Loans Receivable and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2011

Loans Receivable and Allowance for Loan Losses [Abstract]

Loans Receivable and Allowance for Loan Losses

Note 3: Loans Receivable and Allowance for Loan Losses

A summary of the Company’s loan portfolio at September 30, 2011 and December 31, 2010 is as follows:

	September 30,			December 31,
	2011			2010
Real Estate
Commercial	$	210,128,617		$	228,842,489
Residential		151,147,445			187,058,318
Construction		12,857,291			63,889,083
Construction to permanent		10,864,395			10,331,043
Commercial		28,553,155			14,573,790
Consumer home equity		48,225,020			42,884,962
Consumer installment		2,163,798			1,932,763
Total Loans		463,939,721			549,512,448
Premiums on purchased loans		234,884			242,426
Net deferred costs		116,348			150,440
Allowance for loan losses		(11,157,678	)		(15,374,101	)
Loans receivable, net	$	453,133,275		$	534,531,213

The changes in the allowance for loan losses for the periods shown are as follows:

	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Balance, beginning of period	$	11,399,727		$	13,989,069		$	15,374,101		$	15,794,118
Provision for loan losses		—			5,025,000			8,464,427			6,264,000
Loans charged-off		(217,788	)		(1,917,286	)		(7,405,926	)		(5,094,670	)
Recoveries of loans previously charged-off		16,086			53,345			779,736			186,680
Transferred to loans held-for-sale		(40,347	)		—			(6,054,660	)		—
Balance, end of period	$	11,157,678		$	17,150,128		$	11,157,678		$	17,150,128

At September 30, 2011 and December 31, 2010, the unpaid balances of loans delinquent 90 days or more and still accruing interest were $5.8 million and $3.4 million, respectively. At September 30, 2011, this was comprised of seven loans. Six of the loans totaling $5.3 million are past their maturity dates but are current for payment and are well secured. One loan is delinquent 60 days as for payment, is past maturity, but is well secured and in the process of collection. The Company has agreed to forbear from pursuing its remedies while the borrowers arrange refinancing from other financial institutions.

The unpaid principal balances of loans on nonaccrual status and considered impaired were $21.8 million at September 30, 2011 and $89.1 million at December 31, 2010. On March 24, 2011, the Company completed the sale of certain non-performing assets that included 21 non-accruing loans with an aggregate net book value of $52.4 million (net of related specific reserves) and 4 other real estate owned (“OREO”) properties with an aggregate carrying value of $14.4 million. The sale of $66.8 million of non-performing assets was consummated for a cash purchase price of $60,602,036 which represented 90.7% of the Bank’s net book value for these assets.

If non-accrual loans had been performing in accordance with their contractual terms, the Company would have recorded approximately $0.4 million of additional income during the quarter ended September 30, 2011 and $1.9 million during the quarter ended September 30, 2010. If non-accrual loans had been performing in accordance with their contractual terms, the Company would have recorded approximately $1.9 million of additional income for the nine months ended September 30, 2011 and $5.3 million during the nine months ended September 30, 2010.

For the three months ended September 30, 2011 and 2010, the interest collected and recognized as income on impaired loans was approximately $4,000 and $362,000, respectively. For the nine months ended September 30, 2011 and 2010, the interest income collected and recognized on impaired loans was approximately $465,000 and $1,641,000 respectively. The average recorded investment in impaired loans for the three and nine months ended September 30, 2011 was $40.4 million and $54.0 million respectively.

At September 30, 2011, there were 13 loans totaling $27.7 million that were considered “troubled debt restructurings,” all of which are included in impaired loans, as compared to December 31, 2010 when there were 19 loans totaling $38.0 million, all of which were included in impaired loans. At September 30, 2011, 6 of the 13 loans aggregating $16.1 million were accruing loans and 7 loans aggregating $11.6 million were non-accruing loans.

The Company’s lending activities are conducted principally in Fairfield and New Haven Counties in Connecticut and Westchester County, New York City and Long Island, New York. The Company originates commercial real estate loans, commercial business loans and a variety of consumer loans. In addition, the Company had originated loans for the construction of residential homes, residential developments and for land development projects. A moratorium on all new construction loans was instituted by management in July 2008. All residential and commercial mortgage loans are collateralized primarily by first or second mortgages on real estate. The ability and willingness of borrowers to satisfy their loan obligations is dependent in large part upon the status of the regional economy and regional real estate market. Accordingly, the ultimate collectability of a substantial portion of the loan portfolio and the recovery of a substantial portion of any resulting real estate acquired is susceptible to changes in market conditions.

The Company has established credit policies applicable to each type of lending activity in which it engages, evaluates the creditworthiness of each customer and, in most cases, extends credit of up to 75% of the market value of the collateral at the date of the credit extension depending on the Company’s evaluation of the borrowers’ creditworthiness and type of collateral. In the case of construction loans, the maximum loan-to-value was 65% of the “as completed” market value. The market value of collateral is monitored on an ongoing basis and additional collateral is obtained when warranted. Real estate is the primary form of collateral. Other important forms of collateral are accounts receivable, inventory, other business assets, marketable securities and time deposits. While collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment to be based on the borrower’s ability to generate continuing cash flows on all loans not related to construction.

Risk characteristics of the Company’s portfolio classes include the following:

Commercial Real Estate Loans — In underwriting commercial real estate loans, the Company evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loans. Repayment of such loans may be negatively impacted should the borrower default or should there be a substantial decline in the value of the property securing the loan or a decline in the general economic conditions. Where the owner occupies the property, the Company also evaluates the business’s ability to repay the loan on a timely basis. In addition, the Company may require personal guarantees, lease assignments and/or the guarantee of the operating company when the property is owner occupied. These types of loans may involve greater risks than other types of lending, because payments on such loans are often dependent upon the successful operation of the business involved, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions affecting the borrowers’ business.

Construction Loans — Construction loans are short-term loans (generally up to 18 months) secured by land for both residential and commercial development. The loans are generally made for acquisition and improvements. Funds are disbursed as phases of construction are completed.

In the past, the Company funded construction of single family homes, when no contract of sale exists, based upon the experience of the builder, the financial strength of the owner, the type and location of the property and other factors. Construction loans are generally personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by the builders’ inability to complete construction, by a downturn in the new construction market, by a significant increase in interest rates or by a decline in general economic conditions. The Company has had a moratorium in place since mid-2008 on new speculative construction loans.

Residential Real Estate Loans — Various loans secured by residential real estate properties are offered by the Company, including 1-4 family residential mortgages, multi-family residential loans and a variety of home equity line of credit products. Repayment of such loans may be negatively impacted should the borrower default, should there be a significant decline in the value of the property securing the loan or should there be a decline in general economic conditions.

Commercial and Industrial Loans — The Company’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses and professionals. These loans are usually made to finance the purchase of inventory, new or used equipment or other short or long-term working capital purposes. These loans are generally secured by corporate assets, often with real estate as secondary collateral, but are also offered on an unsecured basis. In granting this type of loan, the Company primarily looks to the borrower’s cash flow as the source of repayment with collateral and personal guarantees, where obtained, as a secondary source. Commercial loans are often larger and may involve greater risks than other type of loans offered by the Company. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, management’s inability to effectively manage the business, claims of others against the borrower’s assets which may take priority over the Company’s claims against assets, death or disability of the borrower or loss of market for the borrower’s products or services.

Other Loans — The Company also offers installment loans and reserve lines of credit to individuals. Repayments of such loans are often dependent on the personal income of the borrower which may be negatively impacted by adverse changes in economic conditions. The Company does not place an emphasis on originating these types of loans.

The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burdened ratios.

The following table sets forth activity in our allowance for loan losses, by loan type, for the period ended September 30, 2011. The following table also details the amount of loans receivable, net, that are evaluated individually, and collectively, for impairment, and the related portion of allowance for loan losses that is allocated to each loan portfolio segment.

			Commercial Real						Construction
Three months ended September 30, 2011	Commercial		Estate			Construction			to Permanent			Residential			Consumer		Unallocated		Total
Allowance for loan losses:
Beginning Balance	$	885,310	$	6,437,699		$	1,340,939		$	885,052		$	1,245,489		$	604,058	$	1,180	$	11,399,727
Charge-offs		—		—			(217,788	)		—			—			—		—		(217,788	)
Recoveries		—		14,987			499			—			—			600		—		16,086
Transferred to loans held-for-sale		—		—			(40,347	)		—			—			—		—		(40,347	)
Provision		206,481		(118,612	)		(365,592	)		(1,741	)		(45,348	)		48,312		276,500		—
Ending Balance	$	1,091,791	$	6,334,074		$	717,711		$	883,311		$	1,200,141		$	652,970	$	277,680	$	11,157,678
Ending balance: individually evaluated for impairment	$	383,678	$	1,349,634		$	31,520		$	791,962		$	182,071		$	151,500	$	—	$	2,890,365
Ending balance: collectively evaluated for impairment	$	708,113	$	4,984,440		$	686,191		$	91,349		$	1,018,070		$	501,470	$	277,680	$	8,267,313
Total Allowance for Loan Losses	$	1,091,791	$	6,334,074		$	717,711		$	883,311		$	1,200,141		$	652,970	$	277,680	$	11,157,678
Total Loans ending balance	$	28,553,155	$	210,128,617		$	12,857,291		$	10,864,395		$	151,147,445		$	50,388,818	$	—	$	463,939,721
Ending balance: individually evaluated for impairment	$	699,379	$	11,708,562		$	1,545,001		$	8,555,062		$	13,926,561		$	1,417,742	$	—	$	37,852,307
Ending balance: collectively evaluated for impairment	$	27,853,776	$	198,420,055		$	11,312,290		$	2,309,333		$	137,220,884		$	48,971,076	$	—	$	426,087,414

			Commercial Real						Construction
Nine months ended September 30, 2011	Commercial		Estate			Construction			to Permanent		Residential			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	441,319	$	7,632,355		$	3,478,058		$	491,446	$	2,363,838		$	578,612		$	388,473		$	15,374,101
Charge-offs		—		(2,736,140	)		(3,049,828	)		—		(1,458,199	)		(161,759	)		—			(7,405,926	)
Recoveries		240		18,776			461,781			—		—			298,939			—			779,736
Transferred to loans held-for-sale		—		(963,461	)		(1,409,701	)		—		(3,681,498	)		—			—			(6,054,660	)
Provision		650,232		2,382,544			1,237,401			391,865		3,976,000			(62,822	)		(110,793	)		8,464,427
Ending Balance	$	1,091,791	$	6,334,074		$	717,711		$	883,311	$	1,200,141		$	652,970		$	277,680		$	11,157,678
Ending balance: individually evaluated for impairment	$	383,678	$	1,349,634		$	31,520		$	791,962	$	182,071		$	151,500		$	—		$	2,890,365
Ending balance: collectively evaluated for impairment	$	708,113	$	4,984,440		$	686,191		$	91,349	$	1,018,070		$	501,470		$	277,680		$	8,267,313
Total Allowance for Loan Losses	$	1,091,791	$	6,334,074		$	717,711		$	883,311	$	1,200,141		$	652,970		$	277,680		$	11,157,678
Total Loans ending balance	$	28,553,155	$	210,128,617		$	12,857,291		$	10,864,395	$	151,147,445		$	50,388,818		$	—		$	463,939,721
Ending balance: individually evaluated for impairment	$	699,379	$	11,708,562		$	1,545,001		$	8,555,062	$	13,926,561		$	1,417,742		$	—		$	37,852,307
Ending balance : collectively evaluated for impairment	$	27,853,776	$	198,420,055		$	11,312,290		$	2,309,333	$	137,220,884		$	48,971,076		$	—		$	426,087,414

The Company monitors the credit quality of its loans receivable in an ongoing manner. Credit quality is monitored by reviewing certain credit quality indicators. Management has determined that loan-to-value ratios (LTVs), (at period end) and internally assigned risk ratings are the key credit quality indicators that best help management monitor the credit quality of the Company’s loans receivable. Loan-to-value ratios used by management in monitoring credit quality are based on current period loan balances and original values at time of origination (unless a current appraisal has been obtained as a result of the loan being deemed impaired or the loan is a maturing construction loan).

Appraisals on properties securing impaired loans and Other Real Estate Owned are updated annually. Additionally, appraisals on construction loans are updated four months in advance of scheduled maturity dates. We update our impairment analysis monthly based on the most recent appraisal as well as other factors (such as senior lien positions, e.g. property taxes), and we are using published information regarding actual median home sales prices in the towns/counties where our collateral is located in CT and NY.

The majority of the Company’s impaired loans have been resolved through courses of action other than via bank liquidations of real estate collateral through OREO. These include normal loan payoffs, the traditional workout process, triggering personal guarantee obligations, and troubled debt restructurings. However, as loan workout efforts progress to a point where the bank’s liquidation of real estate collateral is the likely outcome, the impairment analysis is updated to reflect actual recent experience with bank sales of OREO properties.

A disposition discount is built into our impairment analysis and reflected in our allowance once a property is determined to be a likely OREO (e.g. foreclosure is probable). To determine the discount we compare the actual sales prices of our OREO properties to the appraised value that was obtained as of the date when we took title to the property. The difference is the bank-owned disposition discount.

The Company has a risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a risk rating to each loan in their portfolio at origination. When the lender learns of important financial developments, the risk rating is reviewed accordingly, and adjusted if necessary. Similarly, the Loan Committee can adjust a risk rating. The Loan Workout Committee meets on a regular basis and reviews loans rated “special mention” or worse. In addition, the Company engages a third party independent loan reviewer that performs semi-annual reviews of a sample of loans, validating the Bank’s risk ratings assigned to such loans. The risk ratings play an important role in the establishment of the loan loss provision and to confirm the adequacy of the allowance for loan losses.

When assigning a risk rating to a loan, management utilizes the Bank’s internal nine-point risk rating system. Loans deemed to be “acceptable quality” are rated 1 through 5, with a rating of 1 established for loans with minimal risk and borrowers exhibiting the strongest financial condition. Loans rated 1 — 5 are considered “Pass”. Loans that are deemed to be of “questionable quality” are rated 6 (special mention). An asset is considered “special mention” when it has a potential weakness based on objective evidence, but does not currently expose the Company to sufficient risk to warrant classification in one of the following categories. Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. An asset is considered “substandard” if it is not adequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the “distinct possibility” that the Company will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.”

Charge-off generally commences in the month that the loan is classified “doubtful” and is fully charged off within six months of such classification. If the account is classified “loss” the full balance is charged off immediately. The full balance is charged off regardless of the potential recovery from the sale of the collateral. This amount is recognized as a recovery once the collateral is sold.

In accordance with FFIEC (“Federal Financial Institutions Examination Council”) published policies establishing uniform criteria for the classification of retail credit based on delinquency status, “Open-end” credits are charged-off when 180 days delinquent and “Closed-end” credits are charged-off when 120 days delinquent. Typically, consumer installment loans are charged off no later than 90 days past due.

The following table details the credit risk exposure of loans receivable, by loan type and credit quality indicator at September 30, 2011:

CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY

													Construction to
	Commercial				Commercial Real Estate				Construction				Permanent				Residential Real Estate				Consumer
LTVs:	< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		Other		Total
Internal Risk Rating
Pass	$	22,015,837	$	760,654	$	138,358,750	$	6,203,715	$	—	$	—	$	600,000	$	—	$	95,563,057	$	32,641,241	$	44,474,523	$	501,306	$	680,201	$	341,799,284
Special Mention		586,780		168,175		25,926,653		4,601,276		9,594,291		—		1,709,333		—		5,318,049		2,400,000		274,390		3,029,362		—		53,608,309
Substandard & Doubtful		4,674,621		347,088		13,821,012		21,217,211		154,396		3,108,604		—		8,555,062		4,111,951		11,113,147		11,294		1,417,742		—		68,532,128
	$	27,277,238	$	1,275,917	$	178,106,415	$	32,022,202	$	9,748,687	$	3,108,604	$	2,309,333	$	8,555,062	$	104,993,057	$	46,154,388	$	44,760,207	$	4,948,410	$	680,201	$	463,939,721

CREDIT RISK PROFILE

			Commercial Real				Construction to		Residential
	Commercial		Estate		Construction		Permanent		Real Estate		Consumer		Totals
Performing	$	27,853,776	$	198,660,360	$	11,312,289	$	7,214,333	$	147,727,635	$	49,395,078	$	442,163,471
Non Performing		699,379		11,468,257		1,545,002		3,650,062		3,419,810		993,740		21,776,250
Total	$	28,553,155	$	210,128,617	$	12,857,291	$	10,864,395	$	151,147,445	$	50,388,818	$	463,939,721

The following table details the credit risk exposure of loans receivable, by loan type and credit quality indicator at December 31, 2010:

CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY

													Construction to
	Commercial				Commercial Real Estate				Construction				Permanent				Residential Real Estate				Consumer
LTVs:	< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		< 75%		>= 75%		Other		Total
Internal Risk Rating
Pass	$	11,225,261	$	256,296	$	124,645,152	$	9,449,059	$	1,272,028	$	350,000	$	—	$	—	$	91,534,348	$	51,996,851	$	35,192,214	$	—		1,917,783	$	327,838,992
Special Mention		704,053		181,600		35,253,018		4,645,738		15,059,704		4,485,209		1,709,333		—		2,088,700		2,907,285		3,146,244		2,879,621		—		73,060,505
Substandard & Doubtful		1,424,161		782,419		13,792,482		41,057,040		10,712,146		32,009,996		—		8,621,710		18,052,003		20,479,131		99,235		1,567,648		14,980		148,612,951
	$	13,353,475	$	1,220,315	$	173,690,652	$	55,151,837	$	27,043,878	$	36,845,205	$	1,709,333	$	8,621,710	$	111,675,051	$	75,383,267	$	38,437,693	$	4,447,269	$	1,932,763	$	549,512,448

CREDIT RISK PROFILE

			Commercial Real				Construction to		Residential
	Commercial		Estate		Construction		Permanent		Real Estate		Consumer		Totals
Performing	$	13,358,840	$	202,054,317	$	33,003,060	$	8,951,208	$	159,270,574	$	43,724,749	$	460,362,748
Non Performing		1,214,950		26,788,172		30,886,023		1,379,835		27,787,744		1,092,976		89,149,700
Total	$	14,573,790	$	228,842,489	$	63,889,083	$	10,331,043	$	187,058,318	$	44,817,725	$	549,512,448

Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The recorded balance of these nonaccrual loans was $21.8 million and $89.1 million at September 30, 2011, and December 31, 2010 respectively. Generally, loans are placed on non-accruing status when they become 90 days or more delinquent, or earlier if deemed appropriate, and remain on non-accrual status until they are brought current, have six months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status. Additionally, certain loans that cannot demonstrate sufficient global cash flow to continue loan payments in the future and certain trouble debt restructures (TDRs) are placed on non-accrual status.

The following table sets forth the detail, and delinquency status, of non-accrual loans and past due loans at September 30, 2011:

	Non-Accrual and Past Due Loans
													Total Non-
											>90 Days Past		Accrual and
	31-60 Days		61-90 Days		Greater Than		Total Past				Due and		Past Due
2011	Past Due		Past Due		90 Days		Due		Current		Accruing		Loans
Commercial
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Special Mention		—		—		—		—		—		—		—
Substandard		—		172,088		410,170		582,258		117,121		448,000		1,147,379
Total Commercial	$	—	$	172,088	$	410,170	$	582,258	$	117,121	$	448,000	$	1,147,379
Commercial Real Estate
Pass	$	—	$	—	$	—	$	—	$	—	$	574,893	$	574,893
Substandard	$	—	$	—	$	7,745,806	$	7,745,806	$	3,722,450	$	3,099,805	$	14,568,061
Total Commercial Real Estate	$	—	$	—	$	7,745,806	$	7,745,806	$	3,722,450	$	3,674,698	$	15,142,954
Construction Substandard	$	—	$	—	$	289,397	$	289,397	$	1,255,604	$	1,717,999	$	3,263,000
Total Construction	$	—	$	—	$	289,397	$	289,397	$	1,255,604	$	1,717,999	$	3,263,000
Construction to Permanent Substandard	$	—	$	—	$	1,127,875	$	1,127,875	$	2,522,187	$	—	$	3,650,062
Total Construction to Permanent	$	—	$	—	$	1,127,875	$	1,127,875	$	2,522,187	$	—	$	3,650,062
Residential Real Estate Substandard	$	—	$	—	$	3,419,810	$	3,419,810	$	—	$	—	$	3,419,810
Total Residential Real Estate	$	—	$	—	$	3,419,810	$	3,419,810	$	—	$	—	$	3,419,810
Consumer Substandard	$	—	$	—	$	993,742	$	993,742	$	—	$	—	$	993,742
Total Consumer	$	—	$	—	$	993,742	$	993,742	$	—	$	—	$	993,742
Total	$	—	$	172,088	$	13,986,800	$	14,158,888	$	7,617,362	$	5,840,697	$	27,616,947

The following table sets forth the detail, and delinquency status, of non-accrual loans and past due loans at December 31, 2010:

	Non-Accrual and Past Due Loans
													Total Non-
											>90 Days Past		Accrual and
	31-60 Days		61-90 Days		Greater Than		Total Past				Due and		Past Due
2010	Past Due		Past Due		90 Days		Due		Current		Accruing		Loans
Commercial
Special Mention	$	—	$	—	$	—	$	—	$	—	$	63,289	$	63,289
Substandard		350,000		100,000		698,767		1,148,767		66,183		175,000		1,389,950
Total Commercial	$	350,000	$	100,000	$	698,767	$	1,148,767	$	66,183	$	238,289	$	1,453,239
Commercial Real Estate Substandard	$	269,672	$	6,449,096	$	13,521,123	$	20,239,891	$	6,548,281	$	—	$	26,788,172
Total Commercial Real Estate	$	269,672	$	6,449,096	$	13,521,123	$	20,239,891	$	6,548,281	$	—	$	26,788,172
Construction Substandard	$	1,517,943	$	4,059,516	$	13,736,985	$	19,314,444	$	11,571,579	$	3,135,953	$	34,021,976
Total Construction	$	1,517,943	$	4,059,516	$	13,736,985	$	19,314,444	$	11,571,579	$	3,135,953	$	34,021,976
Construction to Permanent Substandard	$	—	$	—	$	—	$	—	$	1,379,835	$	—	$	1,379,835
Total Construction to Permanent	$	—	$	—	$	—	$	—	$	1,379,835	$	—	$	1,379,835
Residential Real Estate Substandard	$	—	$	—	$	15,897,248	$	15,897,248	$	11,890,496	$	—	$	27,787,744
Total Residential Real Estate	$	—	$	—	$	15,897,248	$	15,897,248	$	11,890,496	$	—	$	27,787,744
Consumer Substandard	$	—	$	—	$	1,092,976	$	1,092,976	$	—	$	—	$	1,092,976
Total Consumer	$	—	$	—	$	1,092,976	$	1,092,976	$	—	$	—	$	1,092,976
Total	$	2,137,615	$	10,608,612	$	44,947,099	$	57,693,326	$	31,456,374	$	3,374,242	$	92,523,942

These non-accrual and past due amounts included loans deemed to be impaired of $21.8 million and $89.1 million at September 30, 2011, and December 31, 2010, respectively. Loans past due ninety days or more and still accruing interest were approximately $5.8 million and $3.4 million at September 30, 2011, and December 31, 2010 respectively, and consisted of 7 loans at September 30, 2011. Six of the loans are past their maturity, but are well secured and in the process of collection. One loan is 60 days delinquent as for payment, is past maturity, but is well secured and in the process of collection.

The following table sets forth the detail and delinquency status of loans receivable, by performing and non-performing loans at September 30, 2011.

	Performing (Accruing) Loans										Total Non-
			Greater						Total		Accrual and
	31-60 Days		Than 60		Total Past				Performing		Past Due
2011	Past Due		Days		Due		Current		Loans		Loans		Total Loans
Commercial
Pass	$	18,862	$	—	$	18,862	$	22,757,629	$	22,776,491	$	—	$	22,776,491
Special Mention		—		—		—		754,955		754,955		—		754,955
Substandard		242,868		—		242,868		3,631,462		3,874,330		1,147,379		5,021,709
Total Commercial	$	261,730	$	—	$	261,730	$	27,144,046	$	27,405,776	$	1,147,379	$	28,553,155
Commercial Real Estate
Pass	$	1,918,308	$	—	$	1,918,308	$	142,069,265	$	143,987,573	$	574,893	$	144,562,466
Special Mention		400,516		—		400,516		30,127,412		30,527,928		—		30,527,928
Substandard		617,139		—		617,139		19,853,023		20,470,162		14,568,061		35,038,223
Total Commercial Real Estate	$	2,935,963	$	—	$	2,935,963	$	192,049,700	$	194,985,663	$	15,142,954	$	210,128,617
Construction
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Special Mention		—		—		—		9,594,291		9,594,291		—		9,594,291
Substandard		—		—		—		—		—		3,263,000		3,263,000
Total Construction	$	—	$	—	$	—	$	9,594,291	$	9,594,291	$	3,263,000	$	12,857,291
Construction to Permanent
Pass	$	—	$	—	$	—	$	600,000	$	600,000	$	—	$	600,000
Special Mention		—		—		—		1,709,333		1,709,333		—		1,709,333
Substandard		—		—		—		4,905,000		4,905,000		3,650,062		8,555,062
Total Construction to Permanent	$	—	$	—	$	—	$	7,214,333	$	7,214,333	$	3,650,062	$	10,864,395
Residential Real Estate
Pass	$	148,285	$	—	$	148,285	$	128,056,013	$	128,204,298	$	—	$	128,204,298
Special Mention		—		—		—		7,718,049		7,718,049		—		7,718,049
Substandard		—		—		—		11,805,288		11,805,288		3,419,810		15,225,098
Total Residential Real Estate	$	148,285	$	—	$	148,285	$	147,579,350	$	147,727,635	$	3,419,810	$	151,147,445
Consumer
Pass	$	—	$	—	$	—	$	45,656,029	$	45,656,029	$	—	$	45,656,029
Special Mention		—		—		—		3,303,753		3,303,753		—		3,303,753
Substandard		—		—		—		435,294		435,294		993,742		1,429,036
Total Consumer	$	—	$	—	$	—	$	49,395,076	$	49,395,076	$	993,742	$	50,388,818
Total	$	3,345,978	$	—	$	3,345,978	$	432,976,796	$	436,322,774	$	27,616,947	$	463,939,721

The following table sets forth the detail and delinquency status of loans receivable, net, by performing and non-performing loans at December 31, 2010.

	Performing (Accruing) Loans										Total Non-
			Greater						Total		Accrual and
	31-60 Days		Than 60		Total Past				Perfoming		Past Due
2010	Past Due		Days		Due		Current		Loans		Loans		Total Loans
Commercial
Pass	$	—	$	—	$	—	$	11,481,557	$	11,481,557	$	—	$	11,481,557
Special Mention		—		—		—		822,364		822,364		63,289		885,653
Substandard		—		—		—		816,630		816,630		1,389,950		2,206,580
Total Commercial	$	—	$	—	$	—	$	13,120,551	$	13,120,551	$	1,453,239	$	14,573,790
Commercial Real Estate
Pass	$	—	$	—	$	—	$	134,094,210	$	134,094,210	$	—	$	134,094,210
Special Mention		—		—		—		39,898,756		39,898,756		—		39,898,756
Substandard		—		—		—		28,061,351		28,061,351		26,788,172		54,849,523
Total Commercial Real Estate	$	—	$	—	$	—	$	202,054,317	$	202,054,317	$	26,788,172	$	228,842,489
Construction
Pass	$	—	$	—	$	—	$	1,622,029	$	1,622,029	$	—	$	1,622,029
Special Mention		—		—		—		19,544,913		19,544,913		—		19,544,913
Substandard		—		—		—		8,700,165		8,700,165		34,021,976		42,722,141
Total Construction	$	—	$	—	$	—	$	29,867,107	$	29,867,107	$	34,021,976	$	63,889,083
Construction to Permanent
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Special Mention		—		—		—		1,709,333		1,709,333		—		1,709,333
Substandard		1,127,875		—		1,127,875		6,114,000		7,241,875		1,379,835		8,621,710
Total Construction to Permanent	$	1,127,875	$	—	$	1,127,875	$	7,823,333	$	8,951,208	$	1,379,835	$	10,331,043
Residential Real Estate
Pass	$	198,357	$	—	$	198,357	$	143,332,842	$	143,531,199	$	—	$	143,531,199
Special Mention		2,907,285		—		2,907,285		2,088,700		4,995,985		—		4,995,985
Substandard		—		—		—		10,743,390		10,743,390		27,787,744		38,531,134
Total Residential Real Estate	$	3,105,642	$	—	$	3,105,642	$	156,164,932	$	159,270,574	$	27,787,744	$	187,058,318
Consumer
Pass	$	—	$	—	$	—	$	37,109,997	$	37,109,997	$	—	$	37,109,997
Special Mention		168,589		—		168,589		5,857,276		6,025,865		—		6,025,865
Substandard		—		—		—		588,887		588,887		1,092,976		1,681,863
Total Consumer	$	168,589	$	—	$	168,589	$	43,556,160	$	43,724,749	$	1,092,976	$	44,817,725
Total	$	4,402,106	$	—	$	4,402,106	$	452,586,400	$	456,988,506	$	92,523,942	$	549,512,448

The following table summarizes impaired loans as of September 30, 2011:

	Recorded		Unpaid Principal
	Investment		Balance		Related Allowance
2011
With no related allowance recorded:
Commercial	$	173,208	$	492,972	$	—
Commercial Real Estate		4,675,439		5,402,165		—
Construction		1,410,001		1,414,048		—
Construction to Permanent		4,905,000		4,905,000		—
Residential		9,251,452		9,251,452		—
Consumer		993,742		1,038,640		—
Total:	$	21,408,842	$	22,504,277	$	—
With an allowance recorded:
Commercial	$	526,171	$	553,663	$	383,678
Commercial Real Estate		7,033,123		8,594,940		1,349,634
Construction		135,000		286,625		31,520
Construction to Permanent		3,650,062		3,761,875		791,962
Residential		4,675,109		4,675,110		182,071
Consumer		424,000		424,000		151,500
Total:	$	16,443,465	$	18,296,213	$	2,890,365
Commercial	$	699,379	$	1,046,635	$	383,678
Commercial Real Estate		11,708,562		13,997,105		1,349,634
Construction		1,545,001		1,700,673		31,520
Construction to Permanent		8,555,062		8,666,875		791,962
Residential		13,926,561		13,926,562		182,071
Consumer		1,417,742		1,462,640		151,500
Total:	$	37,852,307	$	40,800,490	$	2,890,365

The recorded investment of impaired loans at September 30, 2011 and December 31, 2010 was $37.9 million and $100.7 million respectively, with related allowances of $2.9 million and $6.0 million, respectively.

Included in the table above at September 30, 2011, are 21 loans with carrying balances of $21.4 million that required no specific reserves. The allowance for loan losses is comprised of 29 non-accruing loans aggregating $21.8 million and six accruing TDR loans aggregating $16.1 million. Loans that did not require specific reserves at September 30, 2011 have sufficient collateral values, less costs to sell, supporting the carrying balances of the loans. In some cases, there may be no specific reserves because the Company already charged-off the specific impairment. Once a borrower is in default, the Company is under no obligation to advance additional funds on unused commitments.

The following table summarizes impaired loans as of December 31, 2010:

	Recorded		Unpaid Principal
	Investment		Balance		Related Allowance
2010
With no related allowance recorded:
Commercial	$	1,077,512	$	1,828,917	$	—
Commercial Real Estate		12,770,033		13,052,924		—
Construction		14,060,251		15,133,253		—
Construction to Permanent		—		—		—
Residential		24,513,106		24,737,293		—
Consumer		1,516,977		1,883,585		—
Total:	$	53,937,879	$	56,635,972	$	—
With an allowance recorded:
Commercial	$	137,438	$	151,633	$	76,045
Commercial Real Estate		15,696,205		19,509,247		2,300,199
Construction		16,825,772		19,368,468		1,895,326
Construction to Permanent		1,379,835		1,425,000		183,835
Residential		12,706,762		12,826,248		1,556,077
Consumer		—		—		—
Total:	$	46,746,012	$	53,280,596	$	6,011,482
Commercial	$	1,214,950	$	1,980,550	$	76,045
Commercial Real Estate		28,466,238		32,562,171		2,300,199
Construction		30,886,023		34,501,721		1,895,326
Construction to Permanent		1,379,835		1,425,000		183,835
Residential		37,219,868		37,563,541		1,556,077
Consumer		1,516,977		1,883,585		—
Total:	$	100,683,891	$	109,916,568	$	6,011,482

Included in the table above at December 31, 2010, are loans with carrying balances of $53.9 million that required no specific reserves in our allowance for loan losses. Loans that did not require specific reserves at December 31, 2010 have sufficient collateral values, less costs to sell, supporting the carrying balances of the loans.

On a case-by-case basis, the Company may agree to modify the contractual terms of a borrower’s loan to remain competitive and assist customers who may be experiencing financial difficulty, as well as preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan classified is a troubled debt restructured loan.

As a result of the adoption of ASU 2011-02, the Company reassessed all restructurings occurred on or after January 1, 2011 for identification as TDRs and has concluded that there were no additional TDRs identified that have not been previously disclosed.

The following table presents the total troubled debt restructured loans as of September 30, 2011:

	Accrual				Non-accrual				Total
	# of				# of				# of
	Loans		Amount		Loans		Amount		Loans		Amount
Commercial Real Estate		3	$	4,794,528		1	$	2,155,000		4	$	6,949,528
Residential Real Estate		3		10,506,751		—		—		3		10,506,751
Construction		—		—		1		1,255,605		1		1,255,605
Construction to permanent		1		4,905,000		3		3,650,062		4		8,555,062
Consumer home equity		1		424,000		—		—		1		424,000
Total Troubled Debt Restructurings		8	$	20,630,279		5	$	7,060,667		13	$	27,690,946

There were no loans modified in a troubled debt restructuring for the three months ended September 30, 2011.

The following table summarizes loans that were modified in a troubled debt restructuring during the nine months ended September 30, 2011.

	Nine months ended September 30, 2011
			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
	Relationships		Investment		Investment
Troubled Debt Restructurings
Commercial Real Estate		2	$	3,579,149	$	3,506,461
Residential Real Estate		1		2,884,141		2,884,141
Construction to permanent		5		12,560,969		8,555,062
Total Troubled Debt Restructurings		8	$	19,024,259	$	14,945,664

The eight loans represented above have been reclassified as troubled debt restructurings during the first nine months of 2011.

Substantially all of our troubled debt restructured loan modifications involve lowering the monthly payments on such loans through either a reduction in interest rate below market rate, an extension of the term of the loan, or a combination of these two methods. These modifications rarely result in the forgiveness of principal or accrued interest. In addition, we frequently obtain additional collateral or guarantor support when modifying commercial loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

In addition to the above, during the nine months ended September 30, 2011, there was one commercial real estate loan modified on March 31, 2011 for $3.3 million that released a guarantor having financial difficulty to allow the borrower to recapitalize and provide additional time in which to develop an exit plan to pay off the debt.

During the nine months ended September 30, 2011, two of the troubled debt restructurings modified had a payment default. One default was a residential loan for $3.5 million and is subsequently an OREO, and the other default was a commercial loan for $1.3 million, and is currently in the foreclosure process.

All troubled debt restructurings are impaired loans, which are individually evaluated for impairment, as discussed above, and were included in the allowance for loan losses.