v2.4.0.6
Loans
6 Months Ended
Jun. 30, 2012
Loans

Note 9 - Loans

 

Loan balances were as follows (in thousands):

    6/30/2012     12/31/2011  
Commercial   $ 181,932     $ 193,176  
Residential real estate     280,135       266,268  
Nonresidential real estate     539,748       523,485  
Construction     100,094       104,788  
Consumer     16,307       16,618  
Municipal obligations     27,014       27,066  
Gross loans     1,145,230       1,131,401  
Less:     Deferred loan origination fees and discount     (1,497 )     (1,447 )
             Allowance for loan losses     (18,346 )     (18,288 )
                 
Net loans   $ 1,125,387     $ 1,111,666  

   

The following tables present the activity in the allowance for loan losses for the three months ending June 30, 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 June 30, 2012 and December 31, 2011 (in thousands):

 

                Non                          
          Residential     Residential                 Municipal        
June 30, 2012   Commercial     Real estate     Real estate     Construction     Consumer     Obligations     Total  
Allowance for loan losses                                                        
Beginning balance   $ 2,581     $ 2,916     $ 6,768     $ 5,694     $ 166     $ 237     $ 18,362  
Provision for loan losses     (406 )     995       163       688       321       (61 )     1,700  
Loans charged off     (16 )     (148 )     (269 )     (1,219 )     (156 )     0       (1,808 )
Recoveries     0       23       4       4       61       0       92  
                                                         
Total ending allowance balance   $ 2,159     $ 3,786     $ 6,666     $ 5,167     $ 392     $ 176     $ 18,346  
                                                         
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ 138     $ 870     $ 2,279     $ 4,229     $ 0     $ 0     $ 7,516  
Collectively evaluated for impairment     2,021       2,916       4,387       938       392       176       10,830  
                                                         
Total ending allowance balance   $ 2,159     $ 3,786     $ 6,666     $ 5,167     $ 392     $ 176     $ 18,346  
                                                         
Loans                                                        
Loans individually evaluated for impairment   $ 865     $ 7,670     $ 19,913     $ 8,077     $ 0     $ 0     $ 36,525  
Loans collectively evaluated for impairment     181,067       272,465       519,835       92,017       16,307       27,014       1,108,705  
                                                         
Total ending loans balance   $ 181,932     $ 280,135     $ 539,748     $ 100,094     $ 16,307     $ 27,014     $ 1,145,230  

  

The following tables present the activity in the allowance for loan losses for the six months ending June 30, 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 June 30, 2012 and December 31, 2011 (in thousands):

 

                Non                          
          Residential     Residential                 Municipal        
June 30, 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     (677 )     1,687       220       1,706       401       163       3,500  
Loans charged off     (372 )     (522 )     (1,173 )     (1,246 )     (325 )     0       (3,638 )
Recoveries     1       30       5       6       154       0       196  
                                                         
Total ending allowance balance   $ 2,159     $ 3,786     $ 6,666     $ 5,167     $ 392     $ 176     $ 18,346  
                                                         
Ending allowance balance attributable to loans                                                        
Individually evaluated for impairment   $ 138     $ 870     $ 2,279     $ 4,229     $ 0     $ 0     $ 7,516  
Collectively evaluated for impairment     2,021       2,916       4,387       938       392       176       10,830  
                                                         
Total ending allowance balance   $ 2,159     $ 3,786     $ 6,666     $ 5,167     $ 392     $ 176     $ 18,346  
                                                         
Loans                                                        
Loans individually evaluated for impairment   $ 865     $ 7,670     $ 19,913     $ 8,077     $ 0     $ 0     $ 36,525  
Loans collectively evaluated for impairment     181,067       272,465       519,835       92,017       16,307       27,014       1,108,705  
                                                         
Total ending loans balance   $ 181,932     $ 280,135     $ 539,748     $ 100,094     $ 16,307     $ 27,014     $ 1,145,230  

 

                Non                          
          Residential     Residential                 Municipal        
June 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     1,387       396       1,138       2,844       253     (18 )      6,000  
Loans charged off     (920 )     (464 )     (2,484 )     (1,499 )     (462 )     0       (5,829 )
Recoveries     24       40       2       1       210       0       277  
                                                         
Total ending allowance balance   $ 3,931     $ 2,403     $ 6,782     $ 4,496     $ 167     $ 37     $ 17,816  

 

                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     $ 0     $ 0     $ 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     $ 0     $ 0     $ 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 June 30, 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     $ 0     $ 309     $ 0     $ 0  
                                                 
Residential real estate                                                
Home equity lines of credit     50       50       0       50       0       0  
Multifamily properties     0       0       0       264       0       0  
Other     2,060       2,045       0       2,059       0       0  
                                                 
Nonresidential real estate                                                
Owner occupied properties     188       188       0       574       0       0  
Non owner occupied properties     1,894       1,892       0       2,317       0       0  
                                                 
Construction     655       355       0       178       0       0  
                                                 
With an allowance recorded                                                
Commercial     557       557       138       1,001       2       1  
                                                 
Residential real estate                                                
Home equity lines of credit     137       137       137       137       0       0  
Multifamily properties     2,115       1,784       241       892       11       11  
Other     3,729       3,654       492       3,642       21       17  
                                                 
Nonresidential real estate                                                
Owner occupied properties     9,009       9,008       1,124       9,037       78       77  
Non owner occupied properties     9,644       8,824       1,155       8,246       47       22  
                                                 
Construction     8,834       7,722       4,229       8,824       46       41  
                                                 
Total   $ 39,221     $ 36,525     $ 7,516     $ 37,530     $ 205     $ 169  

  

The following table presents individually impaired loans by class of loans as of and for the six months ended June 30, 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     $ 0     $ 309     $ 0     $ 0  
                                                 
Residential real estate                                                
Home equity lines of credit     50       50       0       50       0       0  
Multifamily properties     0       0       0       398       0       0  
Other     2,060       2,045       0       1,973       0       0  
                                                 
Nonresidential real estate                                                
Owner occupied properties     188       188       0       802       0       0  
Non owner occupied properties     1,894       1,892       0       2,373       0       0  
                                                 
Construction     655       355       0       169       0       0  
                                                 
With an allowance recorded                                                
Commercial     557       557       138       1,013       3       1  
                                                 
Residential real estate                                                
Home equity lines of credit     137       137       137       103       0       0  
Multifamily properties     2,115       1,784       241       446       11       11  
Other     3,729       3,654       492       3,681       45       40  
                                                 
Nonresidential real estate                                                
Owner occupied properties     9,009       9,008       1,124       9,235       158       156  
Non owner occupied properties     9,644       8,824       1,155       7,884       109       72  
                                                 
Construction     8,834       7,722       4,229       8,778       118       110  
                                                 
Total   $ 39,221     $ 36,525     $ 7,516     $ 37,214     $ 444     $ 390  

  

The following table presents individually impaired loans by class of loans as of and for the six months ended June 30, 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   $ 722     $ 432     $ 0     $ 371     $ 0     $ 0  
                                                 
Residential real estate                                                
Home equity lines of credit     0       0       0       0       0       0  
Multifamily properties     0       0       0       17       0       0  
Other     2,529       2,529       0       1,337       0       0  
                                                 
Nonresidential real estate                                                
Owner occupied properties     341       218       0       143       0       0  
Non owner occupied properties     1,196       1,190       0       867       0       0  
                                                 
Construction     1,757       928       0       464       0       0  
                                                 
With an allowance recorded                                                
Commercial     3,616       3,361       1,320       2,230       7       4  
                                                 
Residential real estate                                                
Home equity lines of credit     0       0       0       0       0       0  
Multifamily properties     870       870       247       871       28       19  
Other     2,679       2,660       581       2,610       36       34  
                                                 
Nonresidential real estate                                                
Owner occupied properties     897       897       178       1,503       1       1  
Non owner occupied properties     9,332       7,915       1,753       9,252       125       120  
                                                 
Construction     10,432       9,191       3,587       8,829       127       108  
                                                 
Total   $ 34,371     $ 30,191     $ 7,666     $ 28,494     $ 324     $ 286  

  

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     $ 0  
                         
Residential real estate                        
Home equity lines of credit     50       50       0  
Multifamily properties     538       538       0  
Other     1,703       1,703       0  
                         
Nonresidential real estate                        
Owner occupied properties     1,101       1,101       0  
Non owner occupied properties     2,122       2,116       0  
                         
Construction     356       319       0  
                         
With an allowance recorded                        
Commercial     733       607       224  
                         
Residential real estate                        
Home equity lines of credit     0       0       0  
Multifamily properties     0       0       0  
Other     3,859       3,809       477  
                         
Nonresidential real estate                        
Owner occupied properties     10,771       9,798       1,477  
Non owner occupied properties     8,476       7,375       1,517  
                         
Construction     8,267       7,535       3,748  
                         
Total   $ 38,326     $ 35,261     $ 7,443  

 

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 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  
June 30, 2012                                        
Commercial   $ 498     $ 0     $ 1,074     $ 180,360     $ 181,932  
Residential real estate                                        
Home equity lines of credit     241       0       1,095       100,244       101,580  
Multifamily properties     0       0       448       42,908       43,356  
Other residential real estate     1,055       0       4,388       129,756       135,199  
                                         
Nonresidential real estate                                        
Owner occupied properties     1,747       0       1,653       263,562       266,962  
Non owner occupied properties     3,369       126       3,583       265,708       272,786  
Construction     78       0       3,798       96,218       100,094  
                                         
Consumer                                        
Credit card balances     20       68       0     6,239       6,327  
Other consumer     43       1       226       9,710       9,980  
                                         
Municipal obligations     0       0       0       27,014       27,014  
                                         
Total   $ 7,051     $ 195     $ 16,265     $ 1,121,719     $ 1,145,230  

 

    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       0       910       92,676       94,680  
Multifamily properties     0       0       0       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       0       2,270       247,875       252,768  
Non owner occupied properties     3,942       0       4,358       262,417       270,717  
Construction     265       0       1,897       102,626       104,788  
                                         
Consumer                                        
Credit card balances     60       32       0       6,400       6,492  
Other consumer     37       1       626       9,462       10,126  
                                         
Municipal obligations     0       0       0       27,066       27,066  
                                         
Total   $ 14,567     $ 219     $ 15,651     $ 1,100,964     $ 1,131,401  

  

Troubled Debt Restructurings:

 

The Company has allocated $4,374,000 and $2,074,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2012 and December 31, 2011, respectively. Troubled debt restructurings totaled $20,737,000 and $15,229,000 as of June 30, 2012 and December 31, 2011, respectively. The Company has not committed to lend additional amounts as of June 30, 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 six months ending June 30, 2012:

 

          Pre-Modification     Post-Modification  
          Outstanding Recorded     Outstanding Recorded  
    Number of Loans     Investment     Investment  
Troubled Debt Restructurings:                        
                         
Commercial     3     $ 508,281     $ 467,796  
Residential real estate                        
Home equity lines of credit     0       0       0  
Multifamily properties                        
Other residential real estate     6       4,170,926       4,049,039  
Nonresidential real estate                        
Owner occupied properties     3       8,137,536       7,857,519  
Non owner occupied properties     4       3,661,111       3,152,428  
Construction     6       5,463,376       5,210,624  
Consumer                        
Credit card balances     0       0       0  
Other consumer     0       0       0  
                         
Municipal obligations           0       0  
                         
Total     22     $ 21,941,230     $ 20,737,406  

 

The troubled debt restructurings described above increased the allowance for loan losses by $681,727 and resulted in charge-offs of $1,112,147 during the second quarter ending June 30, 2012 and $1,262,147 for the six months ending June 30, 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 June 30, 2012:

 

 

Troubled Debt Restructurings            
That Subsequently Defaulted:   Number of Loans     Recorded Investment  
                 
Commercial     3     $ 467,796  
Residential real estate                
Home equity lines of credit                
Multifamily properties                
Other residential real estate     3       3,195,080  
Nonresidential real estate                
Owner occupied properties     1       7,647,784  
Non owner occupied properties     3       1,472,171  
Construction     2       3,168,504  
Consumer                
Credit card balances                
Other consumer                
Municipal obligations     0       0  
                 
Total     12     $ 15,951,335  

 

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 $411,322 and resulted in charge-offs of $1,112,147 during the second quarter ending June 30, 2012 and $1,262,147 for the six months ending June 30, 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                          
    Pass     Mention     Substandard     Doubtful     Not Rated(1)     Total  
June 30, 2012                                                
Commercial   $ 161,292     $ 16,847     $ 3,793     $ 0     $ 0     $ 181,932  
Residential real estate                                                
Home equity lines of credit     11,472       965       1,006       90       88,047       101,580  
Multifamily properties     41,471       101       1,784       0       0       43,356  
Other residential real estate     40,109       1,133       10,844       31       83,082       135,199  
                                                 
Nonresidential real estate                                                
Owner occupied properties     232,488       16,713       17,761       0       0       266,962  
Non owner occupied properties     249,678       7,827       15,281       0       0       272,786  
Construction     85,966       3,383       10,745       0       0       100,094  
                                                 
Consumer                                                
Credit card balances     0       0       0       2       6,325       6,327  
Other consumer     0       0       16       0       9,964       9,980  
Municipal obligations     27,014       0       0       0       0       27,014  
                                                 
Total   $ 849,490     $ 46,969     $ 61,230     $ 123     $ 187,418     $ 1,145,230  

 

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

 

          Special                          
    Pass     Mention     Substandard     Doubtful     Not Rated(1)     Total  
December 31, 2011                                                
Commercial   $ 170,394     $ 9,684     $ 13,098     $ 0     $ 0     $ 193,176  
Residential real estate                                                
Home equity lines of credit     0       712       976       84       92,908       94,680  
Multifamily properties     36,115       103       538       0       0       36,756  
Other residential real estate     38,725       1,357       10,843       0       83,907       134,832  
                                                 
Nonresidential real estate                                                
Owner occupied properties     221,941       7,754       23,073       0       0       252,768  
Non owner occupied properties     246,614       8,902       15,201       0       0       270,717  
Construction     90,297       3,398       11,093       0       0       104,788  
                                                 
Consumer                                                
Credit card balances     0       0       0       0       6,492       6,492  
Other consumer     0       0       22       0       10,104       10,126  
Municipal obligations     27,066       0       0       0       0       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.