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Allowance for Credit Losses (Tables)
 6 Months Ended
Jun. 30, 2012
Receivables [Abstract]  
Allowance for credit losses
The following table shows the summary of activities for the allowance for loan losses as of and for the three months ended June 30, 2012 and 2011 by portfolio segment of loans (in thousands):
 
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, April 1, 2012
 
$
2,714

 
$
5,140

 
$
2,142

 
$
289

 
$
10,285

Provision charged to operations
 
(124
)
 
653

 
(513
)
 
84

 
100

Losses charged to allowance
 
(16
)
 
(319
)
 
(177
)
 
—

 
(512
)
Recoveries
 
225

 
—

 
42

 
—

 
267

Ending balance, June 30, 2012
 
$
2,799

 
$
5,474

 
$
1,494

 
$
373

 
$
10,140

Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, April 1, 2011
 
$
2,960

 
$
6,536

 
$
998

 
$
525

 
$
11,019

Provision charged to operations
 
(40
)
 
(513
)
 
23

 
780

 
250

Losses charged to allowance
 
(70
)
 
(221
)
 
(129
)
 
—

 
(420
)
Recoveries
 
160

 
3

 
23

 
—

 
186

Ending balance, June 30, 2011
 
$
3,010

 
$
5,805

 
$
915

 
$
1,305

 
$
11,035


The following table shows the summary of activities for allowance for credit losses as of and for the six month period ended June 30, 2012 and 2011 by portfolio segment (in thousands):
 
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2012
 
$
2,266

 
$
7,155

 
$
1,836

 
$
139

 
$
11,396

Provision charged to operations
 
361

 
111

 
(206
)
 
234

 
500

Losses charged to allowance
 
(122
)
 
(1,792
)
 
(267
)
 
—

 
(2,181
)
Recoveries
 
294

 
—

 
131

 
—

 
425

Ending balance, June 30, 2012
 
$
2,799

 
$
5,474

 
$
1,494

 
$
373

 
$
10,140

 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2011
 
$
2,437

 
$
5,836

 
$
2,503

 
$
238

 
$
11,014

Provision charged to operations
 
466

 
185

 
(1,368
)
 
1,067

 
350

Losses charged to allowance
 
(226
)
 
(247
)
 
(268
)
 
—

 
(741
)
Recoveries
 
333

 
31

 
48

 
—

 
412

Ending balance, June 30, 2011
 
$
3,010

 
$
5,805

 
$
915

 
$
1,305

 
$
11,035
Loans by impairment methdology
The following table shows the ending balances of loans as of June 30, 2012 and December 31, 2011 by portfolio segment and by impairment methodology (in thousands):

 
 
Commercial
 
Real Estate
 
Consumer
 
Total
Loans:
 
 

 
 

 
 

 
 

Ending balance, June 30, 2012
 
$
119,429

 
$
242,509

 
$
53,339

 
$
415,277

Ending balance: individually evaluated for impairment
 
$
2,423

 
$
13,347

 
$
2,049

 
$
17,819

Ending balance: collectively evaluated for impairment
 
$
117,006

 
$
229,162

 
$
51,290

 
$
397,458

 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

Ending balance, December 31, 2011
 
$
108,047

 
$
259,241

 
$
60,871

 
$
428,159

Ending balance: individually evaluated for impairment
 
$
3,857

 
$
17,359

 
$
2,428

 
$
23,644

Ending balance: collectively evaluated for impairment
 
$
104,190

 
$
241,882

 
$
58,443

 
$
404,515
Loan portfolio by internal risk rating
The following table shows the loan portfolio allocated by management’s internal risk ratings at June 30, 2012 (in thousands):
 
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
68,088

 
$
819

 
$
6,879

 
$
—

 
$
75,786

Agricultural land and production
 
43,643

 
—

 
—

 
—

 
43,643

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
101,454

 
2,211

 
5,671

 
—

 
109,336

Real estate construction and other land loans
 
16,798

 
3,659

 
11,752

 
—

 
32,209

Commercial real estate
 
44,156

 
3,871

 
6,551

 
—

 
54,578

Agricultural real estate
 
36,254

 
1,906

 
—

 
—

 
38,160

Other real estate
 
8,226

 
—

 
—

 
—

 
8,226

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
41,980

 
299

 
2,482

 
—

 
44,761

Consumer and installment
 
8,403

 
91

 
84

 
—

 
8,578

Total
 
$
369,002

 
$
12,856

 
$
33,419

 
$
—

 
$
415,277


The following table shows the loan portfolio allocated by management’s internally assigned risk grade ratings at December 31, 2011 (in thousands):

 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
70,093

 
$
2,595

 
$
5,401

 
$
—

 
$
78,089

Agricultural land and production
 
29,958

 
—

 
—

 
—

 
29,958

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
105,308

 
3,125

 
4,750

 
—

 
113,183

Real estate construction and other land loans
 
15,717

 
4,056

 
13,274

 
—

 
33,047

Commercial real estate
 
47,323

 
5,035

 
10,165

 
—

 
62,523

Agricultural real estate
 
40,808

 
1,788

 
—

 
—

 
42,596

Other real estate
 
7,672

 
220

 
—

 
—

 
7,892

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
46,939

 
1,047

 
3,120

 
—

 
51,106

Consumer and installment
 
9,570

 
105

 
90

 
—

 
9,765

Total
 
$
373,388

 
$
17,971

 
$
36,800

 
$
—

 
$
428,159
Loan portfolio by time past due
The following table shows an aging analysis of the loan portfolio by the time past due at June 30, 2012 (in thousands):
 
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
—

 
$
—

 
$
—

 
$
—

 
$
75,786

 
$
75,786

 
$
—

 
$
—

Agricultural land and production
 
—

 
—

 
—

 
—

 
43,643

 
43,643

 
—

 
—

Real estate:
 
—

 
 

 
 

 
—

 
—

 
—

 
 

 
 
Owner occupied
 
—

 
—

 
—

 
—

 
109,336

 
109,336

 
—

 
1,631

Real estate construction and other land loans
 
730

 
—

 
—

 
730

 
31,479

 
32,209

 
—

 
6,562

Commercial real estate
 
—

 
—

 
—

 
—

 
54,578

 
54,578

 
—

 
—

Agricultural real estate
 
—

 
—

 
—

 
—

 
38,160

 
38,160

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

 
8,226

 
8,226

 
—

 
—

Consumer:
 
 

 
 

 
 

 
—

 
—

 
—

 
 

 
 
Equity loans and lines of credit
 
—

 
78

 
—

 
78

 
44,683

 
44,761

 
—

 
1,978

Consumer and installment
 
46

 
71

 
—

 
117

 
8,461

 
8,578

 
—

 
71

Total
 
$
776

 
$
149


$
—


$
925


$
414,352


$
415,277


$
—


$
10,242

 
The following table shows an aging analysis of the loan portfolio by the time past due at December 31, 2011 (in thousands):
 
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-
accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
57

 
$
—

 
$
236

 
$
293

 
$
77,796

 
$
78,089

 
$
—

 
$
267

Agricultural land and production
 
—

 
—

 
—

 
—

 
29,958

 
29,958

 
—

 
—

Real estate:
 
—

 
 

 
 

 
 

 
 

 
 

 
 

 
 
Owner occupied
 
—

 
—

 
122

 
122

 
113,061

 
113,183

 
—

 
1,372

Real estate construction and other land loans
 
1,532

 
—

 
—

 
1,532

 
31,515

 
33,047

 
—

 
6,823

Commercial real estate
 
—

 
—

 
3,544

 
3,544

 
58,979

 
62,523

 
—

 
3,544

Agricultural real estate
 
—

 
—

 
—

 
—

 
42,596

 
42,596

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

 
7,892

 
7,892

 
—

 
—

Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
Equity loans and lines of credit
 
123

 
—

 
97

 
220

 
50,886

 
51,106

 
—

 
2,354

Consumer and installment
 
29

 
74

 
—

 
103

 
9,662

 
9,765

 
—

 
74

Total
 
$
1,741

 
$
74

 
$
3,999

 
$
5,814

 
$
422,345

 
$
428,159

 
$
—

 
$
14,434
Impaired loans
The following table shows information related to impaired loans at June 30, 2012 (in thousands):
 
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
963

 
$
963

 
$
—

Agricultural land and production
 
—

 
—

 
—

Total commercial
 
963

 
963

 
—

Real estate:
 
 

 
 

 
 

Owner occupied
 
1,630

 
1,743

 
—

Real estate construction and other land loans
 
1,447

 
1,898

 
—

Commercial real estate
 
—

 
—

 
—

Agricultural real estate
 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

Total real estate
 
3,077

 
3,641

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
1,737

 
1,994

 
—

Consumer and installment
 
—

 
—

 
—

Total consumer
 
1,737

 
1,994

 
—

Total with no related allowance recorded
 
5,777

 
6,598

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
1,460

 
1,460

 
536

Agricultural land and production
 
—

 
—

 
—

Total commercial
 
1,460

 
1,460

 
536

Real estate:
 
 

 
 

 
 

Owner occupied
 
—

 
—

 
—

Real estate construction and other land loans
 
10,270

 
11,024

 
1,600

Commercial real estate
 
—

 
—

 
—

Agricultural real estate
 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

Total real estate
 
10,270

 
11,024

 
1,600

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
241

 
250

 
35

Consumer and installment
 
71

 
74

 
24

Total consumer
 
312

 
324

 
59

Total with an allowance recorded
 
12,042

 
12,808

 
2,195

Total
 
$
17,819

 
$
19,406

 
$
2,195


The following table shows information related to impaired loans at December 31, 2011 (in thousands):
 
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
2,140

 
$
2,160

 
$
—

Agricultural land and production
 
—

 
—

 
—

Total commercial
 
2,140

 
2,160

 
—

Real estate:
 
 

 
 

 
 

Owner occupied
 
231

 
243

 
—

Real estate construction and other land loans
 
1,532

 
1,906

 
—

Commercial real estate
 
1,801

 
1,801

 
—

Agricultural real estate
 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

Total real estate
 
3,564

 
3,950

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
—

 
—

 
—

Consumer and installment
 
—

 
—

 
—

Total consumer
 
—

 
—

 
—

Total with no related allowance recorded
 
5,704

 
6,110

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
1,717

 
1,718

 
231

Agricultural land and production
 
—

 
—

 
—

Total commercial
 
1,717

 
1,718

 
231

Real estate:
 
 

 
 

 
 

Owner occupied
 
1,141

 
1,216

 
268

Real estate construction and other land loans
 
10,911

 
11,490

 
2,130

Commercial real estate
 
1,743

 
1,743

 
1,366

Agricultural real estate
 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

Total real estate
 
13,795

 
14,449

 
3,764

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
2,354

 
2,581

 
350

Consumer and installment
 
74

 
74

 
23

Total consumer
 
2,428

 
2,655

 
373

Total with an allowance recorded
 
17,940

 
18,822

 
4,368

Total
 
$
23,644

 
$
24,932

 
$
4,368

 
The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2012 and 2011.

 
 
 Three Months Ended June 30, 2012
 
 Three Months Ended June 30, 2011
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
$
1,144

 
$
—

 
$
1,046

 
$
—

Agricultural land and production
 
—

 
—

 
—

 
—

Total commercial
 
1,144

 
—

 
1,046

 
—

Real estate:
 
 

 
 

 
 

 
 

Owner occupied
 
1,022

 
—

 
909

 
—

Real estate construction and other land loans
 
5,011

 
—

 
3,335

 
—

Commercial real estate
 
—

 
—

 
1,512

 
—

Agricultural real estate
 
—

 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

Total real estate
 
6,033

 
—

 
5,756

 
—

Consumer:
 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
1,758

 
—

 
813

 
—

Consumer and installment
 
—

 
—

 
—

 
—

Total consumer
 
1,758

 
—

 
813

 
—

Total with no related allowance recorded
 
8,935

 
—

 
7,615

 
—

 
 
 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
1,473

 
56

 
9

 
—

Agricultural land and production
 
—

 
—

 
—

 
—

Total commercial
 
1,473

 
56

 
9

 
—

Real estate:
 
 

 
 

 
 

 
 

Owner occupied
 
—

 
—

 
1,054

 
—

Real estate construction and other land loans
 
6,868

 
94

 
5,664

 
—

Commercial real estate
 
—

 
—

 
—

 
—

Agricultural real estate
 
—

 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

Total real estate
 
6,868

 
94

 
6,718

 
—

Consumer:
 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
352

 
—

 
2,182

 
—

Consumer and installment
 
48

 
—

 
—

 
—

Total consumer
 
400

 
—

 
2,182

 
—

Total with an allowance recorded
 
8,741

 
150

 
8,909

 
—

Total
 
$
17,676

 
$
150

 
$
16,524

 
$
—

The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the six months ended June 30, 2012 and 2011.

 
 
Six Months Ended
 June 30, 2012
 
Six Months Ended
 June 30, 2011
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
$
1,412

 
$
—

 
$
1,466

 
$
—

Agricultural land and production
 
—

 
—

 
—

 
—

Total commercial
 
1,412

 
—

 
1,466

 
—

Real estate:
 
 

 
 

 
 

 
 

Owner occupied
 
625

 
—

 
908

 
—

Real estate construction and other land loans
 
5,811

 
—

 
1,808

 
—

Commercial real estate
 
—

 
—

 
1,732

 
—

Agricultural real estate
 
—

 
—

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

Total real estate
 
6,436

 
—

 
4,448

 
—

Consumer:
 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
1,460

 
—

 
521

 
—

Consumer and installment
 
—

 
—

 
—

 
—

Total consumer
 
1,460

 
—

 
521

 
—

Total with no related allowance recorded
 
9,308

 
—

 
6,435

 
—

 
 
 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
1,511

 
127

 
165

 
—

Agricultural land and production
 
—

 
—

 
—

 
—

Total commercial
 
1,511

 
127

 
165

 
—

Real estate:
 
 

 
 

 
 

 
 

Owner occupied
 
—

 
—

 
1,056

 
—

Real estate construction and other land loans
 
6,164

 
193

 
5,780

 
—

Commercial real estate
 
—

 
—

 
—

 
—

Agricultural real estate
 
—

 
—

 
—

 
—

Other real estate
 
—

 
—

 
2,215

 
—

Total real estate
 
6,164

 
193

 
9,051

 
—

Consumer:
 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
294

 
—

 
—

 
—

Consumer and installment
 
60

 
—

 
41

 
—

Total consumer
 
354

 
—

 
41

 
—

Total with an allowance recorded
 
8,029

 
320

 
9,257

 
—

Total
 
$
17,337

 
$
320

 
$
15,692

 
$
—
Troubled Debt Restructurings
The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2012 (in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification (2)
 
Post Modification Outstanding Recorded Investment (3)
 
Outstanding Recorded Investment
Real Estate - Owner occupied
 
2

 
$
500

 
$
—

 
$
500

 
$
500


(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.
(3)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.
The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ending June 30, 2012 (in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification (2)
 
Post Modification Outstanding Recorded Investment (3)
 
Outstanding Recorded Investment
Real Estate - Owner occupied
 
2

 
$
500

 
$
—

 
$
500

 
$
500


(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.
(3)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.