LOANS (Tables)

9 Months Ended

Sep. 30, 2012

Major classifications of loans at September 30, 2012 and December 31, 2011 are summarized as follows:

	2012		2011
Residential real estate	$	218,631	$	221,756
Multifamily real estate		29,776		34,335
Commercial real estate:
Owner occupied		97,286		101,864
Non owner occupied		172,417		166,540
Commercial and industrial		72,276		76,960
Consumer		28,827		30,090
All other		73,275		59,378
	$	692,488	$	690,923

Activity in the allowance for loan losses by portfolio segment

Activity in the allowance for loan losses by portfolio segment for the nine months ending September 30, 2012 was as follows:

Loan Class	Balance Dec 31, 2011		Provision for loan losses			Loans charged-off		Recoveries		Balance Sept 30, 2012

Residential real estate	$	2,134	$	422		$	223	$	44	$	2,377
Multifamily real estate		284		92			-		-		376
Commercial real estate:
Owner occupied		918		(172	)		15		272		1,003
Non owner occupied		2,381		(236	)		318		3		1,830
Commercial and industrial		1,880		1,585			1,216		2		2,251
Consumer		298		87			186		77		276
All other		1,900		1,182			527		87		2,642
Total	$	9,795	$	2,960		$	2,485	$	485	$	10,755

Activity in the allowance for loan losses by portfolio segment for the nine months ending September 30, 2011 was as follows:

Loan Class	Balance Dec 31, 2010		Provision for loan losses			Loans charged-off		Recoveries		Balance Sept 30, 2011

Residential real estate	$	2,666	$	83		$	318	$	28	$	2,459
Multifamily real estate		252		32			-		21		305
Commercial real estate:
Owner occupied		1,141		35			-		2		1,178
Non owner occupied		1,644		819			261		28		2,230
Commercial and industrial		2,421		(430	)		17		36		2,010
Consumer		366		36			90		67		379
All other		1,375		2,575			179		66		3,837
Total	$	9,865	$	3,150		$	865	$	248	$	12,398

Activity in the allowance for loan losses by portfolio segment for the three months ending September 30, 2012 was as follows:

Loan Class	Balance June 30, 2012		Provision for loan losses			Loans charged-off		Recoveries		Balance Sept 30, 2012

Residential real estate	$	2,268	$	201		$	104	$	12	$	2,377
Multifamily real estate		427		(51	)		-		-		376
Commercial real estate:
Owner occupied		979		(248	)		-		272		1,003
Non owner occupied		2,306		(199	)		277		-		1,830
Commercial and industrial		1,984		490			224		1		2,251
Consumer		310		(11	)		47		24		276
All other		1,588		1,078			53		29		2,642
Total	$	9,862	$	1,260		$	705	$	338	$	10,755

Activity in the allowance for loan losses by portfolio segment for the three months ending September 30, 2011 was as follows:

Loan Class	Balance June 30, 2011		Provision for loan losses			Loans charged-off		Recoveries		Balance Sept 30, 2011

Residential real estate	$	2,666	$	(69	)	$	150	$	12	$	2,459
Multifamily real estate		349		(63	)		-		19		305
Commercial real estate:
Owner occupied		988		190			-		-		1,178
Non owner occupied		1,639		566			-		25		2,230
Commercial and industrial		1,934		49			1		28		2,010
Consumer		364		18			30		27		379
All other		3,808		119			106		16		3,837
Total	$	11,748	$	810		$	287	$	127	$	12,398

Purchased loans

As a result of the acquisition of Abigail Adams National Bancorp, the Company holds purchased loans for which there was, at the October 1, 2009 acquisition date, evidence of deterioration of credit quality since their origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans is as follows at September 30, 2012 and December 31, 2011.

	2012		2011
Residential real estate	$	206	$	282
Multifamily real estate		3,258		3,708
Commercial real estate
Owner occupied		274		1,934
Non owner occupied		6,036		6,427
Commercial and industrial		528		583
All other		1,243		1,925
Total carrying amount	$	11,545	$	14,859

Carrying amount, net of allowance	$	11,045	$	14,859

Past due and non-performing loans

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2012 and December 31 2011. The recorded investment in a non-accrual loan may be less than the principal owed on the loan due to discounts applied to the carrying value of the loan at time of its acquisition and/or interest payments made by the borrower which have been used to reduce the recorded investment in the loan rather than recognized as interest income.

September 30, 2012	Principal Owed on Non-accrual Loans		Recorded Investment in Non-accrual Loans		Loans Past Due Over 90 Days, still accruing

Residential real estate	$	3,154	$	2,838	$	1,128
Multifamily real estate		5,446		4,381		622
Commercial real estate
Owner occupied		6,387		5,544		862
Non owner occupied		12,816		9,233		202
Commercial and industrial		11,733		10,314		18
Consumer		114		104		-
All other		4,803		2,033		-
Total	$	44,453	$	34,447	$	2,832

December 31, 2011	Principal Owed on Non-accrual Loans		Recorded Investment in Non-accrual Loans		Loans Past Due Over 90 Days, still accruing

Residential real estate	$	4,479	$	4,111	$	1,216
Multifamily real estate		13,118		11,139		-
Commercial real estate
Owner occupied		9,970		8,260		851
Non owner occupied		12,938		9,835		1,596
Commercial and industrial		4,756		3,227		814
Consumer		246		237		50
All other		9,198		5,545		-
Total	$	54,705	$	42,354	$	4,527

Aging of recorded investment in past due loans by loan class

The following table presents the aging of the recorded investment in past due loans as of September 30, 2012 by class of loans:

Loan Class	Total Loans		30-89 Days Past Due		Greater than 90 days past due		Total Past Due		Loans Not Past Due

Residential real estate	$	218,631	$	6,965	$	3,182	$	10,147	$	208,484
Multifamily real estate		29,776		-		5,003		5,003		24,773
Commercial real estate:
Owner occupied		97,286		2,334		1,561		3,895		93,391
Non owner occupied		172,417		237		4,359		4,596		167,821
Commercial and industrial		72,276		884		5,118		6,002		66,274
Consumer		28,827		510		44		554		28,273
All other		73,275		100		2,030		2,130		71,145
Total	$	692,488	$	11,030	$	21,297	$	32,327	$	660,161

The following table presents the aging of the recorded investment in past due loans as of December 31, 2011 by class of loans:

Loan Class	Total Loans		30-89 Days Past Due		Greater than 90 days past due		Total Past Due		Loans Not Past Due

Residential real estate	$	221,756	$	6,729	$	3,635	$	10,364	$	211,392
Multifamily real estate		34,335		3,249		8,892		12,141		22,194
Commercial real estate:
Owner occupied		101,864		8,081		3,981		12,062		89,802
Non owner occupied		166,540		2,444		6,065		8,509		158,031
Commercial and industrial		76,960		1,714		3,153		4,867		72,093
Consumer		30,090		497		233		730		29,360
All other		59,378		222		5,532		5,754		53,624
Total	$	690,923	$	22,936	$	31,491	$	54,427	$	636,496

Allowance for loan losses and recorded investment in loans by portfolio segment based on impairment method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2012:

	Allowance for Loan Losses								Loan Balances
Loan Class	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deteriorated Credit Quality		Total

Residential real estate	$	701	$	1,676	$	-	$	2,377	$	8,921	$	209,504	$	206	$	218,631
Multifamily real estate		-		376		-		376		921		25,597		3,258		29,776
Commercial real estate:
Owner occupied		112		891		-		1,003		7,084		89,928		274		97,286
Non-owner occupied		362		1,468		-		1,830		4,745		161,636		6,036		172,417
Commercial and industrial		1,574		677		-		2,251		11,259		60,489		528		72,276
Consumer		36		240		-		276		36		28,791		-		28,827
All other		132		2,010		500		2,642		4,296		67,736		1,243		73,275
Total	$	2,917	$	7,338	$	500	$	10,755	$	37,262	$	643,681	$	11,545	$	692,488

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2011:

	Allowance for Loan Losses								Loan Balances
Loan Class	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deteriorated Credit Quality		Total

Residential real estate	$	451	$	1,683	$	-	$	2,134	$	9,795	$	211,679	$	282	$	221,756
Multifamily real estate		-		284		-		284		8,594		22,033		3,708		34,335
Commercial real estate:
Owner occupied		138		780		-		918		8,663		91,267		1,934		101,864
Non-owner occupied		922		1,459		-		2,381		5,147		154,966		6,427		166,540
Commercial and industrial		894		986		-		1,880		3,636		72,741		583		76,960
Consumer		37		261		-		298		37		30,053		-		30,090
All other		605		1,295		-		1,900		8,372		49,081		1,925		59,378
Total	$	3,047	$	6,748	$	-	$	9,795	$	44,244	$	631,820	$	14,859	$	690,923

Loans individually evaluated for impairment by class of loans

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2012. The table includes $11,545,000 of loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Residential real estate	$	5,328	$	5,124	$	-
Multifamily real estate		5,954		4,179		-
Commercial real estate
Owner occupied		8,096		6,736		-
Non owner occupied		13,407		9,995		-
Commercial and industrial		3,748		2,563		-
All other		6,404		3,769		-
		42,937		32,366		-
With an allowance recorded:
Residential real estate	$	4,025	$	4,003	$	701
Commercial real estate
Owner occupied		622		622		112
Non owner occupied		806		786		362
Commercial and industrial		9,438		9,224		1,574
Consumer		36		36		36
All other		1,947		1,770		632
		16,874		16,441		3,417
Total	$	59,811	$	48,807	$	3,417

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011. The table includes $14,859,000 of loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Residential real estate	$	5,602	$	5,329	$	-
Multifamily real estate		15,513		12,302		-
Commercial real estate
Owner occupied		10,939		9,291		-
Non owner occupied		12,296		9,383		-
Commercial and industrial		3,392		2,287		-
All other		8,957		5,306		-
		56,699		43,898		-
With an allowance recorded:
Residential real estate	$	4,803	$	4,748	$	451
Commercial real estate
Owner occupied		1,384		1,306		138
Non owner occupied		2,240		2,191		922
Commercial and industrial		2,242		1,932		894
Consumer		37		37		37
All other		4,992		4,991		605
		15,698		15,205		3,047
Total	$	72,397	$	59,103	$	3,047

The average balance of loans individually evaluated for impairment and interest income recognized

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the nine months ended September 30, 2012 and September 30, 2011. The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

	Nine months ended Sept 30, 2012						Nine months ended Sept 30, 2011
Loan Class	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized

Residential real estate	$	9,905	$	410	$	383	$	265	$	8	$	4
Multifamily real estate		6,546		1,387		1,389		7,459		202		194
Commercial real estate:
Owner occupied		8,298		981		984		13,167		1,070		1,073
Non-owner occupied		11,305		66		73		11,377		13		14
Commercial and industrial		9,738		397		378		7,941		214		209
Consumer		36		2		2		44		6		6
All other		7,307		852		842		12,119		83		82
Total	$	53,135	$	4,095	$	4,051	$	52,372	$	1,596	$	1,582

The following table presents the average balance of loans individually evaluated for impairment and interest income recognized on these loans for the three months ended September 30, 2012 and September 30, 2011. The table includes loans acquired with deteriorated credit quality that are still individually evaluated for impairment.

	Three months ended Sept 30, 2012						Three months ended Sept 30, 2011
Loan Class	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized

Residential real estate	$	9,646	$	93	$	79	$	266	$	5	$	1
Multifamily real estate		4,493		37		48		8,698		185		177
Commercial real estate:
Owner occupied		7,425		43		61		14,545		580		582
Non-owner occupied		11,008		11		22		11,549		-		-
Commercial and industrial		11,710		156		144		7,502		25		18
Consumer		36		1		1		48		4		4
All other		6,031		658		660		11,495		58		56
Total	$	50,349	$	999	$	1,015	$	54,103	$	857	$	838

Troubled debt restructurings

The following table presents TDR's as of September 30, 2012 and December 31, 2011:

September 30, 2012	TDR's on Non-accrual		Other TDR's		Total TDR's

Residential real estate	$	309	$	1,075	$	1,384
Commercial real estate
Owner occupied		4,308		-		4,308
Non owner occupied		2,888		2,103		4,991
Commercial and industrial		2		2,586		2,588
All other		-		2,205		2,205
Total	$	7,507	$	7,969	$	15,476

December 31, 2011	TDR's on Non-accrual		Other TDR's		Total TDR's

Residential real estate	$	59	$	1,371	$	1,430
Commercial real estate
Owner occupied		4,541		-		4,541
Non owner occupied		3,135		1,641		4,776
Commercial and industrial		42		897		939
Consumer		11		1		12
All other		-		2,041		2,041
Total	$	7,788	$	5,951	$	13,739

Troubled debt restructuring during the period

The following table presents TDR's that occurred during the three and nine months ended September 30, 2012:

	Three months ended Sept. 30, 2012						Nine months ended Sept. 30, 2012
Loan Class	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 real estate
Non owner occupied		1	$	519	$	519		1	$	519	$	519
Commercial and industrial		-		-		-		1		1,809		1,809
All other		-		-		-		1		190		190
Total		1	$	519	$	519		3	$	2,518	$	2,518

Risk category of loans by class of loans

As of September 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class	Pass		Special Mention		Substandard		Doubtful		Total Loans

Residential real estate	$	198,940	$	6,753	$	12,847	$	91	$	218,631
Multifamily real estate		20,144		2,531		7,101		-		29,776
Commercial real estate:
Owner occupied		80,164		4,188		12,934		-		97,286
Non-owner occupied		152,875		4,612		14,930		-		172,417
Commercial and industrial		56,731		3,551		11,984		10		72,276
Consumer		28,630		111		50		36		28,827
All other		62,576		718		8,302		1,679		73,275
Total	$	600,060	$	22,464	$	68,148	$	1,816	$	692,488

As of December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

Loan Class	Pass		Special Mention		Substandard		Doubtful		Total Loans

Residential real estate	$	198,865	$	8,105	$	14,731	$	55	$	221,756
Multifamily real estate		16,798		2,218		15,319		-		34,335
Commercial real estate:
Owner occupied		79,753		5,377		16,600		134		101,864
Non-owner occupied		146,305		4,883		15,352		-		166,540
Commercial and industrial		58,158		8,675		10,095		32		76,960
Consumer		29,753		198		102		37		30,090
All other		43,485		1,052		14,064		777		59,378
Total	$	573,117	$	30,508	$	86,263	$	1,035	$	690,923