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Note 7 - Loans and Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2012
Financing Receivables [Text Block]
7.  Loans and Allowance for Loan Losses

Major classifications of loans outstanding are summarized as follows:

   
March 31, 2012
   
December 31, 2011
 
(Dollars in thousands)
 
Amount
   
Amount
 
             
Real Estate:
           
Real estate – construction and land development
  $ 118,428     $ 119,989  
Real estate – residential
    439,390       445,464  
Real estate mortgage – farmland and other commercial enterprises
    373,761       384,331  
Commercial:
               
Commercial and industrial
    48,110       48,771  
States and political subdivisions
    23,189       23,601  
Lease financing
    5,903       7,578  
Other
    19,065       21,435  
Consumer:
               
Secured
    12,256       14,214  
Unsecured
    6,751       7,151  
Total loans
    1,046,853       1,072,534  
Less unearned income
    (292 )     (426 )
Total loans, net of unearned income
  $ 1,046,561     $ 1,072,108  

Activity in the allowance for loan losses by portfolio segment was as follows for the periods indicated.

Three months ended March 31, 2012
(Dollars in thousands)
 
Real Estate
   
Commercial
   
Consumer
   
Total
 
                         
Balance, beginning of period
  $ 23,538     $ 3,508     $ 1,218     $ 28,264  
Provision for loan losses
    2,593       (1,296 )     (320 )     977  
Recoveries
    127       99       56       282  
Loans charged off
    (2,268 )     (73 )     (129 )     (2,470 )
Balance, end of period
  $ 23,990     $ 2,238     $ 825     $ 27,053  

Three months ended March 31, 2011
(Dollars in thousands)
 
Real Estate
   
Commercial
   
Consumer
   
Total
 
                         
Balance, beginning of period
  $ 24,527     $ 3,260     $ 997     $ 28,784  
Provision for loan losses
    2,187       227       27       2,441  
Recoveries
    68       39       59       166  
Loans charged off
    (2,173 )     (72 )     (124 )     (2,369 )
Balance, end of period
  $ 24,609     $ 3,454     $ 959     $ 29,022  

The following tables present individually impaired loans by class of loans for the dates indicated.

March 31, 2012 (In thousands)
 
Recorded
Investment
   
Unpaid
Principal
Balance
   
Allowance for
Loan Losses
Allocated
 
Impaired loans with no related allowance recorded:
                 
Real Estate
                 
Real estate – construction and land development
  $ 23,965     $ 33,742        
Real estate mortgage – residential
    7,922       8,127        
Real estate mortgage – farmland and other commercial enterprises
    25,356       28,704        
Total
  $ 57,243     $ 70,573        
                       
Impaired loans with an allowance recorded:
                     
Real Estate
                     
Real estate – construction and land development
  $ 11,504     $ 11,752     $ 716  
Real estate mortgage – residential
    16,071       15,997       1,675  
Real estate mortgage – farmland and other commercial enterprises
    15,232       15,039       1,628  
Commercial
                       
Commercial and industrial
    742       738       453  
Consumer
                       
Secured
    105       104       80  
Unsecured
    190       189       75  
Total
  $ 43,844     $ 43,819     $ 4,627  

Three Months Ended March 31, (In thousands)
 
2012
   
2011
 
Average of individually impaired loans:
           
Real Estate
           
Real estate – construction and land development
  $ 35,550     $ 57,996  
Real estate mortgage – residential
    24,133       31,097  
Real estate mortgage – farmland and other commercial enterprises
    41,107       73,105  
Commercial
               
Commercial and industrial
    765       4,314  
Consumer
               
Secured
    106       203  
Unsecured
    192       -  
Total average of impaired loans
  $ 101,853     $ 166,715  
                 
Interest income recognized during impairment:
               
Real Estate
               
Real estate – construction and land development
  $ 171     $ 271  
Real estate mortgage – residential
    532       382  
Real estate mortgage – farmland and other commercial enterprises
    707       821  
Commercial
               
Commercial and industrial
    14       50  
Consumer
               
Secured
    5       3  
Unsecured
    4       -  
Total interest income recognized during impairment
  $ 1,433     $ 1,527  
                 
Cash-basis interest income recognized:
               
Real Estate
               
Real estate – construction and land development
  $ 160     $ 237  
Real estate mortgage – residential
    522       360  
Real estate mortgage – farmland and other commercial enterprises
    541       719  
Commercial
               
Commercial and industrial
    14       50  
Consumer
               
Secured
    5       2  
Unsecured
    4       -  
Total cash-basis interest income recognized
  $ 1,246     $ 1,368  

December 31, 2011 (In thousands)
 
Recorded
Investment
   
Unpaid
Principal
Balance
   
Allowance for
Loan Losses
Allocated
 
Impaired loans with no related allowance recorded:
                 
Real Estate
                 
Real estate – construction and land development
  $ 26,363     $ 26,337        
Real estate mortgage – residential
    22,923       22,843        
Real estate mortgage – farmland and other commercial enterprises
    43,765       43,438        
Commercial
                     
Commercial and industrial
    2,982       2,939        
Consumer
                     
Unsecured
    19       18        
Total
  $ 96,052     $ 95,575        
                       
Impaired loans with an allowance recorded:
                     
Real Estate
                     
Real estate – construction and land development
  $ 13,440     $ 13,425     $ 139  
Real estate mortgage – residential
    13,239       13,197       998  
Real estate mortgage – farmland and other commercial enterprises
    15,070       15,035       600  
Commercial
                       
Commercial and industrial
    456       453       159  
Consumer
                       
Secured
    60       58       30  
Total
  $ 42,265     $ 42,168     $ 1,926  

The following tables present the balance of the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of March 31, 2012 and December 31, 2011.

March 31, 2012 (In thousands)
 
Real Estate
   
Commercial
   
Consumer
   
Total
 
Allowance for Loan Losses
                       
Ending allowance balance attributable to loans:
                       
Individually evaluated for impairment
  $ 4,019     $ 453     $ 155     $ 4,627  
Collectively evaluated for impairment
    19,971       1,785       670       22,426  
Total ending allowance balance
  $ 23,990     $ 2,238     $ 825     $ 27,053  
                                 
Loans
                               
Loans individually evaluated for impairment
  $ 100,050     $ 742     $ 295     $ 101,087  
Loans collectively evaluated for impairment
    831,529       95,233       18,712       945,474  
Total ending loan balance, net of unearned income
  $ 931,579     $ 95,975     $ 19,007     $ 1,046,561  

December 31, 2011 (In thousands)
 
Real Estate
   
Commercial
   
Consumer
   
Total
 
Allowance for Loan Losses
                       
Ending allowance balance attributable to loans:
                       
Individually evaluated for impairment
  $ 1,737     $ 159     $ 30     $ 1,926  
Collectively evaluated for impairment
    21,801       3,349       1,188       26,338  
Total ending allowance balance
  $ 23,538     $ 3,508     $ 1,218     $ 28,264  
                                 
Loans
                               
Loans individually evaluated for impairment
  $ 134,800     $ 3,438     $ 79     $ 138,317  
Loans collectively evaluated for impairment
    814,984       97,521       21,286       933,791  
Total ending loan balance, net of unearned income
  $ 949,784     $ 100,959     $ 21,365     $ 1,072,108  

The following tables present the recorded investment in nonperforming loans by class of loans as of March 31, 2012 and December 31, 2011.

March 31, 2012 (In thousands)
 
Nonaccrual
   
Restructured Loans
   
Loans Past Due 90 Days or More and Still Accruing
 
Real Estate:
                 
Real estate – construction and land development
  $ 25,413     $ 6,175       -  
Real estate mortgage – residential
    13,975       3,409     $ 18  
Real estate mortgage – farmland and other commercial enterprises
    21,021       7,967       -  
Commercial:
                       
Commercial and industrial
    687       -       -  
Lease financing
    158       -       28  
Consumer:
                       
Secured
    96       -       -  
Unsecured
    8       -       4  
Total
  $ 61,358     $ 17,551     $ 50  

December 31, 2011 (In thousands)
 
Nonaccrual
   
Restructured Loans
   
Loans Past Due 90 Days or More and Still Accruing
 
Real Estate:
                 
Real estate – construction and land development
  $ 30,744     $ 6,207       -  
Real estate mortgage – residential
    14,578       4,894       -  
Real estate mortgage – farmland and other commercial enterprises
    13,831       8,024       -  
Commercial:
                       
Commercial and industrial
    386       -       -  
Lease financing
    124       -       -  
Consumer:
                       
Secured
    80       -       -  
Unsecured
    12       -     $ 1  
Total
  $ 59,755     $ 19,125     $ 1  

The Company has allocated $503 thousand of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2012.  The Company has no commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

During the current period ending March 31, 2012, the Company had no loans that were modified as  troubled debt restructurings. The Company also had no restructured credits during the same time period for which there was a payment default within twelve months following the modification.

The tables below present an age analysis of past due loans 30 days or more by class of loans as of the dates indicated. Past due loans that are also classified as nonaccrual are included in their respective past due category.

March 31, 2012 (In thousands)
 
30-89 Days Past Due
   
90 Days or More Past Due
   
Total
   
Current
   
Total Loans
 
Real Estate:
                             
Real estate – construction and land development
   -     $ 20,782     $ 20,782     $ 97,646     $ 118,428  
Real estate mortgage – residential
  $ 2,411       12,122       14,533       424,857       439,390  
Real estate mortgage – farmland and other commercial enterprises
    9,161       11,285       20,446       353,315       373,761  
Commercial:
                                       
Commercial and industrial
    66       608       674       47,436       48,110  
States and political subdivisions
    -       -       -       23,189       23,189  
Lease financing, net
    23       186       209       5,402       5,611  
Other
    26       -       26       19,039       19,065  
Consumer:
                                       
Secured
    126       102       228       12,028       12,256  
Unsecured
    17       4       21       6,730       6,751  
Total
  $ 11,830     $ 45,089     $ 56,919     $ 989,642     $ 1,046,561  

December 31, 2011 (In thousands)
 
30-89 Days Past Due
   
90 Days or More Past Due
   
Total
   
Current
   
Total Loans
 
Real Estate:
                             
Real estate – construction and land development
  $ 3,343     $ 18,970     $ 22,313     $ 97,676     $ 119,989  
Real estate mortgage – residential
    5,836       7,352       13,188       432,276       445,464  
Real estate mortgage – farmland and other commercial enterprises
    1,684       12,497       14,181       370,150       384,331  
Commercial:
                                       
Commercial and industrial
    98       300       398       48,373       48,771  
States and political subdivisions
    -       -       -       23,601       23,601  
Lease financing, net
    80       96       176       6,976       7,152  
Other
    29       -       29       21,406       21,435  
Consumer:
                                       
Secured
    200       17       217       13,997       14,214  
Unsecured
    61       5       66       7,085       7,151  
Total
  $ 11,331     $ 39,237     $ 50,568     $ 1,021,540     $ 1,072,108  

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends and conditions. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes large-balance loans and non-homogeneous loans, such as commercial real estate and certain residential real estate loans. Loan rating grades, as described further below, are assigned based on a continuous process. The Company uses the following definitions for its risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the borrower’s repayment ability, weaken the collateral or inadequately protect the Company’s credit position at some future date. These credits pose elevated risk, but their weaknesses do not yet justify a substandard classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent of those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above which are analyzed individually as part of the above described process are considered to be pass rated loans.  Based on the most recent analysis performed, the risk category of loans by class of loans is as follows for the dates indicated.

   
Real Estate
   
Commercial
 
March 31, 2012
(In thousands)
 
Real Estate-Construction and Land Development
   
Real Estate Mortgage-Residential
   
Real Estate Mortgage-Farmland and Other Commercial Enterprises
   
Commercial and Industrial
   
States and Political Subdivisions
   
Lease Financing
   
Other
 
Credit risk profile by internally assigned rating grades:
                                         
Pass
  $ 67,007     $ 383,285     $ 296,530     $ 42,312     $ 23,189     $ 5,449     $ 18,050  
Special Mention
    7,754       19,168       24,044       4,429       -       -       1,000  
Substandard
    43,450       35,739       51,528       1,267       -       162       15  
Doubtful
    217       1,198       1,659       102       -       -       -  
     Total
  $ 118,428     $ 439,390     $ 373,761     $ 48,110     $ 23,189     $ 5,611     $ 19,065  

   
Real Estate
   
Commercial
 
December 31, 2011
(In thousands)
 
Real Estate-Construction and Land Development
   
Real Estate Mortgage-Residential
   
Real Estate Mortgage-Farmland and Other Commercial Enterprises
   
Commercial and Industrial
   
States and Political Subdivisions
   
Lease Financing
   
Other
 
Credit risk profile by internally assigned rating grades:
                                         
Pass
  $ 65,306     $ 386,134     $ 303,512     $ 41,556     $ 23,601     $ 7,022     $ 20,415  
Special Mention
    7,443       16,585       19,393       2,969       -       6       1,000  
Substandard
    47,091       41,468       59,395       4,103       -       124       20  
Doubtful
    149       1,277       2,031       143       -       -       -  
     Total
  $ 119,989     $ 445,464     $ 384,331     $ 48,771     $ 23,601     $ 7,152     $ 21,435  

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses.  For consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.  The following table presents the consumer loans outstanding based on payment activity as of March 31, 2012 and December 31, 2011.

   
March 31, 2012
   
December 31, 2011
 
   
Consumer
   
Consumer
 
(In thousands)
 
Secured
   
Unsecured
   
Secured
   
Unsecured
 
Credit risk profile based on payment activity:
                       
Performing
  $ 12,160     $ 6,731     $ 14,134     $ 7,138  
Nonperforming
    96       20       80       13  
Total
  $ 12,256     $ 6,751     $ 14,214     $ 7,151