LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2013

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Summary of loans outstanding, by classification

Loans outstanding, by classification, are summarized as follows (in thousands):

	June 30,		December 31,
	2013		2012
Commercial, financial, and agricultural	$	17,738	$	23,510
Commercial Real Estate	119,354		125,239
Single-Family Residential	35,397		34,523
Construction and Development	2,395		1,813
Consumer	6,029		5,913
	180,913		190,998
Allowance for loan losses	3,414		3,509
	$	177,499	$	187,489

Summary of activity in allowance for loan losses

Activity in the allowance for loan losses for the six months ended June 30, 2013 and 2012 and the year ended December 31, 2012 is summarized as follows (in thousands):

	June 30, 2013			December 31, 2012			June 30, 2012
Balance at beginning of period	$	3,509		$	3,956		$	3,956
Provision for loan losses	275			2,400			1,500
Loans charged-off	(808		)	(3,069		)	(1,216		)
Recoveries on loans previously charged-off	438			222			103
Balance at end of period	$	3,414		$	3,509		$	4,343

Summary of activity in the allowance for loan losses by portfolio segment

Activity in the allowance for loan losses by portfolio segment is summarized as follows (in thousands):

	For the Three Month Period Ended June 30, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	408		$	1,828		$	734		$	186		$	259		$	3,415
Provision for loan losses	(246		)	332			(77		)	(30		)	71			50
Loans charged-off	(1		)	(307		)	(68		)	—			(44		)	(420		)
Recoveries on loans charged-off	7			327			17			—			18			369
Ending Balance	$	168		$	2,180		$	606		$	156		$	304		$	3,414

	For the Six Month Period Ended June 30, 2013
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509
Provision for loan losses	(277		)	346			59			9			138			275
Loans charged-off	(6		)	(373		)	(284		)	(30		)	(115		)	(808		)
Recoveries on loans charged-off	18			354			28			—			38			438
Ending Balance	$	168		$	2,180		$	606		$	156		$	304		$	3,414

	For the Three Month Period Ended June 30, 2012
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	385		$	1,996		$	770		$	568		$	208		$	3,927
Provision for loan losses	(79		)	502			255			6			66			750
Loans charged-off	—			(35		)	(243		)	(58		)	(57		)	(393		)
Recoveries on loans charged-off	7			1			37			—			14			59
Ending Balance	$	313		$	2,464		$	819		$	516		$	231		$	4,343

	For the Six Month Period Ended June 30, 2012
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	394		$	2,206		$	696		$	449		$	211		$	3,956
Provision for loan losses	(89		)	916			459			154			60			1,500
Loans charged-off	(7		)	(666		)	(376		)	(87		)	(80		)	(1,216		)
Recoveries on loans charged-off	15			8			40			—			40			103
Ending Balance	$	313		$	2,464		$	819		$	516		$	231		$	4,343

	For the Year Ended December, 2012
	Commercial			Commercial Real Estate			Single-family Residential			Construction & Development			Consumer			Total
Beginning balance	$	394		$	2,206		$	696		$	449		$	211		$	3,956
Provision for loan losses	27			1,761			646			(140		)	106			2,400
Loans charged-off	(21		)	(2,138		)	(625		)	(136		)	(149		)	(3,069		)
Recoveries on loans charged-off	33			24			86			4			75			222
Ending Balance	$	433		$	1,853		$	803		$	177		$	243		$	3,509

Schedule of allocation of allowance for loan losses by portfolio segment

The allocation of the allowance for loan losses by portfolio segment was as follows (in thousands):

	At June 30, 2013
	Commercial		Commercial Real Estate		Single- family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	282	$	—	$	—	$	—	$	282
Total specific reserves	—		282		—		—		—		282
General reserves	168		1,898		606		156		304		3,132
Total	$	168	$	2,180	$	606	$	156	$	304	$	3,414
Loans individually evaluated for impairment	$	—	$	13,130	$	360	$	—	$	—	$	13,490
Loans collectively evaluated for impairment	17,738		106,224		35,037		2,395		6,029		167,423
Total	$	17,738	$	119,354	$	35,397	$	2,395	$	6,029	$	180,913

	At December 31, 2012
	Commercial		Commercial Real Estate		Single- family Residential		Construction & Development		Consumer		Total
Specific Reserves:
Impaired loans	$	—	$	319	$	1	$	—	$	—	$	320
Total specific reserves	—		319		1		—		—		320
General reserves	433		1,534		802		177		243		3,189
Total	$	433	$	1,853	$	803	$	177	$	243	$	3,509
Loans individually evaluated for impairment	$	—	$	17,248	$	516	$	278	$	—	$	18,042
Loans collectively evaluated for impairment	23,510		107,991		34,007		1,535		5,913		172,956
Total	$	23,510	$	125,239	$	34,523	$	1,813	$	5,913	$	190,998

Schedule of impaired loans by class of loan

The following table presents impaired loans by class of loan (in thousands):

	At June 30, 2013
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment
Residential:
First mortgages	$	—	$	—	$	—	$	231	$	231
HELOC’s and equity	—		—		—		129		129
Commercial
Secured	—		—		—		—		—
Unsecured	—		—		—		—		—
Commercial Real Estate:
Owner occupied	375		343		6		7,787		7,519
Non-owner occupied	3,452		2,848		276		3,304		2,088
Multi-family	—		—		—		388		332
Construction and Development:
Construction	—		—		—		—		—
Improved Land	—		—		—		—		—
Unimproved Land	—		—		—		—		—
Consumer and Other	—		—		—		—		—
Total	$	3,827	$	3,191	$	282	$	11,839	$	10,299

Schedule of average recorded investment and interest income recognized on impaired loans by class of loan

The following table presents the average recorded investment and interest income recognized on impaired loans by class of loan (in thousands):

	June 30, 2013				June 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	231	$	—	$	—	$	—
HELOC’s and equity	128		17		1,924		19
Commercial
Secured	—		—		—		—
Unsecured	—		—		—		—
Commercial Real Estate:
Owner occupied	8,031		394		5,177		122
Non-owner occupied	5,282		171		7,145		417
Multi-family	364		46		1,872		32
Construction and Development:
Construction	—		—		325		38
Improved Land	—		—		249		4
Unimproved Land	—		—		—		—
Consumer and Other	—		—		—		—
Total	$	14,036	$	628	$	16,692	$	632

	At December 31, 2012
							Impaired Loans - With
	Impaired Loans - With Allowance						no Allowance
	Unpaid Principal		Recorded  Investment		Allowance for Loan Losses Allocated		Unpaid Principal		Recorded Investment		Average Recorded Investment		Interest Income Recognized
Residential:
First mortgages	$	—	$	—	$	—	$	234	$	230	$	231	$	—
HELOC’s and equity	77		77		1		261		209		210		44
Commercial
Secured	—		—		—		—		—		—		—
Unsecured	—		—		—		—		—		—		—
Commercial Real Estate:
Owner occupied	2,856		2,856		293		7,199		7,199		10,116		480
Non-owner occupied	492		319		24		7,056		5,770		6,420		673
Multi-family	388		388		2		716		716		1,053		103
Construction and Development
Construction	—		—		—		120		121		122		55
Improved Land	—		—		—		418		157		169		6
Unimproved Land	—		—		—		—		—		—		—
Consumer and Other	—		—				—		—		—		—
Total	$	3,813	$	3,640	$	320	$	16,004	$	14,402	$	18,321	$	1,361

Schedule of aging analysis of loan portfolio

The following table is an aging analysis of our loan portfolio (in thousands):

	At June 30, 2013
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans  Receivable		Recorded Investment > 90 Days and  Accruing		Nonaccrual
Residential:
First mortgages	$	—	$	1,483	$	2,292	$	3,775	$	22,499	$	26,274	$	—	$	3,242
HELOC’s and equity	194		96		306		596		8,527		9,123		—		572
Commercial:
Secured	1		5		71		77		12,198		12,275		—		71
Unsecured	—		—		—		—		5,463		5,463		—		—
Commercial Real Estate:
Owner occupied	1,086		482		—		1,568		58,859		60,427		—		1,788
Non-owner occupied	39		—		3,671		3,710		43,719		47,429		—		4,079
Multi-family	61		—		—		61		11,437		11,498		—		—
Construction and Development:
Construction	—		—		—		—		1,749		1,749		—		—
Improved Land	—		—		120		120		155		275		—		120
Unimproved Land	—		—		—		—		371		371		—		—
Consumer and Other	58		—		63		121		5,908		6,029		—		63
Total	$	1,439	$	2,066	$	6,523	$	10,028	$	170,885	$	180,913	$	—	$	9,935

	At December 31, 2012
	30- 59 Days Past Due		60- 89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and Accruing		Nonaccrual
Residential:
First mortgages	$	1,550	$	957	$	3,116	$	5,623	$	20,106	$	25,729	$	—	$	3,721
HELOC’s and equity	218		32		291		541		8,253		8,794		—		321
Commercial:
Secured	24		—		5		29		16,827		16,856		—		5
Unsecured	5		—		—		5		6,649		6,654		—		—
Commercial Real Estate:
Owner occupied	1,463		188		394		2,045		55,603		57,648		—		2,029
Non-owner occupied	353		634		3,613		4,600		50,486		55,086		—		4,355
Multi-family	—		—		—		—		12,505		12,505		—		—
Construction and Development:
Construction	767		—		—		767		222		989		—		—
Improved Land	—		—		120		120		331		451		—		120
Unimproved Land	—		—		157		157		216		373		—		157
Consumer and Other	49		43		87		179		5,734		5,913		—		87
Total	$	4,429	$	1,854	$	7,783	$	14,066	$	176,932	$	190,998	$	—	$	10,795

Schedule of loan portfolio by risk rating

The following table presents our loan portfolio by risk rating (in thousands):

	At June 30, 2013
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	26,274	$	22,499	$	—	$	3,775	$	—
HELOC’s and equity	9,123		8,506		60		557		—
Commercial:
Secured	12,275		12,230		29		16		—
Unsecured	5,463		5,463		—		—		—
Commercial Real Estate:
Owner occupied	60,427		48,884		7,414		4,129		—
Non-owner occupied	47,429		37,751		3,973		5,705		—
Multi-family	11,498		10,457		648		393		—
Construction and Development:
Construction	1,749		1,629		120		—		—
Improved Land	275		228		—		47		—
Unimproved Land	371		—		—		371		—
Consumer and Other	6,029		5,952		9		62		6
Total	$	180,913	$	153,599	$	12,253	$	15,055	$	6

	At December 31, 2012
	Total		Pass Credits		Special Mention		Substandard		Doubtful
Residential:
First mortgages	$	25,729	$	21,656	$	—	$	4,073	$	—
HELOC’s and equity	8,794		7,745		583		466		—
Commercial:
Secured	16,856		16,788		37		31		—
Unsecured	6,654		5,456		1,185		13		—
Commercial Real Estate:
Owner occupied	57,648		44,252		9,551		3,845		—
Non-owner occupied	55,086		45,127		3,248		6,711		—
Multi-family	12,505		10,636		1,413		456		—
Construction and Development:
Construction	989		869		120		—		—
Improved Land	451		245		—		206		—
Unimproved Land	373		—		—		373		—
Consumer and Other	5,913		5,801		—		87		25
Total	$	190,998	$	158,575	$	16,137	$	16,261	$	25

Schedule of troubled debt restructurings

During the three and six months ended June 30, 2013, the Bank modified 5 and 8 loans that were considered to be troubled debt restructurings.

We extended the terms and decreased the interest rate on 3 and 6 loans during the three and six months ended June 30, 2013.

We decreased the interest rate on 2 and 2 loans during the three and six months ednded June 30, 2013. (dollars in thousands)

Extended Terms and Decreased Interest Rate

	Three months ended June 30, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential mortgages	2	$	335	$	346
Commercial Real Estate:
Non-owner occupied	1	190		196
Total	3	$	525	$	542

	Six months ended June 30, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential mortgages	2	$	335	$	346
Commercial Real Estate:
Owner occupied	2	252		258
Non-owner occupied	2	1,196		1,197
Total	6	$	1,783	$	1,801
Decreased Interest Rate Only

	Three months ended June 30, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential mortgages	2	$	140	$	140
Total	2	$	140	$	140

	Six months ended June 30, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential mortgages	2	$	140	$	140
Total	2	$	140	$	140

During the three and six months ended June 30, 2012, the Bank modified 2 and 5 loans, respectively that were considered to be troubled debt restructurings. We extended the terms and decreased the interest rate on all modified loans (dollar in thousands).

	Three months ended June 30, 2012
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential:
First mortgages	1	$	235	$	244
Commercial Real Estate:
Owner occupied	1	1,001		1,017
Total	2	$	1,236	$	1,261

	Six months ended June 30, 2012
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Troubled Debt Restructurings
Residential:
First mortgages	1	$	235	$	244
Commercial Real Estate:
Owner occupied	2	2,634		2,711
Non-owner occupied	2	947		953
Total	5	$	3,816	$	3,908