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Credit Quality of Loans and Leases and The Reserve for Loan and Lease Losses
9 Months Ended
Sep. 30, 2011
Credit Quality of Loans and Leases and The Reserve for Loan and Lease Losses [Abstract] 
Credit Quality of Loans and Leases and the Reserve for Loan and Lease Losses
Note 4. Credit Quality of Loans and Leases and the Reserve for Loan and Lease Losses
Age Analysis of Past Due Loans and Leases
The following presents, by class of loans and leases, an aging of past due loans and leases, loans and leases which are current and the recorded investment in loans and leases greater than 90 days past due which are accruing interest at September 30, 2011 and December 31, 2010:
                                                         
                                                    Recorded  
                                                    Investment  
                                                    Greater than  
                    Greater                     Total     90 Days  
                    Than                     Loans     Past Due  
    30-59 Days     60-89 Days     90 Days     Total             and     and Accruing  
(Dollars in thousands)   Past Due*     Past Due*     Past Due*     Past Due*     Current*     Leases     Interest*  
 
                                                       
At September 30, 2011
                                                       
Commercial, financial and agricultural
  $ 1,229     $ 815     $ —     $ 2,044     $ 465,656     $ 473,561     $ —  
Real estate-commercial real estate and construction:
                                                       
Commercial real estate
    2,473       565       —       3,038       487,149       518,984       —  
Construction
    —       —       —       —       77,022       83,111       —  
Real estate-residential and home equity:
                                                       
Residential secured for business purpose
    —       —       9       9       32,433       32,657       9  
Residential secured for personal purpose
    —       68       —       68       131,039       131,326       —  
Home equity secured for personal purpose
    240       79       102       421       80,490       80,942       102  
Loans to individuals
    347       194       332       873       41,367       42,290       332  
Lease financings
    850       553       6       1,409       71,288       73,540       6  
 
                                         
Total
  $ 5,139     $ 2,274     $ 449     $ 7,862     $ 1,386,444     $ 1,436,411     $ 449  
 
                                         
     
*  
Excludes impaired loans and leases.
                                                         
                                                    Recorded  
                                                    Investment  
                                                    Greater than  
                    Greater                     Total     90 Days  
                    Than                     Loans     Past Due  
    30-59 Days     60-89 Days     90 Days     Total             and     and Accruing  
(Dollars in thousands)   Past Due*     Past Due*     Past Due*     Past Due*     Current*     Leases     Interest*  
 
                                                       
At December 31, 2010
                                                       
 
                                                       
Commercial, financial and agricultural
  $ 924     $ —     $ —     $ 924     $ 454,792     $ 463,518     $ —  
Real estate-commercial real estate and construction:
                                                       
Commercial real estate
    3,836       —       —       3,836       484,527       516,546       —  
Construction
    156       —       —       156       112,739       119,769       —  
Real estate-residential and home equity:
                                                       
Residential secured for business purpose
    —       —       —       —       42,008       42,459       —  
Residential secured for personal purpose
    92       —       270       362       120,250       121,876       270  
Home equity secured for personal purpose
    118       74       44       236       80,639       80,875       44  
Loans to individuals
    537       153       382       1,072       42,934       44,087       382  
Lease financings
    1,071       421       —       1,492       79,437       82,056       —  
 
                                         
Total
  $ 6,734     $ 648     $ 696     $ 8,078     $ 1,417,326     $ 1,471,186     $ 696  
 
                                         
     
*  
Excludes impaired loans and leases.
Nonaccrual and Troubled Debt Restructured Loans and Leases
The following presents, by class of loans and leases, nonaccrual loans and leases (including nonaccrual troubled debt restructured loans and leases) and accruing troubled debt restructured loans and leases at September 30, 2011 and December 31, 2010.
                                                 
    At September 30, 2011     At December 31, 2010  
            Accruing                     Accruing        
            Troubled                     Troubled        
            Debt     Total             Debt     Total  
    Nonaccrual     Restructured     Impaired     Nonaccrual     Restructured     Impaired  
    Loans and     Loans and     Loans and     Loans and     Loans and     Loans and  
(Dollars in thousands)   Leases*     Leases     Leases     Leases*     Leases     Leases  
Commercial, financial and agricultural
  $ 5,861     $ —     $ 5,861     $ 7,627     $ 175     $ 7,802  
Real estate-commercial real estate and construction:
                                               
Commercial real estate
    26,354       2,443       28,797       28,183       —       28,183  
Construction
    4,887       1,202       6,089       6,874       —       6,874  
Real estate-residential and home equity:
                                               
Residential secured for business purpose
    108       107       215       361       90       451  
Residential secured for personal purpose
    219       —       219       1,264       —       1,264  
Home equity secured for personal purpose
    31       —       31       —       —       —  
Loans to individuals
    —       50       50       21       60       81  
Lease financings
    720       123       843       902       225       1,127  
 
                                   
Total
  $ 38,180     $ 3,925     $ 42,105     $ 45,232     $ 550     $ 45,782  
 
                                   
     
*  
Includes non-accrual troubled debt restructured loans and leases of $6.8 million and $1.2 million at September 30, 2011 and December, 31, 2010, respectively.
Credit Quality Indicators
The following tables present by class, the recorded investment in loans and leases by credit quality indicator at September 30, 2011 and December 31, 2010.
The Corporation employs a ten (10) grade risk rating system related to the credit quality of commercial loans and residential real estate loans secured for a business purpose of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating. Loans with risk ratings of one through five are reviewed based on the relationship dollar amount with the borrower: loans with a relationship total of $2.5 million or greater are reviewed quarterly; loans with a relationship balance of less than $2.5 million but greater than $500 thousand are reviewed annually based on the borrower’s fiscal year; loans with a relationship balance of less than $500 thousand are reviewed only if the loan becomes 60 days or more past due. Loans with risk ratings of six are also reviewed based on the relationship dollar amount with the borrower: loans with a relationship balance of $2.0 million or greater are reviewed quarterly; loans with a relationship balance of less than $2.0 million but greater than $500 thousand are reviewed annually; loans with a relationship balance of less than $500 thousand are reviewed only if the loan becomes 60 days or more past due. Loans with risk ratings of seven are reviewed at least quarterly, and as often as monthly, at management’s discretion. Loans with risk ratings of eight through ten are reviewed monthly.
  1.  
Cash Secured — No credit risk
  2.  
Fully Secured — Negligible credit risk
  3.  
Strong — Minimal credit risk
  4.  
Satisfactory — Nominal credit risk
  5.  
Acceptable — Moderate credit risk
  6.  
Pre-Watch — Marginal, but stable credit risk
  7.  
Special Mention — Potential weakness
  8.  
Substandard — Well-defined weakness
  9.  
Doubtful — Collection in-full improbable
  10.  
Loss — Considered uncollectible
Commercial Credit Exposure Credit Risk by Internally Assigned Grades
                                                                 
                                                    Real Estate—Residential  
    Commercial, Financial                                     Secured for  
    and Agricultural     Real Estate—Commercial     Real Estate—Construction     Business Purpose  
    At     At     At     At     At     At     At     At  
    September 30,     December 31,     September 30,     December 31,     September 30,     December 31,     September 30,     December 31,  
(Dollars in thousands)   2011     2010     2011     2010     2011     2010     2011     2010  
 
                                                               
Grade:
                                                               
1. Cash secured/ 2. Fully secured
  $ 965     $ 2,714     $ —     $ —     $ —     $ —     $ —     $ —  
3. Strong
    5,872       16,350       11,302       11,542       —       2,674       —       28  
4. Satisfactory
    30,484       71,258       30,337       47,755       —       12,217       1,385       1,836  
5. Acceptable
    290,809       254,422       286,952       261,520       46,390       78,116       20,257       24,987  
6. Pre-watch
    81,479       70,259       103,233       109,493       28,161       11,296       7,875       6,322  
7. Special Mention
    22,921       8,476       36,344       17,596       58       684       669       700  
8. Substandard
    38,012       36,933       49,823       67,379       8,502       14,782       2,471       8,586  
9. Doubtful
    3,019       3,106       993       1,261       —       —       —       —  
10. Loss
    —       —       —       —       —       —       —       —  
 
                                               
Total
  $ 473,561     $ 463,518     $ 518,984     $ 516,546     $ 83,111     $ 119,769     $ 32,657     $ 42,459  
 
                                               
The Corporation monitors the credit risk profile by payment activity for the following classifications of loans and leases: residential real estate loans secured for a personal purpose, home equity loans secured for a personal purpose, loans to individuals and lease financings by payment activity. Nonperforming loans and leases are loans past due 90 days or more and loans and leases on non-accrual of interest as well as troubled debt restructured loans. Performing loans and leases are reviewed only if the loan becomes 60 days or more past due. Nonperforming loans and leases are reviewed monthly. Performing loans and leases have a nominal to moderate risk of loss. Nonperforming loans and leases are loans with a well-defined weakness as well as loans where collection in-full is improbable.
Credit Exposure — Real Estate — Residential Secured for Personal Purpose, Real Estate-Home Equity Secured for Personal Purpose, Loans to individuals, Lease Financing Credit Risk Profile by Payment Activity
                                                                 
    Real Estate-Residential     Real Estate-Home Equity              
    Secured for     Secured for              
    Personal Purpose     Personal Purpose     Loans to individuals     Lease Financing  
    At     At     At     At     At     At     At     At  
    September 30,     December 31,     September 30,     December 31,     September 30,     December 31,     September 30,     December 31,  
((Dollars in thousands)   2011     2010     2011     2010     2011     2010     2011     2010  
Performing
  $ 131,107     $ 120,342     $ 80,809     $ 80,831     $ 41,908     $ 43,624     $ 72,691     $ 80,929  
Nonperforming
    219       1,534       133       44       382       463       849       1,127  
 
                                               
Total
  $ 131,326     $ 121,876     $ 80,942     $ 80,875     $ 42,290     $ 44,087     $ 73,540     $ 82,056  
 
                                               
Risks associated with lending activities include, among other things, the impact of changes in interest rates and economic conditions, which may adversely impact the ability of borrowers to repay outstanding loans, and impact the value of the associated collateral.
Commercial, financial and agricultural loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers.
Commercial, financial and agricultural business loans are typically based on the borrowers’ ability to repay the loans from the cash flow of their businesses. These loans may involve greater risk because the availability of funds to repay each loan depends substantially on the success of the business itself. In addition, the collateral securing the loans often depreciates over time, is difficult to appraise and liquidate and fluctuates in value based on the success of the business.
Risk of loss on a construction loan depends largely upon whether our initial estimate of the property’s value at completion of construction equals or exceeds the cost of the property construction (including interest). During the construction phase, a number of factors can result in delays and cost overruns. If estimates of value are inaccurate or if actual construction costs exceed estimates, the value of the property securing the loan may be insufficient to ensure full repayment when completed through a permanent loan or by seizure of collateral. Included in real estate-construction is track development financing. Risk factors related to track development financing include the demand for residential housing and the real estate valuation market. When projects move slower than anticipated, the properties may have significantly lower values than when the original underwriting was completed, resulting in lower collateral values to support the loan. Extended time frames also cause the interest carrying cost for a project to be higher than the builder projected, negatively impacting the builder’s profit and cash flow and, therefore, their ability to make principal and interest payments.
Commercial real estate loans and residential real estate loans with a business purpose secured by owner-occupied properties are dependent upon the successful operation of the borrower’s business. If the operating company suffers difficulties in terms of sales volume and/or profitability, the borrower’s ability to repay the loan may be impaired. Loans secured by properties where repayment is dependent upon payment of rent by third party tenants or the sale of the property may be impacted by loss of tenants, lower lease rates needed to attract new tenants or the inability to sell a completed project in a timely fashion and at a profit.
Commercial, financial and agricultural loans, commercial real estate loans, construction loans and residential real estate loans secured for a business purpose are more susceptible to a risk of loss during a downturn in the business cycle. The Corporation has strict underwriting, review, and monitoring procedures in place, however, these procedures cannot eliminate all of the risks related to these loans.
The Corporation focuses on both assessing the borrower’s capacity and willingness to repay and on obtaining sufficient collateral. Commercial, financial and agricultural loans are generally secured by the borrower’s assets and by personal guarantees. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the Eastern Pennsylvania market area at conservative loan-to-value ratios and often by a guarantee of the borrowers. Management closely monitors the composition and quality of the total commercial loan portfolio to ensure that any credit concentrations by borrower or industry are closely monitored.
The Corporation originates fixed-rate and adjustable-rate real estate-residential mortgage loans that are secured by the underlying 1- to 4-family residential properties for personal purposes. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-equity ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.
In the real estate-home equity loan portfolio secured for a personal purpose, combined loan-to-value ratios at origination are generally limited to 80%. Other credit considerations may warrant higher combined loan-to-value ratios and are generally insured by private mortgage insurance.
Credit risk in the loans to individuals portfolio, which includes, direct consumer loans and credit cards, is controlled by strict adherence to conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.
The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations. The Corporation has strict underwriting, review, and monitoring procedures in place to mitigate this risk. Risk also lies in the residual value of the underlying equipment. Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers. To the extent not guaranteed or assumed by a third party, or otherwise insured against, the Corporation bears the risk of ownership of the leased assets. This includes the risk that the actual value of the leased assets at the end of the lease term will be less than the residual value. The Corporation greatly reduces this risk by using $1.00 buyout leases, in which the entire cost of the leased equipment is included in the contractual payments, leaving no residual payment at the end of the lease terms.

 

Reserve for Loan and Lease Losses and Recorded Investment in Loans and Leases
The following presents, by portfolio segment, a summary of the activity in the reserve for loan and lease losses, the balance in the reserve for loan and lease losses disaggregated on the basis of impairment method and the recorded investment in loans and leases disaggregated on the basis of impairment method for the three and nine months ended September 30, 2011 and 2010:
                                                                 
                            Real Estate—                          
                            Residential                          
                    Real Estate—     and                          
    Commercial,     Real Estate—     Residential     Home Equity                          
    Financial     Commercial     Secured for     Secured for     Loans                    
    and     and     Business     Personal     to     Lease              
(Dollars in thousands)   Agricultural     Construction     Purpose     Purpose     Individuals     Financings     Unallocated     Total  
 
                                                               
For the Three Months Ended September 30, 2011
                                                               
 
                                                               
Reserve for loan and lease losses:
                                                               
Beginning balance
  $ 10,877     $ 16,092     $ 1,019     $ 696     $ 695     $ 1,912     $ 1,310     $ 32,601  
Charge-offs
    (160 )     (4,661 )     (120 )     —       (209 )     (310 )             (5,460 )
Recoveries
    28       35       4       4       65       76               212  
Provision (recovery of provision)
    (1,021 )     4,259       (47 )     (4 )     79       (66 )     449       3,649  
 
                                               
Ending balance
  $ 9,724     $ 15,725     $ 856     $ 696     $ 630     $ 1,612     $ 1,759     $ 31,002  
 
                                               
 
                                                               
For the Three Months Ended September 30, 2010
                                                               
 
                                                               
Reserve for loan and lease losses:
                                                               
Beginning balance
  $ 12,531     $ 11,328     $ 854     $ 482     $ 805     $ 2,023     $ 1,086     $ 29,109  
Charge-offs
    (846 )     (4,340 )     —       —       (253 )     (639 )     —       (6,078 )
Recoveries
    34       123       2       —       37       127       —       323  
Provision (recovery of provision)
    418       2,838       115       111       173       499       1,375       5,529  
 
                                               
Ending balance
  $ 12,137     $ 9,949     $ 971     $ 593     $ 762     $ 2,010     $ 2,461     $ 28,883  
 
                                               
                                                                 
                            Real Estate—                          
                            Residential                          
                    Real Estate—     and                          
    Commercial,     Real Estate—     Residential     Home Equity                          
    Financial     Commercial     Secured for     Secured for     Loans                    
    and     and     Business     Personal     to     Lease              
(Dollars in thousands)   Agricultural     Construction     Purpose     Purpose     Individuals     Financings     Unallocated     Total  
 
                                                               
For the Nine Months Ended September 30, 2011
                                                               
 
                                                               
Reserve for loan and lease losses:
                                                               
Beginning balance
  $ 9,630     $ 15,288     $ 1,333     $ 544     $ 734     $ 1,950     $ 1,419     $ 30,898  
Charge-offs
    (2,934 )     (9,724 )     (314 )     (38 )     (806 )     (1,169 )     —       (14,985 )
Recoveries
    209       115       10       7       143       266       —       750  
Provision (recovery of provision)
    2,819       10,046       (173 )     183       559       565       340       14,339  
 
                                               
Ending balance
  $ 9,724     $ 15,725     $ 856     $ 696     $ 630     $ 1,612     $ 1,759     $ 31,002  
 
                                               
 
                                                               
For the Nine Months Ended September 30, 2010
                                                               
 
                                                               
Reserve for loan and lease losses:
                                                               
Beginning balance
  $ 12,148     $ 7,975     $ 1,058     $ 501     $ 887     $ 1,175     $ 1,054     $ 24,798  
Charge-offs
    (3,194 )     (6,778 )     (5 )     —       (732 )     (1,831 )     —       (12,540 )
Recoveries
    102       612       12       —       179       431       —       1,336  
Provision (recovery of provision)
    3,081       8,140       (94 )     92       428       2,235       1,407       15,289  
 
                                               
Ending balance
  $ 12,137     $ 9,949     $ 971     $ 593     $ 762     $ 2,010     $ 2,461     $ 28,883  
 
                                               
                                                                 
                            Real Estate—                          
                            Residential                          
                    Real Estate—     and                          
    Commercial,     Real Estate—     Residential     Home Equity                          
    Financial     Commercial     Secured for     Secured for     Loans                    
    and     and     Business     Personal     to     Lease              
(Dollars in thousands)   Agricultural     Construction     Purpose     Purpose     Individuals     Financings     Unallocated     Total  
 
                                                               
At September 30, 2011
                                                               
 
                                                               
Reserve for loan and lease losses:
                                                               
Ending balance: individually evaluated for impairment
  $ 374     $ 1,784     $ —     $ —     $ —     $ —     $ N/A     $ 2,158  
Ending balance: collectively evaluated for impairment
    9,350       13,941       856       696       630       1,612       1,759       28,844  
 
                                               
Total ending balance
  $ 9,724     $ 15,725     $ 856     $ 696     $ 630     $ 1,612     $ 1,759     $ 31,002  
 
                                               
 
                                                               
Loans and leases:
                                                               
Ending balance: individually evaluated for impairment
  $ 5,861     $ 34,886     $ 215     $ 250     $ 50     $ 843             $ 42,105  
Ending balance: collectively evaluated for impairment
    467,700       567,209       32,442       212,018       42,240       82,559               1,404,168  
 
                                                 
Total ending balance
  $ 473,561     $ 602,095     $ 32,657     $ 212,268     $ 42,290     $ 83,402             $ 1,446,273  
 
                                                 
 
                                                               
At September 30, 2010
                                                               
 
Reserve for loan and lease losses:
                                                               
Ending balance: individually evaluated for impairment
  $ 721     $ 199     $ 95     $ 4     $ —     $ —     $ N/A     $ 1,019  
Ending balance: collectively evaluated for impairment
    11,416       9,750       876       589       762       2,010       2,461       27,864  
 
                                               
Total ending balance
  $ 12,137     $ 9,949     $ 971     $ 593     $ 762     $ 2,010     $ 2,461     $ 28,883  
 
                                               
 
                                                               
Loans and leases:
                                                               
Ending balance: individually evaluated for impairment
  $ 3,890     $ 26,370     $ 811     $ 1,520     $ 61     $ 1,204             $ 33,856  
Ending balance: collectively evaluated for impairment
    466,109       587,722       43,430       208,703       43,740       83,822               1,433,526  
 
                                                 
Total ending balance
  $ 469,999     $ 614,092     $ 44,241     $ 210,223     $ 43,801     $ 85,026             $ 1,467,382  
 
                                                 
Impaired Loans and Leases
The following presents, by class of loans and leases, the recorded investment and unpaid principal balance of impaired loans and leases, the amounts of the impaired loans and leases for which there is not an allowance for credit losses and the amounts for which there is an allowance for credit losses at September 30, 2011 and December 31, 2010:
                                                 
    At September 30, 2011     At December 31, 2010  
            Unpaid                     Unpaid        
    Recorded     Principal     Related     Recorded     Principal     Related  
(Dollars in thousands)   Investment     Balance     Allowance     Investment     Balance     Allowance  
Impaired loans and leases with no related allowance recorded:
                                               
Commercial, financial and agricultural
  $ 5,051     $ 5,933             $ 4,761     $ 5,074          
Real estate-commercial real estate
    25,743       32,169               21,403       23,094          
Real estate-construction
    4,804       4,804               6,225       8,025          
Real estate-residential secured for business purpose
    215       729               361       730          
Real estate-residential secured for personal purpose
    219       219               632       632          
Real estate-home equity secured for personal purpose
    31       31               —       —          
Loans to individuals
    50       59               81       81          
Lease financings
    843       843               1,127       1,127          
 
                                       
Total impaired loans and leases with no related allowance recorded:
  $ 36,956     $ 44,787             $ 34,590     $ 38,763          
 
                                       
 
                                               
Impaired loans and leases with an allowance recorded:
                                               
Commercial, financial and agricultural
  $ 810     $ 841     $ 374     $ 3,041     $ 3,058     $ 650  
Real estate-commercial real estate
    3,054       5,554       1,743       6,780       8,321       909  
Real estate-construction
    1,285       1,307       41       649       649       33  
Real estate-residential secured for business purpose
    —       —       —       90       90       29  
Real estate-residential secured for personal purpose
    —       —       —       632       632       2  
 
                                   
Total impaired loans and leases with an allowance recorded
  $ 5,149     $ 7,702     $ 2,158     $ 11,192     $ 12,750     $ 1,623  
 
                                   
 
                                               
Total impaired loans and leases:
                                               
Commercial, financial and agricultural
  $ 5,861     $ 6,774     $ 374     $ 7,802     $ 8,132     $ 650  
Real estate-commercial real estate
    28,797       37,723       1,743       28,183       31,415       909  
Real estate-construction
    6,089       6,111       41       6,874       8,674       33  
Real estate-residential secured for business purpose
    215       729       —       451       820       29  
Real estate-residential secured for personal purpose
    219       219       —       1,264       1,264       2  
Real estate-home equity secured for personal purpose
    31       31       —       —       —       —  
Loans to individuals
    50       59       —       81       81       —  
Lease financings
    843       843       —       1,127       1,127       —  
 
                                   
Total impaired loans and leases:
  $ 42,105     $ 52,489     $ 2,158     $ 45,782     $ 51,513     $ 1,623  
 
                                   
The following presents by class of loans and leases, the average recorded investment in impaired loans and leases and an analysis of interest on impaired loans and leases:
                                                 
    Three Months Ended September 30, 2011     Three Months Ended September 30, 2010  
                    Interest Income                     Interest Income  
                    That Would                     That Would  
                    Have Been                     Have Been  
    Average     Interest     Recognized     Average     Interest     Recognized  
    Recorded     Income     Under     Recorded     Income     Under  
(Dollars in thousands)   Investment     Recognized*     Original Terms     Investment     Recognized*     Original Terms  
 
Commercial, financial and agricultural
  $ 5,924     $ —     $ 77     $ 3,010     $ 4     $ 57  
Real estate-commercial real estate
    31,344       39       601       18,793       5       352  
Real estate-construction
    7,899       20       85       6,937       —       89  
Real estate-residential secured for business purpose
    247       2       4       965       6       17  
Real estate-residential secured for personal purpose
    219       —       3       1,128       —       18  
Real estate-home equity secured for personal purpose
    31       —       —       252       —       3  
Loans to individuals
    51       1       —       61       1       —  
Lease financings
    861       —       —       1,021       —       —  
 
                                   
Total
  $ 46,576     $ 62     $ 770     $ 32,167     $ 16     $ 536  
 
                                   
     
*  
Includes interest income recognized on accruing troubled debt restructured loans of $60 thousand and $16 thousand for the three months ended September 30, 2011 and 2010, respectively.
                                                 
    Nine Months Ended September 30, 2011     Nine Months Ended September 30, 2010  
                    Interest Income                     Interest Income  
                    That Would                     That Would  
                    Have Been                     Have Been  
    Average     Interest     Recognized     Average     Interest     Recognized  
    Recorded     Income     Under     Recorded     Income     Under  
(Dollars in thousands)   Investment     Recognized*     Original Terms     Investment     Recognized*     Original Terms  
 
                                               
Commercial, financial and agricultural
  $ 6,498     $ 14     $ 270     $ 3,034     $ 10     $ 146  
Real estate-commercial real estate
    27,670       91       1,445       17,569       63       872  
Real estate-construction
    7,969       48       260       10,177       —       378  
Real estate-residential secured for business purpose
    343       5       13       909       24       30  
Real estate-residential secured for personal purpose
    590       19       23       1,180       13       41  
Real estate-home equity secured for personal purpose
    18       —       —       250       —       8  
Loans to individuals
    59       4       1       62       4       —  
Lease financings
    980       —       —       974       —       —  
 
                                   
Total
  $ 44,127     $ 181     $ 2,012     $ 34,155     $ 114     $ 1,475  
 
                                   
     
*  
Includes interest income recognized on accruing troubled debt restructured loans of $139 thousand and $89 thousand for the nine months ended September 30, 2011 and 2010, respectively.
Troubled Debt Restructured Loans and Leases
The following presents, by class of loans and leases, information regarding accruing and non-accrual loans and leases that were restructured during the three and nine months ended September 30, 2011:
                                                                 
    Three Months Ended September 30, 2011     Nine Months Ended September 30, 2011  
            Pre-     Post-                     Pre-     Post-        
            Restructuring     Restructuring                     Restructuring     Restructuring        
    Number     Outstanding     Outstanding             Number     Outstanding     Outstanding        
    Of     Recorded     Recorded     Related     Of     Recorded     Recorded     Related  
(Dollars in thousands)   Loans     Investment     Investment     Allowance     Loans     Investment     Investment     Allowance  
 
                                                               
Accruing Troubled Debt Restructured Loans and Leases:
                                                               
Real estate-commercial real estate
    —     $ —     $ —     $ —       5     $ 2,438     $ 2,435     $ —  
Real estate-construction
    —       —       —       —       5       2,182       2,182       —  
Real estate-residential secured for business purpose
    —       —       —       —       1       98       98       —  
Real estate-residential secured for personal purpose
    —       —       —       —       1       156       156       —  
Real estate-home equity secured for personal purpose
    —       —       —       —       1       31       31       —  
 
                                               
Total
    —     $ —     $ —     $ —       13     $ 4,905     $ 4,902     $ —  
 
                                               
Nonaccrual Troubled Debt Restructured Loans and Leases:
                                                               
Real estate-commercial real estate
    1     $ 6,667     $ 6,667     $ —       2     $ 9,432     $ 9,432     $ —  
 
                                               
Total
    1     $ 6,667     $ 6,667     $ —       2     $ 9,432     $ 9,432     $ —  
 
                                               
The Corporation grants concessions primarily related to extensions of interest-only payment periods and an occasional payment modification. These modifications typically are on a short-term basis up to one year. Our goal when restructuring a credit is to afford the customer a reasonable period of time to provide cash flow relief to customers experiencing cash flow difficulties.
Accruing loans totaling $4.9 million were restructured during the first nine months of 2011. Accruing troubled debt restructured loans were primarily comprised of two categories of loans on which interest is being accrued under the restructured terms, and the loans were current or less than ninety days past due. The first category included four commercial real estate loans totaling $1.2 million, which had their interest only payment terms extended due to reduced cash flows, and one loan with a balance of $1.2 million, which had an interest rate reduction and maturity date extension due to inability to make payments because of reduced cash flows caused by economic conditions. The second category consisted of five construction loans totaling $2.2 million, which had interest only payment terms extended due to stalled land development projects. Accruing troubled debt restructured loans charged-off during the nine months ended September 30, 2011 subsequent to the restructuring totaled approximately $241 thousand, primarily due to declines in collateral values.
Nonaccrual loans totaling $9.4 million were restructured during the first nine months of 2011. Nonaccrual troubled debt restructured loans were primarily comprised of one commercial real estate loan of $6.7 million. This restructure was necessary due to the customer’s declining revenue and inability to raise additional capital needed to fund future projects, placing a strain on cash flow. To allow payments to be made, based on projected cash flows, two loans were restructured into one loan with a balance of $6.7 million at a reduced interest rate, to begin repayment in October of 2011. Periodic review of the financial performance of the company has been included in the covenants of the restructure, requiring additional payments on the loans as the company’s financial condition improves.
The following presents, by class of loans and leases, information regarding accruing and nonaccrual troubled debt restructured loans and leases, included in the table above, for which there was a payment default during the three and nine month periods ending September 30, 2011.
                                 
    Three Months Ended     Nine Months Ended  
    September 30, 2011     September 30, 2011  
  Number of           Number of        
(Dollars in thousands)   Loans     Recorded Investment     Loans     Recorded Investment  
 
Accruing Troubled Debt Restructured Loans and Leases:
                               
Real estate-residential secured for personal purpose
    1     $ 158       1     $ 158  
Real estate-home equity secured for personal purpose
    1       31       1       31  
 
                       
Total
    2     $ 189       2     $ 189  
 
                       
 
                               
Nonaccrual Troubled Debt Restructured Loans and Leases:
                               
Real estate-commercial real estate
    1     $ 2,761       1     $ 2,761  
 
                       
Total
    1     $ 2,761       1     $ 2,761  
 
                       
Accruing troubled debt restructured loans, restructured during 2011, totaling $189 thousand, had payment defaults subsequent to restructuring in the first nine months of 2011. As a result of the payment default, these loans have been placed on nonaccrual status.
Nonaccrual troubled debt restructured loans, restructured during 2011, totaling $2.8 million, had payment defaults subsequent to restructuring in the first nine months of 2011. The commercial real estate loan for $2.8 million was foreclosed on and $1.0 million was charged-off based on the appraised value of the property and the remaining $1.8 million was transferred to other real estate owned during the third quarter of 2011.