Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 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 September 30, 2013, December 31, 2012, and September 30, 2012, by class of financing receivable and allowance element, is presented in the following tables:



As of September 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	$	1,535,000	$	2,231,000	$	2,037,000	$	—	$	5,803,000
Construction	269,000		178,000		162,000		—		609,000
Other	807,000		764,000		698,000		—		2,269,000
Municipal	—		—		16,000		—		16,000
Residential
Term	228,000		360,000		394,000		—		982,000
Construction	—		7,000		8,000		—		15,000
Home equity line of credit	6,000		352,000		308,000		—		666,000
Consumer	—		342,000		211,000		—		553,000
Unallocated	—		—		—		1,544,000		1,544,000
	$	2,845,000	$	4,234,000	$	3,834,000	$	1,544,000	$	12,457,000



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 September 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	$	1,416,000	$	2,479,000	$	1,800,000	$	—	$	5,695,000
Construction	696,000		210,000		153,000		—		1,059,000
Other	1,240,000		807,000		585,000		—		2,632,000
Municipal	—		—		18,000		—		18,000
Residential
Term	1,494,000		293,000		436,000		—		2,223,000
Construction	—		5,000		9,000		—		14,000
Home equity line of credit	215,000		238,000		337,000		—		790,000
Consumer	1,000		317,000		230,000		—		548,000
Unallocated	—		—		—		1,760,000		1,760,000
	$	5,062,000	$	4,349,000	$	3,568,000	$	1,760,000	$	14,739,000

Summary of Risk Ratings for Loans

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



	Commercial Real Estate		Commercial Construction		Commercial Other		Municipal Loans		All Risk- Rated Loans
1 Strong	$	18,000	$	—	$	268,000	$	—	$	286,000
2 Above Average	14,964,000		667,000		6,789,000		16,124,000		38,544,000
3 Satisfactory	36,696,000		2,219,000		16,368,000		2,094,000		57,377,000
4 Average	110,665,000		12,640,000		31,035,000		—		154,340,000
5 Watch	30,568,000		21,000		11,382,000		—		41,971,000
6 OAEM	25,314,000		3,001,000		3,194,000		—		31,509,000
7 Substandard	30,273,000		861,000		16,094,000		—		47,228,000
8 Doubtful	391,000		—		—		—		391,000
Total	$	248,889,000	$	19,409,000	$	85,130,000	$	18,218,000	$	371,646,000

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 September 30, 2012:



	Commercial Real Estate		Commercial Construction		Commercial Other		Municipal Loans		All Risk- Rated Loans
1 Strong	$	20,000	$	—	$	279,000	$	1,775,000	$	2,074,000
2 Above Average	18,918,000		699,000		5,426,000		8,651,000		33,694,000
3 Satisfactory	36,580,000		643,000		13,497,000		3,523,000		54,243,000
4 Average	105,150,000		10,670,000		30,688,000		2,499,000		149,007,000
5 Watch	39,494,000		1,812,000		19,100,000		—		60,406,000
6 OAEM	21,530,000		1,227,000		3,731,000		—		26,488,000
7 Substandard	34,359,000		6,854,000		10,916,000		—		52,129,000
8 Doubtful	480,000		—		66,000		—		546,000
Total	$	256,531,000	$	21,905,000	$	83,703,000	$	16,448,000	$	378,587,000

Allowance for Loan Losses Transactions

The following table presents allowance for loan losses activity by class for the nine months and quarter ended September 30, 2013, and allowance for loan loss balances by class and related loan balances by class as of September 30, 2013:



	Commercial						Municipal			Residential				Home Equity Line of Credit			Consumer			Unallocated		Total
	Real Estate		Construction		Other					Term		Construction
For the nine months ended September 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	150,000		963,000		1,053,000		—			909,000		—		485,000			333,000			—		3,893,000
Recoveries	—		—		157,000		—			38,000		—		5,000			150,000			—		350,000
Provision (credit)	88,000		213,000		1,115,000		(2,000		)	744,000		4,000		492,000			144,000			702,000		3,500,000
Ending balance	$	5,803,000	$	609,000	$	2,269,000	$	16,000		$	982,000	$	15,000	$	666,000		$	553,000		$	1,544,000	$	12,457,000
For the three months ended September 30, 2013
Beginning 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
Charge offs	89,000		33,000		532,000		—			302,000		—		54,000			81,000			—		1,091,000
Recoveries	—		—		13,000		—			2,000		—		3,000			60,000			—		78,000
Provision (credit)	81,000		51,000		216,000		(2,000		)	256,000		6,000		(20,000		)	(57,000		)	269,000		800,000
Ending balance	$	5,803,000	$	609,000	$	2,269,000	$	16,000		$	982,000	$	15,000	$	666,000		$	553,000		$	1,544,000	$	12,457,000
Allowance for loan losses as of September 30, 2013
Ending balance specifically evaluated for impairment	$	1,535,000	$	269,000	$	807,000	$	—		$	228,000	$	—	$	6,000		$	—		$	—	$	2,845,000
Ending balance collectively evaluated for impairment	$	4,268,000	$	340,000	$	1,462,000	$	16,000		$	754,000	$	15,000	$	660,000		$	553,000		$	1,544,000	$	9,612,000
Related loan balances as of September 30, 2013
Ending balance	$	248,889,000	$	19,409,000	$	85,130,000	$	18,218,000		$	375,387,000	$	7,617,000	$	92,374,000		$	15,049,000		$	—	$	862,073,000
Ending balance specifically evaluated for impairment	$	16,970,000	$	1,364,000	$	4,926,000	$	—		$	19,138,000	$	—	$	1,678,000		$	—		$	—	$	44,076,000
Ending balance collectively evaluated for impairment	$	231,919,000	$	18,045,000	$	80,204,000	$	18,218,000		$	356,249,000	$	7,617,000	$	90,696,000		$	15,049,000		$	—	$	817,997,000

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 (credit)	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 nine months and quarter ended September 30, 2012, and allowance for loan loss balances by class and related loan balances by class as of September 30, 2012:



	Commercial							Municipal			Residential				Home Equity Line of Credit		Consumer		Unallocated			Total
	Real Estate		Construction			Other					Term		Construction
For the nine months ended September 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	1,101,000		87,000			2,168,000		—			554,000		381,000		391,000		382,000		—			5,064,000
Recoveries	4,000		247,000			50,000		—			3,000		42,000		—		157,000		—			503,000
Provision (credit)	1,133,000		241,000			2,687,000		(1,000		)	1,615,000		98,000		586,000		189,000		(248,000		)	6,300,000
Ending balance	$	5,695,000	$	1,059,000		$	2,632,000	$	18,000		$	2,223,000	$	14,000	$	790,000	$	548,000	$	1,760,000		$	14,739,000
For the three months ended September 30, 2012
Beginning 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
Charge offs	186,000		87,000			6,000		—			179,000		263,000		342,000		106,000		—			1,169,000
Recoveries	3,000		1,000			39,000		—			1,000		42,000		—		38,000		—			124,000
Provision (credit)	314,000		(228,000		)	123,000		(1,000		)	814,000		177,000		323,000		13,000		(135,000		)	1,400,000
Ending balance	$	5,695,000	$	1,059,000		$	2,632,000	$	18,000		$	2,223,000	$	14,000	$	790,000	$	548,000	$	1,760,000		$	14,739,000
Allowance for loan losses as of September 30, 2012
Ending balance specifically evaluated for impairment	$	1,416,000	$	696,000		$	1,240,000	$	—		$	1,494,000	$	—	$	215,000	$	1,000	$	—		$	5,062,000
Ending balance collectively evaluated for impairment	$	4,279,000	$	363,000		$	1,392,000	$	18,000		$	729,000	$	14,000	$	575,000	$	547,000	$	1,760,000		$	9,677,000
Related loan balances as of September 30, 2012
Ending balance	$	256,531,000	$	21,905,000		$	83,703,000	$	16,448,000		$	369,949,000	$	6,528,000	$	100,099,000	$	14,708,000	$	—		$	869,871,000
Ending balance specifically evaluated for impairment	$	16,321,000	$	6,645,000		$	4,905,000	$	—		$	19,305,000	$	23,000	$	1,445,000	$	1,000	$	—		$	48,645,000
Ending balance collectively evaluated for impairment	$	240,210,000	$	15,260,000		$	78,798,000	$	16,448,000		$	350,644,000	$	6,505,000	$	98,654,000	$	14,707,000	$	—		$	821,226,000

Troubled debt restructurings by class and specific reserve

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



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	20	$	13,520,000	$	853,000
Construction	2	1,364,000		270,000
Other	21	2,828,000		100,000
Municipal	—	—		—
Residential
Term	55	11,353,000		149,000
Construction	—	—		—
Home equity line of credit	6	856,000		6,000
Consumer	—	—		—
	104	$	29,921,000	$	1,378,000

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 September 30, 2012:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	18	$	12,329,000	$	823,000
Construction	2	3,099,000		696,000
Other	20	2,614,000		594,000
Municipal	—	—		—
Residential
Term	50	10,890,000		371,000
Construction	—	—		—
Home equity line of credit	1	417,000		—
Consumer	—	—		—
	91	$	29,349,000	$	2,484,000

Loans placed on troubled debt restructurings by class and specific reserve



For the quarter ended September 30, 2012	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	2	$	3,150,000	$	3,150,000	$	29,000
Construction	—	—		—		—
Other	6	682,000		682,000		2,000
Municipal	—	—		—		—
Residential
Term	2	264,000		263,000		15,000
Construction	—	—		—		—
Home equity line of credit	1	417,000		417,000		—
Consumer	—	—		—		—
	11	$	4,513,000	$	4,512,000	$	46,000

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



For the quarter ended September 30, 2013	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	—	$	—	$	—	$	—
Construction	—	—		—		—
Other	—	—		—		—
Municipal	—	—		—		—
Residential
Term	2	437,000		400,000		—
Construction	—	—		—		—
Home equity line of credit	1	10,000		10,000		—
Consumer	—	—		—		—
	3	$	447,000	$	410,000	$	—

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



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	1	$	60,000	$	—
Construction	—	—		—
Other	2	388,000		—
Municipal	—	—		—
Residential
Term	13	1,836,000		10,000
Construction	—	—		—
Home equity line of credit	2	211,000		—
Consumer	—	—		—
	18	$	2,495,000	$	10,000

As of September 30, 2012, 15 of the loans classified as TDRs with a total balance of $2,820,000 were more than 30 days past due. Of these loans, six loans with an outstanding balance of $970,000 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 September 30, 2012:



	Number of Loans	Balance		Specific Reserves
Commercial
Real estate	1	$	263,000	$	—
Construction	—	—		—
Other	2	55,000		22,000
Municipal	—	—		—
Residential
Term	12	2,502,000		148,000
Construction	—	—		—
Home equity line of credit	—	—		—
Consumer	—	—		—
	15	$	2,820,000	$	170,000

For the nine months ended September 30, 2013, ten loans were placed on TDR status with a post modification outstanding balance of $3,336,000. This compares to 38 loans placed on TDR status with a post modification outstanding balance of $12,369,000 for the nine months ended September 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 nine months ended September 30, 2013 and 2012, by class of loan and the associated specific reserve included in the allowance for loan losses as of September 30, 2013 and 2012:



For the nine months ended September 30, 2013	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	2	$	1,890,000	$	1,890,000	$	—
Construction	—	—		—		—
Other	3	536,000		523,000		—
Municipal	—	—		—		—
Residential
Term	3	749,000		712,000		—
Construction	—	—		—		—
Home equity line of credit	2	214,000		211,000		—
Consumer	—	—		—		—
	10	$	3,389,000	$	3,336,000	$	—



For the nine months ended September 30, 2012	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserves
Commercial
Real estate	13	$	7,171,000	$	6,962,000	$	175,000
Construction	1	1,951,000		1,951,000		696,000
Other	14	1,380,000		1,369,000		546,000
Municipal	—	—		—		—
Residential
Term	9	1,672,000		1,670,000		84,000
Construction	—	—		—		—
Home equity line of credit	1	417,000		417,000		—
Consumer	—	—		—		—
	38	$	12,591,000	$	12,369,000	$	1,501,000