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Loans
9 Months Ended
Sep. 30, 2011
Loans [Abstract] 
Loans
Note 3. Loans

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

 

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

Real estate loans:

      

Construction

    $ 49,310       $ 52,591   

Secured by 1-4 family residential

      120,014         121,506   

Other real estate loans

      195,486         207,371   

Commercial and industrial loans

      32,649         40,683   

Consumer and other loans

      11,749         12,879   
  

 

 

     

 

 

  

Total loans

    $ 409,208       $ 435,030   

Allowance for loan losses

      18,502         16,036   
  

 

 

     

 

 

  

Loans, net

    $ 390,706       $ 418,994   
  

 

 

     

 

 

  

Consumer loans included $165 thousand and $231 thousand of demand deposit overdrafts at September 30, 2011 and December 31, 2010, respectively.

The Company has a credit concentration of loans secured by real estate. These loans totaled $364.8 million, or 89% of total loans, and $381.5 million, or 88% of total loans, at September 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 $35.1 million at September 30, 2011, representing 76% of total equity and 9% 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 $2.0 million related to this concentration of credit risk during the nine month period ended September 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 September 30, 2011 and December 31, 2010:

 

0000000 0000000 0000000 0000000 0000000 0000000 0000000 0000000
    September 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

   $ 3,998      $ 351      $ 4,156      $ 8,505      $ 40,805      $ 49,310      $ 4,146      $ 361   

1-4 family residential

     4,981        557        706        6,244        113,770        120,014        3,953        —     

Other real estate loans

     7,787        1,813        1,012        10,612        184,874        195,486        12,558        —     

Commercial and industrial

     203        112        312        627        32,022        32,649        2,040        312   

Consumer and other

     69        6        10        85        11,664        11,749        10        —     
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 17,038      $ 2,839      $ 6,196      $ 26,073      $ 383,135      $ 409,208      $ 22,707      $ 673   
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

0000000 0000000 0000000 0000000 0000000 0000000 0000000 0000000
    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 September 30, 2011 and December 31, 2010:

 

00000000 00000000 00000000 00000000 00000000
     September 30, 2011
(in thousands)		  
     Pass      Special
Mention		      Substandard      Doubtful      Total  

Real estate loans:

               

Construction

    $ 21,796       $ 6,028       $ 19,149       $ 2,337       $ 49,310   

Secured by 1-4 family residential

      104,965         6,729         8,320         —           120,014   

Other real estate loans

      143,454         14,579         31,235         6,218         195,486   

Commercial and industrial

      27,460         1,101         4,088         —           32,649   

Consumer

      11,657         82         10         —           11,749   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 309,332       $ 28,519       $ 62,802       $ 8,555       $ 409,208   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

00000000 00000000 00000000 00000000 00000000
     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