorporation with the Virginia State Corporation Commission to effect a reverse stock split of its outstanding common stock which became effective on August 8, 2014. As a result of the reverse split, every sixteen shares of the Company’s issued and outstanding common stock were consolidated into one issued and outstanding share of common stock. The computations of basic and diluted earnings per share have been adjusted retroactively to reflect the reverse stock split.

 

In the opinion of management, the accompanying condensed consolidated financial statements of the Company have been prepared on the accrual basis in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, all adjustments that are, in the opinion of management, necessary for a fair presentation have been included. The results of operations for the three and nine month periods ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year ending December 31, 2014. The unaudited interim financial statements should be read in conjunction with the audited financial statements and notes to financial statements that are presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission.

 

The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet date of September 30, 2014 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

 

Note 2 - Use of estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheets and statements of operations for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan losses and its related provision, and the estimate of the fair value of assets held for sale.

 

8
 

  

Note 3 - Earnings (loss) per common share

 

The following table presents the basic and diluted earnings (loss) per common share computation (in thousands, except per share data):

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2014   2013   2014   2013 
Numerator                    
Net income (loss) - basic and diluted  $134   $(267)  $(701)  $(189)
Preferred stock dividend and accretion   545    221    1,062    664 
Net loss available to common shareholders  $(411)  $(488)  $(1,763)  $(853)
                     
Denominator                    
Weighted average shares outstanding - basic   334    266    334    266 
Dilutive effect of common stock options and restricted stock awards   -    -    -    - 
                     
Weighted average shares outstanding - diluted   334    266    334    266 
                     
Loss per share - basic and diluted  $(1.23)  $(1.84)  $(5.28)  $(3.21)

 

Outstanding options and warrants to purchase common stock were considered in the computation of diluted earnings per share for the periods presented. Stock options for 6,830 were not included in computing diluted earnings per share for the three and nine months ended September 30, 2014 because their effects were anti-dilutive. Restricted stock awards for 14,802 were not included in computing diluted earnings per share for the three and nine months ended September 30, 2014 because their effects were anti-dilutive. Stock options for 16,008 and 16,658 were not included in computing diluted earnings per share for the three and nine months ended September 30, 2013, respectively, because their effects were anti-dilutive. Warrants for 31,190 shares of common stock were not included in computing earnings per share in 2014 and 2013 because their effects were also anti-dilutive.

 

9
 

  

Note 4 – Investment securities available for sale

 

At September 30, 2014 and December 31, 2013, all of our securities were classified as available-for-sale. The following table presents the composition of our investment portfolio at the dates indicated (dollars in thousands):

 

           Gross   Gross   Estimated     
   Par   Amortized   Unrealized   Unrealized   Fair   Average 
   Value   Cost   Gains   Losses   Value   Yield 
September 30, 2014                              
US Treasuries                              
Five to ten years  $8,000   $7,837   $-   $(255)  $7,582    2.01%
US Government Agencies                              
One to Five years   8,000    8,176    -    (245)   7,931    0.44%
Five to ten years   26,500    28,033    -    (1,350)   26,683    2.06%
    34,500    36,209    -    (1,595)   34,614    1.69%
Mortgage-backed securities                              
More than ten years   542    558    2    (2)   558    2.43%
Municipals                              
Five to ten years   6,155    6,621    -    (270)   6,351    2.85%
More than ten years   5,280    6,728    -    (318)   6,410    3.42%
    11,435    13,349    -    (588)   12,761    3.14%
                               
Total investment securities  $54,477   $57,953   $2   $(2,440)  $55,515    2.07%
                               
December 31, 2013                              
US Treasuries                              
Five to ten years  $8,000   $7,825   $-   $(615)  $7,210    2.13%
US Government Agencies                              
One to Five years   4,000    4,194    -    (166)   4,028    0.89%
Five to ten years   31,625    33,510    -    (3,187)   30,323    1.82%
    35,625    37,704    -    (3,353)   34,351    1.71%
Mortgage-backed securities                              
More than ten years   2,782    2,792    10    (50)   2,752    2.43%
Municipals                              
Five to ten years   6,155    6,684    -    (678)   6,006    2.85%
More than ten years   6,780    8,428    -    (999)   7,429    3.34%
Total   12,935    15,112    -    (1,677)   13,435    3.12%
                               
Total investment securities  $59,342   $63,433   $10   $(5,695)  $57,748    2.13%

 

10
 

  

Investment securities available for sale that have an unrealized loss position at September 30, 2014 and December 31, 2013 are detailed below (in thousands):

 

   Securities in a loss   Securities in a loss         
   position for less than   position for more than         
   12 Months   12 Months   Total 
   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
   Value   Losses   Value   Losses   Value   Losses 
September 30, 2014                              
US Treasuries  $-   $-   $7,582   $(255)  $7,582   $(255)
US Government Agencies   -    -    34,614    (1,595)   34,614    (1,595)
Municipals   -    -    12,761    (588)   12,761    (588)
Mortgage-backed securities   432    (2)   -    -    432    (2)
                               
Total  $432   $(2)  $54,957   $(2,438)  $55,389   $(2,440)
                               
December 31, 2013                              
US Treasuries  $7,210   $(615)  $-   $-   $7,210   $(615)
US Government Agencies   34,350    (3,353)   -    -    34,350    (3,353)
Municipals   10,864    (1,471)   2,571    (206)   13,435    (1,677)
Mortgage-backed securities   1,861    (50)   -    -    1,861    (50)
                               
Total  $54,285   $(5,489)  $2,571   $(206)  $56,856   $(5,695)

 

Management does not believe that any individual unrealized loss as of September 30, 2014 and December 31, 2013 is other than a temporary impairment. These unrealized losses are primarily attributable to changes in interest rates. As of September 30, 2014, management does not have the intent to sell any of the securities classified as available for sale and management believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. Approximately $20 million of these securities are pledged against current and potential fundings.

 

11
 

 

Note 5 – Loans and allowance for loan losses

 

The following table presents the composition of our loan portfolio (excluding mortgage loans held for sale) at the dates indicated (dollars in thousands):

 

   September 30, 2014   December 31, 2013 
   Amount   %   Amount   % 
Construction and land development                    
Residential  $4,592    1.67%  $2,931    1.02%
Commercial   25,135    9.14%   28,179    9.84%
    29,727    10.81%   31,110    10.86%
Commercial real estate                    
Owner occupied   58,275    21.18%   73,584    25.68%
Non-owner occupied   39,805    14.47%   43,868    15.31%
Multifamily   11,019    4.01%   11,560    4.03%
Farmland   1,343    0.48%   1,463    0.51%
    110,442    40.14%   130,475    45.53%
Consumer real estate                    
Home equity lines   20,275    7.37%   21,246    7.41%
Secured by 1-4 family residential,                    
First deed of trust   63,425    23.05%   66,873    23.34%
Second deed of trust   8,127    2.95%   8,675    3.03%
    91,827    33.37%   96,794    33.78%
Commercial and industrial loans                    
(except those secured by real estate)   22,471    8.17%   26,254    9.16%
Consumer and other (1)   20,656    7.51%   1,930    0.67%
                     
Total loans   275,123    100.0%   286,563    100.0%
Deferred loan cost, net   666         683      
Less: allowance for loan losses   (5,658)        (7,239)     
                     
   $270,131        $280,007      

 

(1) The Company purchased approximately $19 million in Student loans in the third quarter of 2014

 

The Company assigns risk rating classifications to its loans. These risk ratings are divided into the following groups:

 

·Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating. 1-4 assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;
·Risk rated 5 loans are defined as having potential weaknesses that deserve management’s close attention;
·Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any;
·Risk rated 7 loans have all the weaknesses inherent in substandard loans, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable; and
·Loans rated 6 or 7 are considered “Classified” loans for regulatory classification purposes.

 

12
 

  

The following tables provide information on the risk rating of loans at the dates indicated (in thousands):

 

   Risk Rated   Risk Rated   Risk Rated   Risk Rated   Total 
   1-4   5   6   7   Loans 
September 30, 2014                         
Construction and land development                         
Residential  $4,201   $132   $259   $-   $4,592 
Commercial   19,073    3,046    3,016         25,135 
    23,274    3,178    3,275    -    29,727 
Commercial real estate                         
Owner occupied   46,223    5,102    6,950    -    58,275 
Non-owner occupied   35,847    1,830    2,128    -    39,805 
Multifamily   10,280    739         -    11,019 
Farmland   1,322         21    -    1,343 
    93,672    7,671    9,099    -    110,442 
Consumer real estate                         
Home equity lines   18,040    466    1,769    -    20,275 
Secured by 1-4 family residential                         
First deed of trust   51,309    5,854    6,262    -    63,425 
Second deed of trust   6,606    72    1,449    -    8,127 
    75,955    6,392    9,480    -    91,827 
Commercial and industrial loans                         
(except those secured by real estate)   18,463    3,094    914    -    22,471 
Consumer and other   20,536    76    44    -    20,656 
                          
Total loans  $231,900   $20,411   $22,812   $-   $275,123 
                     
December 31, 2013                         
Construction and land development                         
Residential  $2,715   $-   $216   $-   $2,931 
Commercial   18,265    2,711    7,203    -    28,179 
    20,980    2,711    7,419    -    31,110 
Commercial real estate                         
Owner occupied   51,810    13,214    8,560    -    73,584 
Non-owner occupied   31,990    3,454    8,424    -    43,868 
Multifamily   10,804    756    -    -    11,560 
Farmland   1,346    -    117    -    1,463 
    95,950    17,424    17,101    -    130,475 
Consumer real estate                         
Home equity lines   17,610    727    2,909    -    21,246 
Secured by 1-4 family residential                         
First deed of trust   49,843    6,646    10,384    -    66,873 
Second deed of trust   6,598    212    1,865    -    8,675 
    74,051    7,585    15,158    -    96,794 
Commercial and industrial loans                         
(except those secured by real estate)   22,786    1,042    2,426    -    26,254 
Consumer and other   1,739    131    60    -    1,930 
                          
Total loans  $215,506   $28,893   $42,164   $-   $286,563 

 

13
 

  

The following table presents the aging of the recorded investment in past due loans and leases as of the dates indicated (in thousands):

 

                           Recorded 
           Greater               Investment > 
   30-59 Days   60-89 Days   Than   Total Past       Total   90 Days and 
   Past Due   Past Due   90 Days   Due   Current   Loans   Accruing 
September 30, 2014                                   
Construction and land development                                   
Residential  $-   $-   $-   $-   $4,592   $4,592   $- 
Commercial   37    -    -    37    25,098    25,135    - 
    37    -    -    37    29,690    29,727    - 
Commercial real estate                                   
Owner occupied   913    -    -    913    57,362    58,275    - 
Non-owner occupied   -    -    -    -    39,805    39,805    - 
Multifamily   -    -    -    -    11,019    11,019    - 
Farmland   -    -    -    -    1,343    1,343    - 
    913    -    -    913    109,529    110,442    - 
Consumer real estate                                   
Home equity lines   32    -    -    32    20,243    20,275    - 
Secured by 1-4 family residential                                   
First deed of trust   102    -    -    102    63,323    63,425    - 
Second deed of trust   -    56    -    56    8,071    8,127    - 
    134    56    -    190    91,637    91,827    - 
Commercial and industrial loans                                   
(except those secured by real estate)   9    -    -    9    22,462    22,471    - 
Consumer and other   750    411    -    1,161    19,495    20,656    - 
                                    
Total loans  $1,843   $467   $-   $2,310   $272,813   $275,123   $- 
                             
December 31, 2013                                   
Construction and land development                                   
Residential  $-   $-   $-   $-   $2,931   $2,931   $- 
Commercial   -    116    -    116    28,063    28,179    - 
    -    116    -    116    30,994    31,110    - 
Commercial real estate                                   
Owner occupied   199    -    -    199    73,385    73,584    - 
Non-owner occupied   -    346    -    346    43,522    43,868    - 
Multifamily   221    -    -    221    11,339    11,560    - 
Farmland   194    -    -    194    1,269    1,463    - 
    614    346    -    960    129,515    130,475    - 
Consumer real estate                                   
Home equity lines   98    403    -    501    20,745    21,246    - 
Secured by 1-4 family residential                                   
First deed of trust   555    362    -    917    65,956    66,873    - 
Second deed of trust   -    24    -    24    8,651    8,675    - 
    653    789    -    1,442    95,352    96,794    - 
Commercial and industrial loans                                   
(except those secured by real estate)   25    122    60    207    26,047    26,254    60 
Consumer and other   6    15    -    21    1,909    1,930    - 
                                    
Total loans  $1,298   $1,388   $60   $2,746   $283,817   $286,563   $60 

 

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Loans evaluated individually for impairment include non-performing loans, such as loans on non-accrual, loans past due by 90 days or more, restructured loans and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired, then a specific reserve is established for the amount of impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. Impaired loans are set forth in the following table as of the dates indicated (in thousands):

 

14
 

 

   September 30, 2014 
       Unpaid     
   Recorded   Principal   Related 
   Investment   Balance   Allowance 
With no related allowance recorded               
Construction and land development               
Residential  $259   $259   $- 
Commercial   3,527    3,527    - 
    3,786    3,786    - 
Commercial real estate               
Owner occupied   3,133    3,133      
Non-owner occupied   9,896    9,896    - 
Multifamily   2,336    2,336    - 
Farmland   21    450    - 
    15,386    15,815    - 
Consumer real estate               
Home equity lines   959    959    - 
Secured by 1-4 family residential               
First deed of trust   7,085    7,117    - 
Second deed of trust   1,060    1,379    - 
    9,104    9,455    - 
Commercial and industrial loans               
(except those secured by real estate)   745    850    - 
Consumer and other   17    17    - 
    29,038    29,923    - 
                
With an allowance recorded               
Construction and land development               
Commercial   596    596    26 
Commercial real estate               
Owner occupied   4,395    4,410    323 
Non-Owner occupied   215    215    109 
    4,610    4,625    432 
Consumer real estate               
Secured by 1-4 family residential               
First deed of trust   1,870    1,870    341 
Second deed of trust   260    260    44 
    2,130    2,130    385 
Commercial and industrial loans               
(except those secured by real estate)   100    100    12 
    7,436    7,451    855 
                
Total               
Construction and land development               
Residential   259    259    - 
Commercial   4,123    4,123    26 
    4,382    4,382    26 
Commercial real estate               
Owner occupied   7,528    7,543    323 
Non-owner occupied   10,111    10,111    109 
Multifamily   2,336    2,336    - 
Farmland   21    450    - 
    19,996    20,440    432 
Consumer real estate               
Home equity lines   959    959    - 
Secured by 1-4 family residential,               
First deed of trust   8,955    8,987    341 
Second deed of trust   1,320    1,639    44 
    11,234    11,585    385 
Commercial and industrial loans               
(except those secured by real estate)   845    950    12 
Consumer and other   17    17    - 
   $36,474   $37,374   $855 

 

15
 

 

   December 31, 2013 
       Unpaid     
   Recorded   Principal   Related 
   Investment   Balance   Allowance 
With no related allowance recorded               
Construction and land development               
Residential  $216   $216   $- 
Commercial   3,452    3,497    - 
    3,668    3,713    - 
Commercial real estate               
Owner occupied   1,919    1,969      
Non-owner occupied   11,769    11,928    - 
Multifamily   2,373    2,373    - 
Farmland   117    450    - 
    16,178    16,720    - 
Consumer real estate               
Home equity lines   1,630    1,685    - 
Secured by 1-4 family residential               
First deed of trust   8,177    8,319    - 
Second deed of trust   1,125    1,249    - 
    10,932    11,253    - 
Commercial and industrial loans               
(except those secured by real estate)   809    983    - 
Consumer and other   34    34    - 
    31,621    32,703    - 
                
With an allowance recorded               
Construction and land development               
Commercial   1,753    1,753    220 
Commercial real estate               
Owner occupied   9,794    9,948    680 
Non-Owner occupied   1,297    1,297    371 
    11,091    11,245    1,051 
Consumer real estate               
Secured by 1-4 family residential               
First deed of trust   2,184    2,870    484 
Second deed of trust   132    132    32 
    2,316    3,002    516 
Commercial and industrial loans               
(except those secured by real estate)   151    151    43 
    15,311    16,151    1,830 
                
Total               
Construction and land development               
Residential   216    216    - 
Commercial   5,205    5,250    220 
    5,421    5,466    220 
Commercial real estate               
Owner occupied   11,713    11,917    680 
Non-owner occupied   13,066    13,225    371 
Multifamily   2,373    2,373    - 
Farmland   117    450    - 
    27,269    27,965    1,051 
Consumer real estate               
Home equity lines   1,630    1,685    - 
Secured by 1-4 family residential,               
First deed of trust   10,361    11,189    484 
Second deed of trust   1,257    1,381    32 
    13,248    14,255    516 
Commercial and industrial loans               
(except those secured by real estate)   960    1,134    43 
Consumer and other   34    34    - 
   $46,932   $48,854   $1,830 

 

16
 

 

The following is a summary of average recorded investment in impaired loans with and without a valuation allowance and interest income recognized on those loans for the periods indicated (in thousands):

 

   For the Three Months   For the Nine Months 
   Ended September 30, 2014   Ended September 30, 2014 
   Average   Interest   Average   Interest 
   Recorded   Income   Recorded   Income 
   Investment   Recognized   Investment   Recognized 
With no related allowance recorded                    
Construction and land development                    
Residential  $133   $-   $206   $2 
Commercial   3,584    52    3,841    150 
    3,717    52    4,047    152 
Commercial real estate                    
Owner occupied   2,654    70    3,161    135 
Non-owner occupied   9,557    120    9,994    335 
Multifamily   2,340    35    2,353    106 
Farmland   21    -    21    - 
    14,572    225    15,529    576 
Consumer real estate                    
Home equity lines   950    3    960    19 
Secured by 1-4 family residential                    
First deed of trust   7,259    75    7,175    268 
Second deed of trust   1,147    9    1,066    42 
    9,356    87    9,201    329 
Commercial and industrial loans                    
(except those secured by real estate)   746    7    751    30 
Consumer and other   17    -    19    1 
   $28,408   $371   $29,547   $1,088 
                     
With an allowance recorded                    
Construction and land development                    
Commercial   598    8    603    23 
Commercial real estate                    
Owner occupied   2,801    62    4,446    154 
Non-Owner occupied   1,946    9    217    9 
    4,747    71    4,663    163 
Consumer real estate                    
Secured by 1-4 family residential                    
First deed of trust   1,870    22    1,944    24 
Second deed of trust   260    5    264    8 
    2,130    27    2,208    32 
Commercial and industrial loans                    
(except those secured by real estate)   110    -    115    - 
    7,585    106   $7,589   $218 
                     
Total                    
Construction and land development                    
Residential   133    -    206    2 
Commercial   4,182    60    4,444    173 
    4,315    60    4,650    175 
Commercial real estate                    
Owner occupied   5,455    132    7,607    289 
Non-owner occupied   11,503    129    10,211    344 
Multifamily   2,340    35    2,353    106 
Farmland   21    -    21    - 
    19,319    296    20,192    739 
Consumer real estate                    
Home equity lines   950    3    960    19 
Secured by 1-4 family residential,                    
First deed of trust   9,129    97    9,119    292 
Second deed of trust   1,407    14    1,330    50 
    11,486    114    11,409    361 
Commercial and industrial loans                    
(except those secured by real estate)   856    7    866    30 
Consumer and other   17    -    19    1 
   $35,993   $477   $37,136   $1,306 

 

17
 

 

   For the Three Months   For the Nine Months 
   Ended September 30, 2013   Ended September 30, 2013 
   Average   Interest   Average   Interest 
   Recorded   Income   Recorded   Income 
   Investment   Recognized   Investment   Recognized 
With no related allowance recorded                    
Construction and land development                    
Commercial  $5,749    68   $6,612   $218 
    5,749    68    6,612    218 
Commercial real estate                    
Owner occupied   11,033    177    10,479    419 
Non-owner occupied   11,238    137    11,315    412 
Multifamily   2,390    36    2,402    114 
    24,661    350    24,196    945 
Consumer real estate                    
Home equity lines   1,093    7    1,093    36 
Secured by 1-4 family residential                    
First deed of trust   14,479    128    14,531    478 
Second deed of trust   974    12    978    37 
    16,546    147    16,602    551 
Commercial and industrial loans                    
(except those secured by real estate)   472    9    430    22 
Consumer and other   138    2    142    7 
   $47,566   $576   $47,982   $1,743 
                     
With an allowance recorded                    
Construction and land development                    
Commercial   1,523    -    1,525    6 
Commercial real estate                    
Non-Owner occupied   1,089    13    1,089    44 
Farmland   565    -    569    1 
    1,654    13    1,658    45 
Consumer real estate                    
Home equity lines   -    -    -    - 
Secured by 1-4 family residential                    
First deed of trust   237    -    269    - 
Second deed of trust   136    2    136    4 
    373    2    405    4 
Commercial and industrial loans                    
(except those secured by real estate)   418    4    246    7 
    3,968    19    3,834    62 
                     
Total                    
Construction and land development                    
Commercial   7,272    68    8,137    224 
    7,272    68    8,137    224 
Commercial real estate                    
Owner occupied   11,033    177    10,479    419 
Non-owner occupied   12,327    150    12,404    456 
Multifamily   2,390    36    2,402    114 
Farmland   565    -    569    1 
    26,315    363    25,854    990 
Consumer real estate                    
Home equity lines   1,093    7    1,093    36 
Secured by 1-4 family residential,                    
First deed of trust   14,716    128    14,800    478 
Second deed of trust   1,110    14    1,114    41 
    16,919    149    17,007    555 
Commercial and industrial loans                    
(except those secured by real estate)   890    13    676    29 
Consumer and other   138    2    142    7 
   $51,534   $595   $51,816   $1,805 

 

18
 

 

Included in impaired loans are loans classified as troubled debt restructurings (“TDRs”). A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. For loans classified as impaired TDRs, the Company further evaluates the loans as performing or nonperforming. If, at the time of restructure, the loan is not considered nonaccrual, it will be classified as performing. TDRs originally classified as nonperforming are able to be reclassified as performing if, subsequent to restructure, they experience six months of payment performance according to the restructured terms. The following is a summary of performing and nonaccrual TDRs and the related specific valuation allowance by portfolio segment as of the dates indicated (dollars in thousands):

 

               Specific 
               Valuation 
   Total   Performing   Nonaccrual   Allowance 
September 30, 2014                    
Construction and land development                    
Residential  $7   $-   $7   $- 
Commercial   3,977    3,833    144    26 
    3,984    3,833    151    26 
Commercial real estate                    
Owner occupied   6,356    6,022    334    324 
Non-owner occupied   9,024    9,024    -    108 
Multifamily   2,336    2,336    -    - 
    17,716    17,382    334    432 
Consumer real estate                    
Home equity lines   160    -    160    - 
Secured by 1-4 family residential   -                
First deeds of trust   7,170    4,995    2,175    341 
Second deeds of trust   719    614    105    44 
    8,049    5,609    2,440    385 
Commercial and industrial loans                    
(except those secured by real estate)   240    104    136    12 
Consumer and other   17    -    17    - 
   $30,006   $26,928   $3,078   $855 
                     
Number of loans   112    77    35    25 

 

19
 

 

               Specific 
               Valuation 
   Total   Performing   Nonaccrual   Allowance 
December 31, 2013                    
Construction and land development                    
Residential  $216   $216   $-   $- 
Commercial   4,922    3,393    1,528    211 
    5,138    3,609    1,528    211 
Commercial real estate                    
Owner occupied   10,377    9,010    1,367    374 
Non-owner occupied   9,973    9,568    404    137 
Multifamily   2,373    2,373    -    - 
    22,723    20,951    1,771    511 
Consumer real estate                    
Home equity lines   160    -    160    - 
Secured by 1-4 family residential                    
First deeds of trust   7,296    3,230    4,066    383 
Second deeds of trust   691    324    367    - 
    8,147    3,554    4,593    383 
Commercial and industrial loans                    
(except those secured by real estate)   256    121    135    9 
Consumer and other   21    -    21    - 
   $36,285   $28,235   $8,048   $1,114 
                     
Number of loans   115    62    53    23 

 

The following table provides information about TDRs identified during the indicated periods (dollars in thousands):

 

   Nine Months Ended September 30, 2014   Nine Months Ended September 30, 2013 
       Pre-   Post-       Pre-   Post- 
       Modification   Modification       Modification   Modification 
   Number of   Recorded   Recorded   Number of   Recorded   Recorded 
   Loans   Balance   Balance   Loans   Balance   Balance 
                         
Construction and land development                              
Residential   -   $-   $-    -   $-   $- 
Commercial   1    45    45    6    2,991    2,991 
    1    45    45    6    2,991    2,991 
Commercial real estate                              
Owner occupied   2    743    743    4    1,087    1,087 
Non-owner occupied        -    -    -    -    - 
    2    743    743    4    1,087    1,087 
Consumer real estate                              
Home equity lines   -    -    -    -    -    - 
Secured by 1-4 family residential                              
First deed of trust   7    729    729    16    2,266    2,266 
Second deed of trust   2    105    105    2    162    162 
    9    834    834    18    2,428    2,428 
                               
Consumer and other   -    -    -    1    382    382 
    12   $1,622   $1,622    29   $6,888   $6,888 

 

20
 

 

   Three Months Ended September 30, 2014   Three Months Ended September 30, 2013 
       Pre-   Post-       Pre-   Post- 
       Modification   Modification       Modification   Modification 
   Number of   Recorded   Recorded   Number of   Recorded   Recorded 
   Loans   Balance   Balance   Loans   Balance   Balance 
                         
Commercial real estate                              
Owner occupied   -   $-   $-    4   $2,256   $2,256 
    -    -    -    4    2,256    2,256 
Consumer real estate                              
Secured by 1-4 family residential                              
First deed of trust   3    372    372    5    715    715 
Second deed of trust   2    105    105    2    162    162 
    5    477    477    7    877    877 
Commercial and industrial                              
(except those secured by real estate)                  -    -    - 
    5   $477   $477    11   $3,133   $3,133 

 

The following table summarizes defaults on TDRs identified for the three and nine months ended September 30, 2014 (dollars in thousands):

 

   Three Months Ended   Nine Months Ended 
   September 30, 2014   September 30, 2014 
   Number of   Recorded   Number of   Recorded 
   Loans   Balance   Loans   Balance 
                 
Cosntruction and land development                    
Commercial   -   $-    1   $45 
    -    -    1    45 
Commercial real estate                    
Owner occupied   -    -    1    334 
    -    -    1    334 
Consumer real estate:                    
Secured by 1-4 family residential                    
First deed of trust   1    186    5    541 
Second deed of trust   2    105    2    105 
    3    291    7    646 
                     
Total   3   $291    9   $1,025 

 

21
 

 

Activity in the allowance for loan losses is as follows for the periods indicated (dollars in thousands):

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Three Months Ended September 30, 2014                         
Construction and land development                         
Residential  $141   $-   $-   $-   $141 
Commercial   770    -    -    27    797 
    911    -    -    27    938 
Commercial real estate                         
Owner occupied   1,245    -    -    -    1,245 
Non-owner occupied   (15)   -    -    1    (14)
Multifamily   17    -    -    -    17 
Farmland   409    -    -    -    409 
    1,656    -    -    1    1,657 
Consumer real estate                         
Home equity lines   225    -    (52)   12    185 
Secured by 1-4 family residential                         
First deed of trust   1,744    -    (39)   9    1,714 
Second deed of trust   440    -    -    5    445 
    2,409    -    (91)   26    2,344 
Commercial and industrial loans                         
(except those secured by real estate)   678    -    -    13    691 
Consumer and other   27    -    (3)   4    28 
                          
   $5,681   $-   $(94)  $71   $5,658 

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Three Months Ended September 30, 2013                         
Construction and land development                         
Residential  $596   $-   $-   $-   $596 
Commercial   4,777    -    (175)   35    4,637 
    5,373    -    (175)   35    5,233 
Commercial real estate                         
Owner occupied   1,126    -    (128)   -    998 
Non-owner occupied   307    -    -    -    307 
Multifamily   23    -    -    -    23 
Farmland   808    -    (448)   -    360 
    2,264    -    (576)   -    1,688 
Consumer real estate                         
Home equity lines   415    -    (22)   9    402 
Secured by 1-4 family residential                         
First deed of trust   504    -    (127)   1    378 
Second deed of trust   14    -    -    -    14 
    933    -    (149)   10    794 
Commercial and industrial loans                         
(except those secured by real estate)   947    -    (115)   24    856 
Consumer and other   93    -    (39)   3    57 
                          
   $9,610   $-   $(1,054)  $72   $8,628 

 

22
 

 

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Nine Months Ended September 30, 2014                         
Construction and land development                         
Residential  $135   $5   $-   $1   $141 
Commercial   1,274    (421)   (100)   44    797 
    1,409    (416)   (100)   45    938 
Commercial real estate                         
Owner occupied   1,200    653    (608)   -    1,245 
Non-owner occupied   670    (470)   (238)   24    (14)
Multifamily   19    (2)   -    -    17 
Farmland   337    168    (96)   -    409 
    2,226    349    (942)   24    1,657 
Consumer real estate                         
Home equity lines   424    223    (476)   14    185 
Secured by 1-4 family residential                         
First deed of trust   1,992    (65)   (277)   64    1,714 
Second deed of trust   394    12    (76)   115    445 
    2,810    170    (829)   193    2,344 
Commercial and industrial loans                         
(except those secured by real estate)   724    45    (168)   90    691 
Consumer and other   70    (48)   (8)   14    28 
                          
   $7,239   $100   $(2,047)  $366   $5,658 

  

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Nine Months Ended September 30, 2013                         
Construction and land development                         
Residential  $495   $-   $-   $101   $596 
Commercial   4,611    15    (270)   281    4,637 
    5,106    15    (270)   382    5,233 
Commercial real estate                         
Owner occupied   1,359    -    (404)   43    998 
Non-owner occupied   817    -    (510)   -    307 
Multifamily   23    -    -    -    23 
Farmland   -    808    (448)   -    360 
    2,199    808    (1,362)   43    1,688 
Consumer real estate                         
Home equity lines   658    -    (266)   10    402 
Secured by 1-4 family residential                         
First deed of trust   1,358    -    (1,002)   22    378 
Second deed of trust   224    -    (215)   5    14 
    2,240    -    (1,483)   37    794 
Commercial and industrial loans                         
(except those secured by real estate)   1,162    -    (466)   160    856 
Consumer and other   101    -    (52)   8    57 
                          
   $10,808   $823   $(3,633)  $630   $8,628 

 

23
 

  

   Beginning   Provision for           Ending 
   Balance   Loan Losses   Charge-offs   Recoveries   Balance 
                     
Year Ended December 31, 2013                         
Construction and land development                         
Residential  $495   $(462)  $-   $102   $135 
Commercial   4,611    (3,482)   (279)   424    1,274 
    5,106    (3,944)   (279)   526    1,409 
Commercial real estate                         
Owner occupied   1,359    252    (454)   43    1,200 
Non-owner occupied   817    452    (619)   20    670 
Multifamily   23    (4)   -    -    19 
Farmland   -    1,233    (896)   -    337 
    2,199    1,933    (1,969)   63    2,226 
Consumer real estate                         
Home equity lines   658    23    (266)   9    424 
Secured by 1-4 family residential                         
First deed of trust   1,358    2,493    (1,953)   94    1,992 
Second deed of trust   224    498    (367)   39    394 
    2,240    3,014    (2,586)   142    2,810 
Commercial and industrial loans                         
(except those secured by real estate)   1,162    145    (760)   177    724 
Consumer and other   101    25    (65)   9    70 
                          
   $10,808   $1,173   $(5,659)  $917   $7,239 

 

24
 

 

Loans were evaluated for impairment as follows for the periods indicated (dollars in thousands):

 

   Loans Evaluated for Impairment 
   Individually   Collectively   Total 
             
Nine Months Ended September 30, 2014               
Construction and land development               
Residential  $546   $4,046   $4,592 
Commercial   14,264    10,871    25,135 
                
Commercial real estate               
Owner occupied   38,797    19,478    58,275 
Non-owner occupied   30,929    8,876    39,805 
Multifamily   8,305    2,714    11,019 
Farmland   768    575    1,343 
                
Consumer real estate               
Home equity lines   2,063    18,212    20,275 
Secured by 1-4 family residential               
First deed of trust   7,075    56,350    63,425 
Second deed of trust   514    7,613    8,127 
                
Commercial and industrial loans               
(except those secured by real estate)   8,751    13,720    22,471 
Consumer and other   -    20,656    20,656 
                
   $112,012   $163,111   $275,123 
                
Year Ended December 31, 2013               
Construction and land development               
Residential  $576   $2,355   $2,931 
Commercial   15,592    12,587    28,179 
                
Commercial real estate               
Owner occupied   53,126    20,458    73,584 
Non-owner occupied   34,367    9,501    43,868 
Multifamily   9,363    2,197    11,560 
Farmland   778    685    1,463 
                
Consumer real estate               
Home equity lines   1,382    19,864    21,246