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Allowance for Loan Losses, Nonperforming Assets and Impaired Loans | 9 Months Ended
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Sep. 30, 2012
Allowance for Loan Losses, Nonperforming Assets and Impaired Loans [Abstract] |
Allowance for Loan Losses, Nonperforming Assets and Impaired Loans | Note 4: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan's payment history, the borrower's current financial situation and value of the underlying collateral. Impaired loans are those loans that have been modified in a troubled debt restructure ("TDR" or "restructure") and larger, non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate the probability that collection will not occur according to the loan's terms. Generally, impaired loans are risk rated "classified" or "other assets especially mentioned." Impaired loans are measured at the lower of the invested amount or the fair market value. Impaired loans with an impairment loss are designated nonaccrual. Please refer to Note 1 of the Company's 2011 Form 10-K, "Summary of Significant Accounting Policies" for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs. Troubled debt restructurings impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal or accrued interest, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Further, restructured loans are individually evaluated for impairment, with amounts below fair value accrued in the allowance for loan losses. TDRs that experience a payment default are examined to determine whether the default indicates collateral dependency or cash flows below those that were included in the fair value measurement. TDRs, as well as all impaired loans, that are determined to be collateral dependent or for which decreased cash flows indicate a decline in fair value are charged down to fair value. The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment for application of the allowance for loan losses methodology. These characteristics include collateral type, repayment sources, and (if applicable) the borrower's business model. Change in Portfolio Segments and Classes During the first quarter of 2012, the Company revised its basis for determining segments and classes for the allowance for loan losses. In previous periods, the loan portfolio was segmented primarily by repayment source, whereas beginning with the first quarter of 2012 disaggregation is based primarily upon collateral type for secured loans and borrower type or repayment terms for unsecured loans. This aligns the allowance categories with those used for financial statements and other notes, providing greater uniformity and comparability. Consistent with accounting guidance, prior periods have not been restated and are shown as originally published using the segments and classes in effect for the period. These changes had an insignificant effect on the calculation of the balance in the allowance for loan losses. The segments and classes used in determining the allowance for loan losses, beginning with the first quarter of 2012 are as follows.
Real Estate Construction Construction, residential Construction, other Consumer Real Estate Equity lines Residential closed-end first liens Residential closed-end junior liens Commercial Real Estate Multifamily real estate Commercial real estate, owner occupied Commercial real estate, other | Commercial Non Real Estate Commercial and Industrial Public Sector and IDA Public sector and IDA Consumer Non Real Estate Credit cards Automobile Other consumer loans
Prior to the first quarter of 2012, the Company's segments and classes were as follows.
Consumer Real Estate Equity lines Closed-end consumer real estate Consumer construction Consumer, Non Real Estate Credit cards Consumer, general Consumer overdraft Commercial & Industrial Commercial & Industrial Construction, Development and Land Residential Commercial | Commercial Real Estate College housing Office/Retail space Nursing homes Hotels Municipalities Medical professionals Religious organizations Convenience stores Entertainment and sports Nonprofits Restaurants General contractors Other commercial real estate
Risk factors are analyzed for each class to estimate collective reserves. Factors include allocations for the historical charge-off percentage and changes in national and local economic and business conditions, in the nature and volume of the portfolio, in loan officers' experience and in loan quality. Increased allocations for the risk factors applied to each class are made for special mention and classified loans. The Company allocates additional reserves for "high risk" loans, determined to be junior lien mortgages, high loan-to-value loans and interest-only loans. A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows.
|  | Activity in the Allowance for Loan Losses for the Three Months Ended September 30, 2012
|  | Real Estate Construction |  | Consumer Real Estate |  | Commercial Real Estate |  | Commercial Non Real Estate |  | Public Sector and IDA |  | Consumer Non Real Estate |  | Unallocated |  | Total |
Balance, June 30, 2012 |  | $ | 1,396 |  | $ | 1,910 |  | $ | 3,257 |  | $ | 909 |  | $ | 111 |  | $ | 422 |  | $ | 163 |  | $ | 8,168 |
Charge-offs |  |  | (51 | ) |  | (33 | ) |  | (592 | ) |  | --- |  |  | --- |  |  | (40 | ) |  | --- |  |  | (716 | )
Recoveries |  |  | --- |  |  | --- |  |  | --- |  |  | 1 |  |  | --- |  |  | 23 |  |  | --- |  |  | 24 |
Provision for loan losses |  |  | (158 | ) |  | 95 |  |  | 872 |  |  | (46 | ) |  | 34 |  |  | (5 | ) |  | (14 | ) |  | 778 |
Balance, September 30, 2012 |  | $ | 1,187 |  | $ | 1,972 |  | $ | 3,537 |  | $ | 864 |  | $ | 145 |  | $ | 400 |  | $ | 149 |  | $ | 8,254 |
|  | Activity in the Allowance for Loan Losses for the Nine Months Ended September 30, 2012
|  | Real Estate Construction |  | Consumer Real Estate |  | Commercial Real Estate |  | Commercial Non Real Estate |  | Public Sector and IDA |  | Consumer Non Real Estate |  | Unallocated |  |  | Total |
Balance, December 31, 2011 |  | $ | 1,079 |  | $ | 1,245 |  | $ | 3,515 |  | $ | 1,473 |  | $ | 232 |  | $ | 403 |  | $ | 121 |  | $ | 8,068 |
Charge-offs |  |  | (640 | ) |  | (278 | ) |  | (1,329 | ) |  | (5 | ) |  | --- |  |  | (192 | ) |  | --- |  |  | (2,444 | )
Recoveries |  |  | 13 |  |  | 2 |  |  | --- |  |  | 2 |  |  | --- |  |  | 59 |  |  | --- |  |  | 76 |
Provision for loan losses |  |  | 735 |  |  | 1,003 |  |  | 1,351 |  |  | (606 | ) |  | (87 | ) |  | 130 |  |  | 28 |  |  | 2,554 |
Balance, September 30, 2012 |  | $ | 1,187 |  | $ | 1,972 |  | $ | 3,537 |  | $ | 864 |  | $ | 145 |  | $ | 400 |  | $ | 149 |  | $ | 8,254 |
|  | Activity in the Allowance for Loan Losses for the Three Months Ended September 30, 2011 |
|  | Consumer Real Estate(1) |  |  | Consumer Non Real Estate(1) |  |  | Commercial Real Estate(1) |  |  | Commercial & Industrial(1) |  |  | Construction, Development & Other Land(1) |  |  | Unallocated |  |  | Total |
Balance, June 30, 2011 |  | $ | 1,371 |  |  | $ | 483 |  |  | $ | 4,333 |  |  | $ | 1,348 |  |  | $ | 636 |  |  | $ | 323 |  |  | $ | 8,494 |
Charge-offs |  |  | (217 | ) |  |  | (58 | ) |  |  | (41 | ) |  |  | (30 | ) |  |  | (100 | ) |  |  | --- |  |  |  | (446 | )
Recoveries |  |  | --- |  |  |  | 28 |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | 28 |
Provision for loan losses |  |  | 61 |  |  |  | 8 |  |  |  | 339 |  |  |  | (76 | ) |  |  | 515 |  |  |  | (204 | ) |  |  | 643 |
Balance, September 30, 2011 |  | $ | 1,215 |  |  | $ | 461 |  |  | $ | 4,631 |  |  | $ | 1,242 |  |  | $ | 1,051 |  |  | $ | 119 |  |  | $ | 8,719 |
(1) Segments at September 30, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.
|  | Activity in the Allowance for Loan Losses for the Nine Months Ended September 30, 2011 |
|  | Consumer Real Estate(1) |  |  | Consumer Non Real Estate(1) |  |  | Commercial Real Estate(1) |  |  | Commercial & Industrial(1) |  |  | Construction, Development & Other Land(1) |  |  | Unallocated |  |  | Total |
Balance, December 31, 2010 |  | $ | 1,059 |  |  | $ | 586 |  |  | $ | 4,033 |  |  | $ | 1,108 |  |  | $ | 749 |  |  | $ | 129 |  |  | $ | 7,664 |
Charge-offs |  |  | (429 | ) |  |  | (208 | ) |  |  | (301 | ) |  |  | (167 | ) |  |  | (100 | ) |  |  | --- |  |  |  | (1,205 | )
Recoveries |  |  | 7 |  |  |  | 56 |  |  |  | --- |  |  |  | 1 |  |  |  | --- |  |  |  | --- |  |  |  | 64 |
Provision for loan losses |  |  | 578 |  |  |  | 27 |  |  |  | 899 |  |  |  | 300 |  |  |  | 402 |  |  |  | (10 | ) |  |  | 2,196 |
Balance, September 30, 2011 |  | $ | 1,215 |  |  | $ | 461 |  |  | $ | 4,631 |  |  | $ | 1,242 |  |  | $ | 1,051 |  |  | $ | 119 |  |  | $ | 8,719 |
(1) Segments at September 30, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.
|  | Allowance for Loan Losses as of September 30, 2012 |
|  | Real Estate Construction |  | Consumer Real Estate |  | Commercial Real Estate |  | Commercial Non Real Estate |  | Public Sector and IDA |  | Consumer Non Real Estate |  | Unallocated |  | Total |
Individually evaluated for impairment |  | $ | --- |  | $ | 47 |  | $ | 44 |  | $ | 236 |  | $ | --- |  | $ | --- |  | $ | --- |  | $ | 327 |
Collectively evaluated for impairment |  |  | 1,187 |  |  | 1,925 |  |  | 3,493 |  |  | 628 |  |  | 145 |  |  | 400 |  |  | 149 |  |  | 7,927 |
Total |  | $ | 1,187 |  | $ | 1,972 |  | $ | 3,537 |  | $ | 864 |  | $ | 145 |  | $ | 400 |  | $ | 149 |  | $ | 8,254 |
| Allowance for Loan Losses as of December 31, 2011 |
| Consumer Real Estate(1) |  | Consumer Non Real Estate(1) |  | Commercial Real Estate(1) |  | Commercial & Industrial(1) |  | Construction, Development & Other Land(1) |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | --- |  |  | $ | --- |  |  | $ | 1,014 |  |  | $ | 62 |  |  | $ | 47 |  |  | $ | --- |  |  | $ | 1,123 |
Collectively evaluated for impairment |  |  | 1,052 |  |  |  | 401 |  |  |  | 3,497 |  |  |  | 973 |  |  |  | 901 |  |  |  | 121 |  |  |  | 6,945 |
Total |  | $ | 1,052 |  |  | $ | 401 |  |  | $ | 4,511 |  |  | $ | 1,035 |  |  | $ | 948 |  |  | $ | 121 |  |  | $ | 8,068 |
(1) Segments at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.
|  | Loans as of September 30, 2012
|  | Real Estate Construction |  | Consumer Real Estate |  | Commercial Real Estate |  | Commercial Non Real Estate |  | Public Sector and IDA |  | Consumer Non Real Estate |  | Unallocated |  | Total |
Individually evaluated for impairment |  | $ | 3,623 |  | $ | 949 |  | $ | 6,859 |  | $ | 534 |  | $ | --- |  | $ | --- |  | $ | --- |  | $ | 11,965 |
Collectively evaluated for impairment |  |  | 46,176 |  |  | 140,464 |  |  | 298,508 |  |  | 35,195 |  |  | 26,589 |  |  | 32,564 |  |  | --- |  |  | 579,496
Total |  | $ | 49,799 |  | $ | 141,413 |  | $ | 305,367 |  | $ | 35,729 |  | $ | 26,589 |  | $ | 32,564 |  | $ | --- |  |  | 591,461
| Loans as of December 31, 2011 |
| Consumer Real Estate(1) |  | Consumer Non Real Estate(1) |  | Commercial Real Estate(1) |  | Commercial & Industrial(1) |  | Construction, Development & Other Land(1) |  | Unallocated |  |  | Total |
Individually evaluated for impairment |  | $ | 238 |  |  | $ | --- |  |  | $ | 9,067 |  |  | $ | 139 |  |  | $ | 3,152 |  |  | $ | --- |  |  | $ | 12,596 |
Collectively evaluated for impairment |  |  | 109,843 |  |  |  | 29,707 |  |  |  | 357,507 |  |  |  | 37,584 |  |  |  | 41,233 |  |  |  | --- |  |  |  | 575,874 |
Total |  | $ | 110,081 |  |  | $ | 29,707 |  |  | $ | 366,574 |  |  | $ | 37,723 |  |  | $ | 44,385 |  |  | $ | --- |  |  | $ | 588,470 |
(1) Segments at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. A summary of ratios for the allowance for loan losses follows.
|  | Nine Months Ended September 30, |  |  | Year Ended December 31, |
|  | 2012 |  | 2011 |  | 2011 |
Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees |  |  | 1.40 | % |  | 1.46 | % |  | 1.37 | %
Ratio of net charge-offs to average loans, net of unearned income and deferred fees(1) |  |  | 0.54 | % |  | 0.26 | % |  | 0.43 | %
(1) | Net charge-offs are on an annualized basis.
A summary of nonperforming assets follows.
|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |  |  | 2011 |
Nonperforming assets: |  |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 3,876 |  |  | $ | 1,263 |  |  | $ | 1,398 |
Restructured loans in nonaccrual |  |  | 2,254 |  |  |  | 3,081 |  |  |  | 3,806 |
Total nonperforming loans |  |  | 6,130 |  |  |  | 4,344 |  |  |  | 5,204 |
Other real estate owned, net |  |  | 1,894 |  |  |  | 1,759 |  |  |  | 1,489 |
Total nonperforming assets |  | $ | 8,024 |  |  | $ | 6,103 |  |  | $ | 6,693 |
Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned |  |  | 1.35 | % |  |  | 1.02 | % |  |  | 1.13 | %
Ratio of allowance for loan losses to nonperforming loans(1) |  |  | 134.65 | % |  |  | 200.71 | % |  |  | 155.03 | %
(1) The Company defines nonperforming loans as nonaccrual loans. Loans 90 days or more past due and still accruing and accruing restructured loans are excluded. A summary of loans past due 90 days or more and impaired loans follows.
|  | September 30, |  |  | December 31, |
|  | 2012 |  |  | 2011 |  |  | 2011 |
Loans past due 90 days or more and still accruing |  | $ | 114 |  |  | $ | 339 |  |  | $ | 481 |
Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees |  |  | 0.02 | % |  |  | 0.06 | % |  |  | 0.08 | %
Accruing restructured loans |  | $ | 2,021 |  |  | $ | 5,524 |  |  | $ | 3,756 |
Impaired loans: |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans with no valuation allowance |  | $ | 11,063 |  |  | $ | 2,286 |  |  | $ | 5,505 |
Impaired loans with a valuation allowance |  |  | 902 |  |  |  | 7,754 |  |  |  | 7,091 |
Total impaired loans |  | $ | 11,965 |  |  | $ | 10,040 |  |  | $ | 12,596 |
Valuation allowance |  |  | (327 | ) |  |  | (1,829 | ) |  |  | (1,123 | )
Impaired loans, net of allowance |  | $ | 11,638 |  |  | $ | 8,211 |  |  | $ | 11,473 |
Average recorded investment in impaired loans(1) |  | $ | 13,831 |  |  | $ | 7,834 |  |  | $ | 8,734 |
Interest income recognized on impaired loans, after designation as impaired |  | $ | 292 |  |  | $ | 90 |  |  | $ | 141 |
Amount of income recognized on a cash basis |  | $ | --- |  |  | $ | --- |  |  | $ | --- |
(1) Recorded investment includes principal, accrued interest and net deferred fees. Nonaccrual loans are designated as impaired. No interest income was recognized on nonaccrual loans for the nine months ended September 30, 2012 or September 30, 2011 or for the year ended December 31, 2011, respectively. Please refer to Note 8 for a detailed analysis of the changes in impaired loans with a valuation allowance. A detailed analysis of investment in impaired loans, associated reserves and interest income recognized, segregated by loan class follows.
|  | Impaired Loans as of September 30, 2012 |
|  | Principal Balance |  |  | (A) Total Recorded Investment(1) |  |  | Recorded Investment(1) in (A) for Which There is No Related Allowance |  |  | Recorded Investment(1) in (A) for Which There is a Related Allowance |  |  | Related Allowance |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction, residential |  | $ | 123 |  |  | $ | 118 |  |  | $ | 118 |  |  | $ | --- |  |  | $ | --- |
Construction, other |  |  | 3,500 |  |  |  | 3,498 |  |  |  | 3,498 |  |  |  | --- |  |  |  | --- |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Residential closed-end first liens |  |  | 790 |  |  |  | 793 |  |  |  | 638 |  |  |  | 155 |  |  |  | 47 |
Residential closed-end junior liens |  |  | 159 |  |  |  | 159 |  |  |  | 159 |  |  |  | --- |  |  |  | --- |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 2,034 |  |  |  | 2,049 |  |  |  | 1,787 |  |  |  | 262 |  |  |  | 44 |
Commercial real estate, owner occupied |  |  | 4,825 |  |  |  | 4,842 |  |  |  | 4,842 |  |  |  | --- |  |  |  | --- |
Commercial real estate, other |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 534 |  |  |  | 534 |  |  |  | 44 |  |  |  | 490 |  |  |  | 236 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Public sector and IDA |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Automobile |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Other consumer loans |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Total |  | $ | 11,965 |  |  | $ | 11,993 |  |  | $ | 11,086 |  |  | $ | 907 |  |  | $ | 327 |
(1) Recorded investment includes the unpaid principal balance and any accrued interest and net deferred fees.
|  | Impaired Loans as of December 31, 2011(3) |
|  | Principal Balance |  |  | (A) Total Recorded Investment(1) |  |  | Recorded Investment(1) in (A) for Which There is No Related Allowance |  |  | Recorded Investment(1) in (A) for Which There is a Related Allowance |  |  | Related Allowance |
Consumer Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Closed-end consumer real estate |  | $ | 237 |  |  | $ | 237 |  |  | $ | 237 |  |  | $ | --- |  |  | $ | --- |
Commercial Real Estate(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
College housing |  |  | 366 |  |  |  | 366 |  |  |  | 366 |  |  |  | --- |  |  |  | --- |
Office and retail |  |  | 3,500 |  |  |  | 3,500 |  |  |  | --- |  |  |  | 3,500 |  |  |  | 57 |
Hotel |  |  | 3,319 |  |  |  | 3,320 |  |  |  | 2,794 |  |  |  | 526 |  |  |  | 16 |
Medical professionals |  |  | 66 |  |  |  | 67 |  |  |  | --- |  |  |  | 67 |  |  |  | 66 |
General contractors |  |  | 703 |  |  |  | 703 |  |  |  | 176 |  |  |  | 527 |  |  |  | 402 |
Other commercial real estate |  |  | 1,113 |  |  |  | 1,112 |  |  |  | 425 |  |  |  | 687 |  |  |  | 474 |
Commercial & Industrial(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 139 |  |  |  | 139 |  |  |  | --- |  |  |  | 139 |  |  |  | 62 |
Construction, Development and Land(2) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 2,901 |  |  |  | 2,912 |  |  |  | 1,256 |  |  |  | 1,656 |  |  |  | 46 |
Commercial |  |  | 252 |  |  |  | 252 |  |  |  | 252 |  |  |  | --- |  |  |  | --- |
Total |  | $ | 12,596 |  |  | $ | 12,608 |  |  | $ | 5,506 |  |  | $ | 7,102 |  |  | $ | 1,123 |
(1) Recorded investment includes the unpaid principal balance and any accrued interest and net deferred fees. (2) Only classes with impaired loans are shown. (3) Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. The following tables show the average investment and interest income recognized for impaired loans.
|  | Average Investment and Interest Income for Impaired Loans |
|  | For the Three Months Ended September 30, 2012 |  |  | For the Nine Months Ended September 30, 2012 |
|  | Average Recorded Investment(1) |  |  | Interest Income Recognized |  |  | Average Recorded Investment(1) |  |  | Interest Income Recognized |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, residential |  | $ | 1,428 |  |  | $ | --- |  |  | $ | 1,486 |  |  | $ | --- |
Construction, other |  |  | 3,498 |  |  |  | 58 |  |  |  | 4,568 |  |  |  | 184 |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 6 |  |  |  | --- |  |  |  | 135 |  |  |  | 2 |
Residential closed-end first liens |  |  | 1,038 |  |  |  | 3 |  |  |  | 889 |  |  |  | 7 |
Residential closed-end junior liens |  |  | 220 |  |  |  | --- |  |  |  | 245 |  |  |  | --- |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 2,083 |  |  |  | 16 |  |  |  | 1,226 |  |  |  | 24 |
Commercial real estate, owner occupied |  |  | 5,401 |  |  |  | 28 |  |  |  | 4,656 |  |  |  | 72 |
Commercial real estate, other |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 549 |  |  |  | 1 |  |  |  | 587 |  |  |  | 3 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Public sector and IDA |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Automobile |  |  | 8 |  |  |  | --- |  |  |  | 5 |  |  |  | --- |
Other consumer |  |  | --- |  |  |  | --- |  |  |  | 34 |  |  |  | --- |
Total |  | $ | 14,231 |  |  | $ | 106 |  |  | $ | 13,831 |  |  | $ | 292 |
(1) Recorded investment includes the unpaid principal balance and any accrued interest and net deferred fees.
|  | Average Investment and Interest Income of Impaired Loans For the Year Ended |
|  | December 31, 2011(3) |
|  | Average Recorded Investment(1) |  |  | Interest Income Recognized |
Consumer Real Estate(2) |  |  |  |  |  |
Closed-end consumer real estate |  | $ | 450 |  |  | $ | 3 |
Commercial Real Estate(2) |  |  |  |  |  |  |  |
College housing |  |  | 281 |  |  |  | 7 |
Office & retail |  |  | 292 |  |  |  | --- |
Hotel |  |  | 3,445 |  |  |  | 41 |
Medical professionals |  |  | 67 |  |  |  | 5 |
General contractors |  |  | 112 |  |  |  | 4 |
Other commercial real estate |  |  | 1,139 |  |  |  | 24 |
Commercial & Industrial(2) |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 553 |  |  |  | --- |
Construction, Development and Land(2) |  |  |  |  |  |  |  |
Residential |  |  | 2,143 |  |  |  | 49 |
Commercial |  |  | 252 |  |  |  | 8 |
Total |  | $ | 8,734 |  |  | $ | 141 |
(1) Recorded investment includes the unpaid principal balance and any accrued interest and net deferred fees.
(2) | Only classes with impaired loans are shown.
(3) Segments at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. An analysis of past due and nonaccrual loans as of September 30, 2012 follows.
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Real Estate Construction |  |  |  |  |  |  |  |  |  |  |  |
Construction, residential |  | $ | 158 |  |  | $ | 123 |  |  | $ | --- |  |  | $ | 123 |
Construction, other |  |  | --- |  |  |  | 89 |  |  |  | --- |  |  |  | 89 |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 14 |  |  |  | 54 |  |  |  | 30 |  |  |  | 24 |
Residential closed-end first liens |  |  | 2,167 |  |  |  | 593 |  |  |  | 48 |  |  |  | 972 |
Residential closed-end junior liens |  |  | 99 |  |  |  | 114 |  |  |  | --- |  |  |  | 198 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multifamily real estate |  |  | 701 |  |  |  | 433 |  |  |  | --- |  |  |  | 1,278 |
Commercial real estate, owner occupied |  |  | 1,223 |  |  |  | 2,706 |  |  |  | 20 |  |  |  | 2,953 |
Commercial real estate, other |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 435 |  |  |  | 96 |  |  |  | --- |  |  |  | 490 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Public sector and IDA |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 46 |  |  |  | 3 |  |  |  | 3 |  |  |  | --- |
Automobile |  |  | 283 |  |  |  | 6 |  |  |  | 5 |  |  |  | 3 |
Other consumer loans |  |  | 140 |  |  |  | 8 |  |  |  | 8 |  |  |  | --- |
Total |  | $ | 5,266 |  |  | $ | 4,225 |  |  | $ | 114 |  |  | $ | 6,130 |
An analysis of past due and nonaccrual loans as of December 31, 2011(1) follows.
|  | 30 – 89 Days Past Due |  |  | 90 or More Days Past Due |  |  | 90 or More Days Past Due and Still Accruing |  |  | Nonaccruals (Including Impaired Nonaccruals) |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  | $ | --- |  |  | $ | --- |  |  | $ | --- |  |  | $ | --- |
Closed-end consumer real estate |  |  | 1,735 |  |  |  | 658 |  |  |  | 346 |  |  |  | 313 |
Consumer construction |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 26 |  |  |  | 8 |  |  |  | 8 |  |  |  | --- |
Consumer general |  |  | 270 |  |  |  | 38 |  |  |  | 38 |  |  |  | --- |
Consumer overdraft |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
College housing |  |  | 452 |  |  |  | 250 |  |  |  | --- |  |  |  | 250 |
Office/retail |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Nursing homes |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Hotels |  |  | 616 |  |  |  | 526 |  |  |  | --- |  |  |  | 1,397 |
Municipalities |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Medical professionals |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Religious organizations |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Convenience stores |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Entertainment and sports |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Nonprofits |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Restaurants |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |
General contractors |  |  | 103 |  |  |  | --- |  |  |  | --- |  |  |  | 703 |
Other commercial real estate |  |  | 815 |  |  |  | 488 |  |  |  | 63 |  |  |  | 1,112 |
Commercial and Industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 31 |  |  |  | 26 |  |  |  | 26 |  |  |  | 139 |
Construction, Development and Land |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | --- |  |  |  | 1,290 |  |  |  | --- |  |  |  | 1,290 |
Commercial |  |  | 252 |  |  |  | --- |  |  |  | --- |  |  |  | --- |
Total |  | $ | 4,300 |  |  | $ | 3,284 |  |  | $ | 481 |  |  | $ | 5,204 |
(1) Segments at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. The estimate of credit risk for non-impaired loans is obtained by applying allocations for internal and external factors. The allocations are increased for loans that exhibit greater credit quality risk. Credit quality indicators, which the Company terms risk grades, are assigned through the Company's credit review function for larger loans and selective review of loans that fall below credit review thresholds. Loans that do not indicate heightened risk are graded as "pass." Loans that appear to have elevated credit risk because of frequent or persistent past due status, which is less than 75 days, or that show weakness in the borrower's financial condition are risk graded "special mention." Loans with frequent or persistent delinquency exceeding 75 days or that have a higher level of weakness in the borrower's financial condition are graded "classified." Classified loans have regulatory risk ratings of "substandard" and "doubtful." Allocations are increased by 50% and by 100% for loans with grades of "special mention" and "classified," respectively. Determination of risk grades was completed for the portfolio as of September 30, 2012 and 2011 and December 31, 2011. The following displays collectively-evaluated loans by credit quality indicator. September 30, 2012
|  | Pass |  |  | Special Mention |  |  | Classified (Excluding Impaired) |
Real Estate Construction |  |  |  |  |  |  |  |  |
Construction, 1-4 family residential |  | $ | 15,284 |  |  | $ | --- |  |  | $ | --- |
Construction, other |  |  | 27,842 |  |  |  | 2,961 |  |  |  | 89 |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Equity lines |  |  | 18,265 |  |  |  | 98 |  |  |  | 72 |
Closed-end first liens |  |  | 112,188 |  |  |  | 702 |  |  |  | 2,096 |
Closed-end junior liens |  |  | 6,778 |  |  |  | 124 |  |  |  | 140 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Multifamily residential real estate |  |  | 32,342 |  |  |  | 3,533 |  |  |  | 262 |
Commercial real estate owner-occupied |  |  | 165,685 |  |  |  | 986 |  |  |  | 1,087 |
Commercial real estate other |  |  | 91,482 |  |  |  | 3,132 |  |  |  | --- |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 34,721 |  |  |  | 13 |  |  |  | 461 |
Public Sector and IDA |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  |  | 26,589 |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 6,501 |  |  |  | --- |  |  |  | --- |
Automobile |  |  | 12,913 |  |  |  | 81 |  |  |  | 51 |
Other consumer |  |  | 12,908 |  |  |  | 66 |  |  |  | 44 |
Total |  | $ | 563,498 |  |  | $ | 11,696 |  |  | $ | 4,302 |
The following displays collectively-evaluated loans by credit quality indicator. December 31, 2011(1)
|  | Pass |  |  | Special Mention |  |  | Classified (Excluding Impaired) |
Consumer Real Estate |  |  |  |  |  |  |  |  |
Equity lines |  | $ | 17,971 |  |  | $ | --- |  |  | $ | 14 |
Closed-end consumer real estate |  |  | 87,882 |  |  |  | 595 |  |  |  | 1,332 |
Consumer construction |  |  | 2,050 |  |  |  | --- |  |  |  | --- |
Consumer Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Credit cards |  |  | 6,594 |  |  |  | --- |  |  |  | 1 |
Consumer general |  |  | 22,679 |  |  |  | 42 |  |  |  | 105 |
Consumer overdraft |  |  | 285 |  |  |  | --- |  |  |  | 1 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
College housing |  |  | 88,157 |  |  |  | 452 |  |  |  | 215 |
Office/retail |  |  | 73,106 |  |  |  | 420 |  |  |  | 267 |
Nursing homes |  |  | 16,173 |  |  |  | --- |  |  |  | --- |
Hotel |  |  | 24,498 |  |  |  | --- |  |  |  | 616 |
Municipalities |  |  | 19,230 |  |  |  | --- |  |  |  | --- |
Medical professionals |  |  | 18,577 |  |  |  | --- |  |  |  | --- |
Religious organizations |  |  | 15,852 |  |  |  | --- |  |  |  | --- |
Convenience stores |  |  | 10,519 |  |  |  | --- |  |  |  | --- |
Entertainment and sports |  |  | 7,346 |  |  |  | --- |  |  |  | --- |
Nonprofit |  |  | 3,265 |  |  |  | 3,170 |  |  |  | --- |
Restaurants |  |  | 6,138 |  |  |  | --- |  |  |  | 387 |
General contractors |  |  | 4,550 |  |  |  | 109 |  |  |  | 247 |
Other commercial real estate |  |  | 63,422 |  |  |  | --- |  |  |  | 790 |
Commercial and Industrial |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 37,252 |  |  |  | 196 |  |  |  | 137 |
Construction, Development and Land |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 15,732 |  |  |  | --- |  |  |  | --- |
Commercial |  |  | 22,409 |  |  |  | 2,961 |  |  |  | 130 |
Total |  | $ | 563,687 |  |  | $ | 7,945 |  |  | $ | 4,242 |
(1) Segments at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. Sales, Purchases and Reclassification of Loans The Company finances mortgages under "best efforts" contracts with mortgage purchasers. The mortgages are designated as held for sale upon initiation. There have been no major reclassifications from portfolio loans to held for sale. Occasionally, the Company purchases or sells participations in loans. All participation loans purchased met the Company's normal underwriting standards at the time the participation was entered. Participation loans are included in the appropriate portfolio balances to which the allowance methodology is applied. Troubled Debt Restructurings The Company modified loans in troubled debt restructurings during the periods ended September 30, 2012 and September 30, 2011. The following tables present restructurings by class that occurred during the periods. Note: Only classes with restructured loans are presented.
|  | Restructurings That Occurred During the Three Months Ended September 30, 2012
|  | Number of Contracts |  |  | Pre-Modification Outstanding Principal Balance |  |  | Post-Modification Outstanding Principal Balance |
Consumer Real Estate |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 1 |  |  | $ | 38 |  |  | $ | 38 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 1 |  |  |  | 193 |  |  |  | 193 |
Total |  |  | 2 |  |  | $ | 231 |  |  | $ | 231 |
|  | Restructurings That Occurred During the Three Months Ended September 30, 2011(1)
|  | Number of Contracts |  |  | Pre-Modification Outstanding Principal Balance |  |  | Post-Modification Outstanding Principal Balance |
Construction, Development and Land |  |  |  |  |  |  |  |  |
Residential |  |  | 1 |  |  | $ | 2,400 |  |  | $ | 2,300 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
General contractors |  |  | 2 |  |  |  | 128 |  |  |  | 128 |
Other commercial real estate |  |  | 1 |  |  |  | 392 |  |  |  | 392 |
Total |  |  | 4 |  |  | $ | 2,920 |  |  | $ | 2,820 |
(1) Segments at September 30, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.
|  | Restructurings That Occurred During the Nine Months Ended September 30, 2012 |
|  | Number of Contracts |  |  | Pre-Modification Outstanding Principal Balance |  |  | Post-Modification Outstanding Principal Balance |
Consumer Real Estate |  |  |  |  |  |  |  |  |
Residential closed-end first liens |  |  | 5 |  |  | $ | 383 |  |  | $ | 402 |
Residential closed-end junior liens |  |  | 1 |  |  |  | 143 |  |  |  | 147 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate, owner occupied |  |  | 3 |  |  |  | 890 |  |  |  | 895 |
Commercial Non Real Estate |  |  |  |  |  |  |  |  |  |  |  |
Commercial and Industrial |  |  | 1 |  |  |  | 400 |  |  |  | 400 |
Total |  |  | 10 |  |  | $ | 1,816 |  |  | $ | 1,844 |
|  | Restructurings That Occurred During the Nine Months Ended September 30, 2011(1) |
|  | Number of Contracts |  |  | Pre-Modification Outstanding Principal Balance |  |  | Post-Modification Outstanding Principal Balance |
Consumer Real Estate |  |  |  |  |  |  |  |  |
Closed-end consumer real estate |  |  | 1 |  |  | $ | 75 |  |  | $ | 75 |
Commercial and Industrial |  |  | 1 |  |  |  | 50 |  |  |  | 50 |
Construction, Development and Land |  |  |  |  |  |  |  |  |  |  |  |
Residential |  |  | 2 |  |  |  | 2,634 |  |  |  | 2,534 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |
College housing |  |  | 2 |  |  |  | 422 |  |  |  | 332 |
Medical professionals |  |  | 3 |  |  |  | 73 |  |  |  | 73 |
General contractors |  |  | 2 |  |  |  | 128 |  |  |  | 128 |
Other commercial real estate |  |  | 3 |  |  |  | 696 |  |  |  | 688 |
Total |  |  | 14 |  |  | $ | 4,078 |  |  | $ | 3,880 |
(1) Segments at September 30, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012. Troubled debt restructurings totaled $4,275, with specific allocations of $284 as of September 30, 2012. At September 30, 2011, total restructured loans amounted to $8,605 with specific allocations of $1,372. Loans modified in troubled debt restructurings during the three months ended September 30, 2012 received non-financial underwriting exceptions that reduced payments by changing maturities or amortization structures. The troubled debt restructurings for the nine months ended September 30, 2012 included partial charge offs of $109 for two consumer real estate loans; providing payment relief primarily by extending maturity dates or changing amortization structures without reducing interest rates or amounts owed; and adding a co-borrower to one consumer real estate loan. Restructured loans are designated impaired and measured for impairment. Collateral dependent restructured loans are measured using the fair value of collateral. Non-collateral dependent restructured loans are measured using the present value of cash flows. The impairment measurement resulted in no specific allocations for loans modified during the three months ended September 30, 2012 and $220 for loans modified during the nine months ended September 30, 2012. The following table presents restructured loans that were modified between the dates of October 1, 2011 and September 30, 2012 and that experienced payment default during the three and nine month periods ended September 30, 2012. The company defines default as one or more payments that occur more than 90 days past the due date, or charge-offs after the date of restructuring.
| Restructured Loans That Were Modified Between October 1, 2011 and September 30, 2012 and Defaulted During the
| 3 Month Period Ended September 30, 2012 |  | 9 Month Period Ended September 30, 2012
| Number of Contracts |  | Principal Balance |  | Number of Contracts |  | Principal Balance |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |
Residential closed-end first liens | 1 |  | $ | 96 |  | 1 |  | $ | 96 |
Residential closed-end junior liens | 1 |  |  | 84 |  | 1 |  |  | 84 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |
Commercial real estate owner-occupied | 2 |  |  | 861 |  | 2 |  |  | 861 |
Total | 4 |  | $ | 1,041 |  | 4 |  | $ | 1,041 |
| Restructured Loans That Were Modified Between October 1, 2010 and September 30, 2011 and Defaulted During the
| 3 Month Period Ended September 30, 2011 |  | 9 Month Period Ended September 30, 2011
| Number of Contracts |  | Principal Balance |  | Number of Contracts |  | Principal Balance |
Construction, Development and Land |  |  |  |  |  |  |  |  |  |
Residential | --- |  | $ | --- |  | 1 |  | $ | 234 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |
College housing | --- |  |  | --- |  | 1 |  |  | 255 |
General Contractors | 2 |  |  | 128 |  | 2 |  |  | 131 |
Other commercial real estate | 1 |  |  | 392 |  | 3 |  |  | 700 |
Total | 3 |  | $ | 520 |  | 7 |  | $ | 1,320 |
Of the restructured loans that experienced a payment delay of 90 days or more during the period, all are secured by real estate. The impairment measurement is based upon the fair value of the underlying collateral and as such, was not significantly affected by the payment default. All of the above loans are in nonaccrual status.

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- Definition The allowance for loan and lease losses represents the reserve to cover probable credit losses related to specifically identified loans and leases, as well as probable credit losses inherent in the remainder of the loan portfolio as of the balance sheet date. + References No definition available. + Details
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