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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
9 Months Ended
Sep. 30, 2011
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES [Abstract] 
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
NOTE 6 - LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

The composition of net loans receivable at September 30, 2011 and December 31, 2010 is as follows:

   
2011
   
2010
 
Construction
 
$
42,116
   
$
50,964
 
Commercial real estate
   
61,276
     
72,281
 
Commercial and industrial
   
11,733
     
13,156
 
Residential real estate
   
21,212
     
23,822
 
Manufactured housing
   
4,174
     
4,662
 
Total loans receivable covered under FDIC loss sharing agreements (1)
   
140,511
     
164,885
 
Construction
   
16,625
     
13,387
 
Commercial real estate
   
231,591
     
144,849
 
Commercial and industrial
   
54,708
     
35,942
 
Mortgage warehouse
   
416,670
     
186,113
 
Manufactured housing
   
102,404
     
102,924
 
Residential real estate
   
49,800
     
28,964
 
Consumer
   
1,698
     
1,581
 
Deferred costs (fees), net
   
365
     
327
 
Total loans receivable not covered under FDIC loss sharing agreements
   
873,861
     
514,087
 
Allowance for loan losses
   
(14,025
)
   
(15,129
)
Loans receivable, net
 
$
1,000,347
   
$
663,843
 
 
(1)  Loans that were acquired in the two FDIC assisted transactions and are covered under loss sharing agreements with the FDIC are referred to as “covered” loans throughout these financial statements.
 
Non-Covered Nonaccrual Loans and Loans Past Due

The following table summarizes non-covered nonaccrual loans and past due loans, by class, as of September 30, 2011:

   
30-89 Days
 Past  Due (1)
   
Greater Than
 90 Days (1)
   
Total Past
 Due(1)
   
Non-
 Accrual
   
Current(2)
 
Total Loans (4)
 
Commercial and industrial
 
$
572
   
$
-
   
$
572
   
$
3,537
   
$
50,599
   
$
54,708
 
Commercial real estate
   
6,008
     
132
     
6,140
     
23,624
     
201,827
     
231,591
 
Construction
   
455
     
-
     
455
     
4,381
     
11,789
     
16,625
 
Residential real estate
                                               
First mortgages
   
844
     
-
     
844
     
1,042
     
22,256
     
24,142
 
Home equity
   
213
     
-
     
213
     
1,101
     
24,344
     
25,658
 
Acquired with credit deterioration
   
-
     
-
     
-
     
-
     
-
     
-
 
Consumer
   
76
     
-
     
76
     
59
     
1,563
     
1,698
 
Mortgage warehouse
   
-
     
-
     
-
     
-
     
416,670
     
416,670
 
Manufactured housing (3)
   
2,937
     
31
     
2,968
     
-
     
99,436
     
102,404
 
                                                 
Total
 
$
11,105
   
$
163
   
$
11,268
   
$
33,744
   
$
828,484
   
$
873,496
 

(1) 
Loan balances do not include non-accrual loans.
(2) 
Loans where payments are due within 29 days of the scheduled payment date.
(3) 
Purchased manufactured housing loans are subject to cash reserves held at the Bank and are used to fund the past due payments when the loan reaches 90 days or more delinquent.
(4) 
Loans exclude deferred costs and fees.
 

The following table summarizes non-covered nonaccrual loans and past due loans, by class, as of December 31, 2010:

   
30-89 Days
 Past  Due(1)
   
Greater Than
 90 Days(1)
   
Total Past
 Due(1)
   
Non-
 Accrual
   
Current(2)
 
Total Loans(4)
 
                               
Commercial and industrial
 
$
-
   
$
-
   
$
-
   
$
705
   
$
35,237
   
$
35,942
 
Commercial real estate
   
3,545
     
-
     
3,545
     
15,739
     
125,565
     
144,849
 
Construction
   
51
     
-
     
51
     
4,673
     
8,663
     
13,387
 
Residential real estate
                                               
First mortgages
   
-
     
-
     
-
     
658
     
6,705
     
7,363
 
Home equity
   
400
     
-
     
400
     
467
     
20,702
     
21,569
 
Acquired with credit deterioration
   
-
     
-
     
-
     
32
     
-
     
32
 
Consumer
   
17
     
5
     
22
     
-
     
1,559
     
1,581
 
Mortgage warehouse
   
-
     
-
     
-
     
-
     
186,113
     
186,113
 
Manufactured housing (3)
   
2,698
     
-
     
2,698
     
-
     
100,226
     
102,924
 
                                                 
Total
 
$
6,711
   
$
5
   
$
6,716
   
$
22,274
   
$
484,770
   
$
513,760
 
 
(1)    Loan balances do not include non-accrual loans.
(2)    Loans where payments are due within 29 days of the scheduled payment date. 
(3)    Purchased manufactured housing loans are subject to cash reserves held at the Bank and are used to fund the past due payments when the loan reaches 90 days or more delinquent.
(4)    Loans exclude deferred costs and fees.

At September 30, 2011 and December 31, 2010, the Bank had other real estate owned that was not covered by loss sharing arrangements of $7,245 and $1,906, respectively.  
 
Covered Nonaccrual Loans and Loans Past Due

The following table summarizes covered nonaccrual loans and past due loans, by class, as of September 30, 2011:

  
 
30-89 Days Past Due (1)
  
Greater than 90 days (1)
  
Total past due (1)
  
Nonaccrual
  
Current(3)
  
Total
 
Commercial and industrial
                  
Acquired with credit deterioration
 $-   367  $367  $305  $418  $1,090 
Remaining loans (2)
  255   -   255   236   10,152   10,643 
Commercial real estate
                        
Acquired with credit deterioration
  30   -   30   9,815   3,905   13,750 
Remaining loans (2)
  -   -   -   8,476   39,050   47,526 
Construction
                        
Acquired with credit deterioration
  -   -   -   16,110   4,786   20,896 
Remaining loans (2)
  -   -   -   4,171   17,049   21,220 
Residential real estate
                        
Acquired with credit deterioration
  -   -   -   999   1,855   2,854 
First mortgages (2)
  -   -   -   -   7,049   7,049 
Home equity (2)
  -   -   -   3,130   8,179   11,309 
Manufactured housing
                        
Acquired with credit deterioration
  -   -   -   78   -   78 
Remaining loans (2)
  98   -   98   39   3,959   4,096 
   $383  $367  $750  $43,359  $96,402  $140,511 
  
(1) Loan balances do not include non-accrual loans.
 
(2) Loans that were not identified at the acquisition date as a loan with credit deterioration.
 
(3) Loans where payments are due within 29 days of the scheduled payment date.
 
 
 
The following table summarizes covered nonaccrual loans and past due loans, by class, as of December 31, 2010:

   
30-89 Days
   
Greater than
   
Total past
   
Non-
           
   
Past Due (1)
   
90 days (1)
   
due (1)
   
accrual
   
Current(3)
   
Total
 
                               
Commercial and industrial
                             
Acquired with credit deterioration
 
$
419
   
$
-
   
$
419
   
$
1,790
   
$
1,003
   
$
3,212
 
Remaining loans (2)
   
53
     
-
     
53
     
-
     
9,891
     
9,944
 
Commercial real estate
                                               
Acquired with credit deterioration
   
1,215
     
-
     
1,215
     
15,242
     
23,778
     
40,235
 
Remaining loans (2)
   
795
     
-
     
795
     
433
     
30,818
     
32,046
 
Construction
                                               
Acquired with credit deterioration
   
3,884
     
-
     
3,884
     
19,869
     
-
     
23,753
 
Remaining loans (2)
   
-
     
-
     
-
     
1,912
     
25,299
     
27,211
 
Residential real estate
                                               
Acquired with credit deterioration
   
-
     
-
     
-
     
4,013
     
1,751
     
5,764
 
First mortgages (2)
   
-
     
-
     
-
     
-
     
8,254
     
8,254
 
Home equity (2)
   
248
     
-
     
248
     
4
     
9,552
     
9,804
 
Manufactured housing
                                               
Acquired with credit deterioration
   
-
     
-
     
-
     
95
     
7
     
102
 
Remaining loans (2)
   
113
     
-
     
113
     
 96
     
4,351
     
4,560
 
   
$
6,727
   
$
-
   
$
6,727
   
$
43,454
   
$
114,704
   
$
164,885
 
        
(1) Loan balances do not include non-accrual loans.
       
(2) Loans receivable that were not identified upon acquisition as a loan with credit deterioration.
       
(3) Loans where payments are due within 29 days of the scheduled payment date.
       
 

Impaired Loans - Covered and Non-Covered

The following table presents a summary of the impaired loans at September 30, 2011.

 
Unpaid
 Principal
 Balance (1)
 
Related
 Allowance
 
Average
 Recorded
 Investment
 
Interest
 Income
 Recognized
 
With no related allowance recorded:
                   
Commercial and industrial
 
$
1,949
   
$
-
   
$
1,893
   
$
95
 
Commercial real estate
   
17,449
     
-
     
15,096
     
525
 
Construction
   
3,278
     
-
     
3,420
     
92
 
Consumer
   
39
     
-
     
1
     
2
 
Residential real estate
   
1,029
     
-
     
618
     
35
 
With an allowance recorded:
                               
Commercial and industrial
   
3,330
     
958
     
3,320
     
124
 
Commercial real estate
   
11,661
     
3,402
     
10,880
     
473
 
Construction
   
7,370
     
3,184
     
3,420
     
46
 
Consumer
   
5
     
5
     
1
     
-
 
Residential real estate
   
661
     
268
     
618
     
232
 
                                 
Total
 
$
46,771
   
$
7,817
   
$
39,267
   
$
1,624
 
 
(1) Also represents the recorded investment.
 
The following table presents a summary of the impaired loans at December 31, 2010.

 
  
Unpaid
 Principal
 Balance(1)
 
  
Related
 Allowance
 
  
Average
 Recorded
 Investment
 
  
Interest
 Income
 Recognized
 
With no related allowance recorded:
                               
Commercial and industrial
 
$
179
   
$
-
   
$
83
   
$
2
  
Commercial real estate
   
10,825
     
-
     
4,737
     
356
  
Construction
   
551
     
-
     
278
     
-
 
Consumer
   
-
     
-
     
-
     
-
 
Residential real estate
   
658
     
-
     
496
     
22
  
With an allowance recorded:
                               
Commercial and industrial
   
7,382
     
1,456
     
6,383
     
462
  
Commercial real estate
   
18,293
     
6,551
     
11,715
     
857
  
Construction
   
6,168
     
2,006
     
6,198
     
168
  
Consumer
   
-
     
-
     
-
     
-
 
Residential real estate
   
620
     
305
     
668
     
16
  
                               
  
Total
 
$
44,676
   
$
10,318
   
$
30,558
   
$
1,883
  
 
(1) Also represents the recorded investment.

Troubled Debt Restructurings

At September 30, 2011 there were $9.7 million in loans categorized as troubled debt restructurings (“TDR”). All TDRs are considered impaired loans in the calendar year of their restructuring. In subsequent years, a TDR may cease being classified as impaired if the loan was modified at a market rate and has performed according to the modified terms for at least six months. A loan that has been modified at a below market rate will return to performing status if it satisfies the six month performance requirement; however, it will remain classified as impaired.
 
The following is an analysis of loans modified in a troubled debt restructuring by type of concession during the nine months ended September 30, 2011. There were no modifications that involved forgiveness of debt.
 
   
TDRs in compliance with their modified terms and accruing interest
  
TDRs that are not accruing interest
  
Total
 
     
Extended under forbearance
 $3,093  $5,394  $8,487 
Multiple extentions resulting from financial difficulty
  74   -   74 
Interest rate reductions
  1,009   132   1,141 
Total
 $4,176  $5,526  $9,702 
 

The following is an analysis of loans modified in a troubled debt restructuring by type of concession during the three months ended September 30, 2011. There were no modifications that involved forgiveness of debt.
 
   
TDRs in compliance with their modified terms and accruing interest
  
TDRs that are not accruing interest
  
Total
 
     
Extended under forbearance
 $-  $1,423  $1,423 
Multiple extentions resulting from financial difficulty
  72   -   72 
Interest rate reductions
  901   -   901 
Total
 $973  $1,423  $2,396 
 
 
Troubled Debt Restructurings
 
The following table provides, by class, the number of loans and leases modified in troubled debt restructurings, and the recorded investments and unpaid principal balances during the nine months ended September 30, 2011.
 
  
 
TDRs in compliance with their modified terms and accruing interest
  
TDRs that are not accruing interest
 
   
Number
  
Recorded
  
Number
  
Recorded
 
   
Of Loans
  
Investment
  
of Loans
  
Investment
 
Commercial and Industrial
  1  $108   -  $- 
Commercial Real Estate
  3   2,543   18   4,904 
Construction
  1   550   -   - 
Manufactured Housing
  12   973   -   - 
Residential Real Estate
  -   -   1   622 
Consumer
  1   2   -   - 
Total Loans and Leases
  18  $4,176   19  $5,526 
                  
 
The following table provides, by class, the number of loans and leases modified in troubled debt restructurings, and the recorded investments and unpaid principal balances during the three month ended September 30, 2011.
 
  
 
TDRs in compliance with their modified terms and accruing interest
  
TDRs that are not accruing interest
 
   
Number
 
Recorded
  
Number
 
Recorded
 
   
Of Loans
 
Investment
  
of Loans
 
Investment
 
Commercial Real Estate
  -  $-   4  $1,423 
Manufactured Housing
  12   973   -   - 
Total Loans and Leases
  12  $973   4  $1,423 
                  
 
TDR modifications primarily involve interest rate concessions, extensions of term, deferrals of principal, and other modifications. Other modifications typically reflect other nonstandard terms which the Bancorp would not offer in non-troubled situations. During the three-month and nine-month periods ended September 30, 2011, $1.57 million were modified in a troubled debt restructuring. All modifications took place during the third quarter September 30, 2011. TDR modifications of loans within the commercial and industrial category were primarily interest rate concessions, deferrals of principal and other modifications; modifications of commercial real estate loans were primarily deferrals of principal, extensions of term and other modifications; and modifications of residential real estate loans were primarily interest rate concessions and deferrals of principal.
 
All loans and leases modified in troubled debt restructurings are evaluated for impairment. The nature and extent of impairment of TDRs, including those which have experienced a subsequent default, is considered in the determination of an appropriate level of allowance for credit losses. There was $11,000 in specific reserves resulting from the addition of TDR modifications in the three-month and nine-month periods ended September 30, 2011.

Credit Quality Indicators

Commercial and industrial, Commercial real estate, Residential real estate and Construction loans are based on an internally assigned risk rating system which are assigned at the loan origination and reviewed on a periodic or on an “as needed” basis. Consumer, mortgage warehouse and manufactured housing loans are evaluated based on the payment activity of the loan. The following presents the credit quality tables as of September 30, 2011 and December 31, 2010 for the non-covered loan portfolio.

   
   
September 30, 2011
 
   
Commercial and
Industrial
   
Commercial
Real Estate
   
Construction
   
Residential Real Estate
 
Pass/Satisfactory
 
$
45,077
   
$
184,630
   
$
9,568
   
$
48,239
 
Special Mention
   
19
     
13,595
     
237
     
-
 
Substandard
   
9,288
     
31,428
     
5,685
     
1,561
 
Doubtful
   
324
     
1,938
     
1,135
     
-
 
Total
 
$
54,708
   
$
231,591
   
$
16,625
   
$
49,800
 
 
 
  
Consumer
 
  
Mortgage Warehouse
 
  
Manufactured Housing
 
Performing
  
$
1,639
   
$
416,670
   
$
102,404
  
Nonperforming (1)
  
 
59
     
-
     
-
  
Total
  
$
1,698
   
$
416,670
   
$
102,404
  
 
  
                     
 
(1)
Defined as past due thirty or more days at September 30, 2011.


 
December 31, 2010
   
Commercial and
Industrial
   
Commercial
Real Estate
   
Construction
   
Residential Real Estate
 
Pass/Satisfactory
 
$
27,771
   
$
107,480
   
$
4,653
   
$
27,566
 
Special Mention
   
534
     
8,500
     
1,416
     
-
 
Substandard
   
7,306
     
25,213
     
6,246
     
1,398
 
Doubtful
   
331
     
3,656
     
1,072
     
-
 
Total
 
$
35,942
   
$
144,849
   
$
13,387
   
$
28,964
 
 
 
  
Consumer
 
  
Mortgage Warehouse
 
  
Manufactured Housing
 
Performing
  
$
1,559
   
$
186,113
   
$
100,226
  
Nonperforming (1)
  
 
22
     
-
     
2,698
  
Total
  
$
1,581
   
$
186,113
   
$
102,924
  
 
 (1)
Defined as past due thirty or more days at December 31, 2010.
     
 

The following presents the credit quality tables as of September 30, 2011 and December 31, 2010 for the covered loan portfolio.

 
September 30, 2011
   
Commercial and
Industrial
   
Commercial
Real Estate
   
Construction
   
Residential Real Estate
 
Pass/Satisfactory
 
$
11,294
   
$
37,982
   
$
10,927
   
$
15,886
 
Special Mention
   
54
     
5,357
     
7,642
     
1,198
 
Substandard
   
385
     
17,937
     
23,547
     
4,128
 
Doubtful
                               
Total
 
$
11,733
   
$
61,276
   
$
42,116
   
$
21,212
 
 
 
  
Manufactured Housing
 
Performing
 
$
4,057
  
Nonperforming (1)
   
117
  
Total
 
$
4,174
  
 
 (1)
Defined as past due thirty or more days at September 30, 2011.
 

 
December 31, 2010
   
Commercial and
Industrial
   
Commercial
Real Estate
   
Construction
   
Residential Real Estate
 
Pass/Satisfactory
 
$
11,134
   
$
38,431
   
$
 23,134
   
$
 17,219
 
Special Mention
   
 1,060
     
 16,118
     
 19,573
     
 3,214
 
Substandard
   
 917
     
 14,736
     
 8,257
     
 1,672
 
Doubtful
   
 45
     
 2,996
     
-
     
 1,717
 
Total
 
$
 13,156
   
$
72,281
   
$
50,964
   
$
 23,822
 
 
 
  
Manufactured Housing
 
Performing
 
$
4,358
  
Nonperforming (1)
   
304
  
Total
 
$
4,662
  
 
(1)
Defined as past due thirty or more days at December 31, 2010.
 
Allowance for loan losses

The changes in the allowance for loan losses for the three and nine months ended September 30, 2011 and the loans and allowance for loan losses by loan segment based on impairment method are as follows:

Three months ended September 30, 2011
 
Commercial and
Industrial
   
Commercial
Real Estate
   
Construction
   
Residential Real Estate
 
Beginning Balance, July 1, 2011
 
$
1,945
   
$
7,177
   
$
2,479
   
$
1,607
 
Charge-offs
   
(717
)
   
(182
)
   
-
     
(4
)
Recoveries
   
9
     
72
     
-
     
-
 
Provision for loan losses
   
359
     
(264
)
   
1,191
     
(436
) 
Ending Balance, September 30, 2011
 
$
1,596
   
$
6,803
   
$
3,670
   
$
1,167
 
Nine months ended September 30, 2011
 
Beginning Balance, January 1, 2011
 
$
1,662
   
$
9,152
   
$
2,127
   
$
1,116
 
Charge-offs
   
(2,178
) 
   
(4,389
)
   
(1,069
)
   
(109
) 
Recoveries
   
15
     
78
     
2
     
-
 
Provision for loan losses
   
2,097
     
1,962
     
2,610
     
160
 
Ending Balance, September 30, 2011
 
$
1,596
   
$
6,803
   
$
3,670
   
$
1,167
 
 
Loans:
             
Individually evaluated for impairment
 
$
5,279
   
$
29,110
   
$
10,648
   
$
1,690
 
Collectively evaluated for impairment
   
55,706
     
247,428
     
22,451
     
67,421
 
Loans acquired with credit deterioration
   
892
     
21,971
     
26,535
     
4,469
 
Allowance for loan losses:
                               
Individually evaluated for impairment
 
$
958
   
$
3,402
   
$
3,185
   
$
268
 
Collectively evaluated for impairment
   
561
     
2,742
     
416
     
835
 
Loans acquired with credit deterioration
   
77
     
659
     
69
     
64
 
 
 
Three months ended September 30, 2011
Manufactured Housing
 
Consumer
 
Mortgage Warehouse
 
Unallocated
 
Total
 
Beginning Balance, July 1, 2011
 
$
39
   
$
20
   
$
589
   
$
90
   
$
13,946
 
Charge-offs
   
-
     
(1
) 
   
-
     
-
     
(904
)
Recoveries
   
-
     
2
     
-
     
-
     
83
 
Provision for loan losses
   
(39
)
   
35
     
36
     
18
     
900
 
Ending Balance, September 30, 2011
 
$
-
    $ 
56
    $ 
625
    $ 
108
    $ 
14,025
 
Nine months ended September 30, 2011
 
Beginning Balance, January 1, 2011
 
$
-
   
$
11
   
$
465
   
$
596
   
$
15,129
 
Charge-offs
   
-
     
(7
)
   
-
     
-
     
(7,752
)
Recoveries
   
-
     
3
     
-
     
-
     
98
 
Provision for loan losses
   
-
     
49
     
160
     
(488
)
   
6,550
 
Ending Balance, September 30, 2011
 
$
-
    $ 
56
    $ 
625
    $ 
108
    $ 
14,025
 
 
Loans:
  
Individually evaluated for impairment
 $-  $44  $-  $-  $46,771 
Collectively evaluated for impairment
  115,452   5,689   416,670   -   930,819 
Loans acquired with credit deterioration
  90   -   -   -   53,956 
Market discounts/premiums/valuation adjustments                    (17,539) 
Total loans                    1,014,007 
Allowance for loan losses:
 
Individually evaluated for impairment
 $-  $5  $-  $-  $7,817 
Collectively evaluated for impairment
  -   23   625   108   5,310 
Loans acquired with credit deterioration
  -   28   -   -   898 
 
The non-covered manufactured housing portfolio was purchased in August 2010.  A portion of the purchase price may be used to reimburse the Bank under the specified terms in the Purchase Agreement for defaults of the underlying borrower and other specified items.  At September 30, 2011, funds available for reimbursement, if necessary, are $7,330.   Each quarter, these funds are evaluated to determine if they would be sufficient to absorb probable losses within the manufactured housing portfolio.  
 
The changes in the allowance for loan losses and the loans and allowance for the nine months ended September 30, 2010 are as follows:

Three months ended September 30, 2010
 
Commercial and
Industrial
  
Commercial
Real Estate
  
Construction
  
Residential Real Estate
 
Beginning Balance, July 1, 2010
 $1,806  $6,253  $2,325  $1,127 
Charge-offs
  (1,182 )  -   (121 )  (388 )
Recoveries
  1   -   -   - 
Provision for loan losses
  1,917   (2,938)  (494 )  5,443 
Ending Balance,  September 30, 2010
 $2,542  $3,315  $1,710  $6,182 
Nine months ended September 30, 2010
 
Beginning Balance, January 1, 2010
 $1,285  $4,689  $2,984  $974 
Charge-offs
  (1,432 )   (1,526 )  (1,147 )  (784 ) 
Recoveries
  1   3   -   - 
Provision for loan losses
  2,688   149   (127 )  5,992 
Ending Balance, September 30, 2010
 $2,542  $3,315  $1,710  $6,182 
Loans:
                
Individually evaluated for impairment
 $8,293  $12,766  $6,626  $14,643 
Collectively evaluated for impairment
  24,222   90,372   8,087   46,903 
Loans acquired with credit deterioration
  -   -   -   - 
Allowance for loan losses:
                
Individually evaluated for impairment
 $2,364  $1,976  $1,491  $4,271 
Collectively evaluated for impairment
  178   1,339   219   1,911 
Loans acquired with credit deterioration
  -   -   -   - 
 

Three months ended September 30, 2010
Manufactured Housing
 
Consumer
 
Mortgage Warehouse
 
Unallocated
 
Total
 
Beginning Balance, July 1, 2010
 
$
-
   
$
11
   
$
618
   
$
96
   
$
12,236
 
Charge-offs
   
-
     
-
     
-
     
-
     
(1,691
) 
Recoveries
   
-
     
-
     
-
     
-
     
1
 
Provision for loan losses
   
-
     
-
     
205
     
(58
)     
4,075
 
Ending Balance, September 30, 2010
 
$
-
     
11
     
823
     
38
     
14,621
 
Nine months ended September 30, 2010
 
Beginning Balance, January 1, 2010
 
$
-
   
$
49
   
$
51
   
$
-
   
$
10,032
 
Charge-offs
   
-
     
(23
)
   
-
     
-
     
(4,912)
 
Recoveries
   
-
     
-
     
-
     
-
     
4
 
Provision for loan losses
   
-
     
(15)
     
772
     
88
     
9,547
 
Transfers to reserve for unfunded commitments (a)
   
-
             
-
     
(50
)
   
(50
)
Ending Balance, September 30, 2010
 
$
-
   
$
11
   
$
823
   
$
38
   
$
14,621
 
 
Loans:
  
Individually evaluated for impairment
 $-  $-  $-  $-  $42,328 
Collectively evaluated for impairment
  104,509   1,433   328,943   -   604,469 
Loans acquired with credit deterioration
  -   -   -   -   - 
Allowance for loan losses:
 
Individually evaluated for impairment
 $-  $   $-  $-  $10,102 
Collectively evaluated for impairment
  -   11   823   38   4,519 
Loans acquired with credit deterioration
  -   -   -   -     
                      
 
(a)  
At September 30, 2010, the Bancorp had a reserve of $50 for unfunded commitments included within the allowance for loan losses. The reserve for unfunded loan commitments was reclassified to Other Liabilities during the nine months ended September 30, 2010.
    

The following table presents the loans with credit deterioration as of September 30, 2011 for the loans acquired in the BBI and Tammac transactions.  Both BBI and Tammac transactions occurred in September 2011, and the final calculations were not yet finalized. The balances presented are estimates based on data collected at the time of the transactions.
         
Contractually required payments receivable
  
$
123,932
  
Credit Discount (nonaccretable difference)
  
 
(12,130
) 
Cash flows expected to be collected
  
 
111,802
 
Market Discount (accretable yield)
  
 
644
 
Fair value of loans acquired with credit deterioration
  
$
112,446
  
         

The changes in the accretable yield for the nine months ended September 30, 2011:
  
 
Acquisitions
 
Balance, beginning of period
 
$
7,176
 
Additions resulting from acquisition
   
644
 
Accretion to interest income
   
(1,545
)
Disposals
   
(32
)
Reclassification (to)/from nonaccretable difference
   
(397
)
Balance, end of period
 
$ 
5,846
 
 
FDIC Loss Sharing Receivable
 
Prospective losses incurred on Covered Loans are eligible for partial reimbursement by the FDIC. Subsequent decreases in the amount expected to be collected result in a provision for loan and lease losses, an increase in the allowance for loan losses, and a proportional adjustment to the FDIC loss sharing receivable for the estimated amount to be reimbursed. Subsequent increases in the amount expected to be collected result in the reversal of any previously-recorded provision for loan and lease losses and related allowance for loan and lease losses and adjustments to the FDIC loss sharing receivable, or accretion of certain fair value amounts into interest income in future periods if no provision for loan and lease losses had been recorded.
 
The following table summarizes the activity related to the FDIC loss sharing receivable for the nine months ended September 30, 2011:
      
Balance, beginning of period
 
$
16,702
  
Acquisitions
   
-
  
FDIC loss sharing receivable
   
1,709
  
Reimbursement from the FDIC
   
(6,551
) 
Balance, end of period
 
$
11,860