Loans, Allowance for Loan Losses and Credit Quality

12 Months Ended

Dec. 31, 2011

Loans, Allowance for Loan Losses and Credit Quality [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

(4)    LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following table summarizes changes in the allowance for loan losses by loan category and bifurcates the amount of allowance allocated to each loan category based on collective impairment analysis and loans evaluated individually for impairment:

	As of December 31,
	(Dollars in Thousands)
2011	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business			Residential Real Estate		Consumer Home Equity		Consumer Other		Total
Allowance for Loan Losses:
Beginning Balance	$	10,423	$	21,939	$	2,145	$	3,740		$	2,915	$	3,369	$	1,724	$	46,255
Charge-offs		2,888		2,631		769		1,190			559		1,626		1,678		11,341
Recoveries		420		97		500		160			—		52		635		1,864
Provision		3,727		4,109		200		(814	)		757		2,802		701		11,482
Ending Balance	$	11,682	$	23,514	$	2,076	$	1,896		$	3,113	$	4,597	$	1,382	$	48,260
Ending balance: individually evaluated for impairment	$	562	$	457	$	—	$	148		$	1,245	$	31	$	239	$	2,682
Ending balance: collectively evaluated for impairment	$	11,120	$	23,057	$	2,076	$	1,748		$	1,868	$	4,566	$	1,143	$	45,578
Financing Receivables:
Ending balance: total loans by group	$	575,716	$	1,847,654	$	128,904	$	78,509		$	426,201	$	696,063	$	41,343	$	3,794,390	(1)
Ending balance: individually evaluated for impairment	$	5,608	$	37,476	$	843	$	2,326		$	12,984	$	326	$	2,138	$	61,701
Ending balance: collectively evaluated for impairment	$	570,108	$	1,810,178	$	128,061	$	76,183		$	413,217	$	695,737	$	39,205	$	3,732,689
2010	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business			Residential Real Estate		Consumer Home Equity		Consumer Other		Total
Allowance for Loan Losses:
Beginning Balance	$	7,545	$	19,451	$	2,457	$	3,372		$	2,840	$	3,945	$	2,751	$	42,361
Charge-offs		5,170		3,448		1,716		2,279			557		939		2,078		16,187
Recoveries		361		1		—		217			59		131		657		1,426
Provision		7,687		5,935		1,404		2,430			573		232		394		18,655
Ending Balance	$	10,423	$	21,939	$	2,145	$	3,740		$	2,915	$	3,369	$	1,724	$	46,255
Ending balance: individually evaluated for impairment	$	511	$	411	$	151	$	221		$	991	$	17	$	245	$	2,547
Ending balance: collectively evaluated for impairment	$	9,912	$	21,528	$	1,994	$	3,519		$	1,924	$	3,352	$	1,479	$	43,708
Financing Receivables:
Ending balance: total loans by group	$	502,952	$	1,717,118	$	129,421	$	80,026		$	478,111	$	579,278	$	68,773	$	3,555,679	(1)
Ending balance: individually evaluated for impairment	$	3,823	$	26,665	$	1,999	$	2,494		$	9,963	$	428	$	2,014	$	47,386
Ending balance: collectively evaluated for impairment	$	499,129	$	1,690,453	$	127,422	$	77,532		$	468,148	$	578,850	$	66,759	$	3,508,293

2009	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Consumer Home Equity		Consumer Other		Total
Allowance for Loan Losses:
Beginning Balance	$	5,532	$	15,942	$	4,203	$	2,170	$	2,447	$	3,091	$	3,664	$	37,049
Charge-offs		1,663		834		2,679		2,047		829		1,799		3,404		13,255
Recoveries		27		—		—		204		105		41		855		1,232
Provision		3,649		4,343		933		3,045		1,117		2,612		1,636		17,335
Ending Balance	$	7,545	$	19,451	$	2,457	$	3,372	$	2,840	$	3,945	$	2,751	$	42,361
Ending balance: individually evaluated for impairment	$	403	$	257	$	—	$	346	$	584	$	7	$	175	$	1,772
Ending balance: collectively evaluated for impairment	$	7,142	$	19,194	$	2,457	$	3,026	$	2,256	$	3,938	$	2,576	$	40,589
Financing Receivables:
Ending balance: total loans by group	$	373,531	$	1,614,474	$	175,312	$	82,569	$	566,042	$	471,862	$	111,725	$	3,395,515	(1)
Ending balance: individually evaluated for impairment	$	4,603	$	17,505	$	9,261	$	1,482	$	8,385	$	170	$	1,323	$	42,729
Ending balance: collectively evaluated for impairment	$	368,928	$	1,596,969	$	166,051	$	81,087	$	557,657	$	471,692	$	110,402	$	3,352,786

(1) The amount of deferred fees included in the ending balance was $2.9 million, $2.8 million, and $3.4 million at December 31, 2011, 2010, and 2009, respectively.

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables. Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. Some of the risk characteristics unique to each loan category include:

Commercial Portfolio:

Commercial & Industrial — Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate, if applicable. Repayment sources consist of: primarily, operating cash flow, and secondarily, liquidation of assets.

Commercial Real Estate — Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of: primarily, cash flow from operating leases and rents, and secondarily, liquidation of assets.

Commercial Construction — Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property. Project types include: residential 1-4 family condominium and multi-family homes, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources vary depending upon the type of project and may consist of: sale or lease of units, operating cash flows or liquidation of other assets.

Small Business — Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate (if applicable). Repayment sources consist of: primarily, operating cash flows, and secondarily, liquidation of assets.

For the commercial portfolio it is the Bank’s policy to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities.

Consumer Portfolio:

Residential Real Estate — Residential mortgage loans held in the Bank’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on 1-4 family residential properties. The Company does not originate sub-prime loans.

Consumer Home Equity — Home equity loans and lines are made to qualified individuals for legitimate purposes secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes or on nonowner occupied 1-4 family homes with more restrictive loan to value requirements. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

Consumer — Other — Other consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. Consumer — Other loans may be secured or unsecured.

Credit Quality:

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”).

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point commercial risk-rating system, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows:

1- 6 Rating — Pass

Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average or below average asset quality, margins and market share. Collateral coverage is protective.

7 Rating — Potential Weakness

Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Bank’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

8 Rating — Definite Weakness

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

9 Rating — Partial Loss Probable

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

10 Rating — Definite Loss

Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Bank is not warranted.

The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan.

The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		As of December 31, 2011
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in Thousands)
Pass	1 - 6	$	528,798	$	1,626,745	$	114,633	$	70,543	$	2,340,719
Potential Weakness	7		33,313		124,661		7,859		4,041		169,874
Definite Weakness	8		12,683		93,438		6,412		3,762		116,295
Partial Loss Probable	9		922		2,810		—		163		3,895
Definite Loss	10		—		—		—		—		—
TOTAL		$	575,716	$	1,847,654	$	128,904	$	78,509	$	2,630,783
		As of December 31, 2010
Category	Risk Rating	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in Thousands)
Pass	1 - 6	$	445,116	$	1,496,822	$	110,549	$	70,987	$	2,123,474
Potential Weakness	7		30,250		99,400		6,311		5,252		141,213
Definite Weakness	8		25,864		117,850		12,561		3,533		159,808
Partial Loss Probable	9		1,722		3,046		—		254		5,022
Definite Loss	10		—		—		—		—		—
TOTAL		$	502,952	$	1,717,118	$	129,421	$	80,026	$	2,429,517

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a quarterly basis. In addition, automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically, typically twice per annum. At December 31, 2011, 54.8% of the home equity loans were in first lien position. The following table shows the weighted average FICO scores and the weighted average combined LTV ratio for the periods indicated below:

	As of December 31,
	2011			2010
Residential Portfolio
FICO Score (re-scored)(1)		731			738
Combined LTV (re-valued)(2)		67.0	%		64.0	%
Home Equity Portfolio
FICO Score (re-scored)(1)		762			760
Combined LTV (re-valued)(2)		55.0	%		55.0	%

(1) The average FICO scores above are based upon rescores available from November and actual score data for loans booked between December 1 and December 31, for the years indicated.

(2) The combined LTV ratios are based upon updated automated valuations as of November 30, for the years indicated.

The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. As permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company also may use discretion regarding other loans over 90 days delinquent if the loan is well secured and in process of collection. Set forth is information regarding the Company’s nonperforming loans at the period shown.

The following table shows nonaccrual loans at the dates indicated:

	As of December 31,
	2011		2010
	(Dollars In Thousands)
Commercial and Industrial	$	1,883	$	3,123
Commercial Real Estate		12,829		7,837
Commercial Construction		280		1,999
Small Business		542		887
Residential Real Estate		9,867		6,728
Home Equity		3,130		1,752
Consumer — Other		422		505
Total nonaccrual loans(1)	$	28,953	$	22,831

(1) Included in these amounts were $9.2 million and $4.0 million nonaccruing TDRs at December 31, 2011 and 2010, respectively.

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	As of December 31, 2011
	30-59 days				60-89 days				90 days or more				Total Past Due				Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans		Principal Balance		Number of Loans		Principal Balance		Number of Loans		Principal Balance		Number of Loans		Principal Balance
	(Dollars in Thousands)
Commercial and Industrial		21	$	2,143		10	$	2,709		20	$	1,279		51	$	6,131	$	569,585	$	575,716	$	—
Commercial Real Estate		7		3,684		7		2,522		29		6,737		43		12,943		1,834,711		1,847,654		—
Commercial Construction		—		—		—		—		3		280		3		280		128,624		128,904		—
Small Business		19		320		3		21		12		148		34		489		78,020		78,509		—
Residential Real Estate		14		2,770		10		3,208		31		6,065		55		12,043		404,527		416,570		—
Residential Construction		—		—		—		—		—		—		—		—		9,631		9,631		—
Home Equity		28		1,483		19		1,139		19		1,502		66		4,124		691,939		696,063		—
Consumer — Other		260		1,821		57		303		58		374		375		2,498		38,845		41,343		41
TOTAL		349	$	12,221		106	$	9,902		172	$	16,385		627	$	38,508	$	3,755,882	$	3,794,390	$	41
	As of December 31, 2010
	30-59 days				60-89 days				90 days or more				Total Past Due				Current		Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans		Principal Balance		Number of Loans		Principal Balance		Number of Loans		Principal Balance		Number of Loans		Principal Balance
	(Dollars in Thousands)
Commercial and Industrial		16	$	1,383		8	$	910		18	$	2,207		42	$	4,500	$	498,452	$	502,952	$	—
Commercial Real Estate		13		2,809		7		4,820		29		6,260		49		13,889		1,703,229		1,717,118		—
Commercial Construction		—		—		—		—		9		1,999		9		1,999		127,422		129,421		—
Small Business		23		1,071		11		302		19		420		53		1,793		78,233		80,026		—
Residential Real Estate		14		4,793		6		865		21		4,050		41		9,708		464,228		473,936		—
Residential Construction		—		—		—		—		—		—		—		—		4,175		4,175		—
Home Equity		31		1,737		8		878		12		1,095		51		3,710		575,568		579,278		4
Consumer — Other		402		2,986		89		478		85		564		576		4,028		64,745		68,773		273
TOTAL		499	$	14,779		129	$	8,253		193	$	16,595		821	$	39,627	$	3,516,052	$	3,555,679	$	277

In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work-out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	As of December 31,
	2011		2010
	(Dollars in Thousands)
TDRs on Accrual Status	$	37,151	$	26,091
TDRs on Nonaccrual Status		9,230		3,982
TOTAL TDR’S	$	46,381	$	30,073
Amount of specific reserves included in the allowance for loan loss associated with TDRs:	$	1,887	$	1,658
Additional commitments to lend to a borrower who has been a party to a TDR:	$	693	$	1,240

The Bank’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loans modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

For the Year Ended December 31,	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment(1)
	(Dollars in Thousands)
2011 Troubled Debt Restructurings
Commercial & Industrial		11	$	1,165	$	1,165
Commercial Real Estate		17		8,707		8,707
Small Business		37		1,270		1,270
Residential Real Estate		16		3,460		3,536
Consumer — Home Equity		2		101		101
Consumer — Other		89		985		985
TOTAL		172	$	15,688	$	15,764
2010 Troubled Debt Restructurings
Commercial & Industrial		11	$	1,286	$	1,286
Commercial Real Estate		14		12,491		12,491
Small Business		47		1,514		1,514
Residential Real Estate		19		5,797		5,938
Consumer — Home Equity		4		292		296
Consumer — Other		108		1,405		1,405
TOTAL		203	$	22,785	$	22,930
2009 Troubled Debt Restructurings
Commercial & Industrial		—	$	—	$	—
Commercial Real Estate		4		3,424		3,424
Small Business		9		714		714
Residential Real Estate		25		7,864		8,110
Consumer — Home Equity		1		48		48
Consumer — Other		64		1,330		1,330
TOTAL		103	$	13,380	$	13,626

(1) The post-modification balances represent the balance of the loan on the date of modification. These amounts may show an increase when modifications include a capitalization of interest.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	For the Years Ended December 31,
	2011		2010		2009
	(Dollars in Thousands)
Extended Maturity	$	5,216	$	10,691	$	1,734
Adjusted Interest Rate		1,746		52		218
Combination Rate & Maturity		8,802		12,187		11,674
TOTAL	$	15,764	$	22,930	$	13,626

The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due.

	For the Years Ended December 31,
	2011				2010				2009
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
	(Dollars in Thousands)
Troubled Debt Restructurings That Subsequently Defaulted
Commercial & Industrial		—	$	—		—	$	—		—	$	—
Commercial Real Estate		—		—		1		263		—		—
Small Business		5		75		—		—		—		—
Residential Real Estate		—		—		2		500		—		—
Consumer — Home Equity		—		—		—		—		—		—
Consumer — Other		1		22		2		18		1		42
SUBTOTAL		6	$	97		5	$	781		1	$	42

All TDR loans are considered impaired and therefore are subject to a specific review for impairment. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans) and residential loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less costs to sell. The Bank charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed to determine when a charge-off is appropriate.

A 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. 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 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 table below sets forth information regarding the Company’s impaired loans as of the dates indicated:

As of and for the Years Ended December 31,
2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in Thousands)
With no Related Allowance Recorded:
Commercial & Industrial	$	3,380	$	4,365	$	—	$	4,672	$	300
Commercial Real Estate		19,433		20,010		—		19,760		1,365
Commercial Construction		843		843		—		839		59
Small Business		1,131		1,193		—		1,199		84
Residential Real Estate		—		—		—		—		—
Consumer — Home Equity		22		22		—		22		1
Consumer — Other		31		32		—		35		3
Subtotal		24,840		26,465		—		26,527		1,812
With an Allowance Recorded:
Commercial & Industrial	$	2,228	$	2,280	$	562	$	2,244	$	99
Commercial Real Estate		18,043		19,344		457		19,951		1,173
Commercial Construction		—		—		—		—		—
Small Business		1,195		1,218		148		1,292		73
Residential Real Estate		12,984		13,651		1,245		13,059		512
Consumer — Home Equity		304		349		31		316		19
Consumer — Other		2,107		2,125		239		1,928		73
Subtotal		36,861		38,967		2,682		38,790		1,949
Total	$	61,701	$	65,432	$	2,682	$	65,317	$	3,761
2010	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in Thousands)
With no Related Allowance Recorded:
Commercial & Industrial	$	2,451	$	2,917	$	—	$	2,539	$	171
Commercial Real Estate		19,538		20,280		—		20,223		1,394
Commercial Construction		230		230		—		248		13
Small Business		1,541		1,656		—		1,689		122
Residential Real Estate		205		205		—		205		10
Consumer — Home Equity		—		—		—		—		—
Consumer — Other		10		10		—		7		—
Subtotal		23,975		25,298		—		24,911		1,710
With an Allowance Recorded:
Commercial & Industrial	$	1,372	$	1,373	$	511	$	1,384	$	94
Commercial Real Estate		7,127		7,379		411		7,346		438
Commercial Construction		1,769		1,769		151		1,762		76
Small Business		953		954		221		956		63
Residential Real Estate		9,758		10,146		991		9,836		396
Consumer — Home Equity		428		435		17		432		21
Consumer — Other		2,004		2,035		245		1,364		58
Subtotal		23,411		24,091		2,547		23,080		1,146
Total	$	47,386	$	49,389	$	2,547	$	47,991	$	2,856
2009	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in Thousands)
With no Related Allowance Recorded:
Commercial & Industrial	$	2,927	$	3,086	$	—	$	3,382	$	216
Commercial Real Estate		13,058		13,228		—		13,126		936
Commercial Construction		9,261		10,626		—		9,899		611
Small Business		629		716		—		712		30
Residential Real Estate		3,376		3,376		—		3,298		172
Consumer — Home Equity		122		122		—		124		5
Consumer — Other		—		—		—		—		—
Subtotal		29,373		31,154		—		30,541		1,970
With an Allowance Recorded:
Commercial & Industrial	$	1,676	$	1,676	$	403	$	1,119	$	134
Commercial Real Estate		4,447		4,458		257		4,550		175
Commercial Construction		—		—		—		—		—
Small Business		853		914		346		749		36
Residential Real Estate		5,009		5,009		584		4,131		246
Consumer — Home Equity		48		48		7		48		3
Consumer — Other		1,323		1,338		175		1,049		50
Subtotal		13,356		13,443		1,772		11,646		644
Total	$	42,729	$	44,597	$	1,772	$	42,187	$	2,614

Loans to Insiders

The Bank has granted loans to principal officers, directors (and their affiliates) and principal security holders. All such loans were made in the ordinary course of business on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectability or present other unfavorable features. Annual activity consists of the following:

	2011			2010
	(Dollars in Thousands)
Net Principal Balance of Loans Outstanding as of January 1,	$	29,986		$	31,503
Loan Advances		68,512			50,197
Loan Payments/Payoffs		(57,314	)		(51,714	)
Net Principal Balance of Loans Outstanding as of December 31,	$	41,184		$	29,986