Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Loans Receivable

The following table presents loans at June 30, 2012 and December 31, 2011 by class:

	June 30,			December 31,
	2012			2011
	(in thousands)
Construction and land development	$	189,840		$	202,803
Commercial real estate:
Owner occupied	335,107			348,931
Non-owner occupied	216,290			242,827
Residential mortgages:
1-4 family	174,474			179,047
Multifamily	36,700			39,881
Home equity lines of credit	196,547			201,220
Commercial	167,840			177,047
Consumer and other	54,442			58,283
Total	1,371,240			1,450,039
Less: Net deferred loan origination fees	1,141			885
Allowance for loan losses	(28,797		)	(32,848		)
Loans, net	$	1,343,584		$	1,418,076

Credit Quality Indicators

The following is a summary of credit quality indicators by class at June 30, 2012 and December 31, 2011:

Real Estate Credit Exposure as of June 30, 2012
			Commercial Real Estate
	Construction		Owner occupied		Non-owner occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	122	$	—	$	383	$	—	$	122
Good Quality	497		28		46		1,458		—		7,620
Satisfactory	28,993		103,801		56,119		95,167		8,029		120,738
Merits Attention	90,318		179,792		122,776		57,731		26,687		58,934
Special Mention	32,521		26,683		26,274		9,220		648		4,342
Substandard	14,842		5,731		2,765		2,855		617		1,935
Substandard impaired	22,669		18,950		8,310		7,660		719		2,856
Loss	—		—		—		—		—		—
	$	189,840	$	335,107	$	216,290	$	174,474	$	36,700	$	196,547

Other Credit Exposures as of June 30, 2012
	Commercial		Consumer and other
	(in thousands)
High Quality	$	2,554	$	2,090
Good Quality	5,437		1,366
Satisfactory	46,132		25,403
Merits Attention	82,962		24,083
Special Mention	19,517		816
Substandard	1,890		68
Substandard impaired	9,348		616
Loss	—		—
	$	167,840	$	54,442

Real Estate Credit Exposure as of December 31, 2011
			Commercial Real Estate
	Construction		Owner  occupied		Non-owner  occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	126	$	—	$	423	$	—	$	132
Good Quality	543		32		117		1,701		—		7,545
Satisfactory	30,446		110,051		61,416		98,992		8,789		125,932
Merits Attention	93,974		180,173		134,247		57,310		28,824		58,576
Special Mention	41,739		23,326		24,307		9,112		697		4,807
Substandard	5,054		10,069		11,162		3,586		629		2,006
Substandard impaired	31,047		25,154		11,578		7,923		942		2,222
Loss	—		—		—		—		—		—
	$	202,803	$	348,931	$	242,827	$	179,047	$	39,881	$	201,220

Other Credit Exposures as of December 31, 2011
	Commercial		Consumer and other
	(in thousands)
High Quality	$	2,690	$	1,831
Good Quality	5,472		1,482
Satisfactory	55,309		27,508
Merits Attention	80,064		25,607
Special Mention	12,224		1,189
Substandard	10,367		118
Substandard impaired	10,921		548
Loss	—		—
	$	177,047	$	58,283

Nonaccrual Loans

The following is a breakdown of nonaccrual loans as of June 30, 2012 and December 31, 2011:

	June 30, 2012		December 31, 2011
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	20,582	$	26,575
Commercial Real Estate:
Owner occupied	16,310		16,339
Non-owner occupied	6,652		7,634
Mortgages:
1-4 Family first lien	6,891		7,271
Multifamily	720		942
Home Equity lines of credit	2,856		2,222
Commercial	8,745		8,896
Consumer and other	549		475
Total	$	63,305	$	70,354

Past Due Loan Aging

The following table presents the Bank's aged analysis of past due loans:

	30-59 Days  Past Due		60-89 Days  Past Due		Greater Than  90 Days		Total Past  Due		Current		Total Loans
June 30, 2012	(in thousands)
Construction	$	309	$	1,736	$	9,604	$	11,649	$	178,191	$	189,840
Commercial real estate:
Owner occupied	970		269		3,654		4,893		330,214		335,107
Non-owner occupied	2,040		—		4,462		6,502		209,788		216,290
Commercial	933		285		2,947		4,165		163,675		167,840
Mortgages:
Secured 1-4 family- first lien	1,879		1,281		2,716		5,876		168,598		174,474
Multifamily	278		—		439		717		35,983		36,700
Home equity lines of credit	2,511		378		1,422		4,311		192,236		196,547
Consumer and other	430		124		259		813		53,629		54,442
Total	$	9,350	$	4,073	$	25,503	$	38,926	$	1,332,314	$	1,371,240
December 31, 2011
Construction	$	2,265	$	402	$	15,538	$	18,205	$	184,598	$	202,803
Commercial real estate:
Owner occupied	4,342		1,215		3,727		9,284		339,647		348,931
Non-owner occupied	9,723		86		4,679		14,488		228,339		242,827
Commercial	586		1,432		2,087		4,105		172,942		177,047
Mortgages:
Secured 1-4 family- first lien	3,441		1,049		2,955		7,445		171,602		179,047
Multifamily	277		—		896		1,173		38,708		39,881
Home equity lines of credit	—		634		856		1,490		199,730		201,220
Consumer and other	375		61		128		564		57,719		58,283
Total	$	21,009	$	4,879	$	30,866	$	56,754	$	1,393,285	$	1,450,039

Impaired Loans

The following table presents the Bank's investment in loans considered to be impaired and related information on those impaired loans as of June 30, 2012 and December 31, 2011:

							Quarter to Date				Year to Date
	Recorded  Investment		Unpaid  Principal  Balance		Related  Allowance		Average  Recorded  Investment		Interest Income Recognized		Average  Recorded  Investment		Interest Income Recognized
June 30, 2012	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	18,135	$	27,216	$	—	$	21,072	$	36	$	23,311	$	150
Commercial real estate:
Owner occupied	13,016		14,637		—		14,112		22		16,228		308
Non-owner occupied	5,190		6,544		—		7,828		9		10,150		10
Commercial	6,727		7,246		—		6,534		28		6,326		130
Mortgages:
Secured 1-4 family real estate	4,279		4,720		—		3,078		5		3,413		29
Multifamily	707		884		—		719		—		702		4
Home equity lines of credit	1,234		1,476		—		1,236		—		1,154		8
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	2,477	$	4,269	$	325	$	2,205	$	—	$	1,406	$	—
Commercial real estate:
Owner occupied	8,937		9,945		996		8,877		69		7,631		69
Non-owner occupied	1,371		1,371		97		1,028		16		727		16
Commercial	3,031		3,123		1,838		3,115		—		3,090		164
Mortgages:
Secured 1-4 family real estate	2,889		2,919		222		547		3		421		3
Multifamily	—		—		—		—		—		43		7
Home equity lines of credit	117		130		47		118		—		159		—
Consumer and other	224		224		224		164		—		95		—
Total impaired loans
Construction	$	20,612	$	31,485	$	325	$	23,277	$	36	$	24,717	$	150
Commercial real estate:
Owner occupied	21,953		24,582		996		22,989		91		23,859		377
Non-owner occupied	6,561		7,915		97		8,856		25		10,877		26
Commercial	9,758		10,369		1,838		9,649		28		9,416		294
Mortgages:
Secured 1-4 family real estate	7,168		7,639		222		3,625		8		3,834		32
Multifamily	707		884		—		719		—		745		11
Home equity lines of credit	1,351		1,606		47		1,354		—		1,313		8
Consumer and other	224		224		224		164		—		95		—
Total impaired loans individually reviewed for impairment	$	68,334	$	84,704	$	3,749	$	70,633	$	188	$	74,856	$	898

	As of December 31, 2011						Quarter to Date June 30, 2011				Year to Date June 30, 2011
	Recorded Investment		Unpaid  Principal  Balance		Related  Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	28,067	$	40,045	$	—	$	22,835	$	156	$	22,020	$	298
Commercial real estate:
Owner occupied	17,586		20,070		—		10,104		117		10,451		259
Non-owner occupied	8,639		11,255		—		6,640		26		6,294		63
Commercial	6,381		6,436		—		2,561		34		2,319		59
Mortgages:
Secured 1-4 family real estate	3,843		4,285		—		2,372		26		2,484		42
Multifamily	295		309		—		299		3		302		5
Home equity lines of credit	525		694		—		707		5		813		9
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	1,011	$	1,011	$	570	$	7,181	$	52	$	8,740	$	148
Commercial real estate:
Owner occupied	6,459		6,533		585		6,498		61		5,891		114
Non-owner occupied	975		1,363		143		3,866		48		4,993		88
Commercial	2,914		2,920		2,511		5,113		51		5,218		93
Mortgages:
Secured 1-4 family real estate	498		517		45		2,601		14		2,331		34
Multifamily	300		319		135		447		7		453		16
Home equity lines of credit	403		412		112		618		9		720		12
Consumer and other	—		—		—		125		—		129		6
Total impaired loans
Construction	$	29,078	$	41,056	$	570	$	30,016	$	208	$	30,760	$	446
Commercial real estate:
Owner occupied	24,045		26,603		585		16,602		178		16,342		373
Non-owner occupied	9,614		12,618		143		10,506		74		11,287		151
Commercial	9,295		9,356		2,511		7,674		85		7,537		152
Mortgages:
Secured 1-4 family real estate	4,341		4,802		45		4,973		40		4,815		76
Multifamily	595		628		135		746		10		755		21
Home equity lines of credit	928		1,106		112		1,325		14		1,533		21
Consumer and other	—		—		—		125		—		129		6
Total impaired loan individually reviewed for impairment	$	77,896	$	96,169	$	4,101	$	71,967	$	609	$	73,158	$	1,246

Troubled Debt Restructurings

	Three Months Ended June 30, 2012
	Number of Loans	Recorded  Investment  Prior to  Modification		Recorded  Investment  After  Modification		Adjustment to Reserves as a Result of the Restructuring
		(in thousands)
Extended payment terms
Construction	3	$	710	$	352	$	(25	)
Commercial real estate:
Non-owner occupied	1	211		211		28
Owner occupied	3	1,046		1,026		(55		)
Commercial	1	236		236		(8		)
Total	8	$	2,203	$	1,825	$	(60	)
Principal payment reduction
Commercial real estate:
Owner occupied	1	$	399	$	399	$	103
Total	1	$	399	$	399	$	103
Total	9	$	2,602	$	2,224	$	43

	Six Months Ended June 30, 2012
	Number of Loans	Recorded  Investment  Prior to  Modification		Recorded  Investment  After  Modification		Adjustment to Reserves as a Result of the Restructuring
		(in thousands)
Extended payment terms
Construction	3	$	710	$	352	$	(25	)
Commercial real estate:
Non-owner occupied	1	211		211		28
Owner occupied	5	1,712		1,669		(66		)
Commercial	6	1,872		1,469		(85		)
1-4 Family Residential	3	827		742		12
Consumer	1	27		—		—
Total	19	$	5,359	$	4,443	$	(136	)
Principal payment reduction
Commercial real estate:
Owner occupied	2	$	571	$	568	$	95
Consumer	1	165		9		9
Total	3	$	736	$	577	$	104
Total	22	$	6,095	$	5,020	$	(32	)

The following tables present loans that were modified as troubled debt restructurings during the previous twelve months and for which there was a payment default during the three and six months ended June 30, 2012.

	Three months ended June 30, 2012
	Number of loans	Recorded investment
Extended payment terms		(in thousands)
Consumer	1	$	24
Total	1	$	24
Principal payment reduction
Construction	1	$	973
Total	1	$	973
Total	2	$	997

	Six months ended June 30, 2012
	Number of loans	Recorded investment
Below Market Rate		(in thousands)
Construction	2	$	1,061
Total	2	$	1,061
Extended payment terms
Consumer	1	$	24
Total	1	$	24
Principal payment reduction
Construction	2	$	1,230
Total	2	$	1,230
Total	5	$	2,315

Allowance for Loan Losses

The following table presents changes in the allowance for loan losses for the three months ended June 30, 2012 and 2011:

	March 31, 2012		Charge-offs		Recoveries		Provision			June 30, 2012
	(Amounts in thousands)
Construction	$	7,957	$	2,114	$	170	$	(110	)	$	5,903
Commercial real estate:
Owner occupied	5,334		1,190		116		1,370			5,630
Non-owner occupied	3,726		452		33		275			3,582
Commercial	5,514		593		681		(887		)	4,715
Mortgages:
Secured 1-4 family- first lien	3,353		193		137		(234		)	3,063
Multifamily	506		11		—		68			563
Home equity lines of credit	3,099		229		11		1,518			4,399
Consumer and other	573		125		276		218			942
	$	30,062	$	4,907	$	1,424	$	2,218		$	28,797
	March 31, 2011		Charge-offs		Recoveries		Provision			June 30, 2011
	(Amounts in thousands)
Construction	$	9,592	$	4,097	$	1,008	$	4,267		$	10,770
Commercial real estate:
Owner occupied	7,234		2,098		30		1,535			6,701
Non-owner occupied	5,269		1,355		52		314			4,280
Commercial	4,939		1,806		43		844			4,020
Mortgages:
Secured 1-4 family- first lien	4,323		1,239		46		1,384			4,514
Multifamily	486		—		—		40			526
Home equity lines of credit	3,144		1,154		42		1,980			4,012
Consumer and other	873		129		56		29			829
	$	35,860	$	11,878	$	1,277	$	10,393		$	35,652

The following table presents changes in the allowance for loan losses for the six months ended June 30, 2012 and 2011:

	December 31, 2011		Charge-offs		Recoveries		Provision			June 30, 2012
	(Amounts in thousands)
Construction	$	8,214	$	3,942	$	278	$	1,353		$	5,903
Commercial real estate:
Owner occupied	5,792		1,873		124		1,587			5,630
Non-owner occupied	4,668		1,764		33		645			3,582
Commercial	5,712		1,018		766		(745		)	4,715
Mortgages:
Secured 1-4 family- first lien	3,726		568		148		(243		)	3,063
Multifamily	805		213		—		(29		)	563
Home equity lines of credit	3,310		701		21		1,769			4,399
Consumer and other	621		208		297		232			942
	$	32,848	$	10,287	$	1,667	$	4,569		$	28,797
	December 31, 2010		Charge-offs		Recoveries		Provision			June 30, 2011
	(Amounts in thousands)
Construction	$	12,014	$	7,875	$	1,081	$	5,550		$	10,770
Commercial real estate:
Owner occupied	5,958		2,837		106		3,474			6,701
Non-owner occupied	7,150		2,332		52		(590		)	4,280
Commercial	4,335		2,024		111		1,598			4,020
Mortgages:
Secured 1-4 family- first lien	3,706		1,780		76		2,512			4,514
Multifamily	424		12		—		114			526
Home equity lines of credit	3,298		1,686		81		2,319			4,012
Consumer and other	867		413		92		283			829
	$	37,752	$	18,959	$	1,599	$	15,260		$	35,652

The following tables provide the a breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of June 30, 2012 and December 31, 2011.

	Reserves for  loans  individually  evaluated for  impairment		Loans  individually  evaluated for  impairment		Reserves for  loans  collectively  evaluated for  impairment		Loans  collectively  evaluated for  impairment
As of June 30, 2012	(Amounts in thousands)
Construction	$	325	$	20,612	$	5,578	$	169,228
Commercial real estate:
Owner occupied	996		21,953		4,633		313,154
Non-owner occupied	97		6,561		3,485		209,729
Commercial	1,838		9,758		2,878		158,082
Mortgages:
Secured 1-4 family- first lien	222		7,168		2,841		167,306
Multifamily	—		707		563		35,993
Home equity lines of credit	47		1,351		4,352		195,196
Consumer and other	224		224		718		54,218
	$	3,749	$	68,334	$	25,048	$	1,302,906
	Reserves for  loans  individually  evaluated for  impairment		Loans  individually  evaluated for  impairment		Reserves for  loans  collectively  evaluated for  impairment		Loans  collectively  evaluated for  impairment
As of December 31, 2011	(Amounts in thousands)
Construction	$	570	$	29,078	$	7,644	$	173,725
Commercial real estate:
Owner occupied	585		24,045		5,207		324,886
Non-owner occupied	143		9,614		4,525		233,213
Commercial	2,511		9,295		3,201		167,752
Mortgages:
Secured 1-4 family- first lien	45		4,341		3,681		174,706
Multifamily	135		595		670		39,286
Home equity lines of credit	112		928		3,198		200,292
Consumer and other	—		—		621		58,283
	$	4,101	$	77,896	$	28,747	$	1,372,143