Village Bank & Trust Financial Corp. - 10-Q filing on 2012-11-13

Loans and allowance for loan losses

9 Months Ended

Sep. 30, 2012

Loans and allowance for loan losses [Abstract]

Note 5 – Loans and allowance for loan losses

The following table presents the composition of our loan portfolio (excluding mortgage loans held for sale) at the dates indicated (dollars in thousands).

	September 30, 2012						December 31, 2011
	Amount			%			Amount			%
Construction and land development
Residential	$	4,938			1	%	$	7,906			2	%
Commercial		48,416			13	%		72,621			17	%
Total		53,354			14	%		80,527			19	%
Commercial real estate
Farmland		2,591			1	%		2,465			1	%
Commercial real estate
Owner occupied		97,187			25	%		105,592			24	%
Non-owner occupied		55,295			15	%		54,059			13	%
Multifamily		7,569			2	%		6,680			2	%
Total		162,642			43	%		168,796			39	%
Consumer real estate
Home equity lines		26,712			7	%		30,687			7	%
Secured by 1-4 family residential
Secured by first deed of trust		82,487			22	%		93,219			22	%
Secured by second deed of trust		9,892			3	%		12,042			3	%
Total		119,091			32	%		135,948			32	%
Commercial and industrial loans
(except those secured by real estate)		35,966			10	%		37,734			9	%

Consumer and other		3,298			1	%		4,865			1	%

Total loans		374,351			100	%		427,870			100	%
Deferred fees and costs		776						768
Allowance for loan losses		(12,056	)					(16,071	)

	$	363,071					$	412,567

The Company assigns risk rating classifications to its loans. These risk ratings are divided into the following groups:

·	Risk rated 1 to 4 loans are considered of sufficient quality to preclude an adverse rating. 1-4 assets generally are well protected by the current net worth and paying capacity of the obligor or by the value of the asset or underlying collateral;

·	Risk rated 5 loans are defined as having potential weaknesses that deserve management's close attention;

·	Risk rated 6 loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any, and;

·	Risk rated 7 loans have all the weaknesses inherent in substandard loans, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

The following tables provide information on the risk rating of loans at the dates indicated:

	September 30, 2012
	Risk Rated		Risk Rated		Risk Rated		Risk Rated		Total
		1-4		5		6		7	Loans

Construction and land development
Residential	$	4,074,705	$	671,709	$	191,544	$	-	$	4,937,958
Commercial		26,816,617		5,516,377		15,731,836		350,984		48,415,814
Total		30,891,322		6,188,086		15,923,380		350,984		53,353,772

Commercial real estate
Farmland		1,541,788				1,049,489		-		2,591,277
Commercial real estate
Owner occupied		69,783,788		8,412,897		18,770,066		220,195		97,186,946
Non-owner occupird		25,558,925		12,118,805		17,616,609		-		55,294,339
Multifamily		4,652,304		1,751,451		1,165,284		-		7,569,039
Total		101,536,805		22,283,153		38,601,448		220,195		162,641,601

Consumer real estate
Home equity lines		21,960,295		1,889,385		2,805,308		57,000		26,711,988
Secured by 1-4 family residential
Secured by first deed of trust		54,705,786		10,670,351		17,110,672		-		82,486,809
Secured by second deed of trust		7,866,200		455,326		1,570,968		-		9,892,494
Total		84,532,281		13,015,062		21,486,948		57,000		119,091,291

Commercial and industrial loans
(except those secured by real estate)		28,469,590		1,626,538		5,217,585		652,480		35,966,193

Consumer and other		2,936,909		206,052		154,950		-		3,297,911

Total loans	$	248,366,907	$	43,318,891	$	81,384,311	$	1,280,659	$	374,350,768

	December 31, 2011

	Risk Rated		Risk Rated		Risk Rated		Risk Rated		Total
		1-4		5		6		7	Loans
Construction and land development:
Residential
Commercial		4,943,061				2,963,404		-	$	7,906,465
Total construction and land development		44,315,474		-		28,305,063		-		72,620,537
		49,258,535		-		31,268,467		-		80,527,002
Commercial real estate:
Farmland
Commercial real estate - owner occupied		2,464,981		-		-		-		2,464,981
Commercial real estate - non-owner occupied		46,958,816		16,352,920		42,280,412		-		105,592,148
Multifamily		37,581,904		3,036,887		13,440,358		-		54,059,149
Total commercial real estate		5,511,882		-		1,167,446		-		6,679,328
		92,517,583		19,389,807		56,888,216		-		168,795,606
Consumer real estate:
Home equity lines
Secured by 1-4 family residential, secured by first deeds of trust		26,403,850		1,373,002		2,910,374		-		30,687,226
Secured by 1-4 family residential, secured by second deeds of trust		80,670,887		6,052,128		6,495,783		-		93,218,798
Total consumer real estate		9,960,928		706,484		1,374,651		-		12,042,063
		117,035,665		8,131,614		10,780,808		-		135,948,087
Commercial and industrial loans (except those secured by real estate)
		31,322,834		4,289,037		2,122,645		-		37,734,516
Consumer and other
		3,508,768		384,387		972,350		-		4,865,505
Total Loans
		293,643,385		32,194,845		102,032,486		-		427,870,716

The following table presents the aging of the recorded investment in past due loans and leases as of the dates indicated:

	September 30, 2012
													Recorded
					Greater								Investment >
	30-59 Days		60-89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing


Construction and land development
Residential	$	-	$	-	$	-	$	-	$	4,937,958	$	4,937,958	$	-
Commercial		11,291		449,955		-		461,246		47,954,568		48,415,814		-
Total		11,291		449,955		-		461,246		52,892,526		53,353,772		-

Commercial real estate
Farmland		-		-		-		-		2,591,277		2,591,277		-
Commercial real estate		-		379,961		-		379,961		96,806,985		97,186,946		-
Owner occupied		-		718,354		-		718,354		54,575,985		55,294,339		-
Non-owner occupied
Multifamily		-		-		-		-		7,569,039		7,569,039		-
Total		-		1,098,315		-		1,098,315		161,543,286		162,641,601		-

Consumer real estate
Home equity lines		188,130		782,639		97,158		1,067,927		25,644,061		26,711,988		97,158
Secured by 1-4 family residential
Secured by first deed of trust		2,204,913		707,010		369,792		3,281,715		79,205,094		82,486,809		369,792
Secured by second deed of trust		-		106,287		-		106,287		9,786,207		9,892,494		-
Total		2,393,043		1,595,936		466,950		4,455,929		114,635,362		119,091,291		466,950

Commercial and industrial loans
(except those secured by real estate)		68,652		357,954		15,418		442,024		35,524,169		35,966,193		15,418

Consumer and other		16,998		3,000		-		19,998		3,277,913		3,297,911		-

Total loans	$	2,489,984	$	3,505,160	$	482,368	$	6,477,512	$	367,873,256	$	374,350,768	$	482,368

	December 31, 2011
													Recorded
					Greater								Investment >
	30-59 Days		60-89 Days		Than		Total Past				Total		90 Days and
	Past Due		Past Due		90 Days		Due		Current		Loans		Accruing


Construction and land development
Residential	$	575,200	$	251,799	$	-	$	826,999	$	7,079,466	$	7,906,465	$	-
Commercial		1,367,360		408,000		36,770		1,812,130		70,808,407		72,620,537		36,770
Total		1,942,560		659,799		36,770		2,639,129		77,887,873		80,527,002		36,770

Commercial real estate
Farmland		-		-		-		-		2,464,981		2,464,981		-
Commercial real estate
Owner occupied		598,006		36,972		-		634,978		104,957,170		105,592,148		-
Non-owner occupied		55,709		673,561		-		729,270		53,329,879		54,059,149		-
Multifamily		111,571		255,196		-		366,767		6,312,561		6,679,328		-
Total		765,286		965,729		-		1,731,015		167,064,591		168,795,606		-

Consumer real estate:
Home equity lines		323,349		99,494		299,783		722,626		29,964,600		30,687,226		299,783
Secured by 1-4 family residential
Secured by first deed of trust		985,116		1,572,973		624,740		3,182,829		90,035,969		93,218,798		624,740
Secured by second deed of trust		12,673		132,928		156,026		301,627		11,740,436		12,042,063		156,026
Total		1,321,138		1,805,395		1,080,549		4,207,082		131,741,005		135,948,087		1,080,549

Commercial and industrial loans
(except those secured by real estate)		46,392		3,313		54,918		104,623		37,629,893		37,734,516		54,918

Consumer and other		59,697		3,176		-		62,873		4,802,632		4,865,505		-

Total loans	$	4,135,073	$	3,437,412	$	1,172,237	$	8,744,722	$	419,125,994	$	427,870,716	$	1,172,237

Loans are considered impaired when, based on current information and events it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Loans evaluated individually for impairment include non-performing loans, such as loans on non-accrual, loans past due by 90 days or more, restructured loans and other loans selected by management. The evaluations are based upon discounted expected cash flows or collateral valuations. If the evaluation shows that a loan is individually impaired then a specific reserve is established for the amount of impairment. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. September 30, 2012 and December 31, 2011 impaired loans are set forth in the following table.

	September 30, 2012

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance

With no related allowance recorded
Construction and land development
Residential	$	191,544	$	471,544	$	-
Commercial		9,219,142		15,132,049		-
Total		9,410,686		15,603,593		-
Commercial real estate
Farmland		1,049,489		1,049,489		-
Commercial real estate - owner occupied		8,484,371		8,514,955		-
Commercial real estate - non-owner occupied		12,915,719		13,061,948		-
Multifamily		1,574,878		1,574,878		-
Total		24,024,457		24,201,270		-
Consumer real estate
Home equity lines		1,175,230		1,307,554		-
Secured by 1-4 family residential, secured by first deeds of trust		9,328,458		10,460,195		-
Secured by 1-4 family residential, secured by second deeds of trust		640,995		864,571		-
Total		11,144,683		12,632,320		-
Commercial and industrial loans (except those secured by real estate)		748,040		1,535,397		-
Consumer and other		52,019		52,019		-
	$	45,379,885	$	54,024,599	$	-

With an allowance recorded
Construction and land development
Residential	$	-	$	-	$	-
Commercial		5,748,863		7,531,385		344,651
Total		5,748,863		7,531,385		344,651
Commercial real estate
Farmland
Commercial real estate - owner occupied		7,101,305		7,616,761		917,527
Commercial real estate - non-owner occupied		4,221,512		4,221,512		513,685
Multifamily		-		-		-
Total		11,322,817		11,838,273		1,431,212
Consumer real estate
Home equity lines		399,312		447,596		79,550
Secured by 1-4 family residential, secured by first deeds of trust		1,508,740		1,508,740		59,277
Secured by 1-4 family residential, secured by second deeds of trust		117,002		117,002		105,997
Total		2,025,054		2,073,338		244,824
Commercial and industrial loans (except those secured by real estate)		417,541		927,130		124,646
Consumer and other		-		-		-
	$	19,514,275	$	22,370,126	$	2,145,333

Total
Construction and land development
Residential	$	191,544	$	471,544	$	-
Commercial		14,968,005		22,663,434		344,651
Total		15,159,549		23,134,978		344,651
Commercial real estate
Farmland		1,049,489		1,049,489		-
Commercial real estate - owner occupied		15,585,676		16,131,716		917,527
Commercial real estate - non-owner occupied		17,137,231		17,283,460		513,685
Multifamily		1,574,878		1,574,878		-
Total		35,347,274		36,039,543		1,431,212
Consumer real estate
Home equity lines		1,574,542		1,755,150		79,550
Secured by 1-4 family residential, secured by first deeds of trust		10,837,198		11,968,935		59,277
Secured by 1-4 family residential, secured by second deeds of trust		757,997		981,573		105,997
Total		13,169,737		14,705,658		244,824
Commercial and industrial loans (except those secured by real estate)		1,165,581		2,462,527		124,646
Consumer and other		52,019		52,019		-
	$	64,894,160	$	76,394,725	$	2,145,333

	December 31, 2011
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance

With no related allowance recorded
Construction and land development
Residential	$	624,651	$	712,243	$	-
Commercial		9,722,132		11,094,408		-
Total		10,346,783		11,806,651		-
Commercial real estate
Farmland		-		-		-
Commercial real estate - owner occupied		6,414,362		6,414,362		-
Commercial real estate - non-owner occupied		7,146,531		7,146,531		-
Multifamily		2,019,675		2,019,675		-
Total		15,580,568		15,580,568		-
Consumer real estate
Home equity lines		702,338		702,338		-
Secured by 1-4 family residential, secured by first deeds of trust		6,319,837		6,792,837		-
Secured by 1-4 family residential, secured by second deeds of trust		336,257		336,257		-
Total		7,358,432		7,831,432		-
Commercial and industrial loans (except those secured by real estate)		1,194,913		1,494,913		-
Consumer and other		143,241		143,241		-
	$	34,623,937	$	36,856,805	$	-

With an allowance recorded
Construction and land development
Residential	$	587,235	$	587,235	$	320,250
Commercial		14,885,541		15,785,541		3,913,820
Total		15,472,776		16,372,776		4,234,070
Commercial real estate
Farmland		-		-		-
Commercial real estate - owner occupied		9,508,393		9,652,393		2,031,740
Commercial real estate - non-owner occupied		1,719,690		1,719,690		450,000
Multifamily		-		-		-
Total		11,228,083		11,372,083		2,481,740
Consumer real estate
Home equity lines		756,892		756,892		233,606
Secured by 1-4 family residential, secured by first deeds of trust		4,224,325		4,749,325		1,007,155
Secured by 1-4 family residential, secured by second deeds of trust		167,523		167,523		119,524
Total		5,148,740		5,673,740		1,360,285
Commercial and industrial loans (except those secured by real estate)		818,597		818,597		452,773
Consumer and other		267,166		267,166		266,178
	$	32,935,362	$	34,504,362	$	8,795,046

Total
Construction and land development
Residential	$	1,211,886	$	1,299,478	$	320,250
Commercial		24,607,673		26,879,949		3,913,820
Total		25,819,559		28,179,427		4,234,070
Commercial real estate
Farmland		-		-		-
Commercial real estate - owner occupied		15,922,755		16,066,755		2,031,740
Commercial real estate - non-owner occupied		8,866,221		8,866,221		450,000
Multifamily		2,019,675		2,019,675		-
Total		26,808,651		26,952,651		2,481,740
Consumer real estate
Home equity lines		1,459,230		1,459,230		233,606
Secured by 1-4 family residential, secured by first deeds of trust		10,544,162		11,542,162		1,007,155
Secured by 1-4 family residential, secured by second deeds of trust		503,780		503,780		119,524
Total		12,507,172		13,505,172		1,360,285
Commercial and industrial loans (except those secured by real estate)		2,013,510		2,313,510		452,773
Consumer and other		410,407		410,407		266,178
	$	67,559,299	$	71,361,167	$	8,795,046

The following is a summary of average recorded investment in impaired loans with and without a valuation allowance and interest income recognized on those loans for the three and nine months ended September 30, 2012.

	For the Three Months				For the Nine Months
	Ended September 30, 2012				Ended September 30, 2012

	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized

Impaired loans with no related allowance recorded

Construction and land development
Residential	$	248,422	$	3,050	$	191,544	$	14,791
Commercial		12,460,662		89,431		10,188,879		270,464
Total construction and land development		12,709,084		92,481		10,380,423		285,255
Commercial real estate
Farmland		1,049,489		2,000		1,049,489		17,405
Commercial real estate - owner occupied		7,770,119		213,499		8,631,653		439,458
Commercial real estate - non-owner occupied		12,778,883		437,034		13,340,847		677,127
Multifamily		1,361,630		44,333		1,580,204		71,631
Total commercial real estate		22,960,121		696,866		24,602,193		1,205,621
Consumer real estate
Home equity lines		1,454,661		22,556		1,175,339		55,535
Secured by 1-4 family residential, secured by first deeds of trust		9,222,570		78,162		9,142,698		308,917
Secured by 1-4 family residential, secured by second deeds of trust		674,842		4,677		646,695		22,789
Total consumer real estate		11,352,073		105,395		10,964,732		387,241
Commercial and industrial loans (except those secured by real estate)		876,549		5,416		816,643		27,325
Consumer and other		45,710		1,006		54,754		2,099
	$	47,943,537	$	901,164	$	46,818,745	$	1,907,541

Impaired loans with an allowance recorded

Construction and land development:
Residential	$	-	$	-	$	-	$	-
Commercial		4,896,911		-		5,929,859		1,373
Total construction and land development		4,896,911		-		5,929,859		1,373
Commercial real estate:
Farmland		-
Commercial real estate - owner occupied		7,380,990		398		7,362,455		52,668
Commercial real estate - non-owner occupied		4,482,345		-		4,304,172		26,222
Multifamily		-		-		-		-
Total commercial real estate		11,863,335		398		11,666,627		78,890
Consumer real estate:
Home equity lines		431,298		-		406,192		6,814
Secured by 1-4 family residential, secured by first deeds of trust		3,233,526		-		2,315,032		52,470
Secured by 1-4 family residential, secured by second deeds of trust		117,246		-		117,388		1,684
Total consumer real estate		3,782,070		-		2,838,612		60,968
Commercial and industrial loans (except those secured by real estate)		1,436,105		-		1,362,576		32,587
Consumer and other		-		-		-		-
	$	21,978,421	$	398	$	21,797,674	$	173,818
								-
Total
Construction and land development
Residential	$	248,422	$	3,050	$	191,544	$	14,791
Commercial		17,357,573		89,431		16,118,738		271,837
Total construction and land development		17,605,995		92,481		16,310,282		286,628
Commercial real estate
Farmland		1,049,489		2,000		1,049,489		17,405
Commercial real estate - owner occupied		15,151,109		213,897		15,994,108		492,126
Commercial real estate - non-owner occupied		17,261,228		437,034		17,645,019		703,349
Multifamily		1,361,630		44,333		1,580,204		71,631
Total commercial real estate		34,823,456		697,264		36,268,820		1,284,511
Consumer real estate
Home equity lines		1,885,959		22,556		1,581,531		62,349
Secured by 1-4 family residential, secured by first deeds of trust		12,456,096		78,162		11,457,730		361,387
Secured by 1-4 family residential, secured by second deeds of trust		792,088		4,677		764,083		24,473
Total consumer real estate		15,134,143		105,395		13,803,344		448,209
Commercial and industrial loans (except those secured by real estate)		2,312,654		5,416		2,179,219		59,912
Consumer and other		45,710		1,006		54,754		2,099
	$	69,921,958	$	901,562	$	68,616,419	$	2,081,359

	For the Three Months				For the Nine Months
	Ended September 30, 2011				Ended September 30, 2011

	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized

Impaired loans with no related allowance recorded

Construction and land development
Residential	$	343,992	$	-	$	168,361	$	4,045
Commercial		9,224,062		3,989		8,608,213		23,977
Total construction and land development		9,568,054		3,989		8,776,574		28,022
Commercial real estate
Farmland		-		-		-		-
Commercial real estate - owner occupied		1,253,390		-		1,651,229		-
Commercial real estate - non-owner occupied		2,289,859		-		1,866,440		49,627
Multifamily		187,721		-		974,736		-
Total commercial real estate		3,730,970		-		4,492,405		49,627
Consumer real estate
Home equity lines		32,607		765		204,024		13,153
Secured by 1-4 family residential, secured by first deeds of trust		9,045,607		-		8,154,334		56,654
Secured by 1-4 family residential, secured by second deeds of trust		160,812		348		189,526		3,397
Total consumer real estate		9,239,026		1,113		8,547,884		73,204
Commercial and industrial loans (except those secured by real estate)		3,984,776		-		2,764,133		27,667
Consumer and other		351,876		-		196,895		272
	$	26,874,702	$	5,102	$	24,777,891	$	178,792

Impaired loans with an allowance recorded

Construction and land development:
Residential	$	184,660	$	-	$	138,495	$	-
Commercial		14,083,611		1,630		13,828,972		4,785
Total construction and land development		14,268,271		1,630		13,967,467		4,785
Commercial real estate:
Farmland		-
Commercial real estate - owner occupied		1,753,731		-		2,220,067		-
Commercial real estate - non-owner occupied		558,472		-		418,854		-
Multifamily		-		-		-		-
Total commercial real estate		2,312,203		-		2,638,921		-
Consumer real estate:
Home equity lines		246,129		-		203,270		-
Secured by 1-4 family residential, secured by first deeds of trust		3,233,526		-		2,990,049		2,502
Secured by 1-4 family residential, secured by second deeds of trust		80,999		450		80,999		729
Total consumer real estate		3,560,654		450		3,274,318		3,231
Commercial and industrial loans (except those secured by real estate)		-		-		-		-
Consumer and other		-		-		-		-
	$	20,141,128	$	2,080	$	19,880,706	$	8,016
								-
Total
Construction and land development
Residential	$	528,652	$	-	$	306,856	$	4,045
Commercial		23,307,673		5,619		22,437,185		28,762
Total construction and land development		23,836,325		5,619		22,744,041		32,807
Commercial real estate
Farmland		-		-		-		-
Commercial real estate - owner occupied		3,007,121		-		3,871,296		-
Commercial real estate - non-owner occupied		2,848,331		-		2,285,294		49,627
Multifamily		187,721		-		974,736		-
Total commercial real estate		6,043,173		-		7,131,326		49,627
Consumer real estate
Home equity lines		278,736		765		407,294		13,153
Secured by 1-4 family residential, secured by first deeds of trust		12,279,133		-		11,144,383		59,156
Secured by 1-4 family residential, secured by second deeds of trust		241,811		798		270,525		4,126
Total consumer real estate		12,799,680		1,563		11,822,202		76,435
Commercial and industrial loans (except those secured by real estate)		3,984,776		-		2,764,133		27,667
Consumer and other		351,876		-		196,895		272
	$	47,015,830	$	7,182	$	44,658,597	$	186,808

Included in impaired loans are loans classified as troubled debt restructurings (TDRs). A modification of a loan's terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrowers financial difficulties that it would not otherwise consider. For loans classified as impaired TDRs, the Company further evaluates the loans as performing or nonperforming. If, at the time of restructure, the loan is not considered nonaccrual, it will be classified as performing. TDRs originally classified as nonperforming are able to be reclassified as performing if, subsequent to restructure, they experience six months of payment performance according to the restricted terms. The following is a summary of performing and nonaccrual TDRs and the related specific valuation allowance by portfolio segment as of the dates indicated.

	Three Months Ended September 30, 2012
							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance

Construction and land development
Commercial	$	39,769	$	-	$	39,769	$	-
Total		39,769		-		39,769		-
Commercial real estate:
Commercial real estate - owner occupied		-		-		-
Commercial real estate - non-owner occupied		4,737,776		4,276,511		461,265		-
Multifamily		634,594		-		-		-
Total		5,372,370		4,276,511		461,265		-
Consumer real estate:
Secured by 1-4 family residential, secured by first deeds of trust		1,042,595		599,242		443,353		17,949
Total		1,042,595		599,242		443,353		17,949
Commercial and industrial loans (except those secured by real estate)		199,964		-		199,964
	$	6,654,698	$	4,875,753	$	1,144,351	$	17,949

	Nine Months Ended September 30, 2012
							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance

Construction and land development:
Residential	$	191,544	$	-	$	191,544	$	-
Commercial		9,876,951		5,165,826		4,711,125		278,000
Total construction and land development		10,068,495		5,165,826		4,902,669		278,000
Commercial real estate:
Commercial real estate - owner occupied		10,385,569		5,886,028		4,499,541		779,111
Commercial real estate - non-owner occupied		13,760,683		7,759,407		6,001,276		719,226
Multifamily		1,210,273		1,210,273		-		-
Total commercial real estate		25,356,525		14,855,708		10,500,817		1,498,337
Consumer real estate:
Home equity lines		349,192		-		349,192		45,590
Secured by 1-4 family residential, secured by first deeds of trust		5,384,930		2,069,732		3,315,198		17,949
Secured by 1-4 family residential, secured by second deeds of trust		69,815		-		69,815		68,200
Total consumer real estate		5,803,937		2,069,732		3,734,205		131,739
Commercial and industrial loans (except those secured by real estate)		456,028		6,180		449,848		80,943
	$	41,684,985	$	22,097,446	$	19,587,539	$	1,989,019


	Three Months Ended September 30, 2011
							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance

Construction and land development
Commercial	$	2,655,029		-	$	2,655,029		823,522
Total		2,655,029		-		2,655,029		823,522
Commercial real estate
Commercial real estate - owner occupied		-		-		-
Commercial real estate - non-owner occupied		-		-		-
Multifamily		-		-		-		-
Total		-		-		-		-
Consumer real estate
Secured by 1-4 family residential, secured by first deeds of trust		3,837,577		3,837,577		-		404,000
Total		3,837,577		3,837,577		-		404,000
Commercial and industrial loans (except those secured by real estate)		360,000		-		360,000		-
	$	6,852,606	$	3,837,577	$	3,015,029	$	1,227,522

	Nine Months Ended September 30, 2011
							Specific
							Valuation
	Total		Performing		Nonaccrual		Allowance

Construction and land development
Residential	$	-	$	-	$	-	$	-
Commercial		5,495,511		600,000		4,895,511		864,868
Total		5,495,511		600,000		4,895,511		864,868
Commercial real estate
Commercial real estate - owner occupied		-		-		-		-
Commercial real estate - non-owner occupied		775,456		775,456		-		-
Multifamily		-		-		-		-
Total		775,456		775,456		-		-
Consumer real estate
Home equity lines		-		-		-		-
Secured by 1-4 family residential, secured by first deeds of trust		3,837,577		3,837,577		-		404,000
Secured by 1-4 family residential, secured by second deeds of trust		-		-		-		-
Total		3,837,577		3,837,577		-		404,000
Commercial and industrial loans (except those secured by real estate)		360,000		-		360,000		-
	$	10,468,544	$	5,213,033	$	5,255,511	$	1,268,868

The following table provides information about TDRs identified during the current period:

	September 30, 2012
			Pre-		Post-
	Number		Modification		Modification
	of		Recorded		Recorded
	Loans		Balance		Balance

Construction and land development
Residential		-	$	-	$	-
Commercial		1		39,769		39,769
Total		1		39,769		39,769
Commercial real estate
Farmland				-		-
Commercial real estate - owner occupied		-		-		-
Commercial real estate - non-owner occupied		7		4,737,776		4,737,776
Multifamily		1		634,594		634,594
Total		8		5,372,370		5,372,370
Consumer real estate
Home equity lines		-		-		-
Secured by 1-4 family residential, secured by first deeds of trust		4		1,042,595		1,042,595
Secured by 1-4 family residential, secured by second deeds of trust		-		-		-
Total		4		1,042,595		1,042,595
Commercial and industrial loans (except those secured by real estate)		1		199,964		199,964
Consumer and other		-		-		-
		14	$	6,654,698	$	6,654,698

	September 30, 2012
	Number
	of		Recorded
Defaults on TDRs	Loans		Balance
Construction and land development
Residential		-	$	-
Commercial		1		39,769
Total		1		39,769
Commercial real estate
Farmland		-		-
Commercial real estate - owner occupied		-		-
Commercial real estate - non-owner occupied		1		461,265
Multifamily		1		461,265
Total
Consumer real estate
Home equity lines		-		-
Secured by 1-4 family residential, secured by first deeds of trust		-		-
Secured by 1-4 family residential, secured by second deeds of trust		-		-
Total		-		-
Commercial and industrial loans (except those secured by real estate)		1		119,964
Consumer and other		-		-
		3	$	620,998

	Nine Months Ended						Year Ended
	September 30, 2012						December 31, 2011
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Balance		Balance		Loans		Balance		Balance

Construction and land development:
Residential		3	$	191,544	$	191,544			$	-	$	-
Commercial		12		3,938,672		3,938,672		11		6,604,400		6,604,400
Total construction and land development		15		4,130,216		4,130,216		11	$	6,604,400		6,604,400
Commercial real estate:												-
Farmland				-		-						-
Commercial real estate - owner occupied		1		1,388,851		1,388,851		9		9,748,062		9,748,062
Commercial real estate - non-owner occupied		9		9,665,791		9,665,791		5		4,031,868		4,031,868
Multifamily		1		634,594		634,594				-		-
Total commercial real estate		11		11,689,236		11,689,236		14		13,779,930		13,779,930
Consumer real estate:
Home equity lines		1		349,192		349,192				-		-
Secured by 1-4 family residential, secured by first deeds of trust		39		4,505,468		4,505,468		2		1,422,772		1,422,772
Secured by 1-4 family residential, secured by second deeds of trust		1		69,815		69,815				-		-
Total consumer real estate		41		4,924,475		4,924,475		2		1,422,772		1,422,772
Commercial and industrial loans (except those secured by real estate)		6		456,028		456,028		3		159,073		159,073
Consumer and other		-		-		-		1		128,419		128,419
		73	$	21,199,955	$	21,199,955		31	$	21,966,175	$	21,966,175

	Nine Months Ended						Year Ended
	September 30, 2012						December 31, 2011
	Number of		Recorded				Number of		Recorded
Defaults on TDRs	Loans		Balance				Loans		Balance
Construction and land development:
Residential		3	$	191,544				-	$	-
Commercial		17		4,703,352				8		11,389,291
Total construction and land development		20		4,894,896				8		11,389,291
Commercial real estate:
Farmland		-		-
Commercial real estate - owner occupied		3		496,933				2		2,202,688
Commercial real estate - non-owner occupied		1		461,265						-
Multifamily		4		958,198				2		2,202,688
Total commercial real estate
Consumer real estate:
Home equity lines		1		349,192
Secured by 1-4 family residential, secured by first deeds of trust		20		2,459,862				2		1,422,772
Secured by 1-4 family residential, secured by second deeds of trust		1		69,815						-
Total consumer real estate		22		2,878,869				2		1,422,772
Commercial and industrial loans (except those secured by real estate)		5		449,848				2		151,790
Consumer and other		-		-				1		128,419
Total		51	$	9,181,811				15	$	15,294,960

	Three Months Ended						Nine Months Ended
	September 30, 2011						September 30, 2011
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
	Number of		Recorded		Recorded		Number of		Recorded		Recorded
	Loans		Balance		Balance		Loans		Balance		Balance

Construction and land development:
Residential			$	-	$	-					$	-
Commercial		2		2,655,029		2,655,029		7		5,495,511		5,495,511
Total construction and land development		2		2,655,029		2,655,029		7	$	5,495,511		5,495,511
Commercial real estate:												-
Farmland				-		-						-
Commercial real estate - owner occupied				-		-		-				-
Commercial real estate - non-owner occupied				-		-		1		775,456		775,456
Multifamily				-		-						-
Total commercial real estate		-		-		-		1		775,456		775,456
Consumer real estate:
Home equity lines				-		-				-		-
Secured by 1-4 family residential, secured by first deeds of trust		3		3,837,577		3,837,577		3		3,837,577		3,837,577
Secured by 1-4 family residential, secured by second deeds of trust				-		-				-		-
Total consumer real estate		3		3,837,577		3,837,577		3		3,837,577		3,837,577
Commercial and industrial loans (except those secured by real estate)		2		360,000		360,000		2		360,000		360,000
		7		6,852,606		6,852,606		13		10,468,544		10,468,544

	Three Months Ended						Nine Months Ended
	September 30, 2011						September 30, 2011
	Number of		Recorded				Number of		Recorded
Defaults on TDRs	Loans		Balance				Loans		Balance
Construction and land development:
Commercial		4	$	5,822,810				10		11,475,296
Total construction and land development		4		5,822,810				10		11,475,296
Commercial real estate:
Commercial real estate - owner occupied		1		2,180,716				1		2,180,716
Total commercial real estate		1		2,180,716				1		2,180,716
Commercial and industrial loans (except those secured by real estate)		2		360,000				2		360,000
Total		7	$	8,363,526				13	$	14,016,012

Activity in the allowance for loan losses is as follows for the periods indicated:

	Construction and			Construction and						Commercial			Commercial
	land development			land development						Real estate			Real estate
	Residential			Commercial			Farmland			owner occupied			non-owner occupied			Multifamily
Nine months ended September 30, 2012
Beginning balance	$	704,728		$	6,798,177		$	-		$	1,496,466		$	1,548,899		$	406,635
Provision for loan losses		542,067			3,444,160			-			623,552			(300,898	)		(373,238	)
Charge-offs		(797,286	)		(5,505,724	)		-			(684,670	)		(431,354	)		-
Recoveries		44,783			4,595			-			-			205			-
Ending balance		494,292			4,741,208			-			1,435,348			816,852			33,397

Loans Individually Evaluated for Impairment		1,190,484			32,649,687			1,394,273			70,478,705			42,844,047			5,683,101
Loans collectively Evaluated for Impairment		3,747,474			15,766,127			1,197,004			26,708,241			12,450,292			1,885,938
	$	4,937,958		$	48,415,814		$	2,591,277		$	97,186,946		$	55,294,339		$	7,569,039

				Consumer Secured			Consumer Secured			Commercial and
	Consumer			by 1-4 family residential			by 1-4 family residential			Industrial (except those
	Home equity lines			first deeds of trust			second deeds of trust			secured by real estate)			Consumer and Other			Total

Beginning balance	$	860,307		$	1,881,470		$	397,504		$	1,655,713		$	321,525		$	16,071,424
Provision for loan losses		668,614			2,610,905			468,192			1,230,555			181,091			9,095,000
Charge-offs		(681,405	)		(3,045,937	)		(427,882	)		(1,427,841	)		(403,680	)		(13,405,779	)
Recoveries		8,461			80,804			4,633			146,984			4,734			295,199
Ending balance		855,977			1,527,242			442,447			1,605,411			103,670			12,055,844

Loans Individually Evaluated for Impairment		1,416,634			13,734,018			562,841			16,008,630			-			185,962,420
Loans collectively Evaluated for Impairment		25,295,354			68,752,791			9,329,653			19,957,563			3,297,911			188,388,348
	$	26,711,988		$	82,486,809		$	9,892,494		$	35,966,193		$	3,297,911		$	374,350,768


	Construction and			Construction and						Commercial			Commercial
	land development			land development						Real estate			Real estate
	Residential			Commercial			Farmland			owner occupied			non-owner occupied			Multifamily
Three months ended September 30, 2012
Beginning balance		599,554			4,562,330						2,520,907			1,400,093			92,728
Provision for loan losses		(146,645	)		1,907,303			-			(710,375	)		(465,241	)		(59,331	)
Charge-offs		(2,500	)		(1,732,520	)		-			(375,184	)		(118,000	)		-
Recoveries		43,883			4,095			-			-			-			-
Ending balance		494,292			4,741,208			-			1,435,348			816,852			33,397

Loans Individually Evaluated for Impairment		1,190,484			32,649,687			1,394,273			70,478,705			42,844,047			5,683,101
Loans collectively Evaluated for Impairment		3,747,474			15,766,127			1,197,004			26,708,241			12,450,292			1,885,938
	$	4,937,958		$	48,415,814		$	2,591,277		$	97,186,946		$	55,294,339		$	7,569,039

				Consumer Secured			Consumer Secured			Commercial and
	Consumer			by 1-4 family residential			by 1-4 family residential			Industrial (except those
	Home equity lines			first deeds of trust			second deeds of trust			secured by real estate)			Consumer and Other			Total

Beginning balance	$	776,732		$	2,038,947		$	375,552		$	2,345,245		$	153,633		$	14,865,721
Provision for loan losses		461,686			(55,146	)		298,168			(480,271	)		(50,148	)		700,000
Charge-offs		(389,585	)		(456,559	)		(231,273	)		(272,059	)		(1,374	)		(3,579,054	)
Recoveries		7,144			-			-			12,496			1,559			69,177
Ending balance		855,977			1,527,242			442,447			1,605,411			103,670			12,055,844

Loans Individually Evaluated for Impairment		1,416,634			13,734,018			562,841			16,008,630			-			185,962,420
Loans collectively Evaluated for Impairment		25,295,354			68,752,791			9,329,653			19,957,563			3,297,911			188,388,348
	$	26,711,988		$	82,486,809		$	9,892,494		$	35,966,193		$	3,297,911		$	374,350,768

	Construction and		Construction and					Commercial		Commercial
	land development		land development					Real estate		Real estate
	Residential		Commercial			Farmland		owner occupied		non-owner occupied		Multifamily
Three months ended September 30, 2011
Beginning balance	$	493,841	$	3,142,119		$	-	$	78,445	$	26,174	$	(82,501	)
Provision for loan losses		152,747		3,380,084			-		1,314,523		1,416,169		461,041
Charge-offs		-		(193,251	)		-		-		-		-
Recoveries		8,750		-			-		-		-		-
Ending balance		655,338		6,328,952			-		1,392,968		1,442,343		378,540

Loans Individually Evaluated for Impairment		3,900,611		28,604,482			-		90,752,748		47,537,154		5,762,076
Loans collectively Evaluated for Impairment		6,397,303		47,565,048			2,026,014		12,819,848		6,926,201		983,943
	$	10,297,914	$	76,169,530		$	2,026,014	$	103,572,596	$	54,463,355	$	6,746,019

				Consumer Secured			Consumer Secured			Commercial and
	Consumer			by 1-4 family residential			by 1-4 family residential			Industrial (except those
	Home equity lines			first deeds of trust			second deeds of trust			secured by real estate)			Consumer and Other			Total

Beginning balance	$	169,497		$	1,703,207		$	462,249		$	927,948		$	335,635		$	7,256,614
Provision for loan losses		831,159			164,474			76,189			1,655,766			55,732			9,507,884
Charge-offs		(200,397	)		(115,624	)		(167,379	)		(1,042,622	)		(93,414	)		(1,812,687	)
Recoveries		211			-			-			-			1,290			10,251
Ending balance		800,470			1,752,057			371,059			1,541,092			299,243			14,962,062

Loans Individually Evaluated for Impairment		3,976,796			12,172,119			1,066,215			14,828,282			3,976,796		$	212,577,279
Loans collectively Evaluated for Impairment		28,973,441			82,417,488			11,428,907			23,133,570			814,921			223,486,684
	$	32,950,237		$	94,589,607		$	12,495,122		$	37,961,852		$	4,791,717		$	436,063,963

	Construction and		Construction and					Commercial		Commercial
	land development		land development					Real estate		Real estate
	Residential		Commercial			Farmland		owner occupied		non-owner occupied			Multifamily
Nine months ended September 30, 2011
Beginning balance	$	293,841	$	2,832,119		$	-	$	78,445	$	20,477		$	-
Provision for loan losses		352,747		3,680,084			-		1,314,523		1,666,169			461,041
Charge-offs		-		(193,251	)		-		-		(244,303	)		(82,501	)
Recoveries		8,750		10,000			-		-		-			-
Ending balance		655,338		6,328,952			-		1,392,968		1,442,343			378,540

Loans Individually Evaluated for Impairment		3,900,611		28,604,482			-		90,752,748		47,537,154			5,762,076
Loans collectively Evaluated for Impairment		6,397,303		47,565,048			2,026,014		12,819,848		6,926,201			983,943
	$	10,297,914	$	76,169,530		$	2,026,014	$	103,572,596	$	54,463,355		$	6,746,019

				Consumer Secured			Consumer Secured			Commercial and
	Consumer			by 1-4 family residential			by 1-4 family residential			Industrial (except those
	Home equity lines			first deeds of trust			second deeds of trust			secured by real estate)			Consumer and Other			Total

Beginning balance	$	641,975		$	1,403,207		$	297,401		$	1,315,582		$	428,665		$	7,311,712
Provision for loan losses		1,281,159			464,474			276,189			1,858,766			55,732		$	11,410,884
Charge-offs		(1,124,221	)		(115,624	)		(202,531	)		(1,635,256	)		(186,886	)		(3,784,573	)
Recoveries		1,557			-			-			2,000			1,732			24,039
Ending balance		800,470			1,752,057			371,059			1,541,092			299,243			14,962,062

Loans Individually Evaluated for Impairment		3,976,796			12,172,119			1,066,215			14,828,282			3,976,796		$	212,577,279
Loans collectively Evaluated for Impairment		28,973,441			82,417,488			11,428,907			23,133,570			814,921			223,486,684
	$	32,950,237		$	94,589,607		$	12,495,122		$	37,961,852		$	4,791,717		$	436,063,963

	Construction and			Construction and					Commercial			Commercial
	land development			land development					Real estate			Real estate
	Residential			Commercial			Farmland		owner occupied			non-owner occupied			Multifamily
Year ended December 31, 2011
Beginning balance	$	293,841		$	2,832,119		$	-	$	78,445		$	20,477		$	-
Provision for loan losses		467,187			8,249,320			-		1,568,052			1,871,804			489,136
Charge-offs		(65,500	)		(4,293,262	)		-		(150,031	)		(343,382	)		(82,501	)
Recoveries		9,200			10,000			-		-			-			-
Ending balance		704,728			6,798,177			-		1,496,466			1,548,899			406,635

Loans Individually Evaluated for Impairment		1,831,478			30,292,460			-		91,008,321			45,529,918			5,625,490
Loans collectively Evaluated for Impairment		6,074,987			42,328,077			2,464,981		14,583,827			8,529,231			1,053,838
	$	7,906,465		$	72,620,537		$	2,464,981	$	105,592,148		$	54,059,149		$	6,679,328

				Consumer Secured			Consumer Secured			Commercial and
	Consumer			by 1-4 family residential			by 1-4 family residential			Industrial (except those
	Home equity lines			first deeds of trust			second deeds of trust			secured by real estate)			Consumer and Other			Total

Beginning balance	$	641,975		$	1,403,207		$	297,401		$	1,315,582		$	428,665		$	7,311,712
Provision for loan losses		1,447,272			1,571,813			462,634			2,496,729			140,349			18,764,296
Charge-offs		(1,232,153	)		(1,129,509	)		(362,531	)		(2,159,669	)		(249,526	)		(10,068,063	)
Recoveries		3,213			35,959			-			3,070			2,037			63,479
Ending balance		860,307			1,881,470			397,504			1,655,713			321,525			16,071,424

Loans Individually Evaluated for Impairment		4,314,190			13,105,245			1,692,944			14,343,224			3,501,524			211,244,794
Loans collectively Evaluated for Impairment		26,373,036			80,113,553			10,349,119			23,391,292			1,363,981			216,625,922
	$	30,687,226		$	93,218,798		$	12,042,063		$	37,734,516		$	4,865,505		$	427,870,716