Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2013

Allowance for Loan and Lease Losses, Provision for Loss, Net [Abstract]

Allowance for loan losses by class of financing receivable and allowance

A breakdown of the allowance for loan losses as of June 30, 2013, December 31, 2012, and June 30, 2012, by class of financing receivable and allowance element, is presented in the following tables:



As of June 30, 2013	Specific Reserves on Loans Evaluated Individually for Impairment		General Reserves on Loans Based on Historical Loss Experience		Reserves for Qualitative Factors		Unallocated Reserves		Total Reserves
Commercial
Real estate	$	1,510,000	$	2,148,000	$	2,153,000	$	—	$	5,811,000
Construction	266,000		162,000		163,000		—		591,000
Other	1,005,000		783,000		784,000		—		2,572,000
Municipal	—		—		18,000		—		18,000
Residential
Term	218,000		380,000		428,000		—		1,026,000
Construction	—		4,000		5,000		—		9,000
Home equity line of credit	7,000		402,000		328,000		—		737,000
Consumer	—		408,000		223,000		—		631,000
Unallocated	—		—		—		1,275,000		1,275,000
	$	3,006,000	$	4,287,000	$	4,102,000	$	1,275,000	$	12,670,000



As of December 31, 2012	Specific Reserves on Loans Evaluated Individually for Impairment		General Reserves on Loans Based on Historical Loss Experience		Reserves for Qualitative Factors		Unallocated Reserves		Total Reserves
Commercial
Real estate	$	1,523,000	$	2,369,000	$	1,973,000	$	—	$	5,865,000
Construction	969,000		213,000		177,000		—		1,359,000
Other	652,000		763,000		635,000		—		2,050,000
Municipal	—		—		18,000		—		18,000
Residential
Term	395,000		278,000		436,000		—		1,109,000
Construction	—		4,000		7,000		—		11,000
Home equity line of credit	—		315,000		339,000		—		654,000
Consumer	—		362,000		230,000		—		592,000
Unallocated	—		—		—		842,000		842,000
	$	3,539,000	$	4,304,000	$	3,815,000	$	842,000	$	12,500,000



As of June 30, 2012	Specific Reserves on Loans Evaluated Individually for Impairment		General Reserves on Loans Based on Historical Loss Experience		Reserves for Qualitative Factors		Unallocated Reserves		Total Reserves
Commercial
Real estate	$	1,133,000	$	2,685,000	$	1,746,000	$	—	$	5,564,000
Construction	787,000		355,000		231,000		—		1,373,000
Other	932,000		935,000		609,000		—		2,476,000
Municipal	—		—		19,000		—		19,000
Residential
Term	966,000		165,000		456,000		—		1,587,000
Construction	48,000		2,000		8,000		—		58,000
Home equity line of credit	300,000		155,000		354,000		—		809,000
Consumer	11,000		351,000		241,000		—		603,000
Unallocated	—		—		—		1,895,000		1,895,000
	$	4,177,000	$	4,648,000	$	3,664,000	$	1,895,000	$	14,384,000

Summary of Risk Ratings for Loans

he following table summarizes the risk ratings for the Company's commercial real estate, commercial construction, commercial other, and municipal loans as of June 30, 2013:



	Commercial Real Estate		Commercial Construction		Commercial Other		Municipal Loans		All Risk- Rated Loans
1 Strong	$	18,000	$	—	$	255,000	$	1,590,000	$	1,863,000
2 Above Average	12,914,000		569,000		6,135,000		7,775,000		27,393,000
3 Satisfactory	39,155,000		2,716,000		17,439,000		4,183,000		63,493,000
4 Average	102,063,000		10,963,000		33,117,000		1,337,000		147,480,000
5 Watch	39,466,000		42,000		15,716,000		—		55,224,000
6 OAEM	24,265,000		3,001,000		4,196,000		—		31,462,000
7 Substandard	33,503,000		1,350,000		14,535,000		—		49,388,000
8 Doubtful	415,000		—		—		—		415,000
Total	$	251,799,000	$	18,641,000	$	91,393,000	$	14,885,000	$	376,718,000

The following table summarizes the risk ratings for the Company's commercial real estate, commercial construction, commercial other, and municipal loans as of December 31, 2012:



	Commercial Real Estate		Commercial Construction		Commercial Other		Municipal Loans		All Risk- Rated Loans
1 Strong	$	19,000	$	—	$	271,000	$	1,731,000	$	2,021,000
2 Above Average	13,871,000		1,274,000		4,084,000		7,061,000		26,290,000
3 Satisfactory	34,454,000		2,312,000		14,578,000		3,487,000		54,831,000
4 Average	99,712,000		12,322,000		28,618,000		2,425,000		143,077,000
5 Watch	43,369,000		1,721,000		19,524,000		—		64,614,000
6 OAEM	26,302,000		79,000		5,300,000		—		31,681,000
7 Substandard	33,153,000		4,709,000		8,806,000		—		46,668,000
8 Doubtful	455,000		—		2,000		—		457,000
Total	$	251,335,000	$	22,417,000	$	81,183,000	$	14,704,000	$	369,639,000

The following table summarizes the risk ratings for the Company's commercial real estate, commercial construction, commercial other, and municipal loans as of June 30, 2012:



	Commercial Real Estate		Commercial Construction		Commercial Other		Municipal Loans		All Risk- Rated Loans
1 Strong	$	21,000	$	—	$	284,000	$	1,822,000	$	2,127,000
2 Above Average	19,319,000		170,000		4,601,000		7,933,000		32,023,000
3 Satisfactory	36,207,000		1,751,000		13,541,000		3,770,000		55,269,000
4 Average	99,855,000		20,932,000		32,700,000		2,564,000		156,051,000
5 Watch	41,089,000		1,969,000		21,147,000		—		64,205,000
6 OAEM	21,135,000		1,649,000		4,357,000		—		27,141,000
7 Substandard	34,931,000		6,601,000		11,111,000		—		52,643,000
8 Doubtful	636,000		—		92,000		—		728,000
Total	$	253,193,000	$	33,072,000	$	87,833,000	$	16,089,000	$	390,187,000

Allowance for Loan Losses Transactions

he following table presents allowance for loan losses activity by class for the six-months and quarter ended June 30, 2013, and allowance for loan loss balances by class and related loan balances by class as of June 30, 2013:



	Commercial							Municipal		Residential					Home Equity Line of Credit			Consumer		Unallocated		Total
	Real Estate			Construction		Other				Term		Construction
For the six months ended June 30, 2013
Beginning balance	$	5,865,000		$	1,359,000	$	2,050,000	$	18,000	$	1,109,000	$	11,000		$	654,000		$	592,000	$	842,000	$	12,500,000
Charge offs	61,000			930,000		521,000		—		607,000		—			431,000			252,000		—		2,802,000
Recoveries	—			—		144,000		—		36,000		—			2,000			90,000		—		272,000
Provision	7,000			162,000		899,000		—		488,000		(2,000		)	512,000			201,000		433,000		2,700,000
Ending balance	$	5,811,000		$	591,000	$	2,572,000	$	18,000	$	1,026,000	$	9,000		$	737,000		$	631,000	$	1,275,000	$	12,670,000
For the three months ended June 30, 2013
Beginning balance	$	5,879,000		$	1,064,000	$	2,115,000	$	18,000	$	1,113,000	$	9,000		$	859,000		$	574,000	$	1,089,000	$	12,720,000
Charge offs	7,000			527,000		233,000		—		407,000		—			69,000			125,000		—		1,368,000
Recoveries	—			—		41,000		—		34,000		—			1,000			42,000		—		118,000
Provision	(61,000		)	54,000		649,000		—		286,000		—			(54,000		)	140,000		186,000		1,200,000
Ending balance	$	5,811,000		$	591,000	$	2,572,000	$	18,000	$	1,026,000	$	9,000		$	737,000		$	631,000	$	1,275,000	$	12,670,000
Allowance for loan losses as of June 30, 2013
Ending balance specifically evaluated for impairment	$	1,510,000		$	266,000	$	1,005,000	$	—	$	218,000	$	—		$	7,000		$	—	$	—	$	3,006,000
Ending balance collectively evaluated for impairment	$	4,301,000		$	325,000	$	1,567,000	$	18,000	$	808,000	$	9,000		$	730,000		$	631,000	$	1,275,000	$	9,664,000
Related loan balances as of June 30, 2013
Ending balance	$	251,799,000		$	18,641,000	$	91,393,000	$	14,885,000	$	374,522,000	$	4,759,000		$	95,013,000		$	15,059,000	$	—	$	866,071,000
Ending balance specifically evaluated for impairment	$	17,332,000		$	1,819,000	$	5,790,000	$	—	$	19,695,000	$	—		$	1,695,000		$	—	$	—	$	46,331,000
Ending balance collectively evaluated for impairment	$	234,467,000		$	16,822,000	$	85,603,000	$	14,885,000	$	354,827,000	$	4,759,000		$	93,318,000		$	15,059,000	$	—	$	819,740,000

The following table presents allowance for loan losses activity by class for the year-ended December 31, 2012 and allowance for loan loss balances by class and related loan balances by class as of December 31, 2012:



	Commercial						Municipal			Residential				Home Equity Line of Credit		Consumer		Unallocated			Total
	Real Estate		Construction		Other					Term		Construction
For the year ended December 31, 2012
Beginning balance	$	5,659,000	$	658,000	$	2,063,000	$	19,000		$	1,159,000	$	255,000	$	595,000	$	584,000	$	2,008,000		$	13,000,000
Charge offs	1,394,000		928,000		3,215,000		—			1,911,000		389,000		688,000		555,000		—			9,080,000
Recoveries	13,000		246,000		113,000		—			110,000		54,000		1,000		208,000		—			745,000
Provision	1,587,000		1,383,000		3,089,000		(1,000		)	1,751,000		91,000		746,000		355,000		(1,166,000		)	7,835,000
Ending balance	$	5,865,000	$	1,359,000	$	2,050,000	$	18,000		$	1,109,000	$	11,000	$	654,000	$	592,000	$	842,000		$	12,500,000
Allowance for loan losses as of December 31, 2012
Ending balance specifically evaluated for impairment	$	1,523,000	$	969,000	$	652,000	$	—		$	395,000	$	—	$	—	$	—	$	—		$	3,539,000
Ending balance collectively evaluated for impairment	$	4,342,000	$	390,000	$	1,398,000	$	18,000		$	714,000	$	11,000	$	654,000	$	592,000	$	842,000		$	8,961,000
Related loan balances as of December 31, 2012
Ending balance	$	251,335,000	$	22,417,000	$	81,183,000	$	14,704,000		$	379,447,000	$	6,459,000	$	99,082,000	$	14,657,000	$	—		$	869,284,000
Ending balance specifically evaluated for impairment	$	15,774,000	$	3,354,000	$	5,861,000	$	—		$	19,444,000	$	—	$	1,311,000	$	—	$	—		$	45,744,000
Ending balance collectively evaluated for impairment	$	235,561,000	$	19,063,000	$	75,322,000	$	14,704,000		$	360,003,000	$	6,459,000	$	97,771,000	$	14,657,000	$	—		$	823,540,000

The following table presents allowance for loan losses activity by class for the six-months and quarter ended June 30, 2012, and allowance for loan loss balances by class and related loan balances by class as of June 30, 2012:



	Commercial						Municipal		Residential					Home Equity Line of Credit		Consumer		Unallocated			Total
	Real Estate		Construction		Other				Term		Construction
For the six months ended June 30, 2012
Beginning balance	$	5,659,000	$	658,000	$	2,063,000	$	19,000	$	1,159,000	$	255,000		$	595,000	$	584,000	$	2,008,000		$	13,000,000
Charge offs	915,000		—		2,162,000		—		375,000		118,000			49,000		276,000		—			3,895,000
Recoveries	1,000		246,000		11,000		—		2,000		—			—		119,000		—			379,000
Provision	819,000		469,000		2,564,000		—		801,000		(79,000		)	263,000		176,000		(113,000		)	4,900,000
Ending balance	$	5,564,000	$	1,373,000	$	2,476,000	$	19,000	$	1,587,000	$	58,000		$	809,000	$	603,000	$	1,895,000		$	14,384,000
For the three months ended June 30, 2012
Beginning balance	$	5,862,000	$	704,000	$	2,125,000	$	19,000	$	1,236,000	$	59,000		$	682,000	$	568,000	$	1,699,000		$	12,954,000
Charge offs	915,000		—		160,000		—		136,000		118,000			—		96,000		—			1,425,000
Recoveries	1,000		—		9,000		—		1,000		—			—		44,000		—			55,000
Provision	616,000		669,000		502,000		—		486,000		117,000			127,000		87,000		196,000			2,800,000
Ending balance	$	5,564,000	$	1,373,000	$	2,476,000	$	19,000	$	1,587,000	$	58,000		$	809,000	$	603,000	$	1,895,000		$	14,384,000
Allowance for loan losses as of June 30, 2012
Ending balance specifically evaluated for impairment	$	1,133,000	$	787,000	$	932,000	$	—	$	966,000	$	48,000		$	300,000	$	11,000	$	—		$	4,177,000
Ending balance collectively evaluated for impairment	$	4,431,000	$	586,000	$	1,544,000	$	19,000	$	621,000	$	10,000		$	509,000	$	592,000	$	1,895,000		$	10,207,000
Related loan balances as of June 30, 2012
Ending balance	$	253,193,000	$	33,072,000	$	87,833,000	$	16,089,000	$	368,876,000	$	6,449,000		$	100,689,000	$	15,613,000	$	—		$	881,814,000
Ending balance specifically evaluated for impairment	$	13,795,000	$	3,619,000	$	4,100,000	$	—	$	19,052,000	$	1,336,000		$	1,456,000	$	16,000	$	—		$	43,374,000
Ending balance collectively evaluated for impairment	$	239,398,000	$	29,453,000	$	83,733,000	$	16,089,000	$	349,824,000	$	5,113,000		$	99,233,000	$	15,597,000	$	—		$	838,440,000

Troubled debt restructurings by class and specific reserve

he following table shows TDRs by class and the specific reserve as of June 30, 2013:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	20	$	13,593,000	$	868,000
Construction	3	1,789,000		267,000
Other	23	3,491,000		607,000
Municipal	—	—		—
Residential
Term	54	11,149,000		167,000
Construction	—	—		—
Home equity line of credit	5	852,000		7,000
Consumer	—	—		—
	105	$	30,874,000	$	1,916,000

The following table shows TDRs by class and the specific reserve as of December 31, 2012:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	18	$	11,961,000	$	823,000
Construction	3	3,319,000		969,000
Other	23	3,074,000		574,000
Municipal	—	—		—
Residential
Term	53	10,945,000		224,000
Construction	—	—		—
Home equity line of credit	4	656,000		—
Consumer	—	—		—
	101	$	29,955,000	$	2,590,000

The following table shows TDRs by class and the specific reserve as of June 30, 2012:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	17	$	9,216,000	$	496,000
Construction	2	3,099,000		696,000
Other	15	1,984,000		590,000
Municipal	—	—		—
Residential
Term	48	10,681,000		327,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	82	$	24,980,000	$	2,109,000

Loans placed on troubled debt restructurings by class and specific reserve

he following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of June 30, 2013:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	2	$	319,000	$	5,000
Construction	1	423,000		—
Other	2	370,000		9,000
Municipal	—	—		—
Residential
Term	7	1,085,000		6,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	12	$	2,197,000	$	20,000

As of June 30, 2012, 13 of the loans classified as TDRs with a total balance of $2,487,000 were more than 30 days past due. Of these loans, six loans with an outstanding balance of $864,000 had been placed on TDR status in the previous 12 months. The following table shows these TDRs by class and the associated specific reserves included in the allowance for loan losses as of June 30, 2012:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	1	$	269,000	$	111,000
Construction	—	—		—
Other	3	180,000		—
Municipal	—	—		—
Residential
Term	9	2,038,000		92,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	13	$	2,487,000	$	203,000

For the six months ended June 30, 2013, ten loans were placed on TDR status with an outstanding balance of $3,890,000. This compares to 29 loans placed on TDR status with an outstanding balance of $8,107,000 for the six months ended June 30, 2012. These were considered TDRs because concessions had been granted to borrowers experiencing financial difficulties. Concessions include reductions in interest rates, principal and/or interest forbearance, payment extensions, or combinations thereof.

The following tables show loans placed on TDR status in the six months ended June 30, 2013 and 2012, by class of loan and the associated specific reserve included in the allowance for loan losses as of June 30, 2013 and 2012:



For the six months ended June 30, 2013	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	2	$	1,897,000	$	1,897,000	$	—
Construction	—	—		—		—
Other	5	1,164,000		1,150,000		$	—
Municipal	—	—		—		—
Residential
Term	2	625,000		475,000		—
Construction	—	—		—		—
Home equity line of credit	1	204,000		202,000		—
Consumer	—	—		—		—
	10	$	3,890,000	$	3,724,000	—



For the six months ended June 30, 2012	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	12	$	4,032,000	$	3,845,000	$	152,000
Construction	1	1,951,000		1,951,000		696,000
Other	9	713,000		712,000		544,000
Municipal	—	—		—		—
Residential
Term	7	1,411,000		1,411,000		76,000
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	29	$	8,107,000	$	7,919,000	$	1,468,000

The following tables show loans placed on TDR status in the three months ended June 30, 2013 and 2012, by class of loan and the associated specific reserve included in the allowance for loan losses as of June 30, 2013 and 2012:



For the quarter ended June 30, 2013	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	2	623,000		620,000		—
Municipal	—	—		—		—
Residential
Term	1	313,000		163,000		$	—
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	3	$	936,000	$	783,000	$	—



For the quarter ended June 30, 2012	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	5	$	1,598,000	$	1,449,000	$	152,000
Construction	1	1,951,000		1,951,000		696,000
Other	6	701,000		700,000		545,000
Municipal	—	—		—		—
Residential
Term	3	855,000		855,000		61,000
Construction	—	—		—		—
Home equity line of credit	—	—		—		—
Consumer	—	—		—		—
	15	$	5,105,000	$	4,955,000	$	1,454,000