Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2013

The following table presents loans at March 31, 2013 and December 31, 2012 by class:



	March 31,			December 31,
	2013			2012
	(in thousands)
Construction and land development	$	133,200		$	131,981
Commercial real estate:
Owner occupied	356,955			342,962
Non-owner occupied	205,474			211,489
Residential mortgages:
1-4 family	166,565			168,611
Multifamily	34,361			35,337
Home equity lines of credit	193,404			191,888
Commercial	163,325			174,440
Consumer and other	49,931			51,664
Total	1,303,215			1,308,372
Less: Net deferred loan origination fees	1,049			1,132
Allowance for loan losses	(24,492		)	(25,149		)
Loans, net	$	1,279,772		$	1,284,355

Credit Quality Indicators

The following is a summary of credit quality indicators by class at March 31, 2013 and December 31, 2012:



Real Estate Credit Exposure as of March 31, 2013
			Commercial Real Estate
	Construction		Owner occupied		Non-owner occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	118	$	—	$	370	$	—	$	107
Good Quality	331		—		—		1,265		—		6,779
Satisfactory	21,509		120,390		54,508		92,612		7,381		117,259
Merits Attention	82,489		198,036		129,409		58,496		25,553		61,288
Special Mention	17,689		28,248		13,517		6,899		565		4,280
Substandard	1,779		2,900		2,002		3,339		594		1,686
Substandard impaired	9,403		7,263		6,038		3,584		268		2,005
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	133,200	$	356,955	$	205,474	$	166,565	$	34,361	$	193,404



Other Credit Exposures as of March 31, 2013
	Commercial		Consumer and other		Total Loans
	(in thousands)
High Quality	$	2,454	$	2,242	$	5,291
Good Quality	5,243		1,289		14,907
Satisfactory	48,356		21,257		483,272
Merits Attention	86,707		24,205		666,183
Special Mention	12,206		557		83,961
Substandard	4,264		26		16,590
Substandard impaired	4,095		355		33,011
Doubtful	—		—		—
Loss	—		—		—
	$	163,325	$	49,931	$	1,303,215



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

Nonaccrual Loans

The following is a breakdown of nonaccrual loans as of March 31, 2013 and December 31, 2012:



	March 31, 2013		December 31, 2012
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	7,574	$	7,385
Commercial Real Estate:
Owner occupied	5,211		5,787
Non-owner occupied	2,561		1,697
Mortgages:
1-4 Family first lien	3,027		3,123
Multifamily	268		539
Home Equity lines of credit	2,005		1,041
Commercial	2,756		2,790
Consumer and other	310		455
Total	$	23,712	$	22,817

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
March 31, 2013	(in thousands)
Construction	$	1,435	$	—	$	2,026	$	3,461	$	129,739	$	133,200
Commercial real estate:
Owner occupied	593		147		3,013		3,753		353,202		356,955
Non-owner occupied	85		—		756		841		204,633		205,474
Commercial	245		2		2,638		2,885		160,440		163,325
Mortgages:
Secured 1-4 family- first lien	3,119		584		1,215		4,918		161,647		166,565
Multifamily	—		9		—		9		34,352		34,361
Home equity lines of credit	831		31		42		904		192,500		193,404
Consumer and other	315		13		50		378		49,553		49,931
Total	$	6,623	$	786	$	9,740	$	17,149	$	1,286,066	$	1,303,215

December 31, 2012
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

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 March 31, 2013 and December 31, 2012:



							Quarter to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2013	(in thousands)

Impaired loans without a related allowance for loan losses
Construction	$	5,654	$	5,773	$	—	$	5,976	$	24
Commercial real estate:
Owner occupied	3,277		3,387		—		3,300		25
Non-owner occupied	5,542		5,577		—		5,573		60
Commercial	4,434		4,455		—		4,440		40
Mortgages:
Secured 1-4 family real estate	727		793		—		730		7
Multifamily	259		292		—		260		—
Home equity lines of credit	464		500		—		473		—
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	2,630	$	2,761	$	240	$	2,634	$	21
Commercial real estate:
Owner occupied	7,684		7,915		435		7,705		58
Non-owner occupied	444		455		59		497		2
Commercial	1,193		1,245		799		1,193		—
Mortgages:
Secured 1-4 family real estate	574		575		19		448		3
Multifamily	—		—		—		—		—
Home equity lines of credit	743		750		570		745		2
Consumer and other	—		—		—		—		—
Total impaired loans
Construction	$	8,284	$	8,534	$	240	$	8,610	$	45
Commercial real estate:
Owner occupied	10,961		11,302		435		11,005		83
Non-owner occupied	5,986		6,032		59		6,070		62
Commercial	5,627		5,700		799		5,633		40
Mortgages:
Secured 1-4 family real estate	1,301		1,368		19		1,178		10
Multifamily	259		292		—		260		—
Home equity lines of credit	1,207		1,250		570		1,218		2
Consumer and other	—		—		—		—		—
Total impaired loans individually reviewed for impairment	$	33,625	$	34,478	$	2,122	$	33,974	$	242



	As of December 31, 2012						Quarter to Date March 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	$	—	$	25,801	$	114
Commercial real estate:
Owner occupied	6,563		7,071		—		18,574		286
Non-owner occupied	4,976		5,358		—		13,713		2
Commercial	4,460		4,482		—		5,997		102
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		3,853		24
Multifamily	530		565		—		692		4
Home equity lines of credit	705		800		—		1,093		7
Consumer and other	—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	1,958	$	2,136	$	191	$	258	$	—
Commercial real estate:
Owner occupied	4,961		5,082		189		6,563		—
Non-owner occupied	561		643		89		243		—
Commercial	1,193		1,245		928		3,122		164
Mortgages:
Secured 1-4 family real estate	—		—		—		257		—
Multifamily	—		—		—		75		7
Home equity lines of credit	—		—		—		190		—
Consumer and other	—		—		—		5		—
Total impaired loans
Construction	$	8,170	$	9,812	$	191	$	26,059	$	114
Commercial real estate:
Owner occupied	11,524		12,153		189		25,137		286
Non-owner occupied	5,537		6,001		89		13,956		2
Commercial	5,653		5,727		928		9,119		266
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		4,110		24
Multifamily	530		565		—		767		11
Home equity lines of credit	705		800		—		1,283		7
Consumer and other	—		—		—		5		—
Total impaired loan individually reviewed for impairment	$	33,554	$	36,561	$	1,397	$	80,436	$	710

Troubled Debt Restructurings



	Three Months Ended March 31, 2013
	Number of Loans	Recorded Investment Prior to Modification		Recorded Investment After Modification
		(in thousands)
Extended payment terms
Commercial real estate:
Owner occupied	1	$	224	$	224
Non-owner occupied	1	167		166
Total	2	$	391	$	390



	Three months ended March 31, 2012
	Number of loans	Recorded investment
Extended payment terms		(in thousands)
Commercial real estate:
Owner occupied	2	$	664
Commercial	5	1,246
Secured 1-4 family mortgages	3	751
Consumer	1	24
Total extended payment terms	11	$	2,685

Principal payment reduction
Commercial real estate:
Owner occupied	1	$	172
Consumer	1	9
Total principal payment reduction	2	$	181

Total	13	$	2,866

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 months ended March 31, 2013 and 2012.



	Three months ended March 31, 2013
	Number of loans	Recorded investment
Extended payment terms
Construction	1	$	500
Commercial real estate:
Owner occupied	1	93
Non-owner occupied	2	211
Total	4	$	804



	Three months ended March 31, 2012
	Number of loans	Recorded investment
Below Market Rate		(in thousands)
Construction	2	$	1,061
Total below market rate	2	$	1,061
Extended payment terms
Commercial	1	$	120
Secured 1-4 family mortgages	1	100
Total extended payment terms	2	$	220
Principal payment reduction
Construction	1	$	257
Home equity lines of credit	1	165
Total principal payment reduction	2	$	422

Total	6	$	1,703

Allowance for Loan Losses

The following table presents changes in the allowance for loan losses for the three months ended March 31, 2013 and 2012:



	December 31, 2012		Charge-offs		Recoveries		Provision			March 31, 2013
	(Amounts in thousands)
Construction	$	4,269	$	646	$	516	$	(105	)	$	4,034
Commercial real estate:
Owner occupied	4,374		10		24		25			4,413
Non-owner occupied	3,935		175		6		45			3,811
Commercial	4,291		399		86		27			4,005
Mortgages:
Secured 1-4 family- first lien	3,191		251		21		(83		)	2,878
Multifamily	594		—		—		(15		)	579
Home equity lines of credit	3,822		81		84		309			4,134
Consumer and other	673		89		20		34			638
	$	25,149	$	1,651	$	757	$	237		$	24,492

	December 31, 2011		Charge-offs		Recoveries		Provision			March 31, 2012
	(Amounts in thousands)
Construction	$	8,214	$	1,828	$	107	$	1,464		$	7,957
Commercial real estate:
Owner occupied	5,792		683		7		218			5,334
Non-owner occupied	4,668		1,312		1		369			3,726
Commercial	5,712		425		85		142			5,514
Mortgages:
Secured 1-4 family- first lien	3,726		375		11		(9		)	3,353
Multifamily	805		202		—		(97		)	506
Home equity lines of credit	3,310		471		10		250			3,099
Consumer and other	621		82		21		13			573
	$	32,848	$	5,378	$	242	$	2,350		$	30,062

The following tables provide the a breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of March 31, 2013 and December 31, 2012.



	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 March 31, 2013	(Amounts in thousands)
Construction	$	240	$	8,284	$	3,794	$	124,916
Commercial real estate:
Owner occupied	435		10,961		3,978		345,994
Non-owner occupied	59		5,986		3,752		199,488
Commercial	799		5,627		3,206		157,698
Mortgages:
Secured 1-4 family- first lien	19		1,301		2,859		165,264
Multifamily	—		259		579		34,102
Home equity lines of credit	570		1,207		3,564		192,197
Consumer and other	—		—		638		49,931
	$	2,122	$	33,625	$	22,370	$	1,269,590

	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