The following table presents total outstanding loans and a summary of the related payment status:



	30-59 Days Past Due			60-89 Days Past Due			90 Days or More Past Due			Total Past Due			Total Current or Less Than 30 Days Past Due			Purchased Credit-Impaired Loans			Total Outstanding
	(In thousands)
June 30, 2012
Real estate	$	—		$	5		$	—		$	5		$	3,860		$	470		$	4,335
Commercial	1			—			—			1			1,103			7			1,111
Installment	13			—			—			13			2,672			161			2,846
Total loans	$	14		$	5		$	—		$	19		$	7,635		$	638		$	8,292

Percentage of outstanding	0.17		%	0.06		%	—		%	0.23		%	92.08		%	7.69		%	100.00		%



December 31, 2011
Real estate	$	—		$	—		$	—		$	—		$	4,983		$	503		$	5,486
Commercial	2			—			—			2			1,371			44			1,417
Installment	—			—			—			—			2,881			252			3,133
Total loans	$	2		$	—		$	—		$	2		$	9,235		$	799		$	10,036

Percentage of outstanding	0.02		%	—		%	—		%	0.02		%	92.02		%	7.96		%	100.00		%

Nonperforming Loans

The following table presents our nonperforming loans, including impaired loans other than purchased credit-impaired loans. See Note 2–Summary of Significant Accounting Policies to the Consolidated Financial Statements of our 2011 Annual Report on Form 10-K for further information on the criteria for classification as nonperforming.



	June 30, 2012		December 31, 2011
	(In thousands)
Real estate	$	1,387	$	—
Commercial	216		—
Installment	134		—
Total loans	$	1,737	$	—

Credit Quality Indicators

We closely monitor and assess the credit quality and credit risk of our loan portfolio on an ongoing basis. We continuously review and update loan risk classifications. We evaluate our loans using non-classified or classified as the primary credit quality indicator. Classified loans are those loans that have demonstrated credit weakness where we believe there is a heightened risk of principal loss, including all impaired loans. Classified loans are generally internally categorized as substandard, doubtful or loss consistent with regulatory guidelines.

The table below present our primary credit quality indicators related to our loan portfolio:



	June 30, 2012				December 31, 2011
	Non-Classified		Classified		Non-Classified		Classified
	(In thousands)
Real estate	$	2,479	$	1,856	$	5,125	$	361
Commercial	888		223		1,407		10
Installment	2,558		288		2,982		151
Total loans	$	5,925	$	2,367	$	9,514	$	522

Note 5—Loans (continued)

Purchased Credit-Impaired Loans

The table below presents the remaining unpaid principal balance and carrying amount for purchased credit-impaired loans:



	June 30, 2012		December 31, 2011
	(In thousands)
Unpaid principal balance	$	1,261	$	1,506
Carrying value excluding allowance for loan losses	648		799

The table below shows activity for the accretable yield on purchased credit-impaired loans:



	Three Months Ended			Six Months Ended
	June 30, 2012			June 30, 2012
	(In thousands)
Accretable yield at beginning of period	$	74		$	99
Accretion	(11		)	(36		)
Adjustments	35			35
Accretable yield at end of period	$	98		$	98

Impaired Loans and Troubled Debt Restructurings

We consider a loan to be impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Our impaired loans also include loans modified in a troubled debt restructuring, or TDR. Loans whose contractual terms have been modified in a TDR are typically placed on nonaccrual status and reported as nonperforming until the loans have performed for an adequate period of time under the restructured agreement. These impaired loans generally have estimated losses which are included in the allowance for loan losses. Impaired loans exclude purchased credit-impaired loans.

Once we determine a loan to be impaired, we measure the impairment based on the present value of the expected future cash flows discounted at the loan's effective interest rate. We may also measure impairment on loans that are solely dependent on the collateral for repayment based on the estimated fair value of the collateral less estimated costs to sell. If the recorded investment in impaired loans exceeds this amount, we establish a specific allowance as a component of the allowance for loan losses or by adjusting an existing valuation allowance for the impaired loan.

The table below presents key information about our impaired loans. Certain impaired loans do not have a related allowance as the current fair value of these impaired loans exceeds the carrying value. We had no impaired loans as of December 31, 2011:



	June 30, 2012						Six Months Ended June 30, 2012
	Unpaid Principal Balance		Carrying Value		Related Allowance		Average Carrying Value		Interest Income Recognized
	(In thousands)
With no recorded allowance
Real estate	$	696	$	664	N/A		$	662	$	28
Commercial	199		43		N/A		61		10
Installment	24		14		N/A		31		3
With an allowance recorded
Real estate	$	806	$	728	$	5	$	715	$	30
Commercial	599		227		54		216		25
Installment	348		150		30		152		26
Total
Real estate	$	1,502	$	1,392	$	5	$	1,377	$	58
Commercial	798		270		54		277		35
Installment	372		164		30		183		29

Note 5—Loans (continued)

When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR. The following table presents key information regarding loans that we modified in TDRs during the six months ended June 30, 2012. Our TDR modifications related to extensions of the maturity date or dates at a stated interest rate lower than the current market rate for new debt with similar risk:



	June 30, 2012
	Unpaid Principal Balance		Carrying Value
	(In thousands)
Real estate	$	718	$	660
Commercial	158		50
Installment	372		164

Allowance for Loan Losses

We establish an allowance for loan losses to account for estimated credit losses inherent in our loan portfolio. For the portfolio of loans excluding impaired and PCI loans, our estimate of inherent losses is separately calculated on an aggregate basis for groups of loans that are considered to have similar credit characteristics and risk of loss. We analyze historical loss rates for these groups and then adjust the rates for qualitative factors which in our judgment affect the expected inherent losses. Qualitative considerations include, but are not limited to, prevailing economic or market conditions, changes in the loan grading and underwriting process, changes in the estimated value of the underlying collateral for collateral dependent loans, delinquency and nonaccrual status, problem loan trends, and geographic concentrations. We separately establish specific allowances for impaired and PCI loans based on the present value of changes in cash flows expected to be collected, or for impaired loans that are considered collateral dependent, the estimated fair value of the collateral. As of December 31, 2011, there was no allowance for loan losses.

Activity in the allowance for loan losses consisted of the following:



	Three Months Ended		Six Months Ended
	June 30, 2012		June 30, 2012
	(In thousands)
Allowance for loan losses, beginning of period	$	—	$	—
Provision for loans	310		310
Allowance for loan losses, end of period	$	310	$	310

The following table disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology:



	June 30, 2012
	(In thousands)
Collectively evaluated for impairment
Allowance for loan losses	$	211
Carrying value, gross of allowance	6,128
Impaired loans and troubled debt restructurings¹
Allowance for loan losses	$	89
Carrying value, gross of allowance	1,826
Purchased credit-impaired loans
Allowance for loan losses	$	10
Carrying value, gross of allowance	648
Total
Allowance for loan losses	$	310
Carrying value, gross of allowance	8,602

¹ Represents loans individually evaluated for impairment