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NOTE 3 - LOANS
 3 Months Ended
Mar. 31, 2013
Loans Receivable, Net [Abstract]  
LOANS

NOTE 3 – LOANS

 

The Company originates loans for business, consumer and real estate activities and for equipment purchases. 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. Major classifications of loans were as follows (in thousands):

 

    March 31,     December 31,  
    2013     2012  
Commercial   $ 48,300     $ 46,078  
Real estate - commercial     297,516       295,630  
Real estate - construction     21,438       23,003  
Real estate - mortgage     70,514       74,353  
Installment     6,012       6,689  
Other     44,462       45,941  
Gross loans     488,242       491,694  
Deferred loan fees, net     364       517  
Allowance for loan losses     (9,651 )     (10,458 )
Total loans, net   $ 478,955     $ 481,753  
 

Certain real estate loans receivable are pledged as collateral for available borrowings with the FHLB, FRB, and certain correspondent banks. Pledged loans totaled $106,380,000 and $116,929,000 at March 31, 2013 and December 31, 2012, respectively.

 

The following table presents impaired loans and the related allowance for loan losses as of the dates indicated (in thousands):

 

    As of March 31, 2013     As of December 31, 2012  
          Unpaid                 Unpaid        
    Recorded     Principal     Related     Recorded     Principal     Related  
    Investment     Balance     Allowance     Investment     Balance     Allowance  
With no allocated allowance                                                
Commercial   $ 50     $ 50     $ —     $ 585     $ 586     $ —  
Real estate - commercial     5,695       5,947       —       2,778       2,974       —  
Real estate - construction     1,186       1,249       —       1,210       1,273       —  
Real estate - mortgage     1,231       1,256       —       684       736       —  
Installment     121       136       —       122       138       —  
Other     155       165       —       111       120       —  
Subtotal     8,438       8,803       —       5,490       5,827       —  
                                                 
With allocated allowance                                                
Commercial     513       519       287       —       —       —  
Real estate - commercial     —       —       —        184       217       171  
Real estate - construction     —       —       —        161       161       18  
Subtotal     513       519       287       345       378       189  
Total Impaired Loans   $ 8,951     $ 9,322     $ 287     $ 5,835     $ 6,205     $ 189  

 

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

 

    Three Months ended March 31,  
    2013     2012  
    Average Book     Interest Income     Average Book     Interest Income  
    Balance     Recognized     Balance     Recognized  
                         
Commercial   $ 571     $ —     $ 1,202     $ —  
Real estate - commercial     5,540       21       4,564       —  
Real estate - construction     916       7       8,867       —  
Real estate - mortgage     819       10       921       —  
Installment     96       1       166       —  
Other     158       —       138       —  
Total   $ 8,100     $ 39     $ 15,858     $ —  

 

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):

 

    March 31,     December 31,  
    2013     2012  
Nonaccrual loans   $ 6,449     $ 5,835  
Loans 90 days past due or more but still accruing interest     —       —  
Total nonperforming loans   $ 6,449     $ 5,835  
                 
Nonaccrual loans to total gross loans     1.32 %     1.19 %
Nonperforming loans to total gross loans     1.32 %     1.19 %
 

If interest on nonaccrual loans had been accrued, such income would have approximated $85,000 and $155,000 for the three months ended March 31, 2013 and 2012, respectively.

 

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

 

    As of March 31, 2013  
    Accruing Interest              
                Greater than              
          30-89 Days     90 Days              
    Current     Past Due     Past Due     Nonaccrual     Total  
                               
Commercial   $ 47,737     $ —     $ —     $ 563     $ 48,300  
Real estate - commercial     293,075       86       —       4,355       297,516  
Real estate - construction     20,668       —       —       770       21,438  
Real estate - mortgage     69,979       22       —       513       70,514  
Installment     5,894       25       —       93       6,012  
Other     44,134       173       —       155       44,462  
Total   $ 481,487     $ 306     $ —     $ 6,449     $ 488,242  

 

    As of December 31, 2012  
    Accruing Interest              
                Greater than              
          30-89 Days     90 Days              
    Current     Past Due     Past Due     Nonaccrual     Total  
                               
Commercial   $ 45,473     $ 20     $ —     $ 585     $ 46,078  
Real estate - commercial     292,505       163       —       2,962       295,630  
Real estate - construction     21,436       196       —       1,371       23,003  
Real estate - mortgage     72,907       762       —       684       74,353  
Installment     6,529       38       —       122       6,689  
Other     45,581       249       —       111       45,941  
Total   $ 484,431     $ 1,428     $ —     $ 5,835     $ 491,694  

 

A troubled debt restructuring (“TDR”) is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower. 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. At March 31, 2013, 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 March 31, 2013 to customers with outstanding loans that are classified as troubled debt restructurings. There were no TDR’s that subsequently defaulted during the twelve months following the modification of terms. The following table shows information related to troubled debt restructurings as of March 31, 2013 (dollars in thousands):

 

    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   —   $ —     $ —     2   $ 563     $ 563  
Real estate-commercial   5   $ 1,340     $ 1,340     1   $ 303     $ 303  
Real estate - construction   2   $ 416     $ 416     1   $ 320     $ 320  
Real estate-mortgage   2   $ 718     $ 718     1   $ 202     $ 202  
Installment   1   $ 28     $ 28     3   $ 92     $ 92  
Other   —   $ —     $ —     1   $ 24     $ 24  
 

The following table present loans that were modified and recorded as TDR’s for the three months ended March 31, 2013. There were no loans modified or recorded as TDR’s for the three months ended March 31, 2012.

 

    Three Months ended March 31, 2013
        Pre-Modification     Post-Modification  
    Number   Outstanding     Outstanding  
    of   Recorded     Recorded  
    Contracts   Investment     Investment  
Commercial   1   $ 50     $ 50  
Real estate-commercial   1   $ 303     $ 303  
Real estate-mortgage   1   $ 202     $ 202  

 

The following table shows the post-modification recorded investment by class for TDR’s restructured during the three months ended March 31, 2013 by the primary type of concession granted. There were no loans modified or recorded as TDR’s for the three months ended March 31, 2012.

 

                    Rate        
                    Reduction        
    Number               and        
    of   Rate     Maturity     Maturity        
    Contracts   Reduction     Extention     Extention     Total  
Commercial   1   $ —     $ 50     $ —     $ 50  
Real estate-commercial   1   $ —     $ —     $ 303     $ 303  
Real estate-mortgage   1   $ 202     $ —     $ —     $ 202  

 

The following table shows information related to troubled debt restructurings as of December 31, 2012 (dollars in thousands):

 

    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   $ 529     $ 529  
Real estate - commercial   5   $ 1,350     $ 1,350     —   $ —     $ —  
Real estate - construction   1   $ 343     $ 343     2   $ 398     $ 398  
Real estate - mortgage   2   $ 721     $ 721     —   $ —     $ —  
Installment   —   $ —     $ —     4   $ 120     $ 120  
Other   —   $ —     $ —     1   $ 25     $ 25  

 

A summary of TDR’s by type of loans and by accrual/nonaccrual status as of December 31, 2012 is shown below (in thousands):

 

    Accruing TDRs     Non Accruing TDRs  
    Rate                 Rate              
    Reduction                 Reduction              
    and                 and              
    Maturity     Maturity           Maturity     Maturity        
    Extention     Extention     Total     Extention     Extention     Total  
Commercial   $ —     $ —     $ —     $ 529     $ —     $ 529  
Real estate - commercial   $ 273     $ —     $ 273     $ —     $ —     $ —  
Real estate - construction   $ —     $ —     $ —     $ —     $ 327     $ 327  
Real estate - mortgage   $ —     $ 423     $ 423     $ —     $ —     $ —  
Installment   $ —     $ —     $ —     $ 120     $ —     $ 120  
Other   $ —     $ —     $ —     $ 25     $ —     $ 25  

 

At December 31, 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 December 31, 2012 to customers with outstanding loans that are classified as troubled debt restructurings. There were no TDR’s that subsequently defaulted during the twelve months following the modification of terms.

 

At December 31, 2012, there were twelve loans to customers whose loan terms were modified in troubled debt restructurings. Of those twelve loans there were eight modifications involving a reduction of the stated interest rate and extension of the maturity date: two at 5.50% with a one-year extension to the maturity date, one at 4.50% with a 14-month maturity date, one at 3.00% with a 15-year maturity date, one at 8.00% with a three-month extension of the maturity date, one at 7.00% with a 10-year maturity date, and one at 4.00% with a 10-year maturity date; there were two modifications involving an extension only of the maturity dates: one for 90 days and one for 12 months; and there were two loans that did not have modifications during the last twelve months. The recorded investment in the ten loans was reduced in the aggregate amount of $665,000 during the year.