JUNIATA VALLEY FINANCIAL CORP - Quarter Report: 2011 March (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-13232

Juniata Valley Financial Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania		23-2235254
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
Bridge and Main Streets, Mifflintown, Pennsylvania		17059
(Address of principal executive offices)		(Zip Code)

(717) 436-8211

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of May 9, 2011
Common Stock ($1.00 par value)		4,238,265 shares

 

 

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2011 and December 31, 2010 (Unaudited)			3
Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010 (Unaudited)			4
Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2011 and 2010 (Unaudited)			5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited)			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures about Market Risk			29
Item 4. Controls and Procedures			31
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 3. Defaults upon Senior Securities			32
Item 4. (Removed and Reserved)			32
Item 5. Other Information			32
Item 6. Exhibits			32
Signatures			33
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements

Juniata Valley Financial Corp. and Subsidiary

(Unaudited, in thousands, except share data)

		March 31,				December 31,
		2011				2010
ASSETS
Cash and due from banks		$	8,481			$	12,758
Interest bearing deposits with banks			147				218
Federal funds sold			4,900				12,300
Cash and cash equivalents			13,528				25,276
Interest bearing time deposits with banks			1,096				1,345
Securities available for sale			100,982				79,923
Restricted investment in Federal Home Loan Bank (FHLB) stock			1,983				2,088
Investment in unconsolidated subsidiary			3,607				3,550
Total loans, net of unearned interest			297,450				298,102
Less: Allowance for loan losses			(2,901	)			(2,824	)
Total loans, net of allowance for loan losses			294,549				295,278
Premises and equipment, net			6,943				7,067
Other real estate owned			340				412
Bank owned life insurance and annuities			13,693				13,568
Core deposit intangible			243				254
Goodwill			2,046				2,046
Accrued interest receivable and other assets			5,730				4,946
Total assets		$	444,740			$	435,753
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing		$	62,219			$	60,696
Interest bearing			324,198				316,094
Total deposits			386,417				376,790
Securities sold under agreements to repurchase			2,631				3,314
Other interest bearing liabilities			1,201				1,200
Accrued interest payable and other liabilities			4,588				4,473
Total liabilities			394,837				385,777
Stockholders’ Equity:
Preferred stock, no par value:
Authorized — 500,000 shares, none issued			—				—
Common stock, par value $1.00 per share:
Authorized — 20,000,000 shares
Issued — 4,745,826 shares
Outstanding —
4,238,265 shares at March 31, 2011;
4,257,765 shares at December 31, 2010			4,746				4,746
Surplus			18,360				18,354
Retained earnings			38,213				37,868
Accumulated other comprehensive loss			(1,558	)			(1,465	)
Cost of common stock in Treasury:
507,561 shares at March 31, 2011;
488,061 shares at December 31, 2010			(9,858	)			(9,527	)
Total stockholders’ equity			49,903				49,976
Total liabilities and stockholders’ equity		$	444,740			$	435,753

See accompanying notes to consolidated financial statements.

Juniata Valley Financial Corp. and Subsidiary

(Unaudited)

(in thousands, except share data)

		Three Months Ended
		March 31,
		2011				2010
Interest income:
Loans, including fees		$	4,592			$	5,036
Taxable securities			253				233
Tax-exempt securities			233				275
Federal funds sold			2				1
Other interest income			8				9
Total interest income			5,088				5,554
Interest expense:
Deposits			1,175				1,519
Securities sold under agreements to repurchase			1				1
Short-term borrowings			—				1
Long-term debt			—				34
Other interest bearing liabilities			7				3
Total interest expense			1,183				1,558
Net interest income			3,905				3,996
Provision for loan losses			88				285
Net interest income after provision for loan losses			3,817				3,711
Noninterest income:
Trust fees			113				120
Customer service fees			312				382
Earnings on bank-owned life insurance and annuities			119				122
Commissions from sales of non-deposit products			103				96
Income from unconsolidated subsidiary			65				56
Gain on sales or calls of securities			5				12
Gain (Loss) on sales of other assets			15				(1	)
Other noninterest income			292				236
Total noninterest income			1,024				1,023
Noninterest expense:
Employee compensation expense			1,255				1,286
Employee benefits			401				416
Occupancy			243				233
Equipment			155				119
Data processing expense			322				365
Director compensation			77				87
Professional fees			139				93
Taxes, other than income			127				130
FDIC Insurance premiums			133				147
Amortization of intangibles			11				11
Other noninterest expense			315				258
Total noninterest expense			3,178				3,145
Income before income taxes			1,663				1,589
Provision for income taxes			424				401
Net income		$	1,239			$	1,188
Earnings per share
Basic		$	0.29			$	0.27
Diluted		$	0.29			$	0.27
Cash dividends declared per share		$	0.21			$	0.20
Weighted average basic shares outstanding			4,255,982				4,330,136
Weighted average diluted shares outstanding			4,259,061				4,334,000

See accompanying notes to consolidated financial statements.

Juniata Valley Financial Corp. and Subsidiary

(Unaudited)

(in thousands, except share data)

Three Months Ended March 31, 2011

		Number																Accumulated
		of																Other								Total
		Shares				Common								Retained				Comprehensive				Treasury				Stockholders’
		Outstanding				Stock				Surplus				Earnings				Loss				Stock				Equity
Balance at December 31, 2010			4,257,765			$	4,746			$	18,354			$	37,868			$	(1,465	)		$	(9,527	)		$	49,976
Comprehensive income:
Net income															1,239												1,239
Change in unrealized gains on securities available for sale, net of reclassification adjustment and tax effects																			(119	)							(119	)
Defined benefit retirement plan adjustments, net of tax effects																			26								26
Total comprehensive income																											1,146
Cash dividends at $0.21 per share															(894	)											(894	)
Stock-based compensation activity											6																6
Purchase of treasury stock			(19,500	)																			(331	)			(331	)
Balance at March 31, 2011			4,238,265			$	4,746			$	18,360			$	38,213			$	(1,558	)		$	(9,858	)		$	49,903

Three Months Ended March 31, 2010

		Number																Accumulated
		of																Other								Total
		Shares				Common								Retained				Comprehensive				Treasury				Stockholders’
		Outstanding				Stock				Surplus				Earnings				Income (Loss)				Stock				Equity
Balance at December 31, 2009			4,337,587			$	4,746			$	18,315			$	36,478			$	(805	)		$	(8,131	)		$	50,603
Comprehensive income:
Net income															1,188												1,188
Change in unrealized gains on securities available for sale, net of reclassification adjustment and tax effects																			140								140
Defined benefit retirement plan adjustments, net of tax effects																			21								21
Total comprehensive income																											1,349
Cash dividends at $0.21 per share															(867	)											(867	)
Stock-based compensation activity											12																12
Purchase of treasury stock			(16,100	)																			(284	)			(284	)
Balance at March 31, 2010			4,321,487			$	4,746			$	18,327			$	36,799			$	(644	)		$	(8,415	)		$	50,813

See accompanying notes to consolidated financial statements.

Juniata Valley Financial Corp. and Subsidiary

(Unaudited)

(in thousands)

		Three Months Ended March 31
		2011				2010
Operating activities:
Net income		$	1,239			$	1,188
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses			88				285
Depreciation			152				127
Net amortization of securities premiums			77				70
Amortization of core deposit intangible			11				11
Net amortization of loan origination costs			14				5
Deferral of net loan costs			15				39
Net realized gains on sales or calls of securities			(5	)			(12	)
(Gains) losses on sales of other real estate owned			(15	)			1
Earnings on bank owned life insurance and annuities			(119	)			(122	)
Deferred income tax expense			30				19
Equity in earnings of unconsolidated subsidiary, net of dividends of $10 and $9			(55	)			(47	)
Stock-based compensation expense			6				12
Increase in accrued interest receivable and other assets			(726	)			(432	)
Increase (decrease) in accrued interest payable and other liabilities			122				(114	)
Net cash provided by operating activities			834				1,030
Investing activities:
Purchases of:
Securities available for sale			(25,708	)			(10,226	)
Premises and equipment			(28	)			(98	)
Bank owned life insurance and annuities			(18	)			(30	)
Proceeds from:
Maturities and calls of and principal repayments on securities available for sale			4,394				12,754
Redemption of FHLB stock			105				—
Bank owned life insurance and annuities			6				17
Sale of other real estate owned			166				296
Sale of other assets			—				11
Net decrease in interest-bearing time deposits			249				75
Net decrease (increase) in loans receivable			533				(330	)
Net cash (used in) provided by investing activities			(20,301	)			2,469
Financing activities:
Net increase (decrease) in deposits			9,627				(2,766	)
Net decrease in securities sold under agreements to repurchase			(683	)			(655	)
Cash dividends			(894	)			(867	)
Purchase of treasury stock			(331	)			(284	)
Net cash provided by (used in) financing activities			7,719				(4,572	)
Net decrease in cash and cash equivalents			(11,748	)			(1,073	)
Cash and cash equivalents at beginning of period			25,276				19,895
Cash and cash equivalents at end of period		$	13,528			$	18,822
Supplemental information:
Interest paid		$	1,187			$	1,595
Income taxes paid		$	75			$	200
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to other real estate owned and repossessed assets		$	79			$	112

See accompanying notes to consolidated financial statements.

Juniata Valley Financial Corp. and Subsidiary

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Basis of Presentation and Accounting Policies

The financial information includes the accounts of Juniata Valley Financial Corp. (the “Corporation”) and its wholly owned subsidiary, The Juniata Valley Bank (the “Bank”). All significant intercompany accounts and transactions have been eliminated.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three-month period ended March 31, 2011, are not necessarily indicative of the results for the year ended December 31, 2011. For further information, refer to the consolidated financial statements and footnotes thereto included in Juniata Valley Financial Corp.’s Annual Report on Form 10-K for the year ended December 31, 2010.

The Corporation has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2011 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

NOTE 2 — Recent Accounting Pronouncements

ASU 2011-02

The Financial Accounting Standards Board (FASB) has issued this Accounting Standards Update (ASU) to clarify the accounting principles applied to loan modifications, as defined by FASB Accounting Standards Codification (ASC) Subtopic 310-40, Receivables — Troubled Debt Restructurings by Creditors. This guidance was prompted by the increased volume in loan modifications prompted by the recent economic downturn. The ASU clarifies guidance on a creditor’s evaluation of whether or not a concession has been granted, with an emphasis on evaluating all aspects of the modification rather than a focus on specific criteria, such as the effective interest rate test, to determine a concession. The ASU goes on to provide guidance on specific types of modifications such as changes in the interest rate of the borrowing, and insignificant delays in payments, as well as guidance on the creditor’s evaluation of whether or not a debtor is experiencing financial difficulties.

For public entities, the amendments in the ASU are effective for the first interim or annual periods beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. The entity should also disclose information required by ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which had previously been deferred by ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in ASU No. 2010-20, for interim and annual periods beginning on or after June 15, 2011. Nonpublic entities are required to adopt the amendments in this Update for annual periods ending on or after December 15, 2012. Early adoption is permitted. This guidance will not have a significant impact on the Corporation’s financial position or results of operations.

ASU 2010-29

The objective of this ASU is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations.

Subsection 805-10-50-2(h) requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period.

In practice, some preparers have presented the pro forma information in their comparative financial statements as if the business combination that occurred in the current reporting period had occurred as of the beginning of each of the current and prior annual reporting periods. Other preparers have disclosed the pro forma information as if the business combination occurred at the beginning of the prior annual reporting period only, and carried forward the related adjustments, if applicable, through the current reporting period.

The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.

The amendments in this ASU also expand the supplemental pro forma disclosures under ASC Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.

The amendments in this ASU are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. This guidance will not have an impact on the Corporation’s financial position or results of operations.

ASU 2010-28

The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples in subsection 350-20-35-30, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

These amendments eliminate an entity’s ability to assert that a reporting unit is not required to perform Step 2 because the carrying amount of the reporting unit is zero or negative despite the existence of qualitative factors that indicate the goodwill is more likely than not impaired. As a result, goodwill impairments may be reported sooner than under current practice.

For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities may early adopt the amendments using the effective date for public entities.

Upon adoption of the amendments, an entity with reporting units that have carrying amounts that are zero or negative is required to assess whether it is more likely than not that the reporting units’ goodwill is impaired. If the entity determines that it is more likely than not that the goodwill of one or more of its reporting units is impaired, the entity should perform Step 2 of the goodwill impairment test for those reporting unit(s). Any resulting goodwill impairment should be recorded as a cumulative-effect adjustment to beginning retained earnings in the period of adoption. Any goodwill impairments occurring after the initial adoption of the amendments should be included in earnings as required by Section 350-20-35. This guidance will not have a significant impact on the Corporation’s financial position or results of operations.

NOTE 3 — Comprehensive Income

U.S. GAAP requires that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities and the liability associated with defined benefit plans, are reported as a separate component of the equity section of the consolidated statements of financial condition, such items, along with net income, are components of comprehensive income.

The components of comprehensive income and related tax effects are as follows (in thousands):

		Three Months Ended March 31, 2011												Three Months Ended March 31, 2010
		Before				Tax Expense								Before				Tax Expense
		Tax				or				Net-of-Tax				Tax				or				Net-of-Tax
		Amount				(Benefit)				Amount				Amount				(Benefit)				Amount
Net income		$	1,663			$	424			$	1,239			$	1,589			$	401			$	1,188
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities:
Unrealized gains (losses) arising during the period			(180	)			(62	)			(118	)			215				73				142
Unrealized gains from unconsolidated subsidiary			2				—				2				6				—				6
Less reclassification adjustment for:
gains included in net income			(5	)			(2	)			(3	)			(12	)			(4	)			(8	)
Change in pension liability			40				14				26				32				11				21
Other comprehensive income (loss)			(143	)			(50	)			(93	)			241				80				161
Total comprehensive income		$	1,520			$	374			$	1,146			$	1,830			$	481			$	1,349

Components of accumulated other comprehensive loss, net of tax consist of the following (in thousands):

		3/31/2011				12/31/2010
Unrealized gains on available for sale securities		$	280			$	399
Unrecognized expense for defined benefit pension			(1,838	)			(1,864	)
Accumulated other comprehensive loss		$	(1,558	)		$	(1,465	)

NOTE 4 — Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share:

		Three Months				Three Months
		Ended				Ended
(Amounts, except earnings per share, in thousands)		March 31, 2011				March 31, 2010
Net income		$	1,239			$	1,188
Weighted-average common shares outstanding			4,256				4,330
Basic earnings per share		$	0.29			$	0.27
Weighted-average common shares outstanding			4,256				4,330
Common stock equivalents due to effect of stock options			3				4
Total weighted-average common shares and equivalents			4,259				4,334
Diluted earnings per share		$	0.29			$	0.27

NOTE 5 — Commitments, Contingent Liabilities and Guarantees

In the ordinary course of business, the Corporation makes commitments to extend credit to its customers through letters of credit, loan commitments and lines of credit. At March 31, 2011, the Corporation had $22,382,000 outstanding in loan commitments and other unused lines of credit extended to its customers as compared to $37,466,000 at December 31, 2010.

The Corporation does not issue any guarantees that would require liability recognition or disclosure, other than its letters of credit. Letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Generally, all letters of credit have expiration dates within one year of issuance. The credit risk involved in issuing letters of credit is essentially the same as the risks that are involved in extending loan facilities to customers. The Corporation generally holds collateral and/or personal guarantees supporting these commitments. The Corporation had outstanding $835,000 and $845,000 of letters of credit commitments as of March 31, 2011 and December 31, 2010, respectively. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of March 31, 2011 for payments under letters of credit issued was not material. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk.

NOTE 6 — Defined Benefit Retirement Plan

The Corporation had a defined benefit retirement plan covering substantially all of its employees, prior to January 1, 2008. Effective January 1, 2008, the plan was amended to close the plan to new entrants. The benefits under the plan are based on years of service and the employees’ compensation. The Corporation’s funding policy allows contributions annually up to the maximum amount that can be deducted for federal income taxes purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. The Corporation has made no contributions in the first three months of 2011 and does not expect to contribute to the defined benefit plan in the remainder of 2011. Pension expense included the following components for the three month periods ended March 31, 2011 and 2010:

		Three Months Ended
		March 31,
(Dollars in thousands)		2011				2010
Components of net periodic pension cost
Service cost		$	48			$	46
Interest cost			120				118
Expected return on plan assets			(158	)			(142	)
Additional recognized amounts			38				31
Net periodic pension cost		$	48			$	53

NOTE 7— Acquisition

In 2006, the Corporation acquired a branch office in Richfield, PA. The acquisition included real estate, deposits and loans. The assets and liabilities of the acquired business were recorded on the consolidated statement of financial condition at their estimated fair values as of September 8, 2006, and their results of operations have been included in the consolidated statements of income since such date.

Included in the purchase price of the branch was goodwill and core deposit intangible of $2,046,000 and $449,000, respectively. The core deposit intangible is being amortized over a ten-year period on a straight line basis. During the first three months of 2011 and 2010, amortization expense was $11,000. Accumulated amortization of core deposit intangible through March 31, 2011 was $206,000. The goodwill is not amortized, but is measured annually for impairment.

NOTE 8 — Investment in Unconsolidated Subsidiary

The Corporation owns 39.16% of the outstanding common stock of The First National Bank of Liverpool (FNBL), Liverpool, PA. This investment is accounted for under the equity method of accounting. The investment is being carried at $3,607,000 as of March 31, 2011. The Corporation increases its investment in FNBL for its share of earnings and decreases its investment by any dividends received from FNBL. A loss in value of the investment which is other than a temporary decline will be recognized. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of FNBL to sustain an earnings capacity which would justify the carrying amount of the investment.

NOTE 9 — Securities

ASC Topic 320, Investments — Debt and Equity Securities, clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment.

In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

The amortized cost and fair value of securities as of March 31, 2011 and December 31, 2010, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities because the securities may be called or prepaid with or without prepayment penalties.

Securities Available for Sale		March 31, 2011
										Gross				Gross
		Amortized				Fair				Unrealized				Unrealized
Type and maturity		Cost				Value				Gains				Losses
U.S. Treasury securities and obligations of U.S. Government agencies and corporations
Within one year		$	5,813			$	5,831			$	18			$	—
After one year but within five years		$	47,185			$	47,170			$	275			$	(290	)
After five years but within ten years			1,000				953				—				(47	)
			53,998				53,954				293				(337	)
Obligations of state and political subdivisions
Within one year			13,689				13,834				146				(1	)
After one year but within five years			26,408				26,756				446				(98	)
After five years but within ten years			1,826				1,648				—				(178	)
			41,923				42,238				592				(277	)
Corporate notes
After one year but within five years			1,000				1,027				27				—
			1,000				1,027				27				—
Mortgage-backed securities			2,712				2,779				81				(14	)
Equity securities			935				984				127				(78	)
Total		$	100,568			$	100,982			$	1,120			$	(706	)

Securities Available for Sale		December 31, 2010
										Gross				Gross
		Amortized				Fair				Unrealized				Unrealized
Type and maturity		Cost				Value				Gains				Losses
U.S. Treasury securities and obligations of U.S.
Government agencies and corporations
After one year but within five years		$	34,607			$	34,783			$	348			$	(172	)
After five years but within ten years			3,000				2,913				—				(87	)
			37,607				37,696				348				(259	)
Obligations of state and political subdivisions
Within one year			12,219				12,390				175				(4	)
After one year but within five years			24,493				24,877				488				(104	)
After five years but within ten years			1,826				1,626				—				(200	)
			38,538				38,893				663				(308	)
Corporate notes
After one year but within five years			1,000				1,028				28				—
			1,000				1,028				28				—
Mortgage-backed securities			1,246				1,345				99				—
Equity securities			935				961				106				(80	)
Total		$	79,326			$	79,923			$	1,244			$	(647	)

The following table shows gross unrealized losses and fair value, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2011 and December 31, 2010 (in thousands):

		Unrealized Losses at March 31, 2011
		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
U.S. Treasury securities and obligations of U.S. Government agencies and corporations		$	30,299			$	(337	)		$	—			$	—			$	30,299			$	(337	)
Obligations of state and political subdivisions			10,676				(257	)			2,555				(20	)			13,231				(277	)
Mortgage-backed securities			1,498				(14	)			—				—				1,498				(14	)
Debt securities			42,473				(608	)			2,555				(20	)			45,028				(628	)
Equity securities			27				(1	)			268				(77	)			295				(78	)
Total temporarily impaired securities		$	42,500			$	(609	)		$	2,823			$	(97	)		$	45,323			$	(706	)

		Unrealized Losses at December 31, 2010
		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
U.S. Treasury securities and obligations of U.S. Government agencies and corporations		$	17,859			$	(259	)		$	—			$	—			$	17,859			$	(259	)
Obligations of state and political subdivisions			9,719				(304	)			881				(4	)			10,600				(308	)
Debt securities			27,578				(563	)			881				(4	)			28,459				(567	)
Equity securities			389				(5	)			270				(75	)			659				(80	)
Total temporarily impaired securities		$	27,967			$	(568	)		$	1,151			$	(79	)		$	29,118			$	(647	)

The unrealized losses noted above are considered to be temporary impairments. There are five debt securities that have had unrealized losses for more than 12 months. Decline in the value of our debt securities is due only to interest rate fluctuations, rather than erosion of quality. As a result, we believe that the payment of contractual cash flows, including principal repayment, is not at risk. As management does not intend to sell the securities, does not believe the Corporation will be required to sell the securities before recovery and expects to recover the entire amortized cost basis, none of the debt securities are deemed to be other-than-temporarily impaired.

Equity securities owned by the Corporation consist of common stock of various financial services providers (“Bank Stocks”) and are evaluated quarterly for evidence of other-than-temporary impairment. Considerations used to determine other-than-temporary impairment (“OTTI”) status for individual holdings include the length of time the stock has remained in an unrealized loss position, the percentage of unrealized loss compared to the carrying cost of the stock, dividend reduction or suspension, market analyst reviews and expectations, and other pertinent developments that would affect expectations for recovery or further decline. There were six equity securities that comprise a group of securities with unrealized losses for 12 months or more at March 31, 2011. In the aggregate and individually, the unrealized loss on this group of securities did not significantly change from December 31, 2010 to March 31, 2011, and, individually, none of these six have significant monetary unrealized losses. Management has identified no new other-than-temporary impairment as of March 31, 2011 in the equity portfolio.

We understand that stocks can be cyclical and will experience some down periods. Historically, bank stocks have sustained cyclical losses, followed by periods of substantial gains. When market values of the bank stocks recover, accounting standards do not allow reversal of any previous other-than-temporary impairment charge until the security is sold, at which time any proceeds above the carrying value will be recognized as gains on the sale of investment securities.

Certain obligations of the U.S. Government and state and political subdivisions are pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law. The fair value of the pledged assets amounted to $30,937,000 and $31,951,000 at March 31, 2011 and December 31, 2010, respectively.

In addition to cash received from the scheduled maturities of securities, some investment securities available for sale are sold at current market values during the course of normal operations and some securities are called pursuant to call features built into the bonds. Following is a summary of proceeds received from all investment securities transactions, and the resulting realized gains and losses (in thousands):

		Three Months Ended
		March 31,
		2011				2010
Gross proceeds from sales of securities		$	—			$	—
Securities available for sale:
Gross realized gains from called securities		$	5			$	12
Gross realized losses			—				—

NOTE 10 — Loans and Related Allowance for Credit Losses

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the outstanding unpaid principal balances, net of any deferred fees or costs, unearned income and the allowance for loan losses. Interest income on all loans, other than nonaccrual loans, is accrued over the term of the loans based on the amount of principal outstanding. Unearned income is amortized to income over the life of the loans, using the interest method.

The loan portfolio is segmented into commercial and consumer loans. These broad categories are further disaggregated into classes of loans used for analysis and reporting. Classes consist of (1) commercial, financial and agricultural, (2) commercial real estate, (3) real estate construction, (4) residential mortgage loans, (5) home equity loans, (6) obligations of states and political subdivisions and (7) personal loans.

Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Accrual of interest on loans is discontinued when the contractual payment of principal or interest has become 90 days past due or reasonable doubt exists as to the full, timely collection of principal or interest. However, it is the Corporation’s policy to continue to accrue interest on loans over 90 days past due as long as they are (1) guaranteed or well secured and (2) there is an effective means of collection. When a loan is placed on non-accrual status, all unpaid interest credited to income in the current year is reversed against current period income and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, accruals are resumed on loans only when the obligation is brought fully current with respect to interest and principal, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Corporation’s intent is to hold loans in the portfolio until maturity. At the time the Corporation’s intent is no longer to hold loans to maturity based on asset/liability management practices, the Corporation transfers loans from its portfolio to held for sale at fair value. Any write-down recorded upon transfer is charged against the allowance for loan losses. Any write-downs recorded after the initial transfer are recorded as a charge to Other Non-Interest Expense. Gains or losses recognized upon sale are recorded as Other Non-Interest Income/Expense.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The reserve for unfunded lending commitments represents management’s estimate of losses inherent in its unfunded lending commitments and is recorded in other liabilities on the consolidated balance sheet. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

For financial reporting purposes, the provision for loan losses charged to current operating income is based on management’s estimates, and actual losses may vary from estimates. These estimates are reviewed and adjusted at least quarterly and are reported in earnings in the periods in which they become known. The loan loss provision for federal income tax purposes is based on current income tax regulations, which allow for deductions equal to net charge-offs.

Loans included in any class are considered for charge-off when:

(1)

principal or interest has been in default for 120 days or more and for which no payment has been received during the previous four months;

(2)

all collateral securing the loan has been liquidated and a deficiency balance remains;

(3)

a bankruptcy notice is received for an unsecured loan; or

(4)

the loan is deemed to be uncollectible for any other reason.

The allowance for loan losses is maintained at a level considered adequate to offset probable losses on the Corporation’s existing loans. This analysis relies heavily on changes in observable trends that may indicate potential credit weaknesses. Management’s periodic evaluation of the adequacy of the allowance is based on the Bank’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses and may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examination, which may not be currently available to management. Based on management’s comprehensive analysis of the loan portfolio, management believes the current level of the allowance for loan losses to be adequate.

There are two components of the allowance: a component for loans that are deemed to be impaired; and a component for contingencies.

A large commercial 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. (A “large” loan (or group of like-loans within one relationship) is defined as a commercial/business loan, with an aggregate outstanding balance in excess of $150,000, or any other loan that management deems of similar characteristics inherent to the deficiencies of an impaired large loan by definition.) 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 loans 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. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. The estimated fair values of substantially all of the Corporation’s impaired loans are measured based on the estimated fair value of the loan’s collateral. For commercial loans secured with real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include the estimated costs to sell the property. For commercial loans secured by non-real estate collateral, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. For such loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The Bank generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date. Nonaccrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for a period of time after modification. Loans classified as troubled debt restructurings are designated as impaired.

The component of the allowance for contingincies relates to other loans that have been segmented into risk rated categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated quarterly or when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have one or more well-defined weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis or current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass. Specific reserves may be established for larger, individual classified loans as a result of this evaluation. Remaining loans are categorized into large groups of smaller balance homogeneous loans and are collectively evaluated for impairment. This computation is generally based on historical loss experience adjusted for qualitative factors. These qualitative risk factors include:

1.

National, regional and local economic and business conditions as well as the condition of various market segments, including the underlying collateral for collateral dependent loans;

2.

Nature and volume of the portfolio and terms of loans;

3.

Experience, ability and depth of lending and credit management and staff;

4.

Volume and severity of past due, classified and nonaccrual loans as well as other loan modifications;

5.

Existence and effect of any concentrations of credit and changes in the level of such concentrations; and

6.

Effect of external factors, including competition.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Commercial, Financial and Agricultural Lending - The Corporation originates commercial, financial and agricultural loans primarily to businesses located in its primary market area and surrounding areas. These loans are used for various business purposes which include short-term loans and lines of credit to finance machinery and equipment purchases, inventory and accounts receivable. Generally, the maximum term for loans extended on machinery and equipment is shorter or does not exceed the projected useful life of such machinery and equipment. Most business lines of credit are written on demand and may be renewed annually.

Commercial loans are generally secured with short-term assets, however, in many cases, additional collateral such as real estate is provided as additional security for the loan. Loan-to-value maximum values have been established by the Corporation and are specific to the type of collateral. Collateral values may be determined using invoices, inventory reports, accounts receivable aging reports, collateral appraisals, etc.

In underwriting commercial loans, an analysis of the borrower’s character, capacity to repay the loan, the adequacy of the borrower’s capital and collateral, as well as an evaluation of conditions affecting the borrower, is performed. Analysis of the borrower’s past, present and future cash flows is also an important aspect of the Corporation’s analysis.

Concentration analysis assists in identifying industry specific risk inherent in commercial, financial and agricultural lending. Mitigants include the identification of secondary and tertiary sources of repayment and appropriate increases in oversight.

Commercial loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions.

Commercial Real Estate Lending — The Corporation engages in commercial real estate lending in its primary market area and surrounding areas. The Corporation’s commercial loan portfolio is secured primarily by residential housing, raw land and hotels. Generally, commercial real estate loans have terms that do not exceed 20 years, have loan-to-value ratios of up to 80% of the appraised value of the property and are typically secured by personal guarantees of the borrowers.

As economic conditions deteriorate, the Corporation reduces its exposure in real estate segments with higher risk characteristics. In underwriting these loans, the Corporation performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, and the reliability and predictability of the cash flow generated by the property securing the loan. Appraisals on properties securing commercial real estate loans originated by the Corporation are performed by independent appraisers.

Commercial real estate loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions.

Real Estate Construction Lending — The Corporation engages in real estate construction lending in its primary market area and surrounding areas. The Corporation’s real estate construction lending consists of commercial and residential site development loans, as well as commercial building construction and residential housing construction loans.

The Corporation’s commercial real estate construction loans are generally secured with the subject property and advances are made in conformity with a pre-determined draw schedule supported by independent inspections. Terms of construction loans depend on the specifics of the project, such as estimated absorption rates, estimated time to complete, etc.

In underwriting commercial real estate construction loans, the Corporation performs a thorough analysis of the financial condition of the borrower, the borrower’s credit history, the reliability and predictability of the cash flow generated by the project using feasibility studies, market data, etc. Appraisals on properties securing commercial real estate loans originated by the Corporation are performed by independent appraisers.

Real estate construction loans generally present a higher level of risk than other types of loans due primarily to the effect of general economic conditions and the difficulty of estimating total construction costs.

Residential Mortgage Lending — One — to four-family residential mortgage loan originations are generated by the Corporation’s marketing efforts, its present customers, walk-in customers and referrals. These loans originate primarily within the Corporation’s market area or with customers primarily from the market area.

The Corporation offers fixed-rate and adjustable rate mortgage loans with terms up to a maximum of 25-years for both permanent structures and those under construction. The Corporation’s one- to four-family residential mortgage originations are secured primarily by properties located in its primary market area and surrounding areas. The majority of the Corporation’s residential mortgage loans originate with a loan-to-value of 80% or less.

In underwriting one-to-four family residential real estate loans, the Corporation evaluates the borrower’s ability to make monthly payments, the borrower’s repayment history and the value of the property securing the loan. Properties securing real estate loans made by the Corporation are appraised by independent fee appraisers. The Corporation generally requires borrowers to obtain an attorney’s title opinion or title insurance, and fire and property insurance (including flood insurance, if necessary) in an amount not less than the amount of the loan. The Corporation does not engage in sub-prime residential mortgage originations.

Residential mortgage loans generally present a lower level of risk than other types of consumer loans because they are secured by the borrower’s primary residence.

Home Equity Installment and Line of Credit Lending — The Corporation originates home equity installment loans and home equity lines of credit primarily within the Corporation’s market area or with customers primarily from the market area.

Home equity installment loans are secured by the borrower’s primary residence with a maximum loan-to-value of 80% and a maximum term of 15 years.

Home equity lines of credit are secured by the borrower’s primary residence with a maximum loan-to-value of 90% and a maximum term of 20 years.

In underwriting home equity lines of credit, a thorough analysis of the borrower’s ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower’s employment history, current financial conditions, and credit background. The analysis is based primarily on the customer’s ability to repay and secondarily on the collateral or security.

Home equity loans generally present a lower level of risk than other types of consumer loans because they are secured by the borrower’s primary residence.

Obligations of States and Political Subdivisions — The Corporation lends to local municipalities and other tax-exempt organizations. These loans are primarily tax-anticipation notes and as such carry little risk. Historically, the Corporation has never had a loss on any loan of this type.

Personal Lending — The Corporation offers a variety of secured and unsecured personal loans, including vehicle, mobile homes and loans secured by savings deposits, as well as other types of personal loans.

Personal loan terms vary according to the type and value of collateral and creditworthiness of the borrower. In underwriting personal loans, a thorough analysis of the borrower’s ability to repay the loan as agreed is performed. The ability to repay is determined by the borrower’s employment history, current financial conditions, and credit background. Personal loans may entail greater credit risk than do residential mortgage loans, particularly in the case of personal loans which are unsecured or are secured by rapidly depreciable assets, such as automobiles or recreational equipment. In such cases, any repossessed collateral for a defaulted personal loan may not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation. In addition, personal loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Corporation’s internal risk rating system as of March 31, 2011 and December 31, 2010 (in thousands).

						Special
As of March 31, 2011		Pass				Mention				Substandard				Doubtful				Total
Commercial financial and agricultural		$	34,612			$	2,160			$	583			$	305			$	37,660
Real estate — commercial			31,121				10,392				2,097				—				43,610
Real estate — construction			8,948				2,298				250				600				12,096
Real estate — mortgage			126,634				7,072				4,162				1,414				139,282
Home equity			43,524				342				—				—				43,866
Obligations of states and political subdivisions			12,692				—				—				—				12,692
Personal			8,143				99				2				—				8,244
Total		$	265,674			$	22,363			$	7,094			$	2,319			$	297,450

						Special
As of December 31, 2010		Pass				Mention				Substandard				Doubtful				Total
Commercial financial and agricultural		$	24,594			$	6,387			$	1,554			$	306			$	32,841
Real estate — commercial			33,437				6,059				4,089				600				44,185
Real estate — construction			11,028				—				—				—				11,028
Real estate — mortgage			127,944				8,069				5,180				1,415				142,608
Home equity			45,228				431				666				—				46,325
Obligations of states and political subdivisions			10,960				—				—				—				10,960
Personal			10,034				117				4				—				10,155
Total		$	263,225			$	21,063			$	11,493			$	2,321			$	298,102

The Corporation has certain loans in its portfolio that are considered to be impaired. It is the policy of the Corporation to recognize income on impaired loans that have been transferred to nonaccrual status on a cash basis, only to the extent that it exceeds principal balance recovery. Until an impaired loan is placed on nonaccrual status, income is recognized on the accrual basis. The following tables summarize information regarding impaired loans by portfolio class as of March 31, 2011 and December 31, 2010 (in thousands):

						Unpaid								Average
As of March 31, 2011		Recorded				Principal				Related				Recorded				Interest Income
Impaired loans		Investment				Balance				Allowance				Investment				Recognized(1)
With no related allowance recorded:
Commercial financial and agricultural		$	288			$	288			$	—			$	288			$	5
Real estate — commercial			4,425				4,425				—				4,728				53
With an allowance recorded:
Real estate — commercial			2,136				2,136				570				2,137				3
Total:
Commercial financial and agricultural			288				288				—				288				5
Real estate — commercial			6,561				6,561				570				6,865				56
		$	6,849			$	6,849			$	570			$	7,153			$	61

						Unpaid								Average
As of December 31, 2010		Recorded				Principal				Related				Recorded				Interest Income
Impaired loans		Investment				Balance				Allowance				Investment				Recognized (2)
With no related allowance recorded:
Real estate — commercial		$	5,606			$	5,606			$	—			$	6,203			$	260
With an allowance recorded:
Real estate — commercial			2,137				2,137				570				1,791				16
Total:
Real estate — commercial		$	7,743			$	7,743			$	570			$	7,994			$	276

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2011 and December 31, 2010 (in thousands):

		March 31, 2011				December 31, 2010
Nonaccrual loans:
Commercial financial and agricultural		$	600			$	784
Real estate — commercial			240				240
Real estate — construction			913				850
Real estate — mortgage			3,655				3,564
Home equity			472				524
Obligations of states and political subdivisions			—				—
Personal			6				2
Total		$	5,886			$	5,964

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status as of March 31, 2011 and December 31, 2010 (in thousands):

																										Loans Past
																										Due greater
		30-59 Days				60-89 Days				Greater than				Total Past												than 90 Days
As of March 31, 2011		Past Due				Past Due				90 Days				Due				Current				Total Loans				and Accruing
Commercial financial and agricultural		$	72			$	172			$	600			$	844			$	36,816			$	37,660			$	—
Real estate — commercial			436				1,284				240				1,960				41,650				43,610				—
Real estate — construction			—				—				913				913				11,183				12,096				—
Real estate — mortgage			3,017				914				3,520				7,451				131,831				139,282				255
Home equity			733				46				469				1,248				42,618				43,866				158
Obligations of states and political subdivisions			—				—				—				—				12,692				12,692				—
Personal			89				33				11				133				8,111				8,244				5
Total		$	4,347			$	2,449			$	5,753			$	12,549			$	284,901			$	297,450			$	418