8. ALLOWANCE FOR LOAN AND LEASE LOSSES

9 Months Ended

Sep. 30, 2012

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

8. ALLOWANCE FOR LOAN AND LEASE LOSSES

The Company’s loan and lease portfolio allocated by management’s internal risk ratings as of September 30, 2012 and December 31, 2011 are summarized below:

September 30, 2012	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	27,123	$	147,303	$	7,089	$	7,884	$	15,395
Watch		2,150		22,538		1,187		418		1,592
Special mention		438		11,845		444		346		1,173
Substandard		1,972		11,131		517		74		505
Doubtful		702		—		—		—		—
Total	$	32,385	$	192,817	$	9,237	$	8,722	$	18,665

	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Leases		Agriculture		Consumer		Total
Grade:
Pass	$	1,882	$	2,882	$	7,820	$	217,378
Watch		—		—		688		28,573
Special mention		—		404		37		14,687
Substandard		4		389		411		15,003
Doubtful		—		—		—		702
Total	$	1,886	$	3,675	$	8,956	$	276,343

December 31, 2011	Credit Risk Profile by Internally Assigned Grade
(dollars in thousands)			Real Estate
	Commercial		Commercial		Multi-family		Construction		Residential
Grade:
Pass	$	33,856	$	164,117	$	5,669	$	6,462	$	16,215
Watch		1,540		20,673		1,204		984		1,163
Special mention		2,173		7,187		449		827		1,372
Substandard		3,794		11,938		258		2,083		945
Doubtful		745		128		—		—		—
Total	$	42,108	$	204,043	$	7,580	$	10,356	$	19,695

	Credit Risk Profile by Internally Assigned Grade Other Credit Exposure
	Leases		Agriculture		Consumer		Total
Grade:
Pass	$	1,708	$	3,416	$	9,684	$	241,127
Watch		—		570		237		26,371
Special mention		—		—		264		12,272
Substandard		17		597		799		20,431
Doubtful		—		—		—		873
Total	$	1,725	$	4,583	$	10,984	$	301,074

The allocation of the Company’s allowance for loan and lease losses and by portfolio segment and by impairment methodology are summarized below:

September 30, 2012
(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, January 1, 2012	$	1,536		$	3,156		$	198		$	582		$	609		$	79		$	167		$	348		$	366	$	7,041
Provision for loan losses		(395	)		728			122			228			36			(74	)		257			463			—		1,365
Loans charged-off		(302	)		(1,124	)		(8	)		(377	)		(167	)		(9	)		(202	)		(494	)				(2,683	)
Recoveries		15			136			3			22			—			6			—			29					211
Ending balance, September 30, 2012	$	854		$	2,896		$	315		$	455		$	478		$	2		$	222		$	346		$	366	$	5,934
Ending balance:
Individually evaluated for impairment	$	306		$	661		$	128		$	—		$	145		$	—		$	163		$	56		$	—	$	1,459
Ending balance:
Collectively evaluated for impairment	$	548		$	2,235		$	187		$	455		$	333		$	2		$	59		$	290		$	366	$	4,475
Loans
Ending balance	$	32,385		$	192,817		$	9,237		$	8,722		$	18,665		$	1,886		$	3,675		$	8,956		$	—	$	276,343
Ending balance:
Individually evaluated for impairment	$	4,574		$	16,812		$	1,688		$	—		$	1,932		$	—		$	389		$	622		$	—	$	26,017
Ending balance:
Collectively evaluated for impairment	$	27,811		$	176,005		$	7,549		$	8,722		$	16,733		$	1,886		$	3,286		$	8,334		$	—	$	250,326

				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, June 30, 2012	$	1,065		$	3,079		$	263	$	371		$	502		$	1		$	206	$	376		$	338	$	6,201
Provision for loan losses		(75	)		25			52		379			30			2			16		(47	)		28		410
Loans charged-off		(151	)		(279	)		—		(295	)		(54	)		(1	)		—		(2	)		—		(782	)
Recoveries		15			71			—		—			—			—			—		19			—		105
Ending balance, September 30, 2012	$	854		$	2,896		$	315	$	455		$	478		$	2		$	222	$	346		$	366	$	5,934

December 31, 2011
(dollars in thousands)			Real Estate								Other
	Com-		Com-		Multi-		Construc-						Agri-
	mercial		mercial		Family		tion		Residential		Leases		culture		Consumer		Unallocated		Total
Ending balance:
Individually evaluated for impairment	$	538	$	707	$	5	$	147	$	118	$	—	$	89	$	76	$	—	$	1,680
Ending balance:
Collectively evaluated for impairment	$	998	$	2,449	$	193	$	435	$	491	$	79	$	78	$	272	$	366	$	5,361
Loans
Ending balance	$	42,108	$	204,043	$	7,580	$	10,356	$	19,695	$	1,725	$	4,583	$	10,984	$	—	$	301,074
Ending balance:
Individually evaluated for impairment	$	5,123	$	18,227	$	1,204	$	2,083	$	2,116	$	17	$	597	$	718	$	—	$	30,085
Ending balance:
Collectively evaluated for impairment	$	36,985	$	185,816	$	6,376	$	8,273	$	17,579	$	1,708	$	3,986	$	10,266	$	—	$	270,989

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, January 1, 2011	$	2,574		$	2,715		$	115		$	1,090		$	581		$	7	$	131		$	221		$	151	$	7,585
Provision for loan losses		(221	)		1,991			167			186			222			87		86			320			787		3,625
Loans charge-offs		(587	)		(1,820	)		(83	)		(456	)		(333	)		—		(240	)		(220	)		—		(3,739	)
Recoveries		152			5			—			—			—			—		241			19			—		417
Ending balance, September 30, 2011	$	1,918		$	2,891		$	199		$	820		$	470		$	94	$	218		$	340		$	938	$	7,888

The Company’s aging analysis of the loan and lease portfolio at September 30, 2012 and December 31, 2011 are summarized below:

September 30, 2012 (dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due Greater Than 90 Days		Total Past Due		Current		Total Loans		Past Due Greater Than 90 Days and Accruing		Nonaccrual
Commercial:
Commercial	$	—	$	—	$	2,285	$	2,285	$	30,100	$	32,385		—	$	3,363
Real estate:
Commercial		555		767		1,948		3,270		189,547		192,817		—		2,579
Multi-family		—		—		—		—		9,237		9,237		—		—
Construction		299		—		—		299		8,423		8,722		—		74
Residential		—		233		—		233		18,432		18,665		—		210
Other:
Leases		—		—		4		4		1,882		1,886		—		4
Agriculture		—		—		—		—		3,675		3,675		—		389
Consumer		56		69		111		236		8,720		8,956		—		158
Total	$	910	$	1,069	$	4,348	$	6,327	$	270,016	$	276,343	$	—	$	6,777

December 31, 2011 (dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Past Due Greater Than 90 Days		Total Past Due		Current		Total Loans		Past Due Greater Than 90 Days and Accruing		Nonaccrual
Commercial:
Commercial	$	60	$	277	$	2,472	$	2,809	$	39,299	$	42,108		—	$	2,775
Real estate:
Commercial		2,318		1,527		5,271		9,116		194,927		204,043		—		7,469
Multi-family		—		—		257		257		7,323		7,580		—		257
Construction		—		244		1,967		2,211		8,145		10,356		—		2,083
Residential		—		—		—		—		19,695		19,695		—		—
Other:
Leases		—		—		17		17		1,708		1,725		—		17
Agriculture		—		—		597		597		3,986		4,583		—		597
Consumer		188		411		139		738		10,246		10,984		—		225
Total	$	2,566	$	2,459	$	10,720	$	15,745	$	285,329	$	301,074	$	—	$	13,423