Allowance for Credit Losses (Tables)

12 Months Ended

Dec. 31, 2012

Changes in the allowance for credit losses were as follows:



	Years Ended December 31,
(In thousands)	2012			2011			2010
Balance, beginning of year	$	11,396		$	11,014		$	10,200
Provision charged to operations	700			1,050			3,800
Losses charged to allowance	(2,850		)	(1,532		)	(4,122		)
Recoveries	887			864			1,136
Balance, end of year	$	10,133		$	11,396		$	11,014

The following table shows the summary of activities for the allowance for credit losses as of and for the years ended December 31, 2012 and 2011 by portfolio segment (in thousands):



	Commercial			Real Estate			Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, January 1, 2012	$	2,266		$	7,155		$	1,836		$	139		$	11,396
Provision charged to operations	18			643			139			(100		)	700
Losses charged to allowance	(123		)	(1,966		)	(761		)	—			(2,850		)
Recoveries	515			45			327			—			887
Ending balance, December 31, 2012	$	2,676		$	5,877		$	1,541		$	39		$	10,133

Allowance for credit losses:
Beginning balance, January 1, 2011	$	2,437		$	5,836		$	2,503		$	238		$	11,014
Provision charged to operations	(177		)	1,403			(77		)	(99		)	1,050
Losses charged to allowance	(280		)	(312		)	(940		)	—			(1,532		)
Recoveries	286			228			350			—			864
Ending balance, December 31, 2011	$	2,266		$	7,155		$	1,836		$	139		$	11,396

The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2012 and December 31, 2011 (in thousands):



	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, December 31, 2012	$	2,676	$	5,877	$	1,541	$	39	$	10,133
Ending balance: individually evaluated for impairment	$	40	$	465	$	5	$	—	$	510
Ending balance: collectively evaluated for impairment	$	2,636	$	5,412	$	1,536	$	39	$	9,623

Ending balance, December 31, 2011	$	2,266	$	7,155	$	1,836	$	139	$	11,396
Ending balance: individually evaluated for impairment	$	231	$	3,764	$	373	$	—	$	4,368
Ending balance: collectively evaluated for impairment	$	2,035	$	3,391	$	1,463	$	139	$	7,028

Loans by impairment methdology

The following table shows the ending balances of loans as of December 31, 2012 and December 31, 2011 by portfolio segment and by impairment methodology (in thousands):



	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, December 31, 2012	$	104,555	$	237,938	$	53,278	$	395,771
Ending balance: individually evaluated for impairment	$	2,405	$	12,868	$	1,832	$	17,105
Ending balance: collectively evaluated for impairment	$	102,150	$	225,070	$	51,446	$	378,666

Loans:
Ending balance, December 31, 2011	$	108,047	$	259,241	$	60,871	$	428,159
Ending balance: individually evaluated for impairment	$	3,857	$	17,359	$	2,428	$	23,644
Ending balance: collectively evaluated for impairment	$	104,190	$	241,882	$	58,443	$	404,515

Loan portfolio by internal risk rating

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at December 31, 2012 (in thousands):



	Pass		Special Mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	71,125	$	824	$	6,007	$	—	$	77,956
Agricultural land and production	26,599		—		—		—		26,599
Real Estate:
Owner occupied	107,281		1,831		5,332		—		114,444
Real estate construction and other land loans	18,517		3,377		11,305		—		33,199
Commercial real estate	44,880		3,952		4,965		—		53,797
Agricultural real estate	26,883		1,517		—		—		28,400
Other real estate	8,098		—		—		—		8,098
Consumer:
Equity loans and lines of credit	40,527		258		2,147		—		42,932
Consumer and installment	10,259		77		10		—		10,346
Total	$	354,169	$	11,836	$	29,766	$	—	$	395,771

The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2011 (in thousands):



	Pass		Special Mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	70,093	$	2,595	$	5,401	$	—	$	78,089
Agricultural land and production	29,958		—		—		—		29,958
Real Estate:
Owner occupied	105,308		3,125		4,750		—		113,183
Real estate construction and other land loans	15,717		4,056		13,274		—		33,047
Commercial real estate	47,323		5,035		10,165		—		62,523
Agricultural real estate	40,808		1,788		—		—		42,596
Other real estate	7,672		220		—		—		7,892
Consumer:
Equity loans and lines of credit	46,939		1,047		3,120		—		51,106
Consumer and installment	9,570		105		90		—		9,765
Total	$	373,388	$	17,971	$	36,800	$	—	$	428,159

Loan portfolio by time past due

The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2012 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	—	$	—	$	—	$	—	$	77,956	$	77,956	$	—	$	—
Agricultural land and production	—		—		—		—		26,599		26,599		—		—
Real estate:	—								—		—
Owner occupied	—		213		—		213		114,231		114,444		—		1,575
Real estate construction and other land loans	—		—		—		—		33,199		33,199		—		6,288
Commercial real estate	—		—		—		—		53,797		53,797		—		—
Agricultural real estate	—		—		—		—		28,400		28,400		—		—
Other real estate	—		—		—		—		8,098		8,098		—		—
Consumer:									—		—
Equity loans and lines of credit	—		—		—		—		42,932		42,932		—		1,832
Consumer and installment	27		—		—		27		10,319		10,346		—		—
Total	$	27	$	213	$	—	$	240	$	395,531	$	395,771	$	—	$	9,695

The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2011 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	57	$	—	$	236	$	293	$	77,796	$	78,089	$	—	$	267
Agricultural land and production	—		—		—		—		29,958		29,958		—		—
Real estate:	—										—
Owner occupied	—		—		122		122		113,061		113,183		—		1,372
Real estate construction and other land loans	1,532		—		—		1,532		31,515		33,047		—		6,823
Commercial real estate	—		—		3,544		3,544		58,979		62,523		—		3,544
Agricultural real estate	—		—		—		—		42,596		42,596		—		—
Other real estate	—		—		—		—		7,892		7,892		—		—
Consumer:											—
Equity loans and lines of credit	123		—		97		220		50,886		51,106		—		2,354
Consumer and installment	29		74		—		103		9,662		9,765		—		74
Total	$	1,741	$	74	$	3,999	$	5,814	$	422,345	$	428,159	$	—	$	14,434

Impaired loans

The following table shows information related to impaired loans by class at December 31, 2012 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	—	$	—
Agricultural land and production	—		—		—
Total commercial	—		—		—
Real estate:
Owner occupied	—		—		—
Real estate construction and other land loans	1,352		1,888		—
Commercial real estate	—		—		—
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	1,352		1,888		—
Consumer:
Equity loans and lines of credit	1,523		1,834		—
Consumer and installment	—		—		—
Total consumer	1,523		1,834		—
Total with no related allowance recorded	2,875		3,722		—

With an allowance recorded:
Commercial:
Commercial and industrial	2,405		2,405		40
Agricultural land and production	—		—		—
Total commercial	2,405		2,405		40
Real estate:
Owner occupied	1,575		1,733		165
Real estate construction and other land loans	9,941		10,875		300
Commercial real estate	—		—		—
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	11,516		12,608		465
Consumer:
Equity loans and lines of credit	309		323		5
Consumer and installment	—		—		—
Total consumer	309		323		5
Total with an allowance recorded	14,230		15,336		510
Total	$	17,105	$	19,058	$	510

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following table shows information related to impaired loans by class at December 31, 2011 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,140	$	2,160	$	—
Agricultural land and production	—		—		—
Total commercial	2,140		2,160		—
Real estate:
Owner occupied	231		243		—
Real estate construction and other land loans	1,532		1,906		—
Commercial real estate	1,801		1,801		—
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	3,564		3,950		—
Consumer:
Equity loans and lines of credit	—		—		—
Consumer and installment	—		—		—
Total consumer	—		—		—
Total with no related allowance recorded	5,704		6,110		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,717		1,718		231
Agricultural land and production	—		—		—
Total commercial	1,717		1,718		231
Real estate:
Owner occupied	1,141		1,216		268
Real estate construction and other land loans	10,911		11,490		2,130
Commercial real estate	1,743		1,743		1,366
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	13,795		14,449		3,764
Consumer:
Equity loans and lines of credit	2,354		2,581		350
Consumer and installment	74		74		23
Total consumer	2,428		2,655		373
Total with an allowance recorded	17,940		18,822		4,368
Total	$	23,644	$	24,932	$	4,368

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2012 and 2011 (in thousands):



	Year Ended December 31, 2012				Year Ended December 31, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	952	$	—	$	544	$	—
Agricultural land and production	—		—		—		—
Total commercial	952		—		544		—
Real estate:
Owner occupied	1,053		—		1,100		—
Real estate construction and other land loans	4,933		—		1,690		—
Commercial real estate	301		—		1,591		—
Agricultural real estate	—		—		—		—
Other real estate	—		—		—		—
Total real estate	6,287		—		4,381		—
Consumer:
Equity loans and lines of credit	1,561		—		357		—
Consumer and installment	6		—		—		—
Total consumer	1,567		—		357		—
Total with no related allowance recorded	9,486		—		5,282		—
	—
With an allowance recorded:	—
Commercial:	1,624,000		178,000		721,000		—
Commercial and industrial	1,581		226		505		181
Agricultural land and production	—		—		—		—
Total commercial	1,581		226		505		181
Real estate:			—				—
Owner occupied	633		—		1,193		—
Real estate construction and other land loans	6,490		375		6,544		230
Commercial real estate	145		—		849		—
Agricultural real estate	—		—		—		—
Other real estate	—		—		—		—
Total real estate	7,268		375		8,586		230
Consumer:
Equity loans and lines of credit	600		—		1,640		—
Consumer and installment	37		—		101		—
Total consumer	637		—		1,741		—
Total with an allowance recorded	9,486		601		10,832		411
Total	$	18,972	$	601	$	16,114	$	411

Troubled Debt Restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2012 (in thousands):



Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification		Post Modification Outstanding Recorded Investment (2)		Outstanding Recorded Investment
Real Estate:
Real Estate - Owner occupied	1	$	425	$	—	$	425	$	415
Consumer:
Equity loans and line of credit	1	75		—		75		72
Total	2	$	500	—		$	500	$	487


(1)	Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.


(2)	Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2011 (in thousands):



Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)		Principal Modification		Post Modification Outstanding Recorded Investment (2)		Outstanding Recorded Investment
Commercial:
Commercial and Industrial	2	$	3,089	$	—	$	3,089	$	2,791
Total commercial	2	3,089		—		3,089		2,791
Real Estate:
Owner occupied	1	1,074		—		1,074		1,019
Real estate construction and other land loans	3	11,094		—		11,094		10,911
Commercial real estate	1	1,110		—		1,110		1,110
Total real estate	5	13,278		—		13,278		13,040
Consumer
Equity loans and line of credit	1	2,271		—		2,271		1,648
Consumer and installment	—	—				—		—
Total consumer	1	2,271		—		2,271		1,648
Total	8	$	18,638	$	—	$	18,638	$	17,479


(1)	Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.


(2)	Balance outstanding after principal modification, if any borrower reduction to recorded investment.