v2.4.0.6
Loans
9 Months Ended
Sep. 30, 2012
Receivables [Abstract]  
Loans

Note 9 - Loans

 

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  

 

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  

 

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  

 

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  

 

Troubled Debt Restructurings:

 

The Company has allocated $2,837,000 and $2,074,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2012 and December 31, 2011, respectively. Troubled debt restructurings totaled $17,129,911 and $15,229,000 as of September 30, 2012 and December 31, 2011, respectively. The Company has not committed to lend additional amounts as of September 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 three months ending September 30, 2012 and 2011:

  

    2012     2011  
    Number
Of
Loans
    Pre-Modification
Outstanding
Recorded
Investment
    Post-Modification
Outstanding
Recorded
Investment
    Number
Of
Loans
    Pre-Modification
Outstanding
Recorded
Investment
    Post-Modification
Outstanding
Recorded
Investment
 
Troubled Debt Restructurings:                                                
                                                 
Commercial     1     $ 31,757     $ 29,979       -     $ -     $ -  
Residential real estate                                                
Home equity lines of credit     -       -       -       -       -       -  
Multifamily properties     -       -       -       -       -       -  
Other residential real estate     -       -       -       1       568,000       568,000  
Nonresidential real estate                                                
Owner occupied properties     -       -       -       1       1,700,000       1,700,000  
Non owner occupied properties     -       -       -       -       -       -  
Construction     -       -       -       -       -       -  
Consumer                                                
Credit card balances     -       -       -       -       -       -  
Other consumer     -       -       -       -       -       -  
Municipal obligations     -       -       -       -       -       -  
Total     1     $ 31,757     $ 29,979       2     $ 2,268,000     $ 2,268,000  

 

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2012 and 2011:

 

    2012     2011  
    Number
Of
Loans
    Pre-Modification
Outstanding
Recorded
Investment
    Post-Modification
Outstanding
Recorded
Investment
    Number
Of
Loans
    Pre-Modification
Outstanding
Recorded
Investment
    Post-Modification
Outstanding
Recorded
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       1       568,000       568,000  
Nonresidential real estate                                                
Owner occupied properties     1       153,891       153,891       1       1,700,000       1,700,000  
Non owner occupied properties     -       -       -       3       10,881,848       10,839,519  
Construction     5       3,204,872       2,957,005       -       -       -  
Consumer                                                
Credit card balances     -       -       -       -       -       -  
Other consumer     -       -       -       -       -       -  
Municipal obligations     -       -       -       -       -       -  
Total     10     $ 4,221,036     $ 3,529,544       5     $ 13,149,848     $ 13,107,519  

  

The troubled debt restructurings described above increased the allowance for loan losses by $2,871 and resulted in charge-offs of $0 during the third quarter ending September 30, 2012 and charge offs of $1,112,147 for the nine months ending September 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 September 30, 2012:

 

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  

 

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 $0 and resulted in charge-offs of $477,091 during the third quarter ending September 30, 2012 and $1,739,238 for the nine months ending September 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  
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.