BANK OF KENTUCKY FINANCIAL CORP (BKYF) Form 10-Q for Period Ending 6/30/2011
Xcelerate Version: 6.12.8
 
Document and Entity Information
Jul. 11, 2011
6 Months Ended
Jun. 30, 2011
Document Type
 
10-Q 
Amendment Flag
 
FALSE 
Document Period End Date
 
06/30/2011 
Document Fiscal Year Focus
 
2011 
Document Fiscal Period Focus
 
Q2 
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
Jun. 30, 2011
Dec. 31, 2010
Assets
 
 
Cash and cash equivalents
$61,098 
$172,664 
Interest bearing deposits with banks
250 
100 
Available-for-sale securities
277,784 
245,448 
Held-to-maturity securities
42,168 
39,778 
Loans held for sale
1,107 
15,279 
Total loans
1,128,511 
1,106,009 
Less: Allowances for loan losses
17,816 
17,368 
Net loans
1,110,695 
1,088,641 
Premises and equipment, net
22,576 
23,170 
FHLB stock, at cost
4,959 
4,959 
Goodwill
21,889 
21,889 
Acquisition intangibles, net
3,139 
3,575 
Cash surrender value of life insurance
32,241 
25,199 
Accrued interest receivable and other assets
23,813 
24,182 
Total assets
1,601,719 
1,664,884 
Liabilities & Shareholders' Equity
 
 
Liabilities
 
 
Deposits
1,355,284 
1,422,312 
Short-term borrowings
20,610 
23,419 
Notes payable
48,750 
48,761 
Accrued interest payable and other liabilities
10,682 
11,022 
Total liabilities
1,435,326 
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
34,018 
33,903 
Preferred stock, no par value, $17,000 liquidation value, 34,000 shares authorized and 17,000 shares issued and outstanding (2011)
16,882 
16,790 
Retained earnings
109,392 
104,683 
Accumulated other comprehensive income
3,003 
896 
Total shareholders' equity
166,393 
159,370 
Total liabilities and shareholders' equity
$1,601,719 
$1,664,884 
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) (USD $)
Jun. 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
Jun. 30, 2011
6 Months Ended
Jun. 30, 2011
3 Months Ended
Jun. 30, 2010
6 Months Ended
Jun. 30, 2010
INTEREST INCOME
 
 
 
 
Loans, including related fees
$14,612 
$28,933 
$15,309 
$30,574 
Securities and other
1,811 
3,489 
1,504 
3,012 
Total interest income
16,423 
32,422 
16,813 
33,586 
INTEREST EXPENSE
 
 
 
 
Deposits
2,142 
4,539 
3,061 
6,606 
Borrowings
254 
508 
298 
592 
Total interest expense
2,396 
5,047 
3,359 
7,198 
Net interest income
14,027 
27,375 
13,454 
26,388 
Provision for loan losses
3,000 
6,000 
4,500 
9,000 
Net interest income after provision for loan losses
11,027 
21,375 
8,954 
17,388 
NON-INTEREST INCOME
 
 
 
 
Service charges and fees
2,424 
4,581 
2,622 
4,889 
Mortgage banking income
228 
506 
337 
659 
Net securities gains
 
231 
 
 
Company owned life insurance earnings
279 
542 
231 
468 
Bankcard transaction revenue
859 
1,648 
749 
1,420 
Trust fee income
723 
1,386 
602 
1,152 
Other
461 
1,003 
399 
957 
Total non-interest income
4,974 
9,897 
4,940 
9,545 
NON-INTEREST EXPENSE
 
 
 
 
Salaries and benefits
5,045 
9,799 
4,764 
9,329 
Occupancy and equipment
1,241 
2,489 
1,187 
2,637 
Data processing
467 
961 
443 
904 
Advertising
399 
722 
314 
562 
Other
3,483 
7,013 
3,608 
7,497 
Total non-interest expense
10,635 
20,984 
10,316 
20,929 
INCOME BEFORE INCOME TAXES
5,366 
10,288 
3,578 
6,004 
Less: income taxes
1,572 
2,982 
968 
1,534 
NET INCOME
3,794 
7,306 
2,610 
4,470 
Preferred stock dividend and discount accretion
(259)
(516)
(514)
(1,024)
Net Income available to common shareholders
3,535 
6,790 
2,096 
3,446 
Comprehensive Income
5,523 
9,413 
3,993 
6,057 
Net income per common share:
 
 
 
 
Earnings per share, basic
0.48 
0.91 
0.37 
0.61 
Earnings per share, diluted
$0.47 
$0.91 
$0.37 
$0.61 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
6 Months Ended
Jun. 30,
In Thousands, except Per Share data
2011
2010
Balance at beginning of year
$159,370 
$141,133 
Comprehensive income:
 
 
Net income
7,306 
4,470 
Change in net unrealized gain(loss), net of tax
2,107 
1,587 
Total comprehensive income
9,413 
6,057 
Cash dividends paid
(2,081)
(1,587)
Exercise of stock options (700 (2011) and 0 (2010) shares), including tax benefit
13 
 
Stock-based compensation expense
101 
157 
Accrued dividends on preferred stock
(425)
(850)
Balance at end of period
166,393 
144,910 
Dividends per share
$0.28 
$0.28 
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical)
6 Months Ended
Jun. 30,
2011
2010
Exercise of stock options, shares
700 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
6 Months Ended
Jun. 30,
In Thousands
2011
2010
Cash Flows from Operating Activities
 
 
Net income
$7,306 
$4,470 
Adjustments to reconcile net income to net cash From operating activities
22,192 
8,170 
Net cash from operating activities
29,498 
12,640 
Cash Flows from Investing Activities
 
 
Net change in interest bearing balances
(150)
 
Proceeds from paydowns and maturities of held-to-maturity securities
4,019 
2,800 
Proceeds from paydowns and maturities of available-for-sale securities
95,626 
98,559 
Purchases of held-to-maturity securities
(6,428)
(1,286)
Purchases of available-for-sale securities
(139,408)
(117,934)
Purchases of company owned life insurance
(6,500)
 
Net change in loans
(31,700)
23,244 
Proceeds from the sale of other real estate
2,684 
1,693 
Proceeds from the sale of securities
13,367 
 
Property and equipment expenditures
(235)
(1,017)
Net cash from investing activities
(68,725)
6,059 
Cash Flows from Financing Activities
 
 
Net change in deposits
(67,028)
(42,323)
Net change in short-term borrowings
(2,809)
(3,572)
Proceeds from exercise of stock options
14 
 
Cash dividends paid
(2,505)
(2,437)
Payments on note payable
(11)
(11)
Net cash from financing activities
(72,339)
(48,343)
Net change in cash and cash equivalents
(111,566)
(29,644)
Cash and cash equivalents at beginning of period
172,664 
98,738 
Cash and cash equivalents at end of period
$61,098 
$69,094 
Basis of Presentation
6 Months Ended
Jun. 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
6 Months Ended
Jun. 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
6 Months Ended
Jun. 30, 2011
Earnings per Share
Note 3 – Earnings per Share:

Earnings per share are computed based upon the weighted average number of shares outstanding during the three and six 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 June 30, 2011 and 2010, 326,682 and 837,204 options were not considered, as they were not dilutive, and for the six months ended June 30, 2011 and 2010, 399,160 and 846,830 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
Ended
June 30
   
Six Months
Ended
June 30
 
   
2011
   
2010
   
2011
   
2010
 
Weighted average shares outstanding
    7,432,487       5,666,707       7,432,391       5,666,707  
Dilutive effects of assumed exercises of stock options and warrants
    69,244       -       48,539       -  
Shares used to compute diluted earnings per share
    7,501,731       5,666,707       7,480,930       5,666,707
Stock Compensation
6 Months Ended
Jun. 30, 2011
Stock Compensation
Note 4 – Stock 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 of common stock.  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 (net of taxes) and $101,000 (net of taxes) in the three and six months ended June 30, 2011, and $79,000 (net of taxes) and $157,000 ($157,000 net of taxes) in the three and six months ended June 30, 2010.
Cash and Cash Equivalents
6 Months Ended
Jun. 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, interest-bearing balances with banks and short-term borrowings with maturities of 90 days or less.
Reclassification
6 Months Ended
Jun. 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.
New Accounting Pronouncements
6 Months Ended
Jun. 30, 2011
New Accounting Pronouncements
Note 7 – New Accounting Pronouncements:

In April 2011, the FASB issued an update (ASU No. 2011-04, Fair Value Measurement) to existing guidance on fair value measurement.  There are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  The following disclosure requirements for public companies were added as a result of the update:

 
·
Level 3 measurements - qualitative discussion of the sensitivity of fair value to changes in unobservable inputs as well as quantitative disclosures about unobservable inputs and assumptions developed by the reporting entity and used in a level 3 measurement.  This disclosure requirement would not apply when the entity utilizes 3rd party pricing information without adjustment.
 
·
The reasons for when the highest and best use of a non-financial asset differs from its current use.
 
·
All transfers between level 1 and level 2, not just significant transfers.
 
·
The ASC 825 fair value table (i.e. FAS 107 table) is now required to be presented by hierarchy level.
 
The amendments in this ASU are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011.
 
Recently Issued and Not Yet Effective Accounting Standards:

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. This guidance is effective for interim and annual reporting periods beginning after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.  For purposes of measuring impairment on newly identified troubled debt restructurings, the amendments should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011.  This amendment is not expected to have a material impact on the Company’s consolidated financial position or results of operations.
Securities
6 Months Ended
Jun. 30, 2011
Securities
Note 8Securities:

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

         
Gross
   
Gross
       
Available-for-Sale
 
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
June 30, 2011
                       
U.S. government, federal agencies and government sponsored enterprises
  $ 168,102     $ 1,144     $ (3 )   $ 169,243  
U.S. government residential mortgage-backed
    104,007       3,457       (48 )     107,416  
Corporate
    1,125       -       -       1,125  
    $ 273,234     $ 4,601     $ (51 )   $ 277,784  

         
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 carrying amount, unrecognized gains and losses and fair value of securities held to maturity were as follows:
         
Gross
   
Gross
       
Held-to-Maturity
 
Amortized
   
Unrecognized
   
Unrecognized
   
Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
2011
                       
Municipal and other obligations
  $ 42,168     $ 1,063     $ (27 )   $ 43,204  
                                 
2010
                               
Municipal and other obligations
  $ 39,778     $ 713     $ (229 )   $ 40,262  

The fair value of debt securities and carrying amount, if different, at June 30, 2011 by contractual maturity were as follows, with securities not due at a single maturity date, primarily mortgage backed securities, shown separately:

   
Available-for-Sale
   
Held-to-Maturity
 
   
Amortized
   
Fair
   
Carrying
   
Fair
 
   
Cost
   
Value
   
Value
   
Value
 
Due in one year or less
  $ -     $ -     $ 2,710     $ 2,741  
Due after one year through five years
    129,681       130,547       16,597       17,055  
Due after five years through ten years
    38,421       38,696       16,601       17,148  
Due after ten years
    1,125       1,125       6,260       6,260  
U.S. government agency mortgage-backed
    104,007       107,416       -       -  
                                 
    $ 273,234     $ 277,784     $ 42,168     $ 43,204  

Proceeds on the sale of $13,367,000 of available-for-sale securities resulted in gains of $231,000 for the first six 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 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 June 30, 2011, the Bank’s security portfolio consisted of 181 securities, 19 of which were in an unrealized loss position of $78.  There was no other-than-temporary-impairment of securities at June 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 June 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 June 30, 2011.

At June 30, 2011 and December 31, 2010, securities with a carrying value of $286,580 and $244,220, respectively, were pledged to secure public deposits and repurchase agreements.

Securities with unrealized losses at June 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
 
June 30, 2011
                                   
U.S. government, federal agencies and government sponsored enterprises
  $ 5,089     $ (3 )   $ -     $ -     $ 5,089     $ (3 )
U.S. government mortgage-backed
    13,263       (48 )     -       -       13,263       (48 )
Municipal & other obligations
    5,802       (27 )     -       -       5,802       (27 )
                                                 
Total temporarily impaired
  $ 24,154     $ (78 )   $ -     $ -     $ 24,154     $ (78 )
                                                 
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
6 Months Ended
Jun. 30, 2011
Loans
Note 9 - Loans

Loan balances were as follows:
   
6/30/2011
   
12/31/2010
 
Commercial
  $ 215,327     $ 216,660  
Residential real estate
    259,716       260,625  
Nonresidential real estate
    503,327       482,173  
Construction
    108,464       107,611  
Consumer
    15,459       16,546  
Municipal obligations
    27,456       23,573  
Gross loans
    1,129,749       1,107,188  
Less:  Deferred loan origination fees and discount
    (1,238 )     (1,179 )
Allowance for loan losses
    (17,816 )     (17,368 )
                 
Net loans
  $ 1,110,695     $ 1,088,641  

Activity in the allowance for loan losses was as follows for the six months ended June 30, 2011:
   
6/30/2011
   
6/30/2010
 
             
Beginning balance
  $ 17,368     $ 15,153  
Provision charged to operations
    6,000       9,000  
Loans charged off
    (5,829 )     (7,876 )
Recoveries
    277       254  
                 
Ending balance
  $ 17,816     $ 16,531  
 
The following tables present the activity in the allowance for loan losses for the six months ending June 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 June 30, 2011 and December 31, 2010.

                
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 )     -       (5,829 )
Recoveries
    24       40       2       1       210       -       277  
                                                         
Total ending allowance balance
  $ 3,931     $ 2,403     $ 6,782     $ 4,496     $ 167     $ 37     $ 17,816  
                                                         
Ending allowance balance attributable to loans
                                                       
Individually evaluated for impairment
  $ 1,320     $ 828     $ 1,931     $ 3,587     $ -     $ -     $ 7,666  
Collectively evaluated for impairment
    2,611       1,575       4,851       909       167       37       10,150  
                                                         
Total ending allowance balance
  $ 3,931     $ 2,403     $ 6,782     $ 4,496     $ 167     $ 37     $ 17,816  
                                                         
Loans
                                                       
Loans individually evaluated for impairment
  $ 3,794     $ 6,059     $ 10,219     $ 10,119     $ -     $ -     $ 30,191  
Loans collectively evaluated for impairment
    211,533       253,657       493,108       98,345       15,459       27,456       1,099,558  
                                                         
Total ending loans balance
  $ 215,327     $ 259,716     $ 503,327     $ 108,464     $ 15,459     $ 27,456     $ 1,129,749  

                
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 loans individually evaluated for impairment by class of loans as of , and for the six months ended June 20, 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
  $ 722     $ 432     $ -     $ 371     $ -     $ -  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
Multifamily properties
    -       -       -       17       -       -  
Other
    2,529       2,529       -       1,337       -       -  
                                                 
Nonresidential real estate
                                               
Owner occupied properties
    341       218       -       143       -       -  
Non owner occupied properties
    1,196       1,190       -       867       -       -  
                                                 
Construction
    1,757       928       -       464       -       -  
                                                 
With an allowance recorded
                                               
Commercial
    3,616       3,361       1,320       2,230       7       4  
                                                 
Residential real estate
                                               
Home equity lines of credit
    -       -       -       -       -       -  
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, 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       609       -  
                         
With an allowance recorded
                       
Commercial
    1,459       1,459       595  
                         
Residential real estate
                       
Home equity lines of credit
    -       -       -  
Multifamily properties
    1,180       1,180       57  
Other
    1,355       1,355       342  
                         
Nonresidential real estate
                       
Owner occupied properties
    1,946       1,946       460  
Non owner occupied properties
    11,417       11,417       2,905  
                         
Construction
    5,167       5,167       1,385  
                         
Total
  $ 25,956     $ 25,956     $ 5,744  

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2011 and December 31, 2010:

         
Loans Past Due Over
 
   
Nonaccrual
   
90 Days Still Accruing
 
   
2011
   
2010
   
2011
   
2010
 
Commercial
  $ 4,020     $ 4,749     $ -     $ -  
Residential real estate
                               
Home equity lines of credit
    1,025       728       -       -  
Multifamily properties
    -       34       -       -  
Other residential real estate
    3,015       3,446       -       263  
                                 
Nonresidential real estate
                               
Owner occupied properties
    1,447       984       -       68  
Non owner occupied properties
    2,990       5,327       -       -  
                                 
Construction
    3,780       5,329       47       -  
                                 
Consumer
                               
Credit card
    -       -       30       83  
Other consumer
    45       51       23       -  
                                 
Municipal obligations
    -       -       -       -  
Total
  $ 16,322     $ 20,648     $ 100     $ 414  

The following table presents the aging of the recorded investment in past due loans by class of loans:

   
Loans
   
Loans over
                   
   
30-90 days
   
90 days
         
Loans not
       
   
past due
   
past due
   
Nonaccrual
   
past due
   
Total
 
June 30, 2011
                             
Commercial
  $ 1,351     $ -     $ 4,020     $ 209,956     $ 215,327  
Residential real estate
                                       
Home equity lines of credit
    284       -       1,025       90,222       91,531  
Multifamily properties
    -       -       -       36,207       36,207  
Other residential real estate
    1,603       -       3,015       127,360       131,978  
                                         
Nonresidential real estate
                                       
Owner occupied properties
    2,298       -       1,447       240,007       243,752  
Non owner occupied properties
    2,231       -       2,990       254,354       259,575  
Construction
    -       47       3,780       104,637       108,464  
                                         
Consumer
                                       
Credit card balances
    32       30       -       6,109       6,171  
Other consumer
    894       23       45       8,326       9,288  
                                         
Municipal obligations
    -       -       -       27,456       27,456  
                                         
Total
  $ 8,693     $ 100     $ 16,322     $ 1,104,634     $ 1,129,749  
 
   
Loans
   
Loans over
                   
   
30-90 days
   
90 days
         
Loans not
       
   
past due
   
past due
   
Nonaccrual
   
past due
   
Total
 
December 31, 2010
                             
Commercial
  $ 1,836     $ -     $ 4,749     $ 210,075     $ 216,660  
Residential real estate
                                       
Home equity lines of credit
    141       -       728       93,317       94,186  
Multifamily properties
    -       -       34       37,663       37,697  
Other residential real estate
    3,571       263       3,446       121,462       128,742  
                                         
Nonresidential real estate
                                       
Owner occupied properties
    1,352       68       984       231,870       234,274  
Non owner occupied properties
    4,525       -       5,327       238,047       247,899  
Construction
    220       -       5,329       102,062       107,611  
                                         
Consumer
                                       
Credit card balances
    102       83       -       5,852       6,037  
Other consumer
    67       -       51       10,391       10,509  
                                         
Municipal obligations
    -       -       -       23,573       23,573  
                                         
Total
  $ 11,814     $ 414     $ 20,648     $ 1,074,312     $ 1,107,188  

Troubled Debt Restructurings:

The Company has allocated $2,715 and $1,436 of specific reserves to customers whose loan terms have been modified