Allowance and Provision for Loan Losses
The ALL was $6.0 million, or 2.26% of our total loan portfolio, at December 31, 2012, compared to $5.3 million, or 2.27%, at December 31, 2011. At December 31, 2012 and 2011, our non-performing loans were $1.9 million and $7.6 million, respectively. The ratio of our ALL to non-performing loans was 324.36% and 69.47% at December 31, 2012 and 2011, respectively. In addition, our ratio of non-performing loans to total loans was 0.70% and 3.26% at December 31, 2012 and 2011, respectively.
The ALL is impacted by inherent risk in the loan portfolio, including the level of our non-performing loans, as well as specific reserves and charge-off activities. There was no provision for loan losses for the quarter and year ended December 31, 2012. There was no provision for loan losses for the quarter ended December 31, 2011 and a $275,000 provision for loan losses for the year ended December 31, 2011. The decline in provision for loan losses recorded during the year ended December 31, 2012, compared to the same period last year, is primarily due to the improvement in the level of our criticized and classified loans, as well as an increase in our ALL during the current year resulting from net recoveries recognized on previously charged-off loans. These declines were partially offset by the provision needed for the $33.7 million increase in our loan portfolio during the current year as compared to the same period last year. Criticized and classified loans generally consist of special mention, substandard and doubtful loans. Special mention, substandard and doubtful loans were $6.6 million, $3.5 million and none, respectively, at December 31, 2012, compared to $3.7 million, $11.0 million, and none, respectively, at December 31, 2011. We had net recoveries of $1.1 million and $731,000 during the quarter and year ended December 31, 2012, respectively, compared to net recoveries (charge-offs) of $38,000 and ($274,000) during the same periods last year. Management believes that the ALL as of December 31, 2012 and 2011 was adequate to absorb known and inherent risks in the loan portfolio.
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