LOANS AND LEASES (Tables)

12 Months Ended

Dec. 31, 2013

Major classifications of LHFI are as follows:

	As of December 31,
(In thousands)	2013		2012
Commercial real estate	$	148,293	$	167,115
Construction and land development		45,261		37,215
Commercial and industrial		79,589		40,560
Multi-family		11,737		11,756
Residential real estate		25,535		24,981
Leases		42,524		37,347
Tax certificates		12,716		24,569
Consumer		826		1,139
		366,481		344,682
Less: Deferred loan fees, net*		-		(517	)
Total LHFI, net of unearned income	$	366,481	$	344,165

*For the 2013 period net deferred fees were allocated among the various loan types.

The following tables present risk ratings for each loan portfolio segment at December 31, 2013 and 2012, excluding LHFS.

As of December 31, 2013					Special
(In thousands)	Pass		Pass-Watch		Mention		Substandard		Non-accrual		Total
Commercial real estate	$	99,525	$	32,267	$	11,572	$	2,604	$	2,325	$	148,293
Construction and land development		14,677		16,270		11,095		569		2,650		45,261
Commercial & industrial		50,478		10,508		5,735		9,239		3,629		79,589
Multi-family		10,792		410		535		-		-		11,737
Residential real estate		24,903		-		-		-		632		25,535
Leases		41,325		485		247		-		467		42,524
Tax certificates		12,262		-		-		-		454		12,716
Consumer		750		76		-		-		-		826
Total LHFI	$	254,712	$	60,016	$	29,184	$	12,412	$	10,157	$	366,481

As of December 31, 2012					Special
(In thousands)	Pass		Pass-Watch		Mention		Substandard		Non-accrual		Total
Commercial real estate	$	64,308	$	69,510	$	19,529	$	3,423	$	10,345	$	167,115
Construction and land development		2,139		13,872		16,343		581		4,280		37,215
Commercial & industrial		14,764		10,774		92		9,969		4,961		40,560
Multi-family		9,019		2,034		703		-		-		11,756
Residential real estate		15,125		6,634		602		1,626		994		24,981
Leases		36,755		325		16		-		251		37,347
Tax certificates		23,968		-		-		-		601		24,569
Consumer		926		213		-		-		-		1,139
Subtotal LHFI		167,004		103,362		37,285		15,599		21,432		344,682
Less: Deferred loan fees												(517	)
Total LHFI											$	344,165

The following tables are an aging analysis of past due payments for each loan portfolio segment at December 31, 2013 and 2012, excluding LHFS.

As of December 31, 2013	30-59 Days		60-89 Days		Accruing		Total
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	996	$	-	$	-	$	2,325	$	144,972	$	148,293
Construction and land development		-		-		-		2,650		42,611		45,261
Commercial & industrial		115		49		-		3,629		75,796		79,589
Multi-family		-		-		-		-		11,737		11,737
Residential real estate		458		262		-		632		24,183		25,535
Leases		485		247		-		467		41,325		42,524
Tax certificates		-		-		-		454		12,262		12,716
Consumer		-		-		-		-		826		826
Total LHFI	$	2,054	$	558	$	-	$	10,157	$	353,712	$	366,481

As of December 31, 2012	30-59 Days		60-89 Days		Accruing		Total
(In thousands)	Past Due		Past Due		90+ Days		Non-accrual		Current		Total
Commercial real estate	$	1,548	$	1,486	$	-	$	10,345	$	153,736	$	167,115
Construction and land development		-		-		-		4,280		32,935		37,215
Commercial & industrial		200		-		-		4,961		35,399		40,560
Multi-family		-		-		-		-		11,756		11,756
Residential real estate		562		486		-		994		22,939		24,981
Leases		325		16		-		251		36,755		37,347
Tax certificates		-		-		-		601		23,968		24,569
Consumer		-		-		-		-		1,139		1,139
Subtotal LHFI		2,635		1,988		-		21,432		318,627		344,682
Less: Deferred loan fees												(517	)
Total LHFI											$	344,165

The following table details the composition of the non-accrual loans.

	As of December 31, 2013				As of December 31, 2012
(In thousands)	Loan balance		Specific reserves		Loan balance		Specific reserves
Non-accrual loans held for investment
Commercial real estate	$	2,325	$	331	$	10,345	$	835
Construction and land development		2,650		-		4,280		820
Commercial & industrial		3,629		452		4,961		255
Residential real estate		632		19		994		14
Leases		467		60		251		55
Tax certificates		454		24		601		47
Total non-accrual LHFI	$	10,157	$	886	$	21,432	$	2,026
Non-accrual loans held for sale
Commercial real estate	$	-	$	-	$	1,572	$	-
Total non-accrual LHFS	$	-	$	-	$	1,572	$	-
Total non-accrual loans	$	10,157	$	886	$	23,004	$	2,026

The following is a summary of information pertaining to impaired loans:

	As of December 31,
(In thousands)	2013		2012
Impaired LHFI with a valuation allowance	$	3,835	$	9,405
Impaired LHFI without a valuation allowance		14,671		19,423
Impaired LHFS		-		1,572
Total impaired loans and leases	$	18,506	$	30,400
Valuation allowance related to impaired LHFI	$	886	$	2,026

	For the years ended December 31,
(In thousands)		2013		2012
Average investment in impaired loans and leases	$	24,714	$	39,412
Interest income recognized on impaired loans and leases	$	559	$	366
Interest income recognized on a cash basis on impaired loans and leases	$	27	$	66

The following table details the Company’s TDRs that are on an accrual status and a non-accrual status at December 31, 2013 and 2012.

	As of December 31, 2013
(In thousands)	Number of loans		Accrual Status		Non-Accrual Status		Total TDRs
Commercial real estate		3	$	3,847	$	-	$	3,847
Construction and land development		4		1,257		479		1,736
Commercial & industrial		3		4,420		1,960		6,380
Residential real estate		2		-		121		121
Total		12	$	9,524	$	2,560	$	12,084

	As of December 31, 2012
(In thousands)	Number of loans		Accrual Status		Non-Accrual Status		Total TDRs
Commercial real estate		4	$	1,664	$	854	$	2,518
Construction and land development		4		613		10,063		10,676
Commercial & industrial		2		5,290		2,457		7,747
Residential real estate		2		-		149		149
Total		12	$	7,567	$	13,523	$	21,090

The following table presents newly restructured loans that occurred during the years ended December 31, 2013 and 2012.

	Modifications by type for the year ended December 31, 2013
(Dollars in thousands)	Number of loans		Rate		Term		Payment		Combination of types		Total		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate		2	$	-	$	-	$	-	$	3,705	$	3,705	$	3,761	$	3,761
Commercial & industrial		1		-		-		-		82		82		87		87
Total		3	$	-	$	-	$	-	$	3,787	$	3,787	$	3,848	$	3,848

	Modifications by type for the year ended December 31, 2012
(Dollars in thousands)	Number of loans		Rate		Term		Payment		Combination of types		Total		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial real estate		2	$	-	$	-	$	-	$	7,624	$	7,624	$	9,426	$	9,426
Construction and land development		1		-		-		-		282		282		290		290
Commercial & industrial		1		-		-		5,290		-		5,290		5,290		5,290
Total		4	$	-	$	-	$	5,290	$	7,906	$	13,196	$	15,006	$	15,006