Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Loans Receivable

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

	June 30,			December 31,
	2013			2012
	(in thousands)
Construction and land development	$	128,950		$	131,981
Commercial real estate:
Owner occupied	374,377			342,962
Non-owner occupied	201,077			211,489
Residential mortgages:
Secured 1-4 family	171,747			168,611
Multifamily	40,662			35,337
Home equity lines of credit	193,299			191,888
Commercial	171,031			174,440
Consumer and other	51,353			51,664
Total	1,332,496			1,308,372
Less: Net deferred loan origination fees	941			1,132
Allowance for loan losses	(21,014		)	(25,149		)
Loans, net	$	1,312,423		$	1,284,355

Credit Quality Indicators

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

Real Estate Credit Exposure as of September 30, 2013
			Commercial Real Estate
	Construction		Owner Occupied		Non-owner Occupied		1-4 Family		Multifamily		Home Equity
	(in thousands)
High Quality	$	—	$	115	$	—	$	—	$	—	$	121
Good Quality	364		—		1,599		1,004		717		6,897
Satisfactory	21,774		124,230		52,587		98,437		6,969		119,019
Merits Attention	87,417		219,372		131,433		59,464		31,556		59,673
Special Mention	14,753		19,058		8,783		5,764		557		4,706
Substandard	1,178		4,226		1,535		3,371		580		1,510
Substandard impaired	3,464		7,376		5,140		3,707		283		1,373
Doubtful	—		—		—		—		—		—
Loss	—		—		—		—		—		—
	$	128,950	$	374,377	$	201,077	$	171,747	$	40,662	$	193,299

Other Credit Exposures as of September 30, 2013
	Commercial		Consumer and Other		Total Loans
	(in thousands)
High Quality	$	2,222	$	1,755	$	4,213
Good Quality	5,192		1,200		16,973
Satisfactory	53,611		21,858		498,485
Merits Attention	90,359		25,511		704,785
Special Mention	9,563		689		63,873
Substandard	7,931		34		20,365
Substandard impaired	2,153		306		23,802
Doubtful	—		—		—
Loss	—		—		—
	$	171,031	$	51,353	$	1,332,496

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 September 30, 2013 and December 31, 2012:

	September 30, 2013		December 31, 2012
	(in thousands)
Financing Receivables on Nonaccrual status
Construction	$	3,464	$	7,385
Commercial real estate:
Owner occupied	5,419		5,787
Non-owner occupied	2,130		1,697
Mortgages:
Secured 1-4 family first lien	3,312		3,123
Multifamily	283		539
Home equity lines of credit	1,373		1,041
Commercial	1,622		2,790
Consumer and other	271		455
Total	$	17,874	$	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
September 30, 2013	(in thousands)
Construction	$	815	$	194	$	1,279	$	2,288	$	126,662	$	128,950
Commercial real estate:
Owner occupied	641		—		1,028		1,669		372,708		374,377
Non-owner occupied	176		42		389		607		200,470		201,077
Commercial	546		76		1,403		2,025		169,006		171,031
Mortgages:
Secured 1-4 family- first lien	553		668		1,717		2,938		168,809		171,747
Multifamily	—		—		27		27		40,635		40,662
Home equity lines of credit	423		—		79		502		192,797		193,299
Consumer and other	265		12		63		340		51,013		51,353
Total	$	3,419	$	992	$	5,985	$	10,396	$	1,322,100	$	1,332,496
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 September 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
September 30, 2013	(in thousands)
Impaired loans without a related allowance for loan losses
Construction	$	3,990	$	4,345	$	—	$	4,602	$	39	$	5,341	$	99
Commercial real estate:
Owner occupied	7,058		7,606		—		5,417		53		4,140		102
Non-owner occupied	5,490		5,559		—		5,358		70		5,419		183
Commercial	4,419		5,657		—		4,416		53		4,428		132
Mortgages:
Secured 1-4 family real estate	671		736		—		679		10		701		24
Multifamily	249		291		—		253		—		257		—
Home equity lines of credit	429		500		—		451		—		462		—
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	—	$	—	$	—	$	63	$	—	$	1,129	$	25
Commercial real estate:
Owner occupied	4,585		4,584		113		5,349		78		6,752		194
Non-owner occupied	—		—		—		105		—		325		2
Commercial	—		—		—		298		—		836		—
Mortgages:
Secured 1-4 family real estate	649		653		296		572		1		475		4
Multifamily	—		—		—		—		—		—		—
Home equity lines of credit	—		—		—		185		—		520		2
Consumer and other	—		—		—		—		—		—		—
Total impaired loans
Construction	$	3,990	$	4,345	$	—	$	4,665	$	39	$	6,470	$	124
Commercial real estate:
Owner occupied	11,643		12,190		113		10,766		131		10,892		296
Non-owner occupied	5,490		5,559		—		5,463		70		5,744		185
Commercial	4,419		5,657		—		4,714		53		5,264		132
Mortgages:
Secured 1-4 family real estate	1,320		1,389		296		1,251		11		1,176		28
Multifamily	249		291		—		253		—		257		—
Home equity lines of credit	429		500		—		636		—		982		2
Consumer and other	—		—		—		—		—		—		—
Total impaired loans individually reviewed for impairment	$	27,540	$	29,931	$	409	$	27,748	$	304	$	30,785	$	767

	As of December 31, 2012						Quarter to Date September 30, 2012				Year to Date September 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	$	—	$	14,694	$	125	$	20,382	$	275
Commercial real estate:
Owner occupied	6,563		7,071		—		13,840		23		15,594		332
Non-owner occupied	4,976		5,358		—		4,017		29		8,193		39
Commercial	4,460		4,482		—		6,403		—		6,316		130
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		1,432		—		2,680		29
Multifamily	530		565		—		703		4		702		7
Home equity lines of credit	705		800		—		1,588		—		1,320		7
Consumer and other	—		—		—		—		—		—		—
Impaired loans with a related allowance for loan losses
Construction	$	1,958	$	2,136	$	191	$	4,106	$	—	$	2,379	$	—
Commercial real estate:
Owner occupied	4,961		5,082		189		6,154		66		6,910		134
Non-owner occupied	561		643		89		3,491		26		1,768		42
Commercial	1,193		1,245		928		2,865		—		3,006		164
Mortgages:
Secured 1-4 family real estate	—		—		—		449		—		411		3
Multifamily	—		—		—		—		—		30		7
Home equity lines of credit	—		—		—		29		—		111		—
Consumer and other	—		—		—		54		—		67		—
Total impaired loans
Construction	$	8,170	$	9,812	$	191	$	18,800	$	125	$	22,761	$	275
Commercial real estate:
Owner occupied	11,524		12,153		189		19,994		89		22,504		466
Non-owner occupied	5,537		6,001		89		7,508		55		9,961		81
Commercial	5,653		5,727		928		9,268		—		9,322		294
Mortgages:
Secured 1-4 family real estate	1,435		1,503		—		1,881		—		3,091		32
Multifamily	530		565		—		703		4		732		14
Home equity lines of credit	705		800		—		1,617		—		1,431		7
Consumer and other	—		—		—		54		—		67		—
Total impaired loan individually reviewed for impairment	$	33,554	$	36,561	$	1,397	$	59,825	$	273	$	69,869	$	1,169

Troubled Debt Restructurings

	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
		(in thousands)			(in thousands)
Extended payment terms
Commercial real estate:
Owner occupied	2	$	593	4	$	1,316
Non-owner occupied	—	—		1	165
Total	2	$	593	5	$	1,481

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
	Number of loans	Recorded investment		Number of loans	Recorded investment
Below Market Rate		(in thousands)			(in thousands)
Secured 1-4 family mortgages	1	$	391	1	$	391
Total	1	$	391	1	$	391
Extended payment terms
Construction	2	$	521	5	$	873
Commercial real estate:
Owner occupied	2	331		7	2,021
Non-owner occupied	2	1,156		3	1,367
Commercial	—	—		6	1,482
Secured 1-4 family mortgages	—	—		3	751
Consumer	—	—		1	24
Total extended payment terms	6	$	2,008	25	$	6,518
Principal payment reduction
Commercial real estate:
Owner occupied	—	$	—	2	$	571
Consumer	—	—		1	9
Total principal payment reduction	—	$	—	3	$	580
Total	7	$	2,399	29	$	7,489

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 nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
	Number of loans	Recorded investment		Number of loans	Recorded investment
Extended payment terms
Construction	—	$	—	1	$	93
Commercial real estate:
Non-owner occupied	—	—		1	121
Total	—	$	—	2	$	214

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
	Number of loans	Recorded investment		Number of loans	Recorded investment
Below Market Rate		(in thousands)			(in thousands)
Construction	—	$	—	1	578
Total below market rate	—	$	—	1	$	578
Extended payment terms
Consumer	—	$	—	1	$	24
Total extended payment terms	—	$	—	1	$	24
Total	—	$	—	2	$	602

Allowance for Loan Losses

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

	June 30, 2013		Charge-offs		Recoveries		Provision			September 30, 2013
	(Amounts in thousands)
Construction	$	3,665	$	254	$	128	$	(37	)	$	3,502
Commercial real estate:
Owner occupied	4,160		139		39		(189		)	3,871
Non-owner occupied	3,459		—		60		(648		)	2,871
Commercial	3,985		1,456		221		494			3,244
Mortgages:
Secured 1-4 family- first lien	2,644		49		126		267			2,988
Multifamily	513		—		—		28			541
Home equity lines of credit	3,843		803		261		5			3,306
Consumer and other	655		114		30		120			691
	$	22,924	$	2,815	$	865	$	40		$	21,014
	June 30, 2012		Charge-offs		Recoveries		Provision			September 30, 2012
	(Amounts in thousands)
Construction	$	5,903	$	3,881	$	45	$	3,675		$	5,742
Commercial real estate:
Owner occupied	5,630		146		2		(943		)	4,543
Non-owner occupied	3,582		697		256		1,096			4,237
Commercial	4,715		771		63		624			4,631
Mortgages:
Secured 1-4 family- first lien	3,063		57		4		(83		)	2,927
Multifamily	563		—		—		5			568
Home equity lines of credit	4,399		372		29		(162		)	3,894
Consumer and other	942		313		21		39			689
	$	28,797	$	6,237	$	420	$	4,251		$	27,231

	December 31, 2012		Charge-offs		Recoveries		Provision			September 30, 2013
	(Amounts in thousands)
Construction	$	4,269	$	2,088	$	726	$	595		$	3,502
Commercial real estate:
Owner occupied	4,374		383		80		(200		)	3,871
Non-owner occupied	3,935		175		85		(974		)	2,871
Commercial	4,291		2,079		543		489			3,244
Mortgages:
Secured 1-4 family- first lien	3,191		687		226		258			2,988
Multifamily	594		—		—		(53		)	541
Home equity lines of credit	3,822		884		376		(8		)	3,306
Consumer and other	673		286		79		225			691
	$	25,149	$	6,582	$	2,115	$	332		$	21,014
	December 31, 2011		Charge-offs		Recoveries		Provision			September 30, 2012
	(Amounts in thousands)
Construction	$	8,214	$	7,823	$	323	$	5,028		$	5,742
Commercial real estate:
Owner occupied	5,792		2,019		126		644			4,543
Non-owner occupied	4,668		2,461		289		1,741			4,237
Commercial	5,712		1,789		829		(121		)	4,631
Mortgages:
Secured 1-4 family- first lien	3,726		625		153		(327		)	2,927
Multifamily	805		213		—		(24		)	568
Home equity lines of credit	3,310		1,073		50		1,607			3,894
Consumer and other	621		521		317		272			689
	$	32,848	$	16,524	$	2,087	$	8,820		$	27,231

The following tables provide a breakdown of allowance for loan losses for collectively evaluated and individually evaluated loans by type as of September 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 September 30, 2013	(Amounts in thousands)
Construction	$	—	$	3,990	$	3,501	$	124,960
Commercial real estate:
Owner occupied	113		11,643		3,758		362,734
Non-owner occupied	—		5,490		2,871		195,587
Commercial	—		4,419		3,244		166,612
Mortgages:
Secured 1-4 family- first lien	296		1,320		2,692		170,427
Multifamily	—		249		542		40,413
Home equity lines of credit	—		429		3,306		192,870
Consumer and other	—		—		691		51,353
	$	409	$	27,540	$	20,605	$	1,304,956
	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