Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

NOTE 8 – DISCONTINUED OPERATIONS

On April 28, 2010, at the Annual Shareholder Meeting, a formal announcement was made regarding the signing of a definitive agreement to sell West Michigan Community Bank (“WMCB”). The transaction was consummated on January 31, 2011, and the Corporation received $10,500,000 from the sale of West Michigan Community Bank (a 10% premium to book). As a condition of the sale, the Corporation assumed certain non-performing assets of West Michigan Community Bank which totaled $9,900,000. The assets were housed in a newly formed real estate holding company subsidiary of the Corporation, FHLLC. In addition, The State Bank assumed $2,900,000 of watch rated credits.

As of July 1, 2011, due to a change in management’s intent, the remaining balances of the assets described above and previously classified as discontinued operations were reclassified to continuing operations; therefore there are no assets or liabilities presented at December 31, 2011 or September 30, 2012. Corresponding amounts also were reclassified for all periods presented.

A condensed statement of income of discontinued operations is presented for the nine months ended September 30, 2011. Due to the sale of West Michigan Community Bank at January 31, 2011, only one month of income and expense is presented for West Michigan Community Bank.

CONDENSED STATEMENT OF INCOME OF DISCONTINUED OPERATIONS

(000s omitted)

	Three Months  Ended September 30, 2011						Nine Months Ended September 30, 2011
	Assumed Loans and Other Real Estate			Total			Assumed Loans and Other Real Estate			WMCB			Total
Interest income	$	(00	)	$	(00	)	$	(00	)	$	515		$	515
Interest expense		0			0			0			129			129
Net interest income		(00	)		(00	)		(00	)		386			386
Provision for loan losses		0			0			0			(50	)		(50	)
Net interest income (loss) after provision for loan losses		(00	)		(00	)		(00	)		436			436
Non-interest income		00			00			00			121			121
Non-interest expense		000			000			82			415			497
Income (loss) before federal income tax		(000	)		(000	)		(82	)		142			60
Federal income tax (benefit) expense		0			0			0			57			57
Gain on sale of subsidiary		0			0			0			469			469
Net income (loss)	$	(000	)	$	(000	)	$	(82	)	$	554		$	472

In connection with the sale of West Michigan Community Bank, the Corporation recognized a gross gain of $711,000. Net of tax the net gain amounted to $469,000.