13. Deposits

Traditional deposit accounts have historically been the primary source of funds for the Company and a competitive strength of the Company. Traditional deposit accounts also provide a customer base for the sale of additional financial products and services and fee income through service charges. The Company sets targets for growth in deposit accounts annually in an effort to increase the number of products per banking relationship. Deposits are attractive sources of funding because of their stability and generally low cost as compared with other funding sources.

The following table summarizes traditional deposit composition at the periods indicated.


(dollars in thousands)	June 30, 2011		December 31, 2010
Noninterest-bearing demand deposits	$	156,059	$	148,933
Interest-bearing demand deposits		228,869		230,084
Savings deposits		45,655		43,724
Money market deposits		282,556		312,007
Brokered deposits		129,024		140,151
Time deposits less than $100,000		398,393		416,098
Time deposits $100,000 or more		364,398		405,393

Total deposits	$	1,604,954	$	1,696,390

At June 30, 2011, $0.3 million of overdrawn transaction deposit accounts were reclassified to loans, compared with $0.3 million at December 31, 2010.

The following table summarizes interest expense on traditional deposit accounts at the periods indicated.


	For the Three Month Period Ended June 30,				For the Six Month Period Ended June 30,
(dollars in thousands)	2011		2010		2011		2010
Interest-bearing demand deposits	$	435	$	620	$	917	$	1,199
Savings deposits		29		815		57		56
Money market deposits		562		28		1,145		1,756
Time deposits		3,937		4,752		8,013		9,606

Total interest expense on deposits	$	4,963	$	6,215	$	10,132	$	12,617

As a result of being critically undercapitalized at June 30, 2011, under the capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank's capital levels do not allow the Bank to increase or renew brokered deposits balances, including all Certificate of Deposit Account Registry Service ("CDARS"), without prior approval from regulators. Regulatory limitations on the ability to accept brokered deposits will also limit the Company's deposit funding options. Based on its existing capital ratios, the Bank could be subject to limitations on the maximum interest rates it can pay on deposit accounts and certain restrictions on brokered deposits. However, on August 2, 2010, the Bank was notified by the FDIC that the geographic areas in which the Bank operates are considered high-rate areas. Accordingly, the Bank is able to offer interest rates on deposits up to 75 basis points over the prevailing interest rates in its geographic areas.