Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Activity in the Loan Balances and the Allowance for Loan Losses by Segment

Activity in the allowance for loan losses by segment for the six months ended June 30, 2013 and 2012 are summarized as follows:



Six Months Ended June 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of year	$	11,386		$	835		$	1,559		$	2,357		$	1,230		$	270		$	17,637
Losses charged off	(844		)	(120		)	(643		)	(1,029		)	(350		)	(109		)	(3,095		)
Recoveries	500			5			100			54			171			43			873
Provision charged to expense	(618		)	(282		)	590			2,126			530			54			2,400
Balance, end of year	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815

Three Months Ended June 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of year	$	10,784		$	534		$	1,664		$	2,948		$	1,610		$	266		$	17,806
Losses charged off	(721		)	(58		)	(130		)	(593		)	(134		)	(31		)	(1,667		)
Recoveries	494			1			35			8			77			11			626
Provision charged to expense	(133		)	(39		)	37			1,145			28			12			1,050
Balance, end of year	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815

As of June 30, 2013
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,566		$	103		$	—		$	—		$	—		$	—		$	1,669
Collectively evaluated for impairment	8,858			335			1,606			3,508			1,581			258			16,146
Total ending allowance balance	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815
Loans:
Individually evaluated for impairment	$	22,383		$	503		$	1,991		$	686		$	225		$	74		$	25,862
Collectively evaluated for impairment	385,109			73,764			64,206			119,637			202,261			12,057			857,034
Total ending loans balance	$	407,492		$	74,267		$	66,197		$	120,323		$	202,486		$	12,131		$	882,896



Six Months Ended June 30, 2012
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of year	$	10,714		$	1,409		$	1,331		$	2,289		$	891		$	429		$	17,063
Losses charged off	(1,319		)	(165		)	(975		)	(555		)	(577		)	(106		)	(3,697		)
Recoveries	30			20			83			15			190			29			367
Provision charged to expense	1,971			(424		)	1,277			397			481			(135		)	3,567
Balance, end of year	$	11,396		$	840		$	1,716		$	2,146		$	985		$	217		$	17,300

Three Months Ended June 30, 2012
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of year	$	11,651		$	585		$	1,574		$	2,298		$	807		$	200		$	17,115
Losses charged off	(340		)	(165		)	(508		)	(152		)	(399		)	(57		)	(1,621		)
Recoveries	10			3			16			11			87			12			139
Provision charged to expense	75			417			634			(11		)	490			62			1,667
Balance, end of year	$	11,396		$	840		$	1,716		$	2,146		$	985		$	217		$	17,300

As of June 30, 2012
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	3,181		$	80		$	37		$	—		$	—		$	—		$	3,298
Collectively evaluated for impairment	8,215			$	760		$	1,679		$	2,146		$	985		$	217		14,002
Total ending allowance balance	$	11,396		$	840		$	1,716		$	2,146		$	985		$	217		$	17,300
Loans:
Individually evaluated for impairment	$	28,102		$	306		$	1,161		$	—		$	—		$	—		$	29,569
Collectively evaluated for impairment	370,149			79,155			63,673			126,568			184,892			13,453			837,890
Total ending loans balance	$	398,251		$	79,461		$	64,834		$	126,568		$	184,892		$	13,453		$	867,459

Age Analysis of Past Due Loans

Information regarding delinquent loans as of June 30, 2013 and December 31, 2012 is as follows:

Age Analysis of Past Due Loans as of June 30, 2013



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	33	$	616	$	10,836	$	11,485	$	396,007	$	407,492	$	—
Commercial	—		85		213		298		73,969		74,267		—
Residential real estate	410		388		3,181		3,979		62,218		66,197		—
Home equity loans	638		841		940		2,419		117,904		120,323		—
Indirect	370		82		18		470		202,016		202,486
Consumer	184		40		96		320		11,811		12,131		—
Total	$	1,635	$	2,052	$	15,284	$	18,971	$	863,925	$	882,896	$	—

Age Analysis of Past Due Loans as of December 31, 2012



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	3,681	$	1,004	$	12,398	$	17,083	$	396,922	$	414,005	$	—
Commercial	—		—		376		376		68,329		68,705		—
Residential real estate	394		1,094		2,827		4,315		60,668		64,983		184
Home equity loans	630		494		1,510		2,634		120,196		122,830		—
Indirect	645		227		69		941		198,983		199,924
Consumer	26		40		123		189		11,912		12,101		—
Total	$	5,376	$	2,859	$	17,303	$	25,538	$	857,010	$	882,548	$	184

Impaired Loans

Impaired loans for the Period Ended June 30, 2013 and December 31, 2012 are as follows:



	At June 30, 2013						Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	17,629	$	24,502	$	—	$	18,332	$	17,347
Commercial	161		213		—		142		141
Residential real estate	1,991		2,298		—		1,991		1,864
Home equity loans	686		870		—		584		522
Indirect	225		248		—		162		108
Consumer	74		74		—		67		65
With allowance recorded:
Commercial real estate	4,754		5,173		1,566		4,830		5,867
Commercial	342		342		103		392		414
Residential real estate	—		—		—		—		60
Home equity loans	—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	25,862	$	33,720	$	1,669	$	26,500	$	26,388

	At December 31, 2012						Three Months Ended June 30, 2012		Six Months Ended June 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,378	$	20,086	$	—	$	9,121	$	9,758
Commercial	138		138		—		208		177
Residential real estate	1,610		1,686		—		1,353		1,184
Home equity loans	398		398		—		—		—
Indirect	—		—		—		—		—
Consumer	61		61		—		—		—
With allowance recorded:
Commercial real estate	7,942		9,876		1,449		19,600		19,511
Commercial	459		459		209		313		269
Residential real estate	181		1,452		15		72		72
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	26,167	$	34,156	$	1,673	$	30,667	$	30,971

*impaired loans shown in the table above included loans that were classified as troubled debt restructurings ("TDRs'). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

Troubled Debt Restructuring Loan Information

The following table summarizes the loans that were modified as a TDR during the period ended June 30, 2013 and 2012.



		Three Months			Six Months
		Recorded Investment			Recorded Investment
	Number of Contracts	Pre-Modification Outstanding	Post-Modification Outstanding	At June 30, 2013	Number of Contracts	Pre-Modification Outstanding	Post-Modification Outstanding	At June 30, 2013
Commercial	4	$110	104	104	4	$110	$104	$104
Residential real estate	1	$109	$109	$109	2	$143	$132	$132
Home equity loans	8	$325	$233	$233	16	$686	$476	$476
Indirect Loans	19	$188	$173	$173	32	$349	$272	$272



		Three Months			Six Months
		Recorded Investment			Recorded Investment
	Number of Contracts	Pre-Modification Outstanding	Post-Modification Outstanding	At June 30, 2012	Number of Contracts	Pre-Modification Outstanding	Post-Modification Outstanding	At June 30, 2012
Commercial real estate	—	$—	$—	$—	5	$2,972	$2,972	$2,972

Loans on Nonaccrual Status

Nonaccrual loan balances at June 30, 2013 and December 31, 2012 are as follows:



Loans On Non-Accrual Status	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Commercial real estate	$	15,562	$	16,349
Commercial	317		472
Residential real estate	5,117		5,622
Home equity loans	4,777		4,293
Indirect	517		711
Consumer	315		349
Total Nonaccrual Loans	$	26,605	$	27,796

Summary of Recorded Investment Based on Delinquency Status

The following table presents the recorded investment of commercial real estate, commercial and residential real estate loans by internal credit risk grade and the recorded investment of residential real estate, home equity, indirect and consumer loans based on delinquency status as of June 30, 2013 and December 31, 2012:



Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	June 30, 2013
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	75	$	—	$	—	$	—	$	—	$	75
Grade 2 — Modest	—		36		—		—		—		—		36
Grade 3 — Better than average	874		—		—		—		—		—		874
Grade 4 — Average	28,056		860		619		—		—		—		29,535
Grade 5 — Acceptable	342,987		69,857		5,853		—		—		—		418,697
Total Pass Credits	371,917		70,828		6,472		—		—		—		449,217
Grade 6 — Special mention	11,332		3,121		39		—		—		—		14,492
Grade 7 — Substandard	24,243		318		1,330		—		—		—		25,891
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	407,492		74,267		7,841		—		—		—		489,600
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		55,007		117,691		202,016		11,811		386,525
30-59 days past due loans not internally risk graded	—		—		410		638		370		184		1,602
60-89 days past due loans not internally risk graded	—		—		388		841		82		40		1,351
90+ days past due loans not internally risk graded	—		—		2,551		1,153		18		96		3,818
Total loans not internally credit risk graded	—		—		58,356		120,323		202,486		12,131		393,296
Total loans internally and not internally credit risk graded	$	407,492	$	74,267	$	66,197	$	120,323	$	202,486	$	12,131	$	882,896


*	Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.



Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	December 31, 2012
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	114	$	—	$	—	$	—	$	—	$	114
Grade 2 — Modest	—		—		—		—		—		—		—
Grade 3 — Better than average	1,100		6		—		—		—		—		1,106
Grade 4 — Average	30,604		4,547		626		—		—		—		35,777
Grade 5 — Acceptable	342,067		60,023		5,584		—		—		—		407,674
Total Pass Credits	373,771		64,690		6,210		—		—		—		444,671
Grade 6 — Special mention	12,201		3,394		42		—		—		—		15,637
Grade 7 — Substandard	27,268		621		1,468		—		—		—		29,357
Grade 8 — Doubtful	765		—		—		—		—		—		765
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	414,005		68,705		7,720		—		—		—		490,430
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		54,416		120,196		198,983		11,912		385,507
30-59 days past due loans not internally risk graded	—		—		394		630		645		26		1,695
60-89 days past due loans not internally risk graded	—		—		1,094		494		227		40		1,855
90+ days past due loans not internally risk graded	—		—		1,359		1,510		69		123		3,061
Total loans not internally credit risk graded	—		—		57,263		122,830		199,924		12,101		392,118
Total loans internally and not internally credit risk graded	$	414,005	$	68,705	$	64,983	$	122,830	$	199,924	$	12,101	$	882,548

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.