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Allowance for Loan Losses and Credit Quality Indicators | 9 Months Ended
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Sep. 30, 2012
Loans and Allowance for Loan Losses and Credit Quality Indicators [Abstract] |
Allowance for Loan Losses and Credit Quality Indicators | Note 6. Allowance for Loan Losses and Credit Quality Indicators Allowance for Loan Losses The allowance for loan losses is maintained at a level management deems 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. Purchased credit impaired loan pools are evaluated separately from the non-purchased credit impaired portfolio for impairment. See Note 3, “Business Combinations,” for additional information. 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 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 loans and credit relationships and allocations to the remaining nonhomogeneous and homogeneous pools of loans that have been deemed impaired. Additionally, a loan that becomes adversely classified or graded is removed from a group of loans with similar risk characteristics that are not classified or graded to evaluate the removed loan collectively in a group of adversely classified or graded loans with similar risk characteristics. Management’s general reserve allocations are based on judgment of qualitative and quantitative factors about 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 nonaccruals. 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 the allowance for loan losses during the third quarter of 2012 by combining three previously reported commercial loan classes, “Construction—commercial”, “Land development”, and “Other land’, into one segment, “Construction, development, and other land”. Management determined that qualitative and quantitative factors for the respective loan classes were significantly similar and do not warrant separate segmentation. The following tables detail activity within the allowance for loan losses, by portfolio segment, for the three and nine months ended September 30, 2012 and 2011.
|  | Three Months Ended September 30, 2012 |  |  | Three Months Ended September 30, 2011 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |  |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 18,257 |  |  | $ | 7,272 |  |  | $ | 642 |  |  | $ | 26,171 |  |  | $ | 12,300 |  |  | $ | 12,641 |  |  | $ | 1,541 |  |  | $ | 26,482 |
Provision for loan losses |  |  | 436 |  |  |  | 1,289 |  |  |  | 191 |  |  |  | 1,916 |  |  |  | 7,393 |  |  |  | (4,811 | ) |  |  | (662 | ) |  |  | 1,920 |
Loans charged off |  |  | (1,184 | ) |  |  | (1,126 | ) |  |  | (303 | ) |  |  | (2,613 | ) |  |  | (2,157 | ) |  |  | (712 | ) |  |  | (193 | ) |  |  | (3,062 | )
Recoveries credited to allowance |  |  | 198 |  |  |  | 63 |  |  |  | 100 |  |  |  | 361 |  |  |  | 968 |  |  |  | 15 |  |  |  | 84 |  |  |  | 1,067 |
Net charge-offs |  |  | (986 | ) |  |  | (1,063 | ) |  |  | (203 | ) |  |  | (2,252 | ) |  |  | (1,189 | ) |  |  | (697 | ) |  |  | (109 | ) |  |  | (1,995 | )
Ending balance |  | $ | 17,707 |  |  | $ | 7,498 |  |  | $ | 630 |  |  | $ | 25,835 |  |  | $ | 18,504 |  |  | $ | 7,133 |  |  | $ | 770 |  |  | $ | 26,407 |
|  | Nine Months Ended September 30, 2012 |  |  | Nine Months Ended September 30, 2011 |
(Amounts in thousands) |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |  |  | Commercial |  |  | Consumer Real Estate |  |  | Consumer and Other |  |  | Total |
Beginning balance |  | $ | 17,752 |  |  | $ | 7,711 |  |  | $ | 742 |  |  | $ | 26,205 |  |  | $ | 12,300 |  |  | $ | 12,641 |  |  | $ | 1,541 |  |  | $ | 26,482 |
Provision for loan losses |  |  | 1,735 |  |  |  | 2,475 |  |  |  | 248 |  |  |  | 4,458 |  |  |  | 10,258 |  |  |  | (3,190 | ) |  |  | (457 | ) |  |  | 6,611 |
Loans charged off |  |  | (2,353 | ) |  |  | (2,802 | ) |  |  | (632 | ) |  |  | (5,787 | ) |  |  | (5,324 | ) |  |  | (2,541 | ) |  |  | (680 | ) |  |  | (8,545 | )
Recoveries credited to allowance |  |  | 573 |  |  |  | 114 |  |  |  | 272 |  |  |  | 959 |  |  |  | 1,270 |  |  |  | 223 |  |  |  | 366 |  |  |  | 1,859 |
Net charge-offs |  |  | (1,780 | ) |  |  | (2,688 | ) |  |  | (360 | ) |  |  | (4,828 | ) |  |  | (4,054 | ) |  |  | (2,318 | ) |  |  | (314 | ) |  |  | (6,686 | )
Ending balance |  | $ | 17,707 |  |  | $ | 7,498 |  |  | $ | 630 |  |  | $ | 25,835 |  |  | $ | 18,504 |  |  | $ | 7,133 |  |  | $ | 770 |  |  | $ | 26,407 |
Credit Quality Indicators 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 tables present the Company’s recorded investment in non-purchased loans considered to be impaired and related information on those impaired loans for the periods indicated:
|  | September 30, 2012 |  |  | December 31, 2011 |
(Amounts in thousands) |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |
Impaired loans with no related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 1,556 |  |  | $ | 2,306 |  |  | $ | — |  |  | $ | 661 |  |  | $ | 661 |  |  | $ | — |
Commercial and industrial |  |  | 836 |  |  |  | 836 |  |  |  | — |  |  |  | 114 |  |  |  | 127 |  |  |  | — |
Multi-family residential |  |  | 365 |  |  |  | 365 |  |  |  | — |  |  |  | 278 |  |  |  | 278 |  |  |  | — |
Single family non-owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,206 |  |  |  | 1,244 |  |  |  | — |
Non-farm, non-residential |  |  | 2,351 |  |  |  | 2,405 |  |  |  | — |  |  |  | 1,616 |  |  |  | 1,647 |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 258 |  |  |  | 258 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 276 |  |  |  | 277 |  |  |  | — |  |  |  | 368 |  |  |  | 378 |  |  |  | — |
Single family owner occupied |  |  | 1,706 |  |  |  | 1,875 |  |  |  | — |  |  |  | 2,428 |  |  |  | 2,508 |  |  |  | — |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 6 |  |  |  | — |
Total impaired loans with no allowance |  |  | 7,090 |  |  |  | 8,064 |  |  |  | — |  |  |  | 6,935 |  |  |  | 7,107 |  |  |  | — |
Impaired loans with a related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 112 |  |  |  | 112 |  |  |  | 4 |
Commercial and industrial |  |  | 3,293 |  |  |  | 8,273 |  |  |  | 3,293 |  |  |  | 4,031 |  |  |  | 4,069 |  |  |  | 2,048 |
Multi-family residential |  |  | 386 |  |  |  | 398 |  |  |  | 26 |  |  |  | — |  |  |  | — |  |  |  | — |
Single family non-owner occupied |  |  | 1,237 |  |  |  | 1,290 |  |  |  | 661 |  |  |  | 2,232 |  |  |  | 2,232 |  |  |  | 124 |
Non-farm, non-residential |  |  | 6,287 |  |  |  | 6,743 |  |  |  | 1,256 |  |  |  | 5,317 |  |  |  | 5,480 |  |  |  | 1,819 |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 744 |  |  |  | 744 |  |  |  | 159 |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Single family owner occupied |  |  | 4,124 |  |  |  | 4,228 |  |  |  | 931 |  |  |  | 5,529 |  |  |  | 5,612 |  |  |  | 1,203 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total impaired loans with an allowance |  |  | 16,071 |  |  |  | 21,676 |  |  |  | 6,326 |  |  |  | 17,221 |  |  |  | 17,505 |  |  |  | 5,198 |
Total impaired loans |  | $ | 23,161 |  |  | $ | 29,740 |  |  | $ | 6,326 |  |  | $ | 24,156 |  |  | $ | 24,612 |  |  | $ | 5,198 |
|  | For the Three Months Ended September 30, 2012 |  |  | For the Nine Months Ended September 30, 2012 |
(Amounts in thousands) |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Impaired loans with no related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 784 |  |  | $ | — |  |  | $ | 1,296 |  |  | $ | — |
Commercial and industrial |  |  | 449 |  |  |  | 3 |  |  |  | 559 |  |  |  | 13 |
Multi-family residential |  |  | 591 |  |  |  | — |  |  |  | 1,146 |  |  |  | 4 |
Single family non-owner occupied |  |  | 954 |  |  |  | 4 |  |  |  | 524 |  |  |  | 29 |
Non-farm, non-residential |  |  | 1,584 |  |  |  | 41 |  |  |  | 2,872 |  |  |  | 65 |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 372 |  |  |  | — |  |  |  | 508 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 321 |  |  |  | — |  |  |  | 592 |  |  |  | 20 |
Single family owner occupied |  |  | 4,456 |  |  |  | 38 |  |  |  | 5,727 |  |  |  | 113 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  | — |
Total impaired loans with no allowance |  |  | 9,511 |  |  |  | 86 |  |  |  | 13,251 |  |  |  | 244 |
Impaired loans with a related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  |  | 55 |  |  |  | — |  |  |  | 55 |  |  |  | 1 |
Commercial and industrial |  |  | 3,600 |  |  |  | — |  |  |  | 3,662 |  |  |  | 163 |
Multi-family residential |  |  | 193 |  |  |  | — |  |  |  | 1,309 |  |  |  | — |
Single family non-owner occupied |  |  | 2,066 |  |  |  | — |  |  |  | 619 |  |  |  | 57 |
Non-farm, non-residential |  |  | 6,454 |  |  |  | 90 |  |  |  | 5,802 |  |  |  | 291 |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 372 |  |  |  | — |  |  |  | 372 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 125 |  |  |  | — |  |  |  | 83 |  |  |  | — |
Single family owner occupied |  |  | 3,355 |  |  |  | 15 |  |  |  | 4,827 |  |  |  | 66 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total impaired loans with an allowance |  |  | 16,220 |  |  |  | 105 |  |  |  | 16,729 |  |  |  | 578 |
Total impaired loans |  | $ | 25,731 |  |  | $ | 191 |  |  | $ | 29,980 |  |  | $ | 822 |
|  | For the Three Months Ended September 30, 2011 |  |  | For the Nine Months Ended September 30, 2011 |
(Amounts in thousands) |  | Average Recorded Investment |  |  | Interest Income Recognized |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
Impaired loans with no related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 83 |  |  | $ | — |  |  | $ | 1,538 |  |  | $ | 1 |
Commercial and industrial |  |  | 221 |  |  |  | 4 |  |  |  | 2,791 |  |  |  | 4 |
Multi-family residential |  |  | 962 |  |  |  | 10 |  |  |  | 1,370 |  |  |  | 24 |
Single family non-owner occupied |  |  | 2,481 |  |  |  | 10 |  |  |  | 1,673 |  |  |  | 29 |
Non-farm, non-residential |  |  | 1,059 |  |  |  | 6 |  |  |  | 1,894 |  |  |  | 16 |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 333 |  |  |  | — |  |  |  | 112 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 398 |  |  |  | 4 |  |  |  | 470 |  |  |  | 12 |
Single family owner occupied |  |  | 1,617 |  |  |  | 21 |  |  |  | 1,374 |  |  |  | 26 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 80 |  |  |  | 3 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 66 |  |  |  | 1 |  |  |  | 25 |  |  |  | 1 |
Total impaired loans with no allowance |  |  | 7,220 |  |  |  | 56 |  |  |  | 11,327 |  |  |  | 116 |
Impaired loans with a related allowance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  |  | 381 |  |  |  | 4 |  |  |  | 293 |  |  |  | 7 |
Commercial and industrial |  |  | 4,066 |  |  |  | 8 |  |  |  | 1,802 |  |  |  | 16 |
Multi-family residential |  |  | 591 |  |  |  | — |  |  |  | 627 |  |  |  | — |
Single family non-owner occupied |  |  | 2,258 |  |  |  | 27 |  |  |  | 2,345 |  |  |  | 81 |
Non-farm, non-residential |  |  | 6,430 |  |  |  | 98 |  |  |  | 3,709 |  |  |  | 109 |
Agricultural |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | — |  |  |  | — |  |  |  | 111 |  |  |  | — |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 335 |  |  |  | — |  |  |  | 145 |  |  |  | — |
Single family owner occupied |  |  | 6,064 |  |  |  | 49 |  |  |  | 5,847 |  |  |  | 141 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total impaired loans with an allowance |  |  | 20,125 |  |  |  | 186 |  |  |  | 14,879 |  |  |  | 354 |
Total impaired loans |  | $ | 27,345 |  |  | $ | 242 |  |  | $ | 26,206 |  |  | $ | 470 |
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, 2012, and December 31, 2011.
|  | September 30, 2012 |
(Amounts in thousands) |  | Non-acquired 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, development, and other land |  | $ | 1,556 |  |  | $ | — |  |  | $ | 70,081 |  |  | $ | 1,230 |  |  | $ | 19,278 |  |  | $ | — |
Commercial and industrial |  |  | 4,121 |  |  |  | 3,285 |  |  |  | 96,367 |  |  |  | 1,339 |  |  |  | 3,910 |  |  |  | 8 |
Multi-family residential |  |  | 386 |  |  |  | 26 |  |  |  | 74,669 |  |  |  | 1,739 |  |  |  | 4,260 |  |  |  | — |
Single family non-owner occupied |  |  | 1,602 |  |  |  | 661 |  |  |  | 129,658 |  |  |  | 2,907 |  |  |  | 4,086 |  |  |  | — |
Non-farm, non-residential |  |  | 8,638 |  |  |  | 1,256 |  |  |  | 457,891 |  |  |  | 4,966 |  |  |  | 33,553 |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | 1,780 |  |  |  | 19 |  |  |  | 2 |  |  |  | — |
Farmland |  |  | 744 |  |  |  | 159 |  |  |  | 36,270 |  |  |  | 327 |  |  |  | 1,055 |  |  |  | — |
Total commercial loans |  |  | 17,047 |  |  |  | 5,387 |  |  |  | 866,716 |  |  |  | 12,527 |  |  |  | 66,144 |  |  |  | 8 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 276 |  |  |  | — |  |  |  | 132,626 |  |  |  | 1,325 |  |  |  | 66,333 |  |  |  | — |
Single family owner occupied |  |  | 5,830 |  |  |  | 931 |  |  |  | 491,877 |  |  |  | 4,781 |  |  |  | 13,737 |  |  |  | — |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 15,846 |  |  |  | 246 |  |  |  | 1,212 |  |  |  | — |
Total consumer real estate loans |  |  | 6,106 |  |  |  | 931 |  |  |  | 640,349 |  |  |  | 6,352 |  |  |  | 81,282 |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | 79,486 |  |  |  | 630 |  |  |  | 911 |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | 5,569 |  |  |  | — |  |  |  | — |  |  |  | — |
Total consumer and other loans |  |  | — |  |  |  | — |  |  |  | 85,055 |  |  |  | 630 |  |  |  | 911 |  |  |  | — |
Total loans |  | $ | 23,153 |  |  | $ | 6,318 |  |  | $ | 1,592,120 |  |  | $ | 19,509 |  |  | $ | 148,337 |  |  | $ | 8 |
|  | December 31, 2011 |
(Amounts in thousands) |  | Non-acquired 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, development, and other land |  | $ | 773 |  |  | $ | 4 |  |  | $ | 60,846 |  |  | $ | 1,888 |  |  | $ | 149 |  |  | $ | — |
Commercial and industrial |  |  | 3,738 |  |  |  | 1,847 |  |  |  | 87,563 |  |  |  | 1,668 |  |  |  | 638 |  |  |  | 201 |
Multi-family residential |  |  | 278 |  |  |  | — |  |  |  | 76,772 |  |  |  | 1,889 |  |  |  | — |  |  |  | — |
Single family non-owner occupied |  |  | 3,438 |  |  |  | 124 |  |  |  | 102,063 |  |  |  | 2,836 |  |  |  | 1,242 |  |  |  | — |
Non-farm, non-residential |  |  | 6,933 |  |  |  | 1,819 |  |  |  | 328,610 |  |  |  | 5,114 |  |  |  | 462 |  |  |  | — |
Agricultural |  |  | — |  |  |  | — |  |  |  | 1,374 |  |  |  | 19 |  |  |  | — |  |  |  | — |
Farmland |  |  | 258 |  |  |  | — |  |  |  | 36,903 |  |  |  | 343 |  |  |  | — |  |  |  | — |
Total commercial loans |  |  | 15,418 |  |  |  | 3,794 |  |  |  | 694,131 |  |  |  | 13,757 |  |  |  | 2,491 |  |  |  | 201 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 368 |  |  |  | — |  |  |  | 111,019 |  |  |  | 1,365 |  |  |  | — |  |  |  | — |
Single family owner occupied |  |  | 7,957 |  |  |  | 1,203 |  |  |  | 464,715 |  |  |  | 4,931 |  |  |  | 395 |  |  |  | — |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 19,577 |  |  |  | 212 |  |  |  | — |  |  |  | — |
Total consumer real estate loans |  |  | 8,325 |  |  |  | 1,203 |  |  |  | 595,311 |  |  |  | 6,508 |  |  |  | 395 |  |  |  | — |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 6 |  |  |  | — |  |  |  | 67,123 |  |  |  | 742 |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | 12,867 |  |  |  | — |  |  |  | — |  |  |  | — |
Total consumer and other loans |  |  | 6 |  |  |  | — |  |  |  | 79,990 |  |  |  | 742 |  |  |  | — |  |  |  | — |
Total loans |  | $ | 23,749 |  |  | $ | 4,997 |  |  | $ | 1,369,432 |  |  | $ | 21,007 |  |  | $ | 2,886 |  |  | $ | 201 |
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, nonperforming 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, liquidity 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 nonaccrual 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 realized in the future.
The following tables present the Company’s investment in loans held for investment by internal credit grade indicator at September 30, 2012, and December 31, 2011. There were no covered loans at December 31, 2011.
|  | September 30, 2012 |
(Amounts in thousands) |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 46,390 |  |  | $ | 4,441 |  |  | $ | 11,107 |  |  | $ | 93 |  |  | $ | — |  |  | $ | 62,031 |
Commercial and industrial |  |  | 86,312 |  |  |  | 2,087 |  |  |  | 3,911 |  |  |  | 5,112 |  |  |  | — |  |  |  | 97,422 |
Multi-family residential |  |  | 67,188 |  |  |  | 3,863 |  |  |  | 4,705 |  |  |  | — |  |  |  | — |  |  |  | 75,756 |
Single family non-owner occupied |  |  | 112,704 |  |  |  | 5,969 |  |  |  | 15,624 |  |  |  | 1,049 |  |  |  | — |  |  |  | 135,346 |
Non-farm, non-residential |  |  | 397,614 |  |  |  | 19,221 |  |  |  | 32,077 |  |  |  | 447 |  |  |  | — |  |  |  | 449,359 |
Agricultural |  |  | 1,430 |  |  |  | 7 |  |  |  | 37 |  |  |  | — |  |  |  | — |  |  |  | 1,474 |
Farmland |  |  | 32,803 |  |  |  | 1,980 |  |  |  | 1,952 |  |  |  | — |  |  |  | — |  |  |  | 36,735 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 106,133 |  |  |  | 1,798 |  |  |  | 3,947 |  |  |  | — |  |  |  | — |  |  |  | 111,878 |
Single family owner occupied |  |  | 437,158 |  |  |  | 9,360 |  |  |  | 28,466 |  |  |  | — |  |  |  | — |  |  |  | 474,984 |
Owner occupied construction |  |  | 15,076 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,076 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 74,661 |  |  |  | 794 |  |  |  | 539 |  |  |  | 9 |  |  |  | — |  |  |  | 76,003 |
Other |  |  | 5,538 |  |  |  | 13 |  |  |  | 18 |  |  |  | — |  |  |  | — |  |  |  | 5,569 |
Total non-covered loans |  | $ | 1,383,007 |  |  | $ | 49,533 |  |  | $ | 102,383 |  |  | $ | 6,710 |  |  | $ | — |  |  | $ | 1,541,633 |
|  | September 30, 2012 |
(Amounts in thousands) |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 12,470 |  |  | $ | 5,966 |  |  | $ | 10,354 |  |  | $ | 95 |  |  | $ | — |  |  | $ | 28,885 |
Commercial and industrial |  |  | 3,802 |  |  |  | 1,300 |  |  |  | (15 | ) |  |  | 1,889 |  |  |  | — |  |  |  | 6,976 |
Multi-family residential |  |  | 2,423 |  |  |  | — |  |  |  | 1,136 |  |  |  | — |  |  |  | — |  |  |  | 3,559 |
Single family non-owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Non-farm, non-residential |  |  | 27,100 |  |  |  | 7,899 |  |  |  | 15,646 |  |  |  | 78 |  |  |  | — |  |  |  | 50,723 |
Agricultural |  |  | 306 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 308 |
Farmland |  |  | (134 | ) |  |  | 1,225 |  |  |  | 243 |  |  |  | — |  |  |  | — |  |  |  | 1,334 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 85,232 |  |  |  | 1,281 |  |  |  | 820 |  |  |  | 25 |  |  |  | — |  |  |  | 87,358 |
Single family owner occupied |  |  | 24,218 |  |  |  | 4,392 |  |  |  | 7,485 |  |  |  | 364 |  |  |  | — |  |  |  | 36,459 |
Owner occupied construction |  |  | 709 |  |  |  | 284 |  |  |  | 989 |  |  |  | — |  |  |  | — |  |  |  | 1,982 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 3,454 |  |  |  | 629 |  |  |  | 236 |  |  |  | 74 |  |  |  | — |  |  |  | 4,393 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total covered loans |  | $ | 159,580 |  |  | $ | 22,976 |  |  | $ | 36,896 |  |  | $ | 2,525 |  |  | $ | — |  |  | $ | 221,977 |
|  | December 31, 2011 |
(Amounts in thousands) |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Total |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 54,162 |  |  | $ | 5,644 |  |  | $ | 1,962 |  |  | $ | — |  |  | $ | — |  |  | $ | 61,768 |
Commercial and industrial |  |  | 86,288 |  |  |  | 568 |  |  |  | 2,679 |  |  |  | 2,404 |  |  |  | — |  |  |  | 91,939 |
Multi-family residential |  |  | 74,486 |  |  |  | 965 |  |  |  | 1,599 |  |  |  | — |  |  |  | — |  |  |  | 77,050 |
Single family non-owner occupied |  |  | 93,444 |  |  |  | 1,346 |  |  |  | 11,953 |  |  |  | — |  |  |  | — |  |  |  | 106,743 |
Non-farm, non-residential |  |  | 303,071 |  |  |  | 9,635 |  |  |  | 22,855 |  |  |  | 444 |  |  |  | — |  |  |  | 336,005 |
Agricultural |  |  | 1,327 |  |  |  | 7 |  |  |  | 40 |  |  |  | — |  |  |  | — |  |  |  | 1,374 |
Farmland |  |  | 35,568 |  |  |  | 1,055 |  |  |  | 538 |  |  |  | — |  |  |  | — |  |  |  | 37,161 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 105,535 |  |  |  | 2,237 |  |  |  | 3,615 |  |  |  | — |  |  |  | — |  |  |  | 111,387 |
Single family owner occupied |  |  | 435,001 |  |  |  | 8,936 |  |  |  | 29,130 |  |  |  | — |  |  |  | — |  |  |  | 473,067 |
Owner occupied construction |  |  | 19,190 |  |  |  | 128 |  |  |  | 259 |  |  |  | — |  |  |  | — |  |  |  | 19,577 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 66,357 |  |  |  | 198 |  |  |  | 574 |  |  |  | — |  |  |  | — |  |  |  | 67,129 |
Other |  |  | 12,857 |  |  |  | 1 |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | 12,867 |
Total loans |  | $ | 1,287,286 |  |  | $ | 30,720 |  |  | $ | 75,213 |  |  | $ | 2,848 |  |  | $ | — |  |  | $ | 1,396,067 |
Nonaccrual loans, presented by loan class, consisted of the following at September 30, 2012, and December 31, 2011. Loans acquired through business combinations, for which a discount exists, are generally not considered to be nonaccrual as a result of the accretion of the discount which is based on the expected cash flows of the loans.
(Amounts in thousands) |  | September 30, 2012 |  |  | December 31, 2011 |
Commercial loans |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 480 |  |  | $ | 793 |
Commercial and industrial |  |  | 3,469 |  |  |  | 3,905 |
Multi-family residential |  |  | 469 |  |  |  | 341 |
Single family non-owner occupied |  |  | 655 |  |  |  | 1,639 |
Non-farm, non-residential |  |  | 9,397 |  |  |  | 8,063 |
Agricultural |  |  | 4 |  |  |  | — |
Farmland |  |  | 744 |  |  |  | 271 |
Consumer real estate loans |  |  |  |  |  |  |  |
Home equity lines |  |  | 817 |  |  |  | 516 |
Single family owner occupied |  |  | 10,371 |  |  |  | 8,255 |
Owner occupied construction |  |  | — |  |  |  | 1 |
Consumer and other loans |  |  |  |  |  |  |  |
Consumer loans |  |  | 86 |  |  |  | 52 |
Other |  |  | 14 |  |  |  | — |
Total |  |  | 26,506 |  |  |  | 23,836 |
Acquired impaired loans |  |  | 8 |  |  |  | 651 |
Total nonaccrual loans |  | $ | 26,514 |  |  | $ | 24,487 |
The following tables present the aging of past due loans, by loan class, at September 30, 2012, and December 31, 2011. Nonaccrual loans, excluding those 0 to 29 days past due, are included in the applicable delinquency category. There were no accruing loans contractually past due 90 days or more at September 30, 2012, or December 31, 2011. Acquired loans that are past due continue to accrue interest through the accretable yield under the accretion method of accounting and therefore are not considered to be nonaccrual.
|  | September 30, 2012 |
(Amounts in thousands) |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current Loans |  |  | Total Loans |
Non-covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 134 |  |  | $ | 6 |  |  | $ | 480 |  |  | $ | 620 |  |  | $ | 61,410 |  |  | $ | 62,030 |
Commercial and industrial |  |  | 464 |  |  |  | 346 |  |  |  | 3,477 |  |  |  | 4,287 |  |  |  | 93,135 |  |  |  | 97,422 |
Multi-family residential |  |  | 152 |  |  |  | — |  |  |  | 386 |  |  |  | 538 |  |  |  | 75,218 |  |  |  | 75,756 |
Single family non-owner occupied |  |  | 882 |  |  |  | 310 |  |  |  | 4,106 |  |  |  | 5,298 |  |  |  | 130,048 |  |  |  | 135,346 |
Non-farm, non-residential |  |  | 3,016 |  |  |  | 1,278 |  |  |  | 9,074 |  |  |  | 13,368 |  |  |  | 435,991 |  |  |  | 449,359 |
Agricultural |  |  | — |  |  |  | 19 |  |  |  | 3 |  |  |  | 22 |  |  |  | 1,452 |  |  |  | 1,474 |
Farmland |  |  | 173 |  |  |  | — |  |  |  | — |  |  |  | 173 |  |  |  | 36,562 |  |  |  | 36,735 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 613 |  |  |  | 239 |  |  |  | 587 |  |  |  | 1,439 |  |  |  | 110,438 |  |  |  | 111,877 |
Single family owner occupied |  |  | 4,502 |  |  |  | 1,334 |  |  |  | 5,366 |  |  |  | 11,202 |  |  |  | 463,783 |  |  |  | 474,985 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 139 |  |  |  | 139 |  |  |  | 14,937 |  |  |  | 15,076 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 694 |  |  |  | 55 |  |  |  | 99 |  |  |  | 848 |  |  |  | 75,156 |  |  |  | 76,004 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,569 |  |  |  | 5,569 |
Total non-covered loans |  | $ | 10,630 |  |  | $ | 3,587 |  |  | $ | 23,717 |  |  | $ | 37,934 |  |  | $ | 1,503,699 |  |  | $ | 1,541,633 |
|  | September 30, 2012 |
(Amounts in thousands) |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current Loans |  |  | Total Loans |
Covered loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 905 |  |  | $ | 386 |  |  | $ | 602 |  |  | $ | 1,893 |  |  | $ | 26,992 |  |  | $ | 28,885 |
Commercial and industrial |  |  | 80 |  |  |  | 30 |  |  |  | — |  |  |  | 110 |  |  |  | 6,866 |  |  |  | 6,976 |
Multi-family residential |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,559 |  |  |  | 3,559 |
Single family non-owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Non-farm, non-residential |  |  | 137 |  |  |  | 731 |  |  |  | 357 |  |  |  | 1,225 |  |  |  | 49,498 |  |  |  | 50,723 |
Agricultural |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | 10 |  |  |  | 298 |  |  |  | 308 |
Farmland |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,334 |  |  |  | 1,334 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 241 |  |  |  | 49 |  |  |  | 417 |  |  |  | 707 |  |  |  | 86,651 |  |  |  | 87,358 |
Single family owner occupied |  |  | 580 |  |  |  | 78 |  |  |  | 299 |  |  |  | 957 |  |  |  | 35,502 |  |  |  | 36,459 |
Owner occupied construction |  |  | — |  |  |  | — |  |  |  | 61 |  |  |  | 61 |  |  |  | 1,921 |  |  |  | 1,982 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,393 |  |  |  | 4,393 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total covered loans |  | $ | 1,953 |  |  | $ | 1,274 |  |  | $ | 1,736 |  |  | $ | 4,963 |  |  | $ | 217,014 |  |  | $ | 221,977 |
|  | December 31, 2011 |
(Amounts in thousands) |  | 30 - 59 Days Past Due |  |  | 60 - 89 Days Past Due |  |  | 90+ Days Past Due |  |  | Total Past Due |  |  | Current Loans |  |  | Total Loans |
Commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, development, and other land |  | $ | 253 |  |  | $ | — |  |  | $ | 987 |  |  | $ | 1,240 |  |  | $ | 60,528 |  |  | $ | 61,768 |
Commercial and industrial |  |  | 150 |  |  |  | 30 |  |  |  | 3,568 |  |  |  | 3,748 |  |  |  | 88,191 |  |  |  | 91,939 |
Multi-family residential |  |  | 667 |  |  |  | — |  |  |  | 342 |  |  |  | 1,009 |  |  |  | 76,041 |  |  |  | 77,050 |
Single family non-owner occupied |  |  | 1,222 |  |  |  | 414 |  |  |  | 1,020 |  |  |  | 2,656 |  |  |  | 104,087 |  |  |  | 106,743 |
Non-farm, non-residential |  |  | 837 |  |  |  | 860 |  |  |  | 2,180 |  |  |  | 3,877 |  |  |  | 332,128 |  |  |  | 336,005 |
Agricultural |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 7 |  |  |  | 1,367 |  |  |  | 1,374 |
Farmland |  |  | 152 |  |  |  | — |  |  |  | 258 |  |  |  | 410 |  |  |  | 36,751 |  |  |  | 37,161 |
Consumer real estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines |  |  | 642 |  |  |  | 222 |  |  |  | 235 |  |  |  | 1,099 |  |  |  | 110,288 |  |  |  | 111,387 |
Single family owner occupied |  |  | 5,230 |  |  |  | 1,993 |  |  |  | 5,333 |  |  |  | 12,556 |  |  |  | 460,511 |  |  |  | 473,067 |
Owner occupied construction |  |  | — |  |  |  | 29 |  |  |  | — |  |  |  | 29 |  |  |  | 19,548 |  |  |  | 19,577 |
Consumer and other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer loans |  |  | 198 |  |  |  | 71 |  |  |  | 12 |  |  |  | 281 |  |  |  | 66,848 |  |  |  | 67,129 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12,867 |  |  |  | 12,867 |
Total loans |  | $ | 9,351 |  |  | $ | 3,626 |  |  | $ | 13,935 |  |  | $ | 26,912 |  |  | $ | 1,369,155 |  |  | $ | 1,396,067 |
The Company’s troubled debt restructurings (“TDRs”) totaled $6.86 million at September 30, 2012, and $9.45 million at December 31, 2011, which are reported net of those on nonaccrual status of $2.18 million and $3.27 million, respectively. Accruing nonperforming TDRs amounted to $121 thousand, or 1.76% of total accruing TDRs at September 30, 2012, and $600 thousand, or 6.35% of total TDRs at December 31, 2011. The allowance for loan losses included reserves related to TDRs of $675 thousand and $1.14 million at September 30, 2012, and December 31, 2011, respectively. Interest income recognized on TDRs for the three and nine months ended September 30, 2012, totaled $62 thousand and $237 thousand, respectively. Interest income recognized on TDRs for the three and nine months ended September 30, 2011, totaled $79 thousand and $428 thousand, respectively. There were no covered loans recorded as TDRs at September 30, 2012. When restructuring loans for borrowers experiencing financial difficulty, the Company generally makes concessions in interest rates, loan terms and/or amortization terms. All restructured loans to borrowers experiencing financial difficulty 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. Certain TDRs are classified as nonperforming at time of restructuring and are returned to performing status after six months of satisfactory payment performance; however, these loans remain identified as impaired until full payment or other satisfaction of the obligation occurs. The following tables present information for loans modified as TDRs, excluding those on nonaccrual status, that were restructured during the three and nine months ended September 30, 2012 and 2011 by type of concession made and loan class. The post-modification recorded investment represents the loan balance immediately following modification.
|  | Three Months Ended September 30, |
|  | 2012 |  |  | 2011 |
(Amounts in thousands) |  | Total Contracts |  |  | Pre-Modification Recorded Investment |  |  | Post-Modification Recorded Investment |  |  | Total Contracts |  |  | Pre-Modification Recorded Investment |  |  | Post-Modification Recorded Investment |
Below market interest rate Single family owner occupied |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 1 |  |  | $ | 72 |  |  | $ | 72 |
Total |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 1 |  |  | $ | 72 |  |  | $ | 72 |
|  | Nine Months Ended September 30, |
|  | 2012 |  |  | 2011 |
(Amounts in thousands) |  | Total Contracts |  |  | Pre-Modification Recorded Investment |  |  | Post-Modification Recorded Investment |  |  | Total Contracts |  |  | Pre-Modification Recorded Investment |  |  | Post-Modification Recorded Investment |
Below market interest rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-farm, non-residential |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 2 |  |  | $ | 480 |  |  | $ | 480 |
Single family owner occupied |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 798 |  |  |  | 775 |
Total |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |  |  |  | 1,278 |  |  |  | 1,255 |
Extended payment term |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family owner occupied |  |  | 1 |  |  |  | 351 |  |  |  | 318 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 1 |  |  |  | 351 |  |  |  | 318 |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 1 |  |  | $ | 351 |  |  | $ | 318 |  |  |  | 6 |  |  | $ | 1,278 |  |  | $ | 1,255 |
There were no payment defaults on loans modified as TDRs during the three and nine months ended September 30, 2012 or 2011 that were restructured within the previous 12 months.

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