Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

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

Activity in the loan balances and the allowance for loan losses by segment at September 30, 2012 and September 30, 2011 are summarized as follows:

Nine Months Ended September 30, 2012
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:	(Dollars in thousands)
Balance, beginning of period	$	10,714		$	1,409		$	1,331		$	2,289		$	891		$	429		$	17,063
Losses charged off		(2,057	)		(213	)		(1,267	)		(851	)		(738	)		(252	)		(5,378	)
Recoveries		39			24			86			31			244			36			460
Provision charged to expense		3,064			(466	)		1,551			661			615			17			5,442
Balance, end of period	$	11,760		$	754		$	1,701		$	2,130		$	1,012		$	230		$	17,587

Three Months Ended September 30, 2012
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:	(Dollars in thousands)
Balance, beginning of period	$	11,396		$	840		$	1,716		$	2,146		$	985		$	217		$	17,300
Losses charged off		(738	)		(48	)		(292	)		(296	)		(161	)		(146	)		(1,681	)
Recoveries		9			4			3			16			54			7			93
Provision charged to expense		1,093			(42	)		274			264			134			152			1,875
Balance, end of period	$	11,760		$	754		$	1,701		$	2,130		$	1,012		$	230		$	17,587
As of September 30, 2012
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,525		$	69		$	2		$	—		$	—		$	—		$	2,596
Collectively evaluated for impairment		9,235			685			1,699			2,130			1,012			230			14,991
Total ending allowance balance	$	11,760		$	754		$	1,701		$	2,130		$	1,012		$	230		$	17,587
Loans:
Individually evaluated for impairment	$	25,310		$	340		$	1,179		$	—		$	—		$	—		$	26,829
Collectively evaluated for impairment		386,614			71,582			67,370			125,108			195,358			12,854			858,886
Total ending loans balance	$	411,924		$	71,922		$	68,549		$	125,108		$	195,358		$	12,854		$	885,715

Nine Months Ended September 30, 2011
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:	(Dollars in thousands)
Balance, beginning of period	$	11,127		$	1,317		$	805		$	1,512		$	904		$	471		$	16,136
Losses charged off		(2,669	)		(236	)		(1,746	)		(957	)		(264	)		(490	)		(6,362	)
Recoveries		249			38			49			15			77			98			526
Provision charged to expense		3,079			6			2,142			1,744			234			340			7,545
Balance, end of period	$	11,786		$	1,125		$	1,250		$	2,314		$	951		$	419		$	17,845

Three Months Ended September 30, 2011
Allowance for loan losses:	(Dollars in thousands)
Balance, beginning of period	$	11,681		$	1,182		$	1,249		$	1,891		$	921		$	427		$	17,351
Losses charged off		(577	)		(13	)		(443	)		(548	)		(117	)		(53	)		(1,751	)
Recoveries		34			2			9			42			44			14			145
Provision charged to expense		648			(46	)		435			929			103			31			2,100
Balance, end of period	$	11,786		$	1,125		$	1,250		$	2,314		$	951		$	419		$	17,845
As of September 30, 2011
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,602		$	166		$	302		$	—		$	—		$	—		$	6,070
Collectively evaluated for impairment		6,184			959			948			2,314			951			419			11,775
Total ending allowance balance	$	11,786		$	1,125		$	1,250		$	2,314		$	951		$	419		$	17,845
Loans:
Individually evaluated for impairment	$	35,349		$	771		$	2,126		$	—		$	—		$	—		$	38,246
Collectively evaluated for impairment		351,542			71,908			66,711			130,143			158,885			12,877			792,066
Total ending loans balance	$	386,891		$	72,679		$	68,837		$	130,143		$	158,885		$	12,877		$	830,312

Age Analysis of Past Due Loans

Age Analysis of Past Due Loans as of September 30, 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	$	2,646	$	1,210	$	15,397	$	19,253	$	392,671	$	411,924	$	—
Commercial		38		19		399		456		71,466		71,922		—
Residential real estate		538		1,218		3,286		5,042		63,507		68,549		—
Home equity loans		1,191		378		1,631		3,200		121,908		125,108		—
Indirect		657		146		56		859		194,499		195,358
Consumer		61		49		163		273		12,581		12,854		—
Total	$	5,131	$	3,020	$	20,932	$	29,083	$	856,632	$	885,715	$	—

Age Analysis of Past Due Loans as of December 31, 2011
(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	$	290	$	804	$	19,023	$	20,117	$	361,735	$	381,852	$	—
Commercial		54		249		805		1,108		75,462		76,570		—
Residential real estate		545		1,172		3,554		5,271		59,253		64,524		—
Home equity loans		1,942		181		1,666		3,789		123,169		126,958		—
Indirect		664		71		124		859		179,230		180,089
Consumer		131		12		28		171		12,924		13,095		—
Total	$	3,626	$	2,489	$	25,200	$	31,315	$	811,773	$	843,088	$	—

Impaired Loans

Information regarding impaired loans as of September 30, 2012 and June 30, 2011 is as follows:

	At September 30, 2012						Three Months Ended September 30, 2012		Nine Months Ended September 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	$	6,168	$	8,935	$	—	$	7,204	$	9,246
Commercial		156		156		—		164		269
Residential real estate		1,080		1,987		—		966		1,052
Home equity loans		—		—		—		—		—
Indirect		—		—		—		—		—
Consumer		—		—		—		—		—
With allowance recorded:
Commercial real estate		19,142		23,652		2,525		19,502		19,376
Commercial		184		184		69		159		216
Residential real estate		99		136		2		85		79
Home equity loans		—		—		—		—		—
Indirect		—		—		—		—		—
Consumer		—		—		—		—		—
Total	$	26,829	$	35,050	$	2,596	$	28,080	$	30,238

	At December 31, 2011						Three Months Ended September 30, 2011		Nine Months Ended September 30, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	12,585	$	20,138	$	—	$	19,406	$	10,278
Commercial		386		386		—		406		432
Residential real estate		1,069		1,897		—		1,321		1,399
Home equity loans		—		—		—		—		—
Indirect		—		—		—		—		—
Consumer		—		—		—		—		—
With allowance recorded:
Commercial real estate		19,161		19,823		3,747		24,612		24,941
Commercial		319		794		148		751		681
Residential real estate		72		72		37		1,321		1,399
Home equity loans		—		—		—		—		—
Indirect		—		—		—		—		—
Consumer		—		—		—		—		—
Total	$	33,592	$	43,110	$	3,932	$	47,817	$	39,130

Loans on Nonaccrual Status

Nonaccrual loans at September 30, 2012 were $32,584 compared to $34,471 at December 31, 2011.

Loans On NonAccrual Status

	September 30, 2012			December 31, 2011
	(Dollars in thousands)
Commercial real estate	$	20,629		$	21,512
Commercial		484			1,072
Residential real estate		6,317			6,551
Home equity loans		4,178			4,365
Indirect		637			711
Consumer		339			260
Total Nonaccrual Loans	$	32,584		$	34,471
Percentage of nonaccrual loans to portfolio loans		3.68	%		4.09	%
Percentage of nonaccrual loans to total assets		2.70	%		2.95	%

Information's of TDR Loans

Information regarding TDR loans for the three and nine months end September 30, 2012 and 2011 is as follows:

	For the Nine Months Ended September 30, 2012				For the Three Months Ended September 30, 2012
	(Dollars in thousands)				(Dollars in thousands)
	Number of Contracts		Post-Modification Outstanding Recorded Investment		Number of Contracts		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial Real Estate		4	$	2,861		—	$	—

	For the Three Months Ended September 30, 2011				For the Nine Months Ended September 30, 2011
	(Dollars in thousands)				(Dollars in thousands)
	Number of Contracts		Post-Modification Outstanding Recorded Investment		Number of Contracts		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial Real Estate		—	$	—		1	$	391

Summary of Recorded Investment Based on Delinquency Status

The following table presents the recorded investment of commercial, commercial real estate and residential construction loans by internal credit risk grade and the recorded investment in residential, home equity, indirect and consumer loans based on delinquency status as of September 30, 2012 and December 31, 2011:

	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	September 30, 2012
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 - Minimal	$	—	$	114	$	—	$	—	$	—	$	—	$	114
Grade 2 - Modest		—		—		—		—		—		—		—
Grade 3 - Better than average		1,551		10		—		—		—		—		1,561
Grade 4 - Average		33,278		4,681		229		—		—		—		38,188
Grade 5 - Acceptable		339,226		63,610		5,733		—		—		—		408,569
Total Pass Credits		374,055		68,415		5,962		—		—		—		448,432
Grade 6 - Special mention		6,415		3,023		44		—		—		—		9,482
Grade 7 - Substandard		31,454		484		1,477		—		—		—		33,415
Grade 8 - Doubtful		—		—		—		—		—		—		—
Grade 9 - Loss		—		—		—		—		—		—		—
Total loans internally credit risk graded		411,924		71,922		7,483		—		—		—		491,329
Loans not monitored by internal risk grade:
Current loans not internally risk graded		—		—		57,545		121,908		194,499		12,581		386,533
30-59 days past due loans not internally risk graded		—		—		538		1,191		657		61		2,447
60-89 days past due loans not internally risk graded		—		—		1,218		378		146		49		1,791
90+ days past due loans not internally risk graded		—		—		1,765		1,631		56		163		3,615
Total loans not internally credit risk graded		—		—		61,066		125,108		195,358		12,854		394,386
Total loans internally and not internally credit risk graded	$	411,924	$	71,922	$	68,549	$	125,108	$	195,358	$	12,854	$	885,715

	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
Commercial Credit Exposure	December 31, 2011
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 - Minimal	$	—	$	3,157	$	—	$	—	$	—	$	—	$	3,157
Grade 2 - Modest		—		—		—		—		—		—		—
Grade 3 - Better than average		1,602		19		—		—		—		—		1,621
Grade 4 - Average		44,527		5,322		237		—		—		—		50,086
Grade 5 - Acceptable		278,458		63,880		4,835		—		—		—		347,173
Total Pass Credits		324,587		72,378		5,072		—		—		—		402,037
Grade 6 - Special mention		16,390		2,947		157		—		—		—		19,494
Grade 7 - Substandard		40,875		1,245		1,830		—		—		—		43,950
Grade 8 - Doubtful		—		—		—		—		—		—		—
Grade 9 - Loss		—		—		—		—		—		—		—
Total loans internally credit risk graded		381,852		76,570		7,059		—		—		—		465,481
Loans not monitored by internal risk grade:
Current loans not internally risk graded		—		—		53,276		123,169		179,230		12,924		368,599
30-59 days past due loans not internally risk graded		—		—		545		1,942		664		131		3,282
60-89 days past due loans not internally risk graded		—		—		1,172		181		71		12		1,436
90+ days past due loans not internally risk graded		—		—		2,472		1,666		124		28		4,290
Total loans not internally credit risk graded		—		—		57,465		126,958		180,089		13,095		377,607
Total loans internally and not internally credit risk graded	$	381,852	$	76,570	$	64,524	$	126,958	$	180,089	$	13,095	$	843,088

* Residential loans include conventional 1-4 family residential property loans and conventional 1-4 family residential property loans used to finance the cost of construction when upon completion of construction the loan converts into a permanent mortgage.