Loans (Tables)

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Major Classifications of Loans

Major classifications of loans at September 30, 2013 and December 31, 2012 are as follows (in thousands):

	September 30, 2013						December 31, 2012
	Acquired Credit Impaired		Other		Total
Commercial and industrial	$	341	30,939		31,280		26,236
Commercial, secured by real estate	4,252		298,059		302,311		238,357
Residential real estate	1,346		214,972		216,318		175,031
Consumer	—		12,928		12,928		10,554
Agricultural	—		3,245		3,245		1,668
Other loans, including deposit overdrafts	—		58		58		1,875
	5,939		560,201		566,140		453,721
Deferred net origination costs (fees)	—		(31	)	(31	)	62
	5,939		560,170		566,109		453,783
Less allowance for loan losses	—		3,423		3,423		3,437
Loans, net	$	5,939	556,747		562,686		450,346

Schedule of Acquired Non Impaired Loans

The following table provides certain information at the acquisition date on loans acquired from First Capital, not including loans considered to be impaired (in thousands):

Contractually required principal at acquisition	$	91,614
Less fair value adjustment	(1,908		)
Fair value of acquired loans	$	89,706
Contractual cash flows not expected to be collected	$	2,149

Acquired Loans Accounted for in Accordance with FASB ASC 310-30

The following table provides details on acquired impaired loans that are accounted for in accordance with FASB ASC 310-30 (in thousands):

Contractually required principal at acquisition	$	11,460
Contractual cash flows not expected to be collected (nonaccretable difference)	(1,260		)
Expected cash flows at acquisition	10,200
Interest component of expected cash flows (accretable discount)	(1,389		)
Fair value of acquired impaired loans	$	8,811

Outstanding and Related Carrying Amount for Acquired Impaired Loans

The following table provides the outstanding balance and related carrying amount for acquired impaired loans at the dates indicated (in thousands):

	September 30, 2013		January 11, 2013
Outstanding balance	$	8,155	11,460
Carrying amount	5,939		8,811

Accretable Discount Related to Acquired Impaired Loans

Activity during 2013 for the accretable discount related to acquired impaired loans is as follows (in thousands):

Accretable discount at January 11, 2013	$	1,389
Reclass from nonaccretable discount to accretable discount	157
Less transferred to other real estate owned	(23		)
Less accretion	(394		)
Accretable discount at September 30, 2013	$	1,129

Non-accrual, Past Due, and Accruing Restructured Loans

Non-accrual, past-due, and accruing restructured loans as of September 30, 2013 and December 31, 2012 are as follows (in thousands):

	September 30, 2013					December 31, 2012
	Acquired Credit Impaired		Other	Total
Non-accrual loans:
Commercial and industrial	$	—	144	144		264
Commercial, secured by real estate	369		1,120	1,489		788
Residential real estate	143		1,052	1,195		1,231
Total non-accrual loans	512		2,316	2,828		2,283
Past-due 90 days or more and still accruing	—		29	29		128
Total non-accrual and past-due 90 days or more and still accruing	512		2,345	2,857		2,411
Accruing restructured loans	—		14,175	14,175		13,343
Total	$	512	16,520	17,032		15,754
Percentage of total non-accrual loans and loans past-due 90 days or more and still accruing to total loans				0.50	%	0.53	%
Percentage of total non-accrual loans, loans past-due 90 days or more and still accruing, and accruing restructured loans to total loans				3.01	%	3.47	%

Allowance for Loan Losses and Recorded Investments in Loans

The allowance for loan losses and recorded investment in loans for the nine months ended September 30 are as follows (in thousands):

	Commercial & Industrial			Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural	Other		Total
2013
Allowance for loan losses:
Balance, beginning of year	$	320		2,296		712		108		—	1		3,437
Provision charged to expenses	(41		)	107		268		14		—	21		369
Losses charged off:
Acquired credit impaired loans	—			—		(5	)	—		—	—		(5	)
Other loans	(120		)	(34	)	(203	)	(148	)	—	(56	)	(561	)
Recoveries	4			26		21		98		—	34		183
Balance, end of period	$	163		2,395		793		72		—	—		3,423
Individually evaluated for impairment	$	1		766		190		1		—	—		958
Collectively evaluated for impairment	162			1,629		603		71		—	—		2,465
Acquired credit impaired loans	—			—		—		—		—	—		—
Balance, end of period	$	163		2,395		793		72		—	—		3,423
Loans:
Individually evaluated for impairment	$	166		14,444		1,543		35		—	—		16,188
Collectively evaluated for impairment	30,739			283,288		213,669		12,983		3,245	58		543,982
Acquired credit impaired loans	341			4,252		1,346		—		—	—		5,939
Balance, end of period	$	31,246		301,984		216,558		13,018		3,245	58		566,109
2012
Allowance for loan losses:
Balance, beginning of year	$	162		1,941		656		166		—	6		2,931
Change in classification	18			(18	)	—		—		—	—		—
Provision charged to expenses	163			(16	)	624		(49	)	—	20		742
Losses charged off	(159		)	(234	)	(479	)	(84	)	—	(64	)	(1,020	)
Recoveries	—			71		7		95		—	40		213
Balance, end of period	$	184		1,744		808		128		—	2		2,866
Individually evaluated for impairment	$	21		49		219		—		—	—		289
Collectively evaluated for impairment	163			1,695		589		128		—	2		2,577
Balance, end of period	$	184		1,744		808		128		—	2		2,866
Loans:
Individually evaluated for impairment	$	264		13,895		1,157		13		—	—		15,329
Collectively evaluated for impairment	25,462			223,898		176,114		11,550		2,061	2,993		442,078
Balance, end of period	$	25,726		237,793		177,271		11,563		2,061	2,993		457,407

Analysis of the Company's Loan Portfolio by Credit Quality Indicators

A breakdown of the loan portfolio by credit quality indicators at September 30, 2013 and December 31, 2012 is as follows (in thousands):

	Pass		OAEM	Substandard	Doubtful	Total
September 30, 2013
Acquired credit impaired:
Commercial & industrial	$	12	—	329	—	341
Commercial, secured by real estate	—		766	3,486	—	4,252
Residential real estate	—		—	1,346	—	1,346
Total	$	12	766	5,161	—	5,939
Other:
Commercial & industrial	$	27,657	1,815	1,433	—	30,905
Commercial, secured by real estate	285,160		1,957	10,615	—	297,732
Residential real estate	208,654		1,774	4,731	53	215,212
Consumer	12,978		—	40	—	13,018
Agricultural	3,245		—	—	—	3,245
Other	58		—	—	—	58
Total	$	537,752	5,546	16,819	53	560,170
Total:
Commercial & industrial	$	27,669	1,815	1,762	—	31,246
Commercial, secured by real estate	285,160		2,723	14,101	—	301,984
Residential real estate	208,654		1,774	6,077	53	216,558
Consumer	12,978		—	40	—	13,018
Agricultural	3,245		—	—	—	3,245
Other	58		—	—	—	58
Total	$	537,764	6,312	21,980	53	566,109
December 31, 2012
Commercial & industrial	$	22,965	1,804	1,177	264	26,210
Commercial, secured by real estate	222,497		2,653	12,872	107	238,129
Residential real estate	168,338		2,353	4,280	298	175,269
Consumer	10,549		—	62	20	10,631
Agricultural	1,665		—	3	—	1,668
Other	1,876		—	—	—	1,876
Total	$	427,890	6,810	18,394	689	453,783

Loan Portfolio Aging Analysis

A loan portfolio aging analysis at September 30, 2013 and December 31, 2012 is as follows (in thousands):

	30-59 Days Past Due		60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total Loans Receivable	Total Loans Greater Than 90 Days and Accruing
September 30, 2013
Acquired credit impaired:
Commercial & industrial	$	—	—	—	—	341	341	—
Commercial, secured by real estate	—		54	127	181	4,071	4,252	—
Residential real estate	—		45	80	125	1,221	1,346	—
Total	$	—	99	207	306	5,633	5,939	—
Other:
Commercial & industrial	$	64	99	144	307	30,598	30,905	—
Commercial, secured by real estate	1,362		769	1,120	3,251	294,481	297,732	—
Residential real estate	1,200		492	1,116	2,808	212,404	215,212	29
Consumer	95		16	—	111	12,907	13,018	—
Agricultural	—		—	—	—	3,245	3,245	—
Other	39		—	—	39	19	58	—
Total	$	2,760	1,376	2,380	6,516	553,654	560,170	29
Total:
Commercial & industrial	$	64	99	144	307	30,939	31,246	—
Commercial, secured by real estate	1,362		823	1,247	3,432	298,552	301,984	—
Residential real estate	1,200		537	1,196	2,933	213,625	216,558	29
Consumer	95		16	—	111	12,907	13,018	—
Agricultural	—		—	—	—	3,245	3,245	—
Other	39		—	—	39	19	58	—
Total	$	2,760	1,475	2,587	6,822	559,287	566,109	29
December 31, 2012
Commercial & industrial	$	—	1	264	265	25,945	26,210	—
Commercial, secured by real estate	346		79	788	1,213	236,916	238,129	—
Residential real estate	791		212	1,172	2,175	173,094	175,269	103
Consumer	61		57	25	143	10,488	10,631	25
Agricultural	—		—	—	—	1,668	1,668	—
Other	72		—	—	72	1,804	1,876	—
Total	$	1,270	349	2,249	3,868	449,915	453,783	128

Impaired Loans

Impaired loans, excluding acquired credit impaired loans, at September 30, 2013 and December 31, 2012 are as follows (in thousands):

	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
September 30, 2013
With no related allowance recorded:
Commercial & industrial	$	—	—	—	—	—
Commercial, secured by real estate	3,067		3,143	—	3,143	85
Residential real estate	344		344	—	382	6
Consumer	—		—	—	1	—
Total	$	3,411	3,487	—	3,526	91
With an allowance recorded:
Commercial & industrial	$	166	271	1	193	1
Commercial, secured by real estate	11,377		11,431	766	10,710	278
Residential real estate	1,199		1,462	190	1,201	23
Consumer	35		35	1	21	2
Total	$	12,777	13,199	958	12,125	304
Total:
Commercial & industrial	$	166	271	1	193	1
Commercial, secured by real estate	14,444		14,574	766	13,853	363
Residential real estate	1,543		1,806	190	1,583	29
Consumer	35		35	1	22	2
Total	$	16,188	16,686	958	15,651	395
December 31, 2012
With no related allowance recorded:
Commercial & industrial	$	—	—	—	975	43
Commercial, secured by real estate	9,541		9,936	—	9,310	350
Residential real estate	417		417	—	397	5
Consumer	20		20	—	23	2
Total	$	9,978	10,373	—	10,705	400
With an allowance recorded:
Commercial & industrial	$	264	822	159	374	—
Commercial, secured by real estate	4,258		4,360	660	4,765	171
Residential real estate	658		853	85	707	2
Consumer	—		—	—	4	—
Total	$	5,180	6,035	904	5,850	173
Total:
Commercial & industrial	$	264	822	159	1,349	43
Commercial, secured by real estate	13,799		14,296	660	14,075	521
Residential real estate	1,075		1,270	85	1,104	7
Consumer	20		20	—	27	2
Total	$	15,158	16,408	904	16,555	573

Troubled Debt Restructurings

Loan modifications that were classified as troubled debt restructurings during the three and nine months ended September 30, 2013 and 2012 are as follows (dollars in thousands):

	2013			2012
	Number of Loans	Balance at Modification		Number of Loans	Balance at Modification
Three Months Ended September 30,
Commercial and industrial	—	$	—	—	$	—
Commercial, secured by real estate	1	702		—	—
Residential real estate	—	—		1	100
Consumer	—	—		2	20
Total	1	$	702	3	$	120
Nine Months Ended September 30,
Commercial and industrial	1	$	22	—	$	—
Commercial, secured by real estate	1	702		—	—
Residential real estate	2	335		3	273
Consumer	2	27		2	20
Total	6	$	1,086	5	$	293