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Loans and the Allowance for Loan Losses (Tables)
 12 Months Ended
Dec. 31, 2012
Loans and the Allowance for Loan Losses [Abstract]  
Outstanding Loans By Segment Type
The following is a summary of the balances in each class of the Company's loan portfolio:


 
December 31,
 
 
December 31,
 
 
2012
 
 
2011
 
 
(in thousands)
 
Mortgage loans on real estate:
 
 
 
 
 
 
Residential 1-4 family
 
$
77,267
 
 
$
77,588
 
Commercial
 
 
274,613
 
 
 
288,108
 
Construction
 
 
12,005
 
 
 
19,981
 
Second mortgages
 
 
14,315
 
 
 
16,044
 
Equity lines of credit
 
 
32,327
 
 
 
34,220
 
Total mortgage loans on real estate
 
 
410,527
 
 
 
435,941
 
Commercial loans
 
 
25,341
 
 
 
35,015
 
Consumer loans
 
 
13,146
 
 
 
17,041
 
Other
 
 
22,119
 
 
 
32,330
 
Total loans
 
 
471,133
 
 
 
520,327
 
Less: Allowance for loan losses
 
 
(7,324
)
 
 
(8,498
)
Loans, net of allowance and deferred fees
 
$
463,809
 
 
$
511,829
 
Credit Quality Information
The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:


Credit Quality Information
 
As of December 31, 2012
 
(in thousands)
 
 
Pass
 
 
OAEM
 
 
Substandard
 
 
Total
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
70,961
 
 
$
1,711
 
 
$
4,595
 
 
$
77,267
 
Commercial
 
 
258,195
 
 
 
6,781
 
 
 
9,637
 
 
 
274,613
 
Construction
 
 
8,651
 
 
 
254
 
 
 
3,100
 
 
 
12,005
 
Second mortgages
 
 
13,488
 
 
 
242
 
 
 
585
 
 
 
14,315
 
Equity lines of credit
 
 
31,704
 
 
 
239
 
 
 
384
 
 
 
32,327
 
Total mortgage loans on real estate
 
 
382,999
 
 
 
9,227
 
 
 
18,301
 
 
 
410,527
 
Commercial loans
 
 
23,997
 
 
 
209
 
 
 
1,135
 
 
 
25,341
 
Consumer loans
 
 
13,042
 
 
 
0
 
 
 
104
 
 
 
13,146
 
Other
 
 
22,119
 
 
 
0
 
 
 
0
 
 
 
22,119
 
Total
 
$
442,157
 
 
$
9,436
 
 
$
19,540
 
 
$
471,133
 



Credit Quality Information
 
As of December 31, 2011
 
(in thousands)
 
 
Pass
 
 
OAEM
 
 
Substandard
 
 
Total
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
74,839
 
 
$
677
 
 
$
2,072
 
 
$
77,588
 
Commercial
 
 
258,610
 
 
 
11,803
 
 
 
17,695
 
 
 
288,108
 
Construction
 
 
19,548
 
 
 
396
 
 
 
37
 
 
 
19,981
 
Second mortgages
 
 
15,212
 
 
 
0
 
 
 
832
 
 
 
16,044
 
Equity lines of credit
 
 
33,390
 
 
 
182
 
 
 
648
 
 
 
34,220
 
Total mortgage loans on real estate
 
 
401,599
 
 
 
13,058
 
 
 
21,284
 
 
 
435,941
 
Commercial loans
 
 
29,455
 
 
 
4,295
 
 
 
1,265
 
 
 
35,015
 
Consumer loans
 
 
16,955
 
 
 
0
 
 
 
86
 
 
 
17,041
 
Other
 
 
32,330
 
 
 
0
 
 
 
0
 
 
 
32,330
 
Total
 
$
480,339
 
 
$
17,353
 
 
$
22,635
 
 
$
520,327
 
Past Due Loans
All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.


Age Analysis of Past Due Loans as of December 31, 2012
 
 
30 - 59 Days Past Due
 
 
60 - 89 Days Past Due
 
 
90 or More Days Past Due
 
 
Total Past Due
 
 
Total Current Loans (1)
 
 
Total
Loans
 
 
Recorded Investment > 90 Days Past Due and
Accruing
 
 
(in thousands)
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
1,115
 
 
$
0
 
 
$
3,783
 
 
$
4,898
 
 
$
72,369
 
 
$
77,267
 
 
$
348
 
Commercial
 
 
207
 
 
 
0
 
 
 
724
 
 
 
931
 
 
 
273,682
 
 
 
274,613
 
 
 
0
 
Construction
 
 
140
 
 
 
0
 
 
 
2,925
 
 
 
3,065
 
 
 
8,940
 
 
 
12,005
 
 
 
0
 
Second mortgages
 
 
113
 
 
 
0
 
 
 
544
 
 
 
657
 
 
 
13,658
 
 
 
14,315
 
 
 
60
 
Equity lines of credit
 
 
90
 
 
 
0
 
 
 
287
 
 
 
377
 
 
 
31,950
 
 
 
32,327
 
 
 
0
 
Total mortgage loans on real estate
 
 
1,665
 
 
 
0
 
 
 
8,263
 
 
 
9,928
 
 
 
400,599
 
 
 
410,527
 
 
 
408
 
Commercial loans
 
 
275
 
 
 
13
 
 
 
122
 
 
 
410
 
 
 
24,931
 
 
 
25,341
 
 
 
25
 
Consumer loans
 
 
85
 
 
 
22
 
 
 
11
 
 
 
118
 
 
 
13,028
 
 
 
13,146
 
 
 
11
 
Other
 
 
54
 
 
 
7
 
 
 
3
 
 
 
64
 
 
 
22,055
 
 
 
22,119
 
 
 
3
 
Total
 
$
2,079
 
 
$
42
 
 
$
8,399
 
 
$
10,520
 
 
$
460,613
 
 
$
471,133
 
 
$
447
 



Age Analysis of Past Due Loans at December 31, 2011
 
 
30 - 59 Days Past Due
 
 
60 - 89 Days Past Due
 
 
90 or More Days Past Due
 
 
Total Past Due
 
 
Total Current Loans (1)
 
 
Total
Loans
 
 
Recorded Investment > 90 Days Past Due and
Accruing
 
 
(in thousands)
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
75
 
 
$
0
 
 
$
627
 
 
$
702
 
 
$
76,886
 
 
$
77,588
 
 
$
0
 
Commercial
 
 
0
 
 
 
0
 
 
 
1,123
 
 
 
1,123
 
 
 
286,985
 
 
 
288,108
 
 
 
510
 
Construction
 
 
148
 
 
 
0
 
 
 
0
 
 
 
148
 
 
 
19,833
 
 
 
19,981
 
 
 
0
 
Second mortgages
 
 
104
 
 
 
0
 
 
 
469
 
 
 
573
 
 
 
15,471
 
 
 
16,044
 
 
 
0
 
Equity lines of credit
 
 
159
 
 
 
0
 
 
 
369
 
 
 
528
 
 
 
33,692
 
 
 
34,220
 
 
 
0
 
Total mortgage loans on real estate
 
 
486
 
 
 
0
 
 
 
2,588
 
 
 
3,074
 
 
 
432,867
 
 
 
435,941
 
 
 
510
 
Commercial loans
 
 
101
 
 
 
0
 
 
 
0
 
 
 
101
 
 
 
34,914
 
 
 
35,015
 
 
 
0
 
Consumer loans
 
 
58
 
 
 
89
 
 
 
2
 
 
 
149
 
 
 
16,892
 
 
 
17,041
 
 
 
2
 
Other
 
 
44
 
 
 
0
 
 
 
5
 
 
 
49
 
 
 
32,281
 
 
 
32,330
 
 
 
5
 
Total
 
$
689
 
 
$
89
 
 
$
2,595
 
 
$
3,373
 
 
$
516,954
 
 
$
520,327
 
 
$
517
 

(1) For purposes of these tables, Total Current Loans includes loans that are 1 - 29 days past due.
Nonaccrual Loans
The following table presents information about loans in nonaccrual status by class of loan as of the dates indicated:


Nonaccrual Loans by Class
 
(in thousands)
 
 
As of December 31,
 
 
2012
 
 
2011
 
Mortgage loans on real estate:
 
 
 
 
 
 
Residential 1-4 family
 
$
3,663
 
 
$
748
 
Commercial
 
 
3,037
 
 
 
6,719
 
Construction
 
 
3,065
 
 
 
0
 
Second mortgages
 
 
484
 
 
 
499
 
Equity lines of credit
 
 
286
 
 
 
368
 
Total mortgage loans on real estate
 
 
10,535
 
 
 
8,334
 
Commercial loans
 
 
97
 
 
 
129
 
Consumer loans
 
 
0
 
 
 
12
 
Total
 
$
10,632
 
 
$
8,475
 
Interest income that would have been recorded under original loan terms
Years Ended December 31,
2012
2011
Reduction in interest income due to nonaccrual loans
$
 552
$
847

 
Troubled Debt Restructurings by Class
The following table presents TDRs during the period indicated, by class of loan:


Troubled Debt Restructurings by Class
 
For the Year Ended December 31, 2012
 
(dollars in thousands)
 
 
Number of Modifications
 
 
Recorded Investment Prior to Modification
 
 
Recorded Investment After Modification
 
 
Current Investment on
December 31, 2012
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
 
1
 
 
$
93
 
 
$
87
 
 
$
80
 
Commercial
 
 
4
 
 
 
5,548
 
 
 
4,836
 
 
 
4,683
 
Second mortgages
 
 
1
 
 
 
111
 
 
 
145
 
 
 
138
 
Total
 
 
6
 
 
$
5,752
 
 
$
5,068
 
 
$
4,901
 


Two loans in the table above were given principal reductions. Two loans were given below-market rates for debt with similar risk characteristics.  Two loans were given both a principal reduction and a below-market rate. TDRs for the previous year, by class of loan, are presented below.


Troubled Debt Restructurings by Class
 
For the Year Ended December 31, 2011
 
(dollars in thousands)
 
 
Number of Modifications
 
 
Recorded Investment Prior to Modification
 
 
Recorded Investment After Modification
 
 
Current Investment on
December 31, 2011
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
 
1
 
 
$
175
 
 
$
175
 
 
$
174
 
Commercial
 
 
3
 
 
 
4,102
 
 
 
3,083
 
 
 
3,012
 
Total mortgage loans on real estate
 
 
4
 
 
 
4,277
 
 
 
3,258
 
 
 
3,186
 
Consumer loans
 
 
1
 
 
 
19
 
 
 
19
 
 
 
18
 
Total
 
 
5
 
 
$
4,296
 
 
$
3,277
 
 
$
3,204
 
Impaired Loans by Class
The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.


Impaired Loans by Class
 
(in thousands)
 
 
As of December 31, 2012
 
 
For the year ended
December 31, 2012
 
 
 
 
 
Recorded Investment
 
 
 
 
 
 
 
 
 
 
 
Unpaid Principal Balance
 
 
Without Valuation Allowance
 
 
With Valuation Allowance
 
 
Associated Allowance
 
 
Average Recorded Investment
 
 
Interest Income
Recognized
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
4,100
 
 
$
681
 
 
$
3,235
 
 
$
226
 
 
$
2,354
 
 
$
136
 
Commercial
 
 
12,459
 
 
 
3,741
 
 
 
5,817
 
 
 
180
 
 
 
10,151
 
 
 
242
 
Construction
 
 
3,782
 
 
 
3,064
 
 
 
0
 
 
 
0
 
 
 
3,320
 
 
 
(9
)
Second mortgages
 
 
695
 
 
 
583
 
 
 
47
 
 
 
5
 
 
 
542
 
 
 
12
 
Equity lines of credit
 
 
370
 
 
 
286
 
 
 
0
 
 
 
0
 
 
 
391
 
 
 
(2
)
Total mortgage loans on real estate
 
$
21,406
 
 
$
8,355
 
 
$
9,099
 
 
$
411
 
 
$
16,758
 
 
$
379
 
Commercial loans
 
 
117
 
 
 
0
 
 
 
97
 
 
 
33
 
 
 
104
 
 
 
(14
)
Consumer loans
 
 
17
 
 
 
17
 
 
 
0
 
 
 
0
 
 
 
26
 
 
 
1
 
Total
 
$
21,540
 
 
$
8,372
 
 
$
9,196
 
 
$
444
 
 
$
16,888
 
 
$
366
 



Impaired Loans by Class
 
(in thousands)
 
 
As of December 31, 2011
 
 
For the year ended
December 31, 2011
 
 
 
 
 
Recorded Investment
 
 
 
 
 
 
 
 
 
 
 
Unpaid Principal Balance
 
 
Without Valuation Allowance
 
 
With Valuation Allowance
 
 
Associated Allowance
 
 
Average Recorded Investment
 
 
Interest Income
Recognized
 
Mortgage loans on real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential 1-4 family
 
$
486
 
 
$
391
 
 
$
91
 
 
$
6
 
 
$
3,753
 
 
$
554
 
Commercial
 
 
8,263
 
 
 
4,734
 
 
 
3,371
 
 
 
968
 
 
 
8,911
 
 
 
456
 
Construction
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
Second mortgages
 
 
520
 
 
 
250
 
 
 
258
 
 
 
31
 
 
 
603
 
 
 
24
 
Equity lines of credit
 
 
371
 
 
 
369
 
 
 
0
 
 
 
0
 
 
 
392
 
 
 
21
 
Total mortgage loans on real estate
 
$
9,640
 
 
$
5,744
 
 
$
3,720
 
 
$
1,005
 
 
$
13,659
 
 
$
1,055
 
Commercial loans
 
 
142
 
 
 
19
 
 
 
110
 
 
 
23
 
 
 
130
 
 
 
2
 
Total
 
$
9,782
 
 
$
5,763
 
 
$
3,830
 
 
$
1,028
 
 
$
13,789
 
 
$
1,057
 
Allowance for loan losses by segment
The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
 
(in thousands)
 
For the Twelve Months Ended           
December 31, 2012
 
Commercial
 
 
Real Estate - Construction
 
 
Real Estate - Mortgage
 
 
Consumer
 
 
Other
 
 
Total
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at the beginning of period
 
$
1,011
 
 
$
323
 
 
$
6,735
 
 
$
300
 
 
$
129
 
 
$
8,498
 
     Charge-offs
 
 
(138
)
 
 
(831
)
 
 
(2,554
)
 
 
(259
)
 
 
(187
)
 
 
(3,969
)
     Recoveries
 
 
67
 
 
 
30
 
 
 
162
 
 
 
70
 
 
 
66
 
 
 
395
 
     Provision for loan losses
 
 
(263
)
 
 
665
 
 
 
1,836
 
 
 
93
 
 
 
69
 
 
 
2,400
 
Ending balance
 
$
677
 
 
$
187
 
 
$
6,179
 
 
$
204
 
 
$
77
 
 
$
7,324
 
Ending balance individually evaluated for impairment
 
$
33
 
 
$
0
 
 
$
411
 
 
$
0
 
 
$
0
 
 
$
444
 
Ending balance collectively evaluated for impairment
 
 
644
 
 
 
187
 
 
 
5,768
 
 
 
204
 
 
 
77
 
 
 
6,880
 
Ending balance
 
$
677
 
 
$
187
 
 
$
6,179
 
 
$
204
 
 
$
77
 
 
$
7,324
 
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance individually evaluated for impairment
 
$
97
 
 
$
3,064
 
 
$
14,390
 
 
$
17
 
 
$
0
 
 
$
17,568
 
Ending balance collectively evaluated for impairment
 
 
25,244
 
 
 
8,941
 
 
 
384,132
 
 
 
13,129
 
 
 
22,119
 
 
 
453,565
 
Ending balance
 
$
25,341
 
 
$
12,005
 
 
$
398,522
 
 
$
13,146
 
 
$
22,119
 
 
$
471,133
 



ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS
 
(in thousands)
 
Year ended December 31, 2011
 
Commercial
 
 
Real Estate - Construction
 
 
Real Estate - Mortgage
 
 
Consumer
 
 
Other
 
 
Total
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of year
 
$
799
 
 
$
441
 
 
$
11,498
 
 
$
357
 
 
$
133
 
 
$
13,228
 
     Charge-offs
 
 
(942
)
 
 
0
 
 
 
(7,822
)
 
 
(333
)
 
 
(210
)
 
 
(9,307
)
     Recoveries
 
 
141
 
 
 
0
 
 
 
575
 
 
 
102
 
 
 
59
 
 
 
877
 
     Provision for loan losses
 
 
1,013
 
 
 
(118
)
 
 
2,484
 
 
 
174
 
 
 
147
 
 
 
3,700
 
Ending balance
 
$
1,011
 
 
$
323
 
 
$
6,735
 
 
$
300
 
 
$
129
 
 
$
8,498
 
Ending balance individually evaluated for impairment
 
$
23
 
 
$
0
 
 
$
1,005
 
 
$
0
 
 
$
0
 
 
$
1,028
 
Ending balance collectively evaluated for impairment
 
 
988
 
 
 
323
 
 
 
5,730
 
 
 
300
 
 
 
129
 
 
 
7,470
 
Ending balance
 
$
1,011
 
 
$
323
 
 
$
6,735
 
 
$
300
 
 
$
129
 
 
$
8,498
 
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance individually evaluated for impairment
 
$
129
 
 
$
0
 
 
$
9,464
 
 
$
0
 
 
$
0
 
 
$
9,593
 
Ending balance collectively evaluated for impairment
 
 
34,886
 
 
 
19,981
 
 
 
406,496
 
 
 
17,041
 
 
 
32,330
 
 
 
510,734
 
Ending balance
 
$
35,015
 
 
$
19,981
 
 
$
415,960
 
 
$
17,041
 
 
$
32,330
 
 
$
520,327