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NOTE 3 - LOANS
 9 Months Ended
Sep. 30, 2012
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 – LOANS


The Company originates loans for business, consumer and real estate activities. Such loans are concentrated in the Company’s market areas which consist of Yolo, Placer, Sonoma, Shasta, Humboldt, Mendocino, Trinity and Del Norte Counties and neighboring communities.


Loans, the Company's major component of earning assets, increased $32,738,000 during the nine months ended September 30, 2012 to $489,257,000 at September 30, 2012 from $456,519,000 at December 31, 2011. Real estate mortgage loans increased by $33,535,000 and real estate commercial loans increased by $13,834,000 while commercial loans decreased by $8,073,000, installment loans decreased by $3,615,000 and real estate construction loans decreased by $2,231,000. The increase in real estate – mortgage loans was due to the purchase of $33,325,000 of jumbo residential mortgages during the quarter ended September 30, 2012. The remaining loan categories remained relatively unchanged from their December 31, 2011 balances.


Major classifications of loans were as follows (in thousands):


    September 30,     December 31,  
    2012     2011  
Commercial   $ 38,087     $ 46,160  
Real estate - commercial     290,478       276,644  
Real estate - construction     25,232       27,463  
Real estate - mortgage     80,897       47,362  
Installment     7,310       10,925  
Other     47,253       47,965  
Gross loans     489,257       456,519  
Deferred loan fees, net     643       (304 )
Allowance for loan losses     (11,427 )     (12,656 )
Total loans, net   $ 478,473     $ 443,559  

Certain real estate loans receivable are pledged as collateral for available borrowings with the FHLB, FRB, and certain correspondent banks. Pledged loans totaled $121,492,000 and $137,528,000 at September 30, 2012 and December 31, 2011, respectively.


The Company did not recognize any interest income on impaired loans for the three and nine month periods ending September 30, 2012 and 2011. The following table presents impaired loans exclusive of deferred loan fees and costs and the related allowance for loan losses as of the dates indicated (in thousands):


    As of September 30, 2012     As of December 31, 2011  
          Unpaid                 Unpaid        
    Recorded     Principal     Related     Recorded     Principal     Related  
    Investment     Balance     Allowance     Investment     Balance     Allowance  
With no allocated allowance                                                
Commercial   $ 800     $ 800     $ —     $ —     $ —     $ —  
Real estate - commercial     5,711       6,130       —       1,502       1,556       —  
Real estate - construction     1,760       1,810       —       4,128       4,153       —  
Real estate - mortgage     692       737       —       643       751       —  
Installment     109       123       —       70       75       —  
Other     275       282       —       88       91       —  
 Subtotal     9,347       9,882       —       6,431       6,626       —  
                                                 
With allocated allowance                                                
Commercial     —       —       —       1,788       1,849       450  
Real estate - commercial     1,952       1,952       417       4,496       5,302       606  
Real estate - construction     —       —       —       5,312       5,312       504  
Real estate - mortgage     274       274       50       295       314       37  
Installment     —       —       —       37       39       13  
Other     —       —       —       —       —       —  
Subtotal     2,226       2,226       467       11,928       12,816       1,610  
Total Impaired Loans   $ 11,573     $ 12,108     $ 467     $ 18,359     $ 19,442     $ 1,610  

The following table presents the average balance related to impaired loans for the period indicated (in thousands):


    Average Recorded Investment     Average Recorded Investment  
    for the three months ended     for the nine months ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
                         
Commercial   $ 938     $ 2,356     $ 1,043     $ 2,388  
Real estate - commercial     7,780       5,523       7,942       5,560  
Real estate - construction     1,766       3,423       1,780       3,422  
Real estate - mortgage     986       1,291       1,006       1,302  
Installment     123       111       133       112  
Other     277       113       287       113  
Total   $ 11,870     $ 12,817     $ 12,191     $ 12,897  

Nonperforming loans include all such loans that are either on nonaccrual status or are 90 days past due as to principal or interest but still accrue interest because such loans are well-secured and in the process of collection. Nonperforming loans are summarized as follows (in thousands):


    September 30,     December 31,  
    2012     2011  
Nonaccrual loans   $ 11,573     $ 18,359  
Loans 90 days past due or more but still accruing interest     6       52  
Total nonperforming loans   $ 11,579     $ 18,411  
                 
Nonaccrual loans to total gross loans     2.36 %     4.02 %
Nonperforming loans to total gross loans     2.36 %     4.04 %

If interest on nonaccrual loans had been accrued, such income would have approximated $495,000 and $824,000 for the nine months ended September 30, 2012 and 2011, respectively.


The following table shows an aging analysis of the loan portfolio by the amount of time past due (in thousands):


    As of September 30, 2012  
    Accruing Interest              
          Greater than              
          30-89 Days     90 Days              
    Current     Past Due     Past Due     Nonaccrual     Total  
                               
Commercial   $ 37,199     $ 88     $ —     $ 800     $ 38,087  
Real estate - commercial     282,039       776       —       7,663       290,478  
Real estate - construction     23,273       199       —       1,760       25,232  
Real estate - mortgage     79,733       198       —       966       80,897  
Installment     7,127       68       6       109       7,310  
Other     46,951       27       —       275       47,253  
Total   $ 476,322     $ 1,356     $ 6     $ 11,573     $ 489,257  

    As of December 31, 2011  
    Accruing Interest              
              Greater than              
          30-89 Days     90 Days              
    Current     Past Due     Past Due     Nonaccrual     Total  
                               
Commercial   $ 44,325     $ 47     $ —     $ 1,788     $ 46,160  
Real estate - commercial     264,143       6,503       —       5,998       276,644  
Real estate - construction     18,023       —       —       9,440       27,463  
Real estate - mortgage     45,170       1,254       —       938       47,362  
Installment     10,614       152       52       107       10,925  
Other     47,877       —       —       88       47,965  
Total   $ 430,152     $ 7,956   $ 52     $ 18,359     $ 456,519  

During the period ending September 30, 2012, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. The following table shows information related to Troubled Debt Restructurings for the periods indicated (in thousands):


    For the three months ended September 30, 2012     For the nine months ended September 30, 2012  
    Accruing TDRs     Accruing TDRs  
          Pre-Modification     Post-Modification           Pre-Modification     Post-Modification  
    Number     Outstanding     Outstanding     Number     Outstanding     Outstanding  
    of     Recorded     Recorded     of     Recorded     Recorded  
    Contracts     Investment     Investment     Contracts     Investment     Investment  
Real estate - construction     —     $ —     $ —       1     $ 347     $ 347  
Real estate - mortgage     1     $ 425     $ 425       1     $ 425     $ 425  

    For the three months ended September 30, 2012     For the nine months ended September 30, 2012  
    Non Accruing TDRs     Non Accruing TDRs  
          Pre-Modification     Post-Modification           Pre-Modification     Post-Modification  
    Number     Outstanding     Outstanding     Number     Outstanding     Outstanding  
    of     Recorded     Recorded     of     Recorded     Recorded  
    Contracts     Investment     Investment     Contracts     Investment     Investment  
Commercial     —     $ —     $ —       1     $ 1,050     $ 800  
Real estate - commercial     —     $ —     $ —       2     $ 269     $ 269  
Real estate - construction     —     $ —     $ —       2     $ 788     $ 788  
Installment     —     $ —     $ —       2     $ 70     $ 70  
Other     1     $ 50     $ 50       1     $ 50     $ 50  

At September 30, 2012, there were no specific reserves allocated to customers whose loan terms were modified in troubled debt restructurings. There are no commitments to lend additional amounts at September 30, 2012 to customers with outstanding loans that are classified as troubled debt restructurings. There were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ending September 30, 2012.


There were five loans with a modification involving a reduction of the stated interest rate, three modifications involving an extension of the maturity date and the recorded investment in five loans were reduced in the aggregate amount of $322,000 for nine months ended September 30, 2012.