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Troubled Debt Restructurings
9 Months Ended
Sep. 30, 2011
Troubled Debt Restructurings [Abstract] 
Troubled Debt Restructurings

NOTE 4 - Troubled Debt Restructurings

The Company considers a loan to be a TDR when the debtor experiences financial difficulties and the Company provides concessions such that we will not collect all principal and interest in accordance with the original terms of the loan agreement.  Concessions can relate to the contractual interest rate, maturity date, or payment structure of the note. As part of our workout plan for individual loan relationships, we may restructure loan terms to assist borrowers facing challenges in the current economic environment. At September 30, 2011 we had 24 loans totaling $7.8 million and two loans totaling $488,000 at December 31, 2010, which we considered as TDRs.

Our policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance. That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms; continued accrual of interest at the restructured interest rate is likely. If a borrower was materially delinquent on payments prior to the restructuring, but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.

We will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms. If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status. Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms before that loan can be placed back on accrual status. Further, the borrower must show capacity to continue performing into the future prior to restoration of accrual status. To date, we have restored one nonaccrual loan classified as a TDR to accrual status.

As a result of adopting the amendments in ASU 2011-02, we reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered TDRs under the amended guidance. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired.

The following table summarizes the recorded investment in our troubled debt restructurings before and after their modification during the respective period.

                                               
        For the three months ended           For the nine months ended  
        September 30, 2011           September 30, 2011  
  (dollars in thousands)     Number
of
Loans		     Pre-Modification
Outstanding
Recorded
Investment		     Post-Modification
Outstanding
Recorded
Investment		           Number
of
Loans		     Pre-
Modification
Outstanding
Recorded
Investment		     Post-Modification
Outstanding
Recorded
Investment		  
  Commercial                                            
  Owner occupied RE     -     -     -           2     3,013     3,013  
  Non-owner occupied RE     -     -     -           2     180     180  
  Construction     -     -     -           -     -     -  
  Business     2     557     565           10     1,925     1,932  
  Consumer                                            
  Real estate     -     -     -           1     335     335  
  Home equity     -     -     -           -     -     -  
  Construction     -     -     -           -     -     -  
  Other     -     -     -           -     -     -  
  Total loans     2     557     565           15     5,453     5,460  

During the three and nine months ended September 30, 2011, the Bank modified two and 15 loans, respectively, that were considered to be TDRs. We reduced or deferred scheduled payments for 9 of the loans and converted six of them to interest only terms during the nine months ended September 30, 2011. In addition, we capitalized interest on one of these loans at the time of modification.

The following table summarizes the troubled debt restructurings that are more than 30 days past due, and have subsequently defaulted during the respective period.

                                   
        For the three months ended           For the nine months ended  
        September 30, 2011           September 30, 2011  
        Number of     Recorded           Number of     Recorded  
  (dollars in thousands)     Loans     Investment           Loans     Investment  
  Commercial                                
  Owner occupied RE     -     -           -     -  
  Non-owner occupied RE     -     -           1     28  
  Construction     -     -           -     -  
  Business     8     1,435           10     2,084  
  Consumer                                
  Real estate     -     -           1     329  
  Home equity     -     -           -     -  
  Construction     -     -           -     -  
  Other     -     -           -     -  
  Total loans     8     1,435           12     2,441  

During the nine months ended September 30, 2011, 12 loans that had previously been restructured, were in default, eight of which went into default during the third quarter of 2011.

In the determination of the allowance for loan losses, management considers TDRs on commercial loans and subsequent defaults in these restructurings by measuring impairment, on a loan by loan basis, based on either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Consumer loans, which we typically consider to be homogeneous, are collectively evaluated for impairment.