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Loans and Leases
 6 Months Ended
Jun. 30, 2012
Loans and Leases [Abstract]  
Loans and Leases
Note 4. Loans and Leases

Summary of Major Loan and Lease Categories

 

                 
(Dollars in thousands)   At
June 30,
2012		     At
December 31,
2011		  
     

Commercial, financial and agricultural

   $ 497,955     $ 484,687  

Real estate-commercial

     517,282       514,953  

Real estate-construction

     79,910       90,397  

Real estate-residential secured for business purpose

     32,097       32,481  

Real estate-residential secured for personal purpose

     140,217       125,220  

Real estate-home equity secured for personal purpose

     78,696       80,478  

Loans to individuals

     44,037       44,965  

Lease financings

     75,255       73,225  
   

 

 

    

 

 

  

Total loans and leases, net of deferred income

   $ 1,465,449     $ 1,446,406  
   

 

 

    

 

 

  
     

Unearned lease income, included in the above table

   $ (10,768 )    $ (9,965 ) 

Net deferred costs, included in the above table

   $ 897     $ 876  

Overdraft deposits included in the above table

   $ 103     $ 123  

Overdraft deposits are re-classified as loans and are included in the total loans and leases on the balance sheet.

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 June 30, 2012 and December 31, 2011:

 

                                                         
(Dollars in thousands)   30-59  Days
Past
Due*		     60-89  Days
Past
Due*		     Greater
Than
90 Days
Past
Due*		     Total
Past
Due*		     Current*     Total Loans
and Leases		     Recorded
Investment
Greater
than
90 Days
Past
Due and
Accruing
Interest*		  
               

At June 30, 2012

                                                        
               

Commercial, financial and agricultural

   $ 137     $ 272     $ 20     $ 429     $ 491,879     $ 497,955     $ 20  

Real estate—commercial real estate and construction:

                                                        

Commercial real estate

     1,890       —         —         1,890       494,516       517,282       —    

Construction

     —         —         —         —         63,241       79,910       —    

Real estate—residential and home equity:

                                                        

Residential secured for business purpose

     295       —         —         295       31,625       32,097       —    

Residential secured for personal purpose

     112       —         —         112       139,793       140,217       —    

Home equity secured for personal purpose

     375       266       58       699       77,997       78,696       58  

Loans to individuals

     393       173       237       803       43,185       44,037       237  

Lease financings

     562       310       69       941       73,691       75,255       69  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 3,764     $ 1,021     $ 384     $ 5,169     $ 1,415,927     $ 1,465,449     $ 384  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Excludes impaired loans and leases.

 

                                                         
(Dollars in thousands)   30-59  Days
Past
Due*		     60-89  Days
Past
Due*		     Greater
Than
90 Days
Past
Due*		     Total
Past
Due*		     Current*     Total Loans
and Leases		     Recorded
Investment
Greater
than
90 Days
Past
Due and
Accruing
Interest*		  
               

At December 31, 2011

                                                        
               

Commercial, financial and agricultural

   $ 3,741     $ 33     $ —       $ 3,774     $ 476,222     $ 484,687     $ —    

Real estate—commercial real estate and construction:

                                                        

Commercial real estate

     2,212       723       —         2,935       491,498       514,953       —    

Construction

     —         —         —         —         74,656       90,397       —    

Real estate—residential and home equity:

                                                        

Residential secured for business purpose

     340       —         —         340       32,026       32,481       —    

Residential secured for personal purpose

     1,783       —         —         1,783       123,380       125,220       —    

Home equity secured for personal purpose

     298       68       117       483       79,968       80,478       117  

Loans to individuals

     386       236       204       826       44,089       44,965       204  

Lease financings

     1,203       544       44       1,791       70,535       73,225       44  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 9,963     $ 1,604     $ 365     $ 11,932     $ 1,392,374     $ 1,446,406     $ 365  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Excludes impaired loans and leases.

Nonaccrual and Troubled Debt Restructured Loans and Lease Modifications

The following presents, by class of loans and leases, nonaccrual loans and leases (including nonaccrual troubled debt restructured loans and lease modifications) and accruing troubled debt restructured loans and lease modifications at June 30, 2012 and December 31, 2011.

 

                                                 
    At June 30, 2012     At December 31, 2011  
(Dollars in thousands)   Nonaccrual
Loans and
Leases*		     Accruing
Troubled
Debt
Restructured
Loans and
Lease
Modifications		     Total
Impaired
Loans
and
Leases		     Nonaccrual
Loans and
Leases*		     Accruing
Troubled
Debt
Restructured
Loans and
Lease
Modifications		     Total
Impaired
Loans
and
Leases		  
             

Commercial, financial and agricultural

   $ 3,948     $ 1,699     $ 5,647     $ 4,614     $ 77     $ 4,691  

Real estate—commercial real estate and construction:

                                                

Commercial real estate

     17,861       3,015       20,876       18,085       2,435       20,520  

Construction

     13,887       2,782       16,669       14,479       1,262       15,741  

Real estate—residential and home equity:

                                                

Residential secured for business purpose

     177       —         177       107       8       115  

Residential secured for personal purpose

     312       —         312       57       —         57  

Home equity secured for personal purpose

     —         —         —         27       —         27  

Loans to individuals

     —         49       49       —         50       50  

Lease financings

     577       46       623       838       61       899  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 36,762     $ 7,591     $ 44,353     $ 38,207     $ 3,893     $ 42,100  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Includes non-accrual troubled debt restructured loans and lease modifications of $8.3 million and $8.6 million at June 30, 2012 and December 31, 2011, respectively.

Credit Quality Indicators

The following tables present by class, the recorded investment in loans and leases by credit quality indicator at June 30, 2012 and December 31, 2011.

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

 

                                                                 
    Commercial, Financial and
Agricultural		     Real Estate—
Commercial		     Real Estate—
Construction		     Real Estate—
Residential Secured for
Business Purpose		  
(Dollars in thousands)   At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		  
                 

Grade:

                                                                

1. Cash secured/2. Fully secured

   $ 2,135     $ 2,426     $ —       $ —       $ —       $ —       $ —       $ —    

3. Strong

     8,631       4,441       9,039       9,365       585       1,124       —         —    

4. Satisfactory

     37,464       32,730       32,282       28,517       2,672       89       349       1,309  

5. Acceptable

     297,403       296,860       286,562       296,499       30,487       35,207       18,418       18,990  

6. Pre-watch

     85,253       79,402       112,196       100,581       27,368       33,993       10,026       8,853  

7. Special Mention

     18,194       26,162       25,872       29,055       1,477       1,715       731       663  

8. Substandard

     47,302       40,634       50,338       49,943       17,321       18,269       2,573       2,666  

9. Doubtful

     1,573       2,032       993       993       —         —         —         —    

10. Loss

     —         —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 497,955     $ 484,687     $ 517,282     $ 514,953     $ 79,910     $ 90,397     $ 32,097     $ 32,481  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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, loans and leases on non-accrual of interest and troubled debt restructured loans and lease modifications. 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 or leases with a well-defined weakness and 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
Secured for Personal
Purpose		     Real Estate—Home
Equity Secured for
Personal Purpose		     Loans to individuals     Lease Financing  
(Dollars in thousands)   At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		     At
June 30,
2012		     At
December 31,
2011		  
                 

Performing

   $ 139,905     $ 125,163     $ 78,638     $ 80,334     $ 43,751     $ 44,711     $ 74,563     $ 72,282  

Nonperforming

     312       57       58       144       286       254       692       943  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 140,217     $ 125,220     $ 78,696     $ 80,478     $ 44,037     $ 44,965     $ 75,255     $ 73,225  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

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 and 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 primarily 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 six months ended June 30, 2012 and 2011:

 

                                                                 
(Dollars in thousands)   Commercial,
Financial
and
Agricultural		     Real
Estate—
Commercial
and
Construction		     Real
Estate—
Residential
Secured
for
Business
Purpose		     Real
Estate—
Residential
and Home
Equity
Secured
for
Personal
Purpose		     Loans to
Individuals		     Lease
Financings		     Unallocated     Total  
                 

For the Three Months Ended June 30, 2012

                                                                
                 

Reserve for loan and lease losses:

                                                                
                 

Beginning balance

   $ 11,701     $ 13,352     $ 948     $ 732     $ 704     $ 1,160     $ 2,000     $ 30,597  
                 

Charge-offs

     (1,458 )      (133 )      —         (2 )      (119 )      (310 )      N/A       (2,022 ) 
                 

Recoveries

     362       44       3       1       26       148       N/A       584  

Provision (recovery of provision)

     1,416       (947 )      (117 )      153       108       163       567       1,343  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Ending balance

   $ 12,021     $ 12,316     $ 834     $ 884     $ 719     $ 1,161     $ 2,567     $ 30,502  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

For the Three Months Ended June 30, 2011

                                                                
                 

Reserve for loan and lease losses:

                                                                
                 

Beginning balance

   $ 11,098     $ 16,464     $ 995     $ 594     $ 701     $ 1,946     $ 1,006     $ 32,804  
                 

Charge-offs

     (1,644 )      (3,375 )      (136 )      (35 )      (396 )      (391 )      N/A       (5,977 ) 
                 

Recoveries

     49       17       3       1       34       114       N/A       218  

Provision (recovery of provision)

     1,374       2,986       157       136       356       243       304       5,556  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Ending balance

   $ 10,877     $ 16,092     $ 1,019     $ 696     $ 695     $ 1,912     $ 1,310     $ 32,601  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
               

For the Six Months Ended June 30, 2012

  

                                                        
                 

Reserve for loan and lease losses:

                                                                
                 

Beginning balance

   $ 11,262     $ 13,317     $ 823     $ 735     $ 730     $ 1,344     $ 1,659     $ 29,870  
                 

Charge-offs

     (3,165 )      (1,675 )      —         (2 )      (240 )      (646 )      N/A       (5,728 ) 
                 

Recoveries

     415       140       55       3       57       247       N/A       917  

Provision (recovery of provision)

     3,509       534       (44 )      148       172       216       908       5,443  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance

   $ 12,021     $ 12,316     $ 834     $ 884     $ 719     $ 1,161     $ 2,567     $ 30,502  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

For the Six Months Ended June 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

     (2,774 )      (5,063 )      (194 )      (38 )      (597 )      (859 )      N/A       (9,525 ) 
                 

Recoveries

     181       80       6       3       78       190       N/A       538  

Provision (recovery of provision)

     3,840       5,787       (126 )      187       480       631       (109 )      10,690  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance

   $ 10,877     $ 16,092     $ 1,019     $ 696     $ 695     $ 1,912     $ 1,310     $ 32,601  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                                 
(Dollars in thousands)   Commercial,
Financial
and
Agricultural		     Real
Estate—
Commercial
and
Construction		     Real
Estate—
Residential
Secured
for
Business
Purpose		     Real
Estate—
Residential
and Home
Equity
Secured
for
Personal
Purpose		     Loans to
Individuals		     Lease
Financings		     Unallocated     Total  
               

At June 30, 2012

  

                                                        
                 

Reserve for loan and lease losses:

                                                                

Ending balance: individually evaluated for impairment

   $ 432     $ —       $ —       $ —       $ —       $ N/A     $ N/A     $ 432  

Ending balance: collectively evaluated for impairment

     11,589       12,316       834       884       719       1,161       2,567       30,070  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total ending balance

   $ 12,021     $ 12,316     $ 834     $ 884     $ 719     $ 1,161     $ 2,567     $ 30,502  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Loans and leases:

                                                                
                 

Ending balance: individually evaluated for impairment

   $ 5,647     $ 37,545     $ 177     $ 312     $ 49     $ N/A             $ 43,730  

Ending balance: collectively evaluated for impairment

     492,308       559,647       31,920       218,601       43,988       75,255               1,421,719  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

 

 

  
                 

Total ending balance

   $ 497,955     $ 597,192     $ 32,097     $ 218,913     $ 44,037     $ 75,255             $ 1,465,449  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

 

 

  
                 

At June 30, 2011

                                                                
                 

Reserve for loan and lease losses:

                                                                

Ending balance: individually evaluated for impairment

   $ 372     $ 933     $ —       $ —       $ —       $ —       $ N/A     $ 1,305  

Ending balance: collectively evaluated for impairment

     10,505       15,159       1,019       696       695       1,912       1,310       31,296  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total ending balance

   $ 10,877     $ 16,092     $ 1,019     $ 696     $ 695     $ 1,912     $ 1,310     $ 32,601  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Loans and leases:

                                                                

Ending balance: individually evaluated for impairment

   $ 5,987     $ 41,149     $ 218     $ 250     $ 52     $ —               $ 47,656  

Ending balance: collectively evaluated for impairment

     473,683       554,870       32,499       212,534       42,525       74,940               1,391,051  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

 

 

  
                 

Total ending balance

   $ 479,670     $ 596,019     $ 32,717     $ 212,784     $ 42,577     $ 74,940             $ 1,438,707  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

 

 

  

Impaired Loans

The following presents, by class of loans, the recorded investment and unpaid principal balance of impaired loans, the amounts of the impaired loans for which there is not an allowance for credit losses and the amounts for which there is an allowance for credit losses at June 30, 2012 and December 31, 2011:

 

                                                 
    At June 30, 2012     At December 31, 2011  
(Dollars in thousands)   Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		     Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		  
             

Impaired loans with no related allowance recorded:

                                                

Commercial, financial and agricultural

   $ 4,660     $ 5,938             $ 3,384     $ 4,422          

Real estate—commercial real estate

     20,876       29,836               19,453       27,146          

Real estate—construction

     16,669       18,713               15,741       17,268          

Real estate—residential secured for business purpose

     177       187               115       631          

Real estate—residential secured for personal purpose

     312       312               57       57          

Real estate—home equity secured for personal purpose

     —         —                 27       27          

Loans to individuals

     49       57               50       58          
   

 

 

    

 

 

            

 

 

    

 

 

          

Total impaired loans with no related allowance recorded:

   $ 42,743     $ 55,043             $ 38,827     $ 49,609          
   

 

 

    

 

 

            

 

 

    

 

 

          
             

Impaired loans with an allowance recorded:

                                                

Commercial, financial and agricultural

   $ 987     $ 1,359     $ 432     $ 1,307     $ 1,700     $ 510  

Real estate—commercial real estate

     —         —         —         1,067       1,067       743  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total impaired loan with an allowance recorded

   $ 987     $ 1,359     $ 432     $ 2,374     $ 2,767     $ 1,253  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
             

Total impaired loans:

                                                

Commercial, financial and agricultural

   $ 5,647     $ 7,297     $ 432     $ 4,691     $ 6,122     $ 510  

Real estate—commercial real estate

     20,876       29,836       —         20,520       28,213       743  

Real estate—construction

     16,669       18,713       —         15,741       17,268       —    

Real estate—residential secured for business purpose

     177       187       —         115       631       —    

Real estate—residential secured for personal purpose

     312       312       —         57       57       —    

Real estate—home equity secured for personal purpose

     —         —         —         27       27       —    

Loans to individuals

     49       57       —         50       58       —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total impaired loans:

   $ 43,730     $ 56,402     $ 432     $ 41,201     $ 52,376     $ 1,253  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following presents by class of loans, the average recorded investment in impaired loans and an analysis of interest on impaired loans:

 

                                                 
    Three Months Ended June 30, 2012     Three Months Ended June 30, 2011  
(Dollars in thousands)   Average
Recorded
Investment		     Interest
Income
Recognized*		     Interest
Income
That
Would
Have Been
Recognized
Under
Original
Terms		     Average
Recorded
Investment		     Interest
Income
Recognized*		     Interest
Income
That
Would
Have Been
Recognized
Under
Original
Terms		  
             

Commercial, financial and agricultural

   $ 6,011     $ 31     $ 60     $ 6,387     $ 12     $ 105  

Real estate—commercial real estate

     19,863       44       257       16,540       49       311  

Real estate—construction

     16,639       35       190       19,355       27       229  

Real estate—residential secured for business purpose

     161       —         2       327       1       3  

Real estate—residential secured for personal purpose

     185       —         3       544       2       5  

Real estate—home equity secured for personal purpose

     —         —         —         23       —         —    

Loans to individuals

     49       2       —         58       2       —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 42,908     $ 112     $ 512     $ 43,234     $ 93     $ 653  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Includes interest income recognized on accruing troubled debt restructured loans of $109 thousand and $73 thousand for the three months ended June 30, 2012 and 2011, respectively.

 

                                                 
    Six Months Ended June 30, 2012     Six Months Ended June 30, 2011  
(Dollars in thousands)   Average
Recorded
Investment		     Interest
Income
Recognized*		     Interest
Income
That
Would
Have Been
Recognized
Under
Original
Terms		     Average
Recorded
Investment		     Interest
Income
Recognized*		     Interest
Income
That
Would
Have Been
Recognized
Under
Original
Terms		  
             

Commercial, financial and agricultural

   $ 5,596     $ 33     $ 152     $ 6,753     $ 14     $ 193  

Real estate—commercial real estate

     20,421       87       526       17,380       52       561  

Real estate—construction

     16,250       52       385       16,986       28       458  

Real estate—residential secured for business purpose

     140       —         3       380       3       9  

Real estate—residential secured for personal purpose

     130       —         4       750       19       20  

Real estate—home equity secured for personal purpose

     4       —         —         13       —         —    

Loans to individuals

     49       3       —         62       3       1  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 42,590     $ 175     $ 1,070     $ 42,324     $ 119     $ 1,242  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Includes interest income recognized on accruing troubled debt restructured loans of $167 thousand and $79 thousand for the six months ended June 30, 2012 and 2011, respectively.

 

Troubled Debt Restructured Loans

The following presents, by class of loans, information regarding accruing and non-accrual loans that were restructured during the three and six months ended June 30, 2012 and 2011.

 

                                                                 
    Three Months Ended June 30, 2012     Three Months Ended June 30 , 2011  

(Dollars in thousands)

   Number
Of
Loans		     Pre-Restructuring
Outstanding
Recorded
Investment		     Post-
Restructuring
Outstanding
Recorded
Investment		     Related
Allowance		     Number
Of
Loans		     Pre-Restructuring
Outstanding
Recorded
Investment		     Post-
Restructuring
Outstanding
Recorded
Investment		     Related
Allowance		  
                 

Accruing Troubled Debt Restructured Loans

                                                                

Commercial, financial and agricultural

     1     $ 135     $ 135     $ —         —       $ —       $ —       $ —    

Real estate—commercial real estate

     1       175       175       —         —         —         —         —    

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

       2     $   310     $     310     $ —           3     $   285     $     285     $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Nonaccrual Troubled Debt Restructured Loans

                                                                

Commercial, financial and agricultural

     —       $ —       $ —       $ —         —       $ —       $ —       $ —    

Real estate—commercial real estate

     —         —         —         —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     —       $ —       $ —       $ —         —       $ —       $ —       $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                                                 
    Six Months Ended June 30, 2012     Six Months Ended June 30, 2011  

(Dollars in thousands)

   Number
Of
Loans		     Pre-Restructuring
Outstanding
Recorded
Investment		     Post-
Restructuring
Outstanding
Recorded
Investment		     Related
Allowance		     Number
Of
Loans		     Pre-Restructuring
Outstanding
Recorded
Investment		     Post-
Restructuring
Outstanding
Recorded
Investment		     Related
Allowance		  
                 

Accruing Troubled Debt Restructured Loans

                                                                

Commercial, financial and agricultural

     8     $ 1,672     $ 1,672     $ —         —       $ —       $ —       $ —    

Real estate—commercial real estate

     3       962       962       —         5       2,438       2,435       —    

Real estate—construction

     2       1,330       1,330       —         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     $ 3,964     $ 3,964     $ —         13     $ 4,905     $ 4,902     $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                 

Nonaccrual Troubled Debt Restructured Loans

                                                                

Commercial, financial and agricultural

     2     $ 448     $ 448     $ —         —       $ —       $ —       $ —    

Real estate—commercial real estate

     1       124       124       —         1       2,765       2,765       —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     3     $ 572     $ 572     $ —         1     $ 2,765     $ 2,765     $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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 $4.0 million were restructured during the first six months of 2012. 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 primarily consisted of four commercial business loans for one borrower totaling $1.3 million, which had their interest only payment terms extended due to reduced cash flows. The second category primarily consisted of one construction loan totaling $1.2 million, which had interest only payment terms extended until projected cash flows from rental property income are received. Accruing troubled debt restructured loans charged-off during the six months ended June 30, 2012 subsequent to the restructuring totaled approximately $372 thousand, primarily due to declines in collateral values for two commercial real estate loans for one borrower.

Nonaccrual loans totaling $572 thousand were restructured during the first six months of 2012. Nonaccrual troubled debt restructured loans were comprised of two commercial business loans and one commercial real estate loan for one borrower, which were granted principal and interest deferrals for a six month period.

There were no accruing or nonaccrual troubled debt restructured loans which had payment defaults within twelve months following restructuring during the three and six month periods ending June 30, 2012 and 2011.