OTHER REAL ESTATE OWNED

12 Months Ended

Dec. 31, 2011

Other Real Estate Owned [Abstract]

OTHER REAL ESTATE OWNED

NOTE 6 – OTHER REAL ESTATE OWNED

OREO declined $8.2 million from $29.2 million at December 31, 2010 to $21.0 million at December 31, 2011.  Set forth below is a table which details the changes in OREO from December 31, 2010 to December 31, 2011.

	For the year ended December 31, 2011
(In thousands)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Beginning balance	$	29,244		$	30,681		$	25,448		$	21,921
Net proceeds from sales		(1,594	)		(4,320	)		(3,364	)		(972	)
Net gain on sales		394			900			206			138
Assets acquired on non-accrual loans		3,030			1,469			1,124			818
Other		-			(535	)		-			-
Impairment charge		(393	)		(2,747	)		(1,493	)		(889	)
Ending balance	$	30,681		$	25,448		$	21,921		$	21,016

During the fourth quarter of 2011, the Company sold collateral related to four loans.  The Company received net proceeds of $312,000 and recorded a loss of $61,000 as a result of these sales. Additionally the Company sold six properties acquired through the tax lien portfolio.  The Company received proceeds of $660,000 and recorded a net gain of $199,000 as a result of these sales. During the fourth quarter, the Company foreclosed on the collateral for one single-family residential loan and transferred $333,000 to OREO.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $485,000 to OREO.  During the fourth quarter of 2011, the Company recorded $860,000 in impairment charges on OREO properties that included one apartment building, five single-family homes, nine residential lots, and 13 residential rental properties.  The impairment charges were the result of impairment analyses using updated appraisals and current sales. The Company recorded impairment charges of $29,000 related to properties acquired through the tax lien portfolio.

During the third quarter of 2011, the Company sold collateral related to an apartment building in Pennsylvania foreclosed on in the second quarter of 2009.  The Company received net proceeds of $2.8 million and recorded a gain of $253,000 as a result of this sale.  In addition the Company sold collateral related to four loans.  The Company received net proceeds of $284,000 and recorded a loss of $47,000 as a result of these sales. In addition to the sales mentioned above the Company sold six properties acquired through the tax lien portfolio.  The Company received proceeds of $246,000 as a result of these sales. During the third quarter of 2011, the Company foreclosed on five residential properties related to two lending relationships.  The Company transferred $348,000 to OREO after recording a $74,000 charge-off to the allowance.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $776,000 to OREO.  During the third quarter of 2011, the Company recorded $1.4 million in impairment charges on five OREO properties as the result of impairment analyses using updated appraisals. The Company recorded impairment charges of $58,000 related to properties acquired through the tax lien portfolio.

During the second quarter of 2011, the Company sold collateral related to three loans.  The Company received net proceeds of $3.7 million and recorded a gain of $912,000 as a result of these sales. Also during the second quarter, the collateral for a loan in which the Company was a participant was sold. The Company was entitled to 14.4% of the net sales proceeds.  The Company received net proceeds of $424,000 related to the sale with the remaining proceeds of $535,000 held in escrow.  In addition to the sales mentioned above the Company sold six properties acquired through the tax lien portfolio.  The Company received proceeds of $195,000 and recorded losses of $12,000 as a result of these sales.  During the second quarter of 2011, the Company foreclosed on 19 properties which were predominantly residential rental properties related to two lending relationships.  The Company transferred $589,000 to OREO after recording an $835,000 charge-off to the allowance, for which $245,000 had previously been reserved, in the allowance in accordance with ASC Topic 310.  The collateral for a loan in which the Company participates was acquired by the lead bank.  The Company is entitled to 23.2% of the collateral value, which is farmland.  The Company transferred $375,000 to OREO after recording a $79,000 charge-off in the allowance in accordance with ASC Topic 310.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $505,000 to OREO.

During the second quarter of 2011, the Company entered into a sales agreement on a rental community consisting of 102 dwelling units for which the Company received a deed in lieu of foreclosure in the second quarter of 2010.  The Company recorded a $2.2 million impairment charge based on the expected net proceeds of the sale. Additional impairment was recorded on two commercial building lots in Maryland that were transferred to OREO during the third quarter of 2010.  After performing an impairment analysis using an updated appraisal on the two lots, the Company recorded a $355,000 impairment charge.  The Company recorded impairment charges of $156,000 related to properties acquired through the tax lien portfolio.

During the first quarter of 2011, the Company sold portions of collateral related to two loans.  The Company received net proceeds of $620,000 and recorded a net loss of $43,000.  As a result of the sales of three single family homes related to one loan, the Company recorded an impairment charge of $100,000 on the remaining collateral. In addition to the sales mentioned above the Company sold five properties acquired through the tax lien portfolio.  The Company received proceeds of $974,000 and recorded gains of $437,000 as a result of these sales.  During the first quarter of 2011, the Company entered into sales agreements on two properties and recorded impairment charges of $293,000 based on the expected net proceeds.  The Company acquired the collateral for one loan held for sale and transferred the fair value of $2.5 million to OREO in the first quarter of 2011.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $540,000 to OREO.

The Company is working to satisfactorily sell the remaining OREO properties using existing relationships and possible future auctions.  However the Company recognizes that due to the continued weak housing and commercial real estate markets the successful disposition of the properties will likely take considerable time.