Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Loans Receivable

The following table presents loans at June 30, 2013 and December 31, 2012 by class:

	June 30,			December 31,
	2013			2012
	(in thousands)
Construction and land development	$	127,564		$	131,981
Commercial real estate:
Owner occupied	362,807			342,962
Non-owner occupied	208,136			211,489
Residential mortgages:
Secured 1-4 family	167,783			168,611
Multifamily	33,724			35,337
Home equity lines of credit	195,648			191,888
Commercial	168,356			174,440
Consumer and other	49,729			51,664
Total	1,313,747			1,308,372
Less: Net deferred loan origination fees	1,014			1,132
Allowance for loan losses	(22,924		)	(25,149		)
Loans, net	$	1,291,837		$	1,284,355

Credit Quality Indicators

The following is a summary of credit quality indicators by class at June 30, 2013 and December 31, 2012:

Real Estate Credit Exposure as of June 30, 2013
			Commercial Real Estate
	Construction		Owner Occupied		Non-owner Occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	116	$	—	$	—	$	—	$	99
Good Quality	372		—		1,609		1,086		360		7,299
Satisfactory	20,571		120,788		56,744		93,744		7,141		119,149
Merits Attention	84,139		210,151		132,089		60,249		24,815		61,097
Special Mention	17,017		21,667		10,162		6,420		561		4,298
Substandard	1,367		2,906		1,818		3,138		586		1,703
Substandard impaired	4,098		7,179		5,714		3,146		261		2,003
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	127,564	$	362,807	$	208,136	$	167,783	$	33,724	$	195,648

Other Credit Exposures as of June 30, 2013
	Commercial		Consumer and other		Total Loans
	(in thousands)
High Quality	$	2,439	$	2,361	$	5,015
Good Quality	5,451		1,289		17,466
Satisfactory	49,254		21,348		488,739
Merits Attention	90,739		23,696		686,975
Special Mention	12,116		631		72,872
Substandard	4,286		33		15,837
Substandard impaired	4,071		371		26,843
Doubtful	—		—		—
Loss	—		—		—
	$	168,356	$	49,729	$	1,313,747

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 June 30, 2013 and December 31, 2012:

	June 30, 2013		December 31, 2012
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	4,098	$	7,385
Commercial real estate:
Owner occupied	5,141		5,787
Non-owner occupied	2,337		1,697
Mortgages:
Secured 1-4 family first lien	2,749		3,123
Multifamily	261		539
Home equity lines of credit	2,003		1,041
Commercial	2,743		2,790
Consumer and other	366		455
Total	$	19,698	$	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
June 30, 2013	(in thousands)
Construction	$	831	$	392	$	1,399	$	2,622	$	124,942	$	127,564
Commercial real estate:
Owner occupied	1,140		74		2,989		4,203		358,604		362,807
Non-owner occupied	1,822		24		570		2,416		205,720		208,136
Commercial	487		130		2,612		3,229		165,127		168,356
Mortgages:
Secured 1-4 family- first lien	429		1,344		1,172		2,945		164,838		167,783
Multifamily	—		—		—		—		33,724		33,724
Home equity lines of credit	1,593		50		60		1,703		193,945		195,648
Consumer and other	136		43		103		282		49,447		49,729
Total	$	6,438	$	2,057	$	8,905	$	17,400	$	1,296,347	$	1,313,747
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 June 30, 2013 and December 31, 2012:

							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, 2013	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	4,650	$	6,579	$	—	$	5,665	$	60	$	3,938	$	36
Commercial real estate:
Owner occupied	3,242		3,374		—		3,282		49		2,443		24
Non-owner occupied	5,168		5,219		—		5,417		113		3,907		53
Commercial	4,416		4,437		—		4,433		79		3,317		40
Mortgages:
Secured 1-4 family real estate	682		742		—		710		14		514		7
Multifamily	253		291		—		258		—		192		—
Home equity lines of credit	458		500		—		468		—		345		—
Consumer and other	—		—		—		—		—		1		—
Impaired loans with a related allowance for loan losses
Construction	$	251	$	273	$	11	$	1,613	$	25	$	846	$	3
Commercial real estate:
Owner occupied	7,627		7,893		386		7,679		116		7,655		58
Non-owner occupied	420		420		55		464		2		426		—
Commercial	1,193		1,245		799		1,193		—		1,193		—
Mortgages:
Secured 1-4 family real estate	341		341		171		401		3		396		—
Multifamily	—		—		—		—		—		—		—
Home equity lines of credit	740		750		566		743		2		741		—
Consumer and other	—		—		—		—		—		—		—
Total impaired loans
Construction	$	4,901	$	6,852	$	11	$	7,278	$	85	$	4,784	$	39
Commercial real estate:
Owner occupied	10,869		11,267		386		10,961		165		10,098		82
Non-owner occupied	5,588		5,639		55		5,881		115		4,333		53
Commercial	5,609		5,682		799		5,626		79		4,510		40
Mortgages:
Secured 1-4 family real estate	1,023		1,083		171		1,111		17		910		7
Multifamily	253		291		—		258		—		192		—
Home equity lines of credit	1,198		1,250		566		1,211		2		1,086		—
Consumer and other	—		—		—		—		—		1		—
Total impaired loans individually reviewed for impairment	$	29,441	$	32,064	$	1,988	$	32,326	$	463	$	25,914	$	221

	As of December 31, 2012						Quarter to Date June 30, 2012				Year to Date June 30, 2012
	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	$	6,212	$	7,676	$	—	$	21,072	$	36	$	23,311	$	150
Commercial real estate:
Owner occupied	6,563		7,071		—		14,112		22		16,228		308
Non-owner occupied	4,976		5,358		—		7,828		9		10,150		10
Commercial	4,460		4,482		—		6,534		28		6,326		130
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		3,078		5		3,413		29
Multifamily	530		565		—		719		—		702		4
Home equity lines of credit	705		800		—		1,236		—		1,154		8
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	1,958	$	2,136	$	191	$	2,205	$	—	$	1,406	$	—
Commercial real estate:
Owner occupied	4,961		5,082		189		8,877		69		7,631		69
Non-owner occupied	561		643		89		1,028		16		727		16
Commercial	1,193		1,245		928		3,115		—		3,090		164
Mortgages:
Secured 1-4 family real estate	—		—		—		547		3		421		3
Multifamily	—		—		—		—		—		43		7
Home equity lines of credit	—		—		—		118		—		159		—
Consumer and other	—		—		—		164		—		95		—
Total impaired loans
Construction	$	8,170	$	9,812	$	191	$	23,277	$	36	$	24,717	$	150
Commercial real estate:
Owner occupied	11,524		12,153		189		22,989		91		23,859		377
Non-owner occupied	5,537		6,001		89		8,856		25		10,877		26
Commercial	5,653		5,727		928		9,649		28		9,416		294
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		3,625		8		3,834		32
Multifamily	530		565		—		719		—		745		11
Home equity lines of credit	705		800		—		1,354		—		1,313		8
Consumer and other	—		—		—		164		—		95		—
Total impaired loan individually reviewed for impairment	$	33,554	$	36,561	$	1,397	$	70,633	$	188	$	74,856	$	898

Troubled Debt Restructurings

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
		(in thousands)			(in thousands)
Extended payment terms
Commercial real estate:
Owner occupied	1	$	499	2	$	724
Non-owner occupied	—	—		1	165
Total	1	$	499	3	$	889

	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms		(in thousands)			(in thousands)
Construction	3	$	352	3	$	352
Commercial real estate:
Owner occupied	3	1,026		5	1,669
Non-owner occupied	1	211		1	211
Commercial	1	236		6	1,469
Secured 1-4 family mortgages	—	—		3	742
Consumer	—	—		1	—
Total extended payment terms	8	$	1,825	19	$	4,443
Principal payment reduction
Commercial real estate:
Owner occupied	1	$	399	2	$	568
Consumer	—	—		1	9
Total principal payment reduction	1	$	399	3	$	577
Total	9	$	2,224	22	$	5,020

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, 2013 and 2012.

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms
Construction	—	$	—	2	$	593
Commercial real estate:
Non-owner occupied	—	—		1	121
Total	—	$	—	3	$	714

	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012
	Number of loans	Recorded investment		Number of loans	Recorded investment
Below Market Rate		(in thousands)			(in thousands)
Construction	—	$	—	2	$	1,061
Total below market rate	—	$	—	2	$	1,061
Extended payment terms
Consumer	1	$	24	1	$	24
Total extended payment terms	1	$	24	1	$	24
Principal payment reduction
Construction	1	$	973	2	$	1,230
Total principal payment reduction	1	$	973	2	$	1,230
Total	2	$	997	5	$	2,315

Allowance for Loan Losses

The following tables present changes in the allowance for loan losses for the three and six months ended June 30, 2013 and 2012:

	March 31, 2013		Charge-offs		Recoveries		Provision			June 30, 2013
	(Amounts in thousands)
Construction	$	4,034	$	1,188	$	82	$	737		$	3,665
Commercial real estate:
Owner occupied	4,413		234		18		(37		)	4,160
Non-owner occupied	3,811		—		18		(370		)	3,459
Commercial	4,005		224		236		(32		)	3,985
Mortgages:
Secured 1-4 family- first lien	2,878		387		79		74			2,644
Multifamily	579		—		—		(66		)	513
Home equity lines of credit	4,134		—		31		(322		)	3,843
Consumer and other	638		82		28		71			655
	$	24,492	$	2,115	$	492	$	55		$	22,924
	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

	December 31, 2012		Charge-offs		Recoveries		Provision			June 30, 2013
	(Amounts in thousands)
Construction	$	4,269	$	1,834	$	598	$	632		$	3,665
Commercial real estate:
Owner occupied	4,374		244		42		(12		)	4,160
Non-owner occupied	3,935		175		24		(325		)	3,459
Commercial	4,291		622		321		(5		)	3,985
Mortgages:
Secured 1-4 family- first lien	3,191		639		100		(8		)	2,644
Multifamily	594		—		—		(81		)	513
Home equity lines of credit	3,822		81		116		(14		)	3,843
Consumer and other	673		172		49		105			655
	$	25,149	$	3,767	$	1,250	$	292		$	22,924
	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

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, 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 June 30, 2013	(Amounts in thousands)
Construction	$	11	$	4,901	$	3,654	$	122,663
Commercial real estate:
Owner occupied	386		10,869		3,774		351,938
Non-owner occupied	55		5,588		3,404		202,548
Commercial	799		5,609		3,186		162,747
Mortgages:
Secured 1-4 family- first lien	171		1,023		2,473		166,760
Multifamily	—		253		513		33,471
Home equity lines of credit	566		1,198		3,277		194,450
Consumer and other	—		—		655		49,729
	$	1,988	$	29,441	$	20,936	$	1,284,306
	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