7. TROUBLED DEBT RESTRUCTURINGS

9 Months Ended

Sep. 30, 2012

Troubled Debt Restructuring, Debtor, Other

7. TROUBLED DEBT RESTRUCTURINGS

At September 30, 2012, there were 40 loans and leases that were considered to be troubled debt restructurings. Of these loans and leases, 30 were modified and are currently performing (less than ninety days past due) totaling $16,296,000 and ten are considered nonperforming (and included in the $6,777,000 discussed in Note 6), totaling $2,449,000. At September 30, 2012 and December 31, 2011, there were no unfunded commitments on those loans considered troubled debt restructures. See also “Impaired Loans and Leases” in Item 2.

The Company has allocated $519,000 and $535,000 of specific reserves to loans whose terms have been modified as troubled debt restructurings as of September 30, 2012 and December 31, 2011.

During the nine-month period ended September 30, 2012, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

The following table presents loans by class modified as troubled debt restructurings during the three months ended September 30, 2012 (dollars in thousands):

			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number		Recorded		Recorded
	of Loans		Investment		Investment
Troubled debt restructurings:
Commercial		2	$	618	$	618
Real estate – commercial		3		1,167		1,129
Real estate – multi-family		2		19		19
Total		7	$	1,804	$	1,766

The following table presents loans by class modified as troubled debt restructurings during the nine months ended September 30, 2012 (dollars in thousands):

			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number		Recorded		Recorded
	of Loans		Investment		Investment
Troubled debt restructurings:
Commercial		7	$	1,311	$	1,311
Real estate – commercial		9		4,676		4,638
Real estate – multi-family		2		539		539
Real estate – residential		3		921		808
Other – agriculture		1		410		410
Other – consumer		4		50		50
Total		26	$	7,907	$	7,756

The troubled debt restructurings described above increased the allowance for loan and lease losses by $146,000 and resulted in charge offs of $38,000 during the three months ended September 30, 2012 and increased the allowance for loan and lease losses by $329,000 and resulted in charge offs of $151,000 during the nine months ended September 30, 2012.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default (typically past due 90 days or more) within twelve months following the modification during the period indicated (dollars in thousands):

Nine months ended September 30, 2012	Number		Recorded
	of Loans		Investment
Troubled debt restructurings that subsequently defaulted:
Real estate – commercial		1	$	506
Consumer		1		5
Total		2	$	511

There were no payment defaults during the three months ended September 30, 2012 on troubled debt restructurings made in the preceding twelve months.

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