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Loans and Allowance for Loan Losses (Tables)
12 Months Ended
Dec. 31, 2012
Receivables [Abstract]  
Past Due Financing Receivables
Outstanding loans by class and payment aging as of December 31, 2012 and 2011 are as follows:
 
Loan Aging Analysis by Class as of December 31, 2012 and 2011
(dollars in thousands)
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential 1

 
Installment and other consumer

 
Total

December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30-59 days past due
$
29

 
$

 
$

 
$

 
$
294

 
$
167

 
$
98

 
$
588

60-89 days past due

 

 

 

 

 

 

 

Greater than 90 days past due (non-accrual) 2
4,893

 
1,403

 
6,843

 
2,239

 
545

 
1,196

 
533

 
17,652

Total past due
4,922

 
1,403

 
6,843

 
2,239

 
839

 
1,363

 
631

 
18,240

Current
171,509

 
195,003

 
502,163

 
28,426

 
92,398

 
48,069

 
18,144

 
1,055,712

Total loans 3
$
176,431

 
$
196,406

 
$
509,006

 
$
30,665

 
$
93,237

 
$
49,432

 
$
18,775

 
$
1,073,952

Non-accrual loans to total loans
2.8
%
 
0.7
%
 
1.3
%
 
7.3
%
 
0.6
%
 
2.4
%
 
2.8
%
 
1.6
%
December 31, 2011
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

30-59 days past due
$
371

 
$
576

 
$
6,060

 
$

 
$
195

 
$

 
$
7

 
$
7,209

60-89 days past due
139

 

 

 

 

 

 
34

 
173

Greater than 90 days past due (non-accrual) 2
2,955

 
2,033

 
741

 
3,014

 
766

 
1,942

 
519

 
11,970

Total past due
3,465

 
2,609

 
6,801

 
3,014

 
961

 
1,942

 
560

 
19,352

Current
172,325

 
172,096

 
439,624

 
48,943

 
97,082

 
59,560

 
22,172

 
1,011,802

Total loans 3
$
175,790

 
$
174,705

 
$
446,425

 
$
51,957

 
$
98,043

 
$
61,502

 
$
22,732

 
$
1,031,154

Non-accrual loans to total loans
1.7
%
 
1.2
%
 
0.2
%
 
5.8
%
 
0.8
%
 
3.2
%
 
2.3
%
 
1.2
%

1 Our residential loan portfolio includes no sub-prime loans, nor is it our normal practice to underwrite loans commonly referred to as "Alt-A mortgages", the characteristics of which are loans lacking full documentation, borrowers having low FICO scores or higher loan-to-value ratios.

2 Amounts include $1.6 million and $2.5 million of Purchased Credit Impaired ("PCI") loans that have stopped accreting interest at December 31, 2012 and 2011, respectively, and exclude accreting PCI loans of $3.0 million and $3.4 million at December 31, 2012 and 2011, respectively, as their accretable yield interest recognition is independent from the underlying contractual loan delinquency status. There were no accruing loans past due more than ninety days at December 31, 2012 or 2011.

3 Amounts were net of deferred loan fees of $769 thousand and $1.6 million at December 31, 2012 and 2011, respectively. Amounts were also net of unaccreted purchase discounts on non-PCI loans of $2.1 million and $2.9 million at December 31, 2012 and 2011, respectively.
Financing Receivable Credit Quality Indicators
The following table represents our analysis of loans by internally assigned grades, including the PCI loans, at December 31, 2012 and 2011:
 
(in thousands)
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential

 
Installment and other consumer

 
Purchased credit-impaired

 
Total

Credit Risk Profile by Internally Assigned Grade:
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pass
$
148,771

 
$
170,553

 
$
489,978

 
$
26,287

 
$
86,957

 
$
45,634

 
$
17,809

 
$
1,862

 
$
987,851

Special Mention
13,267

 
20,346

 
8,671

 
1,970

 
2,931

 
1,067

 

 
933

 
49,185

Substandard
13,753

 
2,992

 
8,963

 
2,408

 
3,349

 
2,731

 
966

 
1,754

 
36,916

Doubtful

 

 

 

 

 

 

 

 

Total loans
$
175,791

 
$
193,891

 
$
507,612

 
$
30,665

 
$
93,237

 
$
49,432

 
$
18,775

 
$
4,549

 
$
1,073,952

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2011
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Pass
$
148,805

 
$
146,449

 
$
433,307

 
$
32,272

 
$
93,189

 
$
54,711

 
$
21,648

 
$
1,541

 
$
931,922

Special Mention
7,874

 
18,434

 
4,877

 

 
838

 
2,010

 

 
529

 
34,562

Substandard
17,897

 
6,609

 
6,617

 
19,492

 
3,677

 
4,420

 
895

 
3,563

 
63,170

Doubtful
98

 

 

 
193

 
339

 
361

 
189

 
320

 
1,500

Total loans
$
174,674

 
$
171,492

 
$
444,801

 
$
51,957

 
$
98,043

 
$
61,502

 
$
22,732

 
$
5,953

 
$
1,031,154

Troubled Debt Restructurings on Financing Receivables
The table below presents the following information for TDRs modified during the periods presented: number of contracts modified, the recorded investment in the loans prior to modification, and the recorded investment in the loans after the loans were restructured. Modifications during the year ended December 31, 2012 primarily involved payment extensions, forbearances, and interest rate concessions, while modifications in 2011 involved interest rate concessions, maturity extensions, and payment deferral, or some combination thereof. There were three commercial loans, two commercial real estate loans and one construction loan modified as troubled debt restructurings within the previous twelve months with recorded investments of $4.5 million that subsequently defaulted and $730 thousand were charged-off, net of recoveries, in the year ended December 31, 2012. We are reporting these defaulted TDRs based on a payment default definition of more than ninety days past due. There were three TDRs in 2011 with loan balances of $1.0 million that subsequently defaulted within twelve months of restructuring and were charged-off during 2011. The table below excludes fully paid-off or fully charged-off TDR loans.

(dollars in thousands)
Number of Contracts Modified

 
Pre-Modification Outstanding Recorded Investment

 
Post-Modification Outstanding Recorded Investment

 
Post-Modification Outstanding Recorded Investment at period end

Troubled Debt Restructurings during the year ended December 31, 2012:
 

 
 

 
 

 
 
Commercial
14

 
$
9,980

 
$
9,903

 
$
5,965

Construction
2

 
2,793

 
2,793

 
1,760

Home Equity
2

 
472

 
473

 
469

Other residential
2

 
1,422

 
1,401

 
1,392

Installment and other consumer
2

 
231

 
231

 
228

Total
22

 
$
14,898

 
$
14,801

 
$
9,814

Troubled Debt Restructurings during the year ended December 31, 2011:
 

 
 

 
 

 
 
Commercial
27

 
$
5,854

 
$
5,940

 
$
4,969

Commercial real estate, owner-occupied
2

 
1,366

 
1,403

 
1,403

Construction
2

 
817

 
817

 
800

Home Equity
3

 
478

 
469

 
467

Other residential
3

 
1,467

 
1,467

 
1,464

Installment and other consumer
13

 
1,607

 
1,605

 
1,552

Total
50

 
$
11,589

 
$
11,701

 
$
10,655

The table below summarizes outstanding TDR loans by loan class as of December 31, 2012 and 2011. The summary includes those TDRs that are on nonaccrual status and those that continue to accrue interest.

(in thousands)
 
 
 
 
As of
Recorded investment in Troubled Debt Restructurings 1
 
 
 
 
December 31, 2012

 
December 31, 2011

 
 
 
 
 
 
 
 
Commercial
 
 
 
 
$
9,470

 
$
4,969

Commercial real estate, owner-occupied
 
 
 
 
1,403

 
1,403

Construction
 
 
 
 
1,929

 
800

Home equity
 
 
 
 
908

 
467

Other residential
 
 
 
 
2,831

 
1,464

Installment and other consumer
 
 
 
 
1,743

 
1,552

Total

 

 
$
18,284

 
$
10,655


1 Includes $10.8 million and $6.3 million of TDR loans that were accruing interest as of December 31, 2012 and 2011, respectively.
Impaired Financing Receivables
The table below summarizes information on impaired loans and their related allowance. Total impaired loans include non-accrual loans, accruing TDR loans and accreting PCI loans that have experienced post-acquisition declines in cash flows expected to be collected.
 
(dollars in thousands)
 
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential

 
Installment and other consumer

 
Total

December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded investment in impaired loans:
 
 
 
 
 
 
 
 
 
 
 
 
With no specific allowance recorded
 
$
6,825

 
$
1,403

 
$
3,725

 
$
2,328

 
$
931

 
$
2,598

 
$
978

 
$
18,788

With a specific allowance recorded
 
2,645

 
471

 
4,513

 
1,840

 
261

 
715

 
1,070

 
11,515

Total recorded investment in impaired loans
 
$
9,470

 
$
1,874

 
$
8,238

 
$
4,168

 
$
1,192

 
$
3,313

 
$
2,048

 
$
30,303

Unpaid principal balance of impaired loans:
 
 

 
 

 
 

 
 

 
 

 
 

With no specific allowance recorded
 
$
7,633

 
$
3,060

 
$
5,717

 
$
2,514

 
$
1,417

 
$
2,598

 
$
1,020

 
$
23,959

With a specific allowance recorded
 
2,930

 
966

 
4,887

 
4,519

 
324

 
715

 
1,070

 
15,411

Total unpaid principal balance of impaired loans
 
$
10,563

 
$
4,026

 
$
10,604

 
$
7,033

 
$
1,741

 
$
3,313

 
$
2,090

 
$
39,370

Specific allowance
 
$
1,131

 
$
26

 
$
374

 
$
118

 
$
154

 
$
120

 
$
431

 
$
2,354

Average recorded investment in impaired loans during 2012
 
$
11,772

 
$
1,538

 
$
5,135

 
$
12,909

 
$
1,314

 
$
2,509

 
$
2,151

 
$
37,328

Interest income recognized on impaired loans during 2012
 
$
803

 
$
111

 
$
512

 
$
570

 
$
32

 
$
175

 
$
96

 
$
2,299

 
 

 













December 31, 2011
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Recorded investment in impaired loans:
 
 

 
 

 
 

 
 

 
 

 
 

With no specific allowance recorded
 
$
2,866

 
$
2,195

 
$
648

 
$
2,395

 
$
591

 
$
1,464

 
$
1,022

 
$
11,181

With a specific allowance recorded
 
2,969

 
1,018

 
623

 
909

 
454

 
1,942

 
1,049

 
8,964

Total recorded investment in impaired loans
 
$
5,835

 
$
3,213

 
$
1,271

 
$
3,304

 
$
1,045

 
$
3,406

 
$
2,071

 
$
20,145

Unpaid principal balance of impaired loans:
 
 

 
 

 
 

 
 

 
 

 
 

With no specific allowance recorded
 
$
4,730

 
$
5,140

 
$
648

 
$
5,007

 
$
1,077

 
$
1,464

 
$
1,064

 
$
19,130

With a specific allowance recorded
 
4,598

 
1,862

 
825

 
1,095

 
544

 
1,942

 
1,049

 
11,915

Total recorded investment in impaired loans
 
$
9,328

 
$
7,002

 
$
1,473

 
$
6,102

 
$
1,621

 
$
3,406

 
$
2,113

 
$
31,045

Specific allowance
 
$
1,285

 
$
169

 
$
163

 
$
194

 
$
262

 
$
408

 
$
465

 
$
2,946

Average recorded investment in impaired loans during 2011
 
$
4,695

 
$
1,873

 
$
595

 
$
3,505

 
$
813

 
$
1,612

 
$
1,844

 
$
14,937

Interest income recognized on impaired loans during 2011
 
$
102

 
$

 
$
38

 
$

 
$
14

 
$
72

 
$
26

 
$
252

Average recorded investment in impaired loans during 2010
 
$
1,326

 
$
3,086

 
$

 
$
6,326

 
$
191

 
$
39

 
$
1,212

 
$
12,180

Interest income recognized on impaired loans during 2010
 
$
85

 
$
22

 
$

 
$
336

 
$
8

 
$
5

 
$
66

 
$
522

Allowance for Credit Losses on Financing Receivables
The following table discloses loans by major portfolio category and activity in the ALLL, as well as the related ALLL disaggregated by impairment evaluation method:

Allowance for Loan Losses and Recorded Investment in Loans as of and for the year ended December 31, 2012
(dollars in thousands)
 
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential

 
Installment and other consumer

 
Unallocated

 
Total

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
4,334

 
$
1,305

 
$
3,710

 
$
1,505

 
$
1,444

 
$
940

 
$
1,182

 
$
219

 
$
14,639

Provision (reversal)
 
117

 
184

 
3,076

 
(643
)
 
190

 
(193
)
 
169

 

 
2,900

Charge-offs
 
(892
)
 
(181
)
 
(2,414
)
 
(373
)
 
(382
)
 
(196
)
 
(122
)
 

 
(4,560
)
Recoveries
 
541

 
5

 

 
122

 
12

 

 
2

 

 
682

Ending balance
 
$
4,100

 
$
1,313

 
$
4,372

 
$
611

 
$
1,264

 
$
551

 
$
1,231

 
$
219

 
$
13,661

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans collectively evaluated for impairment
 
$
2,969

 
$
1,287

 
$
3,998

 
$
493

 
$
1,110

 
$
431

 
$
800

 
$
219

 
$
11,307

Ending ALLL related to loans  individually evaluated for impairment
 
$
1,090

 
$

 
$
178

 
$
118

 
$
154

 
$
120

 
$
431

 
$

 
$
2,091

Ending ALLL related to purchased  credit-impaired loans
 
$
41

 
$
26

 
$
196

 
$

 
$

 
$

 
$

 
$

 
$
263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans outstanding:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
166,860

 
$
193,891


$
500,768


$
26,497


$
92,045


$
46,119


$
16,727


$

 
$
1,042,907

Individually evaluated for impairment1
 
8,931

 

 
6,844

 
4,168

 
1,192

 
3,313

 
2,048

 

 
26,496

Purchased credit-impaired
 
640

 
2,515

 
1,394

 

 

 

 

 

 
4,549

Total
 
$
176,431

 
$
196,406

 
$
509,006

 
$
30,665

 
$
93,237

 
$
49,432

 
$
18,775

 
$

 
$
1,073,952

Ratio of allowance for loan losses to total loans
 
2.32
%
 
0.67
%
 
0.86
%
 
1.99
%
 
1.36
%
 
1.11
%
 
6.56
%
 
NM

 
1.27
%
Allowance for loan losses to non-accrual loans
 
84
%
 
94
%
 
64
%
 
27
%
 
232
%
 
46
%
 
231
%
 
NM

 
77
%

1 Total excludes $3.8 million of PCI loans that have experienced post-acquisition declines in cash flows expected to be collected.These loans are included in the "purchased credit-impaired" amount in the next line below.

NM Not Meaningful

Allowance for Loan Losses and Recorded Investment in Loans as of and for the year ended December 31, 2011
(dollars in thousands)
 
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential

 
Installment and other consumer

 
Unallocated

 
Total

As of December 31, 2011:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
3,114

 
$
1,037

 
$
4,134

 
$
1,694

 
$
643

 
$
738

 
$
835

 
$
197

 
$
12,392

Provision (reversal)
 
4,469

 
377

 
(424
)
 
275

 
1,342

 
202

 
787

 
22

 
7,050

Charge-offs
 
(3,306
)
 
(113
)
 

 
(473
)
 
(554
)
 

 
(456
)
 

 
(4,902
)
Recoveries
 
57

 
4

 

 
9

 
13

 

 
16

 

 
99

Ending balance
 
$
4,334

 
$
1,305

 
$
3,710

 
$
1,505

 
$
1,444

 
$
940

 
$
1,182

 
$
219

 
$
14,639

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans  collectively evaluated for impairment
 
$
3,049

 
$
1,136

 
$
3,547

 
$
1,311

 
$
1,182

 
$
532

 
$
717

 
$
219

 
$
11,693

Ending ALLL related to loans  individually evaluated for impairment
 
$
957

 
$

 
$
91

 
$
194

 
$
262

 
$
408

 
$
465

 
$

 
$
2,377

Ending ALLL related to purchased  credit-impaired loans
 
$
328

 
$
169

 
$
72

 
$

 
$

 
$

 
$

 
$

 
$
569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans outstanding:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
169,564

 
$
171,492

 
$
444,060

 
$
48,653

 
$
96,998

 
$
58,095

 
$
20,661

 
$

 
$
1,009,523

Individually evaluated for impairment1
 
5,110

 

 
741

 
3,304

 
1,045

 
3,407

 
2,071

 

 
15,678

Purchased credit-impaired
 
1,116

 
3,213

 
1,624

 

 

 

 

 

 
5,953

Total
 
$
175,790

 
$
174,705

 
$
446,425

 
$
51,957

 
$
98,043

 
$
61,502

 
$
22,732

 
$

 
$
1,031,154

Ratio of allowance for loan losses to total loans
 
2.47
%
 
0.75
%
 
0.83
%
 
2.90
%
 
1.47
%
 
1.53
%
 
5.20
%
 
NM

 
1.42
%
Allowance for loan losses to non-accrual loans
 
147
%
 
64
%
 
501
%
 
50
%
 
189
%
 
48
%
 
228
%
 
NM

 
122
%

1 Total excludes $4.5 million PCI loans that have experienced credit deterioration post-acquisition, which are included in the "purchased credit-impaired" amount in the next line below.

NM Not Meaningful

Allowance for Loan Losses and Recorded Investment in Loans as of and for the year ended December 31, 2010
(dollars in thousands)
 
Commercial

 
Commercial real estate, owner-occupied

 
Commercial real estate, investor

 
Construction

 
Home equity

 
Other residential

 
Installment and other consumer

 
Unallocated

 
Total

As of December 31, 2010:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
2,544

 
$
1,006

 
$
3,000

 
$
1,832

 
$
586

 
$
734

 
$
662

 
$
254

 
$
10,618

Provision (reversal)
 
1,118

 
78

 
1,134

 
2,395

 
207

 
4

 
471

 
(57
)
 
5,350

Charge-offs
 
(643
)
 
(47
)
 

 
(2,628
)
 
(150
)
 

 
(318
)
 

 
(3,786
)
Recoveries
 
95

 

 

 
95

 

 

 
20

 

 
210

Ending balance
 
$
3,114

 
$
1,037

 
$
4,134

 
$
1,694

 
$
643

 
$
738

 
$
835

 
$
197

 
$
12,392

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending ALLL related to loans  collectively evaluated for impairment
 
$
2,447

 
$
1,037

 
$
4,134

 
$
1,691

 
$
618

 
$
645

 
$
545

 
$
197

 
$
11,314

Ending ALLL related to loans  individually evaluated for impairment
 
$
667

 
$

 
$

 
$
3

 
$
25

 
$
93

 
$
290

 
$

 
$
1,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans outstanding:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
151,351

 
$
141,957

 
$
383,553

 
$
68,322

 
$
86,673

 
$
69,843

 
$
25,592

 
$

 
$
927,291

Individually evaluated for impairment
 
2,485

 
633

 

 
9,297

 
259

 
148

 
1,287

 

 
14,109

Total
 
$
153,836

 
$
142,590

 
$
383,553

 
$
77,619

 
$
86,932

 
$
69,991

 
$
26,879

 
$

 
$
941,400

Ratio of allowance for loan losses to total loans
 
2.02
%
 
0.73
%
 
1.08
%
 
2.18
%
 
0.74
%
 
1.05
%
 
3.11
%
 
NM

 
1.32
%
Allowance for loan losses to non-accrual loans
 
125
%
 
164
%
 
NM

 
18
%
 
NM

 
499
%
 
231
%
 
NM

 
96
%

NM Not Meaningful

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]
The following table reflects the outstanding balance and related carrying value of PCI loans as of the acquisition date (February 18, 2011), December 31, 2011 and 2012:
 
 
December 31, 2012
 
December 31, 2011
 
February 18, 2011
PCI Loans
(dollars in thousands)
Unpaid principal balance

 
Carrying value

 
Unpaid principal balance

 
Carrying value

 
Unpaid principal balance

 
Carrying value

Commercial
$
2,163

 
$
640

 
$
3,168

 
$
1,116

 
$
10,860

 
$
3,706

Commercial real estate
6,370

 
3,909

 
9,466

 
4,837

 
10,139

 
5,664

Total purchased credit-impaired loans
$
8,533

 
$
4,549

 
$
12,634

 
$
5,953

 
$
20,999

 
$
9,370

The following table presents the fair value of loans pursuant to accounting standards for purchased credit-impaired loans and other purchased loans as of the acquisition date:
 
February 18, 2011
(dollars in thousands)
Purchased credit-impaired loans

 
Other purchased loans

 
Total

Contractually required payments including interest
$
24,316

 
$
69,702

 
$
94,018

Less: nonaccretable difference
(13,044
)
 

 
(13,044
)
Cash flows expected to be collected (undiscounted)
11,272

 
69,702

 
80,974

Accretable yield
(1,902
)
 
(17,307
)
1 
(19,209
)
Fair value of purchased loans
$
9,370

 
$
52,395

 
$
61,765


1 $5.8 million of the $17.3 million represents the difference between the contractual principal amounts due and the fair value. This discount is to be accreted to interest income over the remaining lives of the loans. The remaining $11.5 million is the contractual interest to be earned over the life of the loans.
Accretable Yield Activity
The activities in the accretable yield, or income expected to be earned, for PCI loans were as follows:
 
Accretable Yield
 
Years ended
(dollars in thousands)
 
December 31, 2012

 
December 31, 2011

Balance at beginning of period
 
$
5,405

 
$

Additions
 

 
1,902

   Removals 1
 
(1,221
)
 
(1,019
)
Accretion
 
(1,641
)
 
(1,418
)
Reclassifications (to)/from nonaccretable difference 2
 
1,417

 
5,940

Balance at end of period
 
$
3,960

 
$
5,405


1 Represents the accretable difference that is relieved when a loan exits the PCI population due to payoff, full charge-off, or transfer to repossessed assets, etc.

2 Primarily relates to improvements in expected credit performance and changes in expected timing of cash flows.
Schedule of Related Party Transactions
An analysis of net loans to related parties for each of the three years ended December 31, 2012, 2011 and 2010 is as follows:

(in thousands)
2012

 
2011

 
2010

Balance at beginning of year
$
6,866

 
$
6,997

 
$
7,401

Additions
826

 
1,690

 
95

Advances
3

 
43

 

Repayments
(2,730
)
 
(1,864
)
 
(499
)
Reclassified as unrelated-party loan
(1,540
)
 

 

Balance at end of year
$
3,425

 
$
6,866

 
$
6,997