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Allowance for Loan Losses | 6 Months Ended
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Jun. 30, 2011
Allowance for Loan Losses [Abstract] |
Allowance for Loan Losses | Note 4. Allowance for Loan Losses The Company provides for loan losses through the establishment of an allowance for loan losses which represents an estimated reserve for existing losses in the loan portfolio. A systematic methodology is used for determining the allowance that includes a quarterly review process, risk rating changes, and adjustments to the allowance. The loan portfolio is classified in eight segments and credit risk is evaluated separately in each segment. The adequacy of the allowance is evaluated continually based on a review of significant loans, with a particular emphasis on nonaccruing, past due, and other loans that may require special attention. Other factors include general conditions in local and national economies; loan portfolio composition and asset quality indicators; and internal factors such as changes in underwriting policies, credit administration practices, experience, ability and depth of lending management, among others. The allowance consists of four elements: (1) specific reserves for loans evaluated individually for impairment; (2) general reserves for types or portfolios of loans based on historical loan loss experience, (3) qualitative reserves judgmentally adjusted for local and national economic conditions, concentrations, portfolio composition, volume and severity of delinquencies and nonaccrual loans, trends of criticized and classified loans, changes in credit policies, and underwriting standards, credit administration practices, and other factors as applicable; and (4) unallocated reserves. All outstanding loans are considered in evaluating the adequacy of the allowance. A breakdown of the allowance for loan losses as of June 30, 2011, and December 31, 2010, by loan segment and allowance element, is presented in the following tables:
As of June 30, 2011 |  | Specific Reserves on Loans Evaluated Individually for Impairment |  |  | General Reserves Based on Historical Loss Experience |  |  | Reserves for Qualitative Factors |  |  | Unallocated Reserves |  |  | Total Reserves |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 613,000 |  |  | $ | 2,463,000 |  |  | $ | 3,851,000 |  |  | $ | - |  |  | $ | 6,927,000 |
Construction |  |  | - |  |  |  | 274,000 |  |  |  | 428,000 |  |  |  | - |  |  |  | 702,000 |
Other |  |  | 857,000 |  |  |  | 962,000 |  |  |  | 1,504,000 |  |  |  | - |  |  |  | 3,323,000 |
Municipal |  |  | - |  |  |  | - |  |  |  | 19,000 |  |  |  | - |  |  |  | 19,000 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Term |  |  | 265,000 |  |  |  | 505,000 |  |  |  | 586,000 |  |  |  | - |  |  |  | 1,356,000 |
Construction |  |  | - |  |  |  | 16,000 |  |  |  | 19,000 |  |  |  | - |  |  |  | 35,000 |
Home Equity Line of Credit |  |  | 165,000 |  |  |  | 85,000 |  |  |  | 402,000 |  |  |  | - |  |  |  | 652,000 |
Consumer |  |  | 65,000 |  |  |  | 264,000 |  |  |  | 335,000 |  |  |  | - |  |  |  | 664,000 |
Unallocated |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,356,000 |  |  |  | 1,356,000 |
|  | $ | 1,965,000 |  |  | $ | 4,569,000 |  |  | $ | 7,144,000 |  |  | $ | 1,356,000 |  |  | $ | 15,034,000 |
As of December 31, 2010 |  | Specific Reserves on Loans Evaluated Individually for Impairment |  |  | General Reserves Based on Historical Loss Experience |  |  | Reserves for Qualitative Factors |  |  | Unallocated Reserves |  |  | Total Reserves |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | 192,000 |  |  | $ | 2,183,000 |  |  | $ | 2,885,000 |  |  | $ | - |  |  | $ | 5,260,000 |
Construction |  |  | 152,000 |  |  |  | 370,000 |  |  |  | 490,000 |  |  |  | - |  |  |  | 1,012,000 |
Other |  |  | 291,000 |  |  |  | 899,000 |  |  |  | 1,187,000 |  |  |  | - |  |  |  | 2,377,000 |
Municipal |  |  | - |  |  |  | - |  |  |  | 19,000 |  |  |  | - |  |  |  | 19,000 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Term |  |  | 432,000 |  |  |  | 401,000 |  |  |  | 575,000 |  |  |  | - |  |  |  | 1,408,000 |
Construction |  |  | - |  |  |  | 18,000 |  |  |  | 26,000 |  |  |  | - |  |  |  | 44,000 |
Home Equity Line of Credit |  |  | 122,000 |  |  |  | 72,000 |  |  |  | 476,000 |  |  |  | - |  |  |  | 670,000 |
Consumer |  |  | 67,000 |  |  |  | 324,000 |  |  |  | 255,000 |  |  |  | - |  |  |  | 646,000 |
Unallocated |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,880,000 |  |  |  | 1,880,000 |
|  | $ | 1,256,000 |  |  | $ | 4,267,000 |  |  | $ | 5,913,000 |  |  | $ | 1,880,000 |  |  | $ | 13,316,000 |
Commercial loans are comprised of three major categories, commercial real estate loans, commercial construction loans and other commercial loans. Commercial real estate is primarily comprised of loans to small businesses collateralized by owner-occupied real estate, while other commercial is primarily comprised of loans to small businesses collateralized by plant and equipment, commercial fishing vessels and gear, and limited inventory-based lending. Commercial real estate loans typically have a maximum loan-to-value of 75% based upon current appraisal information at the time the loan is made. Construction loans comprise a very small portion of the portfolio, and at 30.0% of capital are well under the regulatory guidance of 100.0% of capital. Construction and non-owner-occupied commercial real estate loans are at 90.0% of total capital, well under regulatory guidance of 300.0% of capital. Municipal loans are comprised of loans to municipalities in Maine for capitalized expenditures, construction projects or tax-anticipation notes. All municipal loans are considered general obligations of the municipality and as such are collateralized by the taxing ability of the municipality for repayment of debt. The process of establishing the allowance with respect to our commercial loan portfolio begins when a loan officer initially assigns each loan a risk rating, using established credit criteria. Approximately 50% of our outstanding loans and commitments are subject to review and validation annually by an independent consulting firm, as well as periodically by our internal credit review function. The methodology employs Management’s judgment as to the level of losses on existing loans based on our internal review of the loan portfolio, including an analysis of a borrowers’ current financial position, and the consideration of current and anticipated economic conditions and their potential effects on specific borrowers and or lines of business. In determining our ability to collect certain loans, we also consider the fair value of underlying collateral. The risk rating system has nine levels, defined as follows: 1 Strong Credits rated "1" are characterized by borrowers fully responsible for the credit with excellent capacity to pay principal and interest. Loans rated “1” may be secured with acceptable forms of liquid collateral. 2 Above Average Credits rated “2” are characterized by borrowers that have better than average liquidity, capitalization, earnings and/or cash flow with a consistent record of solid financial performance. 3 Satisfactory Credits rated “3” are characterized by borrowers with favorable liquidity, profitability and financial condition with adequate cash flow to pay debt service. 4 Average Credits rated “4” are characterized by borrowers that present risk more than 1, 2 and 3 rated loans and merit an ordinary level of ongoing monitoring. Financial condition is on par or somewhat below industry averages while cash flow is generally adequate to meet debt service requirements. 5 Watch Credits rated “5” are characterized by borrowers that warrant greater monitoring due to financial condition or unresolved and identified risk factors. 6 Other Assets Especially Mentioned (OAEM) Loans in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. OAEM have potential weaknesses which may, if not checked or corrected, weaken the asset or inadequately protect the Bank's credit position at some future date. 7 Substandard Loans in this category are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Bank may sustain some loss if the deficiencies are not corrected. 8 Doubtful Loans classified "Doubtful" have the same weaknesses as those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is high, but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the asset, its classification as an estimated loss is deferred until its more exact status may be determined. 9 Loss Loans classified "Loss" are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. The following table summarizes the risk ratings for the Company’s commercial construction, commercial real estate, commercial other, and municipal loans as of June 30, 2011:
|  | Commercial Construction |  |  | Commercial Real Estate |  |  | Commercial Other |  |  | Municipal Loans |  |  | All Risk- Rated Loans |
1 Strong |  | $ | - |  |  | $ | 29,000 |  |  | $ | 467,000 |  |  | $ | 2,341,000 |  |  | $ | 2,837,000 |
2 Above Average |  |  | 10,000 |  |  |  | 21,021,000 |  |  |  | 3,657,000 |  |  |  | 10,772,000 |  |  |  | 35,460,000 |
3 Satisfactory |  |  | 1,616,000 |  |  |  | 40,346,000 |  |  |  | 15,714,000 |  |  |  | 3,985,000 |  |  |  | 61,661,000 |
4 Average |  |  | 12,894,000 |  |  |  | 114,124,000 |  |  |  | 41,208,000 |  |  |  | 2,876,000 |  |  |  | 171,102,000 |
5 Watch |  |  | 6,293,000 |  |  |  | 38,095,000 |  |  |  | 15,042,000 |  |  |  | - |  |  |  | 59,430,000 |
6 OAEM |  |  | 4,015,000 |  |  |  | 19,572,000 |  |  |  | 6,338,000 |  |  |  | - |  |  |  | 29,925,000 |
7 Substandard |  |  | 4,558,000 |  |  |  | 30,150,000 |  |  |  | 20,067,000 |  |  |  | - |  |  |  | 54,775,000 |
8 Doubtful |  |  | - |  |  |  | - |  |  |  | 6,000 |  |  |  | - |  |  |  | 6,000 |
9 Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 29,386,000 |  |  | $ | 263,337,000 |  |  | $ | 102,499,000 |  |  | $ | 19,974,000 |  |  | $ | 415,196,000 |
The following table summarizes the risk ratings for the Company’s commercial construction, commercial real estate, commercial other, and municipal loans as of December 31, 2010:
|  | Commercial Construction |  |  | Commercial Real Estate |  |  | Commercial Other |  |  | Municipal Loans |  |  | All Risk- Rated Loans |
1 Strong |  | $ | - |  |  | $ | 48,000 |  |  | $ | 395,000 |  |  | $ | 2,481,000 |  |  | $ | 2,924,000 |
2 Above Average |  |  | 10,000 |  |  |  | 20,365,000 |  |  |  | 4,483,000 |  |  |  | 11,453,000 |  |  |  | 36,311,000 |
3 Satisfactory |  |  | 4,694,000 |  |  |  | 42,600,000 |  |  |  | 16,052,000 |  |  |  | 4,900,000 |  |  |  | 68,246,000 |
4 Average |  |  | 22,177,000 |  |  |  | 107,167,000 |  |  |  | 41,972,000 |  |  |  | 2,999,000 |  |  |  | 174,315,000 |
5 Watch |  |  | 6,347,000 |  |  |  | 27,898,000 |  |  |  | 12,203,000 |  |  |  | - |  |  |  | 46,448,000 |
6 OAEM |  |  | 3,715,000 |  |  |  | 19,496,000 |  |  |  | 6,463,000 |  |  |  | - |  |  |  | 29,674,000 |
7 Substandard |  |  | 4,926,000 |  |  |  | 27,966,000 |  |  |  | 19,894,000 |  |  |  | - |  |  |  | 52,786,000 |
8 Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
9 Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 41,869,000 |  |  | $ | 245,540,000 |  |  | $ | 101,462,000 |  |  | $ | 21,833,000 |  |  | $ | 410,704,000 |
Residential loans are comprised of two categories: term loans, which include traditional amortizing home mortgages, and construction loans, which include loans for owner-occupied residential construction. Residential loans typically have a 75% to 80% loan to value based upon current appraisal information at the time the loan is made. Home equity loans and lines of credit are typically written to the same underwriting standards. Consumer loans are primarily amortizing loans to individuals collateralized by automobiles, pleasure craft and recreation vehicles, typically with a maximum loan to value of 80%-90% of the purchase price of the collateral. Consumer loans also include a small amount of unsecured short-term time notes to individuals. Residential loans, consumer loans and home equity lines of credit are segregated into homogeneous pools with similar risk characteristics. Trends and current conditions are analyzed and historical loss experience is adjusted accordingly. Quantitative and qualitative adjustment factors for these segments are consistent with those for the commercial and municipal segments. Certain loans in the residential, home equity lines of credit and consumer segments identified as having the potential for further deterioration are analyzed individually to confirm impairment status, and to determine the need for a specific reserve, however there is no formal rating system used for these segments. Consumer loans greater than 120 days past due are generally charged off. Residential loans 90 days or more past due are placed on non-accrual status unless the loans are both well secured and in the process of collection. Allowance for loan losses transactions for the three- and six-month periods ended June 30, 2011 and for the year ended December 31, 2010 were as follows:
For the six months ended |  | Commercial |  |  | Municipal |  |  | Residential |  |  | Home Equity |  |  | Consumer |  |  | Unallocated |  |  | Total |
June 30, 2011 |  | Real Estate |  |  | Construction |  |  | Other |  |  |  |  |  | Term |  |  | Construction |  |  | Line of Credit |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 5,260,000 |  |  | $ | 1,012,000 |  |  | $ | 2,377,000 |  |  | $ | 19,000 |  |  | $ | 1,408,000 |  |  | $ | 44,000 |  |  | $ | 670,000 |  |  | $ | 646,000 |  |  | $ | 1,880,000 |  |  | $ | 13,316,000 |
Charge offs |  |  | 835,000 |  |  |  | - |  |  |  | 319,000 |  |  |  | 13,000 |  |  |  | 697,000 |  |  |  | 505,000 |  |  |  | 45,000 |  |  |  | 156,000 |  |  |  | - |  |  |  | 2,570,000 |
Recoveries |  |  | 5,000 |  |  |  | - |  |  |  | 21,000 |  |  |  | 12,000 |  |  |  | 4,000 |  |  |  | - |  |  |  | 1,000 |  |  |  | 145,000 |  |  |  | - |  |  |  | 188,000 |
Provision |  |  | 2,497,000 |  |  |  | (310,000 | ) |  |  | 1,244,000 |  |  |  | 1,000 |  |  |  | 641,000 |  |  |  | 496,000 |  |  |  | 26,000 |  |  |  | 29,000 |  |  |  | (524,000 | ) |  |  | 4,100,000 |
Ending balance |  | $ | 6,927,000 |  |  | $ | 702,000 |  |  | $ | 3,323,000 |  |  | $ | 19,000 |  |  | $ | 1,356,000 |  |  | $ | 35,000 |  |  | $ | 652,000 |  |  | $ | 664,000 |  |  | $ | 1,356,000 |  |  | $ | 15,034,000 |
Ending balance specifically evaluated for impairment |  | $ | 613,000 |  |  | $ | - |  |  | $ | 857,000 |  |  | $ | - |  |  | $ | 265,000 |  |  | $ | - |  |  | $ | 165,000 |  |  | $ | 65,000 |  |  | $ | - |  |  | $ | 1,965,000 |
Ending balance collectively evaluated for impairment |  | $ | 6,314,000 |  |  | $ | 702,000 |  |  | $ | 2,466,000 |  |  | $ | 19,000 |  |  | $ | 1,091,000 |  |  | $ | 35,000 |  |  | $ | 487,000 |  |  | $ | 599,000 |  |  | $ | 1,356,000 |  |  | $ | 13,069,000 |
Related loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 263,337,000 |  |  | $ | 29,386,000 |  |  | $ | 102,499,000 |  |  | $ | 19,974,000 |  |  | $ | 335,807,000 |  |  | $ | 11,063,000 |  |  | $ | 107,224,000 |  |  | $ | 17,639,000 |  |  | $ | - |  |  | $ | 886,929,000 |
Ending balance specifically evaluated for impairment |  | $ | 6,746,000 |  |  | $ | 772,000 |  |  | $ | 2,095,000 |  |  | $ | - |  |  | $ | 16,191,000 |  |  | $ | 334,000 |  |  | $ | 740,000 |  |  | $ | 103,000 |  |  | $ | - |  |  | $ | 26,981,000 |
Ending balance collectively evaluated for impairment |  | $ | 256,591,000 |  |  | $ | 28,614,000 |  |  | $ | 100,404,000 |  |  | $ | 19,974,000 |  |  | $ | 319,616,000 |  |  | $ | 10,729,000 |  |  | $ | 106,484,000 |  |  | $ | 17,536,000 |  |  | $ | - |  |  | $ | 859,948,000 |
For the quarter ended |  | Commercial |  |  | Municipal |  |  | Residential |  |  | Home Equity |  |  | Consumer |  |  | Unallocated |  |  | Total |
June 30, 2011 |  | Real Estate |  |  | Construction |  |  | Other |  |  |  |  |  | Term |  |  | Construction |  |  | Line of Credit |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 6,310,000 |  |  | $ | 639,000 |  |  | $ | 2,535,000 |  |  | $ | 19,000 |  |  | $ | 1,405,000 |  |  | $ | 146,000 |  |  | $ | 678,000 |  |  | $ | 713,000 |  |  | $ | 1,555,000 |  |  | $ | 14,000,000 |
Charge offs |  |  | 546,000 |  |  |  | - |  |  |  | 158,000 |  |  |  | 13,000 |  |  |  | 240,000 |  |  |  | - |  |  |  | 44,000 |  |  |  | 56,000 |  |  |  | - |  |  |  | 1,057,000 |
Recoveries |  |  | - |  |  |  | - |  |  |  | 4,000 |  |  |  | 12,000 |  |  |  | 1,000 |  |  |  | - |  |  |  | 1,000 |  |  |  | 73,000 |  |  |  | - |  |  |  | 91,000 |
Provision |  |  | 1,163,000 |  |  |  | 63,000 |  |  |  | 942,000 |  |  |  | 1,000 |  |  |  | 190,000 |  |  |  | (111,000 | ) |  |  | 17,000 |  |  |  | (66,000 | ) |  |  | (199,000 | ) |  |  | 2,000,000 |
Ending balance |  | $ | 6,927,000 |  |  | $ | 702,000 |  |  | $ | 3,323,000 |  |  | $ | 19,000 |  |  | $ | 1,356,000 |  |  | $ | 35,000 |  |  | $ | 652,000 |  |  | $ | 664,000 |  |  | $ | 1,356,000 |  |  | $ | 15,034,000 |
Ending balance specifically evaluated for impairment |  | $ | 613,000 |  |  | $ | - |  |  | $ | 857,000 |  |  | $ | - |  |  | $ | 265,000 |  |  | $ | - |  |  | $ | 165,000 |  |  | $ | 65,000 |  |  | $ | - |  |  | $ | 1,965,000 |
Ending balance collectively evaluated for impairment |  | $ | 6,314,000 |  |  | $ | 702,000 |  |  | $ | 2,466,000 |  |  | $ | 19,000 |  |  | $ | 1,091,000 |  |  | $ | 35,000 |  |  | $ | 487,000 |  |  | $ | 599,000 |  |  | $ | 1,356,000 |  |  | $ | 13,069,000 |
Related loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 263,337,000 |  |  | $ | 29,386,000 |  |  | $ | 102,499,000 |  |  | $ | 19,974,000 |  |  | $ | 335,807,000 |  |  | $ | 11,063,000 |  |  | $ | 107,224,000 |  |  | $ | 17,639,000 |  |  | $ | - |  |  | $ | 886,929,000 |
Ending balance specifically evaluated for impairment |  | $ | 6,746,000 |  |  | $ | 772,000 |  |  | $ | 2,095,000 |  |  | $ | - |  |  | $ | 16,191,000 |  |  | $ | 334,000 |  |  | $ | 740,000 |  |  | $ | 103,000 |  |  | $ | - |  |  | $ | 26,981,000 |
Ending balance collectively evaluated for impairment |  | $ | 256,591,000 |  |  | $ | 28,614,000 |  |  | $ | 100,404,000 |  |  | $ | 19,974,000 |  |  | $ | 319,616,000 |  |  | $ | 10,729,000 |  |  | $ | 106,484,000 |  |  | $ | 17,536,000 |  |  | $ | - |  |  | $ | 859,948,000 |
For the year ended |  | Commercial |  |  | Municipal |  |  | Residential |  |  | Home Equity |  |  | Consumer |  |  | Unallocated |  |  | Total |
December 31, 2010 |  | Real Estate |  |  | Construction |  |  | Other |  |  |  |  |  | Term |  |  | Construction |  |  | Line of Credit |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 4,986,000 |  |  | $ | 807,000 |  |  | $ | 3,363,000 |  |  | $ | 23,000 |  |  | $ | 1,198,000 |  |  | $ | 174,000 |  |  | $ | 515,000 |  |  | $ | 717,000 |  |  | $ | 1,854,000 |  |  | $ | 13,637,000 |
Charge offs |  |  | 4,005,000 |  |  |  | 175,000 |  |  |  | 1,125,000 |  |  |  | - |  |  |  | 392,000 |  |  |  | 2,361,000 |  |  |  | 8,000 |  |  |  | 951,000 |  |  |  | - |  |  |  | 9,017,000 |
Recoveries |  |  | 4,000 |  |  |  | - |  |  |  | 69,000 |  |  |  | - |  |  |  | 4,000 |  |  |  | - |  |  |  | - |  |  |  | 219,000 |  |  |  | - |  |  |  | 296,000 |
Provision |  |  | 4,275,000 |  |  |  | 380,000 |  |  |  | 70,000 |  |  |  | (4,000 | ) |  |  | 598,000 |  |  |  | 2,231,000 |  |  |  | 163,000 |  |  |  | 661,000 |  |  |  | 26,000 |  |  |  | 8,400,000 |
Ending balance |  | $ | 5,260,000 |  |  | $ | 1,012,000 |  |  | $ | 2,377,000 |  |  | $ | 19,000 |  |  | $ | 1,408,000 |  |  | $ | 44,000 |  |  | $ | 670,000 |  |  | $ | 646,000 |  |  | $ | 1,880,000 |  |  | $ | 13,316,000 |
Ending balance specifically evaluated for impairment |  | $ | 192,000 |  |  | $ | 152,000 |  |  | $ | 291,000 |  |  | $ | - |  |  | $ | 432,000 |  |  | $ | - |  |  | $ | 122,000 |  |  | $ | 67,000 |  |  | $ | - |  |  | $ | 1,256,000 |
Ending balance collectively evaluated for impairment |  | $ | 5,068,000 |  |  | $ | 860,000 |  |  | $ | 2,086,000 |  |  | $ | 19,000 |  |  | $ | 976,000 |  |  | $ | 44,000 |  |  | $ | 548,000 |  |  | $ | 579,000 |  |  | $ | 1,880,000 |  |  | $ | 12,060,000 |
Related loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 245,540,000 |  |  | $ | 41,869,000 |  |  | $ | 101,462,000 |  |  | $ | 21,833,000 |  |  | $ | 337,927,000 |  |  | $ | 15,512,000 |  |  | $ | 105,297,000 |  |  | $ | 18,156,000 |  |  | $ | - |  |  | $ | 887,596,000 |
Ending balance specifically evaluated for impairment |  | $ | 5,946,000 |  |  | $ | 937,000 |  |  | $ | 1,753,000 |  |  | $ | - |  |  | $ | 12,456,000 |  |  | $ | 3,567,000 |  |  | $ | 519,000 |  |  | $ | 106,000 |  |  | $ | - |  |  | $ | 25,284,000 |
Ending balance collectively evaluated for impairment |  | $ | 239,594,000 |  |  | $ | 40,932,000 |  |  | $ | 99,709,000 |  |  | $ | 21,833,000 |  |  | $ | 325,471,000 |  |  | $ | 11,945,000 |  |  | $ | 104,778,000 |  |  | $ | 18,050,000 |  |  | $ | - |  |  | $ | 862,312,000 |
A troubled debt restructured (“TDR”) constitutes a restructuring of debt if the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower that it would not otherwise consider. To determine whether or not a loan should be classified as a TDR, Management evaluates a loan based upon the following criteria:
· | The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, or an inability to refinance with another lender, and
· | The Bank has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments.
As of June 30, 2011 we had 36 loans with a value of $6.7 million that have been restructured. This compares to 31 loans with a value of $4.8 million classified as TDRs as of June 30, 2010. As of June 30, 2011, nine of the loans classified as TDRs with a total balance of $1.3 million were more than 30 days past due. There is one bankruptcy case in the current TDRs that Management is aware of.

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