Subsequent Events

12 Months Ended

Dec. 31, 2012

Note 23.

Subsequent Events

In accordance with ASC 855-10/SFAS 165, the Company evaluates subsequent events that have occurred after the balance sheet date, but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

Based on the evaluation, the Company identified and recognized two events that required adjustment to, or disclosure in, the financial statements. These events occured subsequent to the Company's February 4, 2013 press release with respect to unaudited financial statements and fourth quarter 2012 earnings.

On March 14, 2013 the Company's Board of Directors approved a settlement on a large nonperforming commercial real estate/hospitality loan based on an updated appraisal received concurrently with a proposed settlement offer. This resulted in a $607,000 addition to the provision for loan loss and an additional charge-off of $1.0 million on the loan. The remaining loan balance of $4.0 million is scheduled to be repaid during the June 2013 quarter. Also during March 2013, the Company received an updated appraisal on an OREO property which resulted in a $370,000 addition to the reserve for OREO loss.