Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the outstanding unpaid principal balances, net of any deferred fees or costs, unearned income and the allowance for loan losses. Interest income on all loans, other than nonaccrual loans, is accrued over the term of the loans based on the amount of principal outstanding. Unearned income is amortized to income over the life of the loans, using the interest method.

The loan portfolio is segmented into commercial and consumer loans. These broad categories are further disaggregated into classes of loans used for analysis and reporting. Classes consist of (1) commercial, financial and agricultural, (2) commercial real estate, (3) real estate construction, (4) residential mortgage loans, (5) home equity loans, (6) obligations of states and political subdivisions and (7) personal loans.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is discontinued when the contractual payment of principal or interest has become 90 days past due or reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Corporation's policy to continue to accrue interest on loans over 90 days past due as long as they are (1) guaranteed or well secured and (2) there is an effective means of collection. When a loan is placed on non-accrual status, all unpaid interest credited to income in the current year is reversed against current period income and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectability of principal. Generally, accruals are resumed on loans only when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Corporation's intent is to hold loans in the portfolio until maturity. At the time the Corporation's intent is no longer to hold loans to maturity based on asset/liability management practices, the Corporation transfers loans from its portfolio to held for sale at fair value. Any write-down recorded upon transfer is charged against the allowance for loan losses. Any write-downs recorded after the initial transfers are recorded as a charge to other non-interest expense. Gains or losses recognized upon sale are included in other non-interest income.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management's estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management's estimate of losses inherent in its unfunded lending commitments and is recorded in other liabilities on the consolidated balance sheet, when necessary. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

For financial reporting purposes, the provision for loan losses charged to current operating income is based on management's estimates, and actual losses may vary from estimates. These estimates are reviewed and adjusted at least quarterly and are reported in earnings in the periods in which they become known. The loan loss provision for federal income tax purposes is based on current income tax regulations, which allow for deductions equal to net charge-offs.

The allowance for loan losses is maintained at a level considered adequate to offset probable losses on the Corporation's existing loans. The analysis of the allowance for loan losses relies heavily on changes in observable trends that may indicate potential credit weaknesses. Management's periodic evaluation of the adequacy of the allowance is based on the Bank's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for loan losses and may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management's comprehensive analysis of the loan portfolio, management believes the level of the allowance for loan losses as of September 30, 2011 to be adequate.

There are two components of the allowance: a specific component for loans that are deemed to be impaired; and a general component for contingencies.

A large commercial loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. (A "large" loan, or group of like-loans within one relationship, is defined as a commercial/business loan with an aggregate outstanding balance in excess of $150,000, or any other loan that management deems of similar characteristics inherent to the deficiencies of an impaired large loan by definition.) Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loans and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent. The estimated fair values of substantially all of the Corporation's impaired loans are measured based on the estimated fair value of the loan's collateral. For commercial loans secured with real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include the estimated costs to sell the property. For commercial loans secured by non-real estate collateral, estimated fair values are determined based on the borrower's financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For such loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The Bank generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a below-market-rate reduction in interest rate or an extension of a loan's stated maturity date. Nonaccrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a period of time after modification. Loans classified as troubled debt restructurings are designated as impaired.

The component of the allowance for contingencies relates to other loans that have been segmented into risk rated categories. The borrower's overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated quarterly or when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified as special mention have potential weaknesses that deserve management's close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have one or more well-defined weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis or current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Specific reserves may be established for larger, individual classified loans as a result of this evaluation, as discussed above. Remaining loans are categorized into large groups of smaller balance homogeneous loans and are collectively evaluated for impairment. This computation is generally based on historical loss experience adjusted for qualitative factors. The historical loss experience is averaged over a ten-year period for each of the portfolio segments. The ten-year timeframe was selected in order to capture activity over a wide range of economic conditions and has been consistently used for the past five years. The qualitative risk factors are reviewed for relevancy each quarter and include:

Each factor is assigned a value to reflect improving, stable or declining conditions based on management's best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Commercial, Financial and Agricultural Lending - The Corporation originates commercial, financial and agricultural loans primarily to businesses located in its primary market area and surrounding areas. These loans are used for various business purposes which include short-term loans and lines of credit to finance machinery and equipment purchases, inventory and accounts receivable. Generally, the maximum term for loans extended on machinery and equipment is shorter or does not exceed the projected useful life of such machinery and equipment. Most business lines of credit are written on demand and may be renewed annually.

Commercial loans are generally secured with short-term assets, however, in many cases, additional collateral, such as real estate is provided as additional security for the loan. Loan-to-value maximum values have been established by the Corporation and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports, accounts receivable aging reports, collateral appraisals, etc.

In underwriting commercial loans, an analysis of the borrower's character, capacity to repay the loan, the adequacy of the borrower's capital and collateral, as well as an evaluation of conditions affecting the borrower, is performed. Analysis of the borrower's past, present and future cash flows is also an important aspect of the Corporation's analysis.

Concentration analysis assists in identifying industry specific risk inherent in commercial, financial and agricultural lending. Mitigants include the identification of secondary and tertiary sources of repayment and appropriate increases in oversight.

Commercial loans generally present a higher level of risk than certain other types of loans due primarily to the effect of general economic conditions.

Commercial Real Estate Lending - The Corporation engages in commercial real estate lending in its primary market area and surrounding areas. The Corporation's commercial loan portfolio is secured primarily by residential housing, raw land and hotels. Generally, commercial real estate loans have terms that do not exceed 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property and are typically secured by personal guarantees of the borrowers.

As economic conditions deteriorate, the Corporation reduces its exposure in real estate segments with higher risk characteristics. In underwriting these loans, the Corporation performs a thorough analysis of the financial condition of the borrower, the borrower's credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Corporation are performed by independent appraisers.

Commercial real estate loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions.

Real Estate Construction Lending - The Corporation engages in real estate construction lending in its primary market area and surrounding areas. The Corporation's real estate construction lending consists of commercial and residential site development loans, as well as commercial building construction and residential housing construction loans.

The Corporation's commercial real estate construction loans are generally secured with the subject property and advances are made in conformity with a pre-determined draw schedule supported by independent inspections. Terms of construction loans depend on the specifics of the project, such as estimated absorption rates, estimated time to complete, etc.

In underwriting commercial real estate construction loans, the Corporation performs a thorough analysis of the financial condition of the borrower, the borrower's credit history, the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, etc. Appraisals on properties securing commercial real estate loans originated by the Corporation are performed by independent appraisers.

Real estate construction loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions and the difficulty of estimating total construction costs.

Residential Mortgage Lending - One- to four-family residential mortgage loan originations are generate

d by the Corporation's marketing efforts, its present customers, walk-in customers and referrals. These loans originate primarily within the Corporation's market area or with customers primarily from the market area.

The Corporation offers fixed-rate and adjustable rate mortgage loans with terms up to a maximum of 25-years for both permanent structures and those under construction. The Corporation's one- to four-family residential mortgage originations are secured primarily by properties located in its primary market area and surrounding areas. The majority of the Corporation's residential mortgage loans originate with a loan-to-value of 80% or less.

In underwriting one-to-four family residential real estate loans, the Corporation evaluates the borrower's ability to make monthly payments, the borrower's repayment history and the value of the property securing the loan. Properties securing real estate loans made by the Corporation are appraised by independent fee appraisers. The Corporation generally requires borrowers to obtain an attorney's title opinion or title insurance, and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. The Corporation does not engage in sub-prime residential mortgage originations.

Residential mortgage loans generally present a lower level of risk than certain other types of consumer loans because they are secured by the borrower's primary residence.

Home Equity Installment and Line of Credit Lending - The Corporation originates home equity installment loans and home equity lines of credit primarily within the Corporation's market area or with customers primarily from the market area.

Home equity installment loans are secured by the borrower's primary residence with a maximum loan-to-value of 80% and a maximum term of 15 years.

Home equity lines of credit are secured by the borrower's primary residence with a maximum loan-to-value of 90% and a maximum term of 20 years.

In underwriting home equity lines of credit, a thorough analysis of the borrower's ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower's employment history, current financial conditions, and credit background. The analysis is based primarily on the customer's ability to repay and secondarily on the collateral or security.

Home equity loans generally present a lower level of risk than certain other types of consumer loans because they are secured by the borrower's primary residence.

Obligations of States and Political Subdivisions - The Corporation lends to local municipalities and other tax-exempt organizations. These loans are primarily tax-anticipation notes and as such carry little risk. Historically, the Corporation has never incurred a loss on any loan of this type.

Personal Lending — The Corporation offers a variety of secured and unsecured personal loans, including vehicle, mobile homes and loans secured by savings deposits, as well as other types of personal loans.

Personal loan terms vary according to the type and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis of the borrower's ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower's employment history, current financial conditions, and credit background.

Personal loans may entail greater credit risk than do residential mortgage loans, particularly in the case of personal loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, any repossessed collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Corporation's internal risk rating system as of September 30, 2011 and December 31, 2010 (in thousands).


			Special
As of September 30, 2011	Pass		Mention		Substandard		Doubtful		Total

Commercial, financial and agricultural	$	17,905	$	1,535	$	345	$	—	$	19,785
Real estate — commercial		47,519		9,660		2,475		—		59,654
Real estate — construction		9,065		6,088		720		1,150		17,023
Real estate — mortgage		126,890		7,653		4,833		1,440		140,816
Home equity		38,216		516		279		133		39,144
Obligations of states and political subdivisions		8,738		—		—		—		8,738
Personal		7,168		19		6		—		7,193

Total	$	255,501	$	25,471	$	8,658	$	2,723	$	292,353


			Special
As of December 31, 2010	Pass		Mention		Substandard		Doubtful		Total

Commercial, financial and agricultural	$	12,557	$	5,732	$	1,316	$	306	$	19,911
Real estate — commercial		44,935		6,405		4,365		600		56,305
Real estate — construction		13,067		—		—		189		13,256
Real estate — mortgage		129,954		8,284		5,142		1,226		144,606
Home equity		45,255		431		666		—		46,352
Obligations of states and political subdivisions		8,984		—		—		—		8,984
Personal		8,473		211		4		—		8,688

Total	$	263,225	$	21,063	$	11,493	$	2,321	$	298,102

The Corporation has certain loans in its portfolio that are considered to be impaired. It is the policy of the Corporation to recognize income on impaired loans that have been transferred to nonaccrual status on a cash basis, only to the extent that it exceeds principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. Collateral analysis is performed on each impaired loan at least quarterly and results are used to determine if a specific reserve is necessary to adjust the carrying value of each individual loan down to the estimated fair value. Generally, specific reserves are carried against impaired loans rather than recording partial charge-offs until termination of the credit is scheduled through liquidation of the collateral or foreclosure. In the case of liquidation, sales agreements are used to determine the loss. In the case of a foreclosure, professional appraisals of collateral, discounted for expected closing costs, are used to determine the charge-off amount. The following tables summarize information regarding impaired loans by portfolio class as of September 30, 2011 and December 31, 2010 (in thousands):


	As of September 30, 2011						As of December 31, 2010
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
Impaired loans	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial and agricultural	$	256	$	274	$	—	$	309	$	309	$	—
Real estate — commercial		2,339		2,339		—		2,395		2,395		—
Real estate — construction		720		720		—		250		250		—
Real estate — mortgage		2,007		2,007		—		2,652		2,652		—

With an allowance recorded:
Real estate — construction	$	1,150	$	1,150	$	343	$	900	$	900	$	235
Real estate — mortgage		1,049		1,049		325		1,237		1,237		335

Total:
Commercial, financial and agricultural	$	256	$	274	$	—	$	309	$	309	$	—
Real estate — commercial		2,339		2,339		—		2,395		2,395		—
Real estate — construction		1,870		1,870		343		1,150		1,150		235
Real estate — mortgage		3,056		3,056		325		3,889		3,889		335

	$	7,521	$	7,539	$	668	$	7,743	$	7,743	$	570

Average recorded investment of impaired loans and related interest income recognized for the three and nine months ended September 30, 2011 are summarized as follows (in thousands):


	Three Months Ended September 30, 2011						Nine Months Ended September 30, 2011
	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
Impaired loans	Investment		Recognized		Income		Investment		Recognized		Income
With no related allowance recorded:
Commercial, financial and agricultural	$	265	$	4	$	—	$	282	$	14	$	—
Real estate — commercial		2,331		29		—		2,357		97		2
Real estate — construction		360		36		—		305		36		—
Real estate — mortgage		2,009		5		—		2,118		18		3

With an allowance recorded:
Real estate — construction	$	1,150	$	—	$	—	$	1,025	$	—	$	—
Real estate — mortgage		1,049		—		—		1,143		—		—

Total:
Commercial, financial and agricultural	$	265	$	4	$	—	$	282	$	14	$	—
Real estate — commercial		2,331		29		—		2,357		97		2
Real estate — construction		1,510		36		—		1,330		36		—
Real estate — mortgage		3,058		5		—		3,261		18		3

	$	7,164	$	74	$	—	$	7,230	$	165	$	5

The following table presents nonaccrual loans by classes of the loan portfolio as of September 30, 2011 and December 31, 2010 (in thousands):


	September 30, 2011		December 31, 2010
Nonaccrual loans:

Commercial, financial and agricultural	$	49	$	246
Real estate — commercial		472		478
Real estate — construction		1,150		1,150
Real estate — mortgage		4,586		3,564
Home equity		333		524
Personal		4		2

Total	$	6,594	$	5,964

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of September 30, 2011 and December 31, 2010 (in thousands):


													Loans Past
													Due greater
	30-59 Days		60-89 Days		Greater than		Total Past						than 90 Days
	Past Due		Past Due		90 Days		Due		Current		Total Loans		and Accruing

Commercial, financial and agricultural	$	10	$	12	$	33	$	55	$	19,730	$	19,785	$	—
Real estate — commercial		418		1,162		667		2,247		57,407		59,654		196
Real estate — construction		198		935		1,150		2,283		14,740		17,023		—
Real estate — mortgage		1,298		3,634		4,900		9,832		130,984		140,816		905
Home equity		898		56		472		1,426		37,718		39,144		198
Obligations of states and political subdivisions		—		—		—		—		8,738		8,738		—
Personal		46		14		6		66		7,127		7,193		2

Total	$	2,868	$	5,813	$	7,228	$	15,909	$	276,444	$	292,353	$	1,301


													Loans Past
													Due greater
	30-59 Days		60-89 Days		Greater than		Total Past						than 90 Days
	Past Due		Past Due		90 Days		Due		Current		Total Loans		and Accruing

Commercial, financial and agricultural	$	293	$	272	$	228	$	793	$	19,118	$	19,911	$	—
Real estate — commercial		1,195		627		720		2,542		53,763		56,305		242
Real estate — construction		20		207		1,150		1,377		11,879		13,256		—
Real estate — mortgage		260		4,832		3,465		8,557		136,049		144,606		590
Home equity		737		318		466		1,521		44,831		46,352		167
Obligations of states and political subdivisions		—		—		—		—		8,984		8,984		—
Personal		110		15		10		135		8,553		8,688		8

Total	$	2,615	$	6,271	$	6,039	$	14,925	$	283,177	$	298,102	$	1,007

The following tables summarize the activity by segments of the allowance for loan losses, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment for the three and nine months ended September 30, 2011 and as of September 30, 2011 and December 31, 2010 (in thousands):


	Commercial,
	financial and			Real estate –		Real estate –		Real estate –
	agricultural			commercial		construction		mortgage			Home equity			Personal			Total
Allowance for loan losses:
Beginning Balance, July 1, 2011	$	145		$	459	$	431	$	1,452		$	332		$	62		$	2,881
Charge-offs		(4	)		—		—		(35	)		—			(7	)		(46	)
Recoveries		1			—		—		—			9			2			12
Provisions		19			9		27		30			(26	)		1			60

Ending balance	$	161		$	468	$	458	$	1,447		$	315		$	58		$	2,907


Beginning Balance, January 1, 2011	$	163		$	442	$	336	$	1,421		$	389		$	73		$	2,824
Charge-offs		(13	)		—		—		(163	)		(15	)		(11	)		(202	)
Recoveries		1			—		—		—			9			11			21
Provisions		10			26		122		189			(68	)		(15	)		264

Ending balance	$	161		$	468	$	458	$	1,447		$	315		$	58		$	2,907


											Obligations of
	Commercial,										states and
	financial and		Real estate –		Real estate –		Real estate –				political
	agricultural		commercial		construction		mortgage		Home equity		subdivisions		Personal		Total
Allowance for loan losses:
Ending balance	$	161	$	468	$	458	$	1,447	$	315	$	—	$	58	$	2,907

Ending balance: individually evaluated for impairment	$	—	$	—	$	343	$	325	$	—	$	—	$	—	$	668
Ending balance: collectively evaluted for impairment	$	161	$	468	$	115	$	1,122	$	315	$	—	$	58	$	2,239

Loans, net of unearned interest:
Ending balance	$	19,785	$	59,654	$	17,023	$	140,816	$	39,144	$	8,738	$	7,193	$	292,353

Ending balance: individually evaluted for impairment	$	256	$	2,339	$	1,870	$	3,056	$	—	$	—	$	—	$	7,521
Ending balance: collectively evaluated for impairment	$	19,529	$	57,315	$	15,153	$	137,760	$	39,144	$	8,738	$	7,193	$	284,832


											Obligations of
	Commercial,										states and
	financial and		Real estate –		Real estate –		Real estate –				political
	agricultural		commercial		construction		mortgage		Home equity		subdivisions		Personal		Total
Allowance for loan losses:
Ending balance	$	163	$	442	$	336	$	1,421	$	389	$	—	$	73	$	2,824

Ending balance: individually evaluated for impairment	$	—	$	—	$	235	$	335	$	—	$	—	$	—	$	570
Ending balance: collectively evaluted for impairment	$	163	$	442	$	101	$	1,086	$	389	$	—	$	73	$	2,254

Loans, net of unearned interest:
Ending balance	$	19,911	$	56,305	$	13,256	$	144,606	$	46,352	$	8,984	$	8,688	$	298,102

Ending balance: individually evaluted for impairment	$	309	$	2,395	$	1,150	$	3,889	$	—	$	—	$	—	$	7,743
Ending balance: collectively evaluated for impairment	$	19,602	$	53,910	$	12,106	$	140,717	$	46,352	$	8,984	$	8,688	$	290,359

As a result of adopting the amendments in ASU No. 2011-02, the Corporation reassessed all restructurings that occurred on or after January 1, 2011 for identification as troubled debt restructurings. The Corporation identified no loans for which the allowance for loan losses had previously been measured under a general allowance for credit losses methodology that are now considered troubled debt restructurings in accordance with ASU No. 2011-02, and as such, there are no retroactive disclosures required.