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Loans
 9 Months Ended
Sep. 30, 2012
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3.   Loans

 

Loans at September 30, 2012 and December 31, 2011 consisted of the following:

 

    September 30,
2012		     December 31,
2011		  
    (In thousands)  
Commercial   $ 99,031     $ 100,884  
Construction     40,208       44,722  
Commercial real estate:                
Owner occupied nonfarm/residential     94,184       92,848  
Other nonfarm/residential     77,221       77,875  
Residential real estate:                
Secured by first liens     112,866       131,054  
Home equity     42,552       44,832  
Consumer     6,488       7,759  
Subtotal     472,550       499,974  
Less:                
Allowance for loan losses     (8,255 )     (10,234 )
Loans, net   $ 464,295     $ 489,740  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2012 and 2011 (in thousands):

 

Three Months Ended September 30, 2012:

 

    Commercial     Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
                                     
Beginning balance   $ 2,637     $ 1,053     $ 4,823     $ 2,418     $ 178     $ 11,109  
Provision for loan losses     (42 )     473       278       137       5       851  
Loans charged-off     (470 )     (223 )     (2,845 )     (236 )     (52 )     (3,826 )
Recoveries     17       53       16       12       23       121  
Ending balance   $ 2,142     $ 1,356     $ 2,272     $ 2,331     $ 154     $ 8,255  

 

Three Months Ended September 30, 2011:

 

    Commercial     Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
                                     
Beginning balance   $ 3,452     $ 1,892     $ 2,652     $ 2,545     $ 372     $ 10,913  
Provision for loan losses     740       137       104       32       (42 )     971  
Loans charged-off     (1,520 )     (866 )     (210 )     (173 )     (71 )     (2,840 )
Recoveries     26       -       7       8       30       71  
Ending balance   $ 2,698     $ 1,163     $ 2,553     $ 2,412     $ 289     $ 9,115  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended September 30, 2012 and 2011 (in thousands):

 

Nine Months Ended September 30, 2012:

 

    Commercial     Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
                                     
Beginning balance   $ 2,999     $ 1,112     $ 3,207     $ 2,681     $ 235     $ 10,234  
Provision for loan losses     50       857       2,066       315       13       3,301  
Loans charged-off     (976 )     (666 )     (3,043 )     (702 )     (168 )     (5,555 )
Recoveries     69       53       42       37       74       275  
Ending balance   $ 2,142     $ 1,356     $ 2,272     $ 2,331     $ 154     $ 8,255  

 

Nine Months Ended September 30, 2011:

 

    Commercial     Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
                                     
Beginning balance   $ 3,245     $ 1,893     $ 2,499     $ 2,803     $ 424     $ 10,864  
Provision for loan losses     2,069       153       261       218       (9 )     2,692  
Loans charged-off     (2,717 )     (885 )     (226 )     (636 )     (257 )     (4,721 )
Recoveries     101       2       19       27       131       280  
Ending balance   $ 2,698     $ 1,163     $ 2,553     $ 2,412     $ 289     $ 9,115  

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans, which includes the unpaid principal balance, net of partial charge-offs of $4.2 million and $6.5 million as of September 30, 2012 and December 31, 2011, by portfolio segment and based on impairment method as of September 30, 2012 and December 31, 2011 (in thousands):

 

September 30, 2012:

 

    Commercial      Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
Allowance for loan losses:                                                
Ending allowance balance attributable to loans:                                                
Individually evaluated for impairment   $ 85     $ 1,207     $ 785     $ 945     $ 1     $ 3,023  
Collectively evaluated for impairment     2,057       149       1,487       1,386       153       5,232  
Total ending allowance balance   $ 2,142     $ 1,356     $ 2,272     $ 2,331     $ 154     $ 8,255  
                                                 
Loans:                                                
Loans individually evaluated for impairment   $ 1,171     $ 13,209     $ 11,803     $ 6,648     $ 54     $ 32,885  
Loans collectively evaluated for impairment     97,860       26,999       159,602       148,770       6,434       439,665  
Total ending loans balance   $ 99,031     $ 40,208     $ 171,405     $ 155,418     $ 6,488     $ 472,550  
 

 

December 31, 2011:

 

    Commercial     Construction     Commercial
Real Estate		     Residential
Real Estate		     Consumer     Total  
Allowance for loan losses:                                                
Ending allowance balance attributable to loans:                                                
Individually evaluated for impairment   $ 517     $ 815     $ 1,749     $ 563     $ 17     $ 3,661  
Collectively evaluated for impairment     2,482       297       1,458       2,118       218       6,573  
Total ending allowance balance   $ 2,999     $ 1,112     $ 3,207     $ 2,681     $ 235     $ 10,234  
                                                 
Loans:                                                
Loans individually evaluated for impairment   $ 1,548     $ 13,902     $ 20,899     $ 3,811     $ 146     $ 40,306  
Loans collectively evaluated for impairment     99,336       30,820       149,824       172,075       7,613       459,668  
Total ending loans balance   $ 100,884     $ 44,722     $ 170,723     $ 175,886     $ 7,759     $ 499,974  
 

 

There were no impaired loans at September 30, 2012 and December 31, 2011 which did not have allocated allowance for loan losses.

 

The following table presents information related to loans individually evaluated for impairment by class of loans as of and for the nine month period ending September 30, 2012:

 

    Unpaid Principal
Balance		     Recorded
Investment		     Allowance for
Loan Losses
Allocated		     Average
Recorded
Investment		     Interest Income
Recognized and
Received		  
    (In thousands)  
Commercial   $ 1,171     $ 1,171     $ 85     $ 1,265     $ 10  
Construction     16,439       13,209       1,207       13,056       122  
Commercial real estate:                                        
Owner occupied nonfarm/nonresidential     1,626       1,626       73       7,796       263  
Other nonfarm/nonresidential     11,098       10,177       712       11,105       169  
Residential real estate:                                        
Secured by first liens     5,072       5,072       531       3,645       28  
Home equity     1,576       1,576       414       650       2  
Consumer     54       54       1       134       -  
Total   $ 37,036     $ 32,885     $ 3,023     $ 37,651     $ 594  

 

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011:

 

    Unpaid Principal
Balance		     Recorded
Investment		     Allowance for
Loan Losses
Allocated		    
      (In thousands)    
Commercial   $ 3,064     $ 1,548     $ 517    
Construction     17,709       13,902       815    
Commercial real estate:                          
Owner occupied nonfarm/nonresidential     9,719       9,719       924    
Other nonfarm/nonresidential     12,299       11,180       825    
Residential real estate:                          
Secured by first liens     3,491       3,416       297    
Home equity     395       395       266    
Consumer     146       146       17    
Total   $ 46,823     $ 40,306     $ 3,661    

 

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

 

The following table presents the information related to loans individually evaluated for impairment by class of loans for the three month period ending September 30, 2012:

 

    Average
Recorded
Investment		     Interest Income
Recognized and
Received		  
    (In thousands)  
Commercial   $ 1,167     $ 2  
Construction     12,478       32  
Commercial real estate:                
Owner occupied nonfarm/nonresidential     5,622       2  
Other nonfarm/nonresidential     10,729       66  
Residential real estate:                
Secured by first liens     4,086       7  
Home equity     917       1  
Consumer     125       -  
Total   $ 35,124     $ 110  

 

The following table presents information related to loans individually evaluated for impairment by class of loans for the three and nine month periods ending September 30, 2011:

  

    Three Months     Nine Months  
    Average
Recorded
Investment		     Interest Income
Recognized and
Received		     Average
Recorded
Investment		     Interest Income
Recognized and
Received		  
    (In thousands)  
Commercial   $ 579     $ 1     $ 396     $ 3  
Construction     10,791       -       9,816       2  
Commercial real estate:                                
Owner occupied nonfarm/nonresidential     663       -       715       1  
Other nonfarm/nonresidential     11,296       69       11,189       225  
Residential real estate:                                
Secured by first liens     3,327       18       4,050       61  
Home equity     146       -       135       -  
Consumer     201       -       199       -  
Total   $ 27,003     $ 88     $ 26,500     $ 292  

 

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2012 and December 31, 2011:

 

    September 30, 2012     December 31, 2011  
    Nonaccrual     Loans Past
Due Over 90
Days Still
Accruing		     Nonaccrual     Loans Past
Due Over 90
Days Still
Accruing		  
    (In thousands)  
Commercial   $ 428     $ -     $ 1,040     $ -  
Construction     7,354       -       7,457       -  
Commercial real estate:                                
Owner occupied nonfarm/nonresidential     627       -       1,036       -  
Other nonfarm/nonresidential     2,987       -       2,290       -  
Residential real estate:                                
Secured by first liens     2,773       -       3,427       -  
Home equity     126       -       372       -  
Consumer     213       -       150       -  
Total   $ 14,508     $ -     $ 15,772     $ -  

 

The following table presents the aging of the recorded investment in past due loans as of September 30, 2012 and December 31, 2011 by class of loans:

 

September 30, 2012:

 

    30 – 59
Days
Past
Due		     60 – 89
Days
Past
Due		     Greater
than 90
Days
Past
Due		     Total
Past
Due		     Loans Not
Past Due		     Loans Past
Due Over
90 Days Still
Accruing		  
    (In thousands)  
Commercial   $ 363     $ 53     $ 448     $ 864     $ 99,031     $ -  
Construction     13       -       7,903       7,916       40,208       -  
Commercial real estate:                                                
Owner occupied nonfarm/nonresidential     119       -       57       176       94,184       -  
Other nonfarm/nonresidential     7       -       2,986       2,993       77,221       -  
Residential real estate:                                                
Secured by first liens     1,782       224       2,623       4,629       112,866       -  
Home equity     542       68       205       815       42,552       -  
Consumer     179       42       81       302       6,488       -  
Total   $ 3,005     $ 387     $ 14,303     $ 17,695     $ 472,550     $ -  

 

December 31, 2011:

 

    30 – 59
Days
Past
Due		     60 – 89
Days
Past
Due		     Greater
than 90
Days
Past
Due		     Total
Past
Due		     Loans Not
Past Due		     Loans Past
Due Over
90 Days Still
Accruing		  
    (In thousands)  
Commercial   $ 263     $ 457     $ 953     $ 1,673     $ 99,211     $ -  
Construction     154       -       8,027       8,181       36,541       -  
Commercial real estate:                                                
Owner occupied nonfarm/nonresidential     299       -       466       765       92,083       -  
Other nonfarm/nonresidential     209       42       2,290       2,541       75,334       -  
Residential real estate:                                                
Secured by first liens     1,181       238       3,391       4,810       126,244       -  
Home equity     800       152       409       1,361       43,471       -  
Consumer     213       14       147       374       7,385       -  
Total   $ 3,119     $ 903     $ 15,683     $ 19,705     $ 480,269     $ -

 

Troubled Debt Restructurings:

 

Troubled debt restructurings (“TDRs”) totaled $12.4 million and $26.6 million at September 30, 2012 and December 31, 2011. Of the total TDRs, $4.1 million and $2.4 million were on non-accrual as of September 30, 2012 and December 31, 2011. The Company has allocated $1.5 million and $2.4 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2012 and December 31, 2011. The Company did not have any commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings as of September 30, 2012 and December 31, 2011.

 

The detail of outstanding TDRs by class and modification type as of September 30, 2012 and December 31, 2011 follows (in thousands):

 

September 30, 2012:

 

    Recorded
Investment		     Allowance for
Loan Losses
Allocated		  
Commercial:                
Extended maturity   $ 177     $ 4  
    Multiple modifications     167       -  
Construction:                
Extended maturity     446       92  
Multiple modifications     5,316       667  
Commercial real estate:                
Owner occupied nonfarm/nonresidential                
Interest only payments     197       -  
Other nonfarm/nonresidential                
    Interest rate reduction     8,070       593  
    Interest only payments     202       2  
    Multiple modifications     1,127       -  
Residential real estate:                
Secured by first liens                
    Interest rate reduction     97       7  
    Extended maturity     306       30  
    Multiple modifications     369       57  
Home equity                
Interest rate reduction     29       2  
Total   $ 16,503     $ 1,454  

 

December 31, 2011:

 

    Recorded
Investment		     Allowance for
Loan Losses
Allocated		  
Commercial:                
Interest only payments   $ 500     $ 24  
Extended maturity     489       281  
Multiple modifications     332       12  
Construction:                
Extended maturity     926       320  
Multiple modifications     5,333       80  
Commercial real estate:                
    Owner occupied nonfarm/nonresidential                
Interest only     8,710       887  
 Other nonfarm/nonresidential                
    Interest rate reduction     8,070       616  
    Interest only payments     206       4  
    Multiple modifications     1,127       87  
Residential real estate:                
 Secured by first liens                
    Interest rate reduction     100       7  
    Interest only payments     124       8  
    Extended maturity     307       4  
    Multiple modifications     373       29  
 Home equity                
Interest rate reduction     30       1  
Consumer                
Interest rate reduction     8       -  
Total   $ 26,635     $ 2,360  

 

A loan is considered in payment default once it is 30 days contractually past due under the modified terms. The following table summarizes the Company’s TDR’s by class, modification type and performance as of September 30, 2012 and December 31, 2011 (in thousands):

 

September 30, 2012:                        
  TDRs Greater than
30 Days Past Due
and
Still Accruing		     TDRs on
Nonaccrual		     Total TDRs
Not
Performing
to
Modified
Terms		     Total TDRs
Defaulted Within
12 Months of
Modification		  
Commercial:                                
Multiple modifications   $ -     $ 100     $ 100     $ 100  
Construction:                                
Extended maturity     -       30       30       30  
Multiple modifications     -       2,656       2,656       2,656  
Commercial real estate:                                
 Other nonfarm/nonresidential                                
    Multiple modifications     -       1,127       1,127       1,127  
Residential:                                
 Secured by first liens                                
Multiple modifications     38       164       202       -  
Total   $ 38     $ 4,077     $ 4,115     $ 3,913  

 

December 31, 2011:                        
  TDRs Greater than
30 Days Past Due
and
Still Accruing		     TDRs on
Nonaccrual		     Total TDRs
Not
Performing
to
Modified
Terms		     Total TDRs
Defaulted Within
12 Months of
Modification		  
Commercial:                                
Interest only   $ -     $ 500     $ 500     $ 500  
Extended maturity     1       248       249       249  
Multiple modifications     262       -       262       262  
Construction:                                
Extended maturity     -       510       510       510  
Commercial real estate:                                
   Owner occupied nonfarm/nonresidential     -       -       -       -  
 Other nonfarm/nonresidential                                
    Multiple modifications     -       1,127       1,127       1,127  
Residential:                                
 Secured by first liens                                
    Multiple modifications     111       -       111       -  
 Home equity     -       -       -       -  
Consumer     -       -       -       -  
Total   $ 374     $ 2,385     $ 2,759     $ 2,648  

 

During the period ending September 30, 2012, the terms of 1 loan were modified as a troubled debt restructuring. The modification of the term of the loan was from principal and interest payments to interest only payments for a period of 4 months.

 

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the company’s internal underwriting policy.

 

The following table presents loans by class modified as TDRs during the nine months ending September 30, 2012 and their performance, by modification type (in thousands):

 

  Number 
of Loans		     Pre-
Modification
Outstanding
Recorded
Investment		     Post-
Modification
Outstanding
Recorded
Investment		     TDRs
Performing to
Modified
Terms		     TDRs Not
Performing to
Modified
Terms		  
Commercial real estate:                                        
Owner occupied nonfarm/nonresidential                                        
Interest only     1     $ 201     $ 201     $ 201     $ -  

 

There were no loans modified during the three months September 30, 2012 that were classified as TDRs.

 

Credit Quality Indicators:

 

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. On a monthly basis, the Company reviews its loans that are risk rated Watch, Special Mention, Substandard, or Doubtful to determine they are properly classified. In addition, the Company reviews loans rated as a “pass” that have exhibited signs that may require a classification change, such as past due great than 30 days and other relevant information including: loan officer recommendations, knowledge of specific borrower circumstances, and receipt of borrower financial statements. The Company uses the following definitions for risk ratings:

 

Watch. Loans classified as watch are not considered “rated” or “classified” for regulatory purposes, but are considered criticized assets which exhibit modest deterioration in financial performance or external threats.

 

Special Mention. Loans classified as special mention exhibit potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan, or in the Company’s credit position at some future date. Economic or market conditions exist which may affect the borrower more severely than other companies in its industry.

 

Substandard. Loans classified as substandard are characterized by having well defined financial weakness. Substandard loans are usually evidenced by chronic or emerging past due performance and serious deficiencies in the primary source of repayment.

 

Doubtful. Loans classified as doubtful have a well-defined and documented financial weaknesses. They have all the weaknesses of a substandard loan with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. Generally, loans classified as doubtful are on non-accrual.

 

Loans not meeting the criteria above that are listed as pass are included in groups of homogeneous loans. The risk category of loans by class of loans based on the most recent analysis performed as of September 30, 2012 and December 31, 2011 is as follows:

 

September 30, 2012:

 

    Watch     Special
Mention		     Substandard     Doubtful     Pass     Total  
    (In thousands)  
Commercial   $ 6,545     $ 602     $ 547     $ 414     $ 90,923     $ 99,031  
Construction     7,045       15       5,286       7,923       19,939       40,208  
Commercial real estate:                                                
Owner occupied nonfarm/nonresidential     4,358       197       1,372       57       88,200       94,184  
Other nonfarm/nonresidential     2,447       1,136       8,540       1,851       63,247       77,221  
Residential real estate:                                                
Secured by first liens     1,401       453       1,948       2,596       106,468       112,866  
Home equity     554       127       1,334       268       40,269       42,552  
Consumer     47       4       95       22       6,320       6,488  
Total   $ 22,397     $ 2,534     $ 19,122     $ 13,131     $ 415,366     $ 472,550  

 

December 31, 2011:

 

    Watch     Special
Mention		     Substandard     Doubtful     Pass     Total  
    (In thousands)  
Commercial   $ 5,261     $ 653     $ 742     $ 1,209     $ 93,019     $ 100,884  
Construction     9,787       -       3,225       8,153       23,557       44,722  
Commercial real estate:                                                
Owner occupied nonfarm/nonresidential     1,835       988       9,075       1,009       79,941       92,848  
Other nonfarm/nonresidential     5,779       213       8,648       2,705       60,530       77,875  
Residential real estate:                                                
Secured by first liens     2,145       385       3,813       1,720       122,991       131,054  
Home equity     1,149       -       386       300       42,997       44,832  
Consumer     87       -       176       27       7,469       7,759  
Total   $ 26,043     $ 2,239     $ 26,065     $ 15,123     $ 430,504     $ 499,974