0001140361-13-031098.txt : 20130808 0001140361-13-031098.hdr.sgml : 20130808 20130808152726 ACCESSION NUMBER: 0001140361-13-031098 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20130630 FILED AS OF DATE: 20130808 DATE AS OF CHANGE: 20130808 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDEPENDENT BANK CORP /MI/ CENTRAL INDEX KEY: 0000039311 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 382032782 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07818 FILM NUMBER: 131021601 BUSINESS ADDRESS: STREET 1: 230 W MAIN ST STREET 2: PO BOX 491 CITY: IONIA STATE: MI ZIP: 48846 BUSINESS PHONE: 6165279450 MAIL ADDRESS: STREET 1: 230 W MAIN ST CITY: IONIA STATE: MI ZIP: 48846 10-Q 1 form10q.htm INDEPENDENT BANK CORPORATION 10-Q 6-30-2013

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2013

Commission file number   0-7818

INDEPENDENT BANK CORPORATION
(Exact name of registrant as specified in its charter)

Michigan
 
38-2032782
(State or jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification Number)

230 West Main Street, P.O. Box 491, Ionia, Michigan  48846
(Address of principal executive offices)

(616) 527-5820
(Registrant's telephone number, including area code)

NONE
Former name, address and fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      YES   x       NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES  x     NO ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or smaller reporting company.
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ¨       NO x

     Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common stock, no par value
9,493,399
Class
Outstanding at August 7, 2013
 


INDEPENDENT BANK CORPORATION AND SUBSIDIARIES

INDEX
 
 
Number(s)
PART I -
Financial Information
 
Item 1.
3
 
4
 
5
 
6
 
7
 
8-67
Item 2.
68-99
Item 3.
100
Item 4.
100
 
 
 
PART II -
Other Information
 
Item 1A
101
Item 2.
101
Item 3b.
101
Item 6.
102

Discussions and statements in this report that are not statements of historical fact, including, without limitation, statements that include terms such as “will,” “may,” “should,” “believe,” “expect,” “forecast,” “anticipate,” “estimate,” “project,” “intend,” “likely,” “optimistic” and “plan,” and statements about future or projected financial and operating results, plans, projections, objectives, expectations, and intentions and other statements that are not historical facts, are forward-looking statements. Forward-looking statements include, but are not limited to, descriptions of plans and objectives for future operations, products or services; projections of our future revenue, earnings or other measures of economic performance; forecasts of credit losses and other asset quality trends; predictions as to our Bank’s ability to maintain certain regulatory capital standards; our expectation that we will have sufficient cash on hand to meet expected obligations during 2013; and descriptions of steps we may take to improve our capital position. These forward-looking statements express our current expectations, forecasts of future events, or long-term goals and, by their nature, are subject to assumptions, risks, and uncertainties.  Although we believe that the expectations, forecasts, and goals reflected in these forward-looking statements are reasonable, actual results could differ materially for a variety of reasons, including, among others:
 
·
our ability to successfully raise new equity capital, effect a redemption of our outstanding convertible preferred stock held by the U.S. Treasury, exit the Troubled Asset Relief Program (“TARP”), bring quarterly payments on our trust preferred securities current, and otherwise implement our capital plan;
·
our receipt of regulatory approvals necessary for us to take certain actions pursuant to our capital plan, including a reclassification of the equity of our subsidiary bank, the return of capital by our subsidiary bank to our holding company, our payment of accrued but unpaid dividends on our trust preferred securities, and our redemption of the preferred stock and warrant held by the U.S. Treasury;
·
the failure of assumptions underlying the establishment of and provisions made to our allowance for loan losses;
1

 
·
the timing and pace of an economic recovery in Michigan and the United States in general, including regional and local real estate markets;
·
the ability of our Bank to remain well-capitalized;
·
the failure of assumptions underlying our estimate of probable incurred losses from vehicle service contract payment plan counterparty contingencies, including our assumptions regarding future cancellations of vehicle service contracts, the value to us of collateral that may be available to recover funds due from our counterparties, and our ability to enforce the contractual obligations of our counterparties to pay amounts owing to us;
·
further adverse developments in the vehicle service contract industry;
·
the risk that sales of our common stock could trigger a reduction in the amount of net operating loss carryforwards that we may be able to utilize for income tax purposes;
·
the continued services of our management team; and
·
implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act or other new legislation, which may have significant effects on us and the financial services industry, the exact nature and extent of which cannot be determined at this time.

This list provides examples of factors that could affect the results described by forward-looking statements contained in this report, but the list is not intended to be all inclusive.  The risk factors disclosed in Part I – Item A of our Annual Report on Form 10-K for the year ended December 31, 2012, as updated by any new or modified risk factors disclosed in Part II – Item 1A of any subsequently filed Quarterly Report on Form 10-Q, include all known risks that our management believes could materially affect the results described by forward-looking statements in this report.  However, those risks may not be the only risks we face.  Our results of operations, cash flows, financial position, and prospects could also be materially and adversely affected by additional factors that are not presently known to us, that we currently consider to be immaterial, or that develop after the date of this report.  We cannot assure you that our future results will meet expectations. While we believe the forward-looking statements in this report are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim, any obligation to update or alter any statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

2

Part I - Item 1.     
INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
 
 
 
June 30,
   
December 31,
 
 
 
2013
   
2012
 
 
 
(unaudited)
 
Assets
 
(In thousands, except share amounts)
 
Cash and due from banks
 
$
47,512
   
$
55,487
 
Interest bearing deposits
   
92,863
     
124,295
 
Cash and Cash Equivalents
   
140,375
     
179,782
 
Interest bearing deposits - time
   
8,698
     
-
 
Trading securities
   
293
     
110
 
Securities available for sale
   
353,775
     
208,413
 
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
   
21,496
     
20,838
 
Loans held for sale, carried at fair value
   
35,529
     
47,487
 
Loans held for sale, carried at lower of cost or fair value
   
-
     
3,292
 
Loans
               
Commercial
   
617,050
     
617,258
 
Mortgage
   
503,042
     
527,340
 
Installment
   
190,041
     
189,849
 
Payment plan receivables
   
75,949
     
84,692
 
Total Loans
   
1,386,082
     
1,419,139
 
Allowance for loan losses
   
(36,786
)
   
(44,275
)
Net Loans
   
1,349,296
     
1,374,864
 
Other real estate and repossessed assets
   
17,790
     
26,133
 
Property and equipment, net
   
47,450
     
47,016
 
Bank-owned life insurance
   
51,564
     
50,890
 
Deferred tax assets, net
   
58,066
     
-
 
Capitalized mortgage loan servicing rights
   
13,037
     
11,013
 
Vehicle service contract counterparty receivables, net
   
15,091
     
18,449
 
Other intangibles
   
3,569
     
3,975
 
Prepaid FDIC deposit insurance assessment
   
-
     
9,448
 
Accrued income and other assets
   
18,645
     
22,157
 
Total Assets
 
$
2,134,674
   
$
2,023,867
 
Liabilities and Shareholders' Equity
               
Deposits
               
Non-interest bearing
 
$
498,511
   
$
488,126
 
Savings and interest-bearing checking
   
898,782
     
871,238
 
Reciprocal
   
46,722
     
33,242
 
Retail time
   
358,849
     
372,340
 
Brokered time
   
13,225
     
14,591
 
Total Deposits
   
1,816,089
     
1,779,537
 
Other borrowings
   
17,503
     
17,625
 
Subordinated debentures
   
50,175
     
50,175
 
Vehicle service contract counterparty payables
   
6,292
     
7,725
 
Accrued expenses and other liabilities
   
35,780
     
33,830
 
Total Liabilities
   
1,925,839
     
1,888,892
 
Shareholders' Equity
               
Convertible preferred stock, no par value, 200,000 shares authorized; 74,426 shares issued and outstanding at June 30, 2013 and December 31, 2012; liquidation preference: $87,292 at June 30, 2013 and $85,150 at December 31, 2012
   
 
86,455
     
 
84,204
 
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding:  9,481,505 shares at June 30, 2013 and 9,093,732 shares at December 31, 2012
   
255,114
     
251,237
 
Accumulated deficit
   
(125,464
)
   
(192,408
)
Accumulated other comprehensive loss
   
(7,270
)
   
(8,058
)
Total Shareholders' Equity
   
208,835
     
134,975
 
Total Liabilities and Shareholders' Equity
 
$
2,134,674
   
$
2,023,867
 

See notes to interim condensed consolidated financial statements (unaudited)
3

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
 
 
 
Three Months Ended
   
Six Months Ended
 
 
 
June 30,
   
June 30,
 
 
 
2013
   
2012
   
2013
   
2012
 
 
 
(unaudited)
 
 
 
(In thousands)
 
Interest Income
 
   
   
   
 
Interest and fees on loans
 
$
20,303
   
$
23,696
   
$
41,013
   
$
48,042
 
Interest on securities
                               
Taxable
   
993
     
933
     
1,663
     
1,591
 
Tax-exempt
   
242
     
244
     
480
     
540
 
Other investments
   
324
     
382
     
656
     
778
 
Total Interest Income
   
21,862
     
25,255
     
43,812
     
50,951
 
Interest Expense
                               
Deposits
   
1,463
     
2,305
     
2,992
     
4,729
 
Other borrowings
   
876
     
1,120
     
1,741
     
2,292
 
Total Interest Expense
   
2,339
     
3,425
     
4,733
     
7,021
 
Net Interest Income
   
19,523
     
21,830
     
39,079
     
43,930
 
Provision for loan losses
   
(2,107
)
   
1,056
     
(2,798
)
   
6,187
 
Net Interest Income After Provision for Loan Losses
   
21,630
     
20,774
     
41,877
     
37,743
 
Non-interest Income
                               
Service charges on deposit accounts
   
3,583
     
4,552
     
6,989
     
8,753
 
Interchange income
   
1,933
     
2,407
     
3,690
     
4,729
 
Net gains (losses) on assets
                               
Mortgage loans
   
3,208
     
3,579
     
6,845
     
7,439
 
Securities
   
107
     
169
     
191
     
853
 
Other than temporary impairment loss on securities
                               
Total impairment loss
   
(26
)
   
(85
)
   
(26
)
   
(262
)
Loss recognized in other comprehensive loss
   
-
     
-
     
-
     
-
 
Net impairment loss recognized in earnings
   
(26
)
   
(85
)
   
(26
)
   
(262
)
Mortgage loan servicing
   
1,654
     
(1,088
)
   
2,276
     
(352
)
Title insurance fees
   
368
     
489
     
852
     
997
 
(Increase) decrease in fair value of U.S. Treasury warrant
   
20
     
(25
)
   
(1,025
)
   
(179
)
Other
   
2,164
     
3,044
     
4,287
     
5,648
 
Total Non-interest Income
   
13,011
     
13,042
     
24,079
     
27,626
 
Non-interest Expense
                               
Compensation and employee benefits
   
11,715
     
13,506
     
23,022
     
25,988
 
Occupancy, net
   
2,147
     
2,490
     
4,571
     
5,206
 
Data processing
   
2,042
     
2,003
     
3,958
     
3,936
 
Loan and collection
   
1,702
     
2,407
     
3,928
     
5,297
 
Vehicle service contract counterparty contingencies
   
3,127
     
326
     
3,254
     
797
 
Furniture, fixtures and equipment
   
1,088
     
1,211
     
2,120
     
2,407
 
Communications
   
730
     
922
     
1,510
     
1,895
 
Legal and professional
   
664
     
1,268
     
1,356
     
2,165
 
FDIC deposit insurance
   
711
     
816
     
1,341
     
1,673
 
Advertising
   
659
     
639
     
1,229
     
1,195
 
Provision for loss reimbursement on sold loans
   
356
     
126
     
1,019
     
558
 
Net losses on other real estate and repossessed assets
   
320
     
633
     
972
     
1,620
 
Interchange expense
   
418
     
447
     
828
     
853
 
Credit card and bank service fees
   
331
     
624
     
665
     
1,275
 
Cost (recoveries) related to unfunded lending commitments
   
48
     
(12
)
   
29
     
(59
)
Other
   
1,684
     
2,077
     
3,413
     
2,726
 
Total Non-interest Expense
   
27,742
     
29,483
     
53,215
     
57,532
 
Income Before Income Tax
   
6,899
     
4,333
     
12,741
     
7,837
 
Income tax benefit
   
(56,489
)
   
-
     
(56,454
)
   
-
 
Net Income
 
$
63,388
   
$
4,333
   
$
69,195
   
$
7,837
 
Preferred stock dividends and discount accretion
   
1,157
     
1,092
     
2,252
     
2,148
 
Net Income Applicable to Common Stock
 
$
62,231
   
$
3,241
   
$
66,943
   
$
5,689
 
Net Income Per Common Share
                               
Basic
 
$
6.56
   
$
0.38
   
$
7.14
   
$
0.66
 
Diluted
   
2.64
     
0.11
     
2.90
     
0.19
 
Dividends Per Common Share
                               
Declared
 
$
.00
   
$
.00
   
$
.00
   
$
.00
 
Paid
   
.00
     
.00
     
.00
     
.00
 
 
See notes to interim condensed consolidated financial statements (unaudited)

4

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income

 
 
Three months ended
   
Six months ended
 
 
 
June 30,
   
June 30,
 
 
 
2013
   
2012
   
2013
   
2012
 
 
 
(unaudited)
   
(unaudited)
 
 
 
(In thousands)
   
(In thousands)
 
Net income
 
$
63,388
   
$
4,333
   
$
69,195
   
$
7,837
 
Other comprehensive income (loss), before tax
                               
Available for sale securities
                               
Unrealized gain (loss) arising during period
   
(2,463
)
   
2,671
     
(1,489
)
   
1,634
 
Change in unrealized losses for which a portion of other than temporary impairment has been recognized in earnings
   
258
     
204
     
291
     
333
 
Reclassification adjustment for other than temporary impairment included in earnings
   
26
     
85
     
26
     
262
 
Reclassification adjustments for (gains) losses included in earnings
   
(15
)
   
(151
)
   
(8
)
   
(843
)
Unrealized gains (losses) recognized in other comprehensive income on available for sale securities
   
(2,194
)
   
2,809
     
(1,180
)
   
1,386
 
Income tax benefit
   
(413
)
   
-
     
(413
)
   
-
 
Unrealized gains (losses) recognized in other comprehensive income on available for sale securities, net of tax
   
(1,781
)
   
2,809
     
(767
)
   
1,386
 
Derivative instruments
                               
Unrealized loss arising during period
   
(35
)
   
(24
)
   
(38
)
   
(75
)
Reclassification adjustment for expense recognized in earnings
   
114
     
120
     
208
     
305
 
Reclassification adjustment for accretion on settled derivatives
   
-
     
146
     
-
     
291
 
Unrealized gains recognized in other comprehensive income on derivative instruments
   
79
     
242
     
170
     
521
 
Income tax benefit
   
(1,385
)
   
-
     
(1,385
)
   
-
 
Unrealized gains recognized in other comprehensive income on derivative instruments, net of tax
   
1,464
     
242
     
1,555
     
521
 
Other comprehensive income (loss)
   
(317
)
   
3,051
     
788
     
1,907
 
Comprehensive income
 
$
63,071
   
$
7,384
   
$
69,983
   
$
9,744
 

See notes to interim condensed consolidated financial statements (unaudited)

5

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
 
 
 
Six months ended June 30,
 
 
 
2013
   
2012
 
 
 
(unaudited - In thousands)
 
Net Income
 
$
69,195
   
$
7,837
 
Adjustments to Reconcile Net Income to Net Cash from Operating Activities
               
Proceeds from sales of loans held for sale
   
249,123
     
246,587
 
Disbursements for loans held for sale
   
(230,320
)
   
(237,733
)
Provision for loan losses
   
(2,798
)
   
6,187
 
Deferred federal income tax benefit
   
(58,066
)
   
-
 
Deferred loan fees
   
(86
)
   
(404
)
Depreciation, amortization of intangible assets and premiums and accretion of discounts on securities and loans
   
(1,735
)
   
(2,351
)
Net gains on mortgage loans
   
(6,845
)
   
(7,439
)
Net gains on securities
   
(191
)
   
(853
)
Securities impairment recognized in earnings
   
26
     
262
 
Net losses on other real estate and repossessed assets
   
972
     
1,620
 
Vehicle service contract counterparty contingencies
   
3,254
     
797
 
Share based compensation
   
427
     
304
 
Increase in accrued income and other assets
   
12,210
     
3,288
 
Increase in accrued expenses and other liabilities
   
1,228
     
4,262
 
Total Adjustments
   
(32,801
)
   
14,527
 
Net Cash from Operating Activities
   
36,394
     
22,364
 
Cash Flow used in Investing Activities
               
Proceeds from the sale of securities available for sale
   
2,940
     
18,999
 
Proceeds from the maturity of securities available for sale
   
23,750
     
60,728
 
Principal payments received on securities available for sale
   
14,697
     
11,220
 
Purchases of securities available for sale
   
(185,450
)
   
(179,262
)
Purchases of interest bearing deposits
   
(8,488
)
   
-
 
Purchase of Federal Reserve Bank stock
   
(658
)
   
-
 
Redemption of Federal Reserve Bank stock
   
-
     
334
 
Net cash from branch sale
   
3,292
     
-
 
Net decrease in portfolio loans (loans originated, net of principal payments)
   
24,938
     
53,220
 
Net proceeds from the sale of watch, substandard and non-performing loans
   
6,721
     
-
 
Proceeds from the collection of vehicle service contract counterparty receivables
   
560
     
396
 
Proceeds from the sale of other real estate and repossessed assets
   
9,821
     
8,912
 
Proceeds from the sale of property and equipment, net
   
3
     
352
 
Capital expenditures
   
(3,881
)
   
(3,609
)
Net Cash used in Investing Activities
   
(111,755
)
   
(28,710
)
Cash Flow from Financing Activities
               
Net increase in total deposits
   
36,552
     
99,472
 
Net increase in other borrowings
   
-
     
9
 
Proceeds from Federal Home Loan Bank advances
   
100
     
12,000
 
Payments of Federal Home Loan Bank advances
   
(222
)
   
(27,467
)
Net increase (decrease) in vehicle service contract counterparty payables
   
(1,433
)
   
485
 
Proceeds from issuance of common stock
   
957
     
497
 
Net Cash from Financing Activities
   
35,954
     
84,996
 
Net Increase (Decrease) in Cash and Cash Equivalents
   
(39,407
)
   
78,650
 
Cash and Cash Equivalents at Beginning of Period
   
179,782
     
341,108
 
Cash and Cash Equivalents at End of Period
 
$
140,375
   
$
419,758
 
Cash paid during the period for
               
Interest
 
$
3,617
   
$
5,914
 
Income taxes
   
76
     
186
 
Transfers to other real estate and repossessed assets
   
2,450
     
5,994
 
Transfer of payment plan receivables to vehicle service contract counterparty receivables
   
418
     
849
 
Purchase of securities available for sale and interest bearing deposits - time not yet settled
   
3,211
     
-
 
Transfers to loans held for sale
   
-
     
54,127
 
Transfers to fixed assets held for sale
   
-
     
11,065
 
Transfers to deposits held for sale
   
-
     
420,261
 

See notes to interim condensed consolidated financial statements (unaudited)
6

INDEPENDENT BANK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders' Equity

 
 
Six months ended
 
 
 
June 30,
 
 
 
2013
   
2012
 
 
 
(unaudited)
 
 
 
(In thousands)
 
 
 
   
 
Balance at beginning of period
 
$
134,975
   
$
102,627
 
Net income
   
69,195
     
7,837
 
Issuance of common stock
   
1,966
     
497
 
Common stock warrant
   
1,484
     
-
 
Share based compensation
   
427
     
304
 
Net change in accumulated other comprehensive loss, net of related tax effect
   
788
     
1,907
 
Balance at end of period
 
$
208,835
   
$
113,172
 

See notes to interim condensed consolidated financial statements (unaudited)
7

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.
Preparation of Financial Statements

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading.  The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2012 included in our Annual Report on Form 10-K.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary to present fairly our consolidated financial condition as of June 30, 2013 and December 31, 2012, and the results of operations for the three and six-month periods ended June 30, 2013 and 2012.  The results of operations for the three and six-month periods ended June 30, 2013, are not necessarily indicative of the results to be expected for the full year.  Certain reclassifications have been made in the prior period financial statements to conform to the current period presentation.  Our critical accounting policies include the assessment for other than temporary impairment (“OTTI”) on investment securities,  the determination of the allowance for loan losses, the determination of vehicle service contract counterparty contingencies, the valuation of originated mortgage loan servicing rights and the valuation of deferred tax assets.  Refer to our 2012 Annual Report on Form 10-K for a disclosure of our accounting policies.

2.
New Accounting Standards

In February, 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. This ASU amended guidance on the reporting of reclassifications out of accumulated other comprehensive income.  The amendments in this guidance require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts.  This amended guidance became effective for us at January 1, 2013 and was applied prospectively.  The effect of adopting this standard did not have a material impact on our consolidated operating results or financial condition, but the additional disclosures are included in note #16.
8

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

3.
Securities

Securities available for sale consist of the following:

 
 
Amortized
   
Unrealized
   
 
 
 
Cost
   
Gains
   
Losses
   
Fair Value
 
 
 
(In thousands)
 
June 30, 2013
 
   
   
   
 
U.S. agency
 
$
13,565
   
$
-
   
$
151
   
$
13,414
 
U.S. agency residential mortgage-backed
   
184,074
     
1,492
     
306
     
185,260
 
Private label residential mortgage-backed
   
8,105
     
94
     
717
     
7,482
 
Other asset backed
   
10,979
     
-
     
-
     
10,979
 
Obligations of states and political subdivisions
   
125,963
     
481
     
2,011
     
124,433
 
Corporate
   
9,886
     
1
     
75
     
9,812
 
Trust preferred
   
2,899
     
-
     
504
     
2,395
 
Total
 
$
355,471
   
$
2,068
   
$
3,764
   
$
353,775
 
 
                               
December 31, 2012
                               
U.S. agency
 
$
30,620
   
$
70
   
$
23
   
$
30,667
 
U.S. agency residential mortgage-backed
   
126,151
     
1,264
     
3
     
127,412
 
Private label residential mortgage-backed
   
9,070
     
-
     
876
     
8,194
 
Obligations of states and political subdivisions
   
38,384
     
736
     
69
     
39,051
 
Trust preferred
   
4,704
     
-
     
1,615
     
3,089
 
Total
 
$
208,929
   
$
2,070
   
$
2,586
   
$
208,413
 

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:
 
 
 
Less Than Twelve Months
   
Twelve Months or More
   
Total
 
 
 
   
Unrealized
   
   
Unrealized
   
   
Unrealized
 
 
 
Fair Value
   
Losses
   
Fair Value
   
Losses
   
Fair Value
   
Losses
 
 
 
(In thousands)
 
 
 
   
   
   
   
   
 
June 30, 2013
 
   
   
   
   
   
 
U.S. agency
 
$
13,414
   
$
151
   
$
-
   
$
-
   
$
13,414
   
$
151
 
U.S. agency residential mortgage-backed
   
60,581
     
306
     
-
     
-
     
60,581
     
306
 
Private label residential mortgage-backed
   
483
     
7
     
5,103
     
710
     
5,586
     
717
 
Obligations of states and political subdivisions
   
89,833
     
1,964
     
1,209
     
47
     
91,042
     
2,011
 
Corporate
   
7,812
     
75
     
-
     
-
     
7,812
     
75
 
Trust preferred
   
-
     
-
     
2,395
     
504
     
2,395
     
504
 
Total
 
$
172,123
   
$
2,503
   
$
8,707
   
$
1,261
   
$
180,830
   
$
3,764
 
 
                                               
December 31, 2012
                                               
U.S. agency
 
$
8,097
   
$
23
   
$
-
   
$
-
   
$
8,097
   
$
23
 
U.S. agency residential mortgage-backed
   
-
     
-
     
457
     
3
     
457
     
3
 
Private label residential mortgage-backed
   
-
     
-
     
8,192
     
876
     
8,192
     
876
 
Obligations of states and political subdivisions
   
7,384
     
69
     
-
     
-
     
7,384
     
69
 
Trust preferred
   
-
     
-
     
3,089
     
1,615
     
3,089
     
1,615
 
Total
 
$
15,481
   
$
92
   
$
11,738
   
$
2,494
   
$
27,219
   
$
2,586
 

9

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Our portfolio of available-for-sale securities is reviewed quarterly for impairment in value. In performing this review management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet the aforementioned recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income or loss.

U.S. agency and U.S. agency residential mortgage-backed securities — at June 30, 2013 we had four U.S. Agency and nine U.S. Agency residential mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to rises in term interest rates and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label residential mortgage backed securities — at June 30, 2013 we had six of these type of securities whose fair value is less than amortized cost. Two of the issues are rated by a major rating agency as investment grade while two are below investment grade and two are split rated. Three of these bonds have impairment in excess of 10% and four of these holdings have been impaired for more than 12 months.

The unrealized losses are largely attributable to credit spread widening on these securities since their acquisition.  The underlying loans within these securities include Jumbo (71%) and Alt A (29%) at June 30, 2013.

 
 
June 30, 2013
   
December 31, 2012
 
 
 
   
Net
   
   
Net
 
 
 
Fair
   
Unrealized
   
Fair
   
Unrealized
 
 
 
Value
   
Gain (Loss)
   
Value
   
Gain (Loss)
 
 
 
(In thousands)
 
 
 
   
   
   
 
Private label residential mortgage-backed
 
   
   
   
 
Jumbo
 
$
5,299
   
$
(483
)
 
$
6,041
   
$
(594
)
Alt-A
   
2,183
     
(140
)
   
2,153
     
(282
)

All of these securities are receiving some principal and interest payments. Most of these transactions are passthrough structures, receiving pro rata principal and interest payments from a dedicated collateral pool for loans that are performing. The nonreceipt of interest cash flows is not expected and thus not presently considered in our discounted cash flow methodology discussed below.
10

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

All private label residential mortgage-backed securities are reviewed for OTTI utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. The cash flows from the underlying loans consider contractual payment terms (scheduled amortization), prepayments, defaults and severity of loss given default. The analysis uses dynamic assumptions for prepayments, defaults and loss severity. Near term prepayment assumptions are based on recently observed prepayment rates. More weight is given to longer term historic performance (12 months). In some cases, recently observed prepayment rates are lower than historic norms due to a minimal amount of new jumbo loan issuances. This loan market is heavily dependent upon securitization for funding, and new securitization transactions have been minimal. Our model projections anticipate that prepayment rates gradually revert to historical levels. For seasoned ARM transactions, normalized prepayment rates range from 12% to 24% CPR. For fixed rate collateral (one transaction), the prepayment speeds are projected to remain stable.

Default assumptions are largely based on the volume of existing real estate owned, pending foreclosures and severe delinquencies. Other considerations include the quality of loan underwriting, recent default experience, realized loss performance and the volume of less severe delinquencies. Default levels generally are projected to remain elevated or increase for a period of time sufficient to address the level of distressed loans in the transaction. Our projections expect defaults to then decline, generally beginning in year three. Current loss severity assumptions are based on recent observations when meaningful data is available. Loss severity is expected to remain elevated for the next 18 months. Severity is expected to decline beginning in year two due to improving overall economic conditions, improving real estate prices and a reduced inventory of foreclosed properties on the market. Except for three securities discussed in further detail below (all three are currently below investment grade), our cash flow analysis forecasts complete recovery of our cost basis for each reviewed security.

At June 30, 2013 three below investment grade private label residential mortgage-backed securities had credit related OTTI and are summarized as follows:

 
 
   
Super
   
Senior
   
 
 
 
Senior
   
Senior
   
Support
   
 
 
 
Security
   
Security
   
Security
   
Total
 
 
 
(In thousands)
 
 
 
   
   
   
 
As of June 30, 2013
 
   
   
   
 
Fair value
 
$
2,903
   
$
1,838
   
$
57
   
$
4,798
 
Amortized cost
   
3,231
     
1,801
     
-
     
5,032
 
Non-credit unrealized loss
   
328
     
-
     
-
     
328
 
Unrealized gain
   
-
     
37
     
57
     
94
 
Cumulative credit related OTTI
   
748
     
457
     
380
     
1,585
 
 
                               
Credit related OTTI recognized in our Condensed
                               
Consolidated Statements of Operations
                               
For the three months ended June 30,
                               
2013
 
$
26
   
$
-
   
$
-
   
$
26
 
2012
   
85
     
-
     
-
     
85
 
For the six months ended June 30,
                               
2013
   
26
     
-
     
-
     
26
 
2012
   
170
     
32
     
60
     
262
 

11

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Each of these securities are receiving principal and interest payments similar to principal reductions in the underlying collateral.  Two of these securities have an unrealized gain and one has an unrealized loss at June 30, 2013.  Prior to June 30, 2013 all three of these securities had an unrealized loss.  The original amortized cost for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI.  During the second quarter of 2013, the unrealized losses (based on original amortized cost) for two of these securities are now less than previously recorded credit related OTTI amounts.  The remaining non-credit related unrealized loss in the senior security is attributed to other factors and is reflected in other comprehensive income during those same periods.

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no other declines discussed above are deemed to be other than temporary.

Obligations of states and political subdivisions — at June 30, 2013 we had 97 municipal securities whose fair value is less than amortized cost. The increase in unrealized losses during the first half of 2013 is primarily due to increases in interest rates.  As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at June 30, 2013 we had six corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening.  As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Trust preferred securities — at June 30, 2013 we had three trust preferred securities whose fair value is less than amortized cost. All of our trust preferred securities are single issue securities issued by a trust subsidiary of a bank holding company. The pricing of trust preferred securities over the past several years has suffered from credit spread widening fueled by uncertainty regarding potential losses of financial companies and repricing of risk related to these hybrid capital securities.

One of the three securities is rated by two major rating agencies as investment grade, while one is rated below investment grade by two major rating agencies and the other one is non-rated. The non-rated issue is a relatively small bank and was never rated. The issuer of this non-rated trust preferred security, which had a total amortized cost of $1.0 million and total fair value of $0.8 million as of June 30, 2013, continues to have satisfactory credit metrics and make interest payments.

The following table breaks out our trust preferred securities in further detail as of June 30, 2013 and December 31, 2012:

 
 
June 30, 2013
   
December 31, 2012
 
 
 
   
Net
   
   
Net
 
 
 
Fair
   
Unrealized
   
Fair
   
Unrealized
 
 
 
Value
   
Loss
   
Value
   
Loss
 
 
 
(In thousands)
 
 
 
   
   
   
 
Trust preferred securities
 
   
   
   
 
Rated issues
 
$
1,615
   
$
(284
)
 
$
1,581
   
$
(316
)
Unrated issues
   
780
     
(220
)
   
1,508
     
(1,299
)

12

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

We recorded credit related OTTI charges in earnings on securities available for sale of $0.026 million and $0.085 million during the three month periods ended June 30, 2013 and 2012, respectively and $0.026 million and $0.262 million during the six month periods ended June 30, 2013 and 2012, respectively (see discussion above).

A roll forward of credit losses recognized in earnings on securities available for sale for the three and six month periods ending June 30, follows:

 
 
Three months ended
   
Six months ended
 
 
 
June 30,
   
June 30,
 
 
 
2013
   
2012
   
2013
   
2012
 
 
 
(In thousands)
 
Balance at beginning of period
 
$
1,809
   
$
1,647
   
$
1,809
   
$
1,470
 
Additions to credit losses on securities for which no previous OTTI was recognized
   
-
     
-
     
-
     
-
 
Increases to credit losses on securities for which OTTI was previously recognized
   
26
     
85
     
26
     
262
 
Balance at end of period
 
$
1,835
   
$
1,732
   
$
1,835
   
$
1,732
 

The amortized cost and fair value of securities available for sale at June 30, 2013, by contractual maturity, follow. The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 
 
Amortized
   
Fair
 
 
 
Cost
   
Value
 
 
 
(In thousands)
 
Maturing within one year
 
$
5,428
   
$
5,435
 
Maturing after one year but within five years
   
42,273
     
42,308
 
Maturing after five years but within ten years
   
26,061
     
26,062
 
Maturing after ten years
   
78,551
     
76,249
 
 
   
152,313
     
150,054
 
U.S. agency residential mortgage-backed
   
184,074
     
185,260
 
Private label residential mortgage-backed
   
8,105
     
7,482
 
Other asset backed
   
10,979
     
10,979
 
Total
 
$
355,471
   
$
353,775
 

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis.  A summary of proceeds from the sale of securities available for sale and gains and losses for the six month periods ending June 30, follows:

 
 
   
Realized
   
 
 
 
Proceeds
   
Gains
   
Losses(1)
 
 
 
(In thousands)
 
2013
 
$
2,940
   
$
15
   
$
7
 
2012
   
18,999
     
843
     
-
 
 

(1)
Losses in 2013 and 2012 exclude $0.026 million and $0.262 million, respectively of credit related OTTI recognized in earnings.
13

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

During 2013 and 2012 our trading securities consisted of various preferred stocks.  During the first six months of 2013 and 2012 we recognized gains on trading securities of $0.183 million and $0.010 million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations.  Both of these amounts, relate to gains  recognized on trading securities still held at each respective period end.

4.
Loans

Our assessment of the allowance for loan losses is based on an evaluation of the loan portfolio, recent loss experience, current economic conditions and other pertinent factors.

An analysis of the allowance for loan losses by portfolio segment for the three months ended June 30, follows:

 
 
   
   
   
Payment
   
   
 
 
 
   
   
   
Plan
   
   
 
 
 
Commercial
   
Mortgage
   
Installment
   
Receivables
   
Unallocated
   
Total
 
 
 
(In thousands)
 
2013
 
   
   
   
   
   
 
Balance at beginning of period
 
$
10,058
   
$
20,163
   
$
3,162
   
$
129
   
$
7,253
   
$
40,765
 
Additions (deductions)
                                               
Provision for loan losses
   
(1,404
)
   
(349
)
   
141
     
(12
)
   
(483
)
   
(2,107
)
Recoveries credited to allowance
   
3,181
     
450
     
306
     
21
     
-
     
3,958
 
Loans charged against the allowance
   
(3,599
)
   
(1,605
)
   
(613
)
   
(13
)
   
-
     
(5,830
)
Balance at end of period
 
$
8,236
   
$
18,659
   
$
2,996
   
$
125
   
$
6,770
   
$
36,786
 
 
                                               
2012
                                               
Balance at beginning of period
 
$
16,441
   
$
23,271
   
$
5,534
   
$
206
   
$
10,554
   
$
56,006
 
Additions (deductions)
                                               
Provision for loan losses
   
1,194
     
570
     
229
     
(7
)
   
(930
)
   
1,056
 
Recoveries credited to allowance
   
390
     
572
     
389
     
-
     
-
     
1,351
 
Loans charged against the allowance
   
(2,379
)
   
(2,950
)
   
(953
)
   
(4
)
   
-
     
(6,286
)
Reclassification to loans held for sale
   
(170
)
   
(192
)
   
(218
)
   
-
     
(201
)
   
(781
)
Balance at end of period
 
$
15,476
   
$
21,271
   
$
4,981
   
$
195
   
$
9,423
   
$
51,346
 

14

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

An analysis of the allowance for loan losses by portfolio segment for the six months ended June 30, follows:

 
 
   
   
   
Payment
   
   
 
 
 
   
   
   
Plan
   
   
 
 
 
Commercial
   
Mortgage
   
Installment
   
Receivables
   
Unallocated
   
Total
 
 
 
(In thousands)
 
2013
 
   
   
   
   
   
 
Balance at beginning of period
 
$
11,402
   
$
21,447
   
$
3,378
   
$
144
   
$
7,904
   
$
44,275
 
Additions (deductions)
                                               
Provision for loan losses
   
(1,676
)
   
(488
)
   
516
     
(16
)
   
(1,134
)
   
(2,798
)
Recoveries credited to allowance
   
3,717
     
1,072
     
592
     
28
     
-
     
5,409
 
Loans charged against the allowance
   
(5,207
)
   
(3,372
)
   
(1,490
)
   
(31
)
   
-
     
(10,100
)
Balance at end of period
 
$
8,236
   
$
18,659
   
$
2,996
   
$
125
   
$
6,770
   
$
36,786
 
 
                                               
2012
                                               
Balance at beginning of period
 
$
18,183
   
$
22,885
   
$
6,146
   
$
197
   
$
11,473
   
$
58,884
 
Additions (deductions)
                                               
Provision for loan losses
   
2,690
     
4,805
     
518
     
23
     
(1,849
)
   
6,187
 
Recoveries credited to allowance
   
1,396
     
1,120
     
715
     
-
     
-
     
3,231
 
Loans charged against the allowance
   
(6,623
)
   
(7,347
)
   
(2,180
)
   
(25
)
   
-
     
(16,175
)
Reclassification to loans held for sale
   
(170
)
   
(192
)
   
(218
)
   
-
     
(201
)
   
(781
)
Balance at end of period
 
$
15,476
   
$
21,271
   
$
4,981
   
$
195
   
$
9,423
   
$
51,346
 

15

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Allowance for loan losses and recorded investment in loans by portfolio segment follows:

 
 
   
   
   
Payment
   
   
 
 
 
   
   
   
Plan
   
   
 
 
 
Commercial
   
Mortgage
   
Installment
   
Receivables
   
Unallocated
   
Total
 
 
 
(In thousands)
 
June 30, 2013
 
   
   
   
   
   
 
Allowance for loan losses:
 
   
   
   
   
   
 
Individually evaluated for impairment
 
$
4,446
   
$
11,637
   
$
1,398
   
$
-
   
$
-
   
$
17,481
 
Collectively evaluated for impairment
   
3,790
     
7,022
     
1,598
     
125
     
6,770
     
19,305
 
Total ending allowance balance
 
$
8,236
   
$
18,659
   
$
2,996
   
$
125
   
$
6,770
   
$
36,786
 
 
                                               
Loans
                                               
Individually evaluated for impairment
 
$
47,559
   
$
82,838
   
$
7,184
   
$
-
           
$
137,581
 
Collectively evaluated for impairment
   
571,150
     
422,710
     
183,612
     
75,949
             
1,253,421
 
Total loans recorded investment
   
618,709
     
505,548
     
190,796
     
75,949
             
1,391,002
 
Accrued interest included in recorded investment
   
1,659
     
2,506
     
755
     
-
             
4,920
 
Total loans
 
$
617,050
   
$
503,042
   
$
190,041
   
$
75,949
           
$
1,386,082
 
 
                                               
December 31, 2012
                                               
Allowance for loan losses:
                                               
Individually evaluated for impairment
 
$
6,558
   
$
12,869
   
$
1,582
   
$
-
   
$
-
   
$
21,009
 
Collectively evaluated for impairment
   
4,844
     
8,578
     
1,796
     
144
     
7,904
     
23,266
 
Total ending allowance balance
 
$
11,402
   
$
21,447
   
$
3,378
   
$
144
   
$
7,904
   
$
44,275
 
 
                                               
Loans
                                               
Individually evaluated for impairment
 
$
55,634
   
$
88,028
   
$
7,505
   
$
-
           
$
151,167
 
Collectively evaluated for impairment
   
563,316
     
441,703
     
183,090
     
84,692
             
1,272,801
 
Total loans recorded investment
   
618,950
     
529,731
     
190,595
     
84,692
             
1,423,968
 
Accrued interest included in recorded investment
   
1,692
     
2,391
     
746
     
-
             
4,829
 
Total loans
 
$
617,258
   
$
527,340
   
$
189,849
   
$
84,692
           
$
1,419,139
 

16

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Loans on non-accrual status and past due more than 90 days (“Non-performing Loans”) follow:

 
 
90+ and
   
   
Total Non-
 
 
 
Still
   
Non-
   
Performing
 
 
 
Accruing
   
Accrual
   
Loans
 
 
 
(In thousands)
 
June 30, 2013
 
   
   
 
Commercial
 
   
   
 
Income producing - real estate
 
$
120
   
$
1,580
   
$
1,700
 
Land, land development and construction - real estate
   
-
     
1,775
     
1,775
 
Commercial and industrial
   
9
     
1,503
     
1,512
 
Mortgage
                       
1-4 family
   
3
     
7,901
     
7,904
 
Resort lending
   
-
     
3,780
     
3,780
 
Home equity line of credit - 1st lien
   
-
     
429
     
429
 
Home equity line of credit - 2nd lien
   
-
     
729
     
729
 
Installment
                       
Home equity installment - 1st lien
   
-
     
1,284
     
1,284
 
Home equity installment - 2nd lien
   
-
     
494
     
494
 
Loans not secured by real estate
   
-
     
431
     
431
 
Other
   
-
     
-
     
-
 
Payment plan receivables
                       
Full refund
   
-
     
57
     
57
 
Partial refund
   
-
     
10
     
10
 
Other
   
-
     
-
     
-
 
Total recorded investment
 
$
132
   
$
19,973
   
$
20,105
 
Accrued interest included in recorded investment
 
$
1
   
$
-
   
$
1
 
December 31, 2012
                       
Commercial
                       
Income producing - real estate
 
$
-
   
$
5,611
   
$
5,611
 
Land, land development and construction - real estate
   
-
     
4,062
     
4,062
 
Commercial and industrial
   
-
     
5,080
     
5,080
 
Mortgage
                       
1-4 family
   
7
     
9,654
     
9,661
 
Resort lending
   
-
     
4,861
     
4,861
 
Home equity line of credit - 1st lien
   
-
     
529
     
529
 
Home equity line of credit - 2nd lien
   
-
     
685
     
685
 
Installment
                       
Home equity installment - 1st lien
   
-
     
1,278
     
1,278
 
Home equity installment - 2nd lien
   
-
     
675
     
675
 
Loans not secured by real estate
   
-
     
390
     
390
 
Other
   
-
     
-
     
-
 
Payment plan receivables
                       
Full refund
   
-
     
57
     
57
 
Partial refund
   
-
     
38
     
38
 
Other
   
-
     
9
     
9
 
Total recorded investment
 
$
7
   
$
32,929
   
$
32,936
 
Accrued interest included in recorded investment
 
$
-
   
$
-
   
$
-
 

17

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

An aging analysis of loans by class follows:

 
 
Loans Past Due
   
Loans not
   
Total
 
 
 
30-59 days
   
60-89 days
   
90+ days
   
Total
   
Past Due
   
Loans
 
 
 
(In thousands)
 
June 30, 2013
 
   
   
   
   
   
 
Commercial
 
   
   
   
   
   
 
Income producing - real estate
 
$
185
   
$
315
   
$
1,229
   
$
1,729
   
$
233,654
   
$
235,383
 
 
                                               
Land, land development and construction - real estate
   
-
     
-
     
427
     
427
     
39,071
     
39,498
 
Commercial and industrial
   
1,190
     
995
     
495
     
2,680
     
341,148
     
343,828
 
Mortgage
                                               
1-4 family
   
4,292
     
805
     
7,904
     
13,001
     
271,706
     
284,707
 
Resort lending
   
124
     
-
     
3,780
     
3,904
     
154,302
     
158,206
 
Home equity line of credit - 1st lien
   
369
     
-
     
429
     
798
     
17,779
     
18,577
 
Home equity line of credit - 2nd lien
   
470
     
194
     
729
     
1,393
     
42,665
     
44,058
 
Installment
                                               
Home equity installment - 1st lien
   
624
     
170
     
1,284
     
2,078
     
27,441
     
29,519
 
Home equity installment - 2nd lien
   
429
     
110
     
494
     
1,033
     
37,150
     
38,183
 
Loans not secured by real estate
   
797
     
213
     
431
     
1,441
     
119,039
     
120,480
 
Other
   
38
     
10
     
-
     
48
     
2,566
     
2,614
 
Payment plan receivables
                                               
Full refund
   
1,817
     
753
     
57
     
2,627
     
68,853
     
71,480
 
Partial refund