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ALLOWANCE FOR LOAN AND LEASE LOSSES
 6 Months Ended
Jun. 30, 2013
ALLOWANCE FOR LOAN AND LEASE LOSSES  
ALLOWANCE FOR LOAN AND LEASE LOSSES

6.   ALLOWANCE FOR LOAN AND LEASE LOSSES

 

The following table presents by class, the activity in the Allowance for the periods indicated:

 

 

 

Commercial,

 

Real estate

 

 

 

 

 

 

 

 

 

 

 

Financial &

 

 

 

Mortgage -

 

Mortgage -

 

 

 

 

 

 

 

 

 

 

 

Aagricultural

 

Construction

 

Residential

 

Commercial

 

Consumer

 

Leases

 

Unallocated

 

Total

 

 

 

(Dollars in thousands)

 

Three Months Ended June 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

8,641

 

$

3,946

 

$

29,991

 

$

35,289

 

$

2,864

 

$

75

 

$

6,000

 

$

86,806

 

Provision (credit) for loan and lease losses

 

2,439

 

1,044

 

(4,241

)

(531

)

1,069

 

(7

)

—

 

(227

)

 

 

11,080

 

4,990

 

25,750

 

34,758

 

3,933

 

68

 

6,000

 

86,579

 

Charge-offs

 

1,597

 

277

 

380

 

—

 

242

 

—

 

—

 

2,496

 

Recoveries

 

170

 

1,747

 

243

 

703

 

157

 

2

 

—

 

3,022

 

Net charge-offs (recoveries)

 

1,427

 

(1,470

)

137

 

(703

)

85

 

(2

)

—

 

(526

)

Ending balance

 

$

9,653

 

$

6,460

 

$

25,613

 

$

35,461

 

$

3,848

 

$

70

 

$

6,000

 

$

87,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

5,301

 

$

21,380

 

$

33,445

 

$

45,911

 

$

2,105

 

$

180

 

$

6,000

 

$

114,322

 

Provision (credit) for loan and lease losses

 

1,523

 

(6,079

)

(3,713

)

1,649

 

22

 

(32

)

—

 

(6,630

)

 

 

6,824

 

15,301

 

29,732

 

47,560

 

2,127

 

148

 

6,000

 

107,692

 

Charge-offs

 

1,394

 

3,715

 

173

 

320

 

323

 

—

 

—

 

5,925

 

Recoveries

 

832

 

745

 

262

 

2

 

204

 

2

 

—

 

2,047

 

Net charge-offs (recoveries)

 

562

 

2,970

 

(89

)

318

 

119

 

(2

)

—

 

3,878

 

Ending balance

 

$

6,262

 

$

12,331

 

$

29,821

 

$

47,242

 

$

2,008

 

$

150

 

$

6,000

 

$

103,814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

4,987

 

$

4,510

 

$

29,910

 

$

48,500

 

$

2,421

 

$

85

 

$

6,000

 

$

96,413

 

Provision (credit) for loan and lease losses

 

5,845

 

73

 

(3,977

)

(10,322

)

1,611

 

(18

)

—

 

(6,788

)

 

 

10,832

 

4,583

 

25,933

 

38,178

 

4,032

 

67

 

6,000

 

89,625

 

Charge-offs

 

1,841

 

355

 

794

 

3,674

 

557

 

—

 

—

 

7,221

 

Recoveries

 

662

 

2,232

 

474

 

957

 

373

 

3

 

—

 

4,701

 

Net charge-offs (recoveries)

 

1,179

 

(1,877

)

320

 

2,717

 

184

 

(3

)

—

 

2,520

 

Ending balance

 

$

9,653

 

$

6,460

 

$

25,613

 

$

35,461

 

$

3,848

 

$

70

 

$

6,000

 

$

87,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

6,110

 

$

28,630

 

$

32,736

 

$

47,729

 

$

2,335

 

$

553

 

$

4,000

 

$

122,093

 

Provision (credit) for loan and lease losses

 

2,126

 

(12,128

)

(2,921

)

(171

)

(148

)

(378

)

2,000

 

(11,620

)

 

 

8,236

 

16,502

 

29,815

 

47,558

 

2,187

 

175

 

6,000

 

110,473

 

Charge-offs

 

3,076

 

5,341

 

373

 

320

 

749

 

28

 

—

 

9,887

 

Recoveries

 

1,102

 

1,170

 

379

 

4

 

570

 

3

 

—

 

3,228

 

Net charge-offs (recoveries)

 

1,974

 

4,171

 

(6

)

316

 

179

 

25

 

—

 

6,659

 

Ending balance

 

$

6,262

 

$

12,331

 

$

29,821

 

$

47,242

 

$

2,008

 

$

150

 

$

6,000

 

$

103,814

 

 

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the Allowance.

 

Our Provision was a credit of $0.2 million and $6.8 million in the second quarter and first half of 2013, respectively, compared to a credit of $6.6 million and $11.6 million in the second quarter and first half of 2012. The decrease in our Allowance is directly attributable to continued improvement in our credit risk profile as evidenced by declines in nonperforming assets and lower levels of net charge-offs.

 

In determining the amount of our Allowance, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions, as well as regulatory requirements and input. If our assumptions prove to be incorrect, our current Allowance may not be sufficient to cover future loan losses and we may experience increases to our Provision.