(6) Allowance for Loan Losses

In August 2011, in consultation with the Audit Committee, Suffolk's management determined it was not properly identifying loan losses in the period incurred. This was the result of deficiencies in Suffolk's internal controls with respect to credit administration and credit risk management, primarily with regard to risk-rating as well as with respect to the timing and recognition of charge-offs, impaired loans, and classified loans. As a result, certain loans should have been considered impaired, charged-off, or classified. The effect of these errors was recorded in the consolidated financial statements as of and for the year ended December 31, 2010 and the quarter ended September 30, 2010.

Suffolk takes into account applicable guidance under U.S. GAAP, including particularly "ASC 855 – Subsequent Events." Under this statement, subsequent events are defined as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement requires that entities recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the balance sheet date, including any estimates underlying the financial statements. The entity should not recognize subsequent events that provide evidence about conditions that arose after the balance sheet date, but should disclose those events which are so important that nondisclosure would make the financial statements misleading.

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the un-collectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired.

A loan is impaired when, based on current information and events, it is probable that Suffolk will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Generally, troubled debt restructurings are initially classified as non-accrual until sufficient time has passed to assess whether the restructured loan will continue to perform. Generally, Suffolk returns a troubled-debt restructuring to accrual status upon six months of performance under the new terms.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Commercial and commercial real estate loans over $250,000 are individually evaluated for impairment. However, the independent review of the loan portfolio included selected loans with balances less than $250,000. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of homogeneous loans with smaller individual balances, such as consumer and residential real estate loans, are evaluated collectively for impairment, and accordingly, are not separately identified for impairment disclosures. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan's effective rate at inception. If a troubled debt restructuring is considered to be "collateral-dependent," the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, Suffolk determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component covers non impaired loans and is based on historical loss experience, adjusted for qualitative factors. The historical loss experience is determined by portfolio segment, and is based on the actual loss history experienced by Suffolk over the historical loan loss period which is a rolling twelve month period. This actual loss experience is supplemented with other qualitative factors based on the risks present for each portfolio segment. These qualitative factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

•

Commercial, financial & agricultural loans

•

Commercial real estate mortgages

•

Real estate — construction loans

•

Residential mortgages (1st and 2nd liens)

•

Home equity loans

•

Consumer loans

This amount is determined by applying historical loss factors to pools of loans within the portfolio having similar risk characteristics.

In addition, the qualitative factors are considered for areas of concern that cannot be fully quantified in the allocation based on historical net charge-off ratios. Qualitative factors include:

•

Economic outlook

•

Trends in delinquency and problem loans

•

Changes in loan volume and nature of terms of loans

•

Effects of changes in lending policy

•

Experience, ability, and depth of lending management and staff

•

Concentrations of credit

•

Effectiveness of loan review processes

•

Changes in value of underlying collateral

•

Competition, regulation, and other external factors

For performing loans, an estimate of adequacy is made by applying qualitative factors specific to the portfolio to the period-end balances. Consideration is also given to the type and collateral of the loans with particular attention paid to commercial real estate construction loans, due to the inherent risk of this type of loan. Allocated and general reserves are available for any identified loss.

Delinquent, non-performing, and classified loans have trended upward. These are primary factors in the determination of the allowance.

At September 30, 2011, non-performing loans, including restructured and non-accrual loans, totaled $92,070,000 as compared to $28,911,000 at December 31, 2010. When compared to total loans, non-performing loans rose to 9.09 percent at September 30, 2011, up from 2.61 percent at December 31, 2010. Commercial loans, commercial mortgages and commercial real estate construction loans were primarily responsible for the increase. Non-performing loans include all non-accrual loans.

The following table presents information about the allowance for loan losses: (in thousands of dollars except for ratios)


Period Ended:	Nine Months Ended September 30, 2011			Year Ended December 31, 2010 Restated
Allowance for loan losses, January 1,	$	28,419		$	12,333

Loans charged-off:
Commercial, financial & agricultural loans		6,537			8,501
Commercial real estate mortgages		1,832			2,788
Real estate construction loans		232			3,548
Residential mortgages (1st and 2nd liens)		411			769
Home equity loans		191			315
Consumer loans		178			317
Other loans		—			—

Total Charge-offs	$	9,381		$	16,238


Loans recovered after being charged-off	Nine Months Ended September 30, 2011			Year Ended December 31, 2010 Restated
Commercial, financial & agricultural loans		551			69
Commercial real estate mortgages		—			—
Real estate construction loans		—			—
Residential mortgages (1st and 2nd liens)		1			—
Home equity loans		—			—
Consumer loans		65			118
Other loans		—			—

Total recoveries	$	617		$	187

Net loans charged-off		8,764			16,051
Reclass (to) from allowance for contingent liabilities		(50	)		51
Provision for loan losses		24,088			32,086

Allowance for loan losses, Ending Balance	$	43,693		$	28,419

Further information pertaining to the allowance for loan losses at September 30, 2011 is as follows: (in thousands)


	Commercial, financial, and agricultural		Commercial real estate		Real estate construction loans		Residential mortgages (1st and 2nd liens)		Home equity loans		Consumer loans		Total
Allowance for loan losses:
Ending balance (total allowance)	$	23,746	$	13,710	$	2,020	$	2,097	$	1,718	$	402	$	43,693
Ending balance: individually evaluated for impairment		6,249		4,654		1,695		—		—		—		12,598
Ending balance: collectively evaluated for impairment		17,497		9,056		325		2,097		1,718		402		31,095
Loan balances:
Ending balance (loan portfolio) (1)	$	213,569	$	433,057	$	62,023	$	171,515	$	80,704	$	51,516	$	1,012,384
Ending balance: individually evaluated for impairment		31,009		64,663		25,135		7,902		3,912		720		133,341
Ending balance: collectively evaluated for impairment		182,560		368,394		36,888		163,613		76,792		50,796		879,043

(1)	Other loans of $504, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to September 30, 2011.

Further information pertaining to the allowance for loan losses at December 31, 2010 (restated) is as follows: (in thousands)


	Commercial, financial, and agricultural		Commercial real estate		Real estate construction loans		Residential mortgages (1st and 2nd liens)		Home equity loans		Consumer loans (2)		Total
Allowance for loan losses:
Ending balance (total allowance)	$	13,826	$	9,226	$	3,177	$	519	$	1,392	$	279	$	28,419
Ending balance: individually evaluated for impairment		2,845		5,636		935		—		—		—		9,416
Ending balance: collectively evaluated for impairment		10,981		3,590		2,242		519		1,392		279		19,003
Loan balances:
Ending balance (loan portfolio) (1)	$	248,750	$	431,179	$	82,720	$	195,993	$	84,696	$	67,814	$	1,111,152
Ending balance: individually evaluated for impairment		17,277		51,540		26,897		3,466		986		75		100,241
Ending balance: collectively evaluated for impairment		231,473		379,639		55,823		192,527		83,710		67,739		1,010,911

(1)

Other loans of $1,127, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to year-end.

(2)	Net of unearned discounts totalling $28 at December 31, 2010.

The following is a summary of current and past due loans at September 30, 2011: (in thousands)


	30-59 days past due		60-89 days past due		90 days and over past due		Total past due		Current		Total loans
Commercial:
Commercial, financial, and agricultural	$	3,951	$	7,685	$	17,197	$	28,833	$	184,736	$	213,569
Commercial real estate		3,034		898		45,687		49,619		383,438		433,057
Real estate construction loans		—		4,250		17,976		22,226		39,797		62,023
Consumer:
Residential mortgages (1st and 2nd liens)		3,141		510		6,578		10,229		161,286		171,515
Home equity loans		123		—		3,912		4,035		76,669		80,704
Consumer loans		350		2		720		1,072		50,444		51,516

Total (1)	$	10,599	$	13,345	$	92,070	$	116,014	$	896,370	$	1,012,384

(1)	Other loans of $504, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to September 30, 2011.

The following is a summary of current and past due loans at December 31, 2010 (restated): (in thousands)


	30-59 days past due		60-89 days past due		90 days and over past due		Total past due		Current		Total loans
Commercial:
Commercial, financial, and agricultural	$	212	$	81	$	2,382	$	2,675	$	246,075	$	248,750
Commercial real estate		4,375		243		11,601		16,219		414,960		431,179
Real estate construction loans		—		—		10,481		10,481		72,239		82,720
Consumer:
Residential mortgages (1st and 2nd liens)		2,162		1,934		3,466		7,562		188,431		195,993
Home equity loans		637		1,140		986		2,763		81,933		84,696
Consumer loans (2)		408		108		75		591		67,223		67,814

Total (1)	$	7,794	$	3,506	$	28,991	$	40,291	$	1,070,861	$	1,111,152

(1)

Other loans of $1,127, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to year-end.

(2)

Net of unearned discounts totalling $28 at December 31, 2010.

The following is a summary of impaired loans: (in thousands)


	September 30, 2011								December 31, 2010
	September 30, 2011								Restated
	Impaired Loans with Valuation Reserves		Impaired Loans without Valuation Reserves		Total Impaired Loans		Total Valuation Reserves		Impaired Loans with Valuation Reserves		Impaired Loans without Valuation Reserves		Total Impaired Loans		Total Valuation Reserves
Commercial, financial & agricultural loans	$	15,726	$	15,283	$	31,009	$	6,249	$	8,227	$	9,050	$	17,277	$	2,845
Commercial real estate mortgages		21,255		43,408	$	64,663		4,654		34,301		17,239		51,540		5,636
Real estate construction loans		8,717		16,418		25,135		1,695		6,569		20,328		26,897		935
Residential mortgages (1st and 2nd liens)		—		7,902		7,902		—		—		3,466		3,466		—
Home equity loans		—		3,912		3,912		—		—		986		986		—
Consumer loans		—		720		720		—		—		75		75		—

Total	$	45,698	$	87,643	$	133,341	$	12,598	$	49,097	$	51,144	$	100,241	$	9,416


			Year ended
	Nine months ended September 30, 2011		December 31, 2010 Restated
Average investment in impaired loans	$	120,823	$	63,101


	Three months		Three months		Nine months		Nine months
	ended		ended		ended		ended
	9/30/11		9/30/10		9/30/11		9/30/10
Interest income recognized on impaired loans	$	1,403	$	1,462	$	3,681	$	2,556
Interest income recognized on a cash basis on impaired loans	$	—	$	—	$	—	$	—

The following is a summary of information pertaining to impaired and non-accrual loans: (in thousands)


	September 30, 2011		December 31, 2010 Restated
Impaired loans without a valuation allowance	$	87,643	$	51,144
Impaired loans with a valuation allowance		45,698		49,097

Total impaired loans		133,341		100,241

Valuation allowance related to impaired loans	$	12,598	$	9,416
Total non-accrual loans (1)		92,070		28,991
Total loans past due 90 days or more and still accruing		—		—
Troubled debt restructurings accruing interest		1,505		11,904
Troubled debt restructurings - nonaccruing		27,855		12,140

(1)	Includes troubled debt restructurings of $12,140 on December 31, 2010 and $27,855 on September 30, 2011

Additional interest income of approximately $1,571,000 and $3,335,000 would have been recorded during the three and nine month periods ended September 30, 2011, respectively, if the loans had performed in accordance with their original terms.

A total of $5,195,000 is committed to be advanced in connection with impaired loans as of September 30, 2011.

The following table summarizes loan balances and allocates the allowance for loan losses by risk rating as of September 30, 2011: (in thousands)


	Commercial, financial, and agricultural			Commercial real estate			Real estate construction loans			Residential mortgages (1st and 2nd liens)			Home equity loans			Consumer loans			Total
Unimpaired loans:
Total pass loans (1)	$	131,862		$	278,132		$	14,354		$	163,613		$	76,792		$	50,796		$	715,549
Loss factor (2)		10.51	%		2.49	%		1.05	%		1.28	%		2.24	%		0.79	%		3.51	%

Reserve		13,863			6,919			151			2,097			1,718			402			25,150

Total special mention loans		21,996			48,228			7,180			—			—			—			77,404
Loss factor		6.97	%		2.37	%		0.78	%											3.53	%

Reserve		1,533			1,142			56			—			—			—			2,731

Total substandard loans		28,702			42,034			15,354			—			—			—			86,090
Loss factor		7.32	%		2.37	%		0.78	%											3.73	%

Reserve		2,101			995			119			—			—			—			3,215

Impaired loans:

Total substandard loans		29,950			64,130			23,628			7,902			3,912			720			130,242
Loss factor		18.93	%		7.26	%		1.79	% (3)											8.25	%

Reserve		5,669			4,654			423			—			—			—			10,746

Total doubtful loans		1,059			533			1,507			—			—			—			3,099
Loss factor		54.77	%		0.00	%		84.41	%											59.76	%

Reserve		580			—			1,272			—			—			—			1,852

Total unimpaired loans	$	182,560		$	368,394		$	36,888		$	163,613		$	76,792		$	50,796		$	879,043
Total reserve on unimpaired loans	$	17,497		$	9,056		$	326		$	2,097		$	1,718		$	402		$	31,096

(1)	Loans risk-graded 1-4. Other loans of $504, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to September 30, 2011

(2)	Loss factor calculation is specific reserves as a percentage of balance for a portfolio segment.

(3)	Loss factor is driven by higher collateral positions and charge offs taken within this portfolio segment.

The following table summarizes loan balances and allocates the allowance for loan losses by risk rating as of December 31, 2010: (restated) (in thousands)


	Commercial, financial, and agricultural			Commercial real estate			Real estate construction loans			Residential mortgages (1st and 2nd liens)			Home equity loans			Consumer loans (4)			Total
Unimpaired loans:

Total pass loans (1)	$	202,926		$	314,447		$	39,530		$	192,527		$	83,710		$	67,739		$	900,879
Loss factor (2)		4.80	%		0.95	%		3.96	%		0.27	%		1.66	%		0.41	%		1.83	%

Reserve		9,731			2,996			1,567			519			1,392			279			16,484

Total special mention loans		6,291			28,823			1,773			—			—			—			36,887
Loss factor		4.43	%		0.91	%		4.12	%											1.67	%

Reserve		279			263			73			—			—			—			615

Total substandard loans		22,256			36,369			14,520			—			—			—			73,145
Loss factor		4.36	%		0.91	%		4.15	%											2.60	%

Reserve		971			331			602			—			—			—			1,904

Impaired loans:

Total substandard loans		16,792			51,540			26,226			3,466			986			75			99,085
Loss factor		14.37	%		10.94	%		1.01	% (3)											8.39	%

Reserve		2,413			5,636			264			—			—			—			8,313

Total doubtful loans		485			—			671			—			—			—			1,156
Loss factor		89.07	%					100.00	%											95.42	%

Reserve		432			—			671			—			—			—			1,103

Total unimpaired loans	$	231,473		$	379,639		$	55,823		$	192,527		$	83,710		$	67,739		$	1,010,911
Total reserve on unimpaired loans	$	10,981		$	3,590		$	2,242		$	519		$	1,392		$	279		$	19,003

(1)	Loans risk-graded 1-4. Other loans of $1,127, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to year-end.

(2)	Loss factor calculation is specific reserves as a percentage of balance for a portfolio segment.

(3)	Loss factor is driven by higher collateral positions and charge offs taken within this portfolio segment.

(4)	Net of unearned discount totalling $28 at December 31, 2010

The following table summarizes the allowance for loan losses by loan type for the three months ended September 30, 2011: (in thousands)


Allowance for loan losses	Commercial, financial & agricultural loans			Commercial real estate mortgages			Real estate construction loans			Residential mortgages (1st and 2nd liens)		Home equity loans			Consumer loans			Total
Beginning balance	$	30,486		$	11,210		$	4,163		$	1,691	$	1,908		$	453		$	49,911
Total charge-offs		(5,248	)		(1,832	)		(232	)				(121	)		(34	)		(7,467	)
Total recoveries		373			—			—			—		—			26			399
Reclass to allowance for contingent liabilities		—			(50	)		—			—		—			—			(50	)
Provision for loan losses		(1,865	)		4,382			(1,911	)		406		(69	)		(43	)		900

Ending balance	$	23,746		$	13,710		$	2,020		$	2,097	$	1,718		$	402		$	43,693

Credit Quality Information

The Bank utilizes an eight-grade risk-rating system for commercial loans, commercial real estate and construction loans as follows:

Risk Grade 1 Excellent:

Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents; loans that are guaranteed or otherwise backed by the full faith and credit of the United States government or an agency thereof, such as the Small Business Administration; or loans to any publicly held company with a current long-term debt rating of A or better.

Risk Grade 2 Good:

Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three consecutive years of profits; loans supported by un-audited financial statements containing strong balance sheets, five consecutive years of profits, a five-year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities where there is no impediment to liquidation; loans to individuals backed by liquid personal assets, established credit history, and unquestionable character; or loans to publicly held companies with current long-term debt ratings of Baa or better.

Risk Grade 3 Satisfactory:

Loans supported by financial statements (audited or un-audited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered.

Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:

•

At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;

•

At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.

•

The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.

•

During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or

•

The borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.

Risk Grade 4 Satisfactory/Monitored:

Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than satisfactory loans due to weak balance sheets, marginal earnings or cash flow, or other uncertainties. These loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in a Satisfactory/Monitored loan is within acceptable underwriting guidelines so long as the loan is given the proper level of management supervision.

Risk Grade 5 Special Mention:

Loans which possess some credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered "potential," not "defined," impairments to the primary source of repayment.

Risk Grade 6 Substandard:

One or more of the following characteristics may be exhibited in loans classified Substandard:

•

Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.

•

Loans are inadequately protected by the current net worth and paying capacity of the obligor.

•

The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

•

Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

•

Unusual courses of action are needed to maintain a high probability of repayment.

•

The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.

•

The lender is forced into a subordinated or unsecured position due to flaws in documentation.

•

Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.

•

The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

•

There is a significant deterioration in market conditions to which the borrower is highly vulnerable.

Risk Grade 7 Doubtful:

One or more of the following characteristics may be present in loans classified Doubtful:

•

Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.

•

The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

•

The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.

Risk Grade 8 Loss:

Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The Bank considers real estate, home equity and consumer loans secured by real estate (such as mobile homes) that are contractually past due 90 days or more or where legal action has commenced against the borrower to be substandard. The Bank follows the Federal Financial Institutions Examination Council ("FFIEC") Uniform Retail Credit Classification guidelines.

The Bank reviews formally, annually, the ratings on all commercial and industrial, commercial real estate and construction loans greater than $1 million. Quarterly, the Bank engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.

The following table identifies credit risk by the internally assigned grade at September 30, 2011: (in thousands)


	Credit Risk Profile By Internally Assigned Grade
	Commercial Credit Exposure						Consumer Credit Exposure
	Commercial, financial, and agricultural		Commercial real estate		Real estate construction loans		Residential mortgages (1st and 2nd liens)		Home equity loans		Consumer loans		Total
Grade:
Pass (1)	$	131,862	$	278,132	$	14,354	$	163,613	$	76,792	$	50,796	$	715,549
Special mention		21,996		48,228		7,180		—		—		—		77,404
Substandard		58,652		106,164		38,982		7,902		3,912		720		216,332
Doubtful		1,059		533		1,507		—		—		—		3,099

Total	$	213,569	$	433,057	$	62,023	$	171,515	$	80,704	$	51,516	$	1,012,384

(1)	Other loans of $504, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to September 30, 2011

The following table identifies credit risk by the internally assigned grade at December 31, 2010 (restated): (in thousands)


	Credit Risk Profile By Internally Assigned Grade
	*Restated*
	Commercial Credit Exposure						Consumer Credit Exposure
	Commercial, financial, and agricultural		Commercial real estate		Real estate construction loans		Residential mortgages (1st and 2nd liens)		Home equity loans		Consumer loans (2)		Total
Grade:
Pass (1)	$	202,926	$	314,447	$	39,530	$	192,527	$	83,710	$	67,739	$	900,879
Special mention		6,291		28,823		1,773		—		—		—		36,887
Substandard		39,048		87,909		40,746		3,466		986		75		172,230
Doubtful		485		—		671		—		—		—		1,156

Total	$	248,750	$	431,179	$	82,720	$	195,993	$	84,696	$	67,814	$	1,111,152

(1)	Other loans of $1,127, not included here, consist of overdraft advances, nearly all of which have been repaid subsequent to December 31, 2010.

(2)	Net of unearned discount totalling $28 at December 31, 2010

The following table summarizes as of September 30, 2011 loans that have been restructured during the periods presented (dollars in thousands):


	For the three months ended September 30, 2011						For the nine months ended September 30, 2011
Troubled Debt Restructurings	# of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		# of Loans		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		4	$	578	$	579		28	$	3,714	$	3,738
Commercial, secured by real estate		1		1,210		1,210		7		8,071		8,071
Real estate construction loans		0		—		—		0		—		—
Residential mortgages		1		100		100		5		1,437		1,622
Home Equity		0		—		—		1		291		291
Consumer		0		—		—		2		34		34

		6	$	1,888	$	1,889		43	$	13,547	$	13,756

The following table summarizes as of September 30, 2011, loans that were restructured that have subsequently defaulted within the last twelve months: (dollars in thousands)


Defaulted Troubled Debt Restructurings	Number of Loans		Recorded Investment
Commercial, financial, and agricultural		37	$	440
Commercial, secured by real estate		4		9,677
Real estate construction loans		1		4,598
Residential mortgages		2		671
Home Equity		1		—
Consumer		0		—

		45	$	15,386

Defaulted restructured loans include 30 contracts with zero balances: 28 commercial, financial, and agricultural loans , one commercial loan secured by real estate and one home equity loan. The home equity loan and one commercial, financial, and agricultural loan were paid off, the remaining 28 were charged off.