v2.4.0.6
Loans
3 Months Ended
Mar. 31, 2012
Loans

Note 9 - Loans

 

Loan balances were as follows (in thousands):

    3/31/2012     12/31/2011  
Commercial   $ 193,536     $ 193,176  
Residential real estate     261,504       266,268  
Nonresidential real estate     528,787       523,485  
Construction     105,033       104,788  
Consumer     15,992       16,618  
Municipal obligations     26,844       27,066  
Gross loans     1,131,696       1,131,401  
Less:  Deferred loan origination fees and discount     (1,496 )     (1,447 )
           Allowance for loan losses     (18,362 )     (18,288 )
                 
Net loans   $ 1,111,838     $ 1,111,666  

  

The following tables present the activity in the allowance for loan losses for the three months ending March 31, 2012 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, 2012 and December 31, 2011 (in thousands):

 

                Non                          
          Residential     Residential                 Municipal        
March 31, 2012   Commercial     Real estate     Real estate     Construction     Consumer     Obligations     Total  
Allowance for loan losses                                                        
Beginning balance   $ 3,207     $ 2,591     $ 7,614     $ 4,701     $ 162     $ 13     $ 18,288  
Provision for loan losses     (271 )     692       57       1,018       80       224       1,800  
Loans charged off     (356 )     (374 )     (904 )     (27 )     (169 )     -       (1,830 )
Recoveries     1       7       1       2       93       -       104  
                                                         
Total ending allowance balance   $ 2,581     $ 2,916     $ 6,768     $ 5,694     $ 166     $ 237     $ 18,362  
                                                         
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ 177     $ 588     $ 2,149     $ 4,699     $ -     $ -     $ 7,613  
Collectively evaluated for impairment     2,404       2,328       4,619       995       166       237       10,749  
                                                         
Total ending allowance balance   $ 2,581     $ 2,916     $ 6,768     $ 5,694     $ 166     $ 237     $ 18,362  
                                                         
Loans                                                        
Loans individually evaluated for impairment   $ 1,753     $ 6,416     $ 20,438     $ 9,928     $ -     $ -     $ 38,535  
Loans collectively evaluated for impairment     191,783       255,088       508,349       95,105       15,992       26,844       1,093,161  
                                                         
Total ending loans balance   $ 193,536     $ 261,504     $ 528,787     $ 105,033     $ 15,992     $ 26,844     $ 1,131,696  
                                                         
                      Non                                  
              Residential       Residential                       Municipal          
March 31, 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     349       38       1,515       983       130       (15 )     3,000  
Loans charged off     (532 )     (329 )     (1,252 )     (506 )     (247 )     -       (2,866 )
Recoveries     22       38       2       -       124       -       186  
                                                         
Total ending allowance balance   $ 3,279     $ 2,178     $ 8,391     $ 3,627     $ 173     $ 4     $ 17,688  

  

                Non                          
          Residential     Residential                 Municipal        
December 31, 2011   Commercial     Real estate     Real estate     Construction     Consumer     Obligations     Total  
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ 224     $ 477     $ 2,994     $ 3,748     $ -     $ -     $ 7,443  
Collectively evaluated for impairment     2,983       2,114       4,620       953       162       13       10,845  
                                                         
    $ 3,207     $ 2,591     $ 7,614     $ 4,701     $ 162     $ 13     $ 18,288  
Loans                                                        
Loans individually evaluated for impairment   $ 917     $ 6,100     $ 20,390     $ 7,854     $ -     $ -     $ 35,261  
Loans collectively evaluated for impairment     192,259       260,168       503,095       96,934       16,618       27,066       1,096,140  
                                                         
Total ending loans balance   $ 193,176     $ 266,268     $ 523,485     $ 104,788     $ 16,618     $ 27,066     $ 1,131,401  

  

The following table presents individually impaired loans by class of loans as of and for the three months ended March 31, 2012 (in thousands):

 

    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     $ 309     $ -     $ 310     $ -     $ -  
                                                 
Residential real estate                                                
Home equity lines of credit     50       50       -       50       -       -  
Multifamily properties     858       527       -       533       -       -  
Other     2,072       2,072       -       1,888       -       -  
                                                 
Nonresidential real estate                                                
Owner occupied properties     960       960       -       1,031       -       -  
Non owner occupied properties     2,994       2,742       -       2,429       -       -  
                                                 
Construction     -       -       -       160       -       -  
                                                 
With an allowance recorded                                                
Commercial     1,669       1,444       177       1,026       1       -  
                                                 
Residential real estate                                                
Home equity lines of credit     137       137       137       69       -       -  
Multifamily properties     -       -       -       -       -       -  
Other     3,630       3,630       451       3,720       24       23  
                                                 
Nonresidential real estate                                                
Owner occupied properties     9,167       9,067       917       9,432       80       79  
Non owner occupied properties     8,540       7,669       1,232       7,522       62       50  
                                                 
Construction     11,683       9,928       4,699       8,732       72       69  
                                                 
Total   $ 42,109     $ 38,535     $ 7,613     $ 36,902     $ 239     $ 221  

  

The following table presents individually impaired loans by class of loans as of and for the three months ended March 31, 2011 (in thousands):

 

    Unpaid           Allowance for     Average     Interest        
    Principal     Recorded     Loan Losses     Recorded     Income     Interest  
    Balance     Investment     Allocated     Investment     Recognized     Received  
                                     
With no related allowance recorded                                                
Commercial   $ 310     $ 310     $ -     $ 310     $ -     $ -  
                                                 
Residential real estate                                                
Home equity lines of credit     -       -       -       -       -       -  
Multifamily properties     34       34       -       34       -       -  
Other     145       145       -       202       -       -  
                                                 
Nonresidential real estate                                                
Owner occupied properties     67       67       -       781       -       -  
Non owner occupied properties     544       544       -       635       -       -  
                                                 
Construction     -       -       -       305       -       -  
                                                 
With an allowance recorded                                                
Commercial     1,098       1,098       503       1,279       3       -  
                                                 
Residential real estate                                                
Home equity lines of credit     -       -       -       -       -       -  
Multifamily properties     872       872       134       1,026       14       14  
Other     2,560       2,560       310       1,958       17       17  
                                                 
Nonresidential real estate                                                
Owner occupied properties     2,108       2,108       312       2,027       -       -  
Non owner occupied properties     10,592       10,592       2,810       11,005       46       46  
                                                 
Construction     8,467       8,467       2,296       6,817       49       43  
                                                 
Total   $ 26,797     $ 26,797     $ 6,365     $ 26,379     $ 129     $ 120  

   

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011 (in thousands):

 

    Unpaid         Allowance for  
    Principal     Recorded     Loan Losses  
    Balance     Investment     Allocated  
                   
With no related allowance recorded                        
Commercial   $ 350     $ 310     $ -  
                         
Residential real estate                        
Home equity lines of credit     50       50       -  
Multifamily properties     538       538       -  
Other     1,703       1,703       -  
                         
Nonresidential real estate                        
Owner occupied properties     1,101       1,101       -  
Non owner occupied properties     2,122       2,116       -  
                         
Construction     356       319       -  
                         
With an allowance recorded                        
Commercial     733       607       224  
                         
Residential real estate                        
Home equity lines of credit     -       -       -  
Multifamily properties     -       -       -  
Other     3,859       3,809       477  
                         
Nonresidential real estate                        
Owner occupied properties     10,771       9,797       1,477  
Non owner occupied properties     8,476       7,375       3,748  
                         
Construction     8,267       7,535       3,748  
                         
Total   $ 38,326     $ 35,260     $ 7,443  

  

The following table presents the aging of the recorded investment in past due loans by class of loans as of March 31, 2012 and December 31, 2011 (in thousands):

 

    Loans     Loans over                    
    30-90 days     90 days           Loans not        
    past due     past due     Nonaccrual     past due     Total  
March 31, 2012                                        
Commercial   $ 335     $ 43     $ 2,013     $ 191,145     $ 193,536  
Residential real estate                                        
Home equity lines of credit     469       -       1,206       89,616       91,291  
Multifamily properties     -       -       -       38,749       38,749  
Other residential real estate     5,381       153       4,249       121,681       131,464  
                                         
Nonresidential real estate                                        
Owner occupied properties     1,153       61       2,042       257,308       260,564  
Non owner occupied properties     972       407       4,654       262,190       268,223  
Construction     219       -       1,991       102,823       105,033  
                                         
Consumer                                        
Credit card balances     65       14       -       6,219       6,298  
Other consumer     53       2       624       9,015       9,694  
                                         
Municipal obligations     -       -       -       26,844       26,844  
                                         
Total   $ 8,647     $ 680     $ 16,779     $ 1,105,590     $ 1,131,696  

 

    Loans     Loans over                    
    30-90 days     90 days           Loans not        
    past due     past due     Nonaccrual     past due     Total  
December 31, 2011                                        
Commercial   $ 692     $ 74     $ 1,175     $ 191,235     $ 193,176  
Residential real estate                                        
Home equity lines of credit     1,094       -       910       92,676       94,680  
Multifamily properties     -       -       -       36,756       36,756  
Other residential real estate     5,854       112       4,415       124,451       134,832  
                                         
Nonresidential real estate                                        
Owner occupied properties     2,623       -       2,270       247,875       252,768  
Non owner occupied properties     3,942       -       4,358       262,417       270,717  
Construction     265       -       1,897       102,626       104,788  
                                         
Consumer                                        
Credit card balances     60       32       -       6,400       6,492  
Other consumer     37       1       626       9,462       10,126  
                                         
Municipal obligations     -       -       -       27,066       27,066  
                                         
Total   $ 14,567     $ 219     $ 15,651     $ 1,100,964     $ 1,131,401  

  

Troubled Debt Restructurings:

 

The Company has allocated $2,391,000 and $2,074,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2012 and December 31, 2011. Troubled debt restructurings totaled $17,765,000 and $15,229,000 as of March 31, 2012 and December 31, 2011, respectively.The Company has not committed to lend additional amounts as of March 31, 2012 and December 31, 2011 to customers with outstanding loans that are classified as troubled debt restructurings.

 

Modifications involving a reduction of the stated interest rate of the loan were for periods up to three years. Modifications involving an extension of the maturity date were for periods ranging from eight months to twelve months.

 

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

 

          Pre-Modification     Post-Modification  
          Outstanding Recorded     Outstanding Recorded  
    Number of Loans     Investment     Investment  
Troubled Debt Restructurings:                  
                   
Commercial     2     $ 349,870     $ 309,439  
Residential real estate                        
Home equity lines of credit     -       -       -  
Multifamily properties                        
Other residential real estate     6       4,036,448       3,942,661  
Nonresidential real estate                        
Owner occupied properties     3       8,137,536       7,924,474  
Non owner occupied properties     4       3,661,111       3,330,160  
Construction     1       2,258,504       2,258,504  
Consumer                        
Credit card balances     -       -       -  
Other consumer     -       -       -  
                         
Municipal obligations     -       -       -  
                         
Total     16     $ 18,443,469     $ 17,765,238  

 

The troubled debt restructurings described above increased the allowance for loan losses by $891,292 and resulted in charge-offs of $150,000 during the first quarter 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 during the period ending March 31, 2012: 

 

Troubled Debt Restructurings            
That Subsequently Defaulted:   Number of Loans     Recorded Investment  
             
Commercial         2     $ 309,439  
Residential real estate                
Home equity lines of credit                
Multifamily properties                
Other residential real estate     1       694,293  
Nonresidential real estate                
Owner occupied properties     1       7,714,655  
Non owner occupied properties     2       742,326  
Construction                
Consumer                
Credit card balances                
Other consumer                
Municipal obligations     -       -  
                 
Total     6     $ 9,460,713  

 

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 $20,050 and resulted in charge-offs of $150,000 during the first quarter 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, including: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater than $100,000 and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. Loans with balances below $100,000 and homogenous loans, such as residential real estate and consumer loans, are analyzed for credit quality based on aging status, which was previously presented. 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 institution 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 characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

 

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):

 

          Special                          
March 31, 2012   Pass     Mention     Substandard     Doubtful     Not Rated(1)     Total  
Commercial   $ 173,996     $ 14,331     $ 5,209     $ -     $ -     $ 193,536  
Residential real estate                                                
Home equity lines of credit     -       935       979       90       89,287       91,291  
Multifamily properties     36,771       1,451       527       -       -       38,749  
Other residential real estate     37,882       960       10,793       -       81,829       131,464  
                                                 
Nonresidential real estate                                                
Owner occupied properties     231,212       9,633       19,719       -       -       260,564  
Non owner occupied properties     243,891       5,542       18,790       -       -       268,223  
Construction     88,394       5,649       10,990       -       -       105,033  
                                                 
Consumer                                                
Credit card balances     -       -       -       -       6,298       6,298  
Other consumer     -       -       22       -       9,672       9,694  
Municipal obligations     26,844       -       -       -       -       26,844  
                                                 
Total   $ 838,990     $ 38,501     $ 67,029     $ 90     $ 187,086     $ 1,131,696  

   

(1) Not rated loans represent the homogenous pools risk category.  

 

        Special                           
December 31, 2011   Pass     Mention     Substandard     Doubtful     Not Rated(1)     Total  
Commercial   $ 170,394     $ 9,684     $ 13,098     $ -     $ -     $ 193,176  
Residential real estate                                                
Home equity lines of credit     -       712       976       84       92,908       94,680  
Multifamily properties     36,115       103       538       -       -       36,756  
Other residential real estate     38,725       1,357       10,843       -       83,907       134,832  
                                                 
Nonresidential real estate                                                
Owner occupied properties     221,941       7,754       23,073       -       -       252,768  
Non owner occupied properties     246,614       8,902       15,201       -       -       270,717  
Construction     90,297       3,398       11,093       -       -       104,788  
                                                 
Consumer                                                
Credit card balances     -       -       -       -       6,492       6,492  
Other consumer     -       -       22       -       10,104       10,126  
Municipal obligations     27,066       -       -       -       -       27,066  
                                                 
Total   $ 831,152     $ 31,910     $ 74,844     $ 84     $ 193,411     $ 1,131,401  

  

(1) Not rated loans represent the homogenous pools risk category. These loans are evaluated primarily based on payment status, which is disclosed elsewhere.