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Allowance for Loan Losses and Credit Quality | 9 Months Ended
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Sep. 30, 2011
Loans and Allowance for Loan Losses and Credit Quality [Abstract] |
Allowance for Loan Losses and Credit Quality | Note 5. Allowance for Loan Losses and Credit Quality The allowance for loan losses is maintained at a level that the Company believes is sufficient to absorb probable loan losses inherent in the loan portfolio. The allowance is increased by charges to earnings in the form of provision for loan losses and recoveries of prior loan charge-offs, and decreased by loans charged off. The provision is calculated to bring the allowance to a level which, according to a systematic process of measurement, reflects the amount management estimates is needed to absorb probable losses within the portfolio. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. Management performs quarterly assessments to determine the appropriate level of allowance for loan losses. Differences between actual loan loss experience and estimates are reflected through adjustments that are made by either increasing or decreasing the allowance based upon current measurement criteria. Commercial, consumer real estate, and non-real estate consumer loan portfolios are evaluated separately for purposes of determining the allowance. The specific components of the allowance include allocations to individual commercial credits and allocations to the remaining non-homogeneous and homogeneous pools of loans that have been deemed impaired. Management’s general reserve allocations are based on judgment of qualitative and quantitative factors about both macro and micro economic conditions reflected within the portfolio of loans and the economy as a whole. Factors considered in this evaluation include, but are not necessarily limited to, probable losses from loan and other credit arrangements, general economic conditions, changes in credit concentrations or pledged collateral, historical loan loss experience, and trends in portfolio volume, maturities, composition, delinquencies, and non-accruals. The allowance methodology was recently enhanced to further segment the commercial loan portfolio by risk grade. Historical loss rates for each risk grade of commercial loans are adjusted by environmental factors to estimate the amount of reserve needed by segment. While management has allocated the allowance for loan losses to various portfolio segments, the entire allowance is available for use against any type of loan loss deemed appropriate by management. The Company enhanced its allowance for loan loss methodology during the first quarter of 2011. The enhancement included, among other things, further segmentation of the commercial loan portfolio by risk code and consideration of additional qualitative factors as outlined in the Interagency Policy Statement for Loan and Lease Losses. Under the previous methodology, qualitative adjustments were a multiple of the historical loss rate calculated by the Company for each segment, as compared to the enhanced methodology that utilizes addition to and subtraction from the historical loss rate. Initially, the qualitative factors for the consumer loan segments under the enhanced methodology were calculated by determining an equivalent rate to the prior method. As part of the continued refinement of the enhanced methodology, the adjustments historically applied to consumer loans were reviewed. As of the third quarter of 2011, it was determined that qualitative adjustments to the consumer loan segments’ loss rates should be revised downward based upon review and analysis of historical loss experience within the portfolio as the Company is now estimating fewer losses on the consumer portfolio. As a result of the downward revision, the allocation of the allowance to the consumer loan segments is 30%. Historically, net consumer charge-offs comprised 28% of total net charge-offs. The decrease in estimated losses on the consumer portfolio segment was offset by increases in estimated losses on the commercial portfolio segment. The increase is particularly in specific loss estimated on certain impaired loans as a result of new information regarding the values of underlying collateral. As an additional enhancement to the loan loss methodology in the third quarter of 2011, the Company further segmented the one-to-four family residential real estate class into owner occupied and non-owner occupied segments, which management believes provides better granularity and segmentation of loans with similar risk characteristics. This also contributed to the overall reduction of estimated losses on non-impaired consumer loan segments in the allowance model, as losses on the Company’s non-owner occupied residential real estate loans have historically been higher than losses on owner occupied residential real estate loans. The following tables reflect the change of the segmentation in the single family residential loan class for the period ended September 30, 2011. The following tables detail the Company’s allowance for loan loss activity, by portfolio segment, for the three- and nine-month periods ended September 30, 2011 and 2010.
|  | For the Three Months Ended September 30, 2011 |
(In Thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 12,300 |  |  | $ | 12,641 |  |  | $ | 1,541 |  |  | $ | 26,482 |
Provision for loan losses |  |  | 7,393 |  |  |  | (4,811 | ) |  |  | (662 | ) |  |  | 1,920 |
Loans charged off |  |  | (2,157 | ) |  |  | (712 | ) |  |  | (193 | ) |  |  | (3,062 | )
Recoveries credited to allowance |  |  | 968 |  |  |  | 15 |  |  |  | 84 |  |  |  | 1,067 |
Net charge-offs |  |  | (1,189 | ) |  |  | (697 | ) |  |  | (109 | ) |  |  | (1,995 | )
Ending balance |  | $ | 18,504 |  |  | $ | 7,133 |  |  | $ | 770 |  |  | $ | 26,407 |
|  | For the Three Months Ended September 30, 2010 |
(In Thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,649 |  |  | $ | 9,157 |  |  | $ | 2,205 |  |  | $ | 25,011 |
Provision for loan losses |  |  | 1,853 |  |  |  | 1,667 |  |  |  | 290 |  |  |  | 3,810 |
Loans charged off |  |  | (1,994 | ) |  |  | (342 | ) |  |  | (315 | ) |  |  | (2,651 | )
Recoveries credited to allowance |  |  | 110 |  |  |  | 16 |  |  |  | 124 |  |  |  | 250 |
Net charge-offs |  |  | (1,884 | ) |  |  | (326 | ) |  |  | (191 | ) |  |  | (2,401 | )
Ending balance |  | $ | 13,618 |  |  | $ | 10,498 |  |  | $ | 2,304 |  |  | $ | 26,420 |
|  | For the Nine Months Ended September 30, 2011 |
(In Thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 12,300 |  |  | $ | 12,641 |  |  | $ | 1,541 |  |  | $ | 26,482 |
Provision for loan losses |  |  | 10,258 |  |  |  | (3,190 | ) |  |  | (457 | ) |  |  | 6,611 |
Loans charged off |  |  | (5,324 | ) |  |  | (2,541 | ) |  |  | (680 | ) |  |  | (8,545 | )
Recoveries credited to allowance |  |  | 1,270 |  |  |  | 223 |  |  |  | 366 |  |  |  | 1,859 |
Net charge-offs |  |  | (4,054 | ) |  |  | (2,318 | ) |  |  | (314 | ) |  |  | (6,686 | )
Ending balance |  | $ | 18,504 |  |  | $ | 7,133 |  |  | $ | 770 |  |  | $ | 26,407 |
|  | For the Nine Months Ended September 30, 2010 |
(In Thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 13,802 |  |  | $ | 8,457 |  |  | $ | 2,018 |  |  | $ | 24,277 |
Provision for loan losses |  |  | 5,936 |  |  |  | 4,249 |  |  |  | 886 |  |  |  | 11,071 |
Loans charged off |  |  | (6,577 | ) |  |  | (2,260 | ) |  |  | (919 | ) |  |  | (9,756 | )
Recoveries credited to allowance |  |  | 457 |  |  |  | 52 |  |  |  | 319 |  |  |  | 828 |
Net charge-offs |  |  | (6,120 | ) |  |  | (2,208 | ) |  |  | (600 | ) |  |  | (8,928 | )
Ending balance |  | $ | 13,618 |  |  | $ | 10,498 |  |  | $ | 2,304 |  |  | $ | 26,420 |
The Company identifies loans for potential impairment through a variety of means including, but not limited to, ongoing loan review, renewal processes, delinquency data, market communications, and public information. If it is determined that it is probable that the Company will not collect all principal and interest amounts contractually due, the loan is generally deemed to be impaired. The following table presents the Company’s recorded investment in loans considered to be impaired and related information on those impaired loans for the periods ended September 30, 2011, and December 31, 2010.
|  | September 30, 2011 |
|  |  |  |  |  |  |  |  |  |  | Quarter-to-Date |  |  | Year-to-Date |
(Amounts in Thousands) |  | Recorded Investment |  |  | Related Allowance |  |  | Unpaid Principal Balance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Loans without a related allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 66 |  |  | $ | — |  |  | $ | 70 |  |  | $ | 73 |  |  | $ | 1 |  |  | $ | 76 |  |  | $ | 4 |
Land development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other land loans |  |  | 68 |  |  |  | — |  |  |  | 68 |  |  |  | 67 |  |  |  | — |  |  |  | 118 |  |  |  | 1 |
Commercial and industrial |  |  | 267 |  |  |  | — |  |  |  | 291 |  |  |  | 314 |  |  |  | 4 |  |  |  | 746 |  |  |  | 8 |
Single family residential |  |  | 4,291 |  |  |  | — |  |  |  | 4,385 |  |  |  | 4,380 |  |  |  | 23 |  |  |  | 4,658 |  |  |  | 68 |
Multi-family residential |  |  | 546 |  |  |  | — |  |  |  | 564 |  |  |  | 1,059 |  |  |  | 11 |  |  |  | 1,150 |  |  |  | 26 |
Non-farm, non-residential |  |  | 2,017 |  |  |  | — |  |  |  | 2,137 |  |  |  | 2,236 |  |  |  | 30 |  |  |  | 2,655 |  |  |  | 60 |
Farmland |  |  | 475 |  |  |  | — |  |  |  | 475 |  |  |  | 552 |  |  |  | — |  |  |  | 552 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 940 |  |  |  | — |  |  |  | 978 |  |  |  | 984 |  |  |  | 17 |  |  |  | 1,061 |  |  |  | 36 |
Single family residential mortgage |  |  | 6,453 |  |  |  | — |  |  |  | 6,600 |  |  |  | 7,030 |  |  |  | 81 |  |  |  | 7,588 |  |  |  | 168 |
Owner-occupied construction |  |  | 119 |  |  |  | — |  |  |  | 125 |  |  |  | 125 |  |  |  | 2 |  |  |  | 126 |  |  |  | 6 |
Consumer loans |  |  | 54 |  |  |  | — |  |  |  | 60 |  |  |  | 62 |  |  |  | 2 |  |  |  | 66 |  |  |  | 4 |
|  | $ | 15,296 |  |  | $ | — |  |  | $ | 15,753 |  |  | $ | 16,882 |  |  | $ | 171 |  |  | $ | 18,796 |  |  | $ | 381 |
Loans with a related allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 265 |  |  | $ | 25 |  |  | $ | 268 |  |  | $ | 268 |  |  | $ | 2 |  |  | $ | 269 |  |  | $ | 2 |
Land development |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other land loans |  |  | 112 |  |  |  | 5 |  |  |  | 112 |  |  |  | 112 |  |  |  | 1 |  |  |  | 113 |  |  |  | 4 |
Commercial and industrial |  |  | 4,032 |  |  |  | 2,045 |  |  |  | 4,064 |  |  |  | 4,041 |  |  |  | 8 |  |  |  | 4,066 |  |  |  | 16 |
Single family residential |  |  | 2,242 |  |  |  | 124 |  |  |  | 2,242 |  |  |  | 2,002 |  |  |  | 25 |  |  |  | 2,012 |  |  |  | 108 |
Multi-family residential |  |  | 591 |  |  |  | 196 |  |  |  | 591 |  |  |  | 591 |  |  |  | — |  |  |  | 591 |  |  |  | — |
Non-farm, non-residential |  |  | 6,373 |  |  |  | 2,153 |  |  |  | 6,456 |  |  |  | 6,423 |  |  |  | 98 |  |  |  | 6,430 |  |  |  | 109 |
Farmland |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 338 |  |  |  | 200 |  |  |  | 339 |  |  |  | 336 |  |  |  | — |  |  |  | 335 |  |  |  | — |
Single family residential mortgage |  |  | 5,969 |  |  |  | 1,210 |  |  |  | 6,048 |  |  |  | 6,198 |  |  |  | 51 |  |  |  | 6,310 |  |  |  | 114 |
Owner-occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 19,922 |  |  | $ | 5,958 |  |  | $ | 20,120 |  |  | $ | 19,971 |  |  | $ | 185 |  |  | $ | 20,126 |  |  | $ | 353 |
|  | December 31, 2010 |
|  |  |  |  |  |  |  |  |  |  | Year-to-Date |
(Amounts in Thousands) |  | Recorded Investment |  |  | Related Allowance |  |  | Unpaid Principal Balance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Loans without a related allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 285 |  |  | $ | — |  |  | $ | 732 |  |  | $ | 730 |  |  | $ | 3 |
Land development |  |  | 50 |  |  |  | — |  |  |  | 144 |  |  |  | 143 |  |  |  | 2 |
Other land loans |  |  | 323 |  |  |  | — |  |  |  | 742 |  |  |  | 152 |  |  |  | 13 |
Commercial and industrial |  |  | 3,518 |  |  |  | — |  |  |  | 5,384 |  |  |  | 6,237 |  |  |  | 10 |
Multi-family residential |  |  | 2,526 |  |  |  | — |  |  |  | 2,673 |  |  |  | 2,680 |  |  |  | 105 |
Non-farm, non-residential |  |  | 3,824 |  |  |  | — |  |  |  | 4,985 |  |  |  | 4,658 |  |  |  | 53 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 1,302 |  |  |  | — |  |  |  | 1,595 |  |  |  | 1,605 |  |  |  | 38 |
Single family residential mortgage |  |  | 7,992 |  |  |  | — |  |  |  | 10,882 |  |  |  | 9,093 |  |  |  | 330 |
Owner-occupied construction |  |  | 6 |  |  |  | — |  |  |  | 6 |  |  |  | 6 |  |  |  | — |
Consumer loans |  |  | 98 |  |  |  | — |  |  |  | 102 |  |  |  | 11 |  |  |  | 5 |
|  | $ | 19,924 |  |  | $ | — |  |  | $ | 27,245 |  |  | $ | 25,315 |  |  | $ | 559 |
Loans with a related allowance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Land development |  |  | 113 |  |  |  | 5 |  |  |  | 113 |  |  |  | 114 |  |  |  | 7 |
Other land loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Multi-family residential |  |  | 723 |  |  |  | 257 |  |  |  | 759 |  |  |  | 768 |  |  |  | 21 |
Non-farm, non-residential |  |  | 1,070 |  |  |  | 158 |  |  |  | 1,140 |  |  |  | 1,151 |  |  |  | 26 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 95 |  |  |  | 34 |  |  |  | 98 |  |  |  | 98 |  |  |  | 2 |
Single family residential mortgage |  |  | 8,801 |  |  |  | 1,870 |  |  |  | 7,548 |  |  |  | 8,913 |  |  |  | 310 |
Owner-occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 10,802 |  |  | $ | 2,324 |  |  | $ | 9,658 |  |  | $ | 11,044 |  |  | $ | 366 |
As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk rating of commercial loans, the level of classified commercial loans, net charge-offs, non-performing loans and general economic conditions. The Company’s loan review function generally reviews all commercial loan relationships greater than $2.00 million on an annual basis and at various times through the year. Smaller commercial and retail loans are sampled for review throughout the year by our internal loan review department. Through the loan review process, loans are identified for upgrade or downgrade in risk rating and changed to reflect current information as part of the process. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows:
| • |  | Pass – This grade includes loans to borrowers of acceptable credit quality and risk. The Company further differentiates within this grade based upon borrower characteristics which include: capital strength, earnings stability, leverage, and industry.
| • |  | Special Mention – This grade includes loans that require more than a normal degree of supervision and attention. These loans have all the characteristics of an adequate asset, but due to being adversely affected by economic or financial conditions 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.
| • |  | Substandard – This grade includes loans that have well defined weaknesses which make payment default or principal exposure possible, but not yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment, or an event outside of the normal course of business to meet the repayment terms.
| • |  | Doubtful – This grade includes loans that are placed on non-accrual status. These loans have all the weaknesses inherent in a “substandard’ loan with the added factor that the weaknesses are so severe that collection or liquidation in full, on the basis of current existing facts, conditions and values, is extremely unlikely, but because of certain specific pending factors, the amount of loss cannot yet be determined.
| • |  | Loss – This grade includes loans that are to be charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the asset has no recovery or salvage value, but simply that it is not practical or desirable to defer writing off all or some portion of the loan, even though partial recovery may be effected in the future.
The following tables present the Company’s investment in loans by internal credit grade indicator at September 30, 2011, and December 31, 2010.
|  | September 30, 2011 |
(Amounts in Thousands) |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 30,678 |  |  | $ | 412 |  |  | $ | 1,189 |  |  | $ | — |  |  | $ | — |  |  | $ | 32,279 |
Land development |  |  | 2,879 |  |  |  | 250 |  |  |  | 175 |  |  |  | — |  |  |  | — |  |  |  | 3,304 |
Other land loans |  |  | 16,845 |  |  |  | 5,880 |  |  |  | 276 |  |  |  | — |  |  |  | — |  |  |  | 23,001 |
Commercial and industrial |  |  | 87,209 |  |  |  | 499 |  |  |  | 2,759 |  |  |  | 2,427 |  |  |  | — |  |  |  | 92,894 |
Single family residential |  |  | 93,622 |  |  |  | 2,543 |  |  |  | 11,714 |  |  |  | — |  |  |  | — |  |  |  | 107,879 |
Multi-family residential |  |  | 79,068 |  |  |  | 985 |  |  |  | 2,886 |  |  |  | — |  |  |  | — |  |  |  | 82,939 |
Non-farm, non-residential |  |  | 294,641 |  |  |  | 7,695 |  |  |  | 23,039 |  |  |  | 455 |  |  |  | — |  |  |  | 325,830 |
Agricultural |  |  | 1,529 |  |  |  | — |  |  |  | 41 |  |  |  | — |  |  |  | — |  |  |  | 1,570 |
Farmland |  |  | 35,004 |  |  |  | 853 |  |  |  | 748 |  |  |  | — |  |  |  | — |  |  |  | 36,605 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 104,251 |  |  |  | 1,884 |  |  |  | 3,309 |  |  |  | — |  |  |  | — |  |  |  | 109,444 |
Single family residential mortgage |  |  | 425,091 |  |  |  | 7,908 |  |  |  | 28,105 |  |  |  | — |  |  |  | — |  |  |  | 461,104 |
Owner-occupied construction |  |  | 18,619 |  |  |  | 130 |  |  |  | 530 |  |  |  | — |  |  |  | — |  |  |  | 19,279 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 66,277 |  |  |  | 174 |  |  |  | 569 |  |  |  | — |  |  |  | — |  |  |  | 67,020 |
Other |  |  | 11,497 |  |  |  | 2 |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | 11,508 |
Total loans |  | $ | 1,267,210 |  |  | $ | 29,215 |  |  | $ | 75,349 |  |  | $ | 2,882 |  |  | $ | — |  |  | $ | 1,374,656 |
|  | December 31, 2010 |
(Amounts in Thousands) |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 40,497 |  |  | $ | 663 |  |  | $ | 1,534 |  |  | $ | — |  |  | $ | — |  |  | $ | 42,694 |
Land development |  |  | 14,458 |  |  |  | 1,226 |  |  |  | 966 |  |  |  | — |  |  |  | — |  |  |  | 16,650 |
Other land loans |  |  | 16,723 |  |  |  | 6,138 |  |  |  | 1,607 |  |  |  | — |  |  |  | — |  |  |  | 24,468 |
Commercial and industrial |  |  | 87,156 |  |  |  | 1,756 |  |  |  | 5,211 |  |  |  | — |  |  |  | — |  |  |  | 94,123 |
Multi-family residential |  |  | 61,059 |  |  |  | 2,553 |  |  |  | 4,212 |  |  |  | — |  |  |  | — |  |  |  | 67,824 |
Non-farm, non-residential |  |  | 316,026 |  |  |  | 18,942 |  |  |  | 16,936 |  |  |  | — |  |  |  | — |  |  |  | 351,904 |
Agricultural |  |  | 1,318 |  |  |  | — |  |  |  | 24 |  |  |  | — |  |  |  | — |  |  |  | 1,342 |
Farmland |  |  | 33,042 |  |  |  | 2,569 |  |  |  | 1,343 |  |  |  | — |  |  |  | — |  |  |  | 36,954 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 106,803 |  |  |  | 1,923 |  |  |  | 2,894 |  |  |  | — |  |  |  | — |  |  |  | 111,620 |
Single family residential mortgage |  |  | 498,830 |  |  |  | 15,224 |  |  |  | 34,449 |  |  |  | 654 |  |  |  | — |  |  |  | 549,157 |
Owner-occupied construction |  |  | 17,389 |  |  |  | 789 |  |  |  | 171 |  |  |  | — |  |  |  | — |  |  |  | 18,349 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 62,676 |  |  |  | 306 |  |  |  | 493 |  |  |  | — |  |  |  | — |  |  |  | 63,475 |
Other |  |  | 7,635 |  |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,646 |
Total loans |  | $ | 1,263,612 |  |  | $ | 52,100 |  |  | $ | 69,840 |  |  | $ | 654 |  |  | $ | — |  |  | $ | 1,386,206 |
The following tables detail the Company’s recorded investment in loans related to each segment in the allowance for loan losses by portfolio segment and disaggregated on the basis of the Company’s impairment methodology at September 30, 2011, and December 31, 2010.
|  | September 30, 2011 |
(Amounts in Thousands) |  | Loans Individually Evaluated for Impairment |  |  | Allowance for Loans Individually Evaluated |  |  | Loans Collectively Evaluated for Impairment |  |  | Allowance for Loans Collectively Evaluated |  |  | Acquired, Impaired Loans Evaluated for Impairment |  |  | Allowance for Acquired, Impaired Loans Evaluated |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction—commercial |  | $ | 331 |  |  | $ | 25 |  |  | $ | 31,948 |  |  | $ | 944 |  |  | $ | — |  |  | $ | — |
Land development |  |  | — |  |  |  | — |  |  |  | 3,304 |  |  |  | 273 |  |  |  | — |  |  |  | — |
Other land loans |  |  | 180 |  |  |  | 5 |  |  |  | 22,672 |  |  |  | 555 |  |  |  | 149 |  |  |  | — |
Commercial and industrial |  |  | 4,299 |  |  |  | 2,045 |  |  |  | 87,965 |  |  |  | 1,969 |  |  |  | 630 |  |  |  | — |
Single family residential |  |  | 6,533 |  |  |  | 124 |  |  |  | 100,096 |  |  |  | 2,791 |  |  |  | 1,250 |  |  |  | — |
Multi-family residential |  |  | 1,137 |  |  |  | 196 |  |  |  | 81,802 |  |  |  | 2,069 |  |  |  | — |  |  |  | — |
Non-farm, non-residential |  |  | 8,390 |  |  |  | 2,153 |  |  |  | 316,986 |  |  |  | 4,931 |  |  |  | 454 |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | 1,570 |  |  |  | 25 |  |  |  | — |  |  |  | — |
Farmland |  |  | 475 |  |  |  | — |  |  |  | 36,130 |  |  |  | 399 |  |  |  | — |  |  |  | — |
Total commercial loans |  |  | 21,345 |  |  |  | 4,548 |  |  |  | 682,473 |  |  |  | 13,956 |  |  |  | 2,483 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 1,278 |  |  |  | 200 |  |  |  | 108,166 |  |  |  | 1,206 |  |  |  | — |  |  |  | — |
Single family residential mortgage |  |  | 12,422 |  |  |  | 1,210 |  |  |  | 448,297 |  |  |  | 4,320 |  |  |  | 385 |  |  |  | — |
Owner-occupied construction |  |  | 119 |  |  |  | — |  |  |  | 19,160 |  |  |  | 197 |  |  |  | — |  |  |  | — |
Total consumer real estate loans |  |  | 13,819 |  |  |  | 1,410 |  |  |  | 575,623 |  |  |  | 5,723 |  |  |  | 385 |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 54 |  |  |  | — |  |  |  | 66,966 |  |  |  | 770 |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | 11,508 |  |  |  | — |  |  |  | — |  |  |  | — |
Total consumer and other loans |  |  | 54 |  |  |  | — |  |  |  | 78,474 |  |  |  | 770 |  |  |  | — |  |  |  | — |
Total loans |  | $ | 35,218 |  |  | $ | 5,958 |  |  | $ | 1,336,570 |  |  | $ | 20,449 |  |  | $ | 2,868 |  |  | $ | — |
|  | December 31, 2010 |
(Amounts in Thousands) |  | Loans Individually Evaluated for Impairment |  |  | Allowance for Loans Individually Evaluated |  |  | Loans Collectively Evaluated for Impairment |  |  | Allowance for Loans Collectively Evaluated |  |  | Acquired, Impaired Loans Evaluated for Impairment |  |  | Allowance for Acquired, Impaired Loans Evaluated |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction—commercial |  | $ | 285 |  |  | $ | — |  |  | $ | 42,409 |  |  | $ | 1,472 |  |  | $ | — |  |  | $ | — |
Land development |  |  | 50 |  |  |  | 5 |  |  |  | 16,600 |  |  |  | 1,767 |  |  |  | — |  |  |  | — |
Other land loans |  |  | 436 |  |  |  | — |  |  |  | 23,520 |  |  |  | 747 |  |  |  | 512 |  |  |  | — |
Commercial and industrial |  |  | 3,518 |  |  |  | — |  |  |  | 90,084 |  |  |  | 4,511 |  |  |  | 521 |  |  |  | — |
Multi-family residential |  |  | 3,249 |  |  |  | 257 |  |  |  | 64,575 |  |  |  | 824 |  |  |  | — |  |  |  | — |
Non-farm, non-residential |  |  | 4,894 |  |  |  | 158 |  |  |  | 346,586 |  |  |  | 2,688 |  |  |  | 424 |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | 1,342 |  |  |  | 19 |  |  |  | — |  |  |  | — |
Farmland |  |  | — |  |  |  | — |  |  |  | 36,954 |  |  |  | 70 |  |  |  | — |  |  |  | — |
Total commercial loans |  |  | 12,432 |  |  |  | 420 |  |  |  | 622,070 |  |  |  | 12,098 |  |  |  | 1,457 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 1,397 |  |  |  | 34 |  |  |  | 110,223 |  |  |  | 2,104 |  |  |  | — |  |  |  | — |
Single family residential mortgage |  |  | 16,793 |  |  |  | 1,870 |  |  |  | 530,600 |  |  |  | 7,999 |  |  |  | 1,764 |  |  |  | — |
Owner-occupied construction |  |  | 6 |  |  |  | — |  |  |  | 18,343 |  |  |  | 193 |  |  |  | — |  |  |  | — |
Total consumer real estate loans |  |  | 18,196 |  |  |  | 1,904 |  |  |  | 659,166 |  |  |  | 10,296 |  |  |  | 1,764 |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 98 |  |  |  | — |  |  |  | 63,377 |  |  |  | 1,764 |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | 7,646 |  |  |  | — |  |  |  | — |  |  |  | — |
Total consumer and other loans |  |  | 98 |  |  |  | — |  |  |  | 71,023 |  |  |  | 1,764 |  |  |  | — |  |  |  | — |
Total loans |  | $ | 30,726 |  |  | $ | 2,324 |  |  | $ | 1,352,259 |  |  | $ | 24,158 |  |  | $ | 3,221 |  |  | $ | — |
Non-accrual and Past Due Loans Non-accrual loans, presented by loan class, consisted of the following at September 30, 2011, and December 31, 2010:
|  | September 30, |  |  | December 31, |
(Amounts in Thousands) |  | 2011 |  |  | 2010 |
Commercial loans |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 331 |  |  | $ | 285 |
Land development |  |  | — |  |  |  | 50 |
Other land loans |  |  | 68 |  |  |  | 321 |
Commercial and industrial |  |  | 3,892 |  |  |  | 3,518 |
Single family residential |  |  | 4,011 |  |  |  | N/A |
Multi-family residential |  |  | 1,138 |  |  |  | 2,463 |
Non-farm, non-residential |  |  | 7,935 |  |  |  | 4,670 |
Farmland |  |  | 475 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |
Home equity lines |  |  | 886 |  |  |  | 868 |
Single family residential mortgage |  |  | 3,561 |  |  |  | 6,364 |
Owner-occupied construction |  |  | 119 |  |  |  | 6 |
Consumer and other loans |  |  |  |  |  |  |  |
Consumer loans |  |  | 54 |  |  |  | 99 |
Total |  |  | 22,470 |  |  |  | 18,644 |
Acquired, impaired loans |  |  | 407 |  |  |  | 770 |
Total non-accrual loans |  | $ | 22,877 |  |  | $ | 19,414 |
The following tables present the aging of the recorded investment in past due loans, by loan class, as of September 30, 2011, and December 31, 2010. There were no loans past due 90 days and still accruing interest at September 30, 2011, or December 31, 2010. Non-accrual loans, excluding those 0 to 29 days past due, are included in the applicable delinquency category.
|  | September 30, 2011 |
(Amounts in Thousands) |  | 30 -59 Days |  |  | 60 -89 Days |  |  | 90+ Days |  |  | Total Past Due |  |  | Current Loans |  |  | Total Loans |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 1,059 |  |  | $ | — |  |  | $ | 11 |  |  | $ | 1,070 |  |  | $ | 31,209 |  |  | $ | 32,279 |
Land development |  |  | — |  |  |  | 46 |  |  |  | — |  |  |  | 46 |  |  |  | 3,258 |  |  |  | 3,304 |
Other land loans |  |  | — |  |  |  | — |  |  |  | 68 |  |  |  | 68 |  |  |  | 22,933 |  |  |  | 23,001 |
Commercial and industrial |  |  | 343 |  |  |  | — |  |  |  | 3,539 |  |  |  | 3,882 |  |  |  | 89,012 |  |  |  | 92,894 |
Single family residential |  |  | 1,456 |  |  |  | 412 |  |  |  | 2,946 |  |  |  | 4,814 |  |  |  | 103,065 |  |  |  | 107,879 |
Multi-family residential |  |  | 63 |  |  |  | 452 |  |  |  | 1,138 |  |  |  | 1,653 |  |  |  | 81,286 |  |  |  | 82,939 |
Non-farm, non-residential |  |  | 776 |  |  |  | 439 |  |  |  | 5,996 |  |  |  | 7,211 |  |  |  | 318,619 |  |  |  | 325,830 |
Agricultural |  |  | 31 |  |  |  | — |  |  |  | — |  |  |  | 31 |  |  |  | 1,539 |  |  |  | 1,570 |
Farmland |  |  | 137 |  |  |  | — |  |  |  | 475 |  |  |  | 612 |  |  |  | 35,993 |  |  |  | 36,605 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 805 |  |  |  | 147 |  |  |  | 563 |  |  |  | 1,515 |  |  |  | 107,929 |  |  |  | 109,444 |
Single family residential mortgage |  |  | 2,345 |  |  |  | 1,985 |  |  |  | 1,859 |  |  |  | 6,189 |  |  |  | 454,915 |  |  |  | 461,104 |
Owner-occupied construction |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 19,277 |  |  |  | 19,279 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 171 |  |  |  | 28 |  |  |  | 10 |  |  |  | 209 |  |  |  | 66,811 |  |  |  | 67,020 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,508 |  |  |  | 11,508 |
Total loans |  | $ | 7,188 |  |  | $ | 3,509 |  |  | $ | 16,605 |  |  | $ | 27,302 |  |  | $ | 1,347,354 |  |  | $ | 1,374,656 |
|  | December 31, 2010 |
(Amounts in Thousands) |  | 30 -59 Days |  |  | 60 -89 Days |  |  | 90+ Days |  |  | Total Past Due |  |  | Current Loans |  |  | Total Loans |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction — commercial |  | $ | 531 |  |  | $ | — |  |  | $ | 122 |  |  | $ | 653 |  |  | $ | 42,041 |  |  | $ | 42,694 |
Land development |  |  | — |  |  |  | — |  |  |  | 50 |  |  |  | 50 |  |  |  | 16,600 |  |  |  | 16,650 |
Other land loans |  |  | — |  |  |  | — |  |  |  | 684 |  |  |  | 684 |  |  |  | 23,784 |  |  |  | 24,468 |
Commercial and industrial |  |  | 3,648 |  |  |  | 121 |  |  |  | 356 |  |  |  | 4,125 |  |  |  | 89,998 |  |  |  | 94,123 |
Multi-family residential |  |  | 956 |  |  |  | — |  |  |  | 1,793 |  |  |  | 2,749 |  |  |  | 65,075 |  |  |  | 67,824 |
Non-farm, non-residential |  |  | 3,251 |  |  |  | 2,056 |  |  |  | 3,249 |  |  |  | 8,556 |  |  |  | 343,348 |  |  |  | 351,904 |
Agricultural |  |  | 19 |  |  |  | — |  |  |  | — |  |  |  | 19 |  |  |  | 1,323 |  |  |  | 1,342 |
Farmland |  |  | 110 |  |  |  | — |  |  |  | — |  |  |  | 110 |  |  |  | 36,844 |  |  |  | 36,954 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 682 |  |  |  | 250 |  |  |  | 608 |  |  |  | 1,540 |  |  |  | 110,080 |  |  |  | 111,620 |
Single family residential mortgage |  |  | 10,287 |  |  |  | 1,741 |  |  |  | 4,213 |  |  |  | 16,241 |  |  |  | 532,916 |  |  |  | 549,157 |
Owner-occupied construction |  |  | 855 |  |  |  | 326 |  |  |  | 6 |  |  |  | 1,187 |  |  |  | 17,162 |  |  |  | 18,349 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 433 |  |  |  | 47 |  |  |  | 31 |  |  |  | 511 |  |  |  | 62,964 |  |  |  | 63,475 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,646 |  |  |  | 7,646 |
Total loans |  | $ | 20,772 |  |  | $ | 4,541 |  |  | $ | 11,112 |  |  | $ | 36,425 |  |  | $ | 1,349,781 |  |  | $ | 1,386,206 |
Troubled Debt Restructurings At September 30, 2011, the allowance for loan losses related to total loan restructurings was $959 thousand. Total interest income recognized on loan restructurings for the three- and nine- month periods ended September 30, 2011, totaled $173 thousand and $428 thousand, respectively. When restructuring loans for troubled borrowers, the Company generally makes concessions in interest rates, loan terms and/or amortization terms. All restructured loans to troubled borrowers in excess of $250 thousand are evaluated for a specific reserve based on the net present value method. Restructured loans under $250 thousand are subject to the reserve calculation at the historical loss rate for classified loans. There were no loans modified as troubled debt restructurings within the previous 12 months for which there was a payment default for the three- and nine-month periods ended September 30, 2011. The Company’s review of loan modifications beginning January 1, 2011, did not identify any new troubled debt restructurings resulting from the adoption of the guidance outlined in ASU 2011-02. For the three- and nine-month periods ended September 30, 2011, the following table presents a breakdown of the types of concessions made by loan class.
|  | For the Three Months ended September 30, 2011 |  |  | For the Nine Months ended September 30, 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 |
Below market interest rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  |  | 1 |  |  | $ | 70,524 |  |  | $ | 70,524 |  |  |  | 1 |  |  | $ | 70,524 |  |  | $ | 70,524 |
Below market interest rate and extended payment terms |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-farm, non-residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 106,682 |  |  |  | 106,682 |
Single family residential mortgage |  |  | 1 |  |  |  | 86,689 |  |  |  | 86,689 |  |  |  | 4 |  |  |  | 542,198 |  |  |  | 542,198 |
Total |  |  | 1 |  |  |  | 86,689 |  |  |  | 86,689 |  |  |  | 6 |  |  |  | 648,880 |  |  |  | 648,880 |
Total loan concessions |  |  | 2 |  |  | $ | 157,213 |  |  | $ | 157,213 |  |  |  | 7 |  |  | $ | 719,404 |  |  | $ | 719,404 |
The following table presents the successes and failures of the types of modification within the previous 12 months as of September 30, 2011.
|  | Paid in Full |  |  | Paying as Restructured |
|  | Number of loans |  |  | Recorded Investment |  |  | Number of loans |  |  | Recorded Investment |
Below market interest rate |  |  | 1 |  |  | $ | — |  |  |  | 1 |  |  | $ | 70,523 |
Below market interest rate and extended payment terms |  |  | — |  |  |  | — |  |  |  | 7 |  |  |  | 1,685,722 |
Total |  |  | 1 |  |  | $ | — |  |  |  | 8 |  |  | $ | 1,756,245 |
|  | Converted to Non-accrual |  |  | Foreclosure/Default |
|  | Number of loans |  |  | Recorded Investment |  |  | Number of loans |  |  | Recorded Investment |
Below market interest rate |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Below market interest rate and extended payment terms |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |

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