XML 49 R12.htm IDEA: XBRL DOCUMENT

Note 3 - Loans/Leases Receivable

9 Months Ended

Sep. 30, 2012

NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of September 30, 2012 and December 31, 2011 is presented as follows:

	As of September 30, 2012			As of December 31, 2011

Commercial and industrial loans	$	355,003,888		$	350,794,278
Commercial real estate loans
Owner-occupied commercial real estate		199,788,124			167,790,621
Commercial construction, land development, and other land		49,191,909			60,384,738
Other non owner-occupied commercial real estate		345,923,717			349,628,491
		594,903,750			577,803,850

Direct financing leases *		102,038,868			93,212,362
Residential real estate loans **		112,492,219			98,107,051
Installment and other consumer loans		76,837,989			78,223,080
		1,241,276,714			1,198,140,621
Plus deferred loan/lease origination costs, net of fees		3,015,495			2,604,876
		1,244,292,209			1,200,745,497
Less allowance for estimated losses on loans/leases		(19,416,748	)		(18,789,262	)
	$	1,224,875,461		$	1,181,956,235


* Direct financing leases:
Net minimum lease payments to be received	$	115,931,555		$	106,389,988
Estimated unguaranteed residual values of leased assets		1,111,627			1,043,326
Unearned lease/residual income		(15,004,314	)		(14,220,952	)
		102,038,868			93,212,362
Plus deferred lease origination costs, net of fees		3,727,752			3,217,011
		105,766,620			96,429,373
Less allowance for estimated losses on leases		(1,884,985	)		(1,339,496	)
	$	103,881,635		$	95,089,877

**Includes residential real estate loans held for sale totaling $6,285,131 and $3,832,760 as of September 30, 2012, and December 31, 2011, respectively.

Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors and management’s expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

For the three and nine months ended September 30, 2012 and 2011, there were no losses on residual values. At September 30, 2012, the Company had 37 leases remaining with residual values totaling $1,111,627 that were not protected with a lease end options rider. At December 31, 2011, the Company had 39 leases remaining with residual values totaling $1,043,326 that were not protected with a lease end options rider. Management has performed specific evaluations of these residual values and determined that the valuations are appropriate.

The aging of the loan/lease portfolio by classes of loans/leases as of September 30, 2012 is presented as follows:

Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total

Commercial and Industrial	$	352,308,795		$	872,105		$	15,252		$	149,750		$	1,657,986		$	355,003,888
Commercial Real Estate
Owner-Occupied Commercial Real Estate		198,070,105			-			1,046,835			-			671,184			199,788,124
Commercial Construction, Land Development, and Other Land		47,080,534			-			-			-			2,111,375			49,191,909
Other Non Owner-Occupied Commercial Real Estate		332,708,671			2,325,809			733,442			-			10,155,795			345,923,717
Direct Financing Leases		100,205,091			632,458			106,595			-			1,094,724			102,038,868
Residential Real Estate		111,142,654			-			-			-			1,349,565			112,492,219
Installment and Other Consumer		75,805,776			255,048			33,730			52,733			690,702			76,837,989
	$	1,217,321,626		$	4,085,420		$	1,935,854		$	202,483		$	17,731,331		$	1,241,276,714

As a percentage of total loan/lease portfolio		98.07	%		0.33	%		0.16	%		0.02	%		1.43	%		100.00	%

The aging of the loan/lease portfolio by classes of loans/leases as of December 31, 2011 is presented as follows:

Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total

Commercial and Industrial	$	347,417,683		$	226,394		$	239,991		$	120,000		$	2,790,210		$	350,794,278
Commercial Real Estate
Owner-Occupied Commercial Real Estate		166,632,318			146,847			-			-			1,011,456			167,790,621
Commercial Construction, Land Development, and Other Land		55,741,827			211,878			486,802			968,919			2,975,312			60,384,738
Other Non Owner-Occupied Commercial Real Estate		336,080,128			522,323			3,732,935			-			9,293,105			349,628,491
Direct Financing Leases		91,273,406			826,187			396,344			-			716,425			93,212,362
Residential Real Estate		95,456,433			1,127,465			389,678			-			1,133,475			98,107,051
Installment and Other Consumer		76,376,399			737,543			12,122			22,160			1,074,856			78,223,080
	$	1,168,978,194		$	3,798,637		$	5,257,872		$	1,111,079		$	18,994,839		$	1,198,140,621

As a percentage of total loan/lease portfolio		97.57	%		0.32	%		0.44	%		0.09	%		1.59	%		100.00	%

Nonperforming loans/leases by classes of loans/leases as of September 30, 2012 is presented as follows:

Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases *		Troubled Debt Restructurings - Accruing		Total Nonperforming Loans/Leases		Percentage of Total Nonperforming Loans/Leases

Commercial and Industrial	$	149,750	$	1,657,986	$	184,813	$	1,992,549		8.32	%
Commercial Real Estate
Owner-Occupied Commercial Real Estate		-		671,184		-		671,184		2.80	%
Commercial Construction, Land Development, and Other Land		-		2,111,375		337,500		2,448,875		10.23	%
Other Non Owner-Occupied Commercial Real Estate		-		10,155,795		5,303,365		15,459,160		64.57	%
Direct Financing Leases		-		1,094,724		-		1,094,724		4.57	%
Residential Real Estate		-		1,349,565		167,739		1,517,304		6.34	%
Installment and Other Consumer		52,733		690,702		16,043		759,478		3.17	%
	$	202,483	$	17,731,331	$	6,009,460	$	23,943,274		100.00	%

*Nonaccrual loans/leases includes $5,749,193 of troubled debt restructurings, including $141,886 in commercial and industrial loans, $5,212,247 in commercial real estate loans, $64,726 in direct financing leases, and $330,334 in installment loans.

Nonperforming loans/leases by classes of loans/leases as of December 31, 2011 is presented as follows:

Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases **		Troubled Debt Restructurings - Accruing		Total Nonperforming Loans/Leases		Percentage of Total Nonperforming Loans/Leases

Commercial and Industrial	$	120,000	$	2,790,210	$	187,407	$	3,097,617		9.68	%
Commercial Real Estate
Owner-Occupied Commercial Real Estate		-		1,011,456		-		1,011,456		3.16	%
Commercial Construction, Land Development, and Other Land		968,919		2,975,312		6,076,143		10,020,374		31.30	%
Other Non Owner-Occupied Commercial Real Estate		-		9,293,105		5,049,795		14,342,900		44.81	%
Direct Financing Leases		-		716,425		590,238		1,306,663		4.08	%
Residential Real Estate		-		1,133,475		-		1,133,475		3.54	%
Installment and Other Consumer		22,160		1,074,856		-		1,097,016		3.43	%
	$	1,111,079	$	18,994,839	$	11,903,583	$	32,009,501		100.00	%

**Nonaccrual loans/leases includes $8,622,874 of troubled debt restructurings, including $198,697 in commercial and industrial loans, $8,074,777 in commercial real estate loans, $64,726 in direct financing leases, and $284,674 in installment loans.

Changes in the allowance for estimated losses on loans/leases by portfolio segment for the three and nine months ended September 30, 2012 and 2011, respectively, are presented as follows:

	Three Months Ended September 30, 2012

	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Balance, beginning	$	4,180,792		$	10,709,991		$	1,610,999		$	986,714		$	1,236,039		$	18,724,535
Provisions charged to expense		136,766			721,358			350,194			233,226			54,650			1,496,194
Loans/leases charged off		(214,036	)		(552,959	)		(111,326	)		(183,031	)		(88,378	)		(1,149,730	)
Recoveries on loans/leases previously charged off		69,959			175,467			35,118			-			65,205			345,749
Balance, ending	$	4,173,481		$	11,053,857		$	1,884,985		$	1,036,909		$	1,267,516		$	19,416,748

	Three Months Ended September 30, 2011

	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total

Balance, beginning	$	7,124,444		$	8,602,639		$	1,591,309		$	757,075	$	1,727,165		$	19,802,632
Provisions charged to expense		(211,491	)		2,645,457			159,965			92,032		(228,998	)		2,456,965
Loans/leases charged off		(1,465,577	)		(852,174	)		(701,658	)		-		(84,358	)		(3,103,767	)
Recoveries on loans/leases previously charged off		174,013			212,683			2,344			-		33,616			422,656
Balance, ending	$	5,621,389		$	10,608,605		$	1,051,960		$	849,107	$	1,447,425		$	19,578,486

	Nine Months Ended September 30, 2012

	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Balance, beginning	$	4,878,006		$	10,596,958		$	1,339,496		$	704,946		$	1,269,856		$	18,789,262
Provisions charged to expense		(637,852	)		2,254,732			924,109			519,751			264,369			3,325,109
Loans/leases charged off		(669,778	)		(1,980,946	)		(454,590	)		(187,788	)		(416,179	)		(3,709,281	)
Recoveries on loans/leases previously charged off		603,105			183,113			75,970			-			149,470			1,011,658
Balance, ending	$	4,173,481		$	11,053,857		$	1,884,985		$	1,036,909		$	1,267,516		$	19,416,748

	Nine Months Ended September 30, 2011

	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate		Installment and Other Consumer			Total

Balance, beginning	$	7,548,922		$	9,087,315		$	1,530,572		$	748,028	$	1,449,819		$	20,364,656
Provisions charged to expense		1,005,002			3,038,359			463,850			101,079		588,560			5,196,850
Loans/leases charged off		(3,256,194	)		(1,773,711	)		(945,104	)		-		(701,390	)		(6,676,399	)
Recoveries on loans/leases previously charged off		323,659			256,642			2,642			-		110,436			693,379
Balance, ending	$	5,621,389		$	10,608,605		$	1,051,960		$	849,107	$	1,447,425		$	19,578,486

The allowance for estimated losses on loans/leases by impairment evaluation and by portfolio segment as of September 30, 2012 and December 31, 2011 is presented as follows:

	As of September 30, 2012
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Allowance for loans/leases individually evaluated for impairment	$	274,666		$	3,482,125		$	157,900		$	169,196		$	68,673		$	4,152,560
Allowance for loans/leases collectively evaluated for impairment		3,898,815			7,571,732			1,727,085			867,713			1,198,843			15,264,188
	$	4,173,481		$	11,053,857		$	1,884,985		$	1,036,909		$	1,267,516		$	19,416,748


Loans/leases individually evaluated for impairment	$	1,071,050		$	18,450,756		$	1,094,724		$	1,517,304		$	759,478		$	22,893,312
Loans/leases collectively evaluated for impairment		353,932,838			576,452,994			100,944,144			110,974,915			76,078,511			1,218,383,402
	$	355,003,888		$	594,903,750		$	102,038,868		$	112,492,219		$	76,837,989		$	1,241,276,714


Allowance as a percentage of loans/leases individually evaluated for impairment		25.64	%		18.87	%		14.42	%		11.15	%		9.04	%		18.14	%
Allowance as a percentage of loans/leases collectively evaluated for impairment		1.10	%		1.31	%		1.71	%		0.78	%		1.58	%		1.25	%
		1.18	%		1.86	%		1.85	%		0.92	%		1.65	%		1.56	%

	As of December 31, 2011
	Commercial and Industrial			Commercial Real Estate			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Allowance for loans/leases individually evaluated for impairment	$	903,187		$	4,297,738		$	66,675		$	55,884		$	22,819		$	5,346,303
Allowance for loans/leases collectively evaluated for impairment		3,974,819			6,299,220			1,272,821			649,062			1,247,037			13,442,959
	$	4,878,006		$	10,596,958		$	1,339,496		$	704,946		$	1,269,856		$	18,789,262

Loans/leases individually evaluated for impairment	$	2,152,855		$	24,281,365		$	1,306,663		$	1,133,474		$	984,806		$	29,859,163
Loans/leases collectively evaluated for impairment		348,641,423			553,522,485			91,905,699			96,973,577			77,238,274			1,168,281,458
	$	350,794,278		$	577,803,850		$	93,212,362		$	98,107,051		$	78,223,080		$	1,198,140,621

Allowance as a percentage of loans/leases individually evaluated for impairment		41.95	%		17.70	%		5.10	%		4.93	%		2.32	%		17.91	%
Allowance as a percentage of loans/leases collectively evaluated for impairment		1.14	%		1.14	%		1.38	%		0.67	%		1.61	%		1.15	%
		1.39	%		1.83	%		1.44	%		0.72	%		1.62	%		1.56	%

Information for impaired loans/leases is presented in the tables below. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease. The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Information for impaired loans/leases by classes of financing receivable as of and for the nine months ended September 30, 2012 is as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received

Impaired Loans/Leases with No Specific Allowance Recorded:
Commercial and Industrial	$	845,703	$	1,635,373	$	-	$	787,146	$	-	$	-
Commercial Real Estate
Owner-Occupied Commercial Real Estate		542,721		542,721		-		657,327		-		-
Commercial Construction, Land Development, and Other Land		1,027,200		1,027,200		-		4,441,935		5,552		5,552
Other Non Owner-Occupied Commercial Real Estate		1,498,599		2,298,599		-		6,613,234		894		894
Direct Financing Leases		853,974		853,974		-		774,855		-		-
Residential Real Estate		948,653		1,131,684		-		861,102		5,037		5,037
Installment and Other Consumer		646,466		646,466		-		1,014,236		245		245
	$	6,363,316	$	8,136,017	$	-	$	15,149,835	$	11,728	$	11,728

Impaired Loans/Leases with Specific Allowance Recorded:
Commercial and Industrial	$	225,347	$	247,599	$	274,666	$	543,668	$	5,935	$	5,935
Commercial Real Estate
Owner-Occupied Commercial Real Estate		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		2,031,823		2,055,057		1,373,340		1,598,548		-		-
Other Non Owner-Occupied Commercial Real Estate		13,350,413		13,603,372		2,108,785		9,859,148		237,408		237,408
Direct Financing Leases		240,750		240,750		157,900		177,551		-		-
Residential Real Estate		568,651		568,651		169,196		463,361		-		-
Installment and Other Consumer		113,012		113,012		68,673		68,286		-		-
	$	16,529,996	$	16,828,441	$	4,152,560	$	12,710,562	$	243,343	$	243,343

Total Impaired Loans/Leases:
Commercial and Industrial	$	1,071,050	$	1,882,972	$	274,666	$	1,330,814	$	5,935	$	5,935
Commercial Real Estate
Owner-Occupied Commercial Real Estate		542,721		542,721		-		657,327		-		-
Commercial Construction, Land Development, and Other Land		3,059,023		3,082,257		1,373,340		6,040,483		5,552		5,552
Other Non Owner-Occupied Commercial Real Estate		14,849,012		15,901,971		2,108,785		16,472,382		238,302		238,302
Direct Financing Leases		1,094,724		1,094,724		157,900		952,406		-		-
Residential Real Estate		1,517,304		1,700,335		169,196		1,324,463		5,037		5,037
Installment and Other Consumer		759,478		759,478		68,673		1,082,522		245		245
	$	22,893,312	$	24,964,458	$	4,152,560	$	27,860,397	$	255,071	$	255,071

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

Information for impaired loans/leases by classes of financing receivable for the three months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended September 30, 2012						Three Months Ended September 30, 2011
Classes of Loans/Leases	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received

Impaired Loans/Leases with No Specific Allowance Recorded:
Commercial and Industrial	$	754,844	$	-	$	-	$	2,236,289	$	-	$	-
Commercial Real Estate
Owner-Occupied Commercial Real Estate		550,725		-		-		1,774,342		11,909		11,909
Commercial Construction, Land Development, and Other Land		1,323,689		1,701		1,701		286,339		-		-
Other Non Owner-Occupied Commercial Real Estate		5,798,404		-		-		1,730,764		-		-
Direct Financing Leases		680,817		-		-		668,944		-		-
Residential Real Estate		943,926		1,691		1,691		942,011		-		-
Installment and Other Consumer		1,063,519		121		121		710,560		-		-
	$	11,115,924	$	3,513	$	3,513	$	8,349,249	$	11,909	$	11,909

Impaired Loans/Leases with Specific Allowance Recorded:
Commercial and Industrial	$	223,917	$	1,984	$	1,984	$	1,534,968	$	-	$	-
Commercial Real Estate
Owner-Occupied Commercial Real Estate		-		-		-		360,894		-		-
Commercial Construction, Land Development, and Other Land		2,157,696		-		-		5,595,484		473		473
Other Non Owner-Occupied Commercial Real Estate		12,036,134		86,744		86,744		7,488,032		-		-
Direct Financing Leases		210,299		-		-		983,131		-		-
Residential Real Estate		524,031		-		-		200,625		-		-
Installment and Other Consumer		68,898		-		-		108,859		-		-
	$	15,220,975	$	88,728	$	88,728	$	16,271,993	$	473	$	473

Total Impaired Loans/Leases:
Commercial and Industrial	$	978,761	$	1,984	$	1,984	$	3,771,257	$	-	$	-
Commercial Real Estate
Owner-Occupied Commercial Real Estate		550,725		-		-		2,135,236		11,909		11,909
Commercial Construction, Land Development, and Other Land		3,481,385		1,701		1,701		5,881,823		473		473
Other Non Owner-Occupied Commercial Real Estate		17,834,538		86,744		86,744		9,218,796		-		-
Direct Financing Leases		891,116		-		-		1,652,075		-		-
Residential Real Estate		1,467,957		1,691		1,691		1,142,636		-		-
Installment and Other Consumer		1,132,417		121		121		819,419		-		-
	$	26,336,899	$	92,241	$	92,241	$	24,621,242	$	12,382	$	12,382

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

Information for impaired loans/leases by classes of financing receivable as of December 31, 2011 is as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance

Impaired Loans/Leases with No Specific Allowance Recorded:
Commercial and Industrial	$	360,947	$	979,901	$	-
Commercial Real Estate
Owner-Occupied Commercial Real Estate		736,610		736,610		-
Commercial Construction, Land Development, and Other Land		-		-		-
Other Non Owner-Occupied Commercial Real Estate		3,936,826		3,986,820		-
Direct Financing Leases		1,094,178		1,094,178		-
Residential Real Estate		788,685		862,298		-
Installment and Other Consumer		593,987		593,987		-
	$	7,511,233	$	8,253,794	$	-

Impaired Loans/Leases with Specific Allowance Recorded:
Commercial and Industrial	$	1,791,908	$	1,791,908	$	903,187
Commercial Real Estate
Owner-Occupied Commercial Real Estate		217,059		217,059		47,911
Commercial Construction, Land Development, and Other Land		9,051,455		9,051,455		3,002,450
Other Non Owner-Occupied Commercial Real Estate		10,339,415		10,839,415		1,247,377
Direct Financing Leases		212,485		212,485		66,675
Residential Real Estate		344,789		344,789		55,884
Installment and Other Consumer		390,819		390,819		22,819
	$	22,347,930	$	22,847,930	$	5,346,303

Total Impaired Loans/Leases:
Commercial and Industrial	$	2,152,855	$	2,771,809	$	903,187
Commercial Real Estate
Owner-Occupied Commercial Real Estate		953,669		953,669		47,911
Commercial Construction, Land Development, and Other Land		9,051,455		9,051,455		3,002,450
Other Non Owner-Occupied Commercial Real Estate		14,276,241		14,826,235		1,247,377
Direct Financing Leases		1,306,663		1,306,663		66,675
Residential Real Estate		1,133,474		1,207,087		55,884
Installment and Other Consumer		984,806		984,806		22,819
	$	29,859,163	$	31,101,724	$	5,346,303

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management’s current estimates.

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of September 30, 2012 and December 31, 2011:

	As of September 30, 2012
			Commercial Real Estate
					Non Owner-Occupied
Internally Assigned Risk Rating	Commercial and Industrial		Owner-Occupied Commercial Real Estate		Commercial Construction, Land Development, and Other Land		Other Commercial Real Estate		Total

Pass (Ratings 1 through 5)	$	331,637,518	$	193,587,897	$	42,177,159	$	311,918,867	$	879,321,441
Special Mention (Rating 6)		7,920,533		4,213,076		560,086		8,660,810		21,354,505
Substandard (Rating 7)		15,445,837		1,987,151		6,454,664		25,344,040		49,231,692
Doubtful (Rating 8)		-		-		-		-		-
	$	355,003,888	$	199,788,124	$	49,191,909	$	345,923,717	$	949,907,638

	As of September 30, 2012
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total

Performing	$	100,944,144	$	110,974,915	$	76,078,511	$	287,997,570
Nonperforming		1,094,724		1,517,304		759,478		3,371,506
	$	102,038,868	$	112,492,219	$	76,837,989	$	291,369,076

*Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to 90 days past due, and accruing troubled debt restructurings.

	As of December 31, 2011
			Commercial Real Estate
					Non Owner-Occupied
Internally Assigned Risk Rating	Commercial and Industrial		Owner-Occupied Commercial Real Estate		Commercial Construction, Land Development, and Other Land		Other Commercial Real Estate		Total

Pass (Ratings 1 through 5)	$	324,225,905	$	158,955,618	$	46,268,554	$	310,401,972	$	839,852,049
Special Mention (Rating 6)		8,814,497		2,700,496		764,586		13,754,798		26,034,377
Substandard (Rating 7)		17,753,876		6,134,507		13,351,598		25,471,721		62,711,702
Doubtful (Rating 8)		-		-		-		-		-
	$	350,794,278	$	167,790,621	$	60,384,738	$	349,628,491	$	928,598,128

	As of December 31, 2011
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total

Performing	$	91,905,699	$	96,973,576	$	77,126,064	$	266,005,339
Nonperforming		1,306,663		1,133,475		1,097,016		3,537,154
	$	93,212,362	$	98,107,051	$	78,223,080	$	269,542,493

For commercial and industrial and commercial real estate loans, the Company’s credit quality indicator is internally assigned risk ratings. Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as needed basis depending on the specific circumstances of the loan.

For direct financing leases, residential real estate loans, and installment and other consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

As of September 30, 2012 and December 31, 2011, troubled debt restructurings totaled $11,758,653 and $20,526,457, respectively.

For each class of financing receivable, the following presents the number and recorded investment of troubled debt restructurings, by type of concession, that were restructured during the three and nine months ended September 30, 2012 and 2011. The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.

	For the three months ended September 30, 2012								For the three months ended September 30, 2011
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance

CONCESSION - Extension of maturity
Other Non Owner-Occupied Commercial Real Estate		4	$	1,184,289	$	1,184,289	$	325,923		-	$	-	$	-	$	-
		4	$	1,184,289	$	1,184,289	$	325,923		-	$	-	$	-	$	-

CONCESSION - Interest rate adjusted below market
Other Non Owner-Occupied Commercial Real Estate		2	$	1,542,784	$	1,289,825	$	55,187		-	$	-	$	-	$	-
		2	$	1,542,784	$	1,289,825	$	55,187		-	$	-	$	-	$	-

TOTAL		6	$	2,727,073	$	2,474,114	$	381,110		-	$	-	$	-	$	-

	For the nine months ended September 30, 2012								For the nine months ended September 30, 2011
Classes of Loans/Leases	Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Specific Allowance

CONCESSION - Extension of maturity
Other Non Owner-Occupied Commercial Real Estate		4	$	1,184,289	$	1,184,289	$	325,923		1	$	2,851,134	$	2,851,134	$	-
		4	$	1,184,289	$	1,184,289	$	325,923		1	$	2,851,134	$	2,851,134	$	-

CONCESSION - Significant payment delay
Commercial and Industrial		-	$	-	$	-	$	-		4	$	1,175,819	$	1,175,819	$	-
Commercial Construction, Land Development, and Other Land		2		200,000		200,000		-		-		-		-		-
		2	$	200,000	$	200,000	$	-		4	$	1,175,819	$	1,175,819	$	-

CONCESSION - Interest rate adjusted below market
Commercial Construction, Land Development, and Other Land		1	$	337,500	$	337,500	$	-		-	$	-	$	-	$	-
Other Non Owner-Occupied Commercial Real Estate		2		1,542,784		1,289,825		55,187		-		-		-		-
Residential Real Estate		1		167,739		167,739		-		-		-		-		-
Installment and Other Consumer		1		16,043		16,043		-		-		-		-		-
		5	$	2,064,066	$	1,811,107	$	55,187		-	$	-	$	-	$	-

TOTAL		11	$	3,448,355	$	3,195,396	$	381,110		5	$	4,026,953	$	4,026,953	$	-

Of the troubled debt restructurings reported above, four with post-modification recorded investments totaling $4,337,321 were on nonaccrual as of September 30, 2012.

For the three and nine months ended September 30, 2012, none of the Company’s troubled debt restructurings has redefaulted within 12 months subsequent to restructure where default is defined as delinquency of 90 days or more and/or placement on nonaccrual status.