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Loans and Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2011
Loans and Allowance for Loan Losses [Abstract]  
LOANS AND ALLOWANCE FOR LOAN LOSSES
3.   LOANS AND ALLOWANCE FOR LOAN LOSSES
 
    Our total loans at June 30, 2011 were $1.12 billion compared to $1.26 billion at December 31, 2010, a decrease of $139.6 million, or 11.1%. The components of our loan portfolio disaggregated by class of loan within the loan portfolio segments at June 30, 2011 and December 31, 2010, and the percentage change in loans from the end of 2010 to the end of the second quarter of 2011, are as follows:
                                         
                                    Percent  
    June 30, 2011     December 31, 2010     Increase  
    Balance     %     Balance     %     (Decrease)  
Commercial:
                                       
Commercial and industrial
  $ 262,097,000       23.3 %   $ 288,515,000       22.8 %     (9.2 )%
Vacant land, land development, and residential construction
    67,784,000       6.0       83,786,000       6.6       (19.1 )
Real estate — owner occupied
    261,404,000       23.3       277,377,000       22.0       (5.8 )
Real estate — non-owner occupied
    381,699,000       34.0       449,104,000       35.6       (15.0 )
Real estate — multi-family and residential rental
    72,422,000       6.5       77,188,000       6.1       (6.2 )
 
                             
Total commercial
    1,045,406,000       93.1       1,175,970,000       93.1       (11.1 )
 
                                       
Retail:
                                       
Home equity and other
    45,278,000       4.0       51,186,000       4.1       (11.5 )
1-4 family mortgages
    32,315,000       2.9       35,474,000       2.8       (8.9 )
 
                             
Total retail
    77,593,000       6.9       86,660,000       6.9       (10.5 )
 
                             
 
                                       
Total loans
  $ 1,122,999,000       100.0 %   $ 1,262,630,000       100.0 %     (11.1 )%
 
                             
Nonperforming loans as of June 30, 2011 and December 31, 2010 were as follows:
                 
    June 30,     December 31,  
    2011     2010  
Loans past due 90 days or more still accruing interest
  $ 0     $ 766,000  
Nonaccrual loans, including troubled debt restructurings
    43,422,000       63,915,000  
Troubled debt restructurings, accruing interest
    0       4,763,000  
 
           
 
               
Total nonperforming loans
  $ 43,422,000     $ 69,444,000  
 
           
     The recorded principal balance of nonaccrual loans, including troubled debt restructurings, was as follows:
                 
    June 30,     December 31,  
    2011     2010  
Commercial:
               
Commercial and industrial
  $ 5,576,000     $ 10,128,000  
Vacant land, land development, and residential construction
    3,330,000       12,441,000  
Real estate — owner occupied
    7,713,000       10,172,000  
Real estate — non-owner occupied
    18,890,000       22,609,000  
Real estate — multi-family and residential rental
    4,960,000       4,686,000  
 
           
Total commercial
    40,469,000       60,036,000  
 
               
Retail:
               
Home equity and other
    1,693,000       2,425,000  
1-4 family mortgages
    1,260,000       1,454,000  
 
           
Total retail
    2,953,000       3,879,000  
 
           
 
               
Total nonaccrual loans
  $ 43,422,000     $ 63,915,000  
 
           
     An age analysis of past due loans is as follows as of June 30, 2011:
                                                         
                    Greater                             Recorded  
    30 - 59     60 - 89     Than 89                             Balance > 89  
    Days     Days     Days     Total             Total     Days and  
    Past Due     Past Due     Past Due     Past Due     Current     Loans     Accruing  
Commercial:
                                                       
Commercial and industrial
  $ 64,000     $ 168,000     $ 1,777,000     $ 2,009,000     $ 260,088,000     $ 262,097,000     $ 0  
Vacant land, land development, and residential construction
    579,000       113,000       1,995,000       2,687,000       65,097,000       67,784,000       0  
Real estate — owner occupied
    529,000       0       3,053,000       3,582,000       257,822,000       261,404,000       0  
Real estate — non-owner occupied
    4,045,000       0       10,282,000       14,327,000       367,372,000       381,699,000       0  
Real estate — multi-family and residential rental
    1,122,000       0       2,100,000       3,222,000       69,200,000       72,422,000       0  
 
                                         
Total commercial
    6,339,000       281,000       19,207,000       25,827,000       1,019,579,000       1,045,406,000       0  
 
                                                       
Retail:
                                                       
Home equity and other
    4,000       115,000       773,000       892,000       44,386,000       45,278,000       0  
1-4 family mortgages
    225,000       0       766,000       991,000       31,324,000       32,315,000       0  
 
                                         
Total retail
    229,000       115,000       1,539,000       1,883,000       75,710,000       77,593,000       0  
 
                                         
 
                                                       
Total past due loans
  $ 6,568,000     $ 396,000     $ 20,746,000     $ 27,710,000     $ 1,095,289,000     $ 1,122,999,000     $ 0  
 
                                         
     An age analysis of past due loans is as follows as of December 31, 2010:
                                                         
                    Greater                             Recorded  
    30 - 59     60 - 89     Than 89                             Balance > 89  
    Days     Days     Days     Total             Total     Days and  
    Past Due     Past Due     Past Due     Past Due     Current     Loans     Accruing  
Commercial:
                                                       
Commercial and industrial
  $ 280,000     $ 2,074,000     $ 1,474,000     $ 3,828,000     $ 284,687,000     $ 288,515,000     $ 19,000  
Vacant land, land development, and residential construction
    0       453,000       3,586,000       4,039,000       79,747,000       83,786,000       0  
Real estate — owner occupied
    1,194,000       574,000       6,497,000       8,265,000       269,112,000       277,377,000       0  
Real estate — non-owner occupied
    164,000       4,341,000       12,520,000       17,025,000       432,079,000       449,104,000       747,000  
Real estate — multi-family and residential rental
    672,000       0       2,692,000       3,364,000       73,824,000       77,188,000       0  
 
                                         
Total commercial
    2,310,000       7,442,000       26,769,000       36,521,000       1,139,449,000       1,175,970,000       766,000  
 
                                                       
Retail:
                                                       
Home equity and other
    1,024,000       179,000       227,000       1,430,000       49,756,000       51,186,000       0  
1-4 family mortgages
    365,000       0       316,000       681,000       34,793,000       35,474,000       0  
 
                                         
Total retail
    1,389,000       179,000       543,000       2,111,000       84,549,000       86,660,000       0  
 
                                         
 
                                                       
Total past due loans
  $ 3,699,000     $ 7,621,000     $ 27,312,000     $ 38,632,000     $ 1,223,998,000     $ 1,262,630,000     $ 766,000  
 
                                         
     Impaired loans were as follows as of June 30, 2011:
                                 
    Unpaid                     Average  
    Contractual     Recorded             Recorded  
    Principal     Principal     Related     Principal  
    Balance     Balance     Allowance     Balance  
With no related allowance recorded:
                               
Commercial:
                               
Commercial and industrial
  $ 3,630,000     $ 1,431,000             $ 1,783,000  
Vacant land, land development and residential construction
    4,700,000       1,853,000               5,962,000  
Real estate — owner occupied
    8,994,000       4,594,000               4,757,000  
Real estate — non-owner occupied
    16,791,000       9,736,000               12,755,000  
Real estate — multi-family and residential rental
    4,361,000       2,254,000               1,653,000  
 
                         
Total commercial
    38,476,000       19,868,000               26,910,000  
Retail:
                               
Home equity and other
    867,000       858,000               504,000  
1-4 family mortgages
    428,000       407,000               272,000  
 
                         
Total retail
    1,295,000       1,265,000               776,000  
 
                         
 
                               
Total with no related allowance recorded
  $ 39,771,000     $ 21,133,000             $ 27,686,000  
 
                         
 
                               
With an allowance recorded:
                               
Commercial:
                               
Commercial and industrial
  $ 5,315,000     $ 3,850,000     $ 1,832,000     $ 5,386,000  
Vacant land, land development and residential construction
    2,067,000       870,000       83,000       2,620,000  
Real estate — owner occupied
    3,827,000       3,026,000       817,000       4,641,000  
Real estate — non-owner occupied
    15,004,000       9,155,000       2,218,000       8,515,000  
Real estate — multi-family and residential rental
    4,432,000       2,555,000       693,000       3,014,000  
 
                       
Total commercial
    30,645,000       19,456,000       5,643,000       24,176,000  
Retail:
                               
Home equity and other
    815,000       788,000       391,000       1,349,000  
1-4 family mortgages
    608,000       600,000       49,000       754,000  
 
                       
Total retail
    1,423,000       1,388,000       440,000       2,103,000  
 
                       
 
                               
Total with an allowance recorded
  $ 32,068,000     $ 20,844,000     $ 6,083,000     $ 26,279,000  
 
                       
 
                               
Total impaired loans:
                               
Commercial
    69,121,000       39,324,000       5,643,000       51,086,000  
Retail
    2,718,000       2,653,000       440,000       2,879,000  
 
                       
Total impaired loans
  $ 71,839,000     $ 41,977,000     $ 6,083,000     $ 53,965,000  
 
                       
Interest income of less than $0.1 million was recognized on impaired loans during the second quarter of 2011 and the first six months of 2011.
     Impaired loans were as follows as of December 31, 2010:
                         
    Unpaid              
    Contractual     Recorded        
    Principal     Principal     Related  
    Balance     Balance     Allowance  
With no related allowance recorded:
                       
Commercial:
                       
Commercial and industrial
  $ 3,133,000     $ 2,135,000          
Vacant land, land development and residential construction
    13,255,000       10,071,000          
Real estate — owner occupied
    9,327,000       4,920,000          
Real estate — non-owner occupied
    23,380,000       15,775,000          
Real estate — multi-family and residential rental
    1,657,000       1,052,000          
 
                   
Total commercial
    50,752,000       33,953,000          
Retail:
                       
Home equity and other
    277,000       151,000          
1-4 family mortgages
    151,000       137,000          
 
                   
Total retail
    428,000       288,000          
 
                   
 
                       
Total with no related allowance recorded
  $ 51,180,000     $ 34,241,000          
 
                   
 
                       
With an allowance recorded:
                       
Commercial:
                       
Commercial and industrial
  $ 7,405,000     $ 6,922,000     $ 3,554,000  
Vacant land, land development and residential construction
    5,702,000       4,370,000       954,000  
Real estate — owner occupied
    7,047,000       6,257,000       1,996,000  
Real estate — non-owner occupied
    13,773,000       7,875,000       1,091,000  
Real estate — multi-family and residential rental
    5,544,000       3,472,000       909,000  
 
                 
Total commercial
    39,471,000       28,896,000       8,504,000  
Retail:
                       
Home equity and other
    1,799,000       1,910,000       1,007,000  
1-4 family mortgages
    1,141,000       909,000       191,000  
 
                 
Total retail
    2,940,000       2,819,000       1,198,000  
 
                 
 
                       
Total with an allowance recorded
  $ 42,411,000     $ 31,715,000     $ 9,702,000  
 
                 
 
                       
Total impaired loans:
                       
Commercial
    90,223,000       62,849,000       8,504,000  
Retail
    3,368,000       3,107,000       1,198,000  
 
                 
Total impaired loans
  $ 93,591,000     $ 65,956,000     $ 9,702,000  
 
                 
Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral.
     Loans by credit quality indicators were as follows as of June 30, 2011:
     Commercial credit exposure — credit risk profiled by internal credit risk grades:
                                         
            Commercial                     Commercial  
            Vacant Land,     Commercial     Commercial     Real Estate -  
    Commercial     Land Development,     Real Estate -     Real Estate -     Multi-Family  
    and     and Residential     Owner     Non-Owner     and Residential  
    Industrial     Construction     Occupied     Occupied     Rental  
Internal credit risk grade groupings:
                                       
Grades 1 — 4
  $ 150,050,000     $ 7,953,000     $ 130,427,000     $ 143,153,000     $ 29,675,000  
Grades 5 — 7
    104,894,000       53,038,000       118,784,000       193,935,000       27,236,000  
Grades 8 — 9
    7,153,000       6,793,000       12,193,000       44,611,000       15,511,000  
 
                             
Total commercial
  $ 262,097,000     $ 67,784,000     $ 261,404,000     $ 381,699,000     $ 72,422,000  
 
                             
 
Retail credit exposure — credit risk profiled by collateral type:                                
                 
    Retail     Retail  
    Home Equity     1-4 Family  
    and Other     Mortgages  
Total retail
  $ 45,278,000     $ 32,315,000  
 
           
     Loans by credit quality indicators were as follows as of December 31, 2010:
     Commercial credit exposure — credit risk profiled by internal credit risk grades:
                                         
            Commercial                     Commercial  
            Vacant Land,     Commercial     Commercial     Real Estate -  
    Commercial     Land Development,     Real Estate -     Real Estate -     Multi-Family  
    and     and Residential     Owner     Non-Owner     and Residential  
    Industrial     Construction     Occupied     Occupied     Rental  
Internal credit risk grade groupings:
                                       
Grades 1 — 4
  $ 161,623,000     $ 8,098,000     $ 137,340,000     $ 160,746,000     $ 29,902,000  
Grades 5 — 7
    113,904,000       58,326,000       123,572,000       249,246,000       31,852,000  
Grades 8 — 9
    12,988,000       17,362,000       16,465,000       39,112,000       15,434,000  
 
                             
Total commercial
  $ 288,515,000     $ 83,786,000     $ 277,377,000     $ 449,104,000     $ 77,188,000  
 
                             
 
Retail credit exposure — credit risk profiled by collateral type:                                
                 
    Retail     Retail  
    Home Equity     1-4 Family  
    and Other     Mortgages  
Total retail
  $ 51,186,000     $ 35,474,000  
             
 
    All commercial loans are graded using the following number system:
         
 
  Grade 1.   Excellent credit rating that contain very little, if any, risk of loss.
 
       
 
  Grade 2.   Strong sources of repayment and have low repayment risk.
 
       
 
  Grade 3.   Good sources of repayment and have limited repayment risk.
 
       
 
  Grade 4.   Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event.
 
       
 
  Grade 5.   Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics.
 
       
 
  Grade 6.   Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management).
 
       
 
  Grade 7.   Defined weaknesses or negative trends that merit close monitoring through Watch List status.
 
       
 
  Grade 8.   Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status.
 
       
 
  Grade 9.   Vital weaknesses exist where collection of principal is highly questionable.
 
       
 
  Grade 10.   Considered uncollectable and of such little value that their continuance as an asset is not warranted.
    The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.
 
    Activity in the allowance for loan losses and the recorded investments in loans as of and during the six months ended June 30, 2011 are as follows:
                                 
    Commercial     Retail              
    Loans     Loans     Unallocated     Total  
Allowance for loan losses:
                               
Beginning balance
  $ 42,359,000     $ 2,972,000     $ 37,000     $ 45,368,000  
Provision for loan losses
    2,488,000       1,356,000       56,000       3,900,000  
Charge-offs
    (10,908,000 )     (1,856,000 )     0       (12,764,000 )
Recoveries
    2,048,000       168,000       0       2,216,000  
 
                       
Ending balance
  $ 35,987,000     $ 2,640,000     $ 93,000     $ 38,720,000  
 
                       
 
Ending balance: individually evaluated for impairment
  $ 5,643,000     $ 440,000     $ 0     $ 6,083,000  
 
                       
 
Ending balance: collectively evaluated for impairment
  $ 30,344,000     $ 2,200,000     $ 93,000     $ 32,637,000  
 
                       
 
Total loans:
                               
Ending balance
  $ 1,045,406,000     $ 77,593,000             $ 1,122,999,000  
 
                         
 
Ending balance: individually evaluated for impairment
  $ 39,324,000     $ 2,653,000             $ 41,977,000  
 
                         
Ending balance: collectively evaluated for impairment
  $ 1,006,082,000     $ 74,940,000             $ 1,081,022,000  
 
                         
 
Activity in the allowance for loan losses during the six months ended June 30, 2010 is as follows:
 
Beginning balance
                          $ 47,878,000  
Provision for loan losses
                            14,600,000  
Charge-offs
                            (16,737,000 )
Recoveries
                            1,997,000  
 
                             
 
Ending balance
                          $ 47,738,000  
 
                             
    During the six months ended June 30, 2011, there were no purchases or sales of loans or reclassifications of loans held for sale.