9. ALLOWANCE FOR LOAN AND LEASE LOSSES

9 Months Ended

Sep. 30, 2011

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

9. ALLOWANCE FOR LOAN AND LEASE LOSSES

The Company’s loan and lease portfolio allocated by management’s internal risk ratings as of September 30, 2011 and December 31, 2010 are summarized below:

September 30, 2011	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)
			Real Estate
	Commercial		Commercial		Multi-Family		Construction		Residential
Grade:
Pass	$	33,372	$	163,220	$	6,110	$	7,076	$	16,334
Watch		1,516		20,548		1,190		456		811
Special mention		2,853		7,372		764		831		1,021
Substandard		4,774		16,850		—		4,197		3,847
Doubtful		393		129		—		—		—
Total	$	42,908	$	208,119	$	8,064	$	12,560	$	22,013

	Other Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
	Leases		Agriculture		Consumer
Grade:
Pass	$	2,133	$	6,086	$	9,730
Watch		—		860		665
Special mention		—		—		262
Substandard		19		597		769
Doubtful		—		—		35
Total	$	2,152	$	7,543	$	11,461

December 31, 2010	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)
			Real Estate
	Commercial		Commercial		Multi-Family		Construction		Residential
Grade:
Pass	$	39,335	$	175,319	$	4,371	$	7,884	$	21,928
Watch		3,515		11,021		1,214		1,632		—
Special mention		4,228		11,713		—		1,178		953
Substandard		11,012		18,023		1,383		5,277		3,218
Doubtful		171		—		—		—		—
Total	$	58,261	$	216,076	$	6,968	$	15,971	$	26,099

	Other Credit Exposure
	Credit Risk Profile by Internally Assigned Grade
	Leases		Agriculture		Consumer
Grade:
Pass	$	2,740	$	6,484	$	12,277
Watch		—		589		514
Special mention		—		—		178
Substandard		26		129		217
Doubtful		—		—		16
Total	$	2,766	$	7,202	$	13,202

The allocation of the Company’s allowance for loan and lease losses as of September 30, 2011 and December 31, 2010, by portfolio segment and by impairment methodology are summarized below:

September 30, 2011
(dollars in thousands)				Real Estate												Other
	Com-			Com-			Multi-			Construc-								Agri-
	mercial			mercial			Family			tion			Residential			Leases		culture			Consumer			Unallocated		Total
Allowance for Loan and Lease Losses
Beginning balance allocated to portfolio segments	$	2,574		$	2,715		$	115		$	1,090		$	581		$	7	$	131		$	221		$	151	$	7,585
Charge-offs		(587	)		(1,820	)		(83	)		(456	)		(333	)		—		(240	)		(220	)		—		(3,739	)
Recoveries		152			5			—			—			—			—		241			19			—		417
Provision		(221	)		1,991			167			186			222			87		86			320			787		3,625
Ending balance allocated to portfolio segments	$	1,918		$	2,891		$	199		$	820		$	470		$	94	$	218		$	340		$	938	$	7,888
Ending balance:
Individually evaluated for impairment	$	465		$	463		$	6		$	367		$	35		$	—	$	89		$	40		$	—	$	1,465
Ending balance:
Collectively evaluated for impairment	$	1,453		$	2,428		$	193		$	453		$	435		$	94	$	129		$	300		$	938	$	6,423
Loans
Ending balance	$	42,908		$	208,119		$	8,064		$	12,560		$	22,013		$	2,152	$	7,543		$	11,461		$	—	$	314,820
Ending balance:
Individually evaluated for impairment	$	5,229		$	22,878		$	1,208		$	4,197		$	4,359		$	—	$	597		$	312		$	—	$	38,780
Ending balance:
Collectively evaluated for impairment	$	37,679		$	185,241		$	6,856		$	8,363		$	17,654		$	2,152	$	6,946		$	11,149		$	—	$	276,040

December 31, 2010
(dollars in thousands)			Real Estate								Other
	Com-		Com-		Multi-		Construc-						Agri-
	mercial		mercial		Family		tion		Residential		Leases		culture		Consumer		Unallocated		Total
Allowance for Loan and Lease Losses
Ending balance allocated to portfolio segments	$	2,574	$	2,715	$	115	$	1,090	$	581	$	7	$	131	$	221	$	151	$	7,585
Ending balance:
Individually evaluated for impairment	$	274	$	1,160	$	22	$	—	$	152	$	—	$	—	$	11	$	—	$	1,619
Ending balance:
Collectively evaluated for impairment	$	2,300	$	1,555	$	93	$	1,090	$	429	$	7	$	131	$	210	$	151	$	5,966
Loans
Ending balance	$	58,261	$	216,076	$	6,968	$	15,971	$	26,099	$	2,766	$	7,202	$	13,202	$	—	$	346,545
Ending balance:
Individually evaluated for impairment	$	8,257	$	21,186	$	2,596	$	4,695	$	2,676	$	—	$	129	$	698	$	—	$	40,237
Ending balance:
Collectively evaluated for impairment	$	50,004	$	194,890	$	4,372	$	11,276	$	23,423	$	2,766	$	7,073	$	12,504	$	—	$	306,308

The Company’s aging analysis of the loan and lease portfolio at September 30, 2011 and December 31, 2010 are summarized below:

September 30, 2011													Past Due
(dollars in thousands)					Past Due								Greater Than
	30-59 Days		60-89 Days		Greater Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing		Nonaccrual
Commercial:
Commercial	$	1,065	$	245	$	2,730	$	4,040	$	38,868	$	42,908		—	$	3,104
Real estate:
Commercial		3,338		3,602		7,762		14,702		193,417		208,119		—		10,047
Multi-family		746		—		—		746		7,318		8,064		—		—
Construction		440		—		3,974		4,414		8,146		12,560		—		3,974
Residential		—		—		3,000		3,000		19,013		22,013		—		3,000
Other:
Leases		—		—		19		19		2,133		2,152		—		19
Agriculture		—		—		597		597		6,946		7,543		—		597
Consumer		35		17		207		259		11,202		11,461		—		224
Total	$	5,624	$	3,864	$	18,289	$	27,777	$	287,043	$	314,820	$	—	$	20,965

December 31, 2010													Past Due
(dollars in thousands)					Past Due								Greater Than
	30-59 Days		60-89 Days		Greater Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing		Nonaccrual
Commercial:
Commercial	$	219	$	19	$	3,346	$	3,584	$	54,677	$	58,261		—	$	3,491
Real estate:
Commercial		1,207		3,140		10,101		14,448		201,628		216,076		—		10,975
Multi-family		—				1,383		1,383		5,585		6,968		—		1,383
Construction		—		1,835		2,859		4,694		11,277		15,971		—		4,694
Residential		795		366		1,149		2,310		23,789		26,099		—		1,554
Other:
Leases		—		—		28		28		2,738		2,766		—		28
Agriculture		—		—		129		129		7,073		7,202		—		129
Consumer		123		8		221		352		12,850		13,202		—		317
Total	$	2,344	$	5,368	$	19,216	$	26,928	$	319,617	$	346,545	$	—	$	22,571