Other Real Estate Owned

6 Months Ended

Jun. 30, 2011

Other Real Estate Owned [Abstract]

Other Real Estate Owned

Note 6.              Other Real Estate Owned

Other real estate owned (“OREO”) decreased $3.8 million from $29.2 million at December 31, 2010 to $25.4 million at June 30, 2011.  Set forth below is a table which details the changes in OREO from December 31, 2010 to June 30, 2011.

	2011
(In thousands)	First Quarter			Second Quarter
Beginning balance	$	29,244		$	30,681
Net proceeds from sales		(1,594	)		(4,320	)
Net gain on sales		394			900
Assets acquired on non-accrual loans		3,030			1,469
Other		-			(535	)
Impairment charge		(393	)		(2,747	)
Ending balance	$	30,681		$	25,448

During the second quarter of 2011, the Company sold collateral related to three loans.  The Company received net proceeds of $3.7 million and recorded a gain of $912,000 as a result of these sales. Also during the second quarter, the collateral for a loan in which the Company was a participant was sold. The Company was entitled to 14.4% of the net sales proceeds.  The Company received net proceeds of $424,000 related to the sale with the remaining proceeds held in escrow.  In addition to the sales mentioned above the Company sold six properties acquired through the tax lien portfolio.  The Company received proceeds of $195,000 and recorded losses of $12,000 as a result of these sales.  During the second quarter of 2011, the Company foreclosed on 19 properties which were predominantly residential rental properties related to two lending relationships.  The Company transferred $589,000 to OREO after recording an $835,000 charge-off to the ALLL, for which $245,000 had previously been reserved, in the allowance for loan and lease losses in accordance withASC Topic 310.  The collateral for a loan in which the Company participates was acquired by the lead bank.  The Company is entitled to 23.2% of the collateral value, which is farmland.  The Company transferred $375,000 to OREO after recording a $79,000 charge-off in the allowance for loan and lease losses in accordance withASC Topic 310.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $505,000 to OREO.

During the second quarter of 2011, the Company entered into a sales agreement on a rental community consisting of 102 dwelling units for which the Company received a deed in lieu of foreclosure in the second quarter of 2010.  The Company recorded a $2.2 million impairment charge based on the expected net proceeds of the sale. Additional impairment was recorded on two commercial building lots in Maryland that were transferred to OREO during the third quarter of 2010.  After performing an impairment analysis using an updated appraisal on the two lots, the Company recorded a $355,000 impairment charge.  The Company recorded impairment charges of $156,000 related to properties acquired through the tax lien portfolio.

During the first quarter of 2011, the Company sold portions of collateral related to two loans.  The Company received net proceeds of $620,000 and recorded a net loss of $43,000.  As a result of the sales of three single family homes related to one loan, the Company recorded an impairment charge of $100,000 on the remaining collateral. In addition to the sales mentioned above the Company sold five properties acquired through the tax lien portfolio.  The Company received proceeds of $974,000 and recorded gains of $437,000 as a result of these sales.  During the first quarter of 2011, the Company entered into sales agreements on two properties and recorded impairment charges of $293,000 based on the expected net proceeds.  The Company acquired the collateral for one loan held for sale and transferred the fair value of $2.6 million to OREO in the first quarter of 2011.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $540,000 to OREO.