Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loan balances were as follows (in thousands):

	9/30/2012			12/31/2011

Commercial	$	181,170		$	193,176
Residential real estate		281,745			266,268
Nonresidential real estate		555,234			523,485
Construction		98,609			104,788
Consumer		16,170			16,618
Municipal obligations		27,603			27,066
Gross loans		1,160,531			1,131,401
Less: Deferred loan origination fees and discount		(1,457	)		(1,447	)
Allowance for loan losses		(16,585	)		(18,288	)

Net loans	$	1,142,489		$	1,111,666

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based on Impairment Method

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

							Non
				Residential			Residential									Municipal
	Commercial			Real estate			Real estate			Construction			Consumer			Obligations			Total
September 30, 2012
Allowance for loan losses
Beginning balance	$	2,159		$	3,786		$	6,666		$	5,167		$	392		$	176		$	18,346
Provision for loan losses		(215	)		2,095			875			(729	)		325			(151	)		2,200
Loans charged off		(89	)		(1,051	)		(436	)		(2,292	)		(371	)		-			(4,239	)
Recoveries		18			3			183			2			72			-			278

Total ending allowance balance	$	1,873		$	4,833		$	7,288		$	2,148		$	418		$	25		$	16,585

Ending allowance balance attributable to loans
Individually evaluated for impairment	$	317		$	1,729		$	2,993		$	1,215		$	-		$	-		$	6,254
Collectively evaluated for impairment		1,556			3,104			4,295			933			418			25			10,331

Total ending allowance balance	$	1,873		$	4,833		$	7,288		$	2,148		$	418		$	25		$	16,585

Loans
Loans individually evaluated for impairment	$	1,118		$	8,500		$	19,111		$	5,774		$	-		$	-		$	34,503
Loans collectively evaluated for impairment		180,052			273,245			536,123			92,835			16,170			27,603			1,126,028

Total ending loans balance	$	181,170		$	281,745		$	555,234		$	98,609		$	16,170		$	27,603		$	1,160,531

							Non
				Residential			Residential									Municipal
	Commercial			Real estate			Real estate			Construction			Consumer			Obligations			Total
September 30, 2011
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

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

							Non
				Residential			Residential									Municipal
	Commercial			Real estate			Real estate			Construction			Consumer			Obligations		Total
September 30, 2012
Allowance for loan losses
Beginning balance	$	3,207		$	2,591		$	7,614		$	4,701		$	162		$	13	$	18,288
Provision for loan losses		(892	)		3,782			1,095			977			726			12		5,700
Loans charged off		(461	)		(1,573	)		(1,609	)		(3,538	)		(696	)		-		(7,877	)
Recoveries		19			33			188			8			226			-		474

Total ending allowance balance	$	1,873		$	4,833		$	7,288		$	2,148		$	418		$	25	$	16,585

Ending allowance balance attributable to loans
Individually evaluated for impairment	$	317		$	1,729		$	2,993		$	1,215		$	-		$	-	$	6,254
Collectively evaluated for impairment		1,556			3,104			4,295			933			418			25		10,331

Total ending allowance balance	$	1,873		$	4,833		$	7,288		$	2,148		$	418		$	25	$	16,585

Loans
Loans individually evaluated for impairment	$	1,118		$	8,500		$	19,111		$	5,774		$	-		$	-	$	34,503
Loans collectively evaluated for impairment		180,052			273,245			536,123			92,835			16,170			27,603		1,126,028

Total ending loans balance	$	181,170		$	281,745		$	555,234		$	98,609		$	16,170		$	27,603	$	1,160,531

							Non
				Residential			Residential									Municipal
	Commercial			Real estate			Real estate			Construction			Consumer			Obligations			Total
September 30, 2011
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

					Non
			Residential		Residential						Municipal
	Commercial		Real estate		Real estate		Construction		Consumer		Obligations		Total
December 31, 2011
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

Individually Impaired Loans by Class of Loans

The following table presents individually impaired loans by class of loans as of and for the three months ended September 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	$	30	$	30	$	-	$	170	$	-	$	-

Residential real estate
Home equity lines of credit		50		50		-		50		-		-
Multifamily properties		379		48		-		24		-		-
Other		2,869		2,626		-		2,336		-		-

Nonresidential real estate
Owner occupied properties		802		792		-		490		-		-
Non owner occupied properties		6,206		5,701		-		3,797		-		-

Construction		809		509		-		432		-		-

With an allowance recorded
Commercial		1,088		1,088		317		823		4		4

Residential real estate
Home equity lines of credit		1,488		1,488		1,341		813		12		12
Multifamily properties		1,324		1,324		243		1,554		11		11
Other		3,109		2,964		145		3,309		31		24

Nonresidential real estate
Owner occupied properties		8,544		8,543		2,651		8,774		81		81
Non owner occupied properties		4,595		4,074		342		6,449		34		34

Construction		6,387		5,266		1,215		6,494		45		45

Total	$	37,680	$	34,503	$	6,254	$	35,515	$	218	$	211

The following table presents individually impaired loans by class of loans as of and for the nine months ended September 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	$	30	$	30	$	-	$	263	$	-	$	-

Residential real estate
Home equity lines of credit		50		50		-		50		-		-
Multifamily properties		379		48		-		273		-		-
Other		2,869		2,626		-		2,094		-		-

Nonresidential real estate
Owner occupied properties		802		792		-		698		-		-
Non owner occupied properties		6,206		5,701		-		2,848		-		-

Construction		809		509		-		256		-		-

With an allowance recorded
Commercial		1,088		1,088		317		950		7		5

Residential real estate
Home equity lines of credit		1,488		1,488		1,341		339		12		12
Multifamily properties		1,324		1,324		243		815		22		22
Other		3,109		2,964		145		3,557		76		64

Nonresidential real estate
Owner occupied properties		8,544		8,543		2,651		9,081		239		237
Non owner occupied properties		4,595		4,074		342		7,406		143		106

Construction		6,387		5,266		1,215		8,017		163		155

Total	$	37,680	$	34,503	$	6,254	$	36,647	$	662	$	601

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 (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	$	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		203		189

Total	$	43,630	$	39,173	$	7,762	$	29,851	$	612	$	513

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		9,798		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

Aging of Recorded Investment in Past Due Loans by Class of Loans

The following table presents the aging of the recorded investment in past due loans by class of loans as of September 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
September 30, 2012
Commercial	$	599	$	-	$	968	$	179,603	$	181,170
Residential real estate
Home equity lines of credit		827		39		768		98,658		100,292
Multifamily properties		111		-		48		46,624		46,783
Other residential real estate		3,657		-		3,676		127,337		134,670

Nonresidential real estate
Owner occupied properties		3,591		-		1,368		273,240		278,199
Non owner occupied properties		1,881		-		6,305		268,849		277,035
Construction		737		-		1,601		96,271		98,609

Consumer
Credit card balances		32		66		-		6,399		6,497
Other consumer		13		-		79		9,581		9,673

Municipal obligations		-		-		-		27,603		27,603

Total	$	11,448	$	105	$	14,813	$	1,134,165	$	1,160,531

	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

Loans by Class Modified as Troubled Debt Restructurings

			Pre-Modification		Post-Modification
			Outstanding Recorded		Outstanding Recorded
	Number of Loans		Investment		Investment
Troubled Debt Restructurings:

Commercial		2	$	190,168	$	184,336
Residential real estate
Home equity lines of credit		-		-		-
Multifamily properties		1		485,000		48,238
Other residential real estate		1		187,105		186,074
Nonresidential real estate
Owner occupied properties		1		153,891		153,891
Non owner occupied properties		-		-		-
Construction		5		3,204,872		2,957,006
Consumer
Credit card balances		-		-		-
Other consumer		-		-		-

Municipal obligations		-		-		-

Total		10	$	4,221,036	$	3,529,544

Loans by Class Modified as Troubled Debt Restructurings for which there was Payment Default within Twelve Months Following Modification

Troubled Debt Restructurings
That Subsequently Defaulted:	Number of Loans		Recorded Investment

Commercial		1	$	154,357
Residential real estate
Home equity lines of credit
Multifamily properties		1		48,238
Other residential real estate		1		465,293
Nonresidential real estate
Owner occupied properties
Non owner occupied properties		3		3,234,737
Construction		2		1,616,100
Consumer
Credit card balances
Other consumer
Municipal obligations		-		-

Total		8	$	5,518,725

Risk Category of Loans by Class of Loans

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
September 30, 2012
Commercial	$	166,935	$	10,448	$	3,787	$	-	$	-	$	181,170
Residential real estate
Home equity lines of credit		11,827		781		1,953		-		85,731		100,292
Multifamily properties		45,311		100		1,372		-		-		46,783
Other residential real estate		40,607		1,143		10,496		-		82,424		134,670

Nonresidential real estate
Owner occupied properties		248,156		10,909		19,134		-		-		278,199
Non owner occupied properties		255,141		7,304		14,590		-		-		277,035
Construction		87,924		2,264		8,421		-		-		98,609

Consumer
Credit card balances		-		-		-		-		6,497		6,497
Other consumer		-		-		19		-		9,654		9,673
Municipal obligations		27,603		-		-		-		-		27,603

Total	$	883,504	$	32,949	$	59,772	$	0	$	184,306	$	1,160,531

(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	$	-	$	-	$	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.