Regulatory Update

9 Months Ended

Sep. 30, 2011

Regulatory Update [Abstract]

Regulatory Update

Note 19 – Regulatory Update

In a Current Report on Form 8-K filed on June 30, 2011, management reported that the Federal Deposit Insurance Corporation ("FDIC") and the Office of Financial Regulation ("OFR") had communicated their preliminary on-site examination findings to the management of Vision Bank. As reported in the June 30, 2011 Form 8-K, the FDIC and the OFR have taken exception to approximately $18 million in guarantor support underlying certain impaired commercial loans, which had been incorporated into our analysis of the allowance for loan losses at Vision Bank.  On August 1, 2011 and August 29, 2011, management of Vision Bank received the final reports of examination from the OFR and FDIC, which were consistent with the preliminary findings communicated to management at the on-site exit meeting.  On October 26, 2011, management formally submitted an appeal to the FDIC and OFR. Management expects to receive a response from the FDIC and OFR during the fourth quarter.  It remains possible that management could be required to re-file the December 31, 2010 call report for Vision Bank if we are unsuccessful upon appeal. The amount of underlying guarantor support specific to the $18 million noted by the FDIC and the OFR has been reduced to $9.0 million at September 30, 2011.

The $18 million in guarantor support noted by the FDIC and the OFR constitutes the majority of the guarantor support that management had incorporated into the analysis of allowance for loan losses at December 31, 2010, which totaled $21.6 million.  The $21.6 million in total guarantor support at December 31, 2010, related to 25 individual credit relationships, has declined to $9.2 million at September 30, 2011.  The decline in guarantor support of $12.4 million during 2011 consists of the following: (1) cash payments received of approximately $3.3 million; (2) new appraisal information received in 2011 that resulted in increases in collateral values of approximately $3.8 million; and (3) charge-offs or additional specific reserves of approximately $5.3 million.