2010 Annual Report

Page 17

cAoM Cobafq bApq | OMNM ANNrAi obmloq

Comparative allowance coverageI as a percentage of key loan categoriesI followsW

qhe following table summarizes loan related assets and statisticsW As of aecember PN

OMNM

OMMV

As of aecember PN

OMM8

ioansW merforming loans ioans past due VM days or more still accruing

Allowance for loan losses A QIOONIRNO

A PIMPSIUUN

A OIVRNIMSQ

PIMMS

NIQNP

OMU

konaccrual loans

RMIRUS

QMIUQQ

ORIPRO

qotal highJrisk loans

RPIRVO

QOIORT

ORIRSM

lther property owned

OISMV

OST

TRR

qotal high risk assets

RSIOMN

QOIROQ

OSIPNR

A QIOTRINMQ

A PIMTVINPU

A OIVTSISOQ

dross loans

eighJrisk loans to gross loans

NKPB

NKQB

MKVB

konaccrual loans to gross loans

NKOB

NKPB

MKVB

aelinquencies as a B of total performing loans

MKQB

MKSB

MKQB

OMNM

OMMV

OMM8

ARRIPVR

AQMITSQ

APNIPRP

Allowance as a percentage ofW dross loans

NKPB

NKPB

NKNB

konaccrual loans

NMVKRB

VVKUB

NOPKTB

eighJrisk loans

NMPKQB

VSKRB

NOOKVB

cor further discussion regarding the allowance for loan lossesI refer to kote P to the consolidated financial statementsI “ioans and Allowance for ioan iosses”K Credit nuality Credit risk arises from the inability of an obligor to meet its repayment obligation and exists in our outstanding loansI unfunded loan commitmentsI and letters of creditK te manage credit risk associated with our lending activities through an assessment of the credit risk profile of an individual borrower based on an analysis of the borrower’s credit historyI repayment capacityI financial positionI and collateralK oepayment capacity focuses on the borrower’s ability to repay the loan based on cash flows from operations or other sources of incomeK qhe Association also manages single borrower hold positions and industry concentrations based on underlying riskK qhe geographic and commodity diversity in the loan portfolioI coupled with disciplined underwritingI reduces the potential for significant credit lossesK Also worth notingI carm Credit bast’s underwriting standards do not allow for subprime lending which is evident based on the current and historical delinquency percentages of the loan portfolioK

cor additional loan type informationI see kote P to the consolidated financial statements “ioans and Allowance for ioan iosses”K Allowance for ioan iosses qhe allowance for loan losses was ARRKQ million at aecember PNI OMNMK ket loan chargeJoffs were ARKQ million for the twelve months ended aecember PNI OMNMK qhe allowance for loan losses at each period end was considered by management to be adequate to absorb probable losses existing in and inherent to the loan portfolioK janagement’s evaluations consider factors including loan loss experienceI portfolio qualityI loan portfolio compositionI current production conditionsI and economic conditionsK

qo reduce portfolio riskI the Association participates in the rpaA’s carm pervice Agency guarantee program and as of aecember PNI OMNM has guarantees totaling AOVQ millionK qhe Association also participates in the carmer jac iong qerm ptandby Commitment to murchase mrogramK As of aecember PNI OMNMI commitments totaling AUU million were in this programK konaccrual loans totaled ARMKS million at aecember PNI OMNMI a decrease of APKS million from a combined ARQKO million at aecember PNI OMMVK konaccrual loans as a percentage of gross loans remained at a relatively low level of NKOBK

T


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