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Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2013
Allowance for Loan Losses [Abstract]  
Allowance for Loan Losses

Note 6. Allowance for Loan Losses

The Company maintains an allowance for loan losses in an amount determined by management on the basis of the character of the loans, loan performance, the financial condition of borrowers, the value of collateral securing loans and other relevant factors.

The following table summarizes the changes in the Company’s allowance for loan losses for the periods indicated.

 

                 
    Three months ended
March 31,		  
    2013     2012  
    (in thousands)  

Allowance for loan losses, beginning of period

   $ 19,197     $ 16,574  

Loans charged off

     (371 )      (424 ) 

Recoveries on loans previously charged-off

     183       184  
   

 

 

    

 

 

  

Net charge-offs

     (188 )      (240 ) 

Provision charged to expense

     750       1,100  
   

 

 

    

 

 

  

Allowance for loan losses, end of period

   $ 19,759     $ 17,434  
   

 

 

    

 

 

  

Further information pertaining to the allowance for loan losses for the three months ending March 31, 2013 follows:

 

                                                                 
    Construction
and Land
Development		     Commercial
and
Industrial		     Commercial
Real
Estate		     Residential
Real
Estate		     Consumer     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                        

Balance at December 31, 2012

   $ 3,041     $ 3,118     $ 9,065     $ 1,994     $ 333     $ 886     $ 760     $ 19,197  

Charge-offs

     —         (226 )      —         —         (145 )      —         —         (371 ) 

Recoveries

     —         65       2       2       114               —         183  

Provision

     158       566       (288 )      75       55       (53 )      237       750  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance at March 31, 2013

   $ 3,199     $ 3,523     $ 8,779     $ 2,071     $ 357     $ 833     $ 997     $ 19,759  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans deemed to be impaired

   $ 1,000     $ 103     $ 396     $ 155     $ —       $ 96     $ —         1,750  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans not deemed to be impaired

   $ 2,199     $ 3,420     $ 8,383     $ 1,916     $ 357     $ 737     $ 997     $ 18,009  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans:

                                                                

Ending balance

   $ 34,021     $ 110,537     $ 570,441     $ 292,871     $ 7,910     $ 121,989     $ —       $ 1,137,769  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans deemed to be impaired

   $ 1,500     $ 1,396     $ 2,262     $ 1,232     $ —       $ 96     $ —       $ 6,486  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans not deemed to be impaired

   $ 32,521     $ 109,141     $ 568,179     $ 291,639     $ 7,910     $ 121,893     $ —       $ 1,131,283  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Further information pertaining to the allowance for loan losses for three months ending March 31, 2012 follows:

 

                                                                 
    Construction
and Land
Development		     Commercial
and
Industrial		     Commercial
Real
Estate		     Residential
Real
Estate		     Consumer     Home
Equity		     Unallocated     Total  
    (Dollars in thousands)  

Allowance for loan losses:

                                        

Balance at December 31, 2011

   $ 2,893     $ 3,139     $ 6,566     $ 1,886     $ 356     $ 704     $ 1,030     $ 16,574  

Charge-offs

     —         (111 )      —         (159 )      (154 )      —         —         (424 ) 

Recoveries

     —         42       1       5       136       —         —         184  

Provision

     27       150       774       52       (21 )      37       81       1,100  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance at March 31, 2012

   $ 2,920     $ 3,220     $ 7,341     $ 1,784     $ 317     $ 741     $ 1,111     $ 17,434  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans deemed to be impaired

   $ 1,000     $ 493     $ 525     $ 93     $ —       $ —       $ —         2,111  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amount of allowance for loan losses for loans not deemed to be impaired

   $ 1,920     $ 2,727     $ 6,816     $ 1,691     $ 317     $ 741     $ 1,111     $ 15,323  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans:

                                                                

Ending balance

   $ 36,937     $ 81,882     $ 502,413     $ 249,981     $ 6,946     $ 109,817     $ —       $ 987,976  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans deemed to be impaired

   $ 1,500     $ 1,721     $ 4,541     $ 515     $ —       $ —       $ —       $ 8,277  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans not deemed to be impaired

   $ 35,437     $ 80,161     $ 497,872     $ 249,466     $ 6,946     $ 109,817     $ —       $ 979,699  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The Company utilizes a six grade internal loan rating system for commercial real estate, construction and commercial loans as follows:

Loans rated 1-3 (Pass):

Loans in this category are considered “pass” rated loans with low to average risk.

Loans rated 4 (Monitor):

These loans represent classified loans that management is closely monitoring for credit quality. These loans have had or may have minor credit quality deterioration as of March 31, 2013 and December 31, 2012.

Loans rated 5 (Substandard):

Substandard loans represent classified loans that management is closely monitoring for credit quality. These loans have had more significant credit quality deterioration as of March 31, 2013 and December 31, 2012.

Loans rated 6 (Doubtful):

Doubtful loans represent classified loans that management is closely monitoring for credit quality. These loans had more significant credit quality deterioration as of March 31, 2013 and December 31, 2012 and are doubtful for full collection.

Impaired:

Impaired loans represent classified loans that management is closely monitoring for credit quality. A loan is classified as impaired when it is probable that the Company will be unable to collect all amounts due.

 

The following table presents the Company’s loans by risk rating at March 31, 2013.

 

                         
    Construction
and land
development		     Commercial
and
industrial		     Commercial
real
estate		  
    (Dollars in thousands)  

Grade:

        

1-3 (Pass)

   $ 25,095     $ 108,669     $ 563,658  

4 (Monitor)

     7,426       472       4,521  

5 (Substandard)

     —         —         —    

6 (Doubtful)

     —         —         —    

Impaired

     1,500       1,396       2,262  
   

 

 

    

 

 

    

 

 

  

Total

   $ 34,021     $ 110,537     $ 570,441  
   

 

 

    

 

 

    

 

 

  

The following table presents the Company’s loans by risk rating at December 31, 2012.

 

                         
    Construction
and land
development		     Commercial
and
industrial		     Commercial
real
estate		  
    (Dollars in thousands)  

Grade:

        

1-3(Pass)

   $ 29,719     $ 86,587     $ 569,760  

4 (Monitor)

     7,399       606       4,424  

5 (Substandard)

     —         —         —    

6 (Doubtful)

     —         —         —    

Impaired

     1,500       1,282       2,281  
   

 

 

    

 

 

    

 

 

  

Total

   $ 38,618     $ 88,475     $ 576,465  
   

 

 

    

 

 

    

 

 

  

The Company utilized payment performance as credit quality indicators for residential real estate, consumer and overdrafts, and the home equity portfolio. The indicators are depicted in the table “aging of past due loans,” below.

Further information pertaining to the allowance for loan losses at March 31, 2013 follows:

 

                                                 
    Accruing
30-89  Days
Past Due		     Non Accrual     Accrual
Greater
Than
90 Days		     Total
Past Due		     Current Loans     Total  
    (Dollars in thousands)  

Construction and land development

   $ 2,395     $ 1,500     $ —       $ 3,895     $ 30,126     $ 34,021  

Commercial and industrial

     904       803       —         1,707       108,830       110,537  

Commercial real estate

     2,193       660       —         2,853       567,588       570,441  

Residential real estate

     2,923       1,150       —         4,073       288,798       292,871  

Consumer and overdrafts

     23       31       —         54       7,856       7,910  

Home equity

     1,308       —         —         1,308       120,681       121,989  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 9,746     $ 4,144     $ —       $ 13,890     $ 1,123,879     $ 1,137,769  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Further information pertaining to the allowance for loan losses at December 31, 2012 follows:

 

                                                 
    Accruing
30-89 Days
Past Due		     Non Accrual     Accrual
Greater
Than
90 Days		     Total
Past Due		     Current Loans     Total  
    (Dollars in thousands)  

Construction and land development

   $ —       $ 1,500     $ —       $ 1,500     $ 37,118     $ 38,618  

Commercial and industrial

     1,256       676               1,932       86,543       88,475  

Commercial real estate

     3,450       674       —         4,124       572,341       576,465  

Residential real estate

     864       1,597       —         2,461       279,396       281,857  

Consumer and overdrafts

     32       24       —         56       7,394       7,450  

Home equity

     1,088       —          —         1,088       117,835       118,923  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 6,690     $ 4,471     $ —       $ 11,161     $ 1,100,627     $ 1,111,788  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is impaired, The Company measures impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company measures impairment based on a loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The Company’s policy for recognizing interest income on impaired loans is contained within Note 1 of the consolidated financial statements.

The following is information pertaining to impaired loans for March 31, 2013:

 

                                         
    Carrying Value     Unpaid
Principal
Balance		     Required
Reserve		     Average
Carrying
Value		     Interest
Income
Recognized		  
    (Dollars in thousands)  

With no required reserve recorded:

                                        

Construction and land development

   $ —       $ —        $ —       $ —       $ —    

Commercial and industrial

     566       1,058       —         545       —    

Commercial real estate

     165       198       —         167       —    

Residential real estate

     319       321       —         102       —    

Consumer

     —         —         —         —         —    

Home equity

     —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 1,050     $ 1,577     $ —       $ 814     $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

With required reserve recorded:

                                        

Construction and land development

   $ 1,500     $ 3,292     $ 1,000     $ 1,500     $ —    

Commercial and industrial

     830       1,046       103       840       9  

Commercial real estate

     2,097       2,146       396       2,105       24  

Residential real estate

     913       995       155       779       —    

Consumer

     —         —         —         —         —    

Home equity

     96       96       96       96       —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 5,436     $ 7,575     $ 1,750     $ 5,320     $ 33  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

                                         

Total:

                                        

Construction and land development

   $ 1,500     $ 3,292     $ 1,000     $ 1,500     $ —    

Commercial and industrial

     1,396       2,104       103       1,385       9  

Commercial real estate

     2,262       2,344       396       2,272       24  

Residential real estate

     1,232       1,316       155       881       —    

Consumer

     —         —         —         —         —    

Home equity

     96       96       96       96       —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 6,486     $ 9,152     $ 1,750     $ 6,134     $ 33  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following is information pertaining to impaired loans for March 31, 2012:

 

                                         
    Carrying Value     Unpaid
Principal
Balance		     Required
Reserve		     Average
Carrying Value		     Interest
Income
Recognized		  
    (Dollars in thousands)  

With no required reserve recorded:

                                        

Construction and land development

   $ —       $ —       $ —       $ 1,125     $ —    

Commercial and industrial

     214       259       —         357          

Commercial real estate

     179       202       —         181       —    

Residential real estate

     32       32       —         145       —    

Consumer

     —         —         —         —         —    

Home equity

     —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 425     $ 493     $ —       $ 1,808     $ —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

With required reserve recorded:

                                        

Construction and land development

     1,500     $ 3,292     $ 1,000     $ 375     $ —    

Commercial and industrial

     1,507       1,730       493       1,285       14  

Commercial real estate

     4,362       4,394       525       4,002       34  

Residential real estate

     483       482       93       789       1  

Consumer

     —         —         —         —         —    

Home equity

     —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 7,852     $ 9,898     $ 2,111     $ 6,451     $ 49  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total:

                                        

Construction and land development

   $ 1,500     $ 3,292     $ 1,000     $ 1,500     $ —    

Commercial and industrial

     1,721       1,989       493       1,642       14  

Commercial real estate

     4,541       4,596       525       4,183       34  

Residential real estate

     515       514       93       934       1  

Consumer

     —         —         —         —         —    

Home equity

     —         —         —         —         —    
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 8,277     $ 10,391     $ 2,111     $ 8,259     $ 49  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

There were no troubled debt restructurings occurring during the three month periods ended March 31, 2012 or March 31, 2013.