Allowance for Loan Losses

3 Months Ended

Mar. 31, 2013

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

Note 5 – Allowance for Loan Losses

The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the prior one to five years. Management believes the five-year historical loss experience methodology is appropriate in the current economic environment, as it captures loss rates that are comparable to the current period being analyzed. The actual allowance for loan loss activity is provided below.

	Three Months Ended
	March 31
	2013		2012
Balance at beginning of the period	$	18,270	$	18,882
Loans charged-off:
Commercial
Owner occupied real estate		132		—
Non owner occupied real estate		146		—
Residential development		—		—
Development & Spec Land Loans		—		—
Commercial and industrial		139		—
Total commercial		417		—
Real estate
Residential mortgage		143		89
Residential construction		—		—
Mortgage warehouse		—		—
Total real estate		143		89
Consumer
Direct Installment		107		113
Direct Installment Purchased		—		—
Indirect Installment		353		338
Home Equity		438		133
Total consumer		898		584
Total loans charged-off		1,458		673
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		32		300
Non owner occupied real estate		2		7
Residential development		—		—
Development & Spec Land Loans		—		—
Commercial and industrial		36		25
Total commercial		70		332
Real estate
Residential mortgage		3		30
Residential construction		—		—
Mortgage warehouse		—		—
Total real estate		3		30
Consumer
Direct Installment		394		15
Direct Installment Purchased		—		—
Indirect Installment		170		201
Home Equity		32		66
Total consumer		596		282
Total loan recoveries		669		644
Net loans charged-off		789		29
Provision charged to operating expense
Commercial		1,738		86
Real estate		312		611
Consumer		34		(138	)
Total provision charged to operating expense		2,084		559
Balance at the end of the period	$	19,565	$	19,412

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value of the underlying collateral.

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down or specific allocation of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the value is known but no later than when a loan is 180 days past due. Pursuant to such guidelines, the Company also charges-off unsecured open-end loans when the loan is 90 days past due, and charges down to the net realizable value other secured loans when they are 90 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection in full will occur regardless of delinquency status, are not charged off.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment analysis:

					Mortgage
March 31, 2013	Commercial		Real Estate		Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,945	$	—	$	—	$	—	$	1,945
Collectively evaluated for impairment		7,221		3,477		1,603		5,319		17,620
Total ending allowance balance	$	9,166	$	3,477	$	1,603	$	5,319	$	19,565
Loans:
Individually evaluated for impairment	$	10,054	$	—	$	—	$	—	$	10,054
Collectively evaluated for impairment		464,369		191,954		144,089		282,764		1,083,176
Total ending loans balance	$	474,423	$	191,954	$	144,089	$	282,764	$	1,093,230
					Mortgage
December 31, 2012	Commercial		Real Estate		Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,945	$	—	$	—	$	—	$	1,945
Collectively evaluated for impairment		5,826		3,204		1,705		5,590		16,325
Total ending allowance balance	$	7,771	$	3,204	$	1,705	$	5,590	$	18,270
Loans:
Individually evaluated for impairment	$	10,597	$	—	$	—	$	—	$	10,597
Collectively evaluated for impairment		451,243		190,292		251,928		290,174		1,183,637
Total ending loans balance	$	461,840	$	190,292	$	251,928	$	290,174	$	1,194,234