Loans and ALLL
 12 Months Ended
Dec. 31, 2013
Receivables [Abstract]  
Loans and ALLL
Note 6 – Loans and ALLL
We grant commercial, agricultural, residential real estate, and consumer loans to customers situated primarily in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of the borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, light manufacturing, retail, gaming, tourism, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees; a portion of loans are unsecured.
Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ALLL, and any deferred fees or costs. Interest income on loans is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the level yield method.
The accrual of interest on commercial, agricultural, and residential real estate loans is typically discontinued at the time the loan is 90 days or more past due unless the credit is well-secured and in the process of collection. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.
For loans that are placed on nonaccrual status or charged-off, all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL. Loans are typically returned to accrual status after six months of continuous performance. For impaired loans not classified as nonaccrual, interest income continues to be accrued over the term of the loan based on the principal amount outstanding.
Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, farmland and agricultural production, and states and political subdivisions. Repayment of these loans is often dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of credit exposure to any one borrower to $12,500. Borrowers with credit needs of more than $12,500 are serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans generally require loan-to-value limits of less than 80%. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, and property and equipment. Personal guarantees are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we require annual financial statements, prepare cash flow analyses, and review credit reports as deemed necessary.
We offer adjustable rate mortgages, fixed rate balloon mortgages, construction loans, and fixed rate mortgage loans which typically have amortization periods up to a maximum of 30 years. Fixed rate loans with an amortization of greater than 15 years are generally sold upon origination to Freddie Mac. Fixed rate residential real estate loans with an amortization of 15 years or less may be held in our portfolio, held for future sale, or sold upon origination. We consider the direction of interest rates, the sensitivity of our balance sheet to changes in interest rates, and overall loan demand to determine whether or not to sell these loans to Freddie Mac.
Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 95% of the lower of the appraised value of the property or the purchase price, with the condition that private mortgage insurance is required on loans with loan-to-value ratios in excess of 80%. Substantially all loans upon origination have a loan to value ratio of less than 80%. Underwriting criteria for residential real estate loans include: evaluation of the borrower’s ability to make monthly payments, the value of the property securing the loan, ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income, all debt servicing does not exceed 36% of income, acceptable credit reports, verification of employment, income, and financial information. Appraisals are performed by independent appraisers and reviewed internally. All mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market automated underwriting system; loans in excess of $400 require the approval of our Internal Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors.
Consumer loans include automobile loans, secured and unsecured personal loans, and overdraft protection related loans. Loans are amortized generally for a period of up to 6 years. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market.
The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the ALLL when we believe the uncollectability of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALLL.
The ALLL is evaluated on a regular basis and is based upon a periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the net realizable value of the loan’s underlying collateral or the net present value of the projected payment stream and our recorded investment. Historical loss allocations were calculated at the loan class and segment levels based on a migration analysis of the loan portfolio over the preceding five years. An unallocated component is maintained to cover uncertainties that we believe affect our estimate of probable losses based on qualitative factors. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
A summary of changes in the ALLL and the recorded investment in loans by segments follows:
 
Allowance for Loan Losses
 
Year Ended December 31, 2013

Commercial
 
Agricultural
 
Residential Real Estate
 
Consumer
 
Unallocated
 
Total
January 1, 2013
$
6,862

 
$
407

 
$
3,627

 
$
666

 
$
374

 
$
11,936

Loans charged-off
(895
)
 
(12
)
 
(1,004
)
 
(429
)
 
—

 
(2,340
)
Recoveries
363

 
—

 
181

 
249

 
—

 
793

Provision for loan losses
(282
)
 
39

 
1,041

 
153

 
160

 
1,111

December 31, 2013
$
6,048

 
$
434

 
$
3,845

 
$
639

 
$
534

 
$
11,500

 
Allowance for Loan Losses and Recorded Investment in Loans
 
As of December 31, 2013
 
Commercial
 
Agricultural
 
Residential Real Estate
 
Consumer
 
Unallocated
 
Total
ALLL
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2,035

 
$
30

 
$
2,287

 
$
—

 
$
—

 
$
4,352

Collectively evaluated for impairment
4,013

 
404

 
1,558

 
639

 
534

 
7,148

Total
$
6,048

 
$
434

 
$
3,845

 
$
639

 
$
534

 
$
11,500

Loans
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
13,816

 
$
1,538

 
$
14,302

 
$
119

 
 
 
$
29,775

Collectively evaluated for impairment
378,288

 
91,051

 
275,629

 
33,294

 
 
 
778,262

Total
$
392,104

 
$
92,589

 
$
289,931

 
$
33,413

 
 
 
$
808,037

 
Allowance for Loan Losses
 
Year Ended December 31, 2012

Commercial
 
Agricultural
 
Residential Real Estate
 
Consumer
 
Unallocated
 
Total
January 1, 2012
$
6,284

 
$
1,003

 
$
2,980

 
$
633

 
$
1,475

 
$
12,375

Loans charged-off
(1,672
)
 
—

 
(1,142
)
 
(542
)
 
—

 
(3,356
)
Recoveries
240

 
—

 
122

 
255

 
—

 
617

Provision for loan losses
2,010

 
(596
)
 
1,667

 
320

 
(1,101
)
 
2,300

December 31, 2012
$
6,862

 
$
407

 
$
3,627

 
$
666

 
$
374

 
$
11,936

 
Allowance for Loan Losses and Recorded Investment in Loans
 
As of December 31, 2012
 
Commercial
 
Agricultural
 
Residential Real Estate
 
Consumer
 
Unallocated
 
Total
ALLL
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2,050

 
$
91

 
$
1,796

 
$
—

 
$
—

 
$
3,937

Collectively evaluated for impairment
4,812

 
316

 
1,831

 
666

 
374

 
7,999

Total
$
6,862

 
$
407

 
$
3,627

 
$
666

 
$
374

 
$
11,936

Loans
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
14,456

 
$
723

 
$
10,704

 
$
75

 
 
 
$
25,958

Collectively evaluated for impairment
357,049

 
82,883

 
273,444

 
33,419

 
 
 
746,795

Total
$
371,505


$
83,606

 
$
284,148

 
$
33,494

 
 
 
$
772,753


The following table displays the credit quality indicators for commercial and agricultural credit exposures based on internally assigned credit ratings as of December 31:
 
2013
 
Commercial
 
Agricultural

Real Estate
 
Other
 
Total
 
Real Estate
 
Other
 
Total
Rating
 
 
 
 
 
 
 
 
 
 

2 - High quality
$
18,671

 
$
14,461

 
$
33,132

 
$
3,527

 
$
3,235

 
$
6,762

3 - High satisfactory
91,323

 
39,403

 
130,726

 
26,015

 
17,000

 
43,015

4 - Low satisfactory
149,921

 
43,809

 
193,730

 
26,874

 
10,902

 
37,776

5 - Special mention
13,747

 
1,843

 
15,590

 
1,609

 
922

 
2,531

6 - Substandard
16,974

 
473

 
17,447

 
1,232

 
1,273

 
2,505

7 - Vulnerable
1,041

 
238

 
1,279

 
—

 
—

 
—

8 - Doubtful
183

 
17

 
200

 
—

 
—

 
—

Total
$
291,860

 
$
100,244

 
$
392,104

 
$
59,257

 
$
33,332

 
$
92,589

 
2012
 
Commercial
 
Agricultural

Real Estate
 
Other
 
Total
 
Real Estate
 
Other
 
Total
Rating
 
 
 
 
 
 
 
 
 
 
 
2 - High quality
$
25,209

 
$
15,536

 
$
40,745

 
$
2,955

 
$
2,313

 
$
5,268

3 - High satisfactory
83,805

 
28,974

 
112,779

 
16,972

 
11,886

 
28,858

4 - Low satisfactory
127,423

 
45,143

 
172,566

 
27,291

 
15,437

 
42,728

5 - Special mention
16,046

 
1,692

 
17,738

 
1,008

 
3,191

 
4,199

6 - Substandard
20,029

 
2,224

 
22,253

 
1,167

 
1,217

 
2,384

7 - Vulnerable
1,512

 
2,294

 
3,806

 
—

 
—

 
—

8 - Doubtful
1,596

 
22

 
1,618

 
—

 
169

 
169

Total
$
275,620

 
$
95,885

 
$
371,505

 
$
49,393

 
$
34,213

 
$
83,606


Internally assigned risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned risk ratings for commercial and agricultural loans are as follows:
1. EXCELLENT – Substantially Risk Free
Credit has strong financial condition and solid earnings history, characterized by:
•
High liquidity, strong cash flow, low leverage.
•
Unquestioned ability to meet all obligations when due.
•
Experienced management, with management succession in place.
•
Secured by cash.
2. HIGH QUALITY – Limited Risk
Credit with sound financial condition and has a positive trend in earnings supplemented by:
•
Favorable liquidity and leverage ratios.
•
Ability to meet all obligations when due.
•
Management with successful track record.
•
Steady and satisfactory earnings history.
•
If loan is secured, collateral is of high quality and readily marketable.
•
Access to alternative financing.
•
Well defined primary and secondary source of repayment.
•
If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident.
3. HIGH SATISFACTORY – Reasonable Risk
Credit with satisfactory financial condition and further characterized by:
•
Working capital adequate to support operations.
•
Cash flow sufficient to pay debts as scheduled.
•
Management experience and depth appear favorable.
•
Loan performing according to terms.
•
If loan is secured, collateral is acceptable and loan is fully protected.
4. LOW SATISFACTORY – Acceptable Risk
Credit with bankable risks, although some signs of weaknesses are shown:
•
Would include most start-up businesses.
•
Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year.
•
Management’s abilities are apparent, yet unproven.
•
Weakness in primary source of repayment with adequate secondary source of repayment.
•
Loan structure generally in accordance with policy.
•
If secured, loan collateral coverage is marginal.
•
Adequate cash flow to service debt, but coverage is low.
To be classified as less than satisfactory, only one of the following criteria must be met.
5. SPECIAL MENTION – Criticized
Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances surrounding a specific loan:
•
Downward trend in sales, profit levels, and margins.
•
Impaired working capital position.
•
Cash flow is strained in order to meet debt repayment.
•
Loan delinquency (30-60 days) and overdrafts may occur.
•
Shrinking equity cushion.
•
Diminishing primary source of repayment and questionable secondary source.
•
Management abilities are questionable.
•
Weak industry conditions.
•
Litigation pending against the borrower.
•
Collateral or guaranty offers limited protection.
•
Negative debt service coverage, however the credit is well collateralized and payments are current.
6. SUBSTANDARD – Classified
Credit where the borrower’s current net worth, paying capacity, and value of the collateral pledged is inadequate. There is a distinct possibility that we will implement collection procedures if the loan deficiencies are not corrected. In addition, the following characteristics may apply:
•
Sustained losses have severely eroded the equity and cash flow.
•
Deteriorating liquidity.
•
Serious management problems or internal fraud.
•
Original repayment terms liberalized.
•
Likelihood of bankruptcy.
•
Inability to access other funding sources.
•
Reliance on secondary source of repayment.
•
Litigation filed against borrower.
•
Collateral provides little or no value.
•
Requires excessive attention of the loan officer.
•
Borrower is uncooperative with loan officer.
7. VULNERABLE – Classified
Credit is considered “Substandard” and warrants placing on nonaccrual. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply:
•
Insufficient cash flow to service debt.
•
Minimal or no payments being received.
•
Limited options available to avoid the collection process.
•
Transition status, expect action will take place to collect loan without immediate progress being made.
8. DOUBTFUL – Workout
Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply:
•
Normal operations are severely diminished or have ceased.
•
Seriously impaired cash flow.
•
Original repayment terms materially altered.
•
Secondary source of repayment is inadequate.
•
Survivability as a “going concern” is impossible.
•
Collection process has begun.
•
Bankruptcy petition has been filed.
•
Judgments have been filed.
•
Portion of the loan balance has been charged-off.
Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due aging. The following tables summarize the past due and current loans as of December 31:
 
2013
 
Accruing Interest
and Past Due:
 
 
 
Total Past Due and Nonaccrual
 
 
 
 

30-59
Days
 
60-89
Days
 
90 Days
or More
 
Nonaccrual
 
 
Current
 
Total
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
$
1,226

 
$
296

 
$
—

 
$
1,136

 
$
2,658

 
$
289,202

 
$
291,860

Commercial other
368

 
15

 
13

 
238

 
634

 
99,610

 
100,244

Total commercial
1,594

 
311

 
13

 
1,374

 
3,292

 
388,812

 
392,104

Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
34

 
295

 
—

 
—

 
329

 
58,928

 
59,257

Agricultural other
—

 
—

 
—

 
—

 
—

 
33,332

 
33,332

Total agricultural
34

 
295

 
—

 
—

 
329

 
92,260

 
92,589

Residential real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior liens
3,441

 
986

 
129

 
1,765

 
6,321

 
229,865

 
236,186

Junior liens
408

 
44

 
—

 
29

 
481

 
13,074

 
13,555

Home equity lines of credit
181

 
—

 
—

 
25

 
206

 
39,984

 
40,190

Total residential real estate
4,030

 
1,030

 
129

 
1,819

 
7,008

 
282,923

 
289,931

Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
167

 
11

 
—

 
50

 
228

 
28,444

 
28,672

Unsecured
25

 
5

 
—

 
1

 
31

 
4,710

 
4,741

Total consumer
192

 
16

 
—

 
51

 
259

 
33,154

 
33,413

Total
$
5,850

 
$
1,652

 
$
142

 
$
3,244

 
$
10,888

 
$
797,149

 
$
808,037

 
2012
 
Accruing Interest
and Past Due:
 
 
 
Total Past Due and Nonaccrual
 
 
 
 

30-59
Days
 
60-89
Days
 
90 Days
or More
 
Nonaccrual
 
 
Current
 
Total
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
$
1,304

 
$
161

 
$
63

 
$
2,544

 
$
4,072

 
$
271,548

 
$
275,620

Commercial other
606

 
—

 
40

 
2,294

 
2,940

 
92,945

 
95,885

Total commercial
1,910

 
161

 
103

 
4,838

 
7,012

 
364,493

 
371,505

Agricultural
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
—

 
—

 
—

 
—

 
—

 
49,393

 
49,393

Agricultural other
90

 
—

 
—

 
169

 
259

 
33,954

 
34,213

Total agricultural
90

 
—

 
—

 
169

 
259

 
83,347

 
83,606

Residential real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior liens
2,000

 
346

 
320

 
2,064

 
4,730

 
223,532

 
228,262

Junior liens
232

 
—

 
—

 
50

 
282

 
16,207

 
16,489

Home equity lines of credit
237

 
—

 
—

 
182

 
419

 
38,978

 
39,397

Total residential real estate
2,469

 
346

 
320

 
2,296

 
5,431

 
278,717

 
284,148

Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
127

 
33

 
4

 
—

 
164

 
28,118

 
28,282

Unsecured
31

 
3

 
1

 
—

 
35

 
5,177

 
5,212

Total consumer
158

 
36

 
5

 
—

 
199

 
33,295

 
33,494

Total
$
4,627

 
$
543

 
$
428

 
$
7,303

 
$
12,901

 
$
759,852

 
$
772,753


Impaired Loans
Loans may be classified as impaired if they meet one or more of the following criteria:
1.
There has been a charge-off of its principal balance (in whole or in part),
2.
The loan has been classified as a TDR, or
3.
The loan is in nonaccrual status.
Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral, less cost to sell, if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Impairment is measured on a loan-by-loan basis for residential real estate and consumer loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate.
We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not in nonaccrual status, interest income is recognized daily, as earned, according to the terms of the loan agreement. The following is a summary of information pertaining to impaired loans as of, and for the years ended, December 31:
 
2013
 
Outstanding Balance
 
Unpaid Principal Balance
 
Valuation Allowance
 
Average Outstanding Balance
 
Interest Income Recognized
Impaired loans with a valuation allowance
 
 
 
 
 
 
 
 
 
Commercial real estate
$
6,748

 
$
6,888

 
$
1,915

 
$
7,256

 
$
400

Commercial other
521

 
521

 
120

 
879

 
51

Agricultural real estate
90

 
90

 
30

 
91

 
4

Agricultural other
—

 
—

 
—

 
53

 
—

Residential real estate senior liens
14,061

 
15,315

 
2,278

 
11,111

 
442

Residential real estate junior liens
48

 
64

 
9

 
80

 
2

Total impaired loans with a valuation allowance
21,468

 
22,878

 
4,352

 
19,470

 
899

Impaired loans without a valuation allowance
 
 
 
 
 
 
 
 
 
Commercial real estate
5,622

 
6,499

 
 
 
4,312

 
337

Commercial other
925

 
1,035

 
 
 
989

 
83

Agricultural real estate
1,370

 
1,370

 
 
 
320

 
28

Agricultural other
78

 
198

 
 
 
357

 
(7
)
Home equity lines of credit
193

 
493

 
 
 
180

 
16

Consumer secured
119

 
148

 
 
 
72

 
2

Total impaired loans without a valuation allowance
8,307

 
9,743

 
 
 
6,230

 
459

Impaired loans
 
 
 
 
 
 
 
 
 
Commercial
13,816

 
14,943

 
2,035

 
13,436

 
871

Agricultural
1,538

 
1,658

 
30

 
821

 
25

Residential real estate
14,302

 
15,872

 
2,287

 
11,371

 
460

Consumer
119

 
148

 
—

 
72

 
2

Total impaired loans
$
29,775

 
$
32,621

 
$
4,352

 
$
25,700

 
$
1,358

 
2012
 
Outstanding Balance
 
Unpaid Principal Balance
 
Valuation Allowance
 
Average Outstanding Balance
 
Interest Income Recognized
Impaired loans with a valuation allowance
 
 
 
 
 
 
 
 
 
Commercial real estate
$
7,295

 
$
7,536

 
$
1,653

 
$
6,155

 
$
237

Commercial other
2,140

 
2,140

 
397

 
1,437

 
93

Agricultural real estate
91

 
91

 
32

 
413

 
—

Agricultural other
420

 
420

 
59

 
1,555

 
54

Residential real estate senior liens
10,450

 
11,672

 
1,783

 
8,861

 
406

Residential real estate junior liens
72

 
118

 
13

 
134

 
6

Total impaired loans with a valuation allowance
20,468

 
21,977

 
3,937

 
18,555

 
796

Impaired loans without a valuation allowance
 
 
 
 
 
 
 
 
 
Commercial real estate
3,749

 
4,408

 
 
 
5,867

 
321

Commercial other
1,272

 
1,433

 
 
 
819

 
87

Agricultural real estate
—

 
—

 
 
 
183

 
—

Agricultural other
212

 
332

 
 
 
201

 
4

Home equity lines of credit
182

 
482

 
 
 
190

 
16

Consumer secured
75

 
84

 
 
 
90

 
6

Total impaired loans without a valuation allowance
5,490

 
6,739

 
 
 
7,350

 
434

Impaired loans
 
 
 
 
 
 
 
 
 
Commercial
14,456

 
15,517

 
2,050

 
14,278

 
738

Agricultural
723

 
843

 
91

 
2,352

 
58

Residential real estate
10,704

 
12,272

 
1,796

 
9,185

 
428

Consumer
75

 
84

 
—

 
90

 
6

Total impaired loans
$
25,958

 
$
28,716

 
$
3,937

 
$
25,905

 
$
1,230


As of December 31, 2013 and 2012, we had committed to advance $134 and $9, respectively, in connection with impaired loans, which include TDRs.
Troubled Debt Restructurings
Loan modifications are considered to be TDRs when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties.
Typical concessions granted include, but are not limited to:
1.
Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics.
2.
Extending the amortization period beyond typical lending guidelines for debt with similar risk characteristics.
3.
Forbearance of principal.
4.
Forbearance of accrued interest.
To determine if a borrower is experiencing financial difficulties, we consider if:
1.
The borrower is currently in default on any of their debt.
2.
The borrower would likely default on any of their debt if the concession was not granted.
3.
The borrower’s cash flow was insufficient to service all of their debt if the concession was not granted.
4.
The borrower has declared, or is in the process of declaring, bankruptcy.
5.
The borrower is unlikely to continue as a going concern (if the entity is a business).
The following is a summary of information pertaining to TDRs granted in the years ended December 31:
 
2013
 
2012
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Post-Modification Recorded Investment
Commercial
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
—

 
$
—

 
$
—

 
1

 
$
912

 
$
792

Commercial other
18

 
5,299

 
5,103

 
28

 
6,437

 
6,437

Total commercial
18

 
5,299

 
5,103

 
29

 
7,349

 
7,229

Agricultural other
4

 
1,379

 
1,379

 
7

 
652

 
652

Residential real estate
 
 
 
 
 
 
 
 
 
 
 
Senior liens
55

 
6,069

 
6,053

 
29

 
3,463

 
3,463

Junior liens
1

 
20

 
20

 
1

 
22

 
22

Total residential real estate
56

 
6,089

 
6,073

 
30

 
3,485

 
3,485

Consumer
 
 
 
 
 
 
 
 
 
 
 
Secured
1

 
27

 
27

 
1

 
—

 
—

Unsecured
2

 
34

 
34

 
—

 
—

 
—

Total consumer
3

 
61

 
61

 
1

 
—

 
—

Total
81

 
$
12,828

 
$
12,616

 
67

 
$
11,486

 
$
11,366

The following tables summarize concessions we granted to borrowers in financial difficulty in the years ended December 31:
 
2013
 
2012

Below Market Interest Rate
 
Below Market Interest Rate and Extension of Amortization Period
 
Below Market Interest Rate
 
Below Market Interest Rate and Extension of Amortization Period
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
 
Number of Loans
 
Pre-Modification Recorded Investment
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
—

 
$
—

 
—

 
$
—

 
—

 
$
—

 
1

 
$
912

Commercial other
12

 
3,070

 
6

 
2,229

 
25

 
4,924

 
3

 
1,513

Total commercial
12

 
3,070

 
6

 
2,229

 
25

 
4,924

 
4

 
2,425

Agricultural other
4

 
1,379

 
—

 
—

 
6

 
561

 
1

 
91

Residential real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior liens
24

 
1,904

 
31

 
4,165

 
17

 
1,779

 
12

 
1,684

Junior liens
—

 
—

 
1

 
20

 
—

 
—

 
1

 
22

Total residential real estate
24

 
1,904

 
32

 
4,185

 
17

 
1,779

 
13

 
1,706

Consumer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
1

 
27

 
—

 
—

 
1

 
—

 
—

 
—

Unsecured
1

 
16

 
1

 
18

 
—

 
—

 
—

 
—

Total Consumer
2

 
43

 
1

 
18

 
1

 
—

 
—

 
—

Total
42

 
$
6,396

 
39

 
$
6,432

 
49

 
$
7,264

 
18

 
$
4,222


We did not restructure any loans through the forbearance of principal or accrued interest during 2013 or 2012.
Based on our historical loss experience, losses associated with TDRs are not significantly different than other impaired loans within the same loan segment. As such, TDRs, including TDRs that have been modified in the past 12 months that subsequently defaulted, are analyzed in the same manner as other impaired loans within their respective loan segment.
Following is a summary of loans that defaulted in the years ended December 31, which were modified within 12 months prior to the default date:
 
2013
 
2012
 
Number of Loans
 
Pre-
Default
Recorded
Investment
 
Charge-off Recorded Upon Default
 
Post-
Default
Recorded
Investment
 
Number of Loans
 
Pre-
Default
Recorded
Investment
 
Charge-off Recorded Upon Default
 
Post-
Default
Recorded
Investment
Commercial other
—

 
$
—

 
$
—

 
$
—

 
5

 
$
342

 
$
143

 
$
199

Residential real estate senior liens
1

 
62

 
11

 
51

 
1

 
47

 
43

 
4

Consumer secured
—

 
—

 
—

 
—

 
1

 
8

 
8

 
—

Consumer unsecured
1

 
16

 
16

 
—

 
—

 
—

 
—

 
—

Total
2

 
$
78

 
$
27

 
$
51

 
7

 
$
397

 
$
194

 
$
203


The following is a summary of TDR loan balances as of December 31:
 
2013
 
2012
TDRs
$
25,865

 
$
19,355