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Loans Receivable and Allowance for Loan Losses
 3 Months Ended
Mar. 31, 2012
Loans Receivable and Allowance for Loan Losses [Abstract]  
Loans Receivable and Allowance for Loan Losses

Note 3: Loans Receivable and Allowance for Loan Losses

A summary of the Company’s loan portfolio at March 31, 2012 and December 31, 2011 is as follows:

 

                 
    March 31,     December 31,  
    2012     2011  

Real Estate

                

Commercial

   $ 230,629,333     $ 215,659,837  

Residential

     140,538,413       188,108,855  

Construction

     11,461,824       12,306,922  

Construction to permanent

     8,298,423       10,012,022  

Commercial

     32,252,224       31,810,735  

Consumer home equity

     48,945,029       49,694,546  

Consumer installment

     2,063,935       2,164,972  
   

 

 

    

 

 

  

Total Loans

     474,189,181       509,757,889  

Premiums on purchased loans

     228,792       231,125  

Net deferred costs

     308,192       622,955  

Allowance for loan losses

     (8,460,943 )      (9,384,672 ) 
   

 

 

    

 

 

  

Loans receivable, net

   $ 466,265,222     $ 501,227,297  
   

 

 

    

 

 

  

On March 29, 2012, the Bank completed the sale of $66.4 million of residential loans consummated for a cash purchase price of $66.7 million, which represented 101% of the Bank’s net book value for these assets.

The changes in the allowance for loan losses for the periods shown are as follows:

 

                 
    Three months ended  
    March 31,  
    2012     2011  

Balance, beginning of period

   $ 9,384,672     $ 15,374,101  

Provision for loan losses

     (845,402 )      6,981,629  

Loans charged-off

     (102,483 )      (4,153,547 ) 

Recoveries of loans previously charged-off

     24,156       20,606  

Transferred to loans held-for-sale

     —         (6,014,313 ) 
   

 

 

    

 

 

  

Balance, end of period

   $ 8,460,943     $ 12,208,476  
   

 

 

    

 

 

  

 

At March 31, 2012 and December 31, 2011, the unpaid balances of loans 90 days or more past maturity, and still accruing interest were $6,574,115 and $9,461,106, respectively. All of the borrowers of said loans at March 31, 2012 continue to make interest payments, but are past maturity where payoff is pending or are in the process of being renewed.

The unpaid principal balances of loans on nonaccrual status and considered impaired were $15.5 million at March 31, 2012 and $20.7 million at December 31, 2011.

If non-accrual loans had been performing in accordance with their contractual terms, the Company would have recorded approximately $280,000 of additional income during the quarter ended March 31, 2012 and $1.0 million during the quarter ended March 31, 2011.

For the three months ended March 31, 2012 and 2011, the interest collected and recognized as income on impaired loans, which includes non-accrual loans, TDRs and loans that were previously classified as TDRs that have been upgraded, was approximately $225,000 and $431,000, respectively. The average recorded investment in impaired loans for the three months ended March 31, 2012 was $34.2 million.

At March 31, 2012, there were nine loans totaling $18.3 million that were considered “troubled debt restructurings,” as compared to December 31, 2011 when there were twelve loans totaling $25.5 million, all of which were included in impaired loans. At March 31, 2012, five of the nine loans aggregating $11.4 million were accruing loans and four loans aggregating $6.9 million were non-accruing loans.

The Company’s lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County, New York City and Long Island, New York. The Company originates commercial real estate loans, commercial business loans and a variety of consumer loans. In addition, the Company had originated loans for the construction of residential homes, residential developments and for land development projects. A moratorium on all new speculative construction loans was instituted by management in July 2008. All residential and commercial mortgage loans are collateralized primarily by first or second mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent in large part upon the status of the regional economy and regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions.

The Company has established credit policies applicable to each type of lending activity in which it engages, evaluates the creditworthiness of each customer and, in most cases, extends credit of up to 75% of the market value of the collateral at the date of the credit extension depending on the Company’s evaluation of the borrowers’ creditworthiness and type of collateral. In the case of construction loans, the maximum loan-to-value was 65% of the “as completed” market value. The market value of collateral is monitored on an ongoing basis and additional collateral is obtained when warranted. Real estate is the primary form of collateral. Other important forms of collateral are accounts receivable, inventory, other business assets, marketable securities and time deposits. While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment to be based on the borrower’s ability to generate continuing cash flows on all loans not related to construction.

Risk characteristics of the Company’s portfolio classes include the following:

Commercial Real Estate Loans – In underwriting commercial real estate loans, the Company evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should the borrower default or should there be a substantial decline in the value of the property securing the loan or a decline in the general economic conditions. Where the owner occupies the property, the Company also evaluates the business’s ability to repay the loan on a timely basis. In addition, the Company may require personal guarantees, lease assignments and/or the guarantee of the operating company when the property is owner occupied. These types of loans may involve greater risks than other types of lending, because payments on such loans are often dependent upon the successful operation of the business involved, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions affecting the borrowers’ business.

 

Construction Loans – Construction loans are short-term loans (generally up to 18 months) secured by land for both residential and commercial development. The loans are generally made for acquisition and improvements. Funds are disbursed as phases of construction are completed.

In the past, the Company funded construction of single family homes, when no contract of sale existed, based upon the experience of the builder, the financial strength of the owner, the type and location of the property and other factors. Construction loans are generally personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by the builders’ inability to complete construction, by a downturn in the new construction market, by a significant increase in interest rates or by a decline in general economic conditions. The Company has had a moratorium in place since mid-2008 on new speculative construction loans.

Residential Real Estate Loans – Various loans secured by residential real estate properties are offered by the Company, including 1-4 family residential mortgages, multi-family residential loans and a variety of home equity line of credit products. Repayment of such loans may be negatively impacted should the borrower default, should there be a significant decline in the value of the property securing the loan or should there be a decline in general economic conditions.

Commercial and Industrial Loans – The Company’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are usually made to finance the purchase of inventory, new or used equipment or other short or long-term working capital purposes. These loans are generally secured by corporate assets, often with real estate as secondary collateral, but are also offered on an unsecured basis. In granting this type of loan, the Company primarily looks to the borrower’s cash flow as the source of repayment with collateral and personal guarantees, where obtained, as a secondary source. Commercial loans are often larger and may involve greater risks than other type of loans offered by the Company. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, management’s inability to effectively manage the business, claims of others against the borrower’s assets which may take priority over the Company’s claims against assets, death or disability of the borrower or loss of market for the borrower’s products or services.

Other Loans – The Company also offers installment loans and reserve lines of credit to individuals. Repayments of such loans are often dependent on the personal income of the borrower which may be negatively impacted by adverse changes in economic conditions. The Company does not place an emphasis on originating these types of loans.

The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.

 

The following table sets forth activity in our allowance for loan losses, by loan type, for the period ended March 31, 2012. The following table also details the amount of loans receivable, net, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment.

 

                                                                 
    Commercial     Commercial Real
Estate		     Construction     Construction
to  Permanent		     Residential     Consumer     Unallocated     Total  

Three months ended March 31, 2012

                                                                

Allowance for loan losses:

                                                                

Beginning Balance

   $ 882,062     $ 4,018,746     $ 867,159     $ 547,333     $ 2,550,588     $ 458,762     $ 60,022     $ 9,384,672  

Charge-offs

     —         (49,922 )      —         —         (52,561 )      —         —         (102,483 ) 

Recoveries

     1,000       21,988       —         —         —         1,168       —         24,156  

Provision

     211,674       654,436       (24,523 )      (311,020 )      (1,448,472 )      (46,206 )      118,709       (845,402 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

   $ 1,094,736     $ 4,645,248     $ 842,636     $ 236,313     $ 1,049,555     $ 413,724     $ 178,731     $ 8,460,943  

Ending balance: individually evaluated for impairment

   $ 97,256     $ 137,441     $ 31,520     $ 125,522     $ 34,363     $ 151,500     $ —       $ 577,602  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

   $ 997,480     $ 4,507,807     $ 811,116     $ 110,791     $ 1,015,192     $ 262,224     $ 178,731     $ 7,883,341  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Allowance for Loan Losses

   $ 1,094,736     $ 4,645,248     $ 842,636     $ 236,313     $ 1,049,555     $ 413,724     $ 178,731     $ 8,460,943  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Loans ending balance

   $ 32,252,224     $ 230,629,333     $ 11,461,824     $ 8,298,423     $ 140,538,413     $ 51,008,964     $ —       $ 474,189,181  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: individually evaluated for impairment

   $ 269,950     $ 9,463,672     $ 1,366,554     $ 6,208,122     $ 14,094,198     $ 1,417,742     $ —       $ 32,820,238  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance : collectively evaluated for impairment

   $ 31,982,274     $ 221,165,661     $ 10,095,270     $ 2,090,301     $ 126,444,215     $ 49,591,222     $ —       $ 441,368,943  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table sets forth activity in our allowance for loan losses, by loan type, for the period ended December 31, 2011. The following table also details the amount of loans receivable, net, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment.

 

                                                                 
    Commercial     Commercial
Real Estate		     Construction     Construction
to  Permanent		     Residential     Consumer     Unallocated     Total  

2011

                                                                

Allowance for loan losses:

                                                                

Beginning Balance

   $ 441,319     $ 7,632,355     $ 3,478,058     $ 491,446     $ 2,363,838     $ 578,612     $ 388,473     $ 15,374,101  

Charge-offs

     (374,506 )      (2,940,901 )      (3,305,318 )      —         (1,458,198 )      (173,851 )      —         (8,252,774 ) 

Transferred to loans held-for-sale

     —         (963,461 )      (1,409,701 )      —         (3,681,498 )      —         —         (6,054,660 ) 

Recoveries

     1,240       33,764       519,160       —         —         299,414       —         853,578  

Provision

     814,009       256,989       1,584,960       55,887       5,326,446       (245,413 )      (328,451 )      7,464,427  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending Balance

   $ 882,062     $ 4,018,746     $ 867,159     $ 547,333     $ 2,550,588     $ 458,762     $ 60,022     $ 9,384,672  

Ending balance: individually evaluated for impairment

   $ 61,145     $ 319,894     $ 31,520     $ 498,254     $ 197,478     $ 151,500     $ —       $ 1,259,791  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: collectively evaluated for impairment

   $ 820,917     $ 3,698,852     $ 835,639     $ 49,079     $ 2,353,110     $ 307,262     $ 60,022     $ 8,124,881  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Allowance for Loan Losses

   $ 882,062     $ 4,018,746     $ 867,159     $ 547,333     $ 2,550,588     $ 458,762     $ 60,022     $ 9,384,672  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Loans ending balance

   $ 31,810,735     $ 215,659,837     $ 12,306,922     $ 10,012,022     $ 188,108,855     $ 51,859,518     $ —       $ 509,757,889  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance: individually evaluated for impairment

   $ 289,560     $ 9,575,970     $ 1,378,579     $ 9,108,987     $ 14,986,243     $ 1,417,742     $ —       $ 36,757,081  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending balance : collectively evaluated for impairment

   $ 31,521,175     $ 206,083,867     $ 10,928,343     $ 903,035     $ 173,122,612     $ 50,441,776     $ —       $ 473,000,808  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The Company monitors the credit quality of its loans receivable in an ongoing manner. Credit quality is monitored by reviewing certain credit quality indicators. Management has determined that loan-to-value ratios (LTVs), (at period end) and internally assigned risk ratings are the key credit quality indicators that best help management monitor the credit quality of the Company’s loans receivable. Loan-to-value ratios used by management in monitoring credit quality are based on current period loan balances and original values at time of originations (unless a current appraisal has been obtained as a result of the loan being deemed impaired or the loan is a maturing construction loan).

Appraisals on properties securing impaired loans and Other Real Estate Owned (“OREO”) are updated annually. Additionally, appraisals on construction loans are updated four months in advance of scheduled maturity dates. We update our impairment analysis monthly based on the most recent appraisal as well as other factors (such as senior lien positions, e.g. property taxes), and we are using published information regarding actual median home sales prices in the towns/counties where our collateral is located in CT and NY.

The majority of the Company’s impaired loans have been resolved through courses of action other than via bank liquidations of real estate collateral through OREO. These include normal loan payoffs, the traditional workout process, triggering personal guarantee obligations, and troubled debt restructurings. However, as loan workout efforts progress to a point where the bank’s liquidation of real estate collateral is the likely outcome, the impairment analysis is updated to reflect recent actual experience with bank sales of OREO properties.

A disposition discount is built into our impairment analysis and reflected in our allowance once a property is determined to be a likely OREO (e.g. foreclosure is probable). To determine the discount we compare the actual sales prices of our OREO properties to the appraised value that was obtained as of the date when we took title to the property. The difference is the bank-owned disposition discount.

The Company has a risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a risk rating to each loan in their portfolio at origination. When the lender learns of important financial developments, the risk rating is reviewed accordingly, and adjusted if necessary. Similarly, the Loan Committee can adjust a risk rating. The Loan Workout Committee reviews loans rated “special mention” or worse. In addition, the Company engages a third party independent loan reviewer that performs quarterly reviews of a sample of loans, validating the Bank’s risk ratings assigned to such loans. The risk ratings play an important role in the establishment of the loan loss provision and to confirm the adequacy of the allowance for loan losses.

When assigning a risk rating to a loan, management utilizes the Bank’s internal nine-point risk rating system. Loans deemed to be “acceptable quality” are rated 1 through 5, with a rating of 1 established for loans with minimal risk and borrowers exhibiting the strongest financial condition. Loans rated 1—5 are considered “Pass”. Loans that are deemed to be of “questionable quality” are rated 6 (special mention). An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories. Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. An asset is considered “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the “distinct possibility” that the Company will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”

Charge-off generally commences in the month that the loan is classified “doubtful” and is fully charged off within six months of such classification. If the account is classified “loss” the full balance is charged off immediately. The full balance is charged off regardless of the potential recovery from the sale of the collateral. This amount is recognized as a recovery once the collateral is sold.

In accordance with FFIEC (“Federal Financial Institutions Examination Council”) published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” credits are charged-off when 180 days delinquent and “Closed-end” credits are charged-off when 120 days delinquent. Typically, consumer installment loans are charged off no later than 90 days past due.

 

The following table details the credit risk exposure of loans receivable, by loan type and credit quality indicator at March 31, 2012:

CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY

 

                                                                                                                 
    Commercial     Commercial Real Estate     Construction     Construction to
Permanent		     Residential Real Estate     Consumer        
LTVs:   < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     Other     Total  

Internal Risk Rating

                                                                                                                

Pass

   $ 23,996,006     $ 2,077,483     $ 169,825,746     $ 8,636,861     $ —       $ —       $ 1,290,611     $ 799,690     $ 92,449,912     $ 25,792,748     $ 44,735,460     $ 1,387,783     $ 657,416     $ 371,649,716  

Special Mention

     439,482       170,214       15,131,732       5,707,423       8,368,236       —         —         —         9,989,533       —         99,532       2,711,032       —         42,617,184  

Substandard & Doubtful

     5,569,039       —         20,121,567       11,206,004       1,231,553       1,862,035       —         6,208,122       5,231,707       7,074,513       —         1,417,741       —         59,922,281  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    $ 30,004,527     $ 2,247,697     $ 205,079,045     $ 25,550,288     $ 9,599,789     $ 1,862,035     $ 1,290,611     $ 7,007,812     $ 107,671,152     $ 32,867,261     $ 44,834,992     $ 5,516,556     $ 657,416     $ 474,189,181  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

CREDIT RISK PROFILE

 

                                                         
    Commercial     Commercial Real
Estate		     Construction     Construction to
Permanent		     Residential
Real Estate		     Consumer     Totals  

Performing

   $ 31,982,274     $ 222,609,945     $ 10,095,270     $ 6,995,301     $ 136,945,654     $ 50,015,222     $ 458,643,666  

Non Performing

     269,950       8,019,388       1,366,554       1,303,122       3,592,759       993,742       15,545,515  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 32,252,224     $ 230,629,333     $ 11,461,824     $ 8,298,423     $ 140,538,413     $ 51,008,964     $ 474,189,181  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table details the credit risk exposure of loans receivable, by loan type and credit quality indicator at December 31, 2011:

CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY

 

                                                                                                                 
    Commercial     Commercial Real Estate     Construction     Construction to
Permanent		     Residential Real Estate     Consumer        
LTVs:   < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     < 75%     >= 75%     Other     Total  

Internal Risk Rating

                                                                                                                

Pass

   $ 23,822,200     $ 1,737,893     $ 151,392,526     $ 11,680,310     $ —       $ —       $ 903,035     $ —       $ 129,132,494     $ 34,895,858     $ 44,969,963     $ 1,531,223     $ 636,863     $ 400,702,365  

Special Mention

     1,544,420       170,575       22,426,235       4,585,523       9,210,344       —         —         —         5,316,201       2,400,000       274,365       3,029,362       —         48,957,025  

Substandard & Doubtful

     4,480,440       55,207       15,981,747       9,593,496       1,243,579       1,852,999       —         9,108,987       3,587,607       12,776,695       —         1,417,742       —         60,098,499  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    $ 29,847,060     $ 1,963,675     $ 189,800,508     $ 25,859,329     $ 10,453,923     $ 1,852,999     $ 903,035     $ 9,108,987     $ 138,036,302     $ 50,072,553     $ 45,244,328     $ 5,978,327     $ 636,863     $ 509,757,889  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

CREDIT RISK PROFILE

 

                                                         
    Commercial     Commercial Real
Estate		     Construction     Construction to
Permanent		     Residential
Real Estate		     Consumer     Totals  

Performing

   $ 31,521,175     $ 206,322,032     $ 10,928,343     $ 5,808,035     $ 183,629,363     $ 50,865,776     $ 489,074,724  
               

Non Performing

     289,560       9,337,805       1,378,579       4,203,987       4,479,492       993,742       20,683,165  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 31,810,735     $ 215,659,837     $ 12,306,922     $ 10,012,022     $ 188,108,855     $ 51,859,518     $ 509,757,889  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The recorded balance of these nonaccrual loans was $15.5 million and $20.7 million at March 31, 2012, and December 31, 2011 respectively. Generally, loans are placed on non-accruing status when they become 90 days or more delinquent, or earlier if deemed appropriate, and remain on non-accrual status until they are brought current, have six months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status. Additionally, certain loans that cannot demonstrate sufficient global cash flow to continue loan payments in the future and certain trouble debt restructures (TDRs) are placed on non-accrual status.

The following table sets forth the detail, and delinquency status, of non-accrual loans and past due loans at March 31, 2012:

 

                                                         
    Non-Accrual and Past Due Loans  
    Non-Accrual Loans              
                                        Total Non-  
                                  >90 Days Past     Accrual and  
    31-60 Days     61-90 Days     Greater Than     Total Past           Due and     Past Due  

2012

   Past Due     Past Due     90 Days     Due     Current     Accruing     Loans  

Commercial

                                                        

Pass

   $ —       $ —       $ —       $ —       $ —       $ 96     $ 96  

Substandard

     —         —         269,950       269,950       —         947,847       1,217,797  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial

   $ —       $ —       $ 269,950     $ 269,950     $ —       $ 947,943     $ 1,217,893  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial Real Estate

                                                        

Pass

   $ —       $ —       $ —       $ —       $ —       $ 399,734     $ 399,734  

Substandard

   $ —       $ —       $ 5,829,302     $ 5,829,302     $ 2,190,086     $ 3,499,404     $ 11,518,792  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial Real Estate

   $ —       $ —       $ 5,829,302     $ 5,829,302     $ 2,190,086     $ 3,899,138     $ 11,918,526  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction

                                                        

Substandard

   $ —       $ —       $ 135,000     $ 135,000     $ 1,231,554     $ 1,727,034     $ 3,093,588  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction

   $ —       $ —       $ 135,000     $ 135,000     $ 1,231,554     $ 1,727,034     $ 3,093,588  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction to Permanent

                                                        

Substandard

   $ —       $ —       $ —       $ —       $ 1,303,122     $ —       $ 1,303,122  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction to Permanent

   $ —       $ —       $ —       $ —       $ 1,303,122     $ —       $ 1,303,122  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential Real Estate

                                                        

Substandard

   $ —       $ —       $ 3,592,759     $ 3,592,759     $ —       $ —       $ 3,592,759  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Residential Real Estate

   $ —       $ —       $ 3,592,759     $ 3,592,759     $ —       $ —       $ 3,592,759  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer

                                                        

Substandard

   $ —       $ —       $ 993,742     $ 993,742     $ —       $ —       $ 993,742  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Consumer

   $ —       $ —       $ 993,742     $ 993,742     $ —       $ —       $ 993,742  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ —       $ —       $ 10,820,753     $ 10,820,753     $ 4,724,762     $ 6,574,115     $ 22,119,630  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table sets forth the detail, and delinquency status, of non-accrual loans and past due loans at December 31, 2011:

 

                                                         
    Non-Accrual and Past Due Loans  
    Non-Accrual Loans              

2011

   31-60 Days
Past Due		     61-90 Days
Past Due		     Greater Than
90 Days		     Total Past
Due		     Current     >90 Days Past
Due and
Accruing		     Total Non-
Accrual and
Past Due
Loans		  

Commercial

                                                        

Special Mention

   $ —       $ —       $ —       $ —       $ —       $ 44,296     $ 44,296  

Substandard

     —         —         289,560       289,560       —         947,847       1,237,407  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial

   $ —       $ —       $ 289,560     $ 289,560     $ —       $ 992,143     $ 1,281,703  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial Real Estate

                                                        

Pass

   $ —       $ —       $ —       $ —       $ —       $ 402,663     $ 402,663  

Special Mention

     —         —         —         —         —         2,832,452       2,832,452  

Substandard

   $ —       $ 443,259     $ 6,670,730     $ 7,113,989     $ 2,223,816     $ 3,515,848     $ 12,853,653  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial Real Estate

   $ —       $ 443,259     $ 6,670,730     $ 7,113,989     $ 2,223,816     $ 6,750,963     $ 16,088,768  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction

                                                        

Substandard

   $ —       $ —       $ 135,000     $ 135,000     $ 1,243,579     $ 1,717,999     $ 3,096,578  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction

   $ —       $ —       $ 135,000     $ 135,000     $ 1,243,579     $ 1,717,999     $ 3,096,578  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction to Permanent

                                                        

Substandard

   $ —       $ —       $ —       $ —       $ 4,203,987     $ —       $ 4,203,987  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction to Permanent

   $ —       $ —       $ —       $ —       $ 4,203,987     $ —       $ 4,203,987  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential Real Estate

                                                        

Substandard

   $ —       $ —       $ 4,479,492     $ 4,479,492     $ —       $ —       $ 4,479,492  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Residential Real Estate

   $ —       $ —       $ 4,479,492     $ 4,479,492     $ —       $ —       $ 4,479,492  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer

                                                        

Substandard

   $ —       $ —       $ 993,742     $ 993,742     $ —       $ —       $ 993,742  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Consumer

   $ —       $ —       $ 993,742     $ 993,742     $ —       $ —       $ 993,742  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ —       $ 443,259     $ 12,568,524     $ 13,011,783     $ 7,671,382     $ 9,461,105     $ 30,144,270  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

These non-accrual and past due amounts included loans deemed to be impaired of $15.5 million and $20.7 million at March 31, 2012, and December 31, 2011, respectively. Loans past due and still accruing interest were $6.6 million and $9.5 million at March 31, 2012, and December 31, 2011 respectively, and consisted of ten loans at March 31, 2012. All of the loans are current as to payment but past maturity where payoff is pending or in the process of renewal.

 

The following table sets forth the detail and delinquency status of loans receivable, by performing and non-performing loans at March 31, 2012.

 

                                                                 
    Performing (Accruing) Loans              

2012

   31-60 Days
Past Due		     61-90 Days
Past Due		     Greater
Than 90
Days		     Total Past
Due		     Current     Total
Performing
Loans		     Total Non-
Accrual and
Past Due
Loans		     Total Loans  

Commercial

                                                                

Pass

   $ —       $ —       $ —       $ —       $ 26,073,393     $ 26,073,393     $ 96     $ 26,073,489  

Special Mention

     —         —         —         —         609,696       609,696       —         609,696  

Substandard

     —         —         —         —         4,351,242       4,351,242       1,217,797       5,569,039  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial

   $ —       $ —       $ —       $ —       $ 31,034,331     $ 31,034,331     $ 1,217,893     $ 32,252,224  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial Real Estate

                                                                

Pass

   $ —       $ —       $ —       $ —       $ 178,062,873     $ 178,062,873     $ 399,734     $ 178,462,607  

Special Mention

     304,731       —         —         304,731       20,534,424       20,839,155       —         20,839,155  

Substandard

     1,909,100       —         —         1,909,100       17,899,679       19,808,779       11,518,792       31,327,571  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial Real Estate

   $ 2,213,831     $ —       $ —       $ 2,213,831     $ 216,496,976     $ 218,710,807     $ 11,918,526     $ 230,629,333  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction

                                                                

Pass

   $ —       $ —       $ —       $ —       $ —       $ —       $ —       $ —    

Special Mention

     —         —         —         —         8,368,236       8,368,236       —         8,368,236  

Substandard

     —         —         —         —         —         —         3,093,588       3,093,588  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction

   $ —       $ —       $ —       $ —       $ 8,368,236     $ 8,368,236     $ 3,093,588     $ 11,461,824  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction to Permanent

                                                                

Pass

   $ —       $ —       $ —       $ —       $ 2,090,301     $ 2,090,301     $ —       $ 2,090,301  

Special Mention

     —         —         —         —         —         —         —         —    

Substandard

     —         —         —         —         4,905,000       4,905,000       1,303,122       6,208,122  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction to Permanent

   $ —       $ —       $ —       $ —       $ 6,995,301     $ 6,995,301     $ 1,303,122     $ 8,298,423  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential Real Estate

                                                                

Pass

   $ —       $ —       $ —       $ —       $ 118,242,660     $ 118,242,660     $ —       $ 118,242,660  

Special Mention

     —         —         —         —         9,989,533       9,989,533       —         9,989,533  

Substandard

     —         —         —         —         8,713,461       8,713,461       3,592,759       12,306,220  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Residential Real Estate

   $ —       $ —       $ —       $ —       $ 136,945,654     $ 136,945,654     $ 3,592,759     $ 140,538,413  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer

                                                                

Pass

   $ 8,731     $ —       $ —       $ 8,731     $ 46,771,928     $ 46,780,659     $ —       $ 46,780,659  

Special Mention

     —         —         —         —         2,810,564       2,810,564       —         2,810,564  

Substandard

     —         —         —         —         423,999       423,999       993,742       1,417,741  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Consumer

   $ 8,731     $ —       $ —       $ 8,731     $ 50,006,491     $ 50,015,222     $ 993,742     $ 51,008,964  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 2,222,562     $ —       $ —       $ 2,222,562     $ 449,846,989     $ 452,069,551     $ 22,119,630     $ 474,189,181  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table sets forth the detail and delinquency status of loans receivable, net, by performing and non-performing loans at December 31, 2011.

 

                                                         
    Performing (Accruing) Loans              

2011

   31-60 Days
Past Due		     Greater
Than 60
Days		     Total Past
Due		     Current     Total
Perfoming
Loans		     Total Non-
Accrual and
Past Due
Loans		     Total Loans  

Commercial

                                                        

Pass

   $ 10,971     $ —       $ 10,971     $ 25,504,826     $ 25,515,797     $ 44,296     $ 25,560,093  

Special Mention

     —         —         —         1,714,995       1,714,995       —         1,714,995  

Substandard

     233,781       —         233,781       3,064,459       3,298,240       1,237,407       4,535,647  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial

   $ 244,752     $ —       $ 244,752     $ 30,284,280     $ 30,529,032     $ 1,281,703     $ 31,810,735  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial Real Estate

                                                        

Pass

   $ —       $ —       $ —       $ 162,670,173     $ 162,670,173     $ 402,663     $ 163,072,836  

Special Mention

     1,915,504       —         1,915,504       22,263,802       24,179,306       2,832,452       27,011,758  

Substandard

     —         —         —         12,721,590       12,721,590       12,853,653       25,575,243  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Commercial Real Estate

   $ 1,915,504     $ —       $ 1,915,504     $ 197,655,565     $ 199,571,069     $ 16,088,768     $ 215,659,837  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction

                                                        

Pass

   $ —       $ —       $ —       $ —       $ —       $ —       $ —    

Special Mention

     —         —         —         9,210,344       9,210,344       —         9,210,344  

Substandard

     —         —         —         —         —         3,096,578       3,096,578  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction

   $ —       $ —       $ —       $ 9,210,344     $ 9,210,344     $ 3,096,578     $ 12,306,922  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Construction to Permanent

                                                        

Pass

   $ —       $ —       $ —       $ 903,035     $ 903,035     $ —       $ 903,035  

Special Mention

     —         —         —         —         —         —         —    

Substandard

     —         —         —         4,905,000       4,905,000       4,203,987       9,108,987  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Construction to Permanent

   $ —       $ —       $ —       $ 5,808,035     $ 5,808,035     $ 4,203,987     $ 10,012,022  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential Real Estate

                                                        

Pass

   $ 42,181     $ —       $ 42,181     $ 163,986,171     $ 164,028,352     $ —       $ 164,028,352  

Special Mention

     4,800,000       —         4,800,000       2,916,201       7,716,201       —         7,716,201  

Substandard

     —         84,225       84,225       11,800,585       11,884,810       4,479,492       16,364,302  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Residential Real Estate

   $ 4,842,181     $ 84,225     $ 4,926,406     $ 178,702,957     $ 183,629,363     $ 4,479,492     $ 188,108,855  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer

                                                        

Pass

   $ 1,459     $ —       $ 1,459     $ 47,136,590     $ 47,138,049     $ —       $ 47,138,049  

Special Mention

     —         —         —         3,303,727       3,303,727       —         3,303,727  

Substandard

     —         —         —         424,000       424,000       993,742       1,417,742  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Consumer

   $ 1,459     $ —       $ 1,459     $ 50,864,317     $ 50,865,776     $ 993,742     $ 51,859,518  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 7,003,896     $ 84,225     $ 7,088,121     $ 472,525,498     $ 479,613,619     $ 30,144,270     $ 509,757,889  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table summarizes impaired loans as of March 31, 2012:

 

                         
    Recorded
Investment		     Unpaid Principal
Balance		     Related Allowance  

2012

                        

With no related allowance recorded:

                        

Commercial

   $ 36,816     $ 269,543     $ —    

Commercial Real Estate

     7,964,198       8,771,196       —    

Construction

     1,231,554       1,235,600       —    

Construction to Permanent

     4,905,000       4,905,000          

Residential

     13,392,843       13,392,843       —    

Consumer

     993,742       993,742       —    
   

 

 

    

 

 

    

 

 

  

Total:

   $ 28,524,153     $ 29,567,924     $ —    
       

With an allowance recorded:

                        

Commercial

   $ 233,134     $ 424,178     $ 97,256  

Commercial Real Estate

     1,499,474       1,598,159       137,441  

Construction

     135,000       286,625       31,520  

Construction to Permanent

     1,303,122       1,425,000       125,522  

Residential

     701,355       701,355       34,363  

Consumer

     424,000       424,000       151,500  
   

 

 

    

 

 

    

 

 

  

Total:

   $ 4,296,085     $ 4,859,317     $ 577,602  
       

Commercial

   $ 269,950     $ 693,721     $ 97,256  

Commercial Real Estate

     9,463,672       10,369,355       137,441  

Construction

     1,366,554       1,522,225       31,520  

Construction to Permanent

     6,208,122       6,330,000       125,522  

Residential

     14,094,198       14,094,198       34,363  

Consumer

     1,417,742       1,417,742       151,500  
   

 

 

    

 

 

    

 

 

  

Total:

   $ 32,820,238     $ 34,427,241     $ 577,602  
   

 

 

    

 

 

    

 

 

  

Impaired loans consist of non-accrual loans, TDRs and loans that were previously classified as TDRs that have been upgraded.

 

The following table summarizes impaired loans as of December 31, 2011:

 

                         
    Recorded
Investment		     Unpaid Principal
Balance		     Related Allowance  

2011

                        

With no related allowance recorded:

                        

Commercial

   $ 210,091     $ 581,974     $ —    

Commercial Real Estate

     4,444,315       5,174,124       —    

Construction

     1,243,579       1,247,627       —    

Construction to Permanent

     6,614,333       6,614,333       —    

Residential

     9,789,727       9,789,727       —    

Consumer

     993,742       1,038,640       —    
   

 

 

    

 

 

    

 

 

  

Total:

   $ 23,295,787     $ 24,446,425     $ —    
       

With an allowance recorded:

                        

Commercial

   $ 79,469     $ 130,137     $ 61,145  

Commercial Real Estate

     5,131,655       5,354,025       319,894  

Construction

     135,000       286,625       31,520  

Construction to Permanent

     2,494,654       2,634,000       498,254  

Residential

     5,196,516       5,196,516       197,478  

Consumer

     424,000       424,000       151,500  
   

 

 

    

 

 

    

 

 

  

Total:

   $ 13,461,294     $ 14,025,303     $ 1,259,791  
       

Commercial

   $ 289,560     $ 712,111     $ 61,145  

Commercial Real Estate

     9,575,970       10,528,149       319,894  

Construction

     1,378,579       1,534,252       31,520  

Construction to Permanent

     9,108,987       9,248,333       498,254  

Residential

     14,986,243       14,986,243       197,478  

Consumer

     1,417,742       1,462,640       151,500  
   

 

 

    

 

 

    

 

 

  

Total:

   $ 36,757,081     $ 38,471,728     $ 1,259,791  
   

 

 

    

 

 

    

 

 

  

The recorded investment of impaired loans at March 31, 2012 and December 31, 2011 was $32.8 million and $36.8 million, with related allowances of $578,000 and $1.3 million, respectively.

Included in the tables above at March 31, 2012 and December 31, 2011 are loans with carrying balances of $28.5 million and $23.3 million that required no specific reserves in our allowance for loan losses. Loans that did not require specific reserves at March 31, 2012 and December 31, 2011 have sufficient collateral values, less costs to sell, supporting the carrying balances of the loans. In some cases, there may be no specific reserves because the Company already charged-off the specific impairment. Once a borrower is in default, the Company is under no obligation to advance additional funds on unused commitments.

On a case-by-case basis, the Company may agree to modify the contractual terms of a borrower’s loan to remain competitive and assist customers who may be experiencing financial difficulty, as well as preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a troubled debt restructured loan.

As a result of the adoption of ASU 2011-02, the Company reassessed all restructurings occurred on or after January 1, 2011 for identification as TDRs and have concluded that there were no additional TDRs identified that have not been previously disclosed.

 

The following table presents the total troubled debt restructured loans as of March 31, 2012:

 

                                                 
    Accrual     Non-accrual     Total  
    # of
Loans		     Amount     # of
Loans		     Amount     # of
Loans		     Amount  

Commercial Real Estate

     1     $ 235,284       2     $ 4,345,087       3     $ 4,580,371  

Residential Real Estate

     2       5,826,329       —         —         2       5,826,329  

Construction

     —         —         1       1,231,554       1       1,231,554  

Construction to permanent

     1       4,905,000       1       1,303,122       2       6,208,122  

Consumer home equity

     1       424,000       —         —         1       424,000  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Troubled Debt Restructurings

     5     $ 11,390,613       4     $ 6,879,763       9     $ 18,270,376  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table presents the total troubled debt restructured loans as of December 31, 2011:

 

                                                 
    Accrual     Non-accrual     Total  
    # of
Loans		     Amount     # of
Loans		     Amount     # of
Loans		     Amount  

Commercial Real Estate

     1     $ 238,165       3     $ 5,666,882       4     $ 5,905,047  

Residential Real Estate

     3       10,506,751       —         —         3       10,506,751  

Construction

     —         —         1       1,243,579       1       1,243,579  

Construction to permanent

     1       4,905,000       2       2,494,654       3       7,399,654  

Consumer home equity

     1       424,000       —         —         1       424,000  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Troubled Debt Restructurings

     6     $ 16,073,916       6     $ 9,405,115       12     $ 25,479,031  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

No loans were modified in a troubled debt restructuring during the three months ended March 31, 2012.

Substantially all of our troubled debt restructured loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or accrued interest. In addition, we frequently obtain additional collateral or guarantor support when modifying commercial loans. If the borrower had demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

During the three months ended March 31, 2012, two of the troubled debt restructured loans were upgraded and are no longer classified as troubled debt restructurings as compared to December 31, 2011. One upgrade was a residential loan for $4.7 million which is no longer classified as substandard due to increased liquidity of the borrower, and the other upgrade was a commercial construction loan for $1.2 million where the bank received additional collateral. One troubled debt restructuring had a payment default on a commercial real estate loan of $1.2 million and is currently in OREO.

All troubled debt restructurings are impaired loans, which are individually evaluated for impairment.