Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2013

Loans and the Allowance for Loan Losses [Abstract]

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	March 31,			December 31,
	2013			2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	76,650		$	77,267
Commercial		271,246			274,613
Construction		11,953			12,005
Second mortgages		13,799			14,315
Equity lines of credit		32,173			32,327
Total mortgage loans on real estate		405,821			410,527
Commercial loans		27,464			25,341
Consumer loans		11,955			13,146
Other		12,270			22,119
Total loans		457,510			471,133
Less: Allowance for loan losses		(7,259	)		(7,324	)
Loans, net of allowance and deferred fees	$	450,251		$	463,809

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 March 31, 2013
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	69,579	$	1,643	$	5,428	$	76,650
Commercial		254,519		4,212		12,515		271,246
Construction		8,791		177		2,985		11,953
Second mortgages		12,289		1,178		332		13,799
Equity lines of credit		31,597		192		384		32,173
Total mortgage loans on real estate		376,775		7,402		21,644		405,821
Commercial loans		26,092		148		1,224		27,464
Consumer loans		11,875		0		80		11,955
Other		12,270		0		0		12,270
Total	$	427,012	$	7,550	$	22,948	$	457,510

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

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 March 31, 2013
	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	$	497	$	108	$	3,551	$	4,156	$	72,494	$	76,650	$	88
Commercial		1,948		0		721		2,669		268,577		271,246		0
Construction		35		0		2,880		2,915		9,038		11,953		0
Second mortgages		25		0		210		235		13,564		13,799		38
Equity lines of credit		89		0		287		376		31,797		32,173		0
Total mortgage loans on real estate		2,594		108		7,649		10,351		395,470		405,821		126
Commercial loans		10		48		0		58		27,406		27,464		0
Consumer loans		110		24		0		134		11,821		11,955		0
Other		41		7		4		52		12,218		12,270		4
Total	$	2,755	$	187	$	7,653	$	10,595	$	446,915	$	457,510	$	130

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

Nonaccrual Loans

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class

	March 31, 2013		December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	3,635	$	3,663
Commercial		2,989		3,037
Construction		2,880		3,065
Second mortgages		172		484
Equity lines of credit		287		286
Total mortgage loans on real estate		9,963		10,535
Commercial loans		21		97
Consumer loans		4		0
Total	$	9,988	$	10,632

Interest income that would have been recorded under original loan terms

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Quarter Ended March 31,
	2013		2012
	(in thousands)
Interest income that would have been recorded under original loan terms	$	140	$	275
Actual interest income recorded for the period		20		32
Reduction in interest income on nonaccrual loans	$	120	$	243

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 Three Months Ended March 31, 2013
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on March 31, 2013
Mortgage loans on real estate:
Residential 1-4 family		1	$	391	$	391	$	391
Commercial		1		207		207		207
Total		2	$	598	$	598	$	598

Troubled Debt Restructurings by Class
For the Three Months Ended March 31, 2012
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on March 31, 2012
Mortgage loans on real estate:
Residential 1-4 family		1	$	93	$	60	$	57
Commercial		1		539		506		474
Second mortgages		4		689		498		474
Total		6	$	1,321	$	1,064	$	1,005

Restructurings that Subsequently Defaulted

The following tables presents TDRs for which there was a payment default where the default occurred within twelve months of restructuring, as of the dates indicated:

Restructurings that Subsequently Defaulted
As of March 31, 2013
(in thousands)
	Recorded Investment in Defaulting Loans
Mortgage loans on real estate:
Commercial	$	1,855

Restructurings that Subsequently Defaulted
As of March 31, 2012
(in thousands)
	Recorded Investment
Mortgage loans on real estate:	in Defaulting Loans
Residential 1-4 family	$ 57
Second mortgages	474
Total mortgage loans on real estate	531
Total	$ 531

Impaired Loans by Class

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) 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 March 31, 2013								For the three months ended March 31, 2013
			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	$	5,396	$	1,952	$	3,166	$	200	$	5,186	$	14
Commercial		13,770		4,820		6,022		910		10,954		148
Construction		3,639		2,880		0		0		2,898		0
Second mortgages		1,358		269		1,024		53		1,303		14
Equity lines of credit		449		287		50		50		336		1
Total mortgage loans on real estate	$	24,612	$	10,208	$	10,262	$	1,213	$	20,677	$	177
Commercial loans		21		21		0		0		25		0
Consumer loans		20		20		0		0		20		1
Total	$	24,653	$	10,249	$	10,262	$	1,213	$	20,722	$	178

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

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 Three Months Ended March 31, 2013	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Charge-offs		(106	)		(64	)		(169	)		(31	)		(48	)		(418	)
Recoveries		29			3			84			21			16			153
Provision for loan losses		579			47			(393	)		(14	)		(19	)		200
Ending balance	$	1,179		$	173		$	5,701		$	180		$	26		$	7,259
Ending balance individually evaluated for impairment	$	0		$	0		$	1,213		$	0		$	0		$	1,213
Ending balance collectively evaluated for impairment		1,179			173			4,488			180			26			6,046
Ending balance	$	1,179		$	173		$	5,701		$	180		$	26		$	7,259
Loan Balances:
Ending balance individually evaluated for impairment	$	21		$	2,880		$	17,590		$	20		$	0		$	20,511
Ending balance collectively evaluated for impairment		27,443			9,073			376,278			11,935			12,270			436,999
Ending balance	$	27,464		$	11,953		$	393,868		$	11,955		$	12,270		$	457,510

For the Year 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