NOTE 6. Troubled Debt Restructurings

All loans deemed a troubled debt restructuring, or "TDR", are considered impaired, and are evaluated for collateral and cash-flow sufficiency. A loan is considered a TDR when the Company, for economic or legal reasons related to a borrower's financial difficulties, grants a concession to the borrower that the Company would not otherwise consider. All of the following factors are indicators that the Bank has granted a concession (one or multiple items may be present):

The borrower receives a reduction of the stated interest rate to a rate less than the institution is willing to accept at the time of the restructure for a new loan with comparable risk.
The borrower receives an extension of the maturity date or dates at a stated interest rate lower than the current market interest rate for new debt with similar risk characteristics.
The borrower receives a reduction of the face amount or maturity amount of the debt as stated in the instrument or other agreement.
The borrower receives a deferral of required payments (principal and/or interest).
The borrower receives a reduction of the accrued interest.

There were twenty-three (23) troubled debt restructured loans totaling $8.2 million at March 31, 2013 and December 31, 2012. There were no outstanding commitments to lend additional amounts to troubled debt restructured borrowers at March 31, 2013.

The following tables set forth information on the Company's troubled debt restructurings by class of financing receivable occurring during the three months ended March 31, 2013 and March 31, 2012:


				Three Months Ended
				March 31, 2013
				(in thousands)
				Pre-Modification	Post-Modification
				Outstanding	Outstanding
	Number of			Recorded	Recorded			Impairment
	Contracts			Investment	Investment			Accrued
Residential
Equity lines		1	$	184	$	184	$	—
Total		1	$	184	$	184	$	—


				Three Months Ended
				March 31, 2012
				(in thousands)
				Pre-Modification	Post-Modification
				Outstanding	Outstanding
	Number of			Recorded	Recorded			Impairment
	Contracts			Investment	Investment			Accrued
Residential
Single family		1	$	91	$	91	$	—
Total		1	$	91	$	91	$	—

During the three months ended March 31, 2013 , the Company restructured one loan by granting concessions to a borrower experiencing financial difficulties. A residential loan was modified by changing payments to interest-only in order to reduce the monthly payment for a period of time.

During the three months ended March 31, 2012, the Company restructured one loan by granting concessions to a borrower experiencing financial difficulties. A residential loan was modified by granting an interest rate reduction.

Loans by class of financing receivable modified as TDRs within the previous 12 months and for which there was a payment default during the stated periods were:


	Three Months Ended
	March 31, 2013
	(in thousands)
	Number of		Recorded
	Contracts		Investment
Commercial Real Estate:
Owner occupied		1	$	161
Non-owner occupied		1		556
Residential
Single family		4	$	962
Total		6	$	1,679


	Three Months Ended
	March 31, 2012
	(in thousands)
	Number of	Recorded
	Contracts	Investment
Residential
Single family		1	$	196
Total		1	$	196

A loan is considered to be in payment default once it is thirty days contractually past due under the modified terms.