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Loans Receivable
 12 Months Ended
Dec. 31, 2012
Loans Receivable [Abstract]  
Loans Receivable
3.   Loans Receivable

The following table summarizes the Company’s loans receivable as of December 31:

 

                     
(In thousands)   2012          2011  

Mortgage loans:

                    

Residential real estate

                    

Single family

     $ 326,005           $ 312,723  

Construction

     46,418           45,363  

Multi family

     33,472           32,370  
   

 

 

        

 

 

  

Total residential real estate

     405,895           390,456  

Commercial real estate

                    

Commercial

     81,077           83,447  

Construction

     15,878           17,307  
   

 

 

        

 

 

  

Total commercial real estate

     96,955           100,754  
   

 

 

        

 

 

  

Subtotal mortgage loans

     502,850           491,210  
   

 

 

        

 

 

  

Other loans:

                    

Consumer loans

                    

Home equity loans

     80,418           72,493  

Dealer auto and RV loans

     46,571           47,039  

Other loans

     7,896           9,255  
   

 

 

        

 

 

  

Total consumer loans

     134,885           128,787  

Commercial business

     54,445           50,337  
   

 

 

        

 

 

  

Subtotal other loans

     189,330           179,124  
   

 

 

        

 

 

  

Total loans receivable

     692,180           670,334  

Less:

                    

Allowance for loan losses

     6,709           6,537  

Deferred loan fees and net discounts

     (1,862 )          (1,852 ) 

Loans in process

     15,247           16,728  
   

 

 

        

 

 

  

Net loans receivable

     $ 672,086           $ 648,921  
   

 

 

        

 

 

  
   

 

 

        

 

 

  

The Company conducts its business through 23 offices in Allegheny, Beaver, Butler and Lawrence counties in Pennsylvania which also serves as its primary lending area. Management does not believe it has significant concentrations of credit risk to any one group of borrowers given its underwriting and collateral requirements.

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, The Company has segmented certain loans in the portfolio by product type. Loans are segmented into the following pools: commercial business loans, commercial real estate loans, residential real estate loans and consumer loans. The Company sub-segments residential real estate loans into the following three classes: single family, construction and multi-family. Commercial real estate is sub-segmented into commercial and construction classes. The Company also sub-segments the consumer loan portfolio into the following three classes: home equity, dealer automobile and recreational vehicle (RV) and other consumer loans. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance allocations. These historical loss percentages are calculated over a three year period for all portfolio segments. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed for each portfolio segment:

 

  •  

Levels of and trends in delinquencies and nonaccruals

 

  •  

Trends in volume and terms

 

  •  

Changes in lending policies and procedures

 

  •  

Volatility of losses within each risk category

 

  •  

Loans and Lending staff acquired through acquisition

 

  •  

Economic trends

 

  •  

Concentrations of credit

 

  •  

Experience depth and ability of management

These qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the portfolio. During 2012, the qualitative factors for changes in levels of and trends in delinquencies were increased for residential mortgages and commercial loans. Changes in portfolio volumes in 2012 resulted in an increase to the related factors for residential mortgages, commercial loans and consumer loans. The changes in portfolio volumes resulted in a decrease to the related factors for commercial mortgages. During 2012, the qualitative factors for volatility of portfolio losses were unchanged for all loans based upon the calculated volatility. The changes to economic trends for commercial mortgages decreased during 2012, based on an improvement in factors relating to this type of lending.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Loans by Segment

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the Statement of Financial Condition date. The Company considers the allowance for loan losses of $6.7 million adequate to cover loan losses inherent in the loan portfolio, at December 31, 2012. The following tables present by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the year ended December 31, 2012 and 2011:

 

                                                 
As of December 31, 2012                                          
(Dollar amounts in thousands)                  
     Commercial     Commercial
Real Estate		     Consumer     Residential     Unallocated     Total  

Allowance for loan losses:

                                                

Beginning balance

     $ 384       $ 2,442       $ 1,045       $ 2,115       $ 551       $ 6,537  

Charge-offs

     32       163       562       289       -       1,046  

Recoveries

     -       -       101       17       -       118  

Provision

     21       85       40       954       -       1,100  

Reallocations

     177       (289 )      407       (256 )      (39 )      -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

     $ 550       $ 2,075       $ 1,031       $ 2,541       $ 512       $ 6,709  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 
As of December 31, 2011                                          
(Dollar amounts in thousands)                  
     Commercial     Commercial
Real Estate		     Consumer     Residential     Unallocated     Total  

Allowance for loan losses:

                                                

Beginning balance

     $ 784       $ 1,831       $ 1,125       $ 2,573       $ 234       $ 6,547  

Charge-offs

     187       -       478       709       -       1,374  

Recoveries

     25       -       160       49       -       234  

Provision

     -       125       275       655       75       1,130  

Reallocations

     (238 )      486       (37 )      (453 )      242       -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

     $ 384       $ 2,442       $ 1,045       $ 2,115       $ 551       $ 6,537  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 
As of December 31, 2010                                          
(Dollar amounts in thousands)                  
     Commercial     Commercial
Real Estate		     Consumer     Residential     Unallocated     Total  

Allowance for loan losses:

                                                

Beginning balance

     $ 864       $ 1,620       $ 1,093       $ 2,206       $ 244       $ 6,027  

Charge-offs

     58       168       583       177       -       986  

Recoveries

     1       -       98       3       -       102  

Provision

     365       350       464       225       -       1,404  

Reallocations

     (388 )      29       53       316       (10 )      -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

     $ 784       $ 1,831       $ 1,125       $ 2,573       $ 234       $ 6,547  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 
As of December 31, 2012                                          
(Dollar amounts in thousands)                  
     Commercial     Commercial
Real Estate		     Consumer     Residential     Unallocated     Total  

Allowance for loan losses:

                                                

Ending balance: individually evaluated for impairment

     $ -       $ 1,110       $ 54       $ -       $ -       $ 1,164  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

     $ 550       $ 965       $ 977       $ 2,541       $ 512       $ 5,545  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans Receivable:

                                                

Ending Balance

     $ 54,445       $ 96,955       $ 134,885       $ 405,895       $ -       $ 692,180  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: individually evaluated for impairment

     $ -       $ 13,414       $ 327       $ 2,163       $ -       $ 15,904  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

     $ 54,445       $ 83,541       $ 134,558       $ 403,732       $ -       $ 676,276  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 
As of December 31, 2011                                          
(Dollar amounts in thousands)                  
     Commercial     Commercial
Real Estate		     Consumer     Residential     Unallocated     Total  

Allowance for loan losses:

                                                

Ending balance: individually evaluated for impairment

     $ 10       $ 1,489       $ 50       $ -       $ -       $ 1,549  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

     $ 374       $ 953       $ 995       $ 2,115       $
 		  
551		   
  		     $ 4,988  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans Receivable:

                                                

Ending Balance

     $ 50,337       $ 100,754       $ 128,787       $ 390,456       $ -       $ 670,334  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: individually evaluated for impairment

     $ 63       $ 14,023       $ 153       $ 1,364       $ -       $ 15,603  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

     $ 50,274       $ 86,731       $ 128,634       $ 389,092       $ -       $ 654,731  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Credit Quality Information

The following tables represent credit exposures by internally assigned grades for year ended December 31, 2012. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

Substandard – loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

 

 

                                         
As of December 31, 2012                                   
(Dollar amounts in thousands)                                        
     Residential
Real Estate
Multi—family		     Residential
Real Estate
Construction		     Commercial
Real Estate
Commercial		     Commercial
Real Estate
Construction		     Commercial  

Pass

     $ 33,472       $ 41,138       $ 65,696       $ 15,878       $ 53,883  

Special Mention

     -       4,477       1,334       -       527  

Substandard

     -       803       14,047       -       35  

Doubtful

     -       -       -       -       -  

Loss

     -       -       -       -       -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

     $ 33,472       $ 46,418       $ 81,077       $ 15,878       $ 54,445  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                         
As of December 31, 2011                                   
(Dollar amounts in thousands)                                        
     Residential
Real Estate
Multi—family		     Residential
Real Estate
Construction		     Commercial
Real Estate
Commercial		     Commercial
Real Estate
Construction		     Commercial  

Pass

     $ 32,370       $ 38,219       $ 67,119       $ 17,307       $ 50,232  

Special Mention

     -       7,144       2,319       -       57  

Substandard

     -       -       14,009       -       39  

Doubtful

     -       -       -       -       -  

Loss

     -       -       -       -       9  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

     $ 32,370       $ 45,363       $ 83,447       $ 17,307       $ 50,337  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following tables present performing and nonperforming single family residential and consumer loans based on payment activity for the years ended December 31, 2012 and 2011. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days delinquent.

 

                                 
As of December 31, 2012                            
(Dollar amounts in thousands)                                
     Residential
Real Estate
Single Family		     Consumer
Home
Equity		     Dealer
Auto and
RV		     Other
Consumer		  

Performing

     $ 322,662       $ 80,124       $ 46,450       $ 7,787  

Nonperforming

     3,343       294       121       109  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     $ 326,005       $ 80,418       $ 46,571       $ 7,896  
   

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
As of December 31, 2011                            
(Dollar amounts in thousands)                                
     Residential
Real Estate
Single Family		     Consumer
Home
Equity		     Dealer
Auto and
RV		     Other
Consumer		  

Performing

     $ 310,263       $ 72,091       $ 46,907       $ 9,162  

Nonperforming

     2,460       402       132       93  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

     $ 312,723       $ 72,493       $ 47,039       $ 9,255  
   

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

Nonperforming loans also include certain loans that have been modified in TDRs where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

Non-performing loans, which include non-accrual loans and TDRs, were $7.4 million and $13.4 million at December 31, 2012 and 2011, respectively. The TDRs included in non-performing loans amounted to $368,000 and $7.8 million at December 31, 2012 and 2011, respectively. At December 31, 2012 the Company also had $8.2 million of TDR’s that were in compliance with their modified terms.

For non-performing loans, the interest income that would have been recorded under the original terms of such loans and the interest income actually recognized for the years ended December 31, 2012, 2011 and 2010 are summarized below:

 

                         
(Dollar amounts in thousands)                        
             2012                     2011                     2010          

Interest income that would have been recorded

     $ 488       $ 858       $ 1,055  

Interest income recognized

     111       728       781  
   

 

 

    

 

 

    

 

 

  

Interest income foregone

     $ 377       $ 130       $ 274  
   

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

  

The Company is not committed to lend additional funds to debtors whose loans are on non-accrual status.

Age Analysis of Past Due Loans Receivable by Class

The following tables include an aging analysis of the investment of past due loans receivable as of December 31, 2012 and 2011:

 

                                                         
(Dollar amounts in thousands)                                                        
As of December 31, 2012                                                        
     30-59 Days
Past Due		     60-89 Days
Past Due		     90 Days
Or Greater		     Total Past
Due		     Current     Total Loans
Receivable		    

Recorded

Investment >
90 Days and
Accruing

  

Residential real estate

                                                        

Single family

     $ 887       $ 420       $ 3,343       $ 4,650       $ 321,355       $ 326,005       $ -  

Construction

     -       -       -       -       46,418       46,418       -  

Multi-family

     -       -       -       -       33,472       33,472       -  

Commercial Real Estate

                                                        

Commercial

     246       598       3,211       4,055       77,022       81,077       -  

Construction

     -       -       -       -       15,878       15,878       -  

Consumer

                                                        

Consumer—home equity

     219       -       223       442       79,976       80,418       -  

Consumer—dealer auto and RV

     771       230       104       1,105       45,466       46,571       -  

Consumer—other

     70       12       109       191       7,705       7,896       -  

Commercial

     -       2       35       37       54,408       54,445       -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     $ 2,193       $ 1,262       $ 7,025       $ 10,480       $ 681,700       $ 692,180       $ -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                         
(Dollar amounts in thousands)                                                        
As of December 31, 2011                                                        
     30-59 Days
Past Due		     60-89 Days
Past Due		     90 Days
Or Greater		     Total Past
Due		     Current     Total Loans
Receivable		    

Recorded

Investment >

90 Days and
Accruing

  

Residential real estate

                                                        

Single family

     $ 464       $ 2,933       $ 2,460       $ 5,857       $ 306,866       $ 312,723       $ -  

Construction

     -       -       -       -       45,363       45,363       -  

Multi-family

     -       -       -       -       32,370       32,370       -  

Commercial Real Estate

                                                        

Commercial

     48       1,507       2,629       4,184       79,263       83,447       -  

Construction

     -       -       -       -       17,307       17,307       -  

Consumer

                                                        

Consumer - home equity

     143       9       249       401       72,092       72,493       -  

Consumer - dealer auto and RV

     698       101       132       931       46,108       47,039       -  

Consumer - other

     98       23       93       214       9,041       9,255       -  

Commercial

     59       -       54       113       50,224       50,337       -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     $ 1,510       $ 4,573       $ 5,617       $ 11,700       $ 658,634       $ 670,334       $ -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Impaired Loans

Management considers commercial loans, multi-family, residential real estate construction and commercial real estate loans which are 90 days or more past due to be impaired. Larger commercial loans and commercial real estate loans which are 60 days or more past due are selected for impairment testing. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the fair value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through a provision for loan loss estimate or a charge-off to the allowance for loan losses.

The Company collectively reviews all other residential real estate and consumer loans for impairment.

 

The following tables include the recorded investment and unpaid principal balances for impaired loans receivable as of December 31, 2012 and 2011 with the associated allowance for loan losses amount, if applicable.

 

                         
(Dollar amounts in thousands)                        
       
As of December 31, 2012                        
     Recorded
Investment		    

Unpaid

Principal
Balance

     Related
Allowance		  

With no related allowance recorded:

                        

Commercial real estate

     $ 5,433       $ 5,540       $ -    

Residential single family

     1,360       1,360       -    

Residential construction loans

     803       803       -    

Consumer loans
Home Equity

     130       130       -    

Dealer auto and RV

     14       14       -    

With an allowance recorded:

                        

Commercial real estate

     7,981       8,144       1,110  

Consumer loans
Home equity

     179       179       50  

Dealer auto and RV

     4       4       4  

Total:

                        

Commercial Real Estate

     13,414       13,684       1,110  

Consumer

     327       327       54  

Residential single family

     1,360       1,360       -    

Residential construction loans

     803       803       -    
   

 

 

    

 

 

    

 

 

  

Total

     15,904       16,174       1,164  
   

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

  

 

                         
(Dollar amounts in thousands)                        
       
As of December 31, 2011                        
     Recorded
Investment		    

Unpaid

Principal
Balance

     Related
Allowance		  

With no related allowance recorded:

                        

Commercial real estate

     $ 5,568       $ 5,675       $ -    

Residential single family

     1,364       1,364       -    

Commercial business loans

     39       39       -    

With an allowance recorded:

                        

Commercial real estate

     8,454       8,454       1,489  

Consumer loans
Home equity

     153       153       50  

Commercial business loans

     25       25       10  

Total:

                        

Commercial Real Estate

     14,022       14,129       1,489  

Consumer

     153       153       50  

Residential single family

     1,364       1,364          

Commercial

     64       64       10  
   

 

 

    

 

 

    

 

 

  

Total

     15,603       15,710       1,549  
   

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

  

 

The following include the average recorded investment and interest income recognized on the loans considered to be impaired during the years ended December 31, 2012, 2011 and 2010:

 

                                                 
(Dollar amounts in thousands)                     
       
As of December 31, 2012   2012     2011     2010  
   

 

 

    

 

 

    

 

 

  
     Average
Recorded
Investment		     Interest
Income
Recognized		     Average
Recorded
Investment		     Interest
Income
Recognized		     Average
Recorded
Investment		     Interest
Income
Recognized		  

With no related allowance recorded:

                                                

Commercial real estate

     $ 5,473       $ 228       $ 1,416       $ 302       $ 732       $ 57  

Commercial business loans

     -       -       68       10       195       4  

Residential single family

     1,362       9       1,207       61       -       -  

Residential construction loans

     512       41       -       -       -       -  

Consumer loans

                                                

Home Equity

     57       11       -       -       -       -  

Dealer auto and RV

     3       3       -       -       -       -  

With an allowance recorded:

                                                

Commercial real estate

                                                

Commercial real estate

     8,186       406       7,478       544       1,198       564  

Consumer loans

                                                

Home equity

     166       12       154       9       24       10  

Dealer auto and RV

     1       1       -       -       -       -  

Commercial business loans

     -       -       122       3       75       21  

Total:

                                                

Commercial Real Estate

     13,659       634       8,894       846       1,930       621  

Consumer

     227       27       154       9       24       10  

Residential single family

     1,362       9       1,207       61       -       -  

Residential construction loans

     512       41       -       -       -       -  

Commercial business loans

     -       -       190       13       270       25  

Nonaccrual Loans

Loans are considered nonaccrual upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed in nonaccrual status, previously accrued but unpaid interest is deducted from interest income.

The following table sets forth the loans receivable on nonaccrual status as of December 31, 2012 and December 31, 2011. The balances are presented by class of loans.

 

                 
(Dollar amounts in thousands)         
             2012                     2011          

Commercial

     $ 35       $ 54  

Commercial Real Estate

     3,432       10,237  

Consumer

                

Consumer - Home Equity

     293       402  

Consumer - Dealer auto and RV

     121       132  

Consumer - other

     109       93  

Residential

     3,403       2,460  
   

 

 

    

 

 

  

Total

     $ 7,393       $ 13,378  
   

 

 

    

 

 

  
   

 

 

    

 

 

  

 

Modifications

The Company’s loan portfolio also includes TDR’s, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The following table includes the recorded investment and number of modifications for modified loans, as of December 31, 2012 and 2011. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured.

 

                                                 
As of December 31, 2012                                          
     
(Dollar amounts in thousands)            
          Pre-Modification Recorded Investment  
     Number of
Contracts		     Pre-Modification
Outstanding
Recorded
Investment		     Maturity Date
Extension		    

Deferral of

Principal Payments

         Other             Total      

Troubled Debt Restructurings

                                                

Residential Construction

     4     $ 1,053     $ 1,053     $ -     $ -     $ 1,053  

Commercial Real Estate

     2       198       198       -       -       198  

Consumer

                                                

Home equity

     7       168       168       -       -       168  

Dealer auto and RV

     4       18       18       -       -       18  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Troubled Debt Restructurings

     17     $ 1,437     $ 1,437     $ -     $ -     $ 1,437  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                 
As of December 31, 2011                                          
     
(Dollar amounts in thousands)            
                Pre-Modification Recorded Investment  
     Number of
Contracts		    

Pre-Modification

Outstanding
Recorded
Investment

     Maturity Date
Extension		     Deferral of
Principal Payments		         Other             Total      

Troubled Debt Restructurings

                                                

Residential Construction

     -     $ -     $ -     $ -     $ -     $ -  

Commercial Real Estate

     3       7,372       -       7,305       125       7,430  

Consumer

                                                

Home equity

     -       -       -       -       -       -  

Dealer auto and RV

     -       -       -       -       -       -  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Troubled Debt Restructurings

     3     $ 7,372     $ -     $ 7,305     $ 125     $ 7,430  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The Company did not have any TDR’s that defaulted subsequent to their modification during the periods reported.