| LOANS |
Portfolio loans were as follows (dollars in thousands):
| |
|
September 30,
2011
|
|
|
December 31,
2010
|
|
| |
|
|
|
|
|
|
Commercial and industrial |
|
$ |
221,619 |
|
|
$ |
264,679 |
|
| |
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
Residential developed |
|
|
40,073 |
|
|
|
46,835 |
|
Unsecured to residential developers |
|
|
2,588 |
|
|
|
7,631 |
|
Vacant and unimproved |
|
|
70,075 |
|
|
|
71,528 |
|
Commercial development |
|
|
5,326 |
|
|
|
8,952 |
|
Residential improved |
|
|
84,331 |
|
|
|
96,784 |
|
Commercial improved |
|
|
318,333 |
|
|
|
355,899 |
|
Manufacturing and industrial |
|
|
77,226 |
|
|
|
81,560 |
|
Total commercial real estate |
|
|
597,952 |
|
|
|
669,189 |
|
| |
|
|
|
|
|
|
|
|
Consumer |
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
134,320 |
|
|
|
135,227 |
|
Unsecured |
|
|
1,918 |
|
|
|
2,867 |
|
Home equity |
|
|
110,263 |
|
|
|
125,866 |
|
Other secured |
|
|
16,440 |
|
|
|
19,368 |
|
Total consumer |
|
|
262,941 |
|
|
|
283,328 |
|
| |
|
|
|
|
|
|
|
|
Total loans |
|
|
1,082,512 |
|
|
|
1,217,196 |
|
Allowance for loan losses |
|
|
(34,842 |
) |
|
|
(47,426 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
$ |
1,047,670 |
|
|
$ |
1,169,770 |
|
Activity in the allowance for loan losses by portfolio segment was as follows (dollars in thousands):
Three months ended September 30, 2011: |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Beginning balance |
|
$ |
5,491 |
|
|
$ |
26,815 |
|
|
$ |
5,115 |
|
|
$ |
56 |
|
|
$ |
37,477 |
|
Charge-offs |
|
|
(997 |
) |
|
|
(2,190 |
) |
|
|
(506 |
) |
|
|
--- |
|
|
|
(3,693 |
) |
Recoveries |
|
|
87 |
|
|
|
2,113 |
|
|
|
108 |
|
|
|
--- |
|
|
|
2,308 |
|
Provision for loan losses |
|
|
463 |
|
|
|
(980 |
) |
|
|
(708 |
) |
|
|
(25 |
) |
|
|
(1,250 |
) |
Ending Balance |
|
$ |
5,044 |
|
|
$ |
25,758 |
|
|
$ |
4,009 |
|
|
$ |
31 |
|
|
$ |
34,842 |
|
Three months ended September 30, 2010: |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Beginning balance |
|
$ |
6,121 |
|
|
$ |
47,103 |
|
|
$ |
3,030 |
|
|
$ |
32 |
|
|
$ |
56.286 |
|
Charge-offs |
|
|
(1,578 |
) |
|
|
(2,729 |
) |
|
|
(806 |
) |
|
|
--- |
|
|
|
(5,113 |
) |
Recoveries |
|
|
146 |
|
|
|
225 |
|
|
|
98 |
|
|
|
--- |
|
|
|
469 |
|
Provision for loan losses |
|
|
2,164 |
|
|
|
(4,816 |
) |
|
|
3,208 |
|
|
|
(6 |
) |
|
|
550 |
|
Ending Balance |
|
$ |
6,853 |
|
|
$ |
39,783 |
|
|
$ |
5,530 |
|
|
$ |
26 |
|
|
$ |
52,192 |
|
Nine months ended September 30, 2011: |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Beginning balance |
|
$ |
7,012 |
|
|
$ |
34,973 |
|
|
$ |
5,415 |
|
|
$ |
26 |
|
|
$ |
47,426 |
|
Charge-offs |
|
|
(2,583 |
) |
|
|
(7,716 |
) |
|
|
(1,956 |
) |
|
|
--- |
|
|
|
(12,255 |
) |
Recoveries |
|
|
1,364 |
|
|
|
2,750 |
|
|
|
257 |
|
|
|
--- |
|
|
|
4,371 |
|
Provision for loan losses |
|
|
(749 |
) |
|
|
(4,249 |
) |
|
|
293 |
|
|
|
5 |
|
|
|
(4,700 |
) |
Ending Balance |
|
$ |
5,044 |
|
|
$ |
25,758 |
|
|
$ |
4,009 |
|
|
$ |
31 |
|
|
$ |
34,842 |
|
Nine months ended September 30, 2010: |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Beginning balance |
|
$ |
6,086 |
|
|
$ |
45,759 |
|
|
$ |
2,767 |
|
|
$ |
11 |
|
|
$ |
54,623 |
|
Charge-offs |
|
|
(6,213 |
) |
|
|
(17,770 |
) |
|
|
(2,217 |
) |
|
|
--- |
|
|
|
(26,200 |
) |
Recoveries |
|
|
554 |
|
|
|
961 |
|
|
|
194 |
|
|
|
--- |
|
|
|
1,709 |
|
Provision for loan losses |
|
|
6,426 |
|
|
|
10,833 |
|
|
|
4,786 |
|
|
|
15 |
|
|
|
22,060 |
|
Ending Balance |
|
$ |
6,853 |
|
|
$ |
39,783 |
|
|
$ |
5,530 |
|
|
$ |
26 |
|
|
$ |
52,192 |
|
The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method (dollars in thousands):
September 30, 2011:
| |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance attributable to loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually reviewed for impairment |
|
$ |
1,768 |
|
|
$ |
6,593 |
|
|
$ |
736 |
|
|
$ |
--- |
|
|
$ |
9,097 |
|
Collectively evaluated for impairment |
|
|
3,276 |
|
|
|
19,165 |
|
|
|
3,273 |
|
|
|
31 |
|
|
|
25,745 |
|
Total ending allowance balance |
|
$ |
5,044 |
|
|
$ |
25,758 |
|
|
$ |
4,009 |
|
|
$ |
31 |
|
|
$ |
34,842 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually reviewed for impairment |
|
$ |
14,318 |
|
|
$ |
55,978 |
|
|
$ |
14,664 |
|
|
$ |
--- |
|
|
$ |
84,960 |
|
Collectively evaluated for impairment |
|
|
207,301 |
|
|
|
541,974 |
|
|
|
248,277 |
|
|
|
--- |
|
|
|
997,552 |
|
Total ending loans balance |
|
$ |
221,619 |
|
|
$ |
597,952 |
|
|
$ |
262,941 |
|
|
$ |
--- |
|
|
$ |
1,082,512 |
|
December 31, 2010:
| |
|
Commercial and
Industrial
|
|
|
Commercial
Real Estate
|
|
|
Consumer |
|
|
Unallocated |
|
|
Total |
|
Allowance for loan losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance attributable to loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually reviewed for impairment |
|
$ |
1,576 |
|
|
$ |
5,334 |
|
|
$ |
458 |
|
|
$ |
--- |
|
|
$ |
7,368 |
|
Collectively evaluated for impairment |
|
|
5,436 |
|
|
|
29,639 |
|
|
|
4,957 |
|
|
|
26 |
|
|
|
40,058 |
|
Total ending allowance balance |
|
$ |
7,012 |
|
|
$ |
34,973 |
|
|
$ |
5,415 |
|
|
$ |
26 |
|
|
$ |
47,426 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually reviewed for impairment |
|
$ |
7,757 |
|
|
$ |
70,677 |
|
|
$ |
13,752 |
|
|
$ |
--- |
|
|
$ |
92,186 |
|
Collectively evaluated for impairment |
|
|
256,922 |
|
|
|
598,512 |
|
|
|
269,576 |
|
|
|
--- |
|
|
|
1,125,010 |
|
Total ending loans balance |
|
$ |
264,679 |
|
|
$ |
669,189 |
|
|
$ |
283,328 |
|
|
$ |
--- |
|
|
$ |
1,217,196 |
|
Total impaired loans of $85.0 million at September 30, 2011 included the additional $15.8 million in troubled debt restructurings (“TDRs”) identified upon adoption of the new accounting standard ASU 2011-02, A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. Since adoption of the new standard was appropriately applied only to restructurings occurring on or after January 1, 2011, the December 31, 2010 impaired loan total does not include TDRs identified under the new standard. Impaired loans were as follows (dollars in thousands):
| |
|
September 30, 2011 |
|
|
December 31, 2010 |
|
| |
|
|
|
|
|
|
Impaired commercial loans with no allocated allowance for loan losses |
|
$ |
21,338 |
|
|
$ |
48,519 |
|
| |
|
|
|
|
|
|
|
|
Impaired loans with allocated allowance for loan losses: |
|
|
|
|
|
|
|
|
Impaired commercial loans |
|
|
48,958 |
|
|
|
29,915 |
|
Consumer mortgage loans modified under a troubled debt restructuring |
|
|
14,664 |
|
|
|
13,752 |
|
| |
|
|
63,622 |
|
|
|
43,667 |
|
| |
|
|
|
|
|
|
|
|
Total impaired loans |
|
$ |
84,960 |
|
|
$ |
92,186 |
|
| |
|
|
|
|
|
|
|
|
Amount of the allowance for loan losses allocated |
|
$ |
9,097 |
|
|
$ |
7,368 |
|
| |
|
Nine Months
Ended
September 30,
2011
|
|
|
Nine Months
Ended
September 30,
2010
|
|
Average of impaired loans during the period: |
|
|
|
|
|
|
Commercial and industrial |
|
$ |
6,011 |
|
|
$ |
9,357 |
|
| |
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
Residential developed |
|
|
13,443 |
|
|
|
25,841 |
|
Unsecured to residential developers |
|
|
727 |
|
|
|
2,015 |
|
Vacant and unimproved |
|
|
5,700 |
|
|
|
4,445 |
|
Commercial development |
|
|
463 |
|
|
|
2,530 |
|
Residential improved |
|
|
9,576 |
|
|
|
14,203 |
|
Commercial improved |
|
|
19,679 |
|
|
|
29,576 |
|
Manufacturing and industrial |
|
|
7,464 |
|
|
|
7,159 |
|
| |
|
|
|
|
|
|
|
|
Consumer |
|
|
12,452 |
|
|
|
10,239 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Interest income recognized during impairment: |
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
157 |
|
|
|
201 |
|
Commercial real estate |
|
|
1,505 |
|
|
|
635 |
|
Consumer |
|
|
308 |
|
|
|
316 |
|
| |
|
|
|
|
|
|
|
|
Cash-basis interest income recognized |
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
220 |
|
|
|
549 |
|
Commercial real estate |
|
|
1,467 |
|
|
|
926 |
|
Consumer |
|
|
315 |
|
|
|
350 |
|
The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2011 (dollars in thousands):
| |
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
Allocated
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
2,588 |
|
|
$ |
2,588 |
|
|
$ |
--- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
11,378 |
|
|
|
5,198 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Vacant and unimproved |
|
|
5,908 |
|
|
|
4,609 |
|
|
|
--- |
|
Commercial development |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Residential improved |
|
|
1,568 |
|
|
|
1,568 |
|
|
|
--- |
|
Commercial improved |
|
|
7,772 |
|
|
|
6,536 |
|
|
|
--- |
|
Manufacturing and industrial |
|
|
839 |
|
|
|
839 |
|
|
|
--- |
|
| |
|
|
27,465 |
|
|
|
18,750 |
|
|
|
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Unsecured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Home equity |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Other secured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
$ |
30,053 |
|
|
$ |
21,338 |
|
|
$ |
--- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
11,731 |
|
|
$ |
11,731 |
|
|
$ |
1,768 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
6,364 |
|
|
|
6,364 |
|
|
|
2,435 |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Vacant and unimproved |
|
|
2,604 |
|
|
|
2,604 |
|
|
|
553 |
|
Commercial development |
|
|
221 |
|
|
|
221 |
|
|
|
17 |
|
Residential improved |
|
|
9,278 |
|
|
|
9,260 |
|
|
|
1,651 |
|
Commercial improved |
|
|
12,205 |
|
|
|
12,205 |
|
|
|
1,652 |
|
Manufacturing and industrial |
|
|
6,573 |
|
|
|
6,573 |
|
|
|
285 |
|
| |
|
|
37,245 |
|
|
|
37,227 |
|
|
|
6,593 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
14,664 |
|
|
|
14,664 |
|
|
|
736 |
|
Unsecured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Home equity |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Other secured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
|
14,664 |
|
|
|
14,664 |
|
|
|
736 |
|
| |
|
$ |
63,640 |
|
|
$ |
63,622 |
|
|
$ |
9,097 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
93,693 |
|
|
$ |
84,960 |
|
|
$ |
9,097 |
|
The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2010 (dollars in thousands):
| |
|
Unpaid
Principal
Balance
|
|
|
Recorded
Investment
|
|
|
Allowance
Allocated
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
5,394 |
|
|
$ |
4,286 |
|
|
$ |
--- |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
28,289 |
|
|
|
8,205 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
315 |
|
|
|
315 |
|
|
|
--- |
|
Vacant and unimproved |
|
|
6,219 |
|
|
|
5,693 |
|
|
|
--- |
|
Commercial development |
|
|
3,176 |
|
|
|
1,055 |
|
|
|
--- |
|
Residential improved |
|
|
4,396 |
|
|
|
4,378 |
|
|
|
--- |
|
Commercial improved |
|
|
24,566 |
|
|
|
22,749 |
|
|
|
--- |
|
Manufacturing and industrial |
|
|
2,239 |
|
|
|
1,838 |
|
|
|
--- |
|
| |
|
|
69,200 |
|
|
|
44,233 |
|
|
|
|
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Unsecured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Home equity |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Other secured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
$ |
74,594 |
|
|
$ |
48,519 |
|
|
$ |
--- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
3,517 |
|
|
$ |
3,470 |
|
|
$ |
1,576 |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
6,373 |
|
|
|
6,373 |
|
|
|
2,402 |
|
Unsecured to residential developers |
|
|
2,364 |
|
|
|
609 |
|
|
|
84 |
|
Vacant and unimproved |
|
|
266 |
|
|
|
266 |
|
|
|
44 |
|
Commercial development |
|
|
199 |
|
|
|
199 |
|
|
|
15 |
|
Residential improved |
|
|
4,806 |
|
|
|
4,662 |
|
|
|
1,381 |
|
Commercial improved |
|
|
6,710 |
|
|
|
6,172 |
|
|
|
1,096 |
|
Manufacturing and industrial |
|
|
8,163 |
|
|
|
8,164 |
|
|
|
312 |
|
| |
|
|
28,881 |
|
|
|
26,445 |
|
|
|
5,334 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
13,752 |
|
|
|
13,752 |
|
|
|
458 |
|
Unsecured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Home equity |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
Other secured |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
| |
|
|
13,752 |
|
|
|
13,752 |
|
|
|
458 |
|
|
|
$ |
46,150 |
|
|
$ |
43,667 |
|
|
$ |
7,368 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
120,744 |
|
|
$ |
92,186 |
|
|
$ |
7,368 |
|
Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.
The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2011:
| |
|
Nonaccrual
|
|
|
Over 90
days
Accruing
|
|
| |
|
|
|
|
|
|
Commercial and industrial |
|
$ |
8,708 |
|
|
$ |
--- |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
Residential developed |
|
|
6,375 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
Vacant and unimproved |
|
|
5,133 |
|
|
|
170 |
|
Commercial development |
|
|
426 |
|
|
|
60 |
|
Residential improved |
|
|
4,902 |
|
|
|
--- |
|
Commercial improved |
|
|
6,137 |
|
|
|
937 |
|
Manufacturing and industrial |
|
|
134 |
|
|
|
--- |
|
| |
|
|
23,107 |
|
|
|
1,167 |
|
Consumer: |
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
1,042 |
|
|
|
331 |
|
Unsecured |
|
|
23 |
|
|
|
--- |
|
Home equity |
|
|
395 |
|
|
|
250 |
|
Other secured |
|
|
--- |
|
|
|
3 |
|
| |
|
|
1,460 |
|
|
|
584 |
|
| |
|
|
|
|
|
|
|
|
Total |
|
$ |
33,275 |
|
|
$ |
1,751 |
|
The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2010:
| |
|
Nonaccrual
|
|
|
Over 90
days
Accruing
|
|
| |
|
|
|
|
|
|
Commercial and industrial |
|
$ |
11,583 |
|
|
$ |
--- |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
Residential developed |
|
|
10,848 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
925 |
|
|
|
390 |
|
Vacant and unimproved |
|
|
7,517 |
|
|
|
--- |
|
Commercial development |
|
|
1,652 |
|
|
|
--- |
|
Residential improved |
|
|
9,858 |
|
|
|
--- |
|
Commercial improved |
|
|
27,816 |
|
|
|
--- |
|
Manufacturing and industrial |
|
|
1,570 |
|
|
|
197 |
|
| |
|
|
60,186 |
|
|
|
587 |
|
Consumer: |
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
1,830 |
|
|
|
--- |
|
Unsecured |
|
|
25 |
|
|
|
--- |
|
Home equity |
|
|
1,127 |
|
|
|
13 |
|
Other secured |
|
|
10 |
|
|
|
--- |
|
| |
|
|
2,992 |
|
|
|
13 |
|
| |
|
|
|
|
|
|
|
|
Total |
|
$ |
74,761 |
|
|
$ |
600 |
|
The following table presents the aging of the recorded investment in past due loans as of September 30, 2011 by class of loans (dollars in thousands):
| |
|
30-90
Days
|
|
|
Greater Than
90 Days
|
|
|
Total
Past Due
|
|
|
Loans Not
Past Due
|
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
682 |
|
|
$ |
739 |
|
|
$ |
1,421 |
|
|
$ |
220,198 |
|
|
$ |
221,619 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
--- |
|
|
|
1,917 |
|
|
|
1,917 |
|
|
|
38,156 |
|
|
|
40,073 |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
2,588 |
|
|
|
2,588 |
|
Vacant and unimproved |
|
|
788 |
|
|
|
3,524 |
|
|
|
4,312 |
|
|
|
65,763 |
|
|
|
70,075 |
|
Commercial development |
|
|
--- |
|
|
|
426 |
|
|
|
426 |
|
|
|
4,900 |
|
|
|
5,326 |
|
Residential improved |
|
|
811 |
|
|
|
865 |
|
|
|
1,676 |
|
|
|
82,655 |
|
|
|
84,331 |
|
Commercial improved |
|
|
3,287 |
|
|
|
4,374 |
|
|
|
7,661 |
|
|
|
310,672 |
|
|
|
318,333 |
|
Manufacturing and industrial |
|
|
--- |
|
|
|
134 |
|
|
|
134 |
|
|
|
77,092 |
|
|
|
77,226 |
|
| |
|
|
4,886 |
|
|
|
11,240 |
|
|
|
16,126 |
|
|
|
581,826 |
|
|
|
597,952 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
316 |
|
|
|
996 |
|
|
|
1,312 |
|
|
|
133,008 |
|
|
|
134,320 |
|
Unsecured |
|
|
54 |
|
|
|
--- |
|
|
|
54 |
|
|
|
1,864 |
|
|
|
1,918 |
|
Home equity |
|
|
1,059 |
|
|
|
608 |
|
|
|
1,667 |
|
|
|
108,596 |
|
|
|
110,263 |
|
Other secured |
|
|
116 |
|
|
|
3 |
|
|
|
119 |
|
|
|
16,321 |
|
|
|
16,440 |
|
| |
|
|
1,545 |
|
|
|
1,607 |
|
|
|
3,152 |
|
|
|
259,789 |
|
|
|
262,941 |
|
Total |
|
$ |
7,113 |
|
|
$ |
13,586 |
|
|
$ |
20,699 |
|
|
$ |
1,061,813 |
|
|
$ |
1,082,512 |
|
The following table presents the aging of the recorded investment in past due loans as of December 31, 2010 by class of loans (dollars in thousands):
| |
|
30-90
Days
|
|
|
Greater Than
90 Days
|
|
|
Total
Past Due
|
|
|
Loans Not
Past Due
|
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
825 |
|
|
$ |
5,389 |
|
|
$ |
6,214 |
|
|
$ |
258,465 |
|
|
$ |
264,679 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
438 |
|
|
|
4,568 |
|
|
|
5,006 |
|
|
|
41,829 |
|
|
|
46,835 |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
999 |
|
|
|
999 |
|
|
|
6,632 |
|
|
|
7,631 |
|
Vacant and unimproved |
|
|
670 |
|
|
|
4,367 |
|
|
|
5,037 |
|
|
|
66,491 |
|
|
|
71,528 |
|
Commercial development |
|
|
--- |
|
|
|
1,144 |
|
|
|
1,144 |
|
|
|
7,808 |
|
|
|
8,952 |
|
Residential improved |
|
|
1,929 |
|
|
|
6,353 |
|
|
|
8,282 |
|
|
|
88,502 |
|
|
|
96,784 |
|
Commercial improved |
|
|
901 |
|
|
|
21,440 |
|
|
|
22,341 |
|
|
|
333,558 |
|
|
|
355,899 |
|
Manufacturing and industrial |
|
|
1,084 |
|
|
|
613 |
|
|
|
1,697 |
|
|
|
79,863 |
|
|
|
81,560 |
|
| |
|
|
5,022 |
|
|
|
39,484 |
|
|
|
44,506 |
|
|
|
624,683 |
|
|
|
669,189 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
1,293 |
|
|
|
1,489 |
|
|
|
2,782 |
|
|
|
132,445 |
|
|
|
135,227 |
|
Unsecured |
|
|
45 |
|
|
|
--- |
|
|
|
45 |
|
|
|
2,822 |
|
|
|
2,867 |
|
Home equity |
|
|
1,207 |
|
|
|
927 |
|
|
|
2,134 |
|
|
|
123,732 |
|
|
|
125,866 |
|
Other secured |
|
|
57 |
|
|
|
10 |
|
|
|
67 |
|
|
|
19,301 |
|
|
|
19,368 |
|
| |
|
|
2,602 |
|
|
|
2,426 |
|
|
|
5,028 |
|
|
|
278,300 |
|
|
|
283,328 |
|
Total |
|
$ |
8,449 |
|
|
$ |
47,299 |
|
|
$ |
55,748 |
|
|
$ |
1,161,448 |
|
|
$ |
1,217,196 |
|
The Company had allocated $5,753,000 and $1,361,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings (“TDRs”) as of September 30, 2011 and December 31, 2010, respectively. These loans involved the restructuring of terms to allow customers to mitigate the risk of foreclosure by meeting a lower loan payment requirement based upon their current cash flow. The Company has been active at utilizing these programs and working with its customers to reduce the risk of foreclosure. For commercial loans, these modifications typically include an interest only period and, in some cases, a lowering of the interest rate on the loan. In some cases, the modification will include separating the note into two notes with the first note structured to be supported by current cash flows and collateral, and the second note made for the remaining unsecured debt. The second note is charged off immediately and collected only after the first note is paid in full. This modification type is commonly referred to as an A-B note structure. For consumer mortgage loans, the restructuring typically includes a lowering of the interest rate to provide payment and cash flow relief.
As with other impaired loans, an allowance for loan loss is estimated for each TDR based on the most likely source of repayment for each loan. For impaired commercial real estate loans that are collateral dependent, the allowance is computed based on the fair value of the underlying collateral. For impaired commercial loans where repayment is expected from cash flows from business operations, the allowance is computed based on a discounted cash flow computation. Certain groups of TDRs, such as residential mortgages, have common characteristics and for them the allowance is computed based on a discounted cash flow computation on the change in weighted rate for the pool. The allowance allocations for commercial TDRs where we have reduced the contractual interest rate are computed by measuring cash flows using the new payment terms discounted at the original contractual rate.
Total TDRs of $62.0 million at September 30, 2011 included the additional $15.8 million in TDRs identified upon adoption of the new accounting standard ASU 2011-02, A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. Since adoption of the new standard was appropriately applied only to restructurings occurring on or after January 1, 2011, the December 31, 2010 TDR total does not include TDRs identified under the new standard.
The following table presents information regarding troubled debt restructurings as of September 30, 2011 and December 31, 2010 (dollars in thousands):
| |
|
September 30, 2011 |
|
|
December 31, 2010 |
|
| |
|
Number of Loans
|
|
|
Outstanding Recorded Balance |
|
|
Number of Loans
|
|
|
Outstanding Recorded Balance |
|
Commercial and industrial |
|
|
37 |
|
|
$ |
8,173 |
|
|
|
6 |
|
|
$ |
743 |
|
Commercial real estate |
|
|
93 |
|
|
|
39,177 |
|
|
|
24 |
|
|
|
11,548 |
|
Consumer |
|
|
83 |
|
|
|
14,664 |
|
|
|
80 |
|
|
|
13,765 |
|
| |
|
|
213 |
|
|
$ |
62,014 |
|
|
|
110 |
|
|
$ |
26,056 |
|
The following table presents information regarding troubled debt restructurings executed during the three and nine month periods ended September 30, 2011 (dollars in thousands):
| |
|
Three Months Ended
September 30, 2011
|
|
|
Nine Months Ended
September 30, 2011
|
|
| |
|
Number of Loans
|
|
|
Outstanding Recorded Balance |
|
|
Principal Writedown upon Modification |
|
|
Number of Loans |
|
|
Outstanding Recorded Balance |
|
|
Principal Writedown upon Modification |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
|
12 |
|
|
$ |
3,876 |
|
|
$ |
51 |
|
|
|
32 |
|
|
$ |
6,124 |
|
|
$ |
51 |
|
Commercial real estate |
|
|
23 |
|
|
|
8,065 |
|
|
|
144 |
|
|
|
37 |
|
|
|
23,459 |
|
|
|
697 |
|
Consumer |
|
|
1 |
|
|
|
213 |
|
|
|
--- |
|
|
|
12 |
|
|
|
1,883 |
|
|
|
--- |
|
The table below presents by class, information regarding troubled debt restructured loans which had payment defaults during the three and nine month periods ended September 30, 2011 (dollars in thousands). Included are loans that became delinquent more than 90 days past due or transferred to nonaccrual within 12 months of restructuring.
| |
|
Three Months Ended
September 30, 2011
|
|
|
Nine Months Ended
September 30, 2011
|
|
| |
|
Number of Loans
|
|
|
Outstanding Recorded Balance |
|
|
Number of Loans |
|
|
Outstanding Recorded Balance |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
1 |
|
|
$ |
66 |
|
|
4 |
|
|
$ |
830 |
|
Commercial real estate |
|
9 |
|
|
|
1,925 |
|
|
9 |
|
|
|
1,925 |
|
Consumer |
|
2 |
|
|
|
402 |
|
|
2 |
|
|
|
402 |
|
Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes commercial loans individually and classifies these relationships by credit risk grading. The Company uses an eight point grading system, with grades 5 through 8 being considered classified, or watch, credits. All commercial loans are assigned a grade at origination, at each renewal or any amendment. When a credit is first downgraded to a watch credit (either through renewal, amendment, lender identification or the loan review process), an Administrative Loan Review (“ALR”) is generated by credit and the lender. All watch credits have an ALR completed monthly which analyzes the collateral position and cash flow of the borrower and its guarantors. The lender is required to complete both a short term and long term plan to rehabilitate or exit the credit and to provide monthly comments on the progress to these plans. Management meets quarterly with lenders to discuss each of these credits in detail and to help attempt to formulate solutions where progress has stalled. When necessary, the loan officer proposes changes to the assigned loan grade as part of the ALR. Additionally, Loan Review reviews all loan grades upon origination, renewal or amendment and again as loans are selected through the loan review process. The credit will stay on the ALR until either its grade has improved to a 4 or better or the credit relationship is at a zero balance. The Company uses the following definitions for the risk grades:
1. Excellent - Borrowings supported by extremely strong financial condition or secured by the Bank's own deposits. Minimal risk to the Bank and the probability of serious rapid financial deterioration is extremely small.
2. Above Average - Borrowings supported by sound financial statements that indicate the ability to repay or borrowings secured (and margined properly) with marketable securities. Nominal risk to the Bank and probability of serious financial deterioration is highly unlikely. The overall quality of these credits is very high.
3. Good Quality - Average borrowings supported by satisfactory asset quality and liquidity, good debt capacity coverage, and good management in all critical positions. Loans are secured by acceptable collateral with adequate margins. There is a slight risk of deterioration if adverse market conditions prevail.
4. Acceptable Risk - This is an acceptable risk to the Bank, which may be slightly below average quality. The borrower has limited financial strength with considerable leverage. There is some probability of deterioration if adverse market conditions prevail. These credits should be monitored closely by the Relationship Manager.
5. Marginally Acceptable - Loans are of marginal quality with above normal risk to the Bank. The borrower shows acceptable asset quality but very little liquidity with high leverage. There is inconsistent earning performance without the ability to sustain adverse market conditions. The primary source of repayment is questionable, but the secondary source of repayment still remains an option. Very close attention by the Relationship Manager and management is needed.
6. Substandard - Loans are inadequately protected by the net worth and paying capacity of the borrower or the collateral pledged. The primary and secondary sources of repayment are questionable. Heavy debt condition may be evident and volume and earnings deterioration may be underway. It is possible that the Bank will sustain some loss if the deficiencies are not immediately addressed and corrected.
7. Doubtful - Borrowings supported by weak or no financial statements. The ability to repay the entire loan is questionable. Loans in this category are normally characterized with less than adequate collateral, insolvent, or extremely weak financial condition. A loan classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses makes collection or liquidation in full highly questionable. The possibility of loss is extremely high, however, activity may be underway to minimize the loss or maximize the recovery.
8. Loss - Loan are considered uncollectible and of little or no value as a bank asset.
As of September 30, 2011, the risk grade category of commercial loans by class of loans was as follows (dollars in thousands):
| |
|
1 |
|
|
2
|
|
|
3 |
|
|
4
|
|
|
5 |
|
|
6 |
|
|
7 |
|
|
8 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
600 |
|
|
$ |
1,335 |
|
|
$ |
44,442 |
|
|
$ |
136,976 |
|
|
$ |
21,721 |
|
|
$ |
7,851 |
|
|
$ |
8,694 |
|
|
$ |
--- |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
--- |
|
|
|
--- |
|
|
|
283 |
|
|
|
10,429 |
|
|
|
15,549 |
|
|
|
7,437 |
|
|
|
6,375 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
|
|
1,386 |
|
|
|
674 |
|
|
|
188 |
|
|
|
340 |
|
|
|
--- |
|
|
|
--- |
|
Vacant and unimproved |
|
|
--- |
|
|
|
--- |
|
|
|
13,895 |
|
|
|
31,243 |
|
|
|
15,398 |
|
|
|
4,406 |
|
|
|
5,133 |
|
|
|
--- |
|
Commercial development |
|
|
--- |
|
|
|
--- |
|
|
|
55 |
|
|
|
2,625 |
|
|
|
1,111 |
|
|
|
1,110 |
|
|
|
426 |
|
|
|
--- |
|
Residential improved |
|
|
--- |
|
|
|
--- |
|
|
|
2,818 |
|
|
|
47,274 |
|
|
|
17,871 |
|
|
|
11,466 |
|
|
|
4,902 |
|
|
|
--- |
|
Commercial improved |
|
|
--- |
|
|
|
--- |
|
|
|
65,385 |
|
|
|
184,163 |
|
|
|
38,461 |
|
|
|
24,186 |
|
|
|
6,137 |
|
|
|
--- |
|
Manufacturing and industrial |
|
|
--- |
|
|
|
221 |
|
|
|
13,637 |
|
|
|
42,170 |
|
|
|
11,572 |
|
|
|
9,493 |
|
|
|
133 |
|
|
|
--- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
600 |
|
|
$ |
1,556 |
|
|
$ |
141,901 |
|
|
$ |
455,554 |
|
|
$ |
121,871 |
|
|
$ |
66,289 |
|
|
$ |
31,800 |
|
|
$ |
--- |
|
As of December 31, 2010, the risk grade category of commercial loans by class of loans was as follows (dollars in thousands):
| |
|
1 |
|
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
6
|
|
|
7 |
|
|
8 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
442 |
|
|
$ |
1,583 |
|
|
$ |
51,558 |
|
|
$ |
148,880 |
|
|
$ |
41,467 |
|
|
$ |
9,165 |
|
|
$ |
11,584 |
|
|
$ |
--- |
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential developed |
|
|
--- |
|
|
|
--- |
|
|
|
240 |
|
|
|
6,682 |
|
|
|
14,705 |
|
|
|
14,360 |
|
|
|
10,848 |
|
|
|
--- |
|
Unsecured to residential developers |
|
|
--- |
|
|
|
--- |
|
|
|
4,784 |
|
|
|
907 |
|
|
|
500 |
|
|
|
515 |
|
|
|
925 |
|
|
|
--- |
|
Vacant and unimproved |
|
|
--- |
|
|
|
794 |
|
|
|
5,450 |
|
|
|
38,808 |
|
|
|
14,978 |
|
|
|
3,982 |
|
|
|
7,516 |
|
|
|
--- |
|
Commercial development |
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
4,240 |
|
|
|
2,765 |
|
|
|
295 |
|
|
|
1,652 |
|
|
|
--- |
|
Residential improved |
|
|
--- |
|
|
|
--- |
|
|
|
3,321 |
|
|
|
49,905 |
|
|
|
18,715 |
|
|
|
14,985 |
|
|
|
9,858 |
|
|
|
--- |
|
Commercial improved |
|
|
--- |
|
|
|
--- |
|
|
|
71,622 |
|
|
|
191,772 |
|
|
|
41,490 |
|
|
|
23,199 |
|
|
|
27,816 |
|
|
|
--- |
|
Manufacturing and industrial |
|
|
--- |
|
|
|
246 |
|
|
|
14,299 |
|
|
|
37,487 |
|
|
|
22,261 |
|
|
|
5,697 |
|
|
|
1,570 |
|
|
|
--- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
442 |
|
|
$ |
2,623 |
|
|
$ |
151,274 |
|
|
$ |
478,681 |
|
|
$ |
156,881 |
|
|
$ |
72,198 |
|
|
$ |
71,769 |
|
|
$ |
--- |
|
Commercial loans rated a 6 or worse per the Company's internal risk rating system are considered substandard, doubtful or loss. Commercial loans classified as substandard or worse were as follows at period-end (dollars in thousands):
| |
|
September 30, 2011 |
|
|
December 31, 2010 |
|
| |
|
|
|
|
|
|
Not classified as impaired |
|
$ |
39,815 |
|
|
$ |
65,533 |
|
Classified as impaired |
|
|
58,274 |
|
|
|
78,434 |
|
| |
|
|
|
|
|
|
|
|
Total commercial loans classified substandard or worse |
|
$ |
98,089 |
|
|
$ |
143,967 |
|
At September 30, 2011, approximately $31.8 million of the $98.1 million of commercial loans classified as substandard or worse were on nonaccrual status, while the remaining $66.3 million of these loans were on accrual status.
At December 31, 2010, approximately $71.8 million of the $144.0 million of commercial loans classified as substandard or worse were on nonaccrual status, while the remaining $72.2 million of these loans were on accrual status.
The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in consumer loans based on payment activity (dollars in thousands):
September 30, 2011 |
|
Residential
Mortgage
|
|
|
Consumer
Unsecured
|
|
|
Home
Equity
|
|
|
Consumer
Other
|
|
Performing |
|
$ |
133,324 |
|
|
$ |
1,918 |
|
|
$ |
109,655 |
|
|
$ |
16,437 |
|
Nonperforming |
|
|
996 |
|
|
|
--- |
|
|
|
608 |
|
|
|
3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
134,320 |
|
|
$ |
1,918 |
|
|
$ |
110,263 |
|
|
$ |
16,440 |
|
December 31, 2010 |
|
Residential
Mortgage
|
|
|
Consumer
Unsecured
|
|
|
Home
Equity
|
|
|
Consumer
Other
|
|
Performing |
|
$ |
133,738 |
|
|
$ |
2,867 |
|
|
$ |
124,939 |
|
|
$ |
19,358 |
|
Nonperforming |
|
|
1,489 |
|
|
|
--- |
|
|
|
927 |
|
|
|
10 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
135,227 |
|
|
$ |
2,867 |
|
|
$ |
125,866 |
|
|
$ |
19,368 |
|
|