Loans and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2012

Loans and Allowance for Loan Losses: [Abstract]

The components of loans receivable are as follows (in thousands):



	December 31, 2012
	Loans Receivable			%		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Commercial	$	121,307		23.0	%	$	6,133	$	115,174
Commercial real estate	186,844			35.4	%	3,373		183,471
Commercial construction	3,832			0.7	%	—		3,832
Land and land development loans	31,278			5.9	%	2,023		29,255
Agriculture	85,967			16.3	%	2,134		83,833
Multifamily	16,544			3.1	%	—		16,544
Residential real estate	60,020			11.3	%	2,362		57,658
Residential construction	940			0.2	%	—		940
Consumer	9,626			1.8	%	168		9,458
Municipal	12,267			2.3	%	—		12,267
Total loans receivable	528,625			100.0	%	$	16,193	$	512,432
Allowance for loan losses	(7,943		)
Deferred loan fees, net of direct origination costs	86
Loans receivable, net	$	520,768
Weighted average interest rate	5.28		%



	December 31, 2011
	Loans Receivable			%		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
Commercial	$	110,395		21.4	%	$	8,585	$	101,810
Commercial real estate	167,586			32.6	%	10,918		156,668
Commercial construction	6,335			1.2	%	747		5,588
Land and land development loans	38,499			7.5	%	5,173		33,326
Agriculture	81,316			15.8	%	2,423		78,893
Multifamily	26,038			5.1	%	—		26,038
Residential real estate	58,861			11.4	%	4,013		54,848
Residential construction	2,742			0.5	%	—		2,742
Consumer	11,847			2.3	%	276		11,571
Municipal	11,063			2.2	%	—		11,063
Total loans receivable	514,682			100.0	%	$	32,135	$	482,547
Allowance for loan losses	(12,690		)
Deferred loan fees, net of direct origination costs	260
Loans receivable, net	$	502,252
Weighted average interest rate	6.04		%

Allowance for Credit Losses on Financing Receivables

The components of the allowance for loan loss by types are as follows (in thousands):



	December 31, 2012
	Total Allowance		Individually Evaluated Allowance		Collectively Evaluated Allowance
Commercial	$	2,156	$	628	$	1,528
Commercial real estate	2,762		267		2,495
Commercial construction	101		—		101
Land and land development loans	1,197		114		1,083
Agriculture	228		10		218
Multifamily	51		—		51
Residential real estate	1,144		458		686
Residential construction	24		—		24
Consumer	202		87		115
Municipal	78		—		78
Total	$	7,943	$	1,564	$	6,379



	December 31, 2011
	Total Allowance		Individually Evaluated Allowance		Collectively Evaluated Allowance
Commercial	$	2,817	$	1,300	$	1,517
Commercial real estate	4,880		2,804		2,076
Commercial construction	500		252		248
Land and land development loans	2,273		728		1,545
Agriculture	172		32		140
Multifamily	91		—		91
Residential real estate	1,566		939		627
Residential construction	59		—		59
Consumer	295		195		100
Municipal	37		—		37
Total	$	12,690	$	6,250	$	6,440

Changes in the allowance for loan losses and the reserve for unfunded commitments during the twelve month periods ended December 31, 2012 and 2011 are as follows:



	Allowance for Loan Losses for the twelve months ended December 31, 2012
	Balance, Beginning of Year		Charge-Offs Jan 1 through Dec 31, 2012			Recoveries Jan 1 through Dec 31, 2012		Provision			Balance, End of Period
	(Dollars in thousands)
Commercial	$	2,817	$	(2,649	)	$	453	$	1,535		$	2,156
Commercial real estate	4,880		(4,548		)	466		1,964			2,762
Commercial construction	500		(243		)	10		(166		)	101
Land and land development loans	2,273		(1,601		)	283		242			1,197
Agriculture	172		(32		)	117		(29		)	228
Multifamily	91		—			—		(40		)	51
Residential real estate	1,566		(1,256		)	196		638			1,144
Residential construction	59		—			7		(42		)	24
Consumer	295		(422		)	166		163			202
Municipal	37		—			—		41			78
Allowance for loan losses	$	12,690	$	(10,751	)	$	1,698	$	4,306		$	7,943



	Allowance for Loan Losses for the twelve months ended December 31, 2011
	Balance, Beginning of Year		Charge-Offs Jan 1 through Dec 31, 2011			Recoveries Jan 1 through Dec 31, 2011		Provision			Balance, End of Period
	(Dollars in thousands)
Commercial	$	2,925	$	(1,366	)	$	755	$	503		$	2,817
Commercial real estate	3,655		(2,594		)	293		3,526			4,880
Commercial construction	540		(217		)	3		174			500
Land and land development loans	2,408		(3,056		)	507		2,414			2,273
Agriculture	779		(400		)	103		(310		)	172
Multifamily	83		—			—		8			91
Residential real estate	1,252		(757		)	157		914			1,566
Residential construction	65		(34		)	—		28			59
Consumer	613		(624		)	176		130			295
Municipal	135		—			—		(98		)	37
Allowances for loan losses	$	12,455	$	(9,048	)	$	1,994	$	7,289		$	12,690



	Allowance for Loan Losses December 31, 2010
	Balance, Beginning of Year		Charge-Offs Jan 1 through Dec 31, 2010			Recoveries Jan 1 through Dec 31, 2010		Provision			Balance, End of Period
	(Dollars in thousands)
Commercial	$	4,785	$	(10,603	)	$	628	$	8,115		$	2,925
Commercial real estate	3,827		(5,610		)	311		5,127			3,655
Commercial construction	1,671		(1,393		)	391		(129		)	540
Land and land development loans	2,707		(8,622		)	175		8,148			2,408
Agriculture	1,390		(1,055		)	31		413			779
Multifamily	26		(16		)	—		73			83
Residential real estate	1,412		(2,019		)	50		1,809			1,252
Residential construction	170		(101		)	—		(4		)	65
Consumer	539		(490		)	158		406			613
Municipal	81		—			—		54			135
Allowances for loan losses	$	16,608	$	(29,909	)	$	1,744	$	24,012		$	12,455

Past Due Financing Receivables

A summary of current, past due and nonaccrual loans as of December 31, 2012 is as follows, (in thousands):



	Current		30-89 Days Past Due		90 Days or More Past Due and Accruing		Nonaccrual		Total
Commercial	$	117,096	$	169	$	—	$	4,042	$	121,307
Commercial real estate	185,128		—		—		1,716		186,844
Commercial construction	3,832		—		—		—		3,832
Land and land development loans	31,032		—		—		246		31,278
Agriculture	85,835		34		—		98		85,967
Multifamily	16,544		—		—		—		16,544
Residential real estate	59,158		439		—		423		60,020
Residential construction	940		—		—		—		940
Consumer	9,577		45		—		4		9,626
Municipal	12,267		—		—		—		12,267
Total	$	521,409	$	687	$	—	$	6,529	$	528,625

A summary of current, past due and nonaccrual loans as of December 31, 2011 is as follows, (in thousands):



	Current		30-89 Days Past Due		90 Days or More Past Due and Accruing		Nonaccrual		Total
Commercial	$	106,509	$	200	$	—	$	3,686	$	110,395
Commercial real estate	164,578		705		—		2,303		167,586
Commercial construction	6,289		—		—		46		6,335
Land and land development loans	35,835		12		—		2,652		38,499
Agriculture	81,129		—		—		187		81,316
Multifamily	26,038		—		—		—		26,038
Residential real estate	58,037		423		—		401		58,861
Residential construction	2,742		—		—		—		2,742
Consumer	11,739		91		—		17		11,847
Municipal	11,063		—		—		—		11,063
Total	$	503,959	$	1,431	$	—	$	9,292	$	514,682

Troubled Debt Restructurings on Financing Receivables

The following table provides a summary of Troubled Debt Restructurings ("TDR") outstanding at period end by performing status, (in thousands).



	December 31, 2012						December 31, 2011
Troubled Debt Restructurings	Nonaccrual		Accrual		Total		Nonaccrual		Accrual			Total
Commercial	$	1,900	$	277	$	2,177	$	371	$	1,071		$	1,442
Commercial real estate	1,463		956		2,419		1,889		498			2,387
Commercial construction	—		—		—		46		295			341
Land and land development loans	—		1,327		1,327		782		794			1,576
Agriculture	—		291		291		22		—		.	22
Residential real estate	—		417		417		—		1,377			1,377
Consumer	—		88		88		27		64			91
Total	$	3,363	$	3,356	$	6,719	$	3,137	$	4,099		$	7,236

The Company's loans that were modified in the twelve month period ended December 31, 2012 and 2011 and considered a TDR are as follows (dollars in thousands):



	Twelve Months Ended December 31, 2012					Twelve Months Ended December 31, 2011
	Number	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial	3	$	1,938	$	1,938	6	$	558	$	558
Commercial real estate	3	2,558		2,558		2	382		382
Land and land development loans	2	73		73		10	3,159		2,190
Agriculture	2	291		291		1	58		58
Residential real estate	1	170		170		7	948		948
Consumer	1	55		55		5	113		113
	12	$	5,085	$	5,085	31	$	5,218	$	4,249

The balances below provide information as to how the loans were modified as TDRs during the twelve months ended December 31, 2012 and 2011 (in thousands).



	Twelve Months Ended December 31, 2012				Twelve Months Ended December 31, 2011
	Adjusted Interest Rate Only		Other*		Adjusted Interest Rate Only		Other*
Commercial	$	75	$	1,863	$	558	$	—
Commercial real estate	214		2,344		382		—
Land and land development loans	73		—		1,041		1,149
Agriculture	291		—		—		58
Residential real estate	170		—		912		36
Residential construction	—		—		—		—
Consumer	55		—		113		—
	$	878	$	4,207	$	3,006	$	1,243
(*) Other includes term or principal concessions or a combination of concessions, including interest rates.

Schedule of Allowance for Unfunded Commitments

Allowance for Unfunded Commitments



	Twelve Months Ended December 31,
	2012		2011			2010
	(Dollars in thousands)
Beginning of period	$	13	$	17		$	11
Adjustment	2		(4		)	6
Allowance — Unfunded Commitments at end of period	$	15	$	13		$	17

Impaired Financing Receivables

The following tables summarize impaired loans:



	Impaired Loans
	December 31, 2012						December 31, 2011
	Recorded Investment		Principal Balance		Related Allowance		Recorded Investment		Principal Balance		Related Allowance
	(Dollars in thousands)
With an allowance recorded:
Commercial	$	1,796	$	1,964	$	628	$	2,942	$	3,323	$	1,300
Commercial real estate	1,315		1,486		267		7,439		8,732		2,804
Commercial construction	—		—		—		747		902		252
Land and land development loans	1,601		1,627		114		1,745		3,237		728
Agriculture	31		31		10		32		405		32
Residential real estate	1,240		1,243		458		1,928		2,165		939
Consumer	138		140		87		247		264		195
Total	$	6,121	$	6,491	$	1,564	$	15,080	$	19,028	$	6,250
Without an allowance recorded:
Commercial	$	4,337	$	6,273	$	—	$	5,643	$	9,099	$	—
Commercial real estate	2,058		3,178		—		3,479		5,038		—
Commercial construction	—		—		—		—		198		—
Land and land development loans	422		493		—		3,428		6,165		—
Agriculture	2,103		2,103		—		2,391		2,512		—
Multifamily	—		—		—		—		—		—
Residential real estate	1,122		1,254		—		2,085		2,296		—
Consumer	30		48		—		29		56		—
Total	$	10,072	$	13,349	$	—	$	17,055	$	25,364	$	—
Total:
Commercial	$	6,133	$	8,237	$	628	$	8,585	$	12,422	$	1,300
Commercial real estate	3,373		4,664		267		10,918		13,770		2,804
Commercial construction	—		—		—		747		1,100		252
Land and land development loans	2,023		2,120		114		5,173		9,402		728
Agriculture	2,134		2,134		10		2,423		2,917		32
Residential real estate	2,362		2,497		458		4,013		4,461		939
Consumer	168		188		87		276		320		195
Total	$	16,193	$	19,840	$	1,564	$	32,135	$	44,392	$	6,250



	Impaired Loans
	Twelve Months Ended December 31, 2012				Twelve Months Ended December 31, 2011
	Average Recorded Investment		Interest Income Recognized (*)		Average Recorded Investment		Interest Income Recognized (*)
	(Dollars in thousands)
With an allowance recorded:
Commercial	$	2,821	$	136	$	3,114	$	251
Commercial real estate	4,369		106		7,319		663
Commercial construction	240		—		774		71
Land and land development loans	2,003		107		2,732		296
Agriculture	25		4		147		72
Residential real estate	1,606		80		1,555		131
Residential construction	—		—		29		—
Consumer	199		10		438		24
Total	$	11,263	$	443	$	16,108	$	1,508
Without an allowance recorded:
Commercial	$	5,046	$	562	$	7,524	$	1,075
Commercial real estate	2,232		265		4,880		587
Commercial construction	59		—		298		25
Land and land development loans	1,699		53		4,816		476
Agriculture	2,242		181		1,669		305
Residential real estate	1,496		112		2,054		180
Residential construction	—		—		122		—
Consumer	33		5		190		6
Total	$	12,807	$	1,178	$	21,553	$	2,654
Total:
Commercial	$	7,867	$	698	$	10,638	$	1,326
Commercial real estate	6,601		371		12,199		1,250
Commercial construction	299		—		1,072		96
Land and land development loans	3,702		160		7,548		772
Agriculture	2,267		185		1,816		377
Residential real estate	3,102		192		3,609		311
Residential construction	—		—		151		—
Consumer	232		15		628		30
Total	$	24,070	$	1,621	$	37,661	$	4,162
(*) Interest Income on individually impaired loans is calculated using the cash-basis method, using year to date interest on loans outstanding at year end.

Financing Receivable Credit Quality Indicators

Credit quality indicators by loan segment are summarized as follows:



	Loan Portfolio Credit Grades by Type December 31, 2012
	Satisfactory Grade 1-3		Internal Watch Grade 4		Special Mention Grade 5		Substandard Grade 6		Doubtful Grade 7		Total
	(Dollars in thousands)
Commercial	$	90,520	$	23,094	$	—	$	7,693	$	—	$	121,307
Commercial real estate	132,659		49,029		—		5,156		—		186,844
Commercial construction	3,794		38		—		—		—		3,832
Land and land development loans	15,869		13,894		—		1,515		—		31,278
Agriculture	69,445		14,379		—		2,143		—		85,967
Multifamily	2,465		8,961		—		5,118		—		16,544
Residential real estate	47,102		9,873		—		3,045		—		60,020
Residential construction	940		—		—		—		—		940
Consumer	8,529		835		—		262		—		9,626
Municipal	12,125		142		—		—		—		12,267
Loans receivable, net	$	383,448	$	120,245	$	—	$	24,932	$	—	$	528,625



	Loan Portfolio Credit Grades by Type December 31, 2011
	Satisfactory Grade 1-3		Internal Watch Grade 4		Special Mention Grade 5		Substandard Grade 6		Doubtful Grade 7		Total
	(Dollars in thousands)
Commercial	$	65,843	$	32,293	$	—	$	12,259	$	—	$	110,395
Commercial real estate	107,984		43,305		—		16,297		—		167,586
Commercial construction	413		5,175		—		747		—		6,335
Land and land development loans	8,658		20,031		1,392		8,418		—		38,499
Agriculture	65,563		12,827		—		2,926		—		81,316
Multifamily	9,721		9,708		—		6,609		—		26,038
Residential real estate	43,419		10,066		—		5,376		—		58,861
Residential construction	2,742		—		—		—		—		2,742
Consumer	10,476		797		—		574		—		11,847
Municipal	11,063		—		—		—		—		11,063
Loans receivable, net	$	325,882	$	134,202	$	1,392	$	53,206	$	—	$	514,682

Schedule Of Nonperforming Assets and Classified Loans

A summary of non-performing assets and classified loans at the dates indicated is as follows:



	December 31, 2012		December 31, 2011
	(Dollars in thousands)
Loans past due in excess of 90 days and still accruing	$	—	$	—
Non-accrual loans	6,529		9,292
Total non-performing loans	6,529		9,292
Other real estate owned (“OREO”)	4,951		6,650
Total non-performing assets (“NPAs”)	$	11,480	$	15,942
Classified loans (1)	$	24,933	$	53,206

_____________________________


1)	Classified loan totals are inclusive of non-performing loans and may also include troubled debt restructured loans, depending on the grading of these restructured loans.

Schedule of Financing Receivables, Minimum Payments

At December 31, 2012, the contractual principal payments due on outstanding loans receivable are shown below (in thousands). Actual payments may differ from expected payments because borrowers have the right to prepay loans, with or without prepayment penalties.



Year Ending December 31,	Amount
2013	$	138,310
2014	46,133
2015	34,092
2016	49,938
2017	49,345
Thereafter	210,807
	$	528,625

Schedule of Loans Sold in Secondary Market

The Company sells mortgage loans and Small Business Administration loans in the secondary market. The sales volumes and the gains on sale of loans are shown below (in thousands):



	Years Ended December 31,
	2012		2011		2010
Loan volume sold	$	77,820	$	49,174	$	63,314
Gain on sale of loans	$	1,835	$	983	$	1,617

Schedule of Loans Serviced

The following table summarizes the detail of loans serviced for others for the periods indicated (in thousands):



	Years Ended December 31,
	2012		2011		2010
Residential real estate	$	147,354	$	122,697	$	116,627
SBA loans	3,903		6,578		8,557
Commercial loans	4,140		8,448		13,000
Total loans serviced for others	$	155,397	$	137,723	$	138,184