NON-PERFORMING ASSETS

9 Months Ended

Sep. 30, 2011

NON-PERFORMING ASSETS [Abstract]

NON-PERFORMING ASSETS

NOTE G – NON-PERFORMING ASSETS

Risk of nonpayment exists with respect to all loans, which could result in the classification of such loans as non-performing. The increase in non-performing assets (NPAs) is primarily due to the economic recession and real estate downturn which has impacted the Company's loan portfolio.  At September 30, 2011, NPA balances were comparable to year-end 2010 primarily due to the continued effect of the adverse economy and real estate downturn on residential land development and construction loan portfolios. 

The Company has a significant concentration in real estate lending, including loans to real estate developers secured by real estate located in Desoto County, Mississippi.  Declining real estate values and a severe constriction in the availability of mortgage financing has negatively impacted real estate sales, which has resulted in customers' inability to repay loans. In addition, the value of collateral underlying such loans has decreased materially.  During 2011, the Company has continued to experience significant levels of non-performing assets relating to real estate lending, primarily in our residential real estate portfolio.

At September 30, 2011 and December 31, 2010, the Company had Troubled Debt Restructured ("TDR") assets of $557 thousand and $308 thousand, respectively.  Policy in managing TDRs is to include the asset in NPAs and reserve appropriately with management  working with the borrower on a plan to either return the obligation to an accruing status or take appropriate measures to secure the collateral for disposition.

The following table presents information with respect to non-performing assets at September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010 (dollars in thousands, except for selected ratios):

	Sept. 30,		Jun. 30,		Mar. 31,		Dec. 31,
	2011		2011		2011		2010
Loans on non-accrual status	$	6,176	$	14,006	$	9,622	$	9,584
Loans past due 90 days or more but
not non-accrual status		119		3		1		63
OREO - non-performing		20,609		16,294		16,424		16,887
Total NPAs	$	26,904	$	30,303	$	26,047	$	26,534
Operating commercial real
estate OREO	$	3,340	$	3,385	$	3,385	$	3,385
OREO - non-performing		20,609		16,294		16,424		16,887
Total OREO	$	23,949	$	19,679	$	19,809	$	20,272
Selected ratios:
NPLs to total gross loans		2.628		5.630		3.903		3.894
NPAs to total gross loans and OREO		10.210		11.285		9.779		9.899
NPAs to total assets		5.102		5.646		4.855		5.178