Trade, Other and Loans Receivable
 12 Months Ended
Dec. 31, 2012
Receivables [Abstract]  
Trade, Other and Loans Receivable
TRADE, OTHER AND LOANS RECEIVABLE

Trade and Other Receivables
 
December 31,
2012
 
December 31,
2011
Trade accounts receivable, net of allowance for
doubtful accounts of $2,264 in 2012 and $2,286 in 2011
$
85,463

 
$
80,533

Other receivables
2,194

 
5,252

Total
$
87,657

 
$
85,785


Loans Receivable

Major classification of WebBank’s loans receivable at December 31, 2012 and 2011 are as follows:
 
Total
 
Current
 
Non-current
 
December 31, 2012
 
%
 
December 31, 2011
 
%
 
December 31, 2012
 
December 31, 2011
 
December 31, 2012
 
December 31, 2011
Real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial - owner occupied
$
6,724

 
10
%
 
$
8,340

 
19
%
 
$
198

 
$
302

 
$
6,526

 
$
8,038

Commercial – other
318

 
—
%
 
300

 
—
%
 
9

 
9

 
309

 
291

Total real estate loans
7,042

 
10
%
 
8,640

 
19
%
 
207

 
311

 
6,835

 
8,329

Commercial and industrial
9,832

 
15
%
 
4,344

 
10
%
 
451

 
3,731

 
9,381

 
613

Loans held for sale
51,505

 
75
%
 
31,363

 
71
%
 
51,505

 
31,363

 
—

 
—

Total loans
68,379

 
100
%
 
44,347

 
100
%
 
52,163

 
35,405

 
16,216

 
8,942

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred fees and discounts
21

 
 
 
(56
)
 
 
 
21

 
(56
)
 
—

 
—

Allowance for loan losses
(285
)
 
 
 
(529
)
 
 
 
(285
)
 
(529
)
 
—

 
—

Total loans receivable, net (a)
$
68,115

 
 
 
$
43,762

 
 
 
$
51,899

 
$
34,820

 
$
16,216

 
$
8,942

(a) The carrying value is considered to be representative of fair value because the rates of interest are not significantly different from market interest rates for instruments with similar maturities. The fair value of loans receivable, net was $71,111 and $44,031 at December 31, 2012 and 2011, respectively.

    


Allowance for Loan and Lease Losses

The Allowance for Loan and Lease Losses (“ALLL”) represents an estimate of probable and estimable losses inherent in the loan and lease portfolio as of the balance sheet date. Losses are charged to the ALLL when recognized. Generally, commercial loans are charged off or charged down at the point at which they are determined to be uncollectible in whole or in part. The amount of the ALLL is established by analyzing the portfolio at least quarterly, and the provisions for loan losses is adjusted so that the ALLL is at an appropriate level at the balance sheet date.

The methodologies used to estimate the ALLL depend upon the impairment status and portfolio segment of the loan. For the commercial and commercial real estate segments, a comprehensive loan grading system is used to assign loss given default grades to each loan. The credit quality indicators discussed subsequently are based on this grading system. Loss given default grades are based on both financial and statistical models and loan officers’ judgment. Groupings of these grades are created for each loan class and calculate historic loss rates ranging from the previous 36 months.

After applying historic loss experience, as described above, the quantitatively derived level of ALLL is reviewed for each segment using qualitative criteria. Various risk factors are tracked that influence judgment regarding the level of the ALLL across the portfolio segments. Primary qualitative factors that may be reflected in the quantitative models include:

•
Asset quality trends
•
Risk management and loan administration practices
•
Risk identification practices
•
Effect of changes in the nature and volume of the portfolio
•
Existence and effect of any portfolio concentrations
•
National economic and business conditions
•
Regional and local economic and business conditions
•
Data availability and applicability

Changes in these factors are reviewed to ensure that changes in the level of the ALLL are consistent with changes in these factors. The magnitude of the impact of each of these factors on the qualitative assessment of the ALLL changes from quarter to quarter according to the extent these factors are already reflected in historic loss rates and according to the extent these factors diverge from one another. Also considered is the uncertainty inherent in the estimation process when evaluating the ALLL.

Changes in the allowance for loan and lease losses are summarized as follows:
 
 
Real Estate
 
 
 
 
 
 
 
 
Commercial - Owner Occupied
 
Commercial - Other
 
Commercial & Industrial
 
Unallocated
 
Total
Beginning balance - December 31, 2011
 
$
347

 
$
46

 
$
136

 
$
—

 
$
529

Charge-offs
 
1

 
—

 
—

 
—

 
1

Recoveries
 
46

 
44

 
80

 
—

 
170

Provision
 
(207
)
 
(56
)
 
(152
)
 
—

 
(415
)
Ending Balance – December 31, 2012
 
$
187

 
$
34

 
$
64

 
$
—

 
$
285








The ALLL and outstanding loan balances according to the Company’s impairment method are summarized as follows at December 31, 2012:
 
 
Real Estate
 
 
 
 
 
 
Commercial - Owner Occupied
 
Commercial - Other
 
Commercial & Industrial
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
—

 
$
—

 
$
—

 
$
—

Collectively evaluated for impairment
 
187

 
34

 
64

 
285

Total
 
$
187

 
$
34

 
$
64

 
$
285

Outstanding Loan balances:
 
 
 
 
 
 
 
 
Individually evaluated for impairment (1)
 
$
2,728

 
$
—

 
$
186

 
$
2,914

Collectively evaluated for impairment
 
3,996

 
318

 
9,646

 
13,960

Total
 
$
6,724

 
$
318

 
$
9,832

 
$
16,874


(1) $2,328 is guaranteed by the USDA or SBA.
    
Nonaccrual and Past Due Loans

Loans are generally placed on nonaccrual status when payment in full of principal and interest is not expected, or the loan is 90 days or more past due as to principal or interest, unless the loan is both well secured and in the process of collection.

A nonaccrual loan may be returned to accrual status when all delinquent interest and principal become current in accordance with the terms of the loan agreement; and the loan, if secured, is well secured; the borrower has paid according to the contractual terms for a minimum of six months; and analysis of the borrower indicates a reasonable assurance of the ability to maintain payments. Payments received on nonaccrual loans are applied as a reduction to the principal outstanding.

Closed-end loans with payments scheduled monthly are reported as past due when the borrower is in arrears for two or more monthly payments. Similarly, open-end credit such as charge-card plans and other revolving credit plans are reported as past due when the minimum payment has not been made for two or more billing cycles. Other multipayment obligations (i.e., quarterly, semiannual, etc.), single payment, and demand notes are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more. Loans past due 90 days or more and still accruing interest were $2,581 and $0 at December 31, 2012 and 2011, respectively.

Nonaccrual loans are summarized as follows:
 
December 31,
2012
 
December 31,
2011
Real Estate Loans:
 
 
 
Commercial - Owner Occupied
$
147

 
$
914

Total Real Estate Loans
147

 
914

Commercial and Industrial
94

 
97

Total Loans
$
241

 
$
1,011











Past due loans (accruing and nonaccruing) are summarized as follows at December 31, 2012:
 
 
Current
 
30-89 days
past due
 
90+ days
past due
 
Total
past due (2)
 
Total
loans
 
Recorded
investment
in accruing
loans 90+
days past due (3)
 
Nonaccrual
loans
that are
current (1)
Real Estate Loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial - Owner Occupied
 
$
3,996

 
$
—

 
$
2,728

 
$
2,728

 
$
6,724

 
$
2,581

 
$
—

Commercial - Other
 
318

 
—

 
—

 
—

 
318

 
—

 
—

Total Real Estate Loans
 
4,314

 
—

 
2,728

 
2,728

 
7,042

 
2,581

 
—

Commercial and Industrial
 
9,738

 
—

 
94

 
94

 
9,832

 
—

 
—

Total Loans
 
$
14,052

 
$
—

 
$
2,822

 
$
2,822

 
$
16,874

 
$
2,581

 
$
—


(1) Represents nonaccrual loans that are not past due more than 30 days; however, full payment of principal and interest is still not expected.

(2) $2,317 is guaranteed by the USDA or SBA.

(3) $2,126 is guaranteed by the USDA or SBA.

Credit Quality Indicators

In addition to the past due and nonaccrual criteria, loans are analyzed using a loan grading system. Generally, internal grades are assigned to loans based on financial/statistical models and loan officer judgment. The Company reviews and grades all loans with unpaid principal balances of $100 or more once per year. Grades follow definitions of Pass, Special Mention, Substandard, and Doubtful. The definitions of Pass, Special Mention, Substandard, and Doubtful are summarized as follows:

•
Pass: A Pass asset is a higher quality asset and does not fit any of the other categories described below. The likelihood of loss is considered remote.
•
Special Mention: A receivable in this category has a specific weakness or problem but does not currently present a significant risk of loss or default as to any material term of the loan or financing agreement.
•
Substandard: A substandard receivable has a developing or currently minor weakness or weaknesses that could result in loss or default if deficiencies are not corrected or adverse conditions arise.
•
Doubtful: A doubtful receivable has an existing weakness or weaknesses that have developed into a serious risk of significant loss or default with regard to a material term of the financing agreement.
    
Outstanding loan balances (accruing and nonaccruing) categorized by these credit quality indicators are summarized as follows at December 31, 2012:
 
 
Pass
 
Special
Mention
 
Sub-
standard (1)
 
Doubtful
 
Total loans
Real Estate Loans:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Commercial - Owner Occupied
 
3,947

 
48

 
2,729

 
—

 
6,724

Commercial - Other
 
318

 
—

 
—

 
—

 
318

Total Real Estate Loans
 
4,265

 
48

 
2,729

 
—

 
7,042

Commercial and Industrial
 
9,646

 
—

 
186

 
—

 
9,832

Total Loans
 
$
13,911

 
$
48

 
$
2,915

 
$
—

 
$
16,874


(1) $2,328 is guaranteed by the USDA or SBA.

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable that WebBank will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. When loans are impaired, an estimate of the amount of the balance that is impaired is made and a specific reserve is assigned to the loan based on the estimated present value of the loan’s future cash flows discounted at the loan’s effective interest rate, the observable market price of the loan, or the fair value of the loan’s underlying collateral less the cost to sell. When the impairment is based on amount on the fair value of the loan’s underlying collateral, the portion of the balance that is impaired is charged off, such that these loans do not have a specific reserve in the ALLL. Payments received on impaired loans that are accruing are recognized in interest income, according to the contractual loan agreement. Payments received on impaired loans that are on nonaccrual are not recognized in interest income, but are applied as a reduction to the principal outstanding. Payments are recognized when cash is received.

Information on impaired loans is summarized as follows at December 31, 2012:
 
 
 
 
Recorded investment
 
 
 
 
 
 
 
 
Unpaid principle
balance
 
with no
allowance
 
with
allowance
 
Total recorded
investment (1)
 
Related
Allowance
 
Average recorded
investment
Real Estate Loans:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial - Owner Occupied
 
$
2,981

 
$
2,729

 
$
—

 
$
2,729

 
$
—

 
$
3,199

Total Real Estate Loans
 
2,981

 
2,729

 
—

 
2,729

 
—

 
3,199

Commercial and Industrial
 
542

 
169

 
17

 
186

 
—

 
198

Total Loans
 
$
3,523

 
$
2,898

 
$
17

 
$
2,915

 
$
—

 
$
3,397


(1) $2,328 is guaranteed by the USDA or SBA.