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Allowance For Loan Losses

9 Months Ended

Sep. 30, 2011

Allowance For Loan Losses [Abstract]

Note 4.

Allowance for Loan Losses

Transactions in the allowance for loan losses for the nine months ended September 30, 2011 and 2010 and for the year ended December 31, 2010 were as follows:


	(in thousands)
	September 30, 2011			December 31, 2010			September 30, 2010
Balance at beginning of year	$	16,036		$	7,106		$	7,106
Provision charged to operating expense		9,395			11,731			2,611
Loan recoveries		208			261			197
Loan charge-offs		(7,137	)		(3,062	)		(1,320	)

Balance at end of period	$	18,502		$	16,036		$	8,594

The following tables present, as of September 30, 2011 and December 31, 2010, the total allowance for loan losses, the allowance by impairment methodology and loans by impairment methodology.

		000000			000000			000000			000000			000000			000000
	September 30, 2011
	(in thousands)
	Commercial and Industrial			Other Real Estate			Construction			Secured by 1-4 Family Residential			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2010	$	858		$	9,187		$	4,050		$	1,681		$	260		$	16,036
Charge-offs		(233	)		(3,420	)		(2,557	)		(726	)		(201	)		(7,137	)
Recoveries		1			—			—			4			203			208
Provision for loan losses		2,190			2,387			1,870			3,011			(63	)		9,395

Ending Balance, September 30, 2011	$	2,816		$	8,154		$	3,363		$	3,970		$	199		$	18,502


Ending Balance:
Individually evaluated for impairment		2,192			4,457			1,639			2,386			—			10,674
Collectively evaluated for impairment		624			3,697			1,724			1,584			199			7,828

Loans:
Ending Balance	$	32,649		$	195,486		$	49,310		$	120,014		$	11,749		$	409,208

Individually evaluated for impairment		2,373			24,244			10,194			8,382			—			45,193
Collectively evaluated for impairment		30,276			171,242			39,116			111,632			11,749			364,015

		000000		000000		000000		000000		000000		000000
	December 31, 2010
	(in thousands)
	Commercial and Industrial		Other Real Estate		Construction		Secured by 1-4 Family Residential		Consumer and Other Loans		Total
Allowance for loan losses:
Ending Balance	$	858	$	9,187	$	4,050	$	1,681	$	260	$	16,036

Ending Balance:
Individually evaluated for impairment		36		5,020		3,006		536		—		8,597
Collectively evaluated for impairment		822		4,167		1,044		1,145		260		7,439

Loans:
Ending Balance		40,683		207,371		52,591		121,506		12,879		435,030

Ending Balance:
Individually evaluated for impairment		48		28,426		9,709		5,682		—		43,865
Collectively evaluated for impairment		40,635		178,945		42,882		115,824		12,879		391,165

Impaired loans and the related allowance at September 30, 2011 and December 31, 2010, were as follows:

		0000000		0000000		0000000		0000000		0000000		0000000		0000000
	September 30, 2011
	(in thousands)
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction	$	12,163	$	2,068	$	8,126	$	10,194	$	1,639	$	6,400	$	293
Secured by 1-4 family		8,478		450		7,932		8,382		2,386		6,837		194
Other real estate loans		27,098		11,500		12,744		24,244		4,457		25,809		711
Commercial and industrial		2,373		10		2,363		2,373		2,192		94		77
Consumer and other loans		—		—		—		—		—		—		—

Total	$	50,112	$	14,028	$	31,165	$	45,193	$	10,674	$	39,139	$	1,275

		0000000		0000000		0000000		0000000		0000000		0000000		0000000
	December 31, 2010
	(in thousands)
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction	$	10,440	$	1,217	$	8,492	$	9,709	$	3,006	$	2,920	$	374
Secured by 1-4 family		5,701		595		5,087		5,682		536		795		222
Other real estate loans		29,480		7,904		20,522		28,426		5,020		18,432		1,345
Commercial and industrial		48		—		48		48		36		163		4
Consumer and other loans		—		—		—		—		—		—		—

Total	$	45,669	$	9,716	$	34,149	$	43,865	$	8,597	$	22,310	$	1,945

The "Recorded Investment" amounts in the table above represent the outstanding principal balance on each loan represented in the table. The "Unpaid Principal Balance" represents the outstanding principal balance on each loan represented in the table plus any amounts that have been charged off on each loan and/or payments that have been applied towards principal on nonaccrual loans.

During the first quarter of 2011, the Bank adjusted its allowance for loan losses methodology by expanding the historical loss period that is applied to the general component of the allowance from one year to three years. The Company decreased the loss history to one year after significant deterioration in economic conditions in 2008. Since then, the Company has determined that a three-year loss history is more appropriate to reflect a reasonable loss inherent in the loan portfolio. For further information on the Company's allowance for loan losses methodology, see the "Allowance for Loan Losses" section included in Part I, Item 2 of this Form 10-Q.

As of September 30, 2011 loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $13.2 million. At September 30, 2011, $6.2 million of the loans classified as TDRs were performing under the restructured terms and were not considered nonperforming assets. There were $14.4 million in TDRs at December 31, 2010. The following table provides further information regarding loans modified under TDRs during the three and nine month periods ended September 30, 2011:


	For the three months ended September 30, 2011 (dollars in thousands)						For the nine months ended September 30, 2011 (dollars in thousands)
	Number of Contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment		Number of Contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment
Real estate loans:
Construction		1	$	701	$	357		1	$	701	$	357
Secured by 1-4 family		—		—		—		2		575		575
Other real estate loans		—		—		—		12		11,724		11,750
Commercial and industrial		—		—		—		—		—		—
Consumer and other loans		—		—		—		—		—		—

Total		1	$	701	$	357		15	$	13,000	$	12,682

As of September 30, 2011, there were no troubled debt restructurings that subsequently defaulted within twelve months of the loan modification. Management defines default as over ninety days past due during the twelve month period subsequent to the modification.