pab bankshares, inc. - SNL Financial

The quantitative risk factors used in determining these general reserves require a high degree of management judgment.
At December 31, 2009, we had $5.58 million in general reserves on $467.1 million in loans compared to $7.79 million in
general reserves on $696.4 million in loans one year ago. In addition, we had $2.2 million of unallocated reserves at
December 31, 2009, compared to $785,000 of unallocated reserves at December 31, 2008. This increase in unallocated
reserves is primarily due to the continued deterioration of overall economic conditions.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more
information becomes available. While we use the best information available to make the evaluation, future adjustments to
the allowance may be necessary if there are significant changes in economic conditions or other environmental factors. In
addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance
for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information
available to them at the time of their examinations.
Allocation of the Allowance for Loan Losses
We have allocated the allowance for loan losses according to the amount deemed to be reasonably necessary at each year
end to provide for the possibility of losses being incurred within the categories of loans set forth in the table below. The
allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the
allowance to absorb losses in any other category. The components of the allowance for loan losses for each of the past
five years are presented below.
As of December 31, 2009 2008 2007 2006 2005
Percentage of Percentage of Percentage of Percentage of Percentage of
Loans in Loans in Loans in Loans in Loans in
Category Category Category Category Category
to Total to Total to Total to Total to Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
(Dollars in Thousands)
Commercial and financial $ 1,415 10.5% $ 1,382 9.1% $ 229 8.6% $ 972 8.1% $ 2,670 6.7%
Agricultural (including
loans secured by farmland) 196 5.0% 112 5.1% 1,029 4.5% 1,184 5.3% 323 7.4%
Real estate - construction 16,828 25.4% 11,950 33.0% 8,383 38.2% 4,875 35.9% 4,427 35.5%
Real estate - commercial 5,121 34.3% 2,552 28.9% 2,008 27.0% 2,276 31.1% 2,280 30.8%
Real estate - residential 3,179 21.7% 2,417 20.5% 815 18.9% 547 17.4% 208 16.9%
Consumer and other loans 415 3.1% 176 3.4% 215 2.8% 255 2.2% 512 2.7%
Unallocated 2,160 N/A 785 N/A 227 N/A 897 N/A 659 N/A
Total $ 29,314 100.0% $ 19,374 100.0% $ 12,906 100.0% $ 11,006 100.0% $ 11,079 100.0%
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