October 30, 2014
Securities and Exchange Commission
Division of Corporate Finance
Washington, D.C. 20549
Dear Mr. Rodriguez:
We have received your comment letter dated October 17, 2014 and have provided responses below.
1. | Please provide us and expand the tabular presentation in future filings to include the information for nonaccrual, past due and restructured loans for each of the last 5 fiscal years pursuant to Item III C 1 of Guide III. In this regard, present the aggregate amount of loans not included above which are “troubled debt restructurings.” In addition, provide a note to the tabular presentation to state the amount of nonaccrual troubled debt restructurings included in nonaccrual loans. |
In future filings, we will include the following table to address this comment.
2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
Nonaccrual Loans: | ||||||||||||||||||||
Real Estate | $ | 9,963 | $ | 9,611 | $ | 7,671 | $ | 5,189 | $ | 2,995 | ||||||||||
Commercial | 1,890 | 2,914 | 5,888 | 1,656 | 261 | |||||||||||||||
Home Equity | 402 | 740 | 266 | 715 | 250 | |||||||||||||||
Other | - | 121 | 39 | 30 | 0 | |||||||||||||||
Loans past due 90 days or more: | ||||||||||||||||||||
Real Estate | 246 | - | 646 | 3021 | 3475 | |||||||||||||||
Commercial | 4 | - | - | 4581 | 57 | |||||||||||||||
Home Equity | 61 | 260 | 588 | 375 | ||||||||||||||||
Other | 16 | - | 6 | 54 | 240 | |||||||||||||||
Restructured Loans: | ||||||||||||||||||||
Real Estate | 50 | 147 | 4,786 | 267 | ||||||||||||||||
Commercial | 1,450 | 4,628 | 1,292 | 385 | ||||||||||||||||
Total Nonperforming loans | $ | 14,082 | $ | 18,161 | $ | 20,854 | $ | 16,486 | $ | 7,653 | ||||||||||
Nonperforming loans as a percentage of loans held for investment | 2.94 | % | 3.89 | % | 4.18 | % | 3.70 | % | 1.76 | % | ||||||||||
Net Loan Losses to Total Loans Held for Investment(1) | 0.78 | % | 0.64 | % | 0.63 | % | 0.53 | % | 0.59 | % | ||||||||||
Allowance for loan and lease losses to nonperforming loans | 58.12 | % | 44.90 | % | 33.26 | % | 35.10 | % | 50.12 | % | ||||||||||
Restructured Nonaccrual | - | - | 1,349 | - | - |
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2. | Please provide us and expand future filings to include the ratio of net charge offs during the period to average loans outstanding during the period pursuant to Item IV A of Guide III. |
We will expand future filings to include the following table to explain the ratio of net charge offs during the period to average loans outstanding.
SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||
Balance at beginning of period | 8,154 | 6,937 | 5,786 | 3,836 | 2,189 | |||||||||||||||
Provision charged to expenses | 3,775 | 4,200 | 4,000 | 4,300 | 4,210 | |||||||||||||||
Loan losses: | ||||||||||||||||||||
Construction/land development | 2,127 | 1,480 | 1,263 | 249 | 677 | |||||||||||||||
Farmland | - | - | - | 3 | - | |||||||||||||||
Real Estate | 173 | 482 | 474 | 181 | 267 | |||||||||||||||
Multi-family | - | - | - | 958 | - | |||||||||||||||
Commercial Real Estate | 201 | 424 | 381 | 346 | 395 | |||||||||||||||
Home Equity – closed end | 159 | 69 | 222 | 200 | 16 | |||||||||||||||
Home Equity – open end | 68 | - | 83 | - | - | |||||||||||||||
Commercial & Industrial – Non Real Estate | 986 | 776 | 423 | 332 | 1,096 | |||||||||||||||
Consumer | 173 | 45 | 90 | 117 | 117 | |||||||||||||||
Dealer Finance | 17 | - | - | - | - | |||||||||||||||
Credit Cards | 121 | 71 | 106 | 97 | 71 | |||||||||||||||
Total loan losses | 4,025 | 3,347 | 3,042 | 2,483 | 2,639 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Construction/land development | 40 | 192 | - | - | - | |||||||||||||||
Farmland | - | 3 | - | - | - | |||||||||||||||
Real Estate | - | - | 8 | 2 | 6 | |||||||||||||||
Multi-family | - | - | 48 | 52 | - | |||||||||||||||
Commercial Real Estate | 42 | 48 | 16 | 2 | - | |||||||||||||||
Home Equity – closed end | - | - | 3 | - | - | |||||||||||||||
Home Equity – open end | 29 | - | 27 | - | - | |||||||||||||||
Commercial & Industrial – Non Real Estate | 127 | 62 | 24 | - | - | |||||||||||||||
Consumer | 14 | 27 | 42 | 56 | 36 | |||||||||||||||
Dealer Finance | - | - | - | - | - | |||||||||||||||
Credit Cards | 28 | 32 | 25 | 21 | 34 | |||||||||||||||
Total recoveries | 280 | 364 | 193 | 133 | 76 | |||||||||||||||
Net loan losses | (3,745 | ) | (2,983 | ) | (2,849 | ) | (2,350 | ) | (2,563 | ) | ||||||||||
Balance at end of period | 8,184 | 8,154 | 6,937 | 5,786 | 3,836 | |||||||||||||||
Allowance for loan losses as a percentage of loans | 1.71 | % | 1.75 | % | 1.54 | % | 1.30 | % | 0.88 | % | ||||||||||
Net loan losses to average loans outstanding (held for investment) | 0.79 | % | 0.65 | % | 0.63 | % | 0.53 | % | 0.61 | % |
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3. | Please provide us and expand future filings to present the Allocation of the Allowance for Loan Losses at the end of each of the last five fiscal years pursuant to Item IV B of Guide III. |
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
2013 | 2012 | 2011* | 2010* | 2009*/** | ||||||||||||||||||||||||||||||||||||
Allowance for loan losses: (in thousands) | BALANCE | PERCENTAGE OF LOANS IN EACH CATEGORY | BALANCE | PERCENTAGE OF LOANS IN EACH CATEGORY | BALANCE | PERCENTAGE OF LOANS IN EACH CATEGORY | BALANCE | PERCENTAGE OF LOANS IN EACH CATEGORY | BALANCE | PERCENTAGE OF LOANS IN EACH CATEGORY | ||||||||||||||||||||||||||||||
Construction/Land Development | 4,007 | 48.96 | % | 2,771 | 33.98 | % | ||||||||||||||||||||||||||||||||||
Real Estate | 400 | 4.89 | % | 924 | 11.33 | % | ||||||||||||||||||||||||||||||||||
Real Estate | 4,407 | 53.85 | % | 3,695 | 45.32 | % | 2,735 | 39.43 | % | 2,284 | 39.48 | % | 1,878 | 48.96 | % | |||||||||||||||||||||||||
Commercial, Financial and Agricultural | 2,239 | 27.36 | % | 3,187 | 39.09 | % | 2,984 | 43.02 | % | 2,653 | 45.86 | % | 1,746 | 45.52 | % | |||||||||||||||||||||||||
Consumer | 905 | 11.06 | % | 253 | 3.10 | % | 298 | 4.30 | % | 270 | 4.67 | % | 212 | 5.53 | % | |||||||||||||||||||||||||
Home Equity | 633 | 7.73 | % | 1,019 | 12.50 | % | 920 | 13.26 | % | 578 | 9.99 | % | - | 0.00 | % | |||||||||||||||||||||||||
Total | $ | 8,184 | 100.00 | % | $ | 8,154 | 100.00 | % | $ | 6,937 | 100.00 | % | $ | 5,785 | 100.00 | % | $ | 3,836 | 100.00 | % |
* Construction/Land Development ALLL was included with Real Estate. | ** Home Equity ALLL was included with Real Estate. |
4. | We note that all the signatures are dated March 28, 2013. Please file an amendment to the Form 10-K to include currently dated signatures. |
Response: We will file an amended Form 10-K as required with the currently dated signatures.
5. | We note that Exhibits 31.1, 31.2 and 32.1 are dated March 31, 2013. Please file newly dated certifications in an amendment to the Form 10-K. |
Response: We will file amendment to Form 10-K Exhibits 31.1, 31.2 and 32.1 with currently dated signatures.
In our responses we acknowledge that,
● | The company is responsible for the adequacy and accuracy of the disclosure in the filing; |
● | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
● | The company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
Sincerely, | |||
/s/ Carrie A. Comer | |||
Carrie A. Comer | |||
Senior Vice President and Chief Financial Officer | |||
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