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LOANS
 3 Months Ended
Mar. 31, 2012
Loans  
LOANS

NOTE 3 - LOANS

The composition of loans receivable and loans held-for-sale is as follows:

(in thousands)   March 31, 2012     December 31, 2011  
   Residential 1-4 family   $ 187,985     $ 187,676  
   Residential 5+ multifamily     3,155       3,187  
   Construction of residential 1-4 family     5,235       5,305  
   Home equity credit     34,523       34,621  
Residential real estate     230,898       230,789  
   Commercial     81,604       81,958  
   Construction of commercial     7,517       7,069  
Commercial real estate     89,121       89,027  
Farm land     3,860       4,925  
Vacant land     12,737       12,828  
Real estate secured     336,616       337,569  
Commercial and industrial     31,081       29,358  
Municipal     2,729       2,415  
Consumer     4,451       4,496  
Loans receivable, gross     374,877       373,838  
Deferred loan origination fees and costs, net     998       1,004  
Allowance for loan losses     (4,166 )     (4,076 )
Loans receivable, net   $ 371,709     $ 370,766  
Loans held-for-sale                
   Residential 1-4 family   $ 1,308     $ 948  

Concentrations of Credit Risk

Salisbury's loans consist primarily of residential and commercial real estate loans located principally in northwestern Connecticut and nearby New York and Massachusetts towns, which constitute Salisbury's service area. Salisbury offers a broad range of loan and credit facilities to borrowers in its service area, including residential mortgage loans, commercial real estate loans, construction loans, working capital loans, equipment loans, and a variety of consumer loans, including home equity lines of credit, and installment and collateral loans. All residential and commercial mortgage loans are collateralized by first or second mortgages on real estate. The ability of single family residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the market area and real estate values. The ability of commercial borrowers to honor their repayment commitments is dependent on the general economy as well as the health of the real estate economic sector in Salisbury’s market area.

Credit Quality

The composition of loans receivable by credit risk rating is as follows:

(in thousands)   Pass     Special mention     Substandard     Doubtful     Loss     Total  
March 31, 2012                                                
   Residential 1-4 family   $ 170,462     $ 13,646     $ 3,877     $ —     $ —     $ 187,985  
   Residential 5+ multifamily     2,724       431       —       —       —       3,155  
   Construction of residential 1-4 family     4,034       415       786       —       —       5,235  
   Home equity credit     31,332       1,524       1,667       —       —       34,523  
Residential real estate     208,552       16,016       6,330       —       —       230,898  
   Commercial     62,620       8,156       10,828       —       —       81,604  
   Construction of commercial     6,744       302       471       —       —       7,517  
Commercial real estate     69,364       8,458       11,299       —       —       89,121  
Farm land     2,300       347       1,213       —       —       3,860  
Vacant land     8,001       878       3,858       —       —       12,737  
Real estate secured     288,217       25,699       22,700       —       —       336,616  
Commercial and industrial     22,331       6,539       2,211       —       —       31,081  
Municipal     2,729       —       —       —       —       2,729  
Consumer     4,243       153       55       —       —       4,451  
Loans receivable, gross   $ 317,520     $ 32,391     $ 24,966     $ —     $ —     $ 374,877  

 

(in thousands)   Pass     Special mention     Substandard     Doubtful     Loss     Total  
December 31, 2011                                                
   Residential 1-4 family   $ 168,326     $ 15,517     $ 3,833     $ —     $ —     $ 187,676  
   Residential 5+ multifamily     2,752       435       —       —       —       3,187  
   Construction of residential 1-4 family     4,116       415       774       —       —       5,305  
   Home equity credit     31,843       1,451       1,327       —       —       34,621  
Residential real estate     207,037       17,818       5,934       —       —       230,789  
   Commercial     64,458       6,187       11,313       —       —       81,958  
   Construction of commercial     6,296       302       471       —       —       7,069  
Commercial real estate     70,754       6,489       11,784       —       —       89,027  
Farm land     2,327       1,768       830       —       —       4,925  
Vacant land     8,039       883       3,906       —       —       12,828  
Real estate secured     288,157       26,958       22,454       —       —       337,569  
Commercial and industrial     21,104       6,847       1,407       —       —       29,358  
Municipal     2,415       —       —       —       —       2,415  
Consumer     4,254       178       64       —       —       4,496  
Loans receivable, gross   $ 315,930     $ 33,983     $ 23,925     $ —     $ —     $ 373,838  

Credit quality segments of loans receivable by credit risk rating are as follows:

(in thousands)   Pass     Special mention     Substandard     Doubtful     Loss     Total  
March 31, 2012                                                
Performing loans   $ 316,514     $ 30,624     $ —     $ —     $ —     $ 347,138  
Potential problem loans     —       —       14,836       —       —       14,836  
Troubled debt restructurings: accruing     1,006       1,767       2,523       —       —       5,296  
Troubled debt restructurings: non-accrual     —       —       1,680       —       —       1,680  
Other non-accrual loans     —       —       5,927       —       —       5,927  
Impaired loans     1,006       1,767       10,130       —       —       12,903  
Loans receivable, gross   $ 317,520     $ 32,391     $ 24,966     $ —     $ —     $ 374,877  
December 31, 2011                                                
Performing loans   $ 314,551     $ 32,570     $ —     $ —     $ —     $ 347,121  
Potential problem loans     —       —       14,039       —       —       14,039  
Troubled debt restructurings: accruing     1,379       1,413       1,810       —       —       4,602  
Troubled debt restructurings: non-accrual     —       —       1,753       —       —       1,753  
Other non-accrual loans     —       —       6,323       —       —       6,323  
Impaired loans     1,379       1,413       9,886       —       —       12,678  
Loans receivable, gross   $ 315,930     $ 33,983     $ 23,925     $ —     $ —     $ 373,838  

Potential problem loans are performing loans risk rated substandard that are not classified as impaired. Impaired loans are loans for which it is probable that Salisbury will not be able to collect all principal and interest amounts due according to the contractual terms of the loan agreements.

The components of impaired loans are as follows:

(in thousands)   March 31, 2012     December 31, 2011  
Troubled debt restructurings: accruing   $ 5,296     $ 4,602  
Troubled debt restructurings: non-accrual     1,680       1,753  
All other non-accrual loans     5,927       6,323  
Impaired loans   $ 12,903     $ 12,678  
Commitments to lend additional amounts to impaired borrowers   $ —     $ —  

The composition of loans receivable delinquency status by credit risk rating is as follows:

(in thousands)   Pass     Special mention     Substandard     Doubtful     Loss     Total  
March 31, 2012                                                
Current   $ 311,798     $ 30,106     $ 11,412     $ —     $ —     $ 353,316  
Past due 001-029     4,899       1,168       4,408       —       —       10,475  
Past due 030-059     765       500       2,253       —       —       3,518  
Past due 060-089     58       617       266       —       —       941  
Past due 090-179     —       —       174       —       —       174  
Past due 180+     —       —       6,453       —       —       6,453  
Loans receivable, gross   $ 317,520     $ 32,391     $ 24,966     $ —     $ —     $ 374,877  
December 31, 2011                                                
Current   $ 311,741     $ 31,407     $ 12,618     $ —     $ —     $ 355,766  
Past due 001-029     3,696       1,195       3,517       —       —       8,408  
Past due 030-059     435       1,024       674       —       —       2,133  
Past due 060-089     58       357       46       —       —       461  
Past due 090-179     —       —       1,095       —       —       1,095  
Past due 180+     —       —       5,975       —       —       5,975  
Loans receivable, gross   $ 315,930     $ 33,983     $ 23,925     $ —     $ —     $ 373,838  

The composition of loans receivable by delinquency status is as follows:

          Past due        
(in thousands)   Current     1-29
days		     30-59
days		     60-89
days		     90-179
days		     180 days
and over		     30 days
and over		     Accruing
90 days
and over		     Non-
accrual		  
March 31, 2012                                                                        
   Residential 1-4 family   $ 181,806     $ 4,108     $ 969     $ 312     $ 152     $ 638     $ 2,071     $ —     $ 1,300  
   Residential 5+ multifamily     2,999       —       —       156       —       —       156       —       —  
   Residential 1-4 family construction     5,090       145       —       —       —       —       —       —       —  
   Home equity credit     32,806       1,038       345       217       —       117       679       —       140  
Residential real estate     222,701       5,291       1,314       685       152       755       2,906       —       1,440  
   Commercial     73,969       4,333       1,632       58       —       1,612       3,302       —       1,755  
   Construction of commercial     7,351       —       —       145       —       21       166       —       21  
Commercial real estate     81,320       4,333       1,632       203       —       1,633       3,468       —       1,776  
Farm land     3,438       44       378       —       —       —       378       —       —  
Vacant land     9,002       72       —       50       —       3,613       3,663       —       3,613  
Real estate secured     316,461       9,740       3,324       938       152       6,001       10,415       —       6,829  
Commercial and industrial     29,776       672       159       —       22       452       633       —       778  
Municipal     2,729       —       —       —       —       —       —       —       —  
Consumer     4,350       63       35       3       —       —       38       —       —  
Loans receivable, gross   $ 353,316     $ 10,475     $ 3,518     $ 941     $ 174     $ 6,453     $ 11,086     $ —     $ 7,607  
December 31, 2011                                                                        
   Residential 1-4 family   $ 182,263     $ 3,772     $ 811     $ 121     $ —     $ 709     $ 1,641     $ —     $ 1,240  
   Residential 5+ multifamily     2,918       —       112       157       —       —       269       —       —  
   Residential 1-4 family construction     5,305       —       —       —       —       —       —       —       —  
   Home equity credit     34,124       298       50       —       83       66       199               173  
Residential real estate     224,610       4,070       973       278       83       775       2,109       —       1,413  
   Commercial     75,486       3,887       483       180       930       992       2,585       —       2,317  
   Construction of commercial     6,796       108       145       —       20       —       165       —       20  
Commercial real estate     82,282       3,995       628       180       950       992       2,750       —       2,337  
Farm land     4,499       46       380       —       —       —       380       —       —  
Vacant land     9,047       73       50       —       —       3,658       3,708       —       3,658  
Real estate secured     320,438       8,184       2,031       458       1,033       5,425       8,947       —       7,408  
Commercial and industrial     28,542       152       51       1       62       550       664       —       668  
Municipal     2,415       —       —       —       —       —       —       —       —  
Consumer     4,371       72       51       2       —       —       53       —       —  
Loans receivable, gross   $ 355,766     $ 8,408     $ 2,133     $ 461     $ 1,095     $ 5,975     $ 9,664     $ —     $ 8,076  

Troubled Debt Restructurings

Troubled debt restructurings occurring during the periods are as follows:

    March 31, 2012     March 31, 2011  
Three months ended
(in thousands)		   Quantity     Pre-modification
balance		     Post-modification
balance		     Quantity     Pre-modification
balance		     Post-modification
balance		  
   Residential real estate     1     $ 326     $ 326       —     $ —     $ —  
   Commercial and industrial     5       779       779       —       —       —  
Troubled debt restructurings     6     $ 1,105     $ 1,105       —     $ —     $ —  
   Rate reduction and term extension     2     $ 373     $ 373       —     $ —     $ —  
   Debt consolidation and term extension     3       706       706       —       —       —  
   Seasonal interest only concession     1       26       26       —       —       —  
Troubled debt restructurings     6     $ 1,105     $ 1,105       —     $ —     $ —  

Six loans were restructured during the quarter ended March 31, 2012 and all were current at March 31, 2012.

Allowance for Loan Losses

Changes in the allowance for loan losses are as follows:

    March 31, 2012     March 31, 2011  
Three months ended
(in thousands)		   Beginning
balance		     Provision     Charge-
offs		     Reco-
veries		     Ending
balance		     Beginning
balance		     Provision     Charge-
offs		     Reco-
veries		     Ending
balance		  
   Residential   $ 1,479     $ 39     $ (18 )   $ —     $ 1,500     $ 1,504     $ 60     $ (101 )   $ —     $ 1,463  
   Commercial     1,139       (79 )     —       1       1,061       1,132       291       (80 )     —       1,343  
   Land     410       (29 )     (42 )     —       339       392       (18 )     (79 )     —       295  
Real estate     3,028       (69 )     (60 )     1       2,900       3,028       333       (260 )     —       3,101  
Commercial & industrial     704       100       (29 )     3       778       541       (9 )     —       —       532  
Municipal     24       4       —       —       28       51       4       —       —       55  
Consumer     79       59       (10 )     5       133       164       16       (19 )     7       168  
Unallocated     241       86       —       —       327       136       (14 )     —       —       122  
Totals   $ 4,076     $ 180     $ (99 )   $ 9     $ 4,166     $ 3,920     $ 330     $ (279 )   $ 7     $ 3,978  

The composition of loans receivable and the allowance for loan losses is as follows:

    Collectively evaluated     Individually evaluated     Total portfolio  
(in thousands)   Loans     Allowance     Loans     Allowance     Loans     Allowance  
March 31, 2012                                                
   Residential 1-4 family   $ 183,741     $ 738     $ 4,244     $ 295     $ 187,985     $ 1,033  
   Residential 5+ multifamily     2,410       17       745       —       3,155       17  
   Construction of residential 1-4 family     5,235       21       —       —       5,235       21  
   Home equity credit     34,383       429       140       —       34,523       429  
Residential real estate     225,769       1,205       5,129       295       230,898       1,500  
   Commercial     75,146       858       6,458       102       81,604       960  
   Construction of commercial     7,496       81       21       21       7,517       102  
Commercial real estate     82,642       939       6,479       123       89,121       1,062  
Farm land     3,040       25       820       150       3,860       175  
Vacant land     8,977       104       3,760       60       12,737       164  
Real estate secured     320,428       2,273       16,188       628       336,616       2,901  
Commercial and industrial     29,083       384       1,998       394       31,081       778  
Municipal     2,729       28       —       —       2,729       28  
Consumer     4,241       42       210       91       4,451       133  
Unallocated allowance     —       —       —       —       —       326  
Totals   $ 356,481     $ 2,727     $ 18,396     $ 1,113     $ 374,877     $ 4,166  

 

    Collectively evaluated     Individually evaluated     Total portfolio  
(in thousands)   Loans     Allowance     Loans     Allowance     Loans     Allowance  
December 31, 2011                                                
   Residential 1-4 family   $ 182,695     $ 762     $ 4,981     $ 297     $ 187,676     $ 1,059  
   Residential 5+ multifamily     2,437       17       750       4       3,187       21  
   Construction of residential 1-4 family     4,606       17       699       —       5,305       17  
   Home equity credit     34,333       382       288       —       34,621       382  
Residential real estate     224,071       1,178       6,718       301       230,789       1,479  
   Commercial     74,419       840       7,539       202       81,958       1,042  
   Construction of commercial     7,049       77       20       20       7,069       97  
Commercial real estate     81,468       917       7,559       222       89,027       1,139  
Farm land     4,095       35       830       150       4,925       185  
Vacant land     9,021       104       3,807       120       12,828       224  
Real estate secured     318,655       2,234       18,914       793       337,569       3,027  
Commercial and industrial     28,091       368       1,267       336       29,358       704  
Municipal     2,415       24       —       —       2,415       24  
Consumer     4,431       44       65       35       4,496       79  
Unallocated allowance     —       —       —       —       —       242  
Totals   $ 353,592     $ 2,670     $ 20,246     $ 1,164     $ 373,838     $ 4,076  

The credit quality segments of loans receivable and the allowance for loan losses are as follows:

    Collectively evaluated     Individually evaluated     Total portfolio  
(in thousands)   Loans     Allowance     Loans     Allowance     Loans     Allowance  
March 31, 2012                                                
Performing loans   $ 346,929     $ 2,419     $ 210     $ 91     $ 347,139     $ 2,510  
Potential problem loans     9,552       308       5,284       242       14,836       550  
Impaired loans     —       —       12,902       780       12,902       780  
Unallocated allowance     —       —       —       —       —       326  
Totals   $ 356,481     $ 2,727     $ 18,396     $ 1,113     $ 374,877     $ 4,166  
December 31, 2011                                                
Performing loans   $ 346,303     $ 2,436     $ 819     $ 35     $ 347,122     $ 2,471  
Potential problem loans     7,289       234       6,750       255       14,039       489  
Impaired loans     —       —       12,677       874       12,677       874  
Unallocated allowance     —       —       —       —       —       242  
Totals   $ 353,592     $ 2,670     $ 20,246     $ 1,164     $ 373,838     $ 4,076  

Certain data with respect to impaired loans individually evaluated is as follows:

    Impaired loans with specific allowance     Impaired loans with no specific allowance  
    Loan balance     Specific     Income     Loan balance     Income  
(in thousands)   Book     Note     Average     allowance     recognized     Book     Note     Average     recognized  
March 31, 2012                                                                        
   Residential 1-4 family   $ 1,950     $ 2,086     $ 2,369     $ 253     $ 45     $ 1,502     $ 1,524     $ 1,152     $ 7  
   Home equity credit     —       —       —       —       —       140       162       164       3  
Residential real estate     1,950       2,086       2,369       253       45       1,642       1,686       1,316       10  
Commercial     1,750       1,891       1,918       123       14       1,979       2,404       2,047       31  
Vacant land     134       154       479       10       2       3,479       4,245       3,167       —  
Real estate secured     3,834       4,131       4,766       386       61       7,100       8,335       6,530       41  
Commercial and industrial     747       828       724       394       —       1,222       1,894       687       28  
Consumer     —       —       —       —       —       —       143       —       —  
Totals   $ 4,581     $ 4,959     $ 5,490     $ 780     $ 61     $ 8,322     $ 10,372     $ 7,217     $ 69  

 

    Impaired loans with specific allowance     Impaired loans with no specific allowance  
    Loan balance     Specific     Income     Loan balance     Income  
(in thousands)   Book     Note     Average     allowance     recognized     Book     Note     Average     recognized  
December 31, 2011                                                                        
   Residential 1-4 family   $ 3,012     $ 3,160     $ 1,822     $ 266     $ 38     $ 390     $ 426     $ 3,875     $ —  
   Home equity credit     —       —       —       —       —       173       177       227       —  
Residential real estate     3,012       3,160       1,822       266       38       563       603       4,102       —  
Commercial     2,151       2,405       2,550       203       77       2,157       2,612       2,175       37  
Vacant land     594       774       639       70       —       3,063       3,627       3,243       —  
Real estate secured     5,757       6,339       5,011       539       115       5,783       6,842       9,520       37  
Commercial and industrial     560       639       364       335       —       577       1,221       876       16  
Consumer     —       —       —       —       —       —       142       14       —  
Totals   $ 6,317     $ 6,978     $ 5,375     $ 874     $ 115     $ 6,360     $ 8,205     $ 10,410     $ 53