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Allowance for Loan Losses

3 Months Ended

Mar. 31, 2013

Allowance for Loan Losses [Abstract]

Note 4.

Allowance for Loan Losses

Transactions in the allowance for loan losses for the three months ended March 31, 2013 and 2012 and for the year ended December 31, 2012 were as follows:


	(in thousands)
	March 31, 2013			December 31, 2012			March 31, 2012
Balance at beginning of year	$	13,075		$	12,937		$	12,937
Provision charged to (recovery from) operating expense		(250	)		3,555			2,000
Loan recoveries		209			376			125
Loan charge-offs		(278	)		(3,793	)		(1,426	)

Balance at end of period	$	12,756		$	13,075		$	13,636

The following tables present, as of March 31, 2013, December 31, 2012 and March 31, 2012, the total allowance for loan losses, the allowance by impairment methodology and loans by impairment methodology.


	March 31, 2013 (in thousands)
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2012	$	2,481		$	3,712		$	6,163		$	608		$	111		$	13,075
Charge-offs		—			(149	)		(82	)		—			(47	)		(278	)
Recoveries		—			2			7			139			61			209
Provision for (recovery of) loan losses		(84	)		134			(263	)		(4	)		(33	)		(250	)

Ending Balance, March 31, 2013	$	2,397		$	3,699		$	5,825		$	743		$	92		$	12,756


Ending Balance:
Individually evaluated for impairment		604			156			903			261			—			1,924
Collectively evaluated for impairment		1,793			3,543			4,922			482			92			10,832

Loans:
Ending Balance		45,783			143,765			162,742			22,743			7,306			382,339

Individually evaluated for impairment		6,098			2,959			7,654			2,509			—			19,220
Collectively evaluated for impairment		39,685			140,806			155,088			20,234			7,306			363,119


	December 31, 2012 (in thousands)
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2011	$	2,843		$	3,766		$	5,192		$	963		$	173		$	12,937
Charge-offs		(431	)		(761	)		(2,154	)		(261	)		(186	)		(3,793	)
Recoveries		1			68			64			35			208			376
Provision for (recovery of) loan losses		68			639			3,061			(129	)		(84	)		3,555

Ending Balance, December 31, 2012	$	2,481		$	3,712		$	6,163		$	608		$	111		$	13,075


Ending Balance:
Individually evaluated for impairment		567			306			930			35			—			1,838
Collectively evaluated for impairment		1,914			3,406			5,233			573			111			11,237

Loans:
Ending Balance		43,524			134,964			174,220			23,071			7,815			383,594

Individually evaluated for impairment		2,516			3,776			10,528			160			—			16,980
Collectively evaluated for impairment		41,008			131,188			163,692			22,911			7,815			366,614


	March 31, 2012 (in thousands)
	Commercial and Industrial			Other Real Estate			Construction and Land Development			Secured by 1-4 Family Residential			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2011	$	963		$	5,192		$	2,843		$	3,766		$	173		$	12,937
Charge-offs		—			(503	)		(369	)		(481	)		(73	)		(1,426	)
Recoveries		5			52			—			2			66			125
Provision for loan losses		(170	)		649			679			854			(12	)		2,000

Ending Balance, March 31, 2012	$	798		$	5,390		$	3,153		$	4,141		$	154		$	13,636


Ending Balance:
Individually evaluated for impairment		134			574			1,062			1,041			—			2,811
Collectively evaluated for impairment		664			4,816			2,091			3,100			154			10,825

Loans:
Ending Balance		29,449			175,738			49,893			125,628			9,686			390,394

Individually evaluated for impairment		481			9,453			5,742			5,946			—			21,622
Collectively evaluated for impairment		28,968			166,285			44,151			119,682			9,686			368,772

Impaired loans and the related allowance at March 31, 2013 and December 31, 2012, were as follows:


	March 31, 2013 (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 and land development	$	6,441	$	4,988	$	1,110	$	6,098	$	604	$	4,244	$	16
Secured by 1-4 family		3,898		1,024		1,935		2,959		156		4,116		23
Other real estate loans		9,443		1,645		6,009		7,654		903		9,151		70
Commercial and industrial		2,510		—		2,509		2,509		261		185		27
Consumer and other loans		—		—		—		—		—		—		—

Total	$	22,292	$	7,657	$	11,563	$	19,220	$	1,924	$	17,696	$	136


	December 31, 2012 (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 and land development	$	2,947	$	622	$	1,894	$	2,516	$	567	$	5,691	$	99
Secured by 1-4 family		4,706		1,690		2,086		3,776		306		4,821		163
Other real estate loans		14,861		4,886		5,642		10,528		930		10,148		276
Commercial and industrial		161		—		160		160		35		330		10
Consumer and other loans		—		—		—		—		—		—		—

	$	22,675	$	7,198	$	9,782	$	16,980	$	1,838	$	20,990	$	548

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 non-accrual loans.

As of March 31, 2013, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $6.5 million. At March 31, 2013, $4.1 million of the loans classified as TDRs were performing under the restructured terms and were not considered non-performing assets. There were $6.3 million in TDRs at December 31, 2012, $1.6 million of which were performing under the restructured terms. Modified terms under TDRs may include rate reductions, extension of terms that are considered to be below market, conversion to interest only, and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. There were no new loans modified under TDRs during the three month periods ended March 31, 2013 and 2012.

For the three months ended March 31, 2013 and 2012, 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.