LOANS AND ALLOWANCE FOR LOAN LOSSES

12 Months Ended

Dec. 31, 2013

Receivables [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

											Percent
	December 31, 2013					December 31, 2012					Increase
	Balance		%			Balance		%			(Decrease)
Commercial:
Commercial and industrial	$	286,373,000		27.2	%	$	285,322,000		27.4	%		0.4	%
Vacant land, land development, and residential construction		36,741,000		3.5			48,099,000		4.6			(23.6	)
Real estate – owner occupied		261,877,000		24.9			259,277,000		24.9			1.0
Real estate – non-owner occupied		364,066,000		34.6			324,886,000		31.2			12.1
Real estate – multi-family and residential rental		37,639,000		3.5			50,922,000		4.9			(26.1	)
Total commercial		986,696,000		93.7			968,506,000		93.0			1.9
Retail:
Home equity and other		35,080,000		3.3			38,917,000		3.7			(9.9	)
1-4 family mortgages		31,467,000		3.0			33,766,000		3.3			(6.8	)
Total retail		66,547,000		6.3			72,683,000		7.0			(8.4	)
Total loans	$	1,053,243,000		100.0	%	$	1,041,189,000		100.0	%		1.2	%

Concentrations within the loan portfolio were as follows at year-end:

	2013					2012
			Percentage of					Percentage of
	Balance		Loan Portfolio			Balance		Loan Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	299,446,000		28.4	%	$	302,723,000		29.1	%

Year-end nonperforming loans were as follows:

	2013		2012
Loans past due 90 days or more still accruing interest	$	0	$	0
Nonaccrual loans		6,718,000		18,970,000
Total nonperforming loans	$	6,718,000	$	18,970,000

The recorded principal balance of nonaccrual loans was as follows:

	December 31,		December 31,
	2013		2012
Commercial:
Commercial and industrial	$	1,501,000	$	1,677,000
Vacant land, land development, and residential construction		785,000		2,194,000
Real estate – owner occupied		389,000		2,087,000
Real estate – non-owner occupied		168,000		9,010,000
Real estate – multi-family and residential rental		208,000		2,021,000
Total commercial		3,051,000		16,989,000
Retail:
Home equity and other		788,000		889,000
1-4 family mortgages		2,879,000		1,092,000
Total retail		3,667,000		1,981,000
Total nonaccrual loans	$	6,718,000	$	18,970,000

An age analysis of past due loans is as follows as of December 31, 2013:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	0	$	0	$	309,000	$	309,000	$	286,064,000	$	286,373,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		36,741,000		36,741,000		0
Real estate – owner occupied		65,000		0		50,000		115,000		261,762,000		261,877,000		0
Real estate – non-owner occupied		0		0		0		0		364,066,000		364,066,000		0
Real estate – multi-family and residential rental		0		0		64,000		64,000		37,575,000		37,639,000		0
Total commercial		65,000		0		423,000		488,000		986,208,000		986,696,000		0
Retail:
Home equity and other		14,000		0		0		14,000		35,066,000		35,080,000		0
1- 4 family mortgages		21,000		44,000		375,000		440,000		31,027,000		31,467,000		0
Total retail		35,000		44,000		375,000		454,000		66,093,000		66,547,000		0
Total past due loans	$	100,000	$	44,000	$	798,000	$	942,000	$	1,052,301,000	$	1,053,243,000	$	0

An age analysis of past due loans is as follows as of December 31, 2012:

					Greater								Recorded
	30 – 59		60 – 89		Than 89								Balance > 89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing
Commercial:
Commercial and industrial	$	80,000	$	0	$	871,000	$	951,000	$	284,371,000	$	285,322,000	$	0
Vacant land, land development, and residential construction		289,000		0		614,000		903,000		47,196,000		48,099,000		0
Real estate – owner occupied		199,000		0		1,337,000		1,536,000		257,741,000		259,277,000		0
Real estate – non-owner occupied		303,000		0		1,123,000		1,426,000		323,460,000		324,886,000		0
Real estate – multi-family and residential rental		0		0		613,000		613,000		50,309,000		50,922,000		0
Total commercial		871,000		0		4,558,000		5,429,000		963,077,000		968,506,000		0
Retail:
Home equity and other		1,000		0		13,000		14,000		38,903,000		38,917,000		0
1- 4 family mortgages		47,000		190,000		437,000		674,000		33,092,000		33,766,000		0
Total retail		48,000		190,000		450,000		688,000		71,995,000		72,683,000		0
Total past due loans	$	919,000	$	190,000	$	5,008,000	$	6,117,000	$	1,035,072,000	$	1,041,189,000	$	0

Impaired loans with no related allowance recorded were as follows as of December 31, 2013:

						Year-To-Date
	Unpaid					Average
	Contractual		Recorded			Recorded
	Principal		Principal		Related	Principal
	Balance		Balance		Allowance	Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,229,000	$	511,000		$	1,205,000
Vacant land, land development and residential construction		475,000		362,000			991,000
Real estate – owner occupied		1,270,000		785,000			1,084,000
Real estate – non-owner occupied		895,000		733,000			4,049,000
Real estate – multi-family and residential rental		41,000		1,000			390,000
Total commercial		4,910,000		2,392,000			7,719,000
Retail:
Home equity and other		507,000		461,000			471,000
1-4 family mortgages		1,272,000		647,000			727,000
Total retail		1,779,000		1,108,000			1,198,000
Total with no related allowance recorded	$	6,689,000	$	3,500,000		$	8,917,000

Impaired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2013:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	1,517,000	$	1,440,000	$	792,000	$	1,880,000
Vacant land, land development and residential construction		4,436,000		4,139,000		844,000		3,354,000
Real estate – owner occupied		1,513,000		1,513,000		528,000		2,550,000
Real estate – non-owner occupied		21,088,000		21,072,000		7,969,000		28,388,000
Real estate – multi-family and residential rental		3,219,000		2,684,000		1,127,000		2,915,000
Total commercial		31,773,000		30,848,000		11,260,000		39,087,000
Retail:
Home equity and other		320,000		289,000		96,000		329,000
1-4 family mortgages		2,274,000		2,231,000		1,030,000		1,628,000
Total retail		2,594,000		2,520,000		1,126,000		1,957,000
Total with an allowance recorded	$	34,367,000	$	33,368,000	$	12,386,000	$	41,044,000
Total impaired loans:
Commercial	$	36,683,000	$	33,240,000	$	11,260,000	$	46,806,000
Retail		4,373,000		3,628,000		1,126,000		3,155,000
Total impaired loans	$	41,056,000	$	36,868,000	$	12,386,000	$	49,961,000

Impaired loans with no related allowance recorded were as follows as of December 31, 2012:

						Year-To-Date
	Unpaid					Average
	Contractual		Recorded			Recorded
	Principal		Principal		Related	Principal
	Balance		Balance		Allowance	Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,926,000	$	1,617,000		$	3,140,000
Vacant land, land development and residential construction		2,356,000		1,401,000			1,848,000
Real estate – owner occupied		2,368,000		1,557,000			3,139,000
Real estate – non-owner occupied		9,984,000		5,492,000			6,578,000
Real estate – multi-family and residential rental		1,188,000		413,000			756,000
Total commercial		17,822,000		10,480,000			15,461,000
Retail:
Home equity and other		580,000		483,000			579,000
1-4 family mortgages		1,636,000		789,000			730,000
Total retail		2,216,000		1,272,000			1,309,000
Total with no related allowance recorded	$	20,038,000	$	11,752,000		$	16,770,000

Impaired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2012:

							Year-To-Date
	Unpaid						Average
	Contractual		Recorded				Recorded
	Principal		Principal		Related		Principal
	Balance		Balance		Allowance		Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	3,221,000	$	1,926,000	$	924,000	$	3,110,000
Vacant land, land development and residential construction		2,333,000		2,219,000		1,367,000		3,267,000
Real estate – owner occupied		4,307,000		3,626,000		1,388,000		4,913,000
Real estate – non-owner occupied		33,818,000		32,964,000		11,773,000		25,061,000
Real estate – multi-family and residential rental		4,471,000		3,923,000		1,408,000		7,429,000
Total commercial		48,150,000		44,658,000		16,860,000		43,780,000
Retail:
Home equity and other		423,000		394,000		204,000		286,000
1-4 family mortgages		555,000		475,000		125,000		482,000
Total retail		978,000		869,000		329,000		768,000
Total with an allowance recorded	$	49,128,000	$	45,527,000	$	17,189,000	$	44,548,000
Total impaired loans:
Commercial	$	65,972,000	$	55,138,000	$	16,860,000	$	59,241,000
Retail		3,194,000		2,141,000		329,000		2,077,000
Total impaired loans	$	69,166,000	$	57,279,000	$	17,189,000	$	61,318,000

Impaired loans for which no allocation of the allowance for loan losses has been made generally reflect situations whereby the loans have been charged-down to estimated collateral value. Interest income recognized on accruing troubled debt restructurings totaled $2.5 million, $2.0 million and $0.2 million during 2013, 2012 and 2011, respectively. Interest income recognized on nonaccrual loans totaled $1.9 million during 2013, reflecting the collection of interest at the time of principal pay-off. No such collections of interest income were recorded during 2012 or 2011. Lost interest income on nonaccrual loans totaled $0.4 million during 2013, $0.8 million during 2012, and $1.4 million during 2011.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral and payment activity.

Loans by credit quality indicators were as follows as of December 31, 2013:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial						Commercial
			Vacant Land,		Commercial		Commercial		Real Estate -
	Commercial		Land Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	208,151,000	$	6,973,000	$	156,230,000	$	219,325,000	$	15,465,000
Grades 5 – 7		76,237,000		25,535,000		103,066,000		122,717,000		19,469,000
Grades 8 – 9		1,985,000		4,233,000		2,581,000		22,024,000		2,705,000
Total commercial	$	286,373,000	$	36,741,000	$	261,877,000	$	364,066,000	$	37,639,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	35,080,000	$	31,467,000

Loans by credit quality indicators were as follows as of December 31, 2012:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

			Commercial						Commercial
			Vacant Land,		Commercial		Commercial		Real Estate -
	Commercial		Land Development,		Real Estate -		Real Estate -		Multi-Family
	and		and Residential		Owner		Non-Owner		and Residential
	Industrial		Construction		Occupied		Occupied		Rental
Internal credit risk grade groupings:
Grades 1 – 4	$	180,314,000	$	6,526,000	$	150,467,000	$	154,127,000	$	24,015,000
Grades 5 – 7		101,832,000		37,697,000		102,988,000		128,041,000		22,082,000
Grades 8 – 9		3,176,000		3,876,000		5,822,000		42,718,000		4,825,000
Total commercial	$	285,322,000	$	48,099,000	$	259,277,000	$	324,886,000	$	50,922,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail		Retail
	Home Equity		1-4 Family
	and Other		Mortgages
Total retail	$	38,917,000	$	33,766,000

All commercial loans are graded using the following number system:

Grade 1. Excellent credit rating that contain very little, if any, risk of loss.

Grade 2. Strong sources of repayment and have low repayment risk.

Grade 3. Good sources of repayment and have limited repayment risk.

Grade 4. Adequate sources of repayment and acceptable repayment risk; however, characteristics are present that render the credit more vulnerable to a negative event.

Grade 5. Marginally acceptable sources of repayment and exhibit defined weaknesses and negative characteristics.

Grade 6. Well defined weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if the credit does not stabilize or if further deterioration is observed in the near term, the loan will likely be downgraded and placed on the Watch List (i.e., list of lending relationships that receive increased scrutiny and review by the Board of Directors and senior management).

Grade 7. Defined weaknesses or negative trends that merit close monitoring through Watch List status.

Grade 8. Inadequately protected by current sound net worth, paying capacity of the obligor, or pledged collateral, resulting in a distinct possibility of loss requiring close monitoring through Watch List status.

Grade 9. Vital weaknesses exist where collection of principal is highly questionable.

Grade 10. Considered uncollectable and of such little value that their continuance as an asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments. We have a reporting system that monitors past due loans and have adopted policies to pursue creditor’s rights in order to preserve our collateral position.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2013 are as follows:

	Commercial			Retail
	Loans			Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Provision for loan losses		(6,730,000	)		(489,000	)		19,000			(7,200,000	)
Charge-offs		(5,120,000	)		(170,000	)		0			(5,290,000	)
Recoveries		6,262,000			372,000			0			6,634,000
Ending balance	$	20,455,000		$	2,358,000		$	8,000		$	22,821,000
Ending balance: individually evaluated for impairment	$	11,260,000		$	1,126,000		$	0		$	12,386,000
Ending balance: collectively evaluated for impairment	$	9,195,000		$	1,232,000		$	8,000		$	10,435,000
Total loans:
Ending balance	$	986,696,000		$	66,547,000					$	1,053,243,000
Ending balance: individually evaluated for impairment	$	33,240,000		$	3,628,000					$	36,868,000
Ending balance: collectively evaluated for impairment	$	953,456,000		$	62,919,000					$	1,016,375,000

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2012 are as follows:

	Commercial Loans			Retail Loans			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	33,431,000		$	3,019,000		$	82,000		$	36,532,000
Provision for loan losses		(2,800,000	)		(207,000	)		(93,000	)		(3,100,000	)
Charge-offs		(12,075,000	)		(569,000	)		0			(12,644,000	)
Recoveries		7,487,000			402,000			0			7,889,000
Ending balance	$	26,043,000		$	2,645,000		$	(11,000	)	$	28,677,000
Ending balance: individually evaluated for impairment	$	16,860,000		$	329,000		$	0		$	17,189,000
Ending balance: collectively evaluated for impairment	$	9,183,000		$	2,316,000		$	(11,000	)	$	11,488,000
Total loans:
Ending balance	$	968,506,000		$	72,683,000					$	1,041,189,000
Ending balance: individually evaluated for impairment	$	55,138,000		$	2,141,000					$	57,279,000
Ending balance: collectively evaluated for impairment	$	913,368,000		$	70,542,000					$	983,910,000

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2011 are as follows:

	Commercial Loans			Retail Loans			Unallocated		Total
Allowance for loan losses:
Beginning balance	$	42,359,000		$	2,972,000		$	37,000	$	45,368,000
Provision for loan losses		4,125,000			2,730,000			45,000		6,900,000
Charge-offs		(16,978,000	)		(2,919,000	)		0		(19,897,000	)
Recoveries		3,925,000			236,000			0		4,161,000
Ending balance	$	33,431,000		$	3,019,000		$	82,000	$	36,532,000
Ending balance: individually evaluated for impairment	$	18,645,000		$	351,000		$	0	$	18,996,000
Ending balance: collectively evaluated for impairment	$	14,786,000		$	2,668,000		$	82,000	$	17,536,000
Total loans:
Ending balance	$	996,905,000		$	75,517,000				$	1,072,422,000
Ending balance: individually evaluated for impairment	$	68,893,000		$	2,085,000				$	70,978,000
Ending balance: collectively evaluated for impairment	$	928,012,000		$	73,432,000				$	1,001,444,000

Loans modified as troubled debt restructurings during 2013 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		3	$	741,000	$	741,000
Vacant land, land development and residential construction		2		3,610,000		3,610,000
Real estate – owner occupied		2		715,000		715,000
Real estate – non-owner occupied		1		45,000		45,000
Real estate – multi-family and residential rental		1		241,000		241,000
Total commercial		9		5,352,000		5,352,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		1		1,879,000		1,879,000
Total retail		1		1,879,000		1,879,000
Total		10	$	7,231,000	$	7,231,000

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2013 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		1		65,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		1		65,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		1	$	65,000

Loans modified as troubled debt restructurings during 2012 were as follows:

	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Commercial:
Commercial and industrial		8	$	1,357,000	$	1,353,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		6		1,745,000		1,744,000
Real estate – non-owner occupied		15		28,987,000		28,987,000
Real estate – multi-family and residential rental		0		0		0
Total commercial		29		32,089,000		32,084,000
Retail:
Home equity and other		0		0		0
1-4 family mortgages		0		0		0
Total retail		0		0		0
Total		29	$	32,089,000	$	32,084,000

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the twelve months ended December 31, 2012 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total		0	$	0

Activity for loans categorized as troubled debt restructurings during 2013 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction			Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental
Commercial Loan Portfolio:
Beginning Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000
Charge-Offs		(35,000	)		(725,000	)		(70,000	)		(2,537,000	)		(15,000	)
Payments		(2,781,000	)		(1,596,000	)		(2,151,000	)		(13,795,000	)		(735,000	)
Transfers to ORE		(74,000	)		0			(363,000	)		(1,153,000	)		0
Net Additions/Deletions		1,826,000			3,751,000			284,000			2,125,000			343,000
Ending Balance	$	1,656,000		$	4,501,000		$	1,816,000		$	22,311,000		$	2,620,000

	Retail Home Equity and Other		Retail 1-4 Family Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	155,000
Charge-Offs		0		0
Payments		0		(46,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		1,878,000
Ending Balance	$	0	$	1,987,000

Activity for loans categorized as troubled debt restructurings during 2012 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction			Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental
Commercial Loan Portfolio:
Beginning Balance	$	4,553,000		$	5,100,000		$	6,183,000		$	12,036,000		$	12,626,000
Charge-Offs		(540,000	)		(63,000	)		(426,000	)		(720,000	)		(2,180,000	)
Payments		(2,584,000	)		(2,013,000	)		(3,443,000	)		(2,482,000	)		(7,422,000	)
Transfers to ORE		(96,000	)		0			(65,000	)		(1,045,000	)		(186,000	)
Net Additions/Deletions		1,387,000			47,000			1,867,000			29,882,000			189,000
Ending Balance	$	2,720,000		$	3,071,000		$	4,116,000		$	37,671,000		$	3,027,000

	Retail Home Equity and Other		Retail 1-4 Family Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	164,000
Charge-Offs		0		0
Payments		0		(9,000	)
Transfers to ORE		0		0
Net Additions/Deletions		0		0
Ending Balance	$	0	$	155,000

Activity for loans categorized as troubled debt restructurings during 2011 is as follows:

	Commercial and Industrial			Commercial Vacant Land, Land Development, and Residential Construction			Commercial Real Estate - Owner Occupied			Commercial Real Estate - Non-Owner Occupied			Commercial Real Estate - Multi-Family and Residential Rental
Commercial Loan Portfolio:
Beginning Balance	$	850,000		$	10,696,000		$	2,589,000		$	9,330,000		$	7,848,000
Charge-Offs		(850,000	)		(2,429,000	)		0			(1,195,000	)		(21,000	)
Payments		0			(3,137,000	)		(2,477,000	)		(3,614,000	)		(92,000	)
Transfers to ORE		0			(5,130,000	)		0			0			0
Net Additions/Deletions		4,553,000			5,100,000			6,071,000			7,515,000			4,891,000
Ending Balance	$	4,553,000		$	5,100,000		$	6,183,000		$	12,036,000		$	12,626,000

	Retail Home Equity and Other		Retail 1-4 Family Mortgages
Retail Loan Portfolio:
Beginning Balance	$	0	$	0
Charge-Offs		0		0
Payments		0		0
Transfers to ORE		0		0
Net Additions/Deletions		0		164,000
Ending Balance	$	0	$	164,000

The allowance related to loans categorized as troubled debt restructurings was as follows:

	December 31, 2013		December 31, 2012
Commercial:
Commercial and industrial	$	187,000	$	772,000
Vacant land, land development, and residential construction		798,000		713,000
Real estate – owner occupied		528,000		1,116,000
Real estate – non-owner occupied		7,828,000		9,751,000
Real estate – multi-family and residential rental		1,010,000		745,000
Total commercial		10,351,000		13,097,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0
Total related allowance	$	10,351,000	$	13,097,000

In general, our policy dictates that a renewal or modification of an 8- or 9-rated commercial loan meets the criteria of a troubled debt restructuring, although we review and consider all renewed and modified loans as part of our troubled debt restructuring assessment procedures. Loan relationships rated 8 contain significant financial weaknesses, resulting in a distinct possibility of loss, while relationships rated 9 reflect vital financial weaknesses, resulting in a highly questionable ability on our part to collect principal; we believe borrowers warranting such ratings would have difficulty obtaining financing from other market participants. Thus, due to the lack of comparable market rates for loans with similar risk characteristics, we believe 8- or 9-rated loans renewed or modified were done so at below market rates. Loans that are identified as troubled debt restructurings are considered impaired and are individually evaluated for impairment when assessing these credits in our allowance for loan losses calculation.