Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses (Tables)

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Loan Composition Schedule

Loan and lease receivables consist of the following:

	June 30, 2012		December 31, 2011
	(In Thousands)
Commercial real estate
Commercial real estate — owner occupied	$	154,191	$	150,528
Commercial real estate — non-owner occupied	298,890		304,597
Construction and land development	43,126		38,124
Multi-family	58,254		43,905
1-4 family	34,453		43,513
Total commercial real estate	588,914		580,667
Commercial and industrial	241,130		237,099
Direct financing leases, net	16,012		17,128
Consumer and other
Home equity and second mortgages	4,839		4,970
Other	12,280		11,682
Total consumer and other loans	17,119		16,652
Total gross loans and leases receivable	863,175		851,546
Less:
Allowance for loan and lease losses	14,818		14,155
Deferred loan fees	646		704
Loans and leases receivable, net	$	847,711	$	836,687

Financing Receivable by Credit Quality Indicators

The following information illustrates ending balances of the Corporation’s loan and lease portfolio, including impaired loans by class of receivable, and considering certain credit quality indicators as of June 30, 2012 and December 31, 2011:

	Category
As of June 30, 2012	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	126,046		$	14,877		$	12,299		$	969		$	154,191
Commercial real estate — non-owner occupied	223,080			46,316			28,483			1,011			298,890
Construction and land development	26,157			5,570			5,455			5,944			43,126
Multi-family	50,525			6,881			797			51			58,254
1-4 family	18,655			4,629			8,431			2,738			34,453
Total commercial real estate	444,463			78,273			55,465			10,713			588,914
Commercial and industrial	206,766			14,670			16,467			3,227			241,130
Direct financing leases, net	10,559			3,607			1,846			—			16,012
Consumer and other:
Home equity and second mortgages	3,585			173			183			898			4,839
Other	11,131			—			—			1,149			12,280
Total consumer and other	14,716			173			183			2,047			17,119
Total gross loans and leases receivable	$	676,504		$	96,723		$	73,961		$	15,987		$	863,175
Rating as a % of total portfolio	78.37		%	11.21		%	8.57		%	1.85		%	100.00		%

	Category
As of December 31, 2011	I			II			III			IV			Total
	(Dollars in Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	117,065		$	16,488		$	14,004		$	2,971		$	150,528
Commercial real estate — non-owner occupied	236,868			34,823			30,657			2,249			304,597
Construction and land development	20,660			5,367			4,867			7,230			38,124
Multi-family	34,162			6,930			804			2,009			43,905
1-4 family	23,266			11,637			4,993			3,617			43,513
Total commercial real estate	432,021			75,245			55,325			18,076			580,667
Commercial and industrial	198,018			25,070			12,453			1,558			237,099
Direct financing leases, net	11,398			5,026			686			18			17,128
Consumer and other:
Home equity and second mortgages	3,524			188			256			1,002			4,970
Other	10,459			—			—			1,223			11,682
Total consumer and other	13,983			188			256			2,225			16,652
Total gross loans and leases receivable	$	655,420		$	105,529		$	68,720		$	21,877		$	851,546
Rating as a % of total portfolio	76.97		%	12.39		%	8.07		%	2.57		%	100.00		%

Past Due Financing Receivables

The delinquency aging of the loan and lease portfolio by class of receivable as of June 30, 2012 and December 31, 2011 were as follows:

As of June 30, 2012	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	507		$	—		$	—		$	507		$	152,715		$	153,222
Non-owner occupied	—			—			—			—			297,879			297,879
Construction and land development	—			—			—			—			37,718			37,718
Multi-family	—			—			—			—			58,203			58,203
1-4 family	314			—			—			314			31,401			31,715
Commercial & industrial	268			—			—			268			237,635			237,903
Direct financing leases, net	—			—			—			—			16,012			16,012
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,941			3,941
Other	—			—			—			—			11,131			11,131
Total	1,089			—			—			1,089			846,635			847,724
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	102		$	—		$	—		$	102		$	867		$	969
Non-owner occupied	—			—			585			585			426			1,011
Construction and land development	110			106			550			766			4,642			5,408
Multi-family	—			—			—			—			51			51
1-4 family	—			247			152			399			2,339			2,738
Commercial & industrial	—			—			269			269			2,958			3,227
Direct financing leases, net	—			—			—			—			—			—
Consumer and other:
Home equity and second mortgages	—			—			200			200			698			898
Other	—			—			1,147			1,147			2			1,149
Total	212			353			2,903			3,468			11,983			15,451
Total loans and leases
Commercial real estate:
Owner occupied	$	609		$	—		$	—		$	609		$	153,582		$	154,191
Non-owner occupied	—			—			585			585			298,305			298,890
Construction and land development	110			106			550			766			42,360			43,126
Multi-family	—			—			—			—			58,254			58,254
1-4 family	314			247			152			713			33,740			34,453
Commercial & industrial	268			—			269			537			240,593			241,130
Direct financing leases, net	—			—			—			—			16,012			16,012
Consumer and other:
Home equity and second mortgages	—			—			200			200			4,639			4,839
Other	—			—			1,147			1,147			11,133			12,280
Total	$	1,301		$	353		$	2,903		$	4,557		$	858,618		$	863,175
Percent of portfolio	0.15		%	0.04		%	0.34		%	0.53		%	99.47		%	100.00		%

As of December 31, 2011	30-59 days past due			60-89 days past due			Greater than 90 days past due			Total past due			Current			Total loans
	(Dollars in Thousands)
Accruing loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	—		$	106		$	147,450		$	147,556
Non-owner occupied	—			131			—			131			302,217			302,348
Construction and land development	3,942			—			—			3,942			26,953			30,895
Multi-family	—			—			—			—			41,896			41,896
1-4 family	—			—			—			—			40,007			40,007
Commercial & industrial	25			—			—			25			235,516			235,541
Direct financing leases, net	—			—			—			—			17,110			17,110
Consumer and other:
Home equity and second mortgages	—			—			—			—			3,968			3,968
Other	—			—			—			—			10,459			10,459
Total	4,073			131			—			4,204			825,576			829,780
Non-accruing loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	2,011		$	2,011		$	961		$	2,972
Non-owner occupied	—			155			1,625			1,780			469			2,249
Construction and land development	114			515			704			1,333			5,896			7,229
Multi-family	—			—			2,009			2,009			—			2,009
1-4 family	404			224			495			1,123			2,383			3,506
Commercial & industrial	21			—			298			319			1,239			1,558
Direct financing leases, net	—			—			—			—			18			18
Consumer and other:
Home equity and second mortgages	—			40			315			355			647			1,002
Other	—			—			1,222			1,222			1			1,223
Total	539			934			8,679			10,152			11,614			21,766
Total loans and leases
Commercial real estate:
Owner occupied	$	106		$	—		$	2,011		$	2,117		$	148,411		$	150,528
Non-owner occupied	—			286			1,625			1,911			302,686			304,597
Construction and land development	4,056			515			704			5,275			32,849			38,124
Multi-family	—			—			2,009			2,009			41,896			43,905
1-4 family	404			224			495			1,123			42,390			43,513
Commercial & industrial	46			—			298			344			236,755			237,099
Direct financing leases, net	—			—			—			—			17,128			17,128
Consumer and other:
Home equity and second mortgages	—			40			315			355			4,615			4,970
Other	—			—			1,222			1,222			10,460			11,682
Total	$	4,612		$	1,065		$	8,679		$	14,356		$	837,190		$	851,546
Percent of portfolio	0.54		%	0.12		%	1.02		%	1.68		%	98.32		%	100.00		%

Schedule of Financing Receivables, Non Accrual Status

The Corporation’s non-accrual loans and leases consisted of the following at June 30, 2012 and December 31, 2011, respectively.

	June 30, 2012		December 31, 2011
	(Dollars in Thousands)
Non-accrual loans and leases
Commercial real estate:
Commercial real estate — owner occupied	$	969	$	2,972
Commercial real estate — non-owner occupied	1,011		2,249
Construction and land development	5,408		7,229
Multi-family	51		2,009
1-4 family	2,738		3,506
Total non-accrual commercial real estate	10,177		17,965
Commercial and industrial	3,227		1,558
Direct financing leases, net	—		18
Consumer and other:
Home equity and second mortgage	898		1,002
Other	1,149		1,223
Total non-accrual consumer and other loans	2,047		2,225
Total non-accrual loans and leases	15,451		21,766
Foreclosed properties, net	1,937		2,236
Total non-performing assets	$	17,388	$	24,002
Performing troubled debt restructurings	$	536	$	111

	June 30, 2012		December 31, 2011
Total non-accrual loans and leases to gross loans and leases	1.79	%	2.56	%
Total non-performing assets to total assets	1.50		2.04
Allowance for loan and lease losses to gross loans and leases	1.72		1.66
Allowance for loan and lease losses to non-accrual loans and leases	95.90		65.03

Troubled Debt Restructurings on Financing Receivables

	As of June 30, 2012					As of December 31, 2011
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
	(Dollars in Thousands)
Troubled debt restructurings:
Commercial real estate
Commercial real estate — owner occupied	4	$	338	$	289	5	$	380	$	352
Commercial real estate — non-owner occupied	6	972		844		6	971		902
Construction and land development	3	8,044		5,057		4	8,457		5,692
Multi-family	1	184		51		—	—		—
1-4 family	14	2,951		2,664		15	3,152		3,031
Commercial and industrial	7	2,250		1,132		9	2,394		1,393
Direct financing leases, net	—	—		—		1	32		18
Consumer and other:
Home equity and second mortgage	8	865		785		8	865		813
Other	1	2,076		1,139		1	2,076		1,222
Total	44	$	17,680	$	11,961	49	$	18,327	$	13,423

Troubled Debt Restructurings by Modification Type

As of June 30, 2012 and December 31, 2011, our troubled debt restructurings grouped by type of concession were as follows:

	As of June 30, 2012			As of December 31, 2011
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Extension of term	2	$	129	2	$	127
Combination of extension and interest rate concession	26	8,776		28	9,850
Commercial and industrial
Extension of term	4	353		5	406
Combination of extension and interest rate concession	3	779		4	987
Consumer and other
Extension of term	2	1,226		5	1,603
Combination of extension and interest rate concession	7	698		4	432
Direct financing leases, net
Extension of term	—	—		1	18
Total	44	$	11,961	49	$	13,423

Troubled Debt Restructurings, Subsequent Defaults

The following table provides the number of loans and leases modified in a troubled debt restructuring during the previous 12 months which subsequently defaulted during the six months ended June 30, 2012, as well as the recorded investment in these restructured loans as of June 30, 2012.

	Six months ended June 30, 2012
	Number of Loans	Recorded Investment
	(Dollars in Thousands)
Commercial real estate
Construction and land development	1	$	110
Total	1	$	110

Impaired Financing Receivables

The following represents additional information regarding the Corporation’s impaired loans and leases by class:

	Impaired Loans and Leases
	As of and for the Six Months Ended June 30, 2012
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net foregone interest income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	573	$	573	$	—	$	2,198	$	88	$	—	$	88
Non-owner occupied	856		2,688		—		1,304		124		154		(30		)
Construction and land development	5,408		8,985		—		5,922		130		24		106
Multi-family	51		418		—		582		46		60		(14		)
1-4 family	1,908		1,990		—		2,203		80		—		80
Commercial and industrial	901		1,105		—		1,372		166		25		141
Direct financing leases, net	—		—		—		8		—		1		(1		)
Consumer and other:
Home equity loans and second mortgages	675		710		—		738		27		1		26
Other	1,140		1,627		—		1,169		57		1		56
Total	11,512		18,096		—		15,496		718		266		452
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	396	$	396	$	13	$	404	$	17	$	—	$	17
Non-owner occupied	155		155		155		155		2		—		2
Construction and land development	536		536		200		546		14		—		14
Multi-family	—		—		—		—		—		—		—
1-4 family	830		830		296		840		23		—		23
Commercial and industrial	2,326		3,826		459		2,101		14		—		14
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity loans and second mortgages	223		223		112		232		9		—		9
Other	9		9		9		9		—		—		—
Total	4,475		5,975		1,244		4,287		79		—		79
Total:
Commercial real estate:
Owner occupied	$	969	$	969	$	13	$	2,602	$	105	$	—	$	105
Non-owner occupied	1,011		2,843		155		1,459		126		154		(28		)
Construction and land development	5,944		9,521		200		6,468		144		24		120
Multi-family	51		418		—		582		46		60		(14		)
1-4 family	2,738		2,820		296		3,043		103		—		103
Commercial and industrial	3,227		4,931		459		3,473		180		25		155
Direct financing leases, net	—		—		—		8		—		1		(1		)
Consumer and other:
Home equity loans and second mortgages	898		933		112		970		36		1		35
Other	1,149		1,636		9		1,178		57		1		56
Grand total	$	15,987	$	24,071	$	1,244	$	19,783	$	797	$	266	$	531

(1) Average recorded investment is calculated primarily using daily average balances.

	Impaired Loans and Leases
	As of and for the Year Ended December 31, 2011
	Recorded investment		Unpaid principal balance		Impairment reserve		Average recorded investment(1)		Foregone interest income		Interest income recognized		Net Foregone Interest Income
	(In Thousands)
With no impairment reserve recorded:
Commercial real estate:
Owner occupied	$	2,455	$	3,669	$	—	$	5,177	$	450	$	200	$	250
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	6,383		9,927		—		7,974		350		48		302
Multi-family	2,009		2,246		—		3,075		362		—		362
1-4 family	2,628		3,016		—		3,160		277		108		169
Commercial and industrial	1,139		1,320		—		3,820		384		424		(40		)
Direct financing leases, net	—		—		—		—		—		—		—
Consumer and other:
Home equity loans and second mortgages	803		827		—		884		62		1		61
Other	1,222		1,682		—		1,691		138		6		132
Total	18,888		26,768		—		31,042		2,447		787		1,660
With impairment reserve recorded:
Commercial real estate:
Owner occupied	$	517	$	517	$	13	$	358	$	81	$	—	$	81
Non-owner occupied	—		—		—		—		—		—		—
Construction and land development	846		846		130		483		48		—		48
Multi-family	—		—		34		287		—		—		—
1-4 family	989		989		337		1,017		61		—		61
Commercial and industrial	419		419		276		384		24		—		24
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity loans and second mortgages	199		199		79		208		20		—		20
Other	1		1		1		1		—		—		—
Total	2,989		2,989		888		2,751		235		—		235
Total:
Commercial real estate:
Owner occupied	$	2,972	$	4,186	$	13	$	5,535	$	531	$	200	$	331
Non-owner occupied	2,249		4,081		—		5,261		424		—		424
Construction and land development	7,229		10,773		130		8,457		398		48		350
Multi-family	2,009		2,246		34		3,362		362		—		362
1-4 family	3,617		4,005		337		4,177		338		108		230
Commercial and industrial	1,558		1,739		276		4,204		408		424		(16		)
Direct financing leases, net	18		18		18		13		1		—		1
Consumer and other:
Home equity loans and second mortgages	1,002		1,026		79		1,092		82		1		81
Other	1,223		1,683		1		1,692		138		6		132
Grand total	$	21,877	$	29,757	$	888	$	33,793	$	2,682	$	787	$	1,895

(1) Average recorded investment is calculated primarily using daily average balances.

Allowance for Credit Losses on Financing Receivables

A summary of the activity in the allowance for loan and lease losses by portfolio segment is as follows:

	As of and for the Six Months Ended June 30, 2012
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	9,554		$	3,977		$	384		$	240		$	14,155
Charge-offs	(447		)	(1,529		)	(94		)	—			(2,070		)
Recoveries	106			64			14			—			184
Provision	784			1,675			121			(31		)	2,549
Ending balance	$	9,997		$	4,187		$	425		$	209		$	14,818
Ending balance: individually evaluated for impairment	$	677		$	459		$	108		$	—		$	1,244
Ending balance: collectively evaluated for impairment	$	9,320		$	3,728		$	317		$	209		$	13,574
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	588,914		$	241,130		$	17,119		$	16,012		$	863,175
Ending balance: individually evaluated for impairment	$	10,713		$	3,227		$	2,047		$	—		$	15,987
Ending balance: collectively evaluated for impairment	$	578,201		$	237,903		$	15,072		$	16,012		$	847,188
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.70		%	1.74		%	2.48		%	1.31		%	1.72		%

	As of and for the Six Months Ended June 30, 2011
	Commercial real estate			Commercial and industrial			Consumer and other			Direct financing leases, net			Total
	(Dollars in Thousands)
Allowance for credit losses:
Beginning balance	$	11,267		$	4,277		$	482		$	245		$	16,271
Charge-offs	(3,538		)	(198		)	(148		)	—			(3,884		)
Recoveries	216			376			61			19			672
Provision	3,111			(274		)	63			(22		)	2,878
Ending balance	$	11,056		$	4,181		$	458		$	242		$	15,937
Ending balance: individually evaluated for impairment	$	2,099		$	757		$	121		$	32		$	3,009
Ending balance: collectively evaluated for impairment	$	8,957		$	3,424		$	337		$	210		$	12,928
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Loans and lease receivables:
Ending balance, gross	$	614,670		$	212,326		$	18,425		$	15,958		$	861,379
Ending balance: individually evaluated for impairment	$	27,310		$	4,483		$	2,799		$	32		$	34,624
Ending balance: collectively evaluated for impairment	$	587,360		$	207,843		$	15,626		$	15,926		$	826,755
Ending balance: loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—
Allowance as % of gross loans	1.80		%	1.97		%	2.49		%	1.52		%	1.85		%