Loans Receivable and Allowance for Loan Losses

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an allowance for loan loss (allowance or ALL) and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan or to the first review date if the loan is on demand. Certain qualifying loans of the Bank totaling $98.6 million at September 30, 2012, collateralize a letter of credit and a long-term borrowing the Bank has with the Federal Home Loan Bank (FHLB).

A summary of the Bank's loans receivable at September 30, 2012 and December 31, 2011 is as follows:



(in thousands)	September 30, 2012		December 31, 2011
Commercial and industrial	$	347,099	$	321,988
Commercial tax-exempt	88,934		81,532
Owner occupied real estate	274,235		279,372
Commercial construction and land development	107,311		103,153
Commercial real estate	393,182		364,405
Residential	82,989		83,940
Consumer	211,240		202,278
	1,504,990		1,436,668
Less: allowance for loan losses	25,596		21,620
Net loans receivable	$	1,479,394	$	1,415,048

The following table summarizes nonaccrual loans by loan type at September 30, 2012 and December 31, 2011:



(in thousands)	September 30, 2012		December 31, 2011
Nonaccrual loans:
Commercial and industrial	$	17,133	$	10,162
Commercial tax-exempt	—		—
Owner occupied real estate	3,230		2,895
Commercial construction and land development	6,826		8,511
Commercial real estate	4,571		7,820
Residential	3,149		2,912
Consumer	2,304		1,829
Total nonaccrual loans	$	37,213	$	34,129

Generally, the Bank's policy is to move a loan to nonaccrual status when it becomes 90 days past due or when the Company does not believe it will collect all of its principal and interest payments. In addition, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, interest is recognized as accrued. Once a loan is on nonaccrual status, it is not returned to accrual status unless the loan has been current for at least six consecutive months and the borrower and/or any guarantors demonstrate the ability to repay the loan. Under certain circumstances such as bankruptcy, if a loan is under collateralized, or if the borrower and/or guarantors do not show evidence of the ability to pay, the loan may be placed on nonaccrual status even though it is not past due by 90 days or more. Therefore, the total nonaccrual loan balance of $37.2 million exceeds the balance of total loans that are 90 days past due of $19.0 million at September 30, 2012 as presented in the aging analysis tables that follow.

Typically, commitments are canceled and no additional advances are made when a loan is placed on nonaccrual. At September 30, 2012 there was $73,000 available to be advanced on two nonaccrual commercial construction and land development loans that were restructured.

The following tables are an age analysis of past due loan receivables as of September 30, 2012 and December 31, 2011:



			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
September 30, 2012
Commercial and industrial	$	334,189	$	1,466	$	4,499	$	6,945	$	12,910	$	347,099	$	7
Commercial tax-exempt	88,934		—		—		—		—		88,934		—
Owner occupied real estate	269,804		441		369		3,621		4,431		274,235		411
Commercial construction and land development	103,436		458		520		2,897		3,875		107,311		—
Commercial real estate	382,395		6,013		2,311		2,463		10,787		393,182		61
Residential	80,562		—		593		1,834		2,427		82,989		85
Consumer	207,922		1,702		357		1,259		3,318		211,240		140
Total	$	1,467,242	$	10,080	$	8,649	$	19,019	$	37,748	$	1,504,990	$	704



			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2011
Commercial and industrial	$	317,016	$	696	$	1,083	$	3,193	$	4,972	$	321,988	$	—
Commercial tax-exempt	81,532		—		—		—		—		81,532		—
Owner occupied real estate	274,720		2,423		328		1,901		4,652		279,372		—
Commercial construction and land development	94,160		470		219		8,304		8,993		103,153		—
Commercial real estate	354,818		2,191		1,272		6,124		9,587		364,405		—
Residential	75,841		4,587		607		2,905		8,099		83,940		621
Consumer	199,671		1,314		350		943		2,607		202,278		71
Total	$	1,397,758	$	11,681	$	3,859	$	23,370	$	38,910	$	1,436,668	$	692

The past due portfolio is constantly moving through collection efforts, restructuring when appropriate, charge-offs or through foreclosure. During the first nine months of 2012, $17.4 million of past due loans at December 31, 2011 improved to current status at September 30, 2012. Additionally, $3.5 million and $2.0 million of those loans past due at December 31, 2011, were charged off or moved to foreclosed real estate, respectively. Another $22.8 million in current loans at December 31, 2011, became delinquent and were reported as past due at September 30, 2012. Out of the $22.8 million of loans that became past due after December 31, 2011, $7.9 million were 90 days past due or greater, $6.7 million were 60-89 days past due while the remainder, or $8.2 million, were 30-59 days past due at September 30, 2012.

Commercial and industrial had the most significant increase in past due status since December 31, 2011. Included in this change from current to past due status, were $8.6 million of commercial and industrial loans that were past due and impaired with a specific reserve of $3.4 million at September 30, 2012.

A summary of the ALL and balance of loans receivable by loan class and by impairment method as of September 30, 2012 and December 31, 2011 is detailed in the tables that follow.



(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construction and land development		Comm. real estate		Residential		Consumer		Unallocated		Total

September 30, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	4,161	$	—	$	1,747	$	2,450	$	—	$	—	$	—	$	—	$	8,358
Collectively evaluated for impairment	6,340		80		664		5,144		3,223		344		789		654		17,238
Total ALL	$	10,501	$	80	$	2,411	$	7,594	$	3,223	$	344	$	789	$	654	$	25,596
Loans receivable:
Loans evaluated individually	$	18,734	$	—	$	4,158	$	17,908	$	16,112	$	4,115	$	3,145	$	—	$	64,172
Loans evaluated collectively	328,365		88,934		270,077		89,403		377,070		78,874		208,095		—		1,440,818
Total loans receivable	$	347,099	$	88,934	$	274,235	$	107,311	$	393,182	$	82,989	$	211,240	$	—	$	1,504,990



(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construction and land development		Comm. real estate		Residential		Consumer		Unallocated		Total

December 31, 2011
Allowance for loan losses:
Individually evaluated for impairment	$	1,000	$	—	$	30	$	2,600	$	—	$	—	$	—	$	—	$	3,630
Collectively evaluated for impairment	7,400		79		699		5,240		3,241		435		831		65		17,990
Total ALL	$	8,400	$	79	$	729	$	7,840	$	3,241	$	435	$	831	$	65	$	21,620
Loans receivable:
Loans evaluated individually	$	15,504	$	—	$	7,492	$	23,216	$	12,117	$	3,346	$	1,829	$	—	$	63,504
Loans evaluated collectively	306,484		81,532		271,880		79,937		352,288		80,594		200,449		—		1,373,164
Total loans receivable	$	321,988	$	81,532	$	279,372	$	103,153	$	364,405	$	83,940	$	202,278	$	—	$	1,436,668

The Bank may create a specific allowance for all of or a part of a particular loan in lieu of a charge-off or charge-down as a result of management's evaluation of impaired loans. In these instances, the Bank has determined that a loss is not imminent based upon available information surrounding the credit at the time of the analysis including, but not limited to, unresolved legal matters; however, management believes an allowance is appropriate to acknowledge the potential risk of loss.

Generally, construction and land development and commercial real estate loans present a greater risk of non-payment by a borrower than other types of loans. The market value of real estate, particularly real estate held for investment, can fluctuate significantly in a relatively short period of time. Commercial and industrial, tax exempt and owner occupied real estate loans generally carry a lower risk factor because the repayment of these loans relies primarily on the cash flow from a business which is more stable and predictable. However, the significance and duration of the economic downturn caused the Bank to experience an elevated level of charge-offs in the commercial and industrial loan category in 2011.

Consumer loan collections are dependent on the borrower's continued financial stability and thus are more likely to be affected by adverse personal circumstances. Consumer and residential loans are also impacted by the market value of real estate. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans. The risk of non-payment is affected by changes in economic conditions, the credit risks of a particular borrower, the duration of the loan and, in the case of a collateralized loan, uncertainties as to the value of the collateral and other factors.

Management bases its quantitative analysis of probable future loan losses (when determining the ALL) on those loans collectively reviewed for impairment on a two-year period of actual historical losses. Given the continued state of the economy and its impact on borrowers' financial conditions and on loan collateral values, management feels a two-year period is an appropriate historical time frame, valid until such time that the economy, borrower repayment ability and loan collateral values show sustained signs of improvement. Management may increase or decrease the historical loss period at some point in the future based on the state of the economy and other circumstances.

The qualitative factors such as changes in levels and trends of charge-offs and delinquencies; material changes in the mix, volume or duration of the loan portfolio; changes in lending policies and procedures including underwriting standards; changes in the experience, ability and depth of lending management and other relevant staff; the existence and effect of any concentrations of credit; changes in the overall values of collateral; changes in the quality of the loan review program and changes in national and local economic trends and conditions among other things, are factors which have not been identified by the quantitative processes. The determination of qualitative factors inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience.

The following tables summarize the transactions in the ALL for the three and nine months ended September 30, 2012 and 2011:



(in thousands)	Comm. and industrial			Comm. tax-exempt		Owner occupied real estate		Comm. construction and land development			Comm. real estate			Residential			Consumer			Unallocated		Total
2012
Balance at July 1	$	10,575		$	74	$	2,117	$	8,917		$	3,139		$	438		$	797		$	101	$	26,158
Provision charged to operating expenses	398			6		294		(762		)	1,609			101			301			553		2,500
Recoveries of loans previously charged-off	15			—		—		64			55			3			20			—		157
Loans charged-off	(487		)	—		—		(625		)	(1,580		)	(198		)	(329		)	—		(3,219		)
Balance at September 30	$	10,501		$	80	$	2,411	$	7,594		$	3,223		$	344		$	789		$	654	$	25,596



(in thousands)	Comm. and industrial			Comm. tax-exempt		Owner occupied real estate			Comm. construction and land development			Comm. real estate			Residential			Consumer			Unallocated		Total
2012
Balance at January 1	$	8,400		$	79	$	729		$	7,840		$	3,241		$	435		$	831		$	65	$	21,620
Provision charged to operating expenses	2,832			1		1,766			464			1,749			168			381			589		7,950
Recoveries of loans previously charged-off	216			—		8			513			85			4			65			—		891
Loans charged-off	(947		)	—		(92		)	(1,223		)	(1,852		)	(263		)	(488		)	—		(4,865		)
Balance at September 30	$	10,501		$	80	$	2,411		$	7,594		$	3,223		$	344		$	789		$	654	$	25,596



(in thousands)	Comm. and industrial			Comm. tax-exempt			Owner occupied real estate			Comm. construction and land development			Comm. real estate			Residential			Consumer			Unallocated			Total
2011
Balance at July 1	$	8,951		$	81		$	994		$	5,391		$	5,035		$	438		$	773		$	60		$	21,723
Provision charged to operating expenses	4,841			(3		)	(58		)	8,781			(119		)	16			302			(10		)	13,750
Recoveries of loans previously charged-off	21			—			1			—			2			—			19			—			43
Loans charged-off	(3,909		)	—			(252		)	(7,532		)	(199		)	(46		)	(271		)	—			(12,209		)
Balance at September 30	$	9,904		$	78		$	685		$	6,640		$	4,719		$	408		$	823		$	50		$	23,307



(in thousands)	Comm. and industrial			Comm. tax-exempt			Owner occupied real estate			Comm. construction and land development			Comm. real estate			Residential			Consumer			Unallocated			Total
2011
Balance at January 1	$	9,679		$	86		$	910		$	5,420		$	4,002		$	442		$	702		$	377		$	21,618
Provision charged to operating expenses	4,973			(8		)	28			10,134			1,384			84			974			(327		)	17,242
Recoveries of loans previously charged-off	74			—			1			—			10			29			53			—			167
Loans charged-off	(4,822		)	—			(254		)	(8,914		)	(677		)	(147		)	(906		)	—			(15,720		)
Balance at September 30	$	9,904		$	78		$	685		$	6,640		$	4,719		$	408		$	823		$	50		$	23,307

The following table presents information regarding the Company's impaired loans as of September 30, 2012 and December 31, 2011:



	September 30, 2012						December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans with no related allowance:
Commercial and industrial	$	11,185	$	17,312	$	—	$	14,504	$	19,672	$	—
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	1,917		2,706		—		7,000		8,845		—
Commercial construction and land development	10,044		11,682		—		11,203		19,756		—
Commercial real estate	16,112		17,836		—		12,117		12,390		—
Residential	4,115		4,375		—		3,346		3,729		—
Consumer	3,145		3,362		—		1,829		2,168		—
Total impaired loans with no related allowance	46,518		57,273		—		49,999		66,560		—
Loans with an allowance recorded:
Commercial and industrial	7,549		8,549		4,161		1,000		1,000		1,000
Owner occupied real estate	2,241		2,241		1,747		492		659		30
Commercial construction and land development	7,864		7,864		2,450		12,013		12,013		2,600
Total impaired loans with an allowance recorded	17,654		18,654		8,358		13,505		13,672		3,630
Total impaired loans:
Commercial and industrial	18,734		25,861		4,161		15,504		20,672		1,000
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	4,158		4,947		1,747		7,492		9,504		30
Commercial construction and land development	17,908		19,546		2,450		23,216		31,769		2,600
Commercial real estate	16,112		17,836		—		12,117		12,390		—
Residential	4,115		4,375		—		3,346		3,729		—
Consumer	3,145		3,362		—		1,829		2,168		—
Total impaired loans	$	64,172	$	75,927	$	8,358	$	63,504	$	80,232	$	3,630

Compared to December 31, 2011, $27.7 million of impaired loans without a specific reserve remained impaired without a specific reserve at September 30, 2012. Metro also had $11.1 million of impaired loans with specific reserves at December 31, 2011 that remained impaired with a specific reserve at September 30, 2012. A total of $15.4 million of loans were downgraded and deemed to be impaired subsequent to December 31, 2011 while $9.3 million in loans had credit improvements and were no longer considered impaired at September 30, 2012. Of the $15.4 million deemed impaired in 2012, $5.4 million, relating to relationships over $1.0 million, were new to the criticized/classified loan portfolio during 2012. For loans deemed impaired with relationships under $1.0 million, there were 55 loans spanning across all categories with an aggregate total of $8.0 million.

Subsequent to December 31, 2011, $5.0 million of impaired loans were either charged off or the real estate was foreclosed. During the first nine months of 2012, principal on impaired loans has also been reduced by payments made by borrowers. In addition, two loans in one relationship totaling $4.5 million were recategorized from commercial construction and land development to commercial real estate as a result of the loans becoming permanent mortgages. This change accounts for the majority of the decrease commercial construction and land development and the increase in commercial real estate from December 31, 2011 to September 30, 2012.

The following table presents additional information regarding the Company's impaired loans for the three and nine months ended September 30, 2012 and 2011:



	Three Months Ended								Nine Months Ended
	September 30, 2012				September 30, 2011				September 30, 2012				September 30, 2011
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance:
Commercial and industrial	$	11,921	$	48	$	8,898	$	7	$	12,042	$	140	$	14,112	$	98
Commercial tax-exempt	—		—		—		—		—		—		—		—
Owner occupied real estate	2,379		27		3,684		33		4,465		150		5,067		133
Commercial construction and land development	9,682		166		10,616		38		10,668		417		11,602		153
Commercial real estate	12,238		79		9,510		19		11,699		175		8,176		29
Residential	4,270		13		3,209		—		3,946		31		3,592		—
Consumer	2,632		6		1,571		—		2,301		8		1,956		—
Total impaired loans with no related allowance	43,122		339		37,488		97		45,121		921		44,505		413
Loans with an allowance recorded:
Commercial and industrial	8,106		—		8,483		—		4,709		—		8,655		—
Owner occupied real estate	2,036		—		—		—		1,436		—		495		—
Commercial construction and land development	11,524		—		4,019		—		12,552		—		3,911		—
Commercial real estate	—		—		1,024		—		—		—		341		—
Total impaired loans with an allowance recorded	21,666		—		13,526		—		18,697		—		13,402		—
Total impaired loans:
Commercial and industrial	20,027		48		17,381		7		16,751		140		22,767		98
Commercial tax-exempt	—		—		—		—		—		—		—		—
Owner occupied real estate	4,415		27		3,684		33		5,901		150		5,562		133
Commercial construction and land development	21,206		166		14,635		38		23,220		417		15,513		153
Commercial real estate	12,238		79		10,534		19		11,699		175		8,517		29
Residential	4,270		13		3,209		—		3,946		31		3,592		—
Consumer	2,632		6		1,571		—		2,301		8		1,956		—
Total impaired loans	$	64,788	$	339	$	51,014	$	97	$	63,818	$	921	$	57,907	$	413

Impaired loans averaged approximately $63.8 million and $57.9 million for the nine months ended September 30, 2012 and 2011, respectively. All nonaccrual loans are considered impaired and interest income is handled as discussed earlier in the nonaccrual section of this footnote. Interest income continued to accrue on impaired loans that were still accruing and totaled $921,000 and $413,000 for the nine months ended September 30, 2012 and 2011, respectively.

The Bank assigns loan risk ratings as credit quality indicators of its loan portfolio: pass, special mention, substandard accrual, substandard nonaccrual and doubtful. Monthly, we track commercial loans that are no longer pass rated. We review the cash flow, operating results and financial condition of the borrower and any guarantors, as well as the collateral position against established policy guidelines as a means of providing a targeted list of loans and loan relationships that require additional attention within the loan portfolio. We categorize loans possessing increased risk as either special mention, substandard accrual, substandard nonaccrual or doubtful. Special mention loans are those loans that are currently adequately protected, but potentially weak. The potential weaknesses may, if not corrected, weaken the loan's credit quality or inadvertently jeopardize our credit position in the future. Substandard accrual and substandard nonaccrual assets are characterized by well-defined weaknesses that jeopardize the liquidation of the debt and by the possibility that the Bank will sustain some loss if the weaknesses are not corrected. Substandard accrual loans would move from accrual to nonaccrual when the Bank does not believe it will collect all of its principal and interest payments. Some identifiers to determine the collectibility are as follows: when the loan is 90 days past due in principal or interest, there are triggering events in the borrower's or any guarantor's financial statements that show continuing deterioration, the borrower's or any guarantor's source of repayment is depleting, or if bankruptcy or other legal matters are present, regardless if the loan is 90 days past due or not. Doubtful loans have all of the weaknesses inherent in those classified as substandard accrual and substandard nonaccrual with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. Pass rated loans are reviewed throughout the year through the recurring review process of an independent loan review function and through the application of other credit metrics.

Credit quality indicators for commercial loans broken out by loan type are presented in the following tables for the periods ended September 30, 2012 and December 31, 2011. There were no loans classified as doubtful for the periods ended September 30, 2012 or December 31, 2011.



	September 30, 2012
(in thousands)	Pass Rated Loans		Special Mention		Substandard Accrual		Substandard Nonaccrual		Total
Commercial credit exposure:
Commercial and industrial	$	303,421	$	6,936	$	19,609	$	17,133	$	347,099
Commercial tax-exempt	88,934		—		—		—		88,934
Owner occupied real estate	257,162		4,308		9,535		3,230		274,235
Commercial construction and land development	87,130		5,338		8,017		6,826		107,311
Commercial real estate	377,713		1,722		9,176		4,571		393,182
Total	$	1,114,360	$	18,304	$	46,337	$	31,760	$	1,210,761



	December 31, 2011
(in thousands)	Pass Rated Loans		Special Mention		Substandard Accrual		Substandard Nonaccrual		Total
Commercial credit exposure:
Commercial and industrial	$	280,884	$	9,176	$	21,766	$	10,162	$	321,988
Commercial tax-exempt	77,657		3,875		—		—		81,532
Owner occupied real estate	263,001		2,887		10,589		2,895		279,372
Commercial construction and land development	76,374		3,071		15,197		8,511		103,153
Commercial real estate	349,786		794		6,005		7,820		364,405
Total	$	1,047,702	$	19,803	$	53,557	$	29,388	$	1,150,450

Consumer loan credit exposures are rated either performing or nonperforming as detailed below at September 30, 2012 and December 31, 2011:



	September 30, 2012
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	79,840	$	3,149	$	82,989
Consumer	208,936		2,304		211,240
Total	$	288,776	$	5,453	$	294,229



	December 31, 2011
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	81,028	$	2,912	$	83,940
Consumer	200,449		1,829		202,278
Total	$	281,477	$	4,741	$	286,218

A troubled debt restructuring (TDR) is a loan of which the contractual terms have been modified, resulting in the Bank granting a concession to a borrower who is experiencing financial difficulties, in order for the Bank to have a greater chance of collecting the indebtedness from the borrower. Concessions could include, but are not limited to: interest rate reductions, multiple and/or significant maturity extensions or principal forgiveness. An additional benefit to the Bank in granting a concession is to possibly avoid foreclosure or repossession of loan collateral at a time when collateral values are low.

The following table presents new TDRs, with the recorded investment at the time of restructure, being the same pre-modification and post-modification, modified during the three and nine month periods ended September 30, 2012 and 2011.



	New TDRs for the Three Months Ended						New TDRs for the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure
Commercial and industrial	1	$	3,404	1	$	555	2	$	4,666	4	$	12,597
Commercial tax-exempt	—	—		—	—		—	—		—	—
Owner occupied real estate	—	—		1	87		—	—		1	87
Commercial construction and land development	1	3,546		18	11,234		6	6,942		18	11,234
Commercial real estate	1	3,275		5	3,385		2	3,343		5	3,385
Residential	1	49		1	79		3	524		2	273
Consumer	2	664		—	—		4	859		—	—
Total	6	$	10,938	26	$	15,340	17	$	16,334	30	$	27,576

The loans included above are considered TDRs as a result of the Bank implementing one or more of the following concessions: granting a material extension of time, entering into a forbearance agreement, adjusting the interest rate, accepting interest only payments for an extended period of time or a change in the amortization period. The following tables present the number of contracts and balances at the time the loans were converted to a TDR status by concession type for the three and nine months ended September 30, 2012 and 2011:



(dollars in thousands)	Granting a Material Extension of Time		Forbearance Agreement		Accepting Interest Only for a Period of Time		Adjusting the Interest Rate		Change in Amortization Period		Combination of Concessions
Three Months Ended
September 30, 2012
Commercial and industrial:
Number of Contracts	—		—		—		1		—		—
Balance at time of TDR	$	—	$	—	$	—	$	3,404	$	—	$	—
Commercial construction and land development:
Number of Contracts	—		—		—		—		—		1
Balance at time of TDR	$	—	$	—	$	—	$	—	$	—	$	3,546
Commercial real estate:
Number of Contracts	—		—		—		—		—		1
Balance at time of TDR	$	—	$	—	$	—	$	—	$	—	$	3,275
Residential:
Number of Contracts	1		—		—		—		—		—
Balance at time of TDR	$	49	$	—	$	—	$	—	$	—	$	—
Consumer:
Number of Contracts	2		—		—		—		—		—
Balance at time of TDR	$	664	$	—	$	—	$	—	$	—	$	—
Totals:
Number of Contracts	3		—		—		1		—		2
Balance at time of TDR	$	713	$	—	$	—	$	3,404	$	—	$	6,821



(dollars in thousands)	Granting a Material Extension of Time		Forbearance Agreement		Accepting Interest Only for a Period of Time		Adjusting the Interest Rate		Change in Amortization Period		Combination of Concessions
Three Months Ended
September 30, 2011
Commercial and industrial:
Number of Contracts	1		—		—		—		—		—
Balance at time of TDR	$	555	$	—	$	—	$	—	$	—	$	—
Owner occupied real estate:
Number of Contracts	—		1		—		—		—		—
Balance at time of TDR	$	—	$	87	$	—	$	—	$	—	$	—
Commercial construction and land development:
Number of Contracts	17		1		—		—		—		—
Balance at time of TDR	$	11,003	$	231	$	—	$	—	$	—	$	—
Commercial real estate:
Number of Contracts	—		1		—		—		4		—
Balance at time of TDR	$	—	$	93	$	—	$	—	$	3,292	$	—
Residential:
Number of Contracts	—		—		—		—		—		1
Balance at time of TDR	$	—	$	—	$	—	$	—	$	—	$	79
Totals:
Number of Contracts	18		3		—		—		4		1
Balance at time of TDR	$	11,558	$	411	$	—	$	—	$	3,292	$	79



(dollars in thousands)	Granting a Material Extension of Time		Forbearance Agreement		Accepting Interest Only for a Period of Time		Adjusting the Interest Rate		Change in Amortization Period		Combination of Concessions
Nine Months Ended
September 30, 2012
Commercial and industrial:
Number of Contracts	1		—		—		1		—		—
Balance at time of TDR	$	1,262	$	—	$	—	$	3,404	$	—	$	—
Commercial construction and land development:
Number of Contracts	5		—		—		—		—		1
Balance at time of TDR	$	3,396	$	—	$	—	$	—	$	—	$	3,546
Commercial real estate:
Number of Contracts	1		—		—		—		—		1
Balance at time of TDR	$	68	$	—	$	—	$	—	$	—	$	3,275
Residential:
Number of Contracts	2		—		—		—		—		1
Balance at time of TDR	$	329	$	—	$	—	$	—	$	—	$	195
Consumer:
Number of Contracts	4		—		—		—		—		—
Balance at time of TDR	$	859	$	—	$	—	$	—	$	—	$	—
Totals:
Number of Contracts	13		—		—		1		—		3
Balance at time of TDR	$	5,914	$	—	$	—	$	3,404	$	—	$	7,016



(dollars in thousands)	Granting a Material Extension of Time		Forbearance Agreement		Accepting Interest Only for a Period of Time		Adjusting the Interest Rate		Change in Amortization Period		Combination of Concessions
Nine Months Ended
September 30, 2011
Commercial and industrial:
Number of Contracts	1		3		—		—		—		—
Balance at time of TDR	$	555	$	12,042	$	—	$	—	$	—	$	—
Owner occupied real estate:
Number of Contracts	—		1		—		—		—		—
Balance at time of TDR	$	—	$	87	$	—	$	—	$	—	$	—
Commercial construction and land development:
Number of Contracts	17		1		—		—		—		—
Balance at time of TDR	$	11,003	$	231	$	—	$	—	$	—	$	—
Commercial real estate:
Number of Contracts	—		1		—		—		4		—
Balance at time of TDR	$	—	$	93	$	—	$	—	$	3,292	$	—
Residential:
Number of Contracts	—		—		1		—		—		1
Balance at time of TDR	$	—	$	—	$	194	$	—	$	—	$	79
Totals:
Number of Contracts	18		6		1		—		4		1
Balance at time of TDR	$	11,558	$	12,453	$	194	$	—	$	3,292	$	79

The following table represents loans receivable modified as TDRs within the 12 months previous to September 30, 2012 and 2011, respectively, which subsequently defaulted during the three and nine month periods ended September 30, 2012 and 2011, respectively. The Bank's policy is to consider a loan past due or delinquent if payment is not received on or before the due date.



Troubled Debt Restructurings That Subsequently Payment Defaulted:	Three Months Ended						Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial and industrial	1	$	2	—	$	—	2	$	177	2	$	8,135
Commercial tax-exempt	—	—		—	—		—	—		—	—
Owner occupied real estate	—	—		—	—		—	—		—	—
Commercial construction and land development	—	—		—	—		4	2,575		1	219
Commercial real estate	—	—		—	—		2	1,011		—	—
Residential	1	65		—	—		3	609		1	187
Consumer	—	—		—	—		1	178		—	—
Total	2	$	67	—	$	—	12	$	4,550	4	$	8,541

Of the 12 contracts that subsequently payment defaulted during the nine month period ended September 30, 2012, seven contracts totaling $3.0 million were still in payment default at September 30, 2012. Three of the seven contracts totaling $2.4 million were less than 30 days past due.

All TDRs are considered impaired and, therefore, are individually evaluated for impairment in the calculation of the ALL. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the ALL.