BANK OF KENTUCKY FINANCIAL CORP (BKYF) Form 10-Q for Period Ending 9/30/2011
Xcelerate Version: 6.12.8
 
Document and Entity Information
Oct. 12, 2011
9 Months Ended
Sep. 30, 2011
Document Type
 
10-Q 
Amendment Flag
 
FALSE 
Document Period End Date
 
09/30/2011 
Document Fiscal Year Focus
 
2011 
Document Fiscal Period Focus
 
Q3 
Trading Symbol
 
BKYF 
Entity Registrant Name
 
BANK OF KENTUCKY FINANCIAL CORP 
Entity Central Index Key
 
0000934547 
Current Fiscal Year End Date
 
12/31 
Entity Filer Category
 
Accelerated Filer 
Entity Common Stock, Shares Outstanding
7,432,995 
 
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Assets
 
 
Cash and cash equivalents
$67,657 
$172,664 
Interest bearing deposits with banks
250 
100 
Available-for-sale securities
294,388 
245,448 
Held-to-maturity securities
45,392 
39,778 
Loans held for sale
6,612 
15,279 
Total loans
1,118,630 
1,106,009 
Less: Allowance for loan losses
17,941 
17,368 
Net loans
1,100,689 
1,088,641 
Premises and equipment, net
22,653 
23,170 
FHLB stock, at cost
4,959 
4,959 
Goodwill
21,889 
21,889 
Acquisition intangibles, net
2,937 
3,575 
Cash surrender value of life insurance
32,540 
25,199 
Accrued interest receivable and other assets
24,433 
24,182 
Total assets
1,624,399 
1,664,884 
Liabilities & Shareholders' Equity
 
 
Liabilities
 
 
Deposits
1,369,215 
1,422,312 
Short-term borrowings
26,248 
23,419 
Notes payable
48,745 
48,761 
Accrued interest payable and other liabilities
10,905 
11,022 
Total liabilities
1,455,113 
1,505,514 
Shareholders' Equity
 
 
Common stock, no par value, 15,000,000 shares authorized, 7,432,995 (2011) and 7,432,295 (2010) shares issued and outstanding
3,098 
3,098 
Additional paid-in capital
34,068 
33,903 
Preferred stock, no par value, $17,000 liquidation value, 34,000 shares authorized and 17,000 shares issued and outstanding (2011and 2010)
16,930 
16,790 
Retained earnings
111,325 
104,683 
Accumulated other comprehensive income
3,865 
896 
Total shareholders' equity
169,286 
159,370 
Total liabilities and shareholders' equity
$1,624,399 
$1,664,884 
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Common stock, no par value
$0 
$0 
Common stock, shares authorized
15,000,000 
15,000,000 
Common stock, shares issued
7,432,995 
7,432,295 
Common stock, shares outstanding
7,432,995 
7,432,295 
Preferred stock, no par value
Preferred stock, liquidation value
17,000 
17,000 
Preferred stock, shares authorized
34,000 
34,000 
Preferred stock, shares issued
17,000 
17,000 
Preferred stock, shares outstanding
17,000 
17,000 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30, 2011
9 Months Ended
Sep. 30, 2011
3 Months Ended
Sep. 30, 2010
9 Months Ended
Sep. 30, 2010
INTEREST INCOME
 
 
 
 
Loans, including related fees
$14,488 
$43,421 
$15,366 
$45,940 
Securities and other
1,792 
5,281 
1,328 
4,340 
Total interest income
16,280 
48,702 
16,694 
50,280 
INTEREST EXPENSE
 
 
 
 
Deposits
1,954 
6,493 
2,781 
9,387 
Borrowings
250 
758 
321 
913 
Total interest expense
2,204 
7,251 
3,102 
10,300 
Net interest income
14,076 
41,451 
13,592 
39,980 
Provision for loan losses
2,550 
8,550 
3,500 
12,500 
Net interest income after provision for loan losses
11,526 
32,901 
10,092 
27,480 
NON-INTEREST INCOME
 
 
 
 
Service charges and fees
2,470 
7,051 
2,589 
7,478 
Mortgage banking income
703 
1,209 
1,041 
1,700 
Net securities gains
 
231 
 
 
Trust fee income
630 
2,016 
620 
1,772 
Other
1,494 
4,687 
1,377 
4,222 
Total non-interest income
5,297 
15,194 
5,627 
15,172 
NON-INTEREST EXPENSE
 
 
 
 
Salaries and benefits
5,351 
15,150 
5,110 
14,439 
Occupancy and equipment
1,216 
3,705 
1,195 
3,832 
Data processing
500 
1,461 
442 
1,346 
Advertising
464 
1,186 
338 
900 
Other
3,196 
10,209 
3,640 
11,137 
Total non-interest expense
10,727 
31,711 
10,725 
31,654 
INCOME BEFORE INCOME TAXES
6,096 
16,384 
4,994 
10,998 
Less: income taxes
1,822 
4,804 
1,466 
3,000 
NET INCOME
4,274 
11,580 
3,528 
7,998 
Preferred stock dividend and discount accretion
(261)
(777)
(515)
(1,539)
Net Income available to common shareholders
4,013 
10,803 
3,013 
6,459 
COMPREHENSIVE INCOME
5,136 
14,549 
3,388 
9,445 
Earnings per share, basic
0.54 
1.45 
0.53 
1.14 
Earnings per share, diluted
$0.54 
$1.45 
$0.53 
$1.14 
DENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
9 Months Ended
Sep. 30,
In Thousands, except Per Share data
2011
2010
Balance at beginning of year
$159,370 
$141,133 
Comprehensive Income:
 
 
Net income
11,580 
7,998 
Change in net unrealized gain(loss), net of tax
2,969 
1,447 
Total Comprehensive Income
14,549 
9,445 
Cash dividends paid on common stock
(4,162)
(3,173)
Exercise of stock options (700 and 0 shares), including tax benefit
14 
 
Stock-based compensation expense
152 
233 
Accrued dividends on preferred stock
(637)
(1,275)
Balance at end of period
169,286 
146,363 
Dividends per share
$0.56 
$0.56 
DENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical)
9 Months Ended
Sep. 30,
2011
2010
Exercise of stock options, shares
700 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
9 Months Ended
Sep. 30,
In Thousands
2011
2010
Cash Flows from Operating Activities
 
 
Net income
$11,580 
$7,998 
Adjustments to reconcile net income to net cash From operating activities
19,113 
(1,480)
Net cash from operating activities
30,693 
6,518 
Cash Flows from Investing Activities
 
 
Net change in interest bearing balances
(150)
 
Proceeds from paydowns and maturities of held-to-maturity securities
4,399 
3,705 
Proceeds from paydowns and maturities of available-for-sale securities
172,311 
147,266 
Purchases of held-to-maturity securities
(10,048)
(10,858)
Purchases of available-for-sale securities
(231,932)
(165,619)
Purchases of company owned life insurance
(6,500)
 
Net change in loans
(24,377)
22,472 
Proceeds from the sale of other real estate
3,021 
1,965 
Proceeds from sale of securities
13,367 
 
Property and equipment expenditures
(722)
(1,133)
Net cash from investing activities
(80,631)
(2,202)
Cash Flows from Financing Activities
 
 
Net change in deposits
(53,097)
(71,817)
Net change in short-term borrowings
2,829 
14,506 
Proceeds from exercise of stock options
14 
 
Cash dividends paid
(4,799)
(4,448)
Payments on note payable
(16)
(15)
Net cash from financing activities
(55,069)
(61,774)
Net change in cash and cash equivalents
(105,007)
(57,458)
Cash and cash equivalents at beginning of period
172,664 
98,738 
Cash and cash equivalents at end of period
$67,657 
$41,280 
Basis of Presentation:
9 Months Ended
Sep. 30, 2011
Basis of Presentation:
Note 1 - Basis of Presentation:

The condensed consolidated financial statements include the accounts of The Bank of Kentucky Financial Corporation (“BKFC” or the “Company”) and its wholly owned subsidiary, The Bank of Kentucky, Inc. (the “Bank”).  All significant intercompany accounts and transactions have been eliminated.
General:
9 Months Ended
Sep. 30, 2011
General:
Note 2 - General:

These financial statements were prepared in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X and, therefore, do not include all of the disclosures necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles.  Except for required accounting changes, these financial statements have been prepared on a basis consistent with the annual financial statements and include, in the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of operations and financial position at the end of and for the periods presented.  These financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions based on available information.  These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ.  The allowance for loan losses and the fair values of financial instruments, in particular, are subject to change.
Earnings per Share:
9 Months Ended
Sep. 30, 2011
Earnings per Share:
Note 3 - Earnings per Share:

Earnings per share are computed based upon the weighted average number of common shares outstanding during the three and nine month periods.  Diluted earnings per share are computed assuming that average stock options outstanding are exercised and the proceeds, including the relevant tax benefit, are used entirely to reacquire shares at the average price for the period.  For the three months ended September 2011 and 2010, 416,604 and 817,264 options were not considered, as they were not dilutive, and for the nine months ended September 2011 and 2010, 354,616 and 836,850 options were not considered, as they were not dilutive. The following table presents the numbers of shares used to compute basic and diluted earnings per share for the indicated periods:
 
   
Three Months
   
Nine Months
 
   
Ended
   
Ended
 
   
September 30
   
September 30
 
   
2011
   
2010
   
2011
   
2010
 
                         
Weighted average shares outstanding
    7,432,995       5,666,707       7,432,762       5,666,707  
Dilutive effects of assumed exercises of stock options and warrant
    55,748       -       41,332       -  
Shares used to compute diluted Earnings per share
    7,488,743       5,666,707       7,474,094       5,666,707
Stock-Based Compensation:
9 Months Ended
Sep. 30, 2011
Stock-Based Compensation:
Note 4 – Stock-Based Compensation:

Options to buy stock are granted to directors, officers and employees under the Company’s stock option and incentive plan (the “Plan”) which provides for the issuance of up to 1,200,000 shares.  The specific terms of each option agreement are determined by the Compensation Committee at the date of the grant.  For current options outstanding, options granted to directors vest immediately and options granted to employees generally vest evenly over a five-year period.

The Company recorded stock option expense of $51,000 ($51,000, net of taxes) and $152,000 ($152,000, net of taxes) for the three and nine months ended September 30, 2011, and stock option expense of $76,000 ($76,000, net of taxes) and $233,000 ($233,000, net of taxes) in the three and nine months ended September 30, 2010.
Cash and Cash Equivalents:
9 Months Ended
Sep. 30, 2011
Cash and Cash Equivalents:
Note 5 – Cash and Cash Equivalents:

Cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold, and investments in money market mutual funds.  The Company reports net cash flows for customer loan and deposit transactions, and interest-bearing balances with banks and short-term borrowings with maturities of 90 days or less.
Reclassification:
9 Months Ended
Sep. 30, 2011
Reclassification:
Note 6 – Reclassification:

Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications have no effect on previously reported net income or shareholders’ equity.
Summary of Signigicant Acouunting Policies:
9 Months Ended
Sep. 30, 2011
Summary of Signigicant Acouunting Policies:
Note 7 – Summary of Signigicant Acouunting Policies:
 
In September 2011, the FASB issued an update to existing guidance relating to goodwill impairment testing. The amendments in this update permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If after assessing the totality of events or circumstances, it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, the entity is required to perform the first step of the two-step impairment. If the carrying amount of the reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss. This update is effective for the Company for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.
 
In April 2011, the FASB amended existing guidance for assisting a creditor in determining whether a restructuring is a troubled debt restructuring.  The amendments clarify the guidance for a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. With regard to determining whether a concession has been granted, the ASU clarifies that creditors are precluded from using the effective interest method to determine whether a concession has been granted. In the absence of using the effective interest method, a creditor must now focus on other considerations such as the value of the underlying collateral, evaluation of other collateral or guarantees, the debtor’s ability to access other funds at market rates, interest rate increases and whether the restructuring results in a delay in payment that is insignificant.  The effect of adopting this standard did not have a material impact on the Company’s consolidated financial position or results of operations.
Securities:
9 Months Ended
Sep. 30, 2011
Securities:
Note 8 – Securities:

The fair value of available for sale securities and the related gains and losses recognized in accumulated other comprehensive income (loss) was as follows (in thousands):

         
Gross
   
Gross
       
 
 
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
Available-for-sale
 
Cost
   
Gains
   
Losses
   
Value
 
September 30, 2011
                       
U.S. Government, federal agencies and government sponsored enterprises
  $ 156,076     $ 1,385     $ (25 )   $ 157,436  
U.S. Government residential mortgage-backed
    131,331       4,506       (10 )     135,827  
Corporate
    1,125       -       -       1,125  
    $ 288,532     $ 5,891     $ (35 )   $ 294,388  

         
Gross
   
Gross
       
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
December 31, 2010
                       
U.S. government, federal agencies and government sponsored enterprises
  $ 145,536     $ 407     $ (876 )   $ 145,067  
U.S. government residential mortgage-backed
    97,429       2,095       (268 )     99,256  
Corporate
    1,125       -       -       1,125  
    $ 244,090     $ 2,502     $ (1,144 )   $ 245,448  
 
The amortized cost, unrecognized gains and losses, and fair value of securities held to maturity were as follows:
         
Gross
   
Gross
       
   
 
Amortized
   
Unrecognized
   
Unrecognized
   
Fair
 
Held-to-Maturity
 
Cost
   
Gains
   
Losses
   
Value
 
2011
                       
Municipal and other obligations
  $ 45,392     $ 1,736     $ (0 )   $ 47,128  
                                 
2010
                               
Municipal and other obligations
  $ 39,778     $ 713     $ (229 )   $ 40,262  

The amortized cost and fair value of debt securities at September 30, 2011 by contractual maturity were as follows. Securities not due at a single maturity date, primarily mortgage backed securities, are shown separately.

   
Available-for-Sale
   
Held-to-Maturity
 
   
Amortized
   
Fair
   
Amortized
   
Fair
 
   
Cost
   
Value
   
Cost
   
Value
 
Due in one year or less
  $ -     $ -     $ 2,728     $ 2,750  
Due after one year through five years
    109,756       110,589       17,721       18,321  
Due after five years through ten years
    46,320       46,847       18,683       19,797  
Due after ten years
    1,125       1,125       6,260       6,260  
U.S. Government agency mortgage-backed
    131,331       135,827       -       -  
    $ 288,532     $ 294,388     $ 45,392     $ 47,128  

Proceeds on the sale of $13,367,000 of available-for-sale securities resulted in gains of $231,000 for the first nine months of 2011, with no losses.  There were no sales of available-for-sale securities in 2010.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  Investment securities classified as available-for-sale or held-to-maturity are evaluated for OTTI under ASC 320, Accounting for Certain Investments in Debt and Equity Securities.

In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  The assessment of whether an other-than temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.
 
When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.  If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  Otherwise, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings.  The amount of the total OTTI related to other factors shall be recognized in other comprehensive income, net of applicable taxes.  The previous amortized cost basis less the OTTI recognized in earnings shall become the new amortized cost basis of the investment.

As of September 30, 2011, the Bank’s security portfolio consisted of 196 securities, 8 of which were in an unrealized loss position of $35,000.  There was no other-than-temporary-impairment of securities at September 30, 2011. Unrealized losses have not been recognized into income because the issuers’ bonds are of high credit quality (U.S. government agencies and government sponsored enterprises and “A” rated or better Kentucky municipalities), management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

Mortgage-Backed Securities

At September 30, 2011, 100% of the mortgage-backed securities held by the Bank were issued by U.S. government sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support.  Because a decline in market value would be attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other than temporarily impaired at September 30, 2011.

At September 30, 2011 and December 31, 2010, securities with a carrying value of $308,823,000 and $244,220,000, respectively, were pledged to secure public deposits and repurchase agreements.

Securities with unrealized losses at September 30, 2011 and December 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

   
Less than 12 Months
   
12 Months or More
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
Description of Securities
 
Value
   
Loss
   
Value
   
Loss
   
Value
   
Loss
 
September 30, 2011
                                   
U.S. government, federal agencies and government sponsored  enterprises
  $ 14,695     $ (25 )   $ -     $ -     $ 14,695     $ (25 )
U.S. government mortgage-backed
    11,688       (10 )     -       -       11,688       (10 )
Municipal & other obligations
    370       -       -       -       370       -  
                                                 
Total temporarily impaired
  $ 26,753     $ (35 )   $ -     $ -     $ 26,753     $ (35 )
December 31, 2010
                                               
U.S. government, federal  agencies and  government sponsored enterprises
  $ 63,952     $ (876 )   $ -     $ -     $ 63,952     $ (876 )
U.S government mortgage-backed
    15,899       (268 )     -       -       15,899       (268 )
Municipal & other obligations
    12,813       (229 )     -       -       12,813       (229 )
                                                 
Total temporarily impaired
  $ 92,664     $ (1,373 )   $ -     $ -     $ 92,664     $ (1,373
Loans
9 Months Ended
Sep. 30, 2011
Loans
Note 9 - Loans

Loan balances were as follows:
   
9/30/2011
   
12/31/2010
 
             
Commercial
  $ 193,697     $ 216,660  
Residential real estate
    260,018       260,625  
Nonresidential real estate
    517,461       482,173  
Construction
    106,406       107,611  
Consumer
    14,794       16,546  
Municipal obligations
    27,460       23,573  
Gross loans
    1,119,836       1,107,188  
Less:   Deferred loan origination fees and discount
    (1,206 )     (1,179 )
    Allowance for loan losses
    (17,941 )     (17,368 )
                 
Net loans
  $ 1,100,689     $ 1,088,641  

Activity in the allowance for loan losses was as follows for the third quarter and nine months ended September 30, 2011:

   
Three months ended September 30,
   
Nine Months ended September 30,
 
   
9/30/2011
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
Beginning balance
  $ 17,816     $ 16,531     $ 17,368     $ 15,153  
Provision charged to operations
    2,550       3,500       8,550       12,500  
Loans charged off
    (2,564 )     (3,112 )     (8,393 )     (10,989 )
Recoveries
    139       244       416       499  
                                 
Ending balance
  $ 17,941     $ 17,163     $ 17,941     $ 17,163  
 
The following tables present the activity in the allowance for loan losses for the three months ended September 30, 2011 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 September 30, 2011 and December 31, 2010.

                
Non
                         
         
Residential
   
Residential
               
Municipal
       
September 30, 2011
 
Commercial
   
Real estate
   
Real estate
   
Construction
   
Consumer
   
Obligations
   
Total
 
Allowance for loan losses
                                         
Beginning balance
  $ 3,931     $ 2,403     $ 6,782     $ 4,496     $ 167     $ 37     $ 17,816  
Provision for loan losses
    262       384       1,590       181       154       (21 )     2,550  
Loans charged off
    (1,014 )     (210 )     (586 )     (501 )     (253 )     -       (2,564 )
Recoveries
    28       2       16       -       93       -       139  
                                                         
Total ending allowance balance
  $ 3,207     $ 2,579     $ 7,802     $ 4,176     $ 161     $ 16     $ 17,941  
                                                         
Ending allowance balance attributable to loans
                                                       
Individually evaluated for impairment
  $ 504     $ 724     $ 3,278     $ 3,256     $ -     $ -     $ 7,762  
Collectively evaluated for impairment
    2,703       1,855       4,524       920       161       16       10,179  
                                                         
Total ending allowance balance
  $ 3,207     $ 2,579     $ 7,802     $ 4,176     $ 161     $ 16     $ 17,941  
                                                         
Loans
                                                       
Loans individually evaluated for impairment
  $ 1,689     $ 5,839     $ 23,029     $ 8,616     $ -     $ -     $ 39,173  
Loans collectively evaluated for impairment
    192,008       254,179       494,432       97,790       14,794       27,460       1,080,663  
                                                         
Total ending loans balance
  $ 193,697     $ 260,018     $ 517,461     $ 106,406     $ 14,794     $ 27,460     $ 1,119,836  
 
The following tables present the activity in the allowance for loan losses for the nine months ended September 30, 2011 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 September 30, 2011 and December 31, 2010.

                
Non
                         
         
Residential
   
Residential
               
Municipal
       
September 30, 2011
 
Commercial
   
Real estate
   
Real estate
   
Construction
   
Consumer
   
Obligations
   
Total
 
Allowance for loan losses
                                         
Beginning balance
  $ 3,440     $ 2,431     $ 8,126     $ 3,150     $ 166     $ 55     $ 17,368  
Provision for loan losses
    1,649       780       2,728       3,025       407       (39 )     8,550  
Loans charged off
    (1,934 )     (674 )     (3,070 )     (2,000 )     (715 )     -       (8,393 )
Recoveries
    52       42       18       1       303       -       416  
                                                         
Total ending allowance balance
  $ 3,207     $ 2,579     $ 7,802     $ 4,176     $ 161     $ 16     $ 17,941  
                                                         
Ending allowance balance attributable to loans
                                                       
Individually evaluated for impairment
  $ 504     $ 724     $ 3,278     $ 3,256     $ -     $ -     $ 7,762  
Collectively evaluated for impairment
    2,703       1,855       4,524       920       161       16       10,179  
                                                         
Total ending allowance balance
  $ 3,207     $ 2,579     $ 7,802     $ 4,176     $ 161     $ 16     $ 17,941  
                                                         
Loans
                                                       
Loans individually evaluated for impairment
  $ 1,689     $ 5,839     $ 23,029     $ 8,616     $ -     $ -     $ 39,173  
Loans collectively evaluated for impairment
    192,008       254,179       494,432       97,790       14,794       27,460       1,080,663  
                                                         
Total ending loans balance
  $ 193,697     $ 260,018     $ 517,461     $ 106,406     $ 14,794     $ 27,460     $ 1,119,836  

                
Non
                         
         
Residential
   
Residential
               
Municipal
       
December 31, 2010
 
Commercial
   
Real estate
   
Real estate
   
Construction
   
Consumer
   
Obligations
   
Total
 
Allowance for loan losses
                                         
Ending allowance balance attributable to loans
                                         
Individually evaluated for impairment
  $ 595     $ 399     $ 3,365     $ 1,385     $ -     $ -     $ 5,744  
Collectively evaluated for impairment
    2,845       2,032       4,761       1,765       166       55       11,624  
                                                         
Total ending allowance balance
  $ 3,440     $ 2,431     $ 8,126     $ 3,150     $ 166     $ 55     $ 17,368  
                                                         
Loans
                                                       
Loans individually evaluated for impairment
  $ 1,769     $ 2,828     $ 15,583     $ 5,776     $ -     $ -     $ 25,956  
Loans collectively evaluated for impairment
    214,891       257,797       466,590       101,835       16,546       23,573       1,081,232  
                                                         
Total ending loans balance
  $ 216,660     $ 260,625     $ 482,173     $ 107,611     $ 16,546     $ 23,573     $ 1,107,188  
 
The following table presents individually impaired loans by class of loans as of, and for the three months ended September 30, 2011:

   
Unpaid
         
Allowance for
   
Average
   
Interest
       
   
Principal
   
Recorded
   
Loan Losses
   
Recorded
   
Income
   
Interest
 
   
Balance
   
Investment
   
Allocated
   
Investment
   
Recognized
   
Received
 
                                     
With no related allowance recorded
                                   
Commercial
  $ 349     $ 310     $ -     $ 371     $ -     $ -  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
Multifamily properties
    -       -       -       -       -       -  
                                                 
Other
    2,121       2,121       -       2,325       -       -  
                                                 
Nonresidential real estate
                                               
Owner occupied properties
    1,011       955       -       587       -       -  
Non owner occupied properties
    897       897       -       1,044       -       -  
                                                 
Construction
    2,036       889       -       909       -       -  
                                                 
With an allowance recorded
                                               
Commercial
    1,379       1,379       504       2,370       10       5  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
Multifamily properties
    868       868       291       869       14       9  
Other
    2,869       2,850       433       2,755       18       17  
                                                 
Nonresidential real estate
                                               
Owner occupied properties
    9,471       9,348       1,093       5,123       80       25  
Non owner occupied properties
    13,667       11,830       2,185       9,870       90       90  
                                                 
Construction
    8,962       7,726       3,256       8,459       76       75  
                                                 
Total
  $ 43,630     $ 39,173     $ 7,762     $ 34,682     $ 288     $ 221  
 
The following table presents individually impaired loans by class of loans as of, and for the nine months ended September 30, 2011:

   
Unpaid
         
Allowance for
   
Average
   
Interest
       
   
Principal
   
Recorded
   
Loan Losses
   
Recorded
   
Income
   
Interest
 
   
Balance
   
Investment
   
Allocated
   
Investment
   
Recognized
   
Received
 
                                     
With no related allowance recorded
                                   
Commercial
  $ 349     $ 310     $ -     $ 351     $ -     $ -  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
Multifamily properties
    -       -       -       17       -       -  
Other
    2,121       2,121       -       1,288       -       -  
                                                 
Nonresidential real estate
                                               
Owner occupied properties
    1,011       955       -       503       -       -  
Non owner occupied properties
    897       897       -       848       -       -  
                                                 
Construction
    2,036       889       -       559       -       -  
                                                 
With an allowance recorded Commercial
    1,379       1,379       504       1,959       17       9  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
Multifamily properties
    868       868       291       922       42       28  
Other
    2,869       2,850       433       2,441       54       51  
                                                 
Nonresidential real estate
                                               
Owner occupied properties
    9,471       9,348       1,093       2,884       81       26  
Non owner occupied properties
    13,667       11,830       2,185       10,044       215       210  
                                                 
Construction
    8,962       7,726       3,256       8,035       230       189  
                                                 
Total
  $ 43,630     $ 39,173     $ 7,762     $ 29851     $ 612     $ 513  
 
The following table presents individually impaired loans by class of loans as of December 31, 2010:

   
Unpaid
         
Allowance for
 
   
Principal
   
Recorded
   
Loan Losses
 
   
Balance
   
Investment
   
Allocated
 
                   
With no related allowance recorded                         
Commercial
  $ 310     $ 310     $ -  
                         
Residential real estate
                       
Home equity lines of credit
    -       -       -  
Multifamily properties
    34       34       -  
Other
    259       259       -  
                         
Nonresidential real estate
                       
Owner occupied properties
    725       725       -  
Non owner occupied properties
    1,495       1,495       -  
                         
Construction
    609