Loans and Related Allowance for Loan Losses

9 Months Ended

Sep. 30, 2011

Loans and Related Allowance for Loan Losses

Loans and Related Allowance for Loan Losses

Note 7 – Loans and Related Allowance for Loan Losses

The following table summarizes the primary segments of the loan portfolio as of September 30, 2011 and December 31, 2010:

(in thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
September 30, 2011
Total loans	$	321,352	$	147,580	$	70,541	$	345,525	$	34,025	$	919,023
Individually evaluated for impairment		18,938		27,810		13,767		5,815		26		66,356
Collectively evaluated for impairment		302,414		119,770		56,774		339,710		33,999		852,667
December 31, 2010
Total loans	$	348,584	$	156,892	$	69,992	$	356,742	$	77,543	$	1,009,753
Individually evaluated for impairment		16,270		31,196		5,131		9,854		152		62,603
Collectively evaluated for impairment		332,314		125,696		64,861		346,888		77,391		947,150

The segments of the Bank's loan portfolio are disaggregated to a level that allows management to monitor risk and performance.  The commercial real estate ("CRE") loan segment is then segregated into two classes. Non-owner occupied CRE loans, which include loans secured by non-owner occupied, nonfarm, nonresidential properties, generally have a greater risk profile than all other CRE loans, which include loans secured by farmland, multifamily structures and owner-occupied commercial structures.  The acquisition and development ("A&D") loan segment is segregated into two classes. One-to-four family residential construction loans are generally made to individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built.  All other A&D loans are generally made to developers or investors for the purpose of acquiring, developing and constructing residential or commercial structures.  These loans have a higher risk profile because the ultimate buyer, once development is completed, is generally not known at the time of the A&D loan.  The commercial and industrial ("C&I") loan segment consists of loans made for the purpose of financing the activities of commercial customers.  The residential mortgage loan segment is segregated into two classes:  (a) amortizing term loans, which are primarily first liens; and (b) home equity lines of credit, which are generally second liens.  The consumer loan segment consists primarily of installment loans (direct and indirect) and overdraft lines of credit connected with customer deposit accounts.

During the second quarter of 2011, the Bank sold $32.5 million of the indirect auto portfolio that is included in the consumer loan class.

Management uses a 10 point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as "Pass" rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.   At December 2010, the portion of any loan that represented a specific allocation of the allowance for loan losses was placed in the Doubtful category.  Based upon consultation with the regulators, beginning with June 30, 2011, only the portion of a specific allocation of the allowance for loan losses that management believes is associated with a pending event that could trigger loss in the short term will be classified in the Doubtful category.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  The Bank's Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in the commercial segments at origination and on an ongoing basis.  The Credit Quality Department performs an annual review of all commercial relationships $500,000 or greater.  Confirmation of the appropriate risk grade is included as part of the review process on an ongoing basis.  The Bank has an experienced Credit Quality and Loan Review Department that continually reviews and assesses loans within the portfolio.  In addition, the Bank engages an external consultant to conduct loan reviews on at least an annual basis. Generally, the external consultant reviews commercial relationships greater than $750,000 and/or criticized relationships greater than $500,000.  Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis.  Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of September 30, 2011 and December 31, 2010:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2011
Commercial real estate
Non owner-occupied	$	104,551	$	9,035	$	33,624	$	0	$	147,210
All other CRE		119,402		14,631		40,109		0		174,142
Acquisition and development
1-4 family residential construction		11,160		0		6,151		0		17,311
All other A&D		82,092		1,642		46,535		0		130,269
Commercial and industrial		51,580		768		18,193		0		70,541
Residential mortgage
Residential mortgage - term		249,826		3,097		13,915		0		266,838
Residential mortgage – home equity		75,724		34		2,929		0		78,687
Consumer		33,578		63		384		0		34,025
Total	$	727,913	$	29,270	$	161,840	$	0	$	919,023
December 31, 2010
Commercial real estate
Non owner-occupied	$	121,144	$	9,541	$	33,914	$	2,768	$	167,367
All other CRE		123,115		8,995		49,027		80		181,217
Acquisition and development
1-4 family residential construction		7,038		0		6,876		334		14,248
All other A&D		86,352		4,664		50,487		1,141		142,644
Commercial and industrial		46,760		2,933		20,299		0		69,992
Residential mortgage
Residential mortgage - term		255,916		2,634		18,576		43		277,169
Residential mortgage – home equity		76,828		0		2,745		0		79,573
Consumer		76,736		23		784		0		77,543
Total	$	793,889	$	28,790	$	182,708	$	4,366	$	1,009,753

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.  A loan is considered to be past due when a payment has not been received for 30 days past its contractual due date.  For all loan segments, the accrual of interest is discontinued when principal or interest is delinquent for 90 days or more unless the loan is well-secured and in the process of collection.  All non-accrual loans are considered to be impaired.  Interest payments received on non-accrual loans are applied as a reduction of the loan principal balance.  Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.  The Corporation's policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and non-accrual loans as of September 30, 2011 and December 31, 2010:

(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days+ Past Due		Total Past Due and still accruing		Non-Accrual		Total Loans
September 30, 2011
Commercial real estate
Non owner-occupied	$	131,425	$	682	$	4,854	$	0	$	5,536	$	10,249	$	147,210
All other CRE		166,717		472		5,232		0		5,704		1,721		174,142
Acquisition and development
1-4 family residential construction		17,311		0		0		0		0		0		17,311
All other A&D		112,349		930		4,807		173		5,910		12,010		130,269
Commercial and industrial		60,241		246		3		1		250		10,050		70,541
Residential mortgage
Residential mortgage - term		257,653		1,745		3,742		580		6,067		3,118		266,838
Residential mortgage – home equity		77,285		1,016		101		0		1,117		285		78,687
Consumer		32,391		1,160		375		73		1,608		26		34,025
Total	$	855,372	$	6,251	$	19,114	$	827	$	26,192	$	37,459	$	919,023
December 31, 2010
Commercial real estate
Non owner-occupied	$	146,470	$	892	$	8,801	$	0	$	9,693	$	11,204	$	167,367
All other CRE		179,661		581		286		0		867		689		181,217
Acquisition and development
1-4 family residential construction		13,626		0		0		0		0		622		14,248
All other A&D		124,731		1,950		188		128		2,266		15,647		142,644
Commercial and industrial		67,688		883		22		44		949		1,355		69,992
Residential mortgage
Residential mortgage - term		253,225		12,168		4,455		2,359		18,982		4,962		277,169
Residential mortgage – home equity		78,533		559		129		78		766		274		79,573
Consumer		74,392		2,116		700		183		2,999		152		77,543
Total	$	938,326	$	19,149	$	14,581	$	2,792	$	36,522	$	34,905	$	1,009,753

Non-accrual loans which have been subject to a partial charge-off totaled $8.9 million as of September 30, 2011, compared to $2.9 million as of December 31, 2010.

           An Allowance for Loan Losses ("ALL") is maintained to absorb losses from the loan portfolio.  The ALL is based on management's continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The Bank's methodology for determining the ALL is based on the requirements of ASC Section 310-10-35, Receivables-Overall-Subsequent Measurement, for loans individually evaluated for impairment and ASC Subtopic 450-20, Contingencies-Loss Contingencies, for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.   The total of the two components represents the Bank's ALL.

The following table summarizes the primary segments of the ALL, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of September 30, 2011 and December 31, 2010.

(In thousands)	Commercial Real Estate		Acquisition and Development		Commercial and Industrial		Residential Mortgage		Consumer		Total
September 30, 2011
Total ALL	$	7,234	$	6,524	$	2,197	$	3,694	$	486	$	20,135
Individually evaluated for impairment	$	1,342	$	2,132	$	1,184	$	78	$	0	$	4,736
Collectively evaluated for impairment	$	5,892	$	4,392	$	1,013	$	3,616	$	486	$	15,399
December 31, 2010
Total ALL	$	8,658	$	6,345	$	1,345	$	4,211	$	1,579	$	22,138
Individually evaluated for impairment	$	2,848	$	1,475	$	0	$	43	$	0	$	4,366
Collectively evaluated for impairment	$	5,810	$	4,870	$	1,345	$	4,168	$	1,579	$	17,772

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan  is greater than $500,000 or is part of a relationship that is greater than $750,000, and (a) is either in nonaccrual status, or (b) is risk-rated Substandard and is greater than 60 days past due.  Loans are considered to be impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  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 loan 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.  The Corporation does not separately evaluate individual consumer and residential mortgage loans for impairment, unless such loans are part of larger relationship that is impaired; otherwise loans in these segments are considered impaired when they are classified as non-accrual.

Once the determination has been made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is measured by comparing the recorded investment in the loan to the fair value of the loan using one of three methods:  (a) the present value of expected future cash flows discounted at the loan's effective interest rate; (b) the loan's observable market price; or (c) the fair value of the collateral less selling costs.  The method is selected on a loan-by-loan basis, with management primarily utilizing the fair value of collateral method.  If the fair value of the collateral less selling costs method is utilized for collateral securing loans in the commercial segments, then an updated external appraisal is ordered on the collateral supporting the loan if the loan balance is greater than $500,000 and the existing appraisal is greater than 18 months old.  If an appraisal is less than 12 months old (the age at which the internal appraisal grid begins) and if management believes that general market conditions in that geographic market have changed considerably, the property has deteriorated or perhaps lost an income stream, or a recent appraisal for a similar property indicates a significant change, then management may adjust the fair value indicated by the existing appraisal until a new appraisal is obtained.  If the most recent appraisal is greater than 12 months old or if an updated appraisal has not been received and reviewed in time for the determination of estimated fair value at quarter (or year) end, then the estimated fair value of the collateral is determined by adjusting the existing appraisal by the appropriate percentage from an internally prepared appraisal discount grid.  This grid considers the age of a third party appraisal and the geographic region where the collateral is located in order to discount an appraisal that is greater than 12 months old.  The discount rates in the appraisal discount grid are updated quarterly to reflect the most current knowledge that management has available, including the results of current appraisals.  If there is a delay in receiving an updated appraisal or if the appraisal is found to be deficient in our internal appraisal review process and re-ordered, the Corporation continues to use a discount factor from the appraisal discount grid based on the collateral location and current appraisal age in order to determine the estimated fair value.  A specific allocation of the ALL is recorded if there is any deficiency in collateral value determined by comparing the estimated fair value to the recorded investment of the loan. When updated appraisals are received and reviewed, adjustments are made to the specific allocation as needed.

The evaluation of the need and amount of a specific allocation of the ALL and whether a loan can be removed from impairment status is made on a quarterly basis.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of September 30, 2011 and December 31, 2010:

	Impaired Loans with  Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
(in thousands)	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
September 30, 2011
Commercial real estate
Non owner-occupied	$	1,257	$	1,073	$	9,282	$	10,539	$	15,666
All other CRE		832		269		7,567		8,399		8,424
Acquisition and development
1-4 family residential construction		2,491		861		0		2,491		2,491
All other A&D		7,884		1,271		17,435		25,319		28,381
Commercial and industrial		9,400		1,184		4,367		13,767		14,063
Residential mortgage
Residential mortgage - term		573		78		4,708		5,281		5,920
Residential mortgage – home equity		0		0		534		534		580
Consumer		0		0		26		26		27
Total impaired loans	$	22,437	$	4,736	$	43,919	$	66,356	$	75,552
December 31, 2010
Commercial real estate
Non owner-occupied	$	8,183	$	2,768	$	4,635	$	12,818	$	12,818
All other CRE		713		80		2,740		3,453		3,478
Acquisition and development
1-4 family residential construction		2,823		334		622		3,445		3,491
All other A&D		7,269		1,141		20,482		27,751		31,284
Commercial and industrial		0		0		5,131		5,131		6,540
Residential mortgage
Residential mortgage - term		725		43		8,606		9,331		10,086
Residential mortgage – home equity		0		0		522		522		522
Consumer		0		0		152		152		153
Total impaired loans	$	19,713	$	4,366	$	42,890	$	62,603	$	68,372

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  For general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.

The classes described above, which are based on the Federal call code assigned to each loan, provide the starting point for the ALL analysis.  Management tracks the historical net charge-off activity (full and partial charge-offs, net of full and partial recoveries) at the call code level.  A historical charge-off factor is calculated utilizing a defined number of consecutive historical quarters. Consumer pools currently utilize a rolling 12 quarters, while Commercial pools currently utilize a rolling eight quarters.

"Pass" rated credits are segregated from "Criticized" credits for the application of qualitative factors. The un-criticized ("pass") pools for commercial and residential real estate are further segmented based upon the geographic location of the underlying collateral.  There are seven geographic regions utilized – six that represent the Bank's lending footprint and a seventh for all out-of-market credits.  Different economic environments and resultant credit risks exist in each region that are acknowledged in the assignment of qualitative factors.  Loans in the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are closely monitored by management and subject to additional qualitative factors.

Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: (a) national and local economic trends and conditions; (b) levels of and trends in delinquency rates and non-accrual loans; (c) trends in volumes and terms of loans; (d) effects of changes in lending policies; (e) experience, ability, and depth of lending staff; (f) value of underlying collateral; and (g) concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.  Residential mortgage and consumer loans are charged off after they are 120 days contractually past due.  All other loans are charged off based on an evaluation of the facts and circumstances of each individual loan. When the Bank believes that its ability to collect is solely dependent on the liquidation of the collateral, a full or partial charge-off is recorded promptly to bring the recorded investment to an amount that the Bank believes is supported by an ability to collect on the collateral.  The circumstances that may impact the Bank's decision to charge-off all or a portion of a loan include default or non-payment by the borrower, scheduled foreclosure actions, and/or prioritization of the Bank's claim in bankruptcy.   There may be circumstances where due to pending events, the Bank will place a specific allocation of the ALL on a loan for which a partial charge-off has been previously recognized.  This specific allocation may be either charged-off or removed depending upon the outcome of the pending event.  Full or partial charge-offs are not recovered until full principal and interest on the loan have been collected, even if a subsequent appraisal supports a higher value. Loans with partial charge-offs remain in non-accrual status. Both full and partial charge-offs reduce the recorded investment of the loan and the ALL and are considered to be charge-offs for purposes of all credit loss metrics and trends, including the historical rolling charge-off rates used in the determination of the ALL.

Activity in the ALL is presented for the nine- and three-months ended September 30, 2011 and September 30, 2010:

	Commercial Real Estate			Acquisition and Development			Commercial and Industrial			Residential Mortgage			Consumer			Total
ALL balance at January 1, 2011	$	8,658		$	6,345		$	1,345		$	4,211		$	1,579		$	22,138
Charge-offs		(5,508	)		(1,048	)		(515	)		(1,403	)		(673	)		(9,147	)
Recoveries		91			278			15			415			406			1,205
Provision		3,993			949			1,352			471			(826	)		5,939
ALL balance at September 30, 2011	$	7,234		$	6,524		$	2,197		$	3,694		$	486		$	20,135
ALL balance at January 1, 2010	$	5,351		$	7,922		$	1,945		$	3,061		$	1,811		$	20,090
Charge-offs		(513	)		(3,601	)		(1,402	)		(1,701	)		(1,489	)		(8,706	)
Recoveries		94			1,067			380			330			380			2,251
Provision		1,103			5,169			985			2,449			947			10,653
ALL balance at September 30, 2010	$	6,035		$	10,557		$	1,908		$	4,139		$	1,649		$	24,288

	Commercial Real Estate			Acquisition and Development			Commercial and Industrial			Residential Mortgage			Consumer			Total
ALL balance at July 1, 2011	$	6,112		$	8,440		$	2,235		$	3,714		$	500		$	21,001
Charge-offs		(978	)		(327	)		(267	)		(601	)		(197	)		(2,370	)
Recoveries		13			7			5			24			121			170
Provision		2,087			(1,596	)		224			557			62			1,334
ALL balance at September 30, 2011	$	7,234		$	6,524		$	2,197		$	3,694		$	486		$	20,135
ALL balance at July 1, 2010	$	5,595		$	10,141		$	2,017		$	4,299		$	1,730		$	23,782
Charge-offs		(49	)		(1,753	)		(1,059	)		(235	)		(293	)		(3,389	)
Recoveries		9			22			147			159			91			428
Provision		480			2,147			803			(84	)		121			3,467
ALL balance at September 30, 2010	$	6,035		$	10,557		$	1,908		$	4,139		$	1,649		$	24,288

The ALL is based on estimates, and actual losses will vary from current estimates.   Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

The following tables present the average recorded investment in impaired loans by class and related interest income recognized for the periods indicated:

	Nine months ended September 30, 2011						Nine months ended September 30, 2010
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	13,409	$	41	$	91	$	9,960	$	214	$	0
All other CRE		6,636		204		50		16,132		483		0
Acquisition and development
1-4 family residential construction		2,921		69		0		1,099		14		0
All other A&D		26,520		444		81		58,253		704		0
Commercial and industrial		11,688		117		0		9,314		226		0
Residential mortgage
Residential mortgage - term		6,761		117		14		7,729		183		0
Residential mortgage – home equity		635		10		4		3,231		65		0
Consumer		61		0		0		51		0		0
Total	$	68,631	$	1,002	$	240	$	105,769	$	1,889	$	0

	Three months ended September 30, 2011						Three months ended September 30, 2010
(in thousands)	Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis		Average investment		Interest income recognized on an accrual basis		Interest income recognized on a cash basis
Commercial real estate
Non owner-occupied	$	11,650	$	6	$	30	$	9,012	$	64	$	0
All other CRE		8,202		74		0		11,750		137		0
Acquisition and development
1-4 family residential construction		2,592		16		0		1,834		14		0
All other A&D		25,158		154		0		47,789		199		0
Commercial and industrial		13,925		40		0		6,857		58		0
Residential mortgage
Residential mortgage - term		5,251		33		8		6,570		40		0
Residential mortgage – home equity		618		3		1		2,574		21		0
Consumer		23		0		0		77		0		0
Total	$	67,419	$	326	$	39	$	86,463	$	533	$	0

In the normal course of business, the Bank modifies loan terms for various reasons.  These reasons may include as a retention strategy to compete in the current interest rate environment, and to re-amortize or extend a loan term to better match the loan's payment stream with the borrower's cash flows.  A modified loan is considered to be a troubled debt restructure ("TDR") when the Bank has determined that the borrower is troubled (i.e. experiencing financial difficulties). The Bank evaluates the probability that the borrower will be in payment default on any of its debt in the foreseeable future without modification. To make this determination, the Bank performs a global financial review of the borrower and loan guarantors to assess their current ability to meet their financial obligations.

When the Bank restructures a loan to a troubled borrower, the loan terms (i.e. interest rate, payment, amortization period, maturity date) are modified in such a way to enable the borrower to cover the modified debt service payments based on current financials and cash flow adequacy.  If a borrower's hardship is thought to be temporary, then modified terms are only offered for that time period. Where possible, the Bank obtains additional collateral and/or secondary payment sources at the time of the restructure in order to put the Bank in the best possible position if the borrower is not able to meet the modified terms. To date, the Bank has not forgiven any principal as a restructuring concession. The Bank will not offer modified terms if it believes that modifying the loan terms will only delay an inevitable permanent default.

All loans designated as TDRs are considered impaired loans and may be in either accruing or non-accruing status.  The Corporation's policy for recognizing interest income on impaired loans does not differ from its overall policy for interest recognition.  Accordingly, the accrual of interest is discontinued when principal or interest is delinquent for 90 days or more unless the loan is well-secured and in the process of collection.  If the loan was accruing at the time of the modification, then it continues to be in accruing status subsequent to the modification. Non-accrual TDRs may return to accruing status when there has been sufficient payment performance for a period of at least six months.  Loans may be removed from TDR status in the calendar year following the modification if the interest rate at the time of modification was consistent with the interest rate for a loan with comparable credit risk and the loan has performed according to its modified terms for at least six months.

The volume and type of TDR activity is considered in the assessment of the local economic trends qualitative factor used in the determination of the ALL for loans that are evaluated collectively for impairment.

The following table presents the volume and recorded investment at the time of modification of TDRs by class and type of modification that occurred during the periods indicated:

	Temporary Rate Modification				Extension of Maturity				Modification of Payment and Other Terms
(in thousands)	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Nine months ended September 30, 2011
Commercial real estate
Non owner-occupied		0	$	0		3	$	809		0	$	0
All other CRE		1		3,233		0		0		0		0
Acquisition and development
1-4 family residential construction		0		0		0		0		1		2,491
All other A&D		0		0		7		8,334		0		0
Commercial and industrial		0		0		0		0		0		0
Residential mortgage
Residential mortgage – term		2		234		2		513		0		0
Residential mortgage – home equity		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Total		3	$	3,467		12	$	9,656		1	$	2,491
Three months ended September 30, 2011
Commercial real estate
Non owner-occupied		0	$	0		2	$	290		0	$	0
All other CRE		0		0		0		0		0		0
Acquisition and development
1-4 family residential construction		0		0		0		0		1		2,491
All other A&D		0		0		3		2,678		0		0
Commercial and industrial		0		0		0		0		0		0
Residential mortgage
Residential mortgage – term		0		0		1		295		0		0
Residential mortgage – home equity		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Total		0	$	0		6	$	3,263		1	$	2,491

There were no new TDRs with temporary rate modifications during the three months ended September 30, 2011 and three new TDRs with temporary rate modifications totaling $3.4 million during the nine months ended September 30, 2011, for which there was no impact to the recorded investment or to the ALL. There were six new TDRs with maturity extension modifications totaling $3.3 million during the three months ended September 30, 2011, for which there was no impact to the recorded investment. There was a $.1 million reduction in the ALL relating to one $2.0 million A&D loan with a maturity extension resulting from the movement of the loan being evaluated collectively for impairment to being evaluated individually for impairment. There were six loans totaling $6.4 million with maturity extension modifications granted in the six months ended June 30, 2011, all of which were classified as TDRs at the time of the additional modifications, for which there was no impact on the recorded investment of the loans or the ALL. There was one new $2.5 million TDR with modified payment terms during the three- and nine-months ended September 30, 2011, for which there was no impact to the recorded investment or the ALL.  There were no loans that were modified as TDRs within the 12 months ended September 30, 2011 for which there was a payment default during the nine- and three-month periods ended September 30, 2011.