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Loans and Allowance for Loan Losses (Tables)
 12 Months Ended
Dec. 31, 2012
Receivables [Abstract]  
Loans Receivable
The following table presents loans at December 31, 2012 and December 31, 2011 by class:
 
December 31,
 
December 31,
 
2012
 
2011
 
(in thousands)
Construction and land development
$
131,981

 
$
202,803

Commercial real estate:
 
 
 
Owner occupied
342,962

 
348,931

Non-owner occupied
211,489

 
242,827

Residential mortgages:
 
 
 
1-4 family
168,611

 
179,047

Multifamily
35,337

 
39,881

Home equity lines of credit
191,888

 
201,220

Commercial
174,440

 
177,047

Consumer and other
51,664

 
58,283

Total
1,308,372

 
1,450,039

Less: Net deferred loan origination fees
1,132

 
885

Allowance for loan losses
(25,149
)
 
(32,848
)
Loans, net
$
1,284,355

 
$
1,418,076
Related Party Loans
An analysis of these related party loans for the year ended December 31, 2012 and 2011 is as follows:

 
 
2012
 
2011
Balance, beginning of year
 
$
15,783,544

 
$
17,712,228

New loans
 
2,435,686

 
1,403,414

Repayments
 
(2,669,046
)
 
(3,332,098
)
Balance, end of year
 
$
15,550,184

 
$
15,783,544
Credit Quality Indicators
The following is a summary of credit quality indicators by class at December 31, 2012 and December 31, 2011:

Real Estate Credit Exposure as of December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Commercial Real Estate
 
 
 
 
 
 
 
Construction
 
Owner
occupied
 
Non-owner
occupied
 
1-4 Family
 
Multifamily
 
Home Equity
 
(in thousands)
High Quality
$
—

 
$
119

 
$
—

 
$
375

 
$
—

 
$
111

Good Quality
464

 
—

 
—

 
1,301

 
—

 
6,756

Satisfactory
22,284

 
115,347

 
58,577

 
95,727

 
7,945

 
118,497

Merits Attention
78,668

 
191,958

 
129,283

 
56,629

 
25,681

 
59,568

Special Mention
16,797

 
23,396

 
16,084

 
7,862

 
571

 
4,228

Substandard
3,939

 
4,286

 
2,136

 
2,850

 
601

 
1,687

Substandard impaired
9,829

 
7,856

 
5,409

 
3,867

 
539

 
1,041

Doubtful
—

 
—

 
—

 
—

 
—

 
—

Loss
—

 
—

 
—

 
—

 
—

 
—

 
$
131,981

 
$
342,962

 
$
211,489

 
$
168,611

 
$
35,337

 
$
191,888



Other Credit Exposures as of December 31, 2012
 
 
 
 
 
 
Commercial
 
Consumer
and other
 
Total Loans
 
(in thousands)
High Quality
$
2,430

 
$
2,289

 
$
5,324

Good Quality
5,738

 
1,316

 
15,575

Satisfactory
62,071

 
22,459

 
502,907

Merits Attention
82,243

 
24,425

 
648,455

Special Mention
16,809

 
551

 
86,298

Substandard
1,009

 
122

 
16,630

Substandard impaired
4,140

 
502

 
33,183

Doubtful
—

 
—

 
—

Loss
—

 
—

 
—

 
$
174,440

 
$
51,664

 
$
1,308,372


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

Doubtful
—

 
—

 
—

 
—

 
—

 
—

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
 
Total Loans
 
(in thousands)
High Quality
$
2,690

 
$
1,831

 
$
5,202

Good Quality
5,472

 
1,482

 
16,892

Satisfactory
55,309

 
27,508

 
518,443

Merits Attention
80,064

 
25,607

 
658,775

Special Mention
12,224

 
1,189

 
117,401

Substandard
10,367

 
118

 
42,991

Substandard impaired
10,921

 
548

 
90,335

Doubtful
—

 
—

 
—

Loss
—

 
—

 
—

 
$
177,047

 
$
58,283

 
$
1,450,039
Nonaccrual Loans
The following is a breakdown of nonaccrual loans as of December 31, 2012 and December 31, 2011:
 
December 31, 2012
 
December 31, 2011
 
(in thousands)
Financing Receivables on Nonaccrual status
 
Construction
$
7,385

 
$
26,575

Commercial Real Estate:
 
 
 
Owner occupied
5,787

 
16,339

Non-owner occupied
1,697

 
7,634

Mortgages:
 
 
 
1-4 Family first lien
3,123

 
7,271

Multifamily
539

 
942

Home Equity lines of credit
1,041

 
2,222

Commercial
2,790

 
8,896

Consumer and other
455

 
475

Total
$
22,817

 
$
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
December 31, 2012
(in thousands)
Construction
$
4,395

 
$
345

 
$
1,865

 
$
6,605

 
$
125,376

 
$
131,981

Commercial real estate:
 
 
 
 
 
 

 
 
 

Owner occupied
838

 
114

 
4,237

 
5,189

 
337,773

 
342,962

Non-owner occupied
1,688

 
500

 
1,098

 
3,286

 
208,203

 
211,489

Commercial
2,027

 
34

 
2,660

 
4,721

 
169,719

 
174,440

Mortgages:
 
 
 
 
 
 

 
 
 

Secured 1-4 family- first lien
2,767

 
910

 
2,226

 
5,903

 
162,708

 
168,611

Multifamily
12

 
—

 
10

 
22

 
35,315

 
35,337

Home equity lines of credit
1,980

 
52

 
924

 
2,956

 
188,932

 
191,888

Consumer and other
236

 
45

 
342

 
623

 
51,041

 
51,664

Total
$
13,943

 
$
2,000

 
$
13,362

 
$
29,305

 
$
1,279,067

 
$
1,308,372

 
 
 
 
 
 
 
 
 
 
 
 
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 December 31, 2012 and December 31, 2011:
 
As of December 31, 2012
 
Year to Date December 31, 2012
 
Recorded
 Investment
Unpaid
 Principal
 Balance
Related
 Allowance
 
Average
 Recorded
 Investment
Interest Income Recognized
 
(in thousands)
 
 
 
 
 
 
 
Impaired loans without a related allowance for loan losses
 
 
 
 
 
 
Construction
$
6,212

$
7,676

$
—

 
$
18,748

$
307

Commercial real estate:
 
 
 
 
 
 
Owner occupied
6,563

7,071

—

 
15,175

228

Non-owner occupied
4,976

5,358

—

 
7,399

254

Commercial
4,460

4,482

—

 
6,350

143

Mortgages:
 
 
 
 
 
 
Secured 1-4 family real estate
1,435

1,503

—

 
2,364

42

Multifamily
530

565

—

 
701

—

Home equity lines of credit
705

800

—

 
1,424

13

Consumer and other
—

—

—

 
—

—

Impaired loans with a related allowance for loan losses
 
 
 
 
 
 
Construction
$
1,958

$
2,136

$
191

 
$
2,929

$
4

Commercial real estate:
 
 
 
 
 
 
Owner occupied
4,961

5,082

189

 
5,163

326

Non-owner occupied
561

643

89

 
2,212

63

Commercial
1,193

1,245

928

 
2,249

8

Mortgages:
 
 
 
 
 
 
Secured 1-4 family real estate
—

—

—

 
347

10

Multifamily
—

—

—

 
—

2

Home equity lines of credit
—

—

—

 
36

—

Consumer and other
—

—

—

 
51

—

Total impaired loans
 
 
 
 
 
 
Construction
$
8,170

$
9,812

$
191

 
$
21,677

$
311

Commercial real estate:
 
 
 
 
 
 
Owner occupied
11,524

12,153

189

 
20,338

554

Non-owner occupied
5,537

6,001

89

 
9,611

317

Commercial
5,653

5,727

928

 
8,599

151

Mortgages:
 
 
 
 
 
 
Secured 1-4 family real estate
1,435

1,503

—

 
2,711

52

Multifamily
530

565

—

 
701

2

Home equity lines of credit
705

800

—

 
1,460

13

Consumer and other
—

—

—

 
51

—

Total impaired loans individually reviewed for impairment
$
33,554

$
36,561

$
1,397

 
$
65,148

$
1,400


 
As of December 31, 2011
 
Year to Date December 31, 2011
 
Recorded Investment
Unpaid
 Principal
 Balance
Related
 Allowance
 
Average Recorded Investment
Interest Income Recognized
 
(in thousands)
Impaired loans without a related allowance for loan losses
 
 
 
 
 
 
Construction
$
28,067

$
40,045

$
—

 
$
27,010

$
234

Commercial real estate:
 
 
 
 
 
 
Owner occupied
17,586

20,070

—

 
15,319

272

Non-owner occupied
8,639

11,255

—

 
8,803

210

Commercial
6,381

6,436

—

 
4,280

132

Mortgages:
 
 
 
 
 
 
Secured 1-4 family real estate
3,843

4,285

—

 
3,051

35

Multifamily
295

309

—

 
302

—

Home equity lines of credit
525

694

—

 
686

—

Consumer and other
—

—

—

 
—

—

Impaired loans with a related allowance for loan losses
 
 
 
 
 
 
Construction
$
1,011

$
1,011

$
570

 
$
7,195

$
50

Commercial real estate:
 
 
 
 
 

Owner occupied
6,459

6,533

585

 
4,044

53

Non-owner occupied
975

1,363

143

 
3,255

8

Commercial
2,914

2,920

2,511

 
3,655

92

Mortgages:
 
 
 
 
 

Secured 1-4 family real estate
498

517

45

 
1,473

6

Multifamily
300

319

135

 
421

—

Home equity lines of credit
403

412

112

 
654

4

Consumer and other
—

—

—

 
100

—

Total impaired loans
 
 
 
 
 
 
Construction
$
29,078

$
41,056

$
570

 
$
34,205

$
284

Commercial real estate:
 
 
 
 
 
 
Owner occupied
24,045

26,603

585

 
19,363

325

Non-owner occupied
9,614

12,618

143

 
12,058

218

Commercial
9,295

9,356

2,511

 
7,935

224

Mortgages:
 
 
 
 
 
 
Secured 1-4 family real estate
4,341

4,802

45

 
4,524

41

Multifamily
595

628

135

 
723

—

Home equity lines of credit
928

1,106

112

 
1,340

4

Consumer and other
—

—

—

 
100

—

Total impaired loan individually reviewed for impairment
$
77,896

$
96,169

$
4,101

 
$
80,248

$
1,096
Troubled Debt Restructurings
 
Year ended December 31, 2012
 
Year ended December 31, 2011
 
Number of
Loans
 
Recorded Investment Prior to Modification
 
Recorded Investment After Modification
 
Number of
Loans
 
Recorded Investment Prior to Modification
 
Recorded Investment After Modification
 
 
 
(in thousands)
 
 
 
(in thousands)
Below market interest rate
 
 
 
 
 
 
 
 
 
 
 
Construction
—

 
$
—

 
$
—

 
5

 
$
5,768

 
$
5,341

Secured 1-4 family mortgages
—

 
—

 
—

 
1

 
150

 
150

Total
—

 
$
—

 
$
—

 
6

 
$
5,918

 
$
5,491

Extended payment terms
 
 
 
 
 
 
 
 
 
 
 
Construction
5

 
$
1,231

 
$
872

 
8

 
$
2,704

 
$
2,696

Commercial real estate:

 

 

 

 
 
 

Non-owner occupied
6

 
5,329

 
4,990

 
3

 
1,133

 
536

Owner occupied
9

 
2,443

 
2,379

 
13

 
10,445

 
9,983

Commercial
7

 
2,676

 
2,286

 
3

 
346

 
346

1-4 Family Residential
4

 
1,259

 
1,130

 
2

 
327

 
303

Consumer
1

 
27

 
24

 
—

 
—

 
—

Total
32

 
$
12,965

 
$
11,681

 
29

 
$
14,955

 
$
13,864

Principal payment reduction
 
 
 
 
 
 
 
 
 
 
 
Construction
—

 
$
—

 
$
—

 
4

 
$
3,302

 
$
1,942

Commercial real estate:

 

 

 

 

 

Owner occupied
2

 
571

 
571

 
1

 
240

 
240

Commercial
—

 
—

 
—

 
2

 
64

 
64

Home equity lines of credit
—

 
—

 
—

 
1

 
165

 
165

Consumer
1

 
165

 
9

 
—

 
—

 
—

Total
3

 
$
736

 
$
580

 
8

 
$
3,771

 
$
2,411

 
 
 
 
 
 
 
 
 
 
 
 
Total
35

 
$
13,701

 
$
12,261

 
43

 
$
24,644

 
$
21,766


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 year ended December 31, 2012 and December 31, 2011.
 
 
 
 
 
 
 

 
 
Year ended December 31, 2012
 
Year ended December 31, 2011
 
 
Number of loans
Recorded investment
 
Number of loans
Recorded investment
Extended payment terms
 
 
 
 
 
 
Construction
 
—

$
—

 
1

$
221

Commercial real estate:
 


 


Non-owner occupied
 
1

—

 
—

—

Owner occupied
 
1

93

 
2

124

Commercial
 
—

—

 
3

346

Secured 1-4 family mortgages
 
1

170

 
1

120

Consumer
 
1

24

 
—

—

Total
 
4

$
287

 
7

$
811

 
 
 
 
 
 
 
Principal payment reduction
 
 
 
 
 
 
Construction
 
—

$
—

 
1

$
797

Home equity lines of credit
 
—

—

 
1

240

Total
 
—

$
—

 
2

$
1,037

 
 
 
 
 
 
 
Total
 
4

$
287

 
9

$
1,848
Allowance for Loan Losses
 
 
 
 
 
 
 
 
 
 
The following table presents changes in the allowance for loan losses for the years ended December 31, 2012 and 2011:
 
December 31, 2011
 
Charge-offs
 
Recoveries
 
Provision
 
December 31, 2012
 
(Amounts in thousands)
Construction
$
8,214

 
$
17,825

 
$
1,138

 
$
12,742

 
$
4,269

Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner occupied
5,792

 
7,334

 
165

 
5,751

 
4,374

Non-owner occupied
4,668

 
9,830

 
664

 
8,433

 
3,935

Commercial
5,712

 
7,796

 
956

 
5,419

 
4,291

Mortgages:
 
 
 
 
 
 
 
 
 
Secured 1-4 family- first lien
3,726

 
3,512

 
215

 
2,762

 
3,191

Multifamily
805

 
347

 
—

 
136

 
594

Home equity lines of credit
3,310

 
4,360

 
186

 
4,686

 
3,822

Consumer and other
621

 
752

 
359

 
445

 
673

 
$
32,848

 
$
51,756

 
$
3,683

 
$
40,374

 
$
25,149

 
 
 
 
 
 
 
 
 
 
 
December 31, 2010
 
Charge-offs
 
Recoveries
 
Provision
 
December 31, 2011
 
(Amounts in thousands)
Construction
$
12,014

 
$
11,391

 
$
2,010

 
$
5,581

 
$
8,214

Commercial real estate:
 
 
 
 
 
 
 
 
 
Owner occupied
5,958

 
3,611

 
136

 
3,309

 
5,792

Non-owner occupied
7,150

 
4,014

 
53

 
1,479

 
4,668

Commercial
4,335

 
3,494

 
423

 
4,448

 
5,712

Mortgages:
 
 
 
 
 
 
 
 
 
Secured 1-4 family- first lien
3,706

 
2,509

 
174

 
2,355

 
3,726

Multifamily
424

 
11

 
—

 
392

 
805

Home equity lines of credit
3,298

 
3,151

 
106

 
3,057

 
3,310

Consumer and other
867

 
652

 
184

 
222

 
621

 
$
37,752

 
$
28,833

 
$
3,086

 
$
20,843

 
$
32,848














The following tables provide the breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of December 31, 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 December 31, 2012
(Amounts in thousands)
Construction
$
191

 
$
8,170

 
$
4,078

 
$
123,811

Commercial real estate:
 
 
 
 
 
 
 
Owner occupied
189

 
11,524

 
4,185

 
331,438

Non-owner occupied
89

 
5,537

 
3,846

 
205,952

Commercial
928

 
5,653

 
3,363

 
168,787

Mortgages:
 
 
 
 
 
 
 
Secured 1-4 family- first lien
—

 
1,435

 
3,191

 
167,176

Multifamily
—

 
530

 
594

 
34,807

Home equity lines of credit
—

 
705

 
3,822

 
191,183

Consumer and other
—

 
—

 
673

 
51,664

 
$
1,397

 
$
33,554

 
$
23,752

 
$
1,274,818

 
 
 
 
 
 
 
 
 
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