ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

3 Months Ended

Mar. 31, 2013

Allowance For Loan Losses and Credit Quality [Abstract]

ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

NOTE 4. ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month period ended March 31, 2013, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2013:

				Commercial
				Real Estate									Consumer
	Commercial			and Multifamily			Agri-business			Other			1-4 Family			Other
	and Industrial			Residential			and Agricultural			Commercial			Mortgage			Consumer			Unallocated		Total
Three Months Ended March 31, 2013
Balance January 1,	$	22,342		$	20,812		$	1,403		$	240		$	2,682		$	609		$	3,357	$	51,445
Provision for loan losses		(359	)		253			(142	)		(17	)		270			(23	)		18		0
Loans charged-off		(133	)		(906	)		0			0			(108	)		(59	)		0		(1,206	)
Recoveries		263			261			2			0			22			31			0		579
Net loans charged-off		130			(645	)		2			0			(86	)		(28	)		0		(627	)
Balance March 31,	$	22,113		$	20,420		$	1,263		$	223		$	2,866		$	558		$	3,375	$	50,818
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4,757		$	6,621		$	43		$	0		$	412		$	28		$	0	$	11,861
Collectively evaluated for impairment		17,356			13,799			1,220			223			2,454			530			3,375		38,957
Total ending allowance balance	$	22,113		$	20,420		$	1,263		$	223		$	2,866		$	558		$	3,375	$	50,818
Loans:
Loans individually evaluated for impairment	$	16,650		$	27,394		$	975		$	0		$	2,594		$	80		$	0	$	47,693
Loans collectively evaluated for impairment		825,817			819,624			203,970			48,863			274,727			41,766			0		2,214,767
Total ending loans balance	$	842,467		$	847,018		$	204,945		$	48,863		$	277,321		$	41,846		$	0	$	2,262,460

The recorded investment in loans does not include accrued interest.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three-month period ended March 31, 2012:

				Commercial
				Real Estate								Consumer
	Commercial			and Multifamily			Agri-business			Other		1-4 Family			Other
	and Industrial			Residential			and Agricultural			Commercial		Mortgage			Consumer			Unallocated		Total
Three Months Ended March 31, 2012
Balance January 1,	$	22,830		$	23,489		$	695		$	65	$	2,322		$	645		$	3,354	$	53,400
Provision for loan losses		(104	)		565			(157	)		119		171			(54	)		259		799
Loans charged-off		(778	)		(847	)		0			0		(14	)		(94	)		0		(1,733	)
Recoveries		186			29			0			2		48			26			0		291
Net loans charged-off		(592	)		(818	)		0			2		34			(68	)		0		(1,442	)
Balance March 31,	$	22,134		$	23,236		$	538		$	186	$	2,527		$	523		$	3,613	$	52,757

The recorded investment in loans does not include accrued interest.

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 method as of December 31, 2012:

			Commercial
			Real Estate						Consumer
	Commercial		and Multifamily		Agri-business		Other		1-4 Family		Other
	and Industrial		Residential		and Agricultural		Commercial		Mortgage		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,542	$	8,559	$	63	$	0	$	607	$	34	$	0	$	14,805
Collectively evaluated for impairment		16,800		12,253		1,340		240		2,075		575		3,357		36,640
Total ending allowance balance	$	22,342	$	20,812	$	1,403	$	240	$	2,682	$	609	$	3,357	$	51,445
Loans:
Loans individually evaluated for impairment	$	18,281	$	36,919	$	797	$	0	$	2,853	$	92	$	0	$	58,942
Loans collectively evaluated for impairment		828,728		763,279		224,008		56,810		280,141		45,612		0		2,198,578
Total ending loans balance	$	847,009	$	800,198	$	224,805	$	56,810	$	282,994	$	45,704	$	0	$	2,257,520

The recorded investment in loans does not include accrued interest.

The allowance for loan losses to total loans at March 31, 2013 and 2012 was 2.25% and 2.37%, respectively. The allowance for loan losses to total loans at December 31, 2012 was 2.28%.

The following table presents loans individually evaluated for impairment as of and for the three-month period ended March 31, 2013:

							Three Months Ended March 31, 2013
											Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	65	$	65	$	0	$	65	$	0	$	0
Non-working capital loans		25		25		0		34		0		0
Commercial real estate and multi-family residential loans:
Owner occupied loans		742		562		0		566		0		0
Agri-business and agricultural loans:
Loans secured by farmland		828		649		0		521		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		57		57		0		58		0		0
Open end and junior lien loans		41		41		0		41		0		0
Other consumer loans		1		1		0		1		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,488		2,879		1,252		3,170		13		13
Non-working capital loans		15,536		13,681		3,505		14,412		135		137
Commercial real estate and multi-family residential loans:
Construction and land development loans		5,728		5,339		996		4,528		45		52
Owner occupied loans		2,330		2,330		695		4,300		29		31
Nonowner occupied loans		19,153		19,163		4,930		24,299		84		87
Agri-business and agricultural loans:
Loans secured by farmland		646		326		43		327		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,443		2,473		397		2,499		0		19
Open end and junior lien loans		52		23		15		40		0		0
Other consumer loans		79		79		28		80		0		0
Total	$	54,214	$	47,693	$	11,861	$	55,132	$	306	$	339

The recorded investment in loans does not include accrued interest.

The following table presents loans individually evaluated for impairment as of and for the three-month period ended March 31, 2012:

							Three Months Ended March 31, 2012
											Cash Basis
	Unpaid				Allowance for		Average		Interest		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Income
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial and industrial loans:
Non-working capital loans	$	196	$	196	$	0	$	171	$	0	$	0
Commercial real estate and multi-family residential loans:
Owner occupied loans		292		292		0		290		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		301		301		0		297		0		0
Open end and junior lien loans		40		40		0		40		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,503		5,502		3,023		5,805		16		15
Non-working capital loans		17,282		17,284		5,455		17,723		180		182
Commercial real estate and multi-family residential loans:
Construction and land development loans		2,060		2,059		550		969		0		0
Owner occupied loans		4,175		4,174		1,169		4,588		12		10
Nonowner occupied loans		27,598		27,597		6,555		29,401		98		99
Multifamily loans		0		0		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		618		618		120		622		0		0
Loans for agricultural production		208		208		18		210		0		0
Other commercial loans		0		0		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		2,445		2,447		329		1,797		11		11
Open end and junior lien loans		270		270		149		354		0		0
Residential construction loans		0		0		0		0		0		0
Other consumer loans		7		7		5		7		0		0
Total	$	60,995	$	60,995	$	17,373	$	62,274	$	317	$	317

The recorded investment in loans does not include accrued interest.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2012:

	Unpaid				Allowance for
	Principal		Recorded		Loan Losses
	Balance		Investment		Allocated
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	61	$	61	$	0
Non-working capital loans		0		0		0
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans		754		574		0
Nonowner occupied loans		385		385		0
Multifamily loans		410		286		0
Agri-business and agricultural loans:
Loans secured by farmland		645		466		0
Loans for ag production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans		59		59		0
Open end and junior lien loans		41		41		0
Residential construction loans
Other consumer loans		1		1		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans		5,833		3,224		1,516
Non-working capital loans		16,763		14,996		4,026
Commercial real estate and multi-family residential loans:
Construction and land development loans		3,352		2,960		934
Owner occupied loans		5,869		5,869		1,476
Nonowner occupied loans		26,835		26,845		6,149
Multifamily loans		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		651		331		63
Loans for agricultural production		0		0		0
Other commercial loans		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		3,387		2,403		415
Open end and junior lien loans		379		350		192
Residential construction loans		0		0		0
Other consumer loans		91		91		34
Total	$	65,516	$	58,942	$	14,805

The recorded investment in loans does not include accrued interest.

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2013 and December 31, 2012:

	March 31, 2013				December 31, 2012
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Nonaccrual		Accruing		Nonaccrual		Accruing
Commercial and industrial loans:
Working capital lines of credit loans	$	1,858	$	0	$	1,899	$	0
Non-working capital loans		3,692		0		4,812		50
Commercial real estate and multi-family residential loans:
Construction and land development loans		390		0		398		0
Owner occupied loans		2,582		0		2,461		0
Nonowner occupied loans		11,568		0		19,200		0
Multifamily loans		0		0		286		0
Agri-business and agricultural loans:
Loans secured by farmland		975		0		797		0
Loans for agricultural production		0		0		0		0
Other commercial loans		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		533		0		504		0
Open end and junior lien loans		64		0		391		0
Residential construction loans		0		0		0		0
Other consumer loans		65		0		77		0
Total	$	21,727	$	0	$	30,825	$	50

The recorded investment in loans does not include accrued interest.

The following table presents the aging of the recorded investment in past due loans as of March 31, 2013 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	1,858	$	1,858	$	435,657	$	437,515
Non-working capital loans		7		3,692		3,699		401,253		404,952
Commercial real estate and multi-family residential loans:
Construction and land development loans		0		390		390		96,498		96,888
Owner occupied loans		152		2,582		2,734		362,661		365,395
Nonowner occupied loans		507		11,568		12,075		326,466		338,541
Multifamily loans		0		0		0		46,194		46,194
Agri-business and agricultural loans:
Loans secured by farmland		0		975		975		98,574		99,549
Loans for agricultural production		0		0		0		105,396		105,396
Other commercial loans		0		0		0		48,863		48,863
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,273		533		1,806		114,087		115,893
Open end and junior lien loans		206		64		270		155,058		155,328
Residential construction loans		54		0		54		6,046		6,100
Other consumer loans		658		65		723		41,123		41,846
Total	$	2,857	$	21,727	$	24,584	$	2,237,876	$	2,262,460

The recorded investment in loans does not include accrued interest.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2012 by class of loans:

	30-89		Greater than
	Days		90 Days		Total		Loans Not
	Past Due		Past Due		Past Due		Past Due		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	233	$	1,899	$	2,132	$	437,705	$	439,837
Non-working capital loans		48		4,862		4,910		402,262		407,172
Commercial real estate and multi-family residential loans:
Construction and land development loans		998		398		1,396		80,954		82,350
Owner occupied loans		1,023		2,461		3,484		354,921		358,405
Nonowner occupied loans		38		19,200		19,238		295,243		314,481
Multifamily loans		0		286		286		44,676		44,962
Agri-business and agricultural loans:
Loans secured by farmland		0		797		797		108,359		109,156
Loans for agricultural production		0		0		0		115,649		115,649
Other commercial loans		0		0		0		56,810		56,810
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		1,475		504		1,979		107,583		109,562
Open end and junior lien loans		361		391		752		161,172		161,924
Residential construction loans		0		0		0		11,508		11,508
Other consumer loans		81		77		158		45,546		45,704
Total	$	4,257	$	30,875	$	35,132	$	2,222,388	$	2,257,520

The recorded investment in loans does not include accrued interest.

Troubled Debt Restructurings:

Troubled debt restructured loans are included in the totals for impaired loans. The Company has allocated $10.9 million and $12.5 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2013 and December 31, 2012. The Company is not committed to lending additional funds to debtors whose loans have been modified in a troubled debt restructuring.

	March 31		December 31,
	2013		2012
Accruing troubled debt restructured loans	$	23,605	$	22,332
Nonaccrual troubled debt restructured loans		19,607		28,506
Total troubled debt restructured loans	$	43,212	$	50,838

During the quarter ending March 31, 2013, loans totaling $1.8 million were modified as troubled debt restructurings. The modified terms of the loans included reductions in the interest rates to one that would not be readily available in the marketplace for borrowers with a similar risk profile and modifications of the repayment terms. These restructured loans were provided to related borrowers who are engaged in land development.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2013:

	Modifications
	Three Months Ended March 31, 2013
	All Modifications						Interest Rate Reductions						Modified Repayment Terms
			Pre-Modification		Post-Modification
			Outstanding		Outstanding				Interest at		Interest at				Extension
	Number of		Recorded		Recorded		Number of		Pre-Modification		Post-Modification		Number of		Period or
	Loans		Investment		Investment		Loans		Rate		Rate		Loans		Range
															(in months)
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		6	$	2,198	$	2,198		6	$	85	$	63		0		0
Total		6	$	2,198	$	2,198		6	$	85	$	63		0		0

For the three month period ending March 31, 2013 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $287,000.

The troubled debt restructurings described above had a charge-off of $365,000 during the period ending March 31, 2013.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending March 31, 2012:

	Modifications
	Three Months Ended March 31, 2012
	All Modifications
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Troubled Debt Restructurings
Commercial real estate and multi-family residential loans:
Construction and land development loans		5		1,638		1,638
Total		5	$	1,638	$	1,638

For the three month period ending March 31, 2012 the commercial real estate and multi-family residential loan troubled debt restructuring described above decreased the allowance for loan losses by $500,000.

The commercial real estate and multi-family residential loan troubled debt restructurings described above did not result in any charge offs during the three months ending March 31, 2012.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month period ending March 31, 2013:

	Modifications
	Three Months ended March 31, 2013
	Number of		Recorded
	Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		1	$	1,249
Total		1	$	1,249

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings described above that subsequently defaulted increased the allowance for loan losses by $15,000 and did not result in any charge offs during the three periods ending March 31, 2013.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification which occurred during the three month period ending March 31, 2012:

	Number of		Recorded
	Loans		Investment
Troubled Debt Restructurings that Subsequently Defaulted
Consumer 1-4 family loans:
Closed end first mortgage loans		1	$	65
Total		1	$	65

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above increased the allowance for loan losses by $1,000 and did not result in any charge offs during the three periods ending March 31, 2012.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as Special Mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as Doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of March 31, 2013 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
					(in thousands)
Commercial and industrial loans:
Working capital lines of credit loans	$	400,217	$	23,496	$	13,802	$	0	$	0
Non-working capital loans		356,623		23,004		25,260		65		0
Commercial real estate and multi-family residential loans:
Construction and land development loans		80,756		5,370		10,762		0		0
Owner occupied loans		322,868		23,209		17,836		0		1,482
Nonowner occupied loans		304,529		14,747		19,265		0		0
Multifamily loans		45,854		340		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland		97,958		0		1,573		0		18
Loans for agricultural production		105,396		0		0		0		0
Other commercial loans		48,744		1		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		23,688		1,053		1,618		0		89,534
Open end and junior lien loans		5,221		2,100		0		0		148,007
Residential construction loans		0		0		0		0		6,100
Other consumer loans		8,016		358		511		0		32,961
Total	$	1,799,870	$	93,678	$	90,745	$	65	$	278,102

The recorded investment in loans does not include accrued interest.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans with the exception of consumer troubled debt restructurings which are evaluated and listed with Substandard commercial grade loans. Loans listed as Not Rated are consumer loans included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. As of December 31, 2012 and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
					(in thousands)
Commercial and industrial loans:
Working capital lines of credit loans	$	403,778	$	22,591	$	13,468	$	0	$	0
Non-working capital loans		355,772		23,192		26,857		66		1,285
Commercial real estate and multi-family residential loans:
Construction and land development loans		67,002		4,595		10,753		0		0
Owner occupied loans		315,672		24,589		18,144		0		0
Nonowner occupied loans		282,108		6,345		26,028		0		0
Multifamily loans		43,425		345		1,192		0		0
Agri-business and agricultural loans:
Loans secured by farmland		107,734		0		1,404		0		18
Loans for agricultural production		115,649		0		0		0		0
Other commercial loans		56,692		0		118		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans		18,685		343		729		0		89,805
Open end and junior lien loans		7,932		300		0		0		153,692
Residential construction loans		0		0		0		0		11,508
Other consumer loans		10,168		378		497		0		34,661
Total	$	1,784,617	$	82,678	$	99,190	$	66	$	290,969

The recorded investment in loans does not include accrued interest.