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Loans
 6 Months Ended
Jun. 30, 2011
Loans  
Loans

Note 3. Loans

Loans at June 30, 2011 and December 31, 2010 are summarized as follows:

 

     (in thousands)  
     June 30,
2011		      December 31,
2010		  

Real estate loans:

      

Construction

    $ 50,741       $ 52,591   

Secured by 1-4 family residential

      120,575         121,506   

Other real estate loans

      195,766         207,371   

Commercial and industrial loans

      35,513         40,683   

Consumer loans

      12,907         12,879   
  

 

 

     

 

 

  

Total loans

    $ 415,502       $ 435,030   

Allowance for loan losses

      13,778         16,036   
  

 

 

     

 

 

  

Loans, net

    $ 401,724       $ 418,994   
  

 

 

     

 

 

  

Consumer loans included $279 thousand and $231 thousand of demand deposit overdrafts at June 30, 2011 and December 31, 2010, respectively.

The Company has a credit concentration of loans secured by real estate. These loans totaled $367.1 million, or 88% of total loans, and $381.5 million, or 88% of total loans, at June 30, 2011 and December 31, 2010, respectively. Although the Company believes that its underwriting standards are generally conservative, the ability of its borrowers to meet their mortgage obligations may be impacted by local economic conditions.

The Company has a concentration of credit risk within the loan portfolio involving loans secured by hotels. This concentration totaled $42.3 million at June 30, 2011, representing 87% of total equity and 10% of total loans. At December 31, 2010, this concentration totaled $41.6 million representing 86% of total equity and 10% of total loans. These loans are included in other real estate loans in the above table. The Company charged down $1.5 million related to this concentration of credit risk during the six month period ended June 30, 2011 and $147 thousand related to these loans during the year ended December 31, 2010.

 

The following table provides a summary of loan classes and an aging of past due loans as of June 30, 2011 and December 31, 2010:

 

     June 30, 2011  
     (in thousands)  
     30-59 Days
Past Due		      60-89
Days
Past Due		      > 90 Days
Past Due		      Total Past
Due		      Current      Total Loans      Nonaccrual
loans		      90 Days or
More Past
Due and
Accruing		  

Real estate loans:

                        

Construction

    $ 916       $ 539       $ 3,540       $ 4,995       $ 45,746       $ 50,741       $ 3,527       $ 369   

1-4 family residential

      3,778         341         435         4,554         116,021         120,575         3,881         —     

Other real estate loans

      2,150         258         2,211         4,619         191,147         195,766         6,122         —     

Commercial and industrial

      456         839         536         1,831         33,682         35,513         112         424   

Consumer

      104         7         —           111         12,796         12,907         —           —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 7,404       $ 1,984       $ 6,722       $ 16,110       $ 399,392       $ 415,502       $ 13,642       $ 793   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     December 31, 2010  
     (in thousands)  
     30-59 Days
Past Due		      60-89
Days
Past Due		      > 90 Days
Past Due		      Total
Past Due		      Current      Total Loans      Nonaccrual
loans		      90 Days or
More Past
Due and
Accruing		  

Real estate loans:

                        

Construction

    $ 525       $ —         $ 3,665       $ 4,190       $ 48,401       $ 52,591       $ 5,780       $ —     

1-4 family residential

      2,642         178         315         3,135         118,371         121,506         628         315   

Other real estate loans

      10,225         3,475         751         14,451         192,920         207,371         4,407         283   

Commercial and industrial

      1,033         3         —           1,036         39,647         40,683         —           —     

Consumer

      168         10         1         179         12,700         12,879         2         —     
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 14,593       $ 3,666       $ 4,732       $ 22,991       $ 412,039       $ 435,030       $ 10,817       $ 598   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans.

The Company utilizes a risk grading matrix to assign a rating to each of its loans. The loan ratings are summarized into the following categories: pass, special mention, substandard, doubtful and loss. Pass rated loans include all risk rated credits other than those included in special mention, substandard or doubtful. Loans classified as loss are charged-off. Loan officers assign risk grades to loans at origination and as renewals arise. The Bank's Credit Administration department reviews risk grades for accuracy on a quarterly basis and as delinquency issues arise. In addition, a certain amount of loans are reviewed each year through the Company's internal and external loan review process. A description of the general characteristics of the loan grading categories is as follows:

Special Mention – Loans classified as special mention 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 or the Bank's credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation in full of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weakness inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The Company considers all doubtful loans to be impaired and places the loan on nonaccrual status.

 

The following tables provide an analysis of the credit risk profile of each loan class as of June 30, 2011 and December 31, 2010:

 

     June 30, 2011
(in thousands)		  
     Pass      Special
Mention		      Substandard      Doubtful      Total  

Real estate loans:

               

Construction

    $ 22,313       $ 6,724       $ 19,636       $ 2,068       $ 50,741   

Secured by 1-4 family residential

      101,448         7,628         11,428         71         120,575   

Other real estate loans

      145,750         17,076         30,673         2,267         195,766   

Commercial and industrial

      28,979         4,338         2,084         112         35,513   

Consumer

      12,907         —           —           —           12,907   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 311,397       $ 35,766       $ 63,821       $ 4,518       $ 415,502   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     December 31, 2010
(in thousands)		  
     Pass      Special
Mention		      Substandard      Doubtful      Total  

Real estate loans:

               

Construction

    $ 21,212       $ 5,237       $ 21,471       $ 4,671       $ 52,591   

Secured by 1-4 family residential

      106,722         4,435         10,349         —           121,506   

Other real estate loans

      143,874         17,915         43,443         2,139         207,371   

Commercial and industrial

      34,619         4,033         2,031         —           40,683   

Consumer

      12,864         13         1         1         12,879   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 319,291       $ 31,633       $ 77,295       $ 6,811       $ 435,030