XML 61 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Allowance for Loan Losses
 9 Months Ended
Sep. 30, 2012
Allowance for Loan Losses [Abstract]  
Allowance for Loan Losses

Note 6. Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, the financial condition of borrowers, the value of collateral securing loans and other relevant factors.

The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

 

                                 
    Three months ended
September 30,		     Nine months ended
September 30,		  
    2012     2011     2012     2011  
    (in thousands)  

Allowance for loan losses, beginning of period

   $ 17,979     $ 15,915     $ 16,574     $ 14,053  

Loans charged off

     (728 )      (1,283 )      (1,787 )      (2,252 ) 

Recoveries on loans previously charged-off

     157       170       621       601  
   

 

 

    

 

 

    

 

 

    

 

 

  

Net charge-offs

     (571 )      (1,113 )      (1,166 )      (1,651 ) 

Provision charged to expense

     1,250       1,200       3,250       3,600  
   

 

 

    

 

 

    

 

 

    

 

 

  

Allowance for loan losses, end of period

   $ 18,658     $ 16,002     $ 18,658     $ 16,002  
   

 

 

    

 

 

    

 

 

    

 

 

  

Further information pertaining to the allowance for loan losses for the three months ending September 30, 2012 follows:

 

                                                                 
    Construction
and  land
development		     Commercial
and
industrial		     Commercial
real
estate		     Residential
real
estate		     Consumer
and other		     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                                
                 

Balance at June 30, 2012

   $ 2,889     $ 3,466     $ 7,754     $ 1,793     $ 293     $ 681     $ 1,103     $ 17,979  

Charge-offs

     —         (532 )      —         (49 )      (147 )      —         —         (728 ) 

Recoveries

     —         38       2       2       99       16       —         157  

Provision

     140       133       967       240       52       176       (458 )      1,250  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at September 30, 2012

   $ 3,029     $ 3,105     $ 8,723     $ 1,986     $ 297     $ 873     $ 645     $ 18,658  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Further information pertaining to the allowance for loan losses for nine months ending September 30, 2012 follows:

 

                                                                 
    Construction
and  Land
Development		     Commercial
and
Industrial		     Commercial
Real
Estate		     Residential
Real
Estate		     Consumer     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                                

Balance at December 31, 2011

   $ 2,893     $ 3,139     $ 6,566     $ 1,886     $ 356     $ 704     $ 1,030     $ 16,574  

Charge-offs

     —         (931 )      —         (110 )      (587 )      (159 )      —         (1,787 ) 

Recoveries

     —         243       5       11       346       16       —         621  

Provision

     136       654       2,152       199       182       312       (385 )      3,250  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance at September 30, 2012

   $ 3,029     $ 3,105     $ 8,723     $ 1,986     $ 297     $ 873     $ 645     $ 18,658  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans deemed to be impaired

   $ 1,000     $ 455     $ 434     $ 127     $ —       $ 97     $ —         2,113  

Amount of allowance for loan losses for loans not deemed to be impaired

   $ 2,029     $ 2,650     $ 8,289     $ 1,859     $ 297     $ 776     $ 645     $ 16,545  

Loans:

                                                                

Ending balance

   $ 38,318     $ 78,567     $ 562,252     $ 262,426     $ 6,661     $ 116,699     $ —       $ 1,064,923  

Loans deemed to be impaired

   $ 1,500     $ 1,882     $ 2,302     $ 777     $ —       $ 97     $ —       $ 6,558  

Loans not deemed to be impaired

   $ 36,818     $ 76,685     $ 559,950     $ 261,649     $ 6,661     $ 116,602     $ —       $ 1,058,365  

 

Further information pertaining to the allowance for loan losses for three months ending September 30, 2011 follows:

 

                                                                 
    Construction
and Land
Development		     Commercial
and
Industrial		     Commercial
Real
Estate		     Residential
Real
Estate		     Consumer     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                                                
                 

Balance at June 30, 2011

   $ 2,572     $ 3,575     $ 6,321     $ 1,745     $ 291     $ 775     $ 636     $ 15,915  

Charge-offs

     (900 )      (203 )      —         —         (180 )      —         —         (1,283 ) 

Recoveries

     —         66       —         4       100       —         —         170  

Provision

     1,312       (217 )      (364 )      31       81       8       349       1,200  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at September 30, 2011

   $ 2,984     $ 3,221     $ 5,957     $ 1,780     $ 292     $ 783     $ 985     $ 16,002  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Further information pertaining to the allowance for loan losses for nine months ending September 30, 2011 follows:

 

                                                                 
    Construction
and Land
Development		     Commercial
and
Industrial		     Commercial
Real
Estate		     Residential
Real
Estate		     Consumer     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                                                
                 

Balance at December 31, 2010

   $ 1,752     $ 3,163     $ 5,671     $ 1,718     $ 298     $ 725     $ 726     $ 14,053  

Charge-offs

     (900 )      (585 )      —         (281 )      (485 )      (1 )      —         (2,252 ) 

Recoveries

     —         222       —         19       360       —         —         601  

Provision

     2,132       421       286       324       119       59       259       3,600  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance at September 30, 2011

   $ 2,984     $ 3,221     $ 5,957     $ 1,780     $ 292     $ 783     $ 985     $ 16,002  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans deemed to be impaired

   $ 350     $ 345     $ 227     $ 3     $ —       $ —       $ —         925  

Amount of allowance for loan losses for loans not deemed to be impaired

   $ 2,634     $ 2,876     $ 5,730     $ 1,777     $ 292     $ 783     $ 985     $ 15,077  

Loans:

                                                                

Ending balance

   $ 54,498     $ 84,765     $ 458,858     $ 235,636     $ 6,419     $ 111,131     $ —       $ 951,307  

Loans deemed to be impaired

   $ 1,800     $ 1,778     $ 4,247     $ 483     $ —       $ —       $ —       $ 8,308  

Loans not deemed to be impaired

   $ 52,698     $ 82,987     $ 454,611     $ 235,153     $ 6,419     $ 111,131     $ —       $ 942,999  

 

The Company utilizes a six grade internal loan rating system for commercial real estate, construction and commercial loans as follows:

Loans rated 1-3 (Pass):

Loans in this category are considered “pass” rated loans with low to average risk.

Loans rated 4 (Monitor):

These loans represent classified loans that management is closely monitoring for credit quality. These loans have had or may have minor credit quality deterioration as of September 30, 2012 and December 31, 2011.

Loans rated 5 (Substandard):

Substandard loans represent classified loans that management is closely monitoring for credit quality. These loans have had more significant credit quality deterioration as of September 30, 2012 and December 31, 2011.

Loans rated 6 (Doubtful):

Doubtful loans represent classified loans that management is closely monitoring for credit quality. These loans had more significant credit quality deterioration as of September 30, 2012 and December 31, 2011 and are doubtful for full collection.

Impaired:

Impaired loans represent classified loans that management is closely monitoring for credit quality. A loan is classified as impaired when it is probable that the Company will be unable to collect all amounts due.

The following table presents the Company’s loans by risk rating at September 30, 2012.

 

                         
    Construction
and land
development		     Commercial
and
industrial		     Commercial
real
estate		  
    (Dollars in thousands)  

Grade:

        

1-3 (Pass)

   $ 29,380     $ 76,213     $ 555,721  

4 (Monitor)

     7,438       472       4,229  

5 (Substandard)

     —         —         —    

6 (Doubtful)

     —         —         —    

Impaired

     1,500       1,882       2,302  
   

 

 

    

 

 

    

 

 

  

Total

   $ 38,318     $ 78,567     $ 562,252  
   

 

 

    

 

 

    

 

 

  

The following table presents the Company’s loans by risk rating at December 31, 2011.

 

                         
    Construction
and land
development		     Commercial
and
industrial		     Commercial
real
estate		  
    (Dollars in thousands)  

Grade:

                        

1-3(Pass)

   $ 48,298     $ 80,140     $ 478,186  

4 (Monitor)

     7,021       739       4,748  

5 (Substandard)

     —         —         —    

6 (Doubtful)

     —         —         —    

Impaired

     1,500       1,525       4,561  
   

 

 

    

 

 

    

 

 

  

Total

   $ 56,819     $ 82,404     $ 487,495  
   

 

 

    

 

 

    

 

 

  

The Company utilized payment performance as credit quality indicators for residential real estate, consumer and overdrafts, and the home equity portfolio. The indicators are depicted in the table “aging of past due loans,” below.

 

Further information pertaining to the allowance for loan losses at September 30, 2012 follows:

 

                                                 
    Accruing
30-89  Days
Past Due		     Non Accrual     Accrual
Greater
Than
90 Days		     Total
Past  Due		     Current Loans     Total  
    (Dollars in thousands)  

Construction and land development

   $ —       $ 1,500     $ —       $ 1,500     $ 36,818     $ 38,318  

Commercial and industrial

     1,237       1,268       —         2,505       76,062       78,567  

Commercial real estate

     914       696       —         1,610       560,642       562,252  

Residential real estate

     954       1,890       —         2,844       259,582       262,426  

Consumer and overdrafts

     16       6       —         22       6,639       6,661  

Home equity

     764       98       —         862       115,837       116,699  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 3,885     $ 5,458     $ —       $ 9,343     $ 1,055,580     $ 1,064,923  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Further information pertaining to the allowance for loan losses at December 31, 2011 follows:

 

                                                 
    Accruing
30-89 Days
Past Due		     Non Accrual     Accrual
Greater
Than
90 Days		     Total
Past Due		     Current Loans     Total  
    (Dollars in thousands)  

Construction and land development

   $ —       $ 1,500     $ —       $ 1,500     $ 55,319     $ 56,819  

Commercial and industrial

     1,417       763       18       2,198       80,206       82,404  

Commercial real estate

     2,528       736       —         3,264       484,231       487,495  

Residential real estate

     2,635       2,324       —         4,959       234,348       239,307  

Consumer and overdrafts

     519       9       —         528       7,153       7,681  

Home equity

     171       495       —         666       110,120       110,786  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 7,270     $ 5,827     $ 18     $ 13,115     $ 971,377     $ 984,492  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is impaired, The Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company measures impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The Company’s policy for recognizing interest income on impaired loans is contained within Note 1 of the consolidated financial statements.

 

The following is information pertaining to impaired loans for September 30, 2012:

 

                                                         
    Carrying Value     Unpaid
Principal
Balance		     Required
Reserve		     Average
Carrying Value
for 3 Months
Ending 9/30/12		     Average
Carrying Value
for 9 Months
Ending 9/30/12		     Interest
Income
Recognized
For 3 Months
Ending  9/30/12		     Interest
Income
Recognized
For 9 months
Ending  9/30/12		  
    (Dollars in thousands)  

With no required reserve recorded:

                                                        

Construction and land development

   $ —       $ —       $ —       $ —       $ 450     $ —       $ —    

Commercial and industrial

     635       1,346       —         473       382       —         —    

Commercial real estate

     172       200       —         174       178       —         —    

Residential real estate

     31       31       —         218       152       —         —    

Consumer

     —         —         —         —         —         —         —    

Home equity

     —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 838     $ 1,577     $ —       $ 865     $ 1,162     $ —       $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

With required reserve recorded:

                                                        

Construction and land development

   $ 1,500     $ 3,292     $ 1,000     $ 1,500     $ 1,050     $ —       $ —    

Commercial and industrial

     1,247       1,295       455       1,745       1,492       12       35  

Commercial real estate

     2,130       2,170       434       2,138       3,027       40       84  

Residential real estate

     746       746       127       494       610       1       1  

Consumer

     —         —         —         —         —         —         —    

Home equity

     97       97       97       73       29       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 5,720     $ 7,600     $ 2,113     $ 5,950     $ 6,208     $ 53     $ 120  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

                                                        

Construction and land development

   $ 1,500     $ 3,292     $ 1,000     $ 1,500     $ 1,500     $ —       $ —    

Commercial and industrial

     1,882       2,641       455       2,218       1,874       12       35  

Commercial real estate

     2,302       2,370       434       2,312       3,205       40       84  

Residential real estate

     777       777       127       712       762       1       1  

Consumer

     —         —         —         —         —         —         —    

Home equity

     97       97       97       73       29       —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 6,558     $ 9,177     $ 2,113     $ 6,815     $ 7,370     $ 53     $ 120  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following is information pertaining to impaired loans for September 30, 2011:

 

                                                         
    Carrying Value     Unpaid
Principal
Balance		     Required
Reserve		     Average
Carrying Value
For 3 Months
Ending 9/30/11		     Average
Carrying Value
For 9 Months
Ending 9/30/11		     Interest
Income
Recognized for
3 Months Ending
9/30/11		     Interest
Income
Recognized for
9 Months Ending
9/30/11		  
    (Dollars in thousands)  

With no required reserve recorded:

                                                        

Construction and land development

   $ —       $ —       $ —       $ 1,350     $ 2,940     $ —       $ —    

Commercial and industrial

     642       1,090       —         443       429       1       3  

Commercial real estate

     415       431       —         246       378       —         —    

Residential real estate

     450       450       —         —         —         —         —    

Consumer

     —         —         —         —         —         —         —    

Home equity

     —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 1,507     $ 1,971     $ —       $ 2,039     $ 3,747     $ 1     $ 3  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

With required reserve recorded:

                                                        

Construction and land development

     1,800     $ 3,292     $ 350     $ 2,110     $ 844     $ —       $ —    

Commercial and industrial

     1,136       1,160       345       1,428       1,087       6       10  

Commercial real estate

     3,832       3,858       227       6,738       5,215       82       112  

Residential real estate

     33       33       3       146       68       1       2  

Consumer

     —         —         —         —         —         —         —    

Home equity

     —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 6,801     $ 8,343     $ 925     $ 10,422     $ 7,214     $ 89     $ 124  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

                                                        

Construction and land development

   $ 1,800     $ 3,292     $ 350     $ 3,460     $ 3,784     $ —       $ —    

Commercial and industrial

     1,778       2,250       345       1,871       1,516       7       13  

Commercial real estate

     4,247       4,289       227       6,984       5,593       82       112  

Residential real estate

     483       483       3       146       68       1       2  

Consumer

     —         —         —         —         —         —         —    

Home equity

     —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 8,308     $ 10,314     $ 925     $ 12,461     $ 10,961     $ 90     $ 127  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

There were no troubled debt restructurings occurring during the nine month period ended September 30, 2012.

Troubled Debt Restructurings occurring during the three month period ended September 30, 2011:

 

                         
    Number of
Contracts		     Pre-
modification
outstanding
recorded
investment		     Post-
modification
outstanding
recorded
investment		  
    (Dollars in
thousands)		              

Construction and land development

     —       $ —       $ —    

Commercial and industrial

     1       41       41  

Commercial real estate

     —         —         —    
   

 

 

    

 

 

    

 

 

  

Total

     1     $ 41     $ 41  
   

 

 

    

 

 

    

 

 

  

Troubled Debt Restructurings occurring during the nine month period ended September 30, 2011:

 

                         
    Number of
Contracts		     Pre-
modification
outstanding
recorded
investment		     Post-
modification
outstanding
recorded
investment		  
    (Dollars in
thousands)		              

Construction and land development

     1     $ 39     $ —    

Commercial and industrial

     7       484       454  

Commercial real estate

     4       2,641       2,636  
   

 

 

    

 

 

    

 

 

  

Total

     12     $ 3,164     $ 3,090  
   

 

 

    

 

 

    

 

 

  

There was one troubled debt restructuring, totaling $11,000, during the 9 months ended September 30, 2011, that subsequently defaulted.

 

Troubled Debt Restructurings were identified as a modification in which a concession was granted to a customer who is having financial difficulties. This concession may be below market rate, longer amortization/term, and a lower payment amount. The present value calculation of the modification did not result in an increase in the allowance for these loans beyond any previously established allocations. The loans were modified, for both the commercial and industrial and commercial real estate loans, by reducing interest rates as well as extending terms on the loans. The financial impact of the modifications for performing commercial and industrial loans were $14,368 reduction in principal and $612 increase in interest payments for the quarter ended September 30, 2011 and $21,378 reduction in principal and $103 increase in interest payments for the nine months ended September 30, 2011. The financial impact of the modifications for performing commercial real estate were $8,953 reduction in principal and $11,911 reduction in interest payments for the quarter ended September 30, 2011 and $17,769 reduction in principal and $25,067 reduction in interest payments for the nine months ended September 30, 2011. The financial impact of the modifications for nonperforming was a $7,000 reduction in the carrying value of the loans as a result of payments received under the modified terms of the loans.