XOTC:FMCB Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended March 31, 2012

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to ________
 
Commission File Number:  000-26099

FARMERS & MERCHANTS BANCORP
(Exact name of registrant as specified in its charter)

Delaware
 
94-3327828
(State or other jurisdiction of incorporation or organization)
 
(I.R.S.  Employer Identification No.)

111 W. Pine Street, Lodi, California
 
95240
(Address of principal Executive offices)
 
(Zip Code)

Registrant's telephone number, including area code (209) 367-2300

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 x  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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
 
Large accelerated filer  o Accelerated filer x 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 x
 
Number of shares of common stock of the registrant:  Par value $0.01, authorized 20,000,000 shares; issued and outstanding 778,939 as of April 30, 2012.
 


 
 

 
 
FARMERS & MERCHANTS BANCORP

FORM 10-Q
 

 
PART I. - FINANCIAL INFORMATION
Page
   
 
Item 1 -   Financial Statements
 
       
    4
       
   
5
 
     
   
6
       
   
7
 
     
   
8
       
   
9
       
 
32
     
 
50
     
 
53
     
PART II. - OTHER INFORMATION
 
   
 
54
     
 
Item 1A – Risk Factors
54
     
 
54
     
 
54
     
 
54
     
 
54
     
 
Item 6 - Exhibits
54
     
55
 
 
 
 
31(a)
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31(b)
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32 Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
 
FARMERS & MERCHANTS BANCORP
Consolidated Balance Sheets
(in thousands)
   
March 31,
   
December 31,
   
March 31,
 
   
2012
   
2011
   
2011
 
Assets
 
(Unaudited)
         
(Unaudited)
 
Cash and Cash Equivalents:
                 
Cash and Due from Banks
  $ 33,489     $ 45,112     $ 29,223  
Interest Bearing Deposits with Banks
    52,216       56,548       28,816  
Total Cash and Cash Equivalents
    85,705       101,660       58,039  
                         
Investment Securities:
                       
Available-for-Sale
    531,817       479,820       461,415  
Held-to-Maturity
    66,416       63,092       65,316  
Total Investment Securities
    598,233       542,912       526,731  
                         
Loans
    1,158,283       1,163,078       1,167,617  
Less: Allowance for Loan Losses
    32,942       33,017       32,331  
Loans, Net
    1,125,341       1,130,061       1,135,286  
                         
Premises and Equipment, Net
    23,751       24,058       23,989  
Bank Owned Life Insurance
    47,874       47,418       46,035  
Interest Receivable and Other Assets
    64,813       73,575       71,082  
Total Assets
  $ 1,945,717     $ 1,919,684     $ 1,861,162  
                         
Liabilities
                       
Deposits:
                       
Demand
  $ 371,760     $ 389,639     $ 317,053  
Interest Bearing Transaction
    230,323       220,736       205,679  
Savings and Money Market
    528,527       498,011       496,146  
Time
    513,432       517,811       559,370  
Total Deposits
    1,644,042       1,626,197       1,578,248  
                         
Securities Sold Under Agreements to Repurchase
    60,000       60,000       60,000  
Federal Home Loan Bank Advances
    514       530       576  
Subordinated Debentures
    10,310       10,310       10,310  
Interest Payable and Other Liabilities
    34,693       33,301       33,377  
Total Liabilities
    1,749,559       1,730,338       1,682,511  
                         
Shareholders' Equity
                       
Preferred Stock
    -       -       -  
Common Stock
    8       8       8  
Additional Paid-In Capital
    75,410       75,590       75,590  
Retained Earnings
    115,271       109,081       102,156  
Accumulated Other Comprehensive Income
    5,469       4,667       897  
Total Shareholders' Equity
    196,158       189,346       178,651  
Total Liabilities and Shareholders' Equity
  $ 1,945,717     $ 1,919,684     $ 1,861,162  
The accompanying notes are an integral part of these unaudited consolidated financial statements
 
 
4

 
 FARMERS & MERCHANTS BANCORP
Consolidated Statements of Income  (Unaudited)
(in thousands except per share data)
 
Three Months
 
   
Ended March 31,
 
   
2012
   
2011
 
Interest Income
           
Interest and Fees on Loans
  $ 16,475     $ 17,507  
Interest on Deposits with Banks
    53       34  
Interest on Investment Securities:
               
Taxable
    2,808       2,342  
Exempt from Federal Tax
    630       648  
Total Interest Income
    19,966       20,531  
                 
Interest Expense
               
Deposits
    1,057       1,546  
Borrowed Funds
    543       538  
Subordinated Debentures
    88       81  
Total Interest Expense
    1,688       2,165  
                 
Net Interest Income
    18,278       18,366  
Provision for Loan Losses
    220       525  
Net Interest Income After Provision for Loan Losses
    18,058       17,841  
                 
Non-Interest Income
               
Service Charges on Deposit Accounts
    1,213       1,375  
Increase in Cash Surrender Value of Life Insurance
    456       451  
Debit Card and ATM Fees
    723       666  
Net Gain on Deferred Compensation Investments
    931       405  
Other
    600       437  
Total Non-Interest Income
    3,923       3,334  
                 
Non-Interest Expense
               
Salaries and Employee Benefits
    7,921       7,242  
Net Gain on Deferred Compensation Investments
    931       405  
Occupancy
    641       633  
Equipment
    718       714  
ORE Holding Costs
    15       525  
FDIC Insurance
    242       474  
Other
    1,654       1,443  
Total Non-Interest Expense
    12,122       11,436  
                 
Income Before Income Taxes
    9,859       9,739  
Provision for Income Taxes
    3,669       3,613  
Net Income
  $ 6,190     $ 6,126  
Basic Earnings Per Common Share
  $ 7.94     $ 7.86  
The accompanying notes are an integral part of these unaudited consolidated financial statements
 
 
5

 
FARMERS & MERCHANTS BANCORP
Consolidated Statements of Comprehensive Income  (Unaudited)
(in thousands)
 
Three Months
 
   
Ended March 31,
 
   
2012
   
2011
 
Net Income
  $ 6,190     $ 6,126  
                 
Other Comprehensive Income (Loss)
               
                 
Unrealized Gains (Losses)  on Securities:
               
Unrealized holding gains (losses) arising during the period, net of income tax effects of $581 and $(520) for the quarters ended March 31, 2012 and 2011, respectively.
    802       (716 )
                 
Less: Reclassification adjustment for realized gains included in net income, net of related income tax effects of $0 for the quarters ended March 31, 2012 and 2011, respectively.
    -       -  
                 
Total Other Comprehensive Income (Loss)
    802       (716 )
                 
Comprehensive Income
  $ 6,992     $ 5,410  
The accompanying notes are an integral part of these unaudited consolidated financial statements
 
 
FARMERS & MERCHANTS BANCORP
Consolidated Statements of Changes in Shareholders' Equity  (Unaudited)
(in thousands except share data)
                         
Accumulated
       
   
Common
         
Additional
         
Other
   
Total
 
   
Shares
   
Common
   
Paid-In
   
Retained
   
Comprehensive
   
Shareholders'
 
   
Outstanding
   
Stock
   
Capital
   
Earnings
   
Income, net
   
Equity
 
Balance, January 1, 2011
    779,424     $ 8     $ 75,590     $ 96,030     $ 1,613     $ 173,241  
Net Income
            -       -       6,126       -       6,126  
Change in Net Unrealized Gains on Securities Available-for-Sale
            -       -       -       (716 )     (716 )
Balance, March 31, 2011
    779,424     $ 8     $ 75,590     $ 102,156     $ 897     $ 178,651  
                                                 
                                                 
Balance, January 1, 2012
    779,424     $ 8     $ 75,590     $ 109,081     $ 4,667     $ 189,346  
Net Income
            -       -       6,190       -       6,190  
Repurchase of Common Stock
    (485 )     -       (180 )     -       -       (180 )
Change in Net Unrealized Gains on Securities Available-for-Sale
            -       -       -       802       802  
Balance, March 31, 2012
    778,939     $ 8     $ 75,410     $ 115,271     $ 5,469     $ 196,158  
The accompanying notes are an integral part of these unaudited consolidated financial statements
  
 
FARMERS & MERCHANTS BANCORP
Consolidated Statements of Cash Flows (Unaudited)
   
Three Months Ended
 
   
March 31,
   
March 31,
 
(in thousands)
 
2012
   
2011
 
Operating Activities:
           
Net Income
  $ 6,190     $ 6,126  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
               
Provision for Loan Losses
    220       525  
Depreciation and Amortization
    441       439  
Net Amortization (Accretion) of Investment Security Premiums & Discounts
    825       183  
Net Loss on Sale of Property & Equipment
    -       6  
Net Change in Operating Assets & Liabilities:
               
Net Decrease in Interest Receivable and Other Assets
    7,733       2,818  
Net Increase in Interest Payable and Other Liabilities
    1,392       2,531  
Net Cash Provided by Operating Activities
    16,801       12,628  
Investing Activities:
               
Purchase of Investment Securities Available-for-Sale
    (98,147 )     (65,059 )
Proceeds from Sold, Matured, or Called Securities Available-for-Sale
    46,706       30,758  
Purchase of Investment Securities Held-to-Maturity
    (4,144 )     (710 )
Proceeds from Matured, or Called Securities Held-to-Maturity
    814       323  
Net Loans Paid, Originated or Acquired
    4,464       7,911  
Principal Collected on Loans Previously Charged Off
    36       19  
Additions to Premises and Equipment
    (134 )     (229 )
Proceeds from Sale of Property & Equipment
    -       8  
Net Cash Used by Investing Activities
    (50,405 )     (26,979 )
Financing Activities:
               
Net Increase in Deposits
    17,845       11,745  
Net Changes in Other Borrowings
    (16 )     (15 )
Common Stock Repurchases
    (180 )     -  
Net Cash Provided by Financing Activities
    17,649       11,730  
Decrease in Cash and Cash Equivalents
    (15,955 )     (2,621 )
Cash and Cash Equivalents at Beginning of Period
    101,660       60,660  
Cash and Cash Equivalents at End of Period
  $ 85,705     $ 58,039  
The accompanying notes are an integral part of these unaudited consolidated financial statements
 
 
FARMERS & MERCHANTS BANCORP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Significant Accounting Policies

Farmers & Merchants Bancorp (the “Company”) was organized March 10, 1999. Primary operations are related to traditional banking activities through its subsidiary Farmers & Merchants Bank of Central California (the “Bank”) which was established in 1916. The Bank’s wholly owned subsidiaries include Farmers & Merchants Investment Corporation and Farmers/Merchants Corp. Farmers & Merchants Investment Corporation has been dormant since 1991. Farmers/Merchants Corp. acts as trustee on deeds of trust originated by the Bank.

The Company’s other subsidiaries include F & M Bancorp, Inc. and FMCB Statutory Trust I. F & M Bancorp, Inc. was created in March 2002 to protect the name F & M Bank. During 2002 the Company completed a fictitious name filing in California to begin using the streamlined name “F & M Bank” as part of a larger effort to enhance the Company’s image and build brand name recognition. In December 2003 the Company formed a wholly owned subsidiary, FMCB Statutory Trust I. FMCB Statutory Trust I is a non-consolidated subsidiary per generally accepted accounting principles (GAAP) and was formed for the sole purpose of issuing Trust Preferred Securities.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America and prevailing practice within the banking industry. The following is a summary of the significant accounting and reporting policies used in preparing the consolidated financial statements.

Basis of Presentation
The accompanying consolidated financial statements and notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America for financial information.

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The results of operations for the three-month period ended March 31, 2012 may not necessarily be indicative of future operating results.

The accompanying consolidated financial statements include the accounts of the Company and the Company’s wholly owned subsidiaries, F & M Bancorp, Inc. and the Bank, along with the Bank’s wholly owned subsidiaries, Farmers & Merchants Investment Corporation and Farmers/Merchants Corp. Significant inter-company transactions have been eliminated in consolidation.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Certain amounts in the prior years' financial statements and related footnote disclosures have been reclassified to conform to the current-year presentation. These reclassifications had no effect on previously reported net income or total shareholders’ equity. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the periods presented.
 
 
Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, the Company has defined cash and cash equivalents as those amounts included in the balance sheet captions Cash and Due from Banks, Interest Bearing Deposits with Banks, Federal Funds Sold and Securities Purchased Under Agreements to Resell. Generally, these transactions are for one-day periods. For these instruments, the carrying amount is a reasonable estimate of fair value.

Investment Securities
Investment securities are classified at the time of purchase as held-to-maturity if it is management’s intent and the Company has the ability to hold the securities until maturity. These securities are carried at cost, adjusted for amortization of premium and accretion of discount using a level yield of interest over the estimated remaining period until maturity. Losses, reflecting a decline in value judged by the Company to be other than temporary, are recognized in the period in which they occur.

Securities are classified as available-for-sale if it is management’s intent, at the time of purchase, to hold the securities for an indefinite period of time and/or to use the securities as part of the Company’s asset/liability management strategy. These securities are reported at fair value with aggregate unrealized gains or losses excluded from income and included as a separate component of shareholders’ equity, net of related income taxes. Fair values are based on quoted market prices or broker/dealer price quotations on a specific identification basis. Gains or losses on the sale of these securities are computed using the specific identification method.

Trading securities, if any, are acquired for short-term appreciation and are recorded in a trading portfolio and are carried at fair value, with unrealized gains and losses recorded in non-interest income.

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.  For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement; and (2) other-than-temporary impairment (OTTI) related to other factors, which is recognized in other comprehensive income.  The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

In order to determine OTTI for purchased beneficial interests that, on the purchase date, were not highly rated, the Company compares the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows.  OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

Loans
Loans are reported at the principal amount outstanding net of unearned discounts and deferred loan fees and costs. Interest income on loans is accrued daily on the outstanding balances using the simple interest method. Loan origination fees are deferred and recognized over the contractual life of the loan as an adjustment to the yield. Loans are placed on non-accrual status when the collection of principal or interest is in doubt or when they become past due for 90 days or more unless they are both well-secured and in the process of collection. For this purpose a loan is considered well-secured if it is collateralized by property having a net realizable value in excess of the amount of the loan or is guaranteed by a financially capable party. When a loan is placed on non-accrual status, the accrued and unpaid interest receivable is reversed and charged against current income; thereafter, interest income is recognized only as it is collected in cash. Additionally, cash would be applied to principal if all principal was not expected to be collected. Loans placed on non-accrual status are returned to accrual status when the loans are paid current as to principal and interest and future payments are expected to be made in accordance with the contractual terms of the loan.

 
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the original agreement. Impaired loans are either: (1) non-accrual loans; or (2) restructured loans that are still accruing interest. Loans determined to be impaired are individually evaluated for impairment. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, it may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral.

A restructuring of a loan constitutes a troubled debt restructuring (TDR) if the Company for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above.

Generally, the Company will not restructure loans for customers unless: (1) the existing loan is brought current as to principal and interest payments; and (2) the restructured loan can be underwritten to reasonable underwriting standards. If these standards are not met other actions will be pursued (e.g., foreclosure) to collect outstanding loan amounts. After restructure a determination is made whether the loan will be kept on accrual status based upon the underwriting of the restructured credit.

Allowance for Loan Losses
The allowance for loan losses is an estimate of probable incurred credit losses inherent in the Company's loan portfolio as of the balance-sheet date. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for inherent losses related to loans that are collectively evaluated for impairment.

The determination of the general reserve for loans that are collectively evaluated for impairment is based on estimates made by management, to include, but not limited to, consideration of historical losses by portfolio segment, internal asset classifications, and qualitative factors to include economic trends in the Company's service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company's underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

The Company maintains a separate allowance for each portfolio segment (loan type). These portfolio segments include: (1) commercial real estate; (2) agricultural real estate; (3) real estate construction (including land and development loans); (4) residential 1st mortgages; (5) home equity lines and loans; (6) agricultural; (7) commercial; and (8) consumer and other. The allowance for loan losses attributable to each portfolio segment, which includes both impaired loans and loans that are collectively evaluated for impairment is combined to determine the Company's overall allowance, which is included on the consolidated balance sheet.

The Company assigns a risk rating to all loans and periodically performs detailed reviews of all such loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. A credit grade is established at inception for smaller balance loans, such as consumer and residential real estate, and then updated only when the loan becomes contractually delinquent or when the borrower requests a modification. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. These risk ratings are also subject to examination by independent specialists engaged by the Company. The risk ratings can be grouped into five major categories, defined as follows:

Pass – A pass loan is a strong credit with no existing or known potential weaknesses deserving of management's close attention.

 
Special Mention – A special mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company's credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.
 
Substandard – A substandard loan is not adequately protected by the current financial condition and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well defined weaknesses include a project's lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project's failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable or improbable.

Loss – Loans classified as loss are considered uncollectible. Once a loan becomes delinquent and repayment becomes questionable, the Company will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Bank will estimate its probable loss and immediately charge-off some or all of the balance.

The general reserve component of the allowance for loan losses also consists of reserve factors that are based on management's assessment of the following for each portfolio segment: (1) inherent credit risk; (2) historical losses; and (3) other qualitative factors. These reserve factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment described below:

Real Estate Construction – Real Estate Construction loans including land loans generally possess a higher inherent risk of loss than other real estate portfolio segments. A major risk arises from the necessity to complete projects within specified cost and time lines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects.

Commercial Real Estate – Commercial real estate mortgage loans generally possess a higher inherent risk of loss than other real estate portfolio segments, except land and construction loans. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for properties to produce sufficient cash flow to service debt obligations.

Commercial – Commercial loans generally possess a lower inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows and economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Agricultural Real Estate and Agricultural – Loans secured by crop production, livestock and related real estate are vulnerable to two risk factors that are largely outside the control of Company and borrowers: commodity prices and weather conditions.

Residential 1st Mortgages and Home Equity Lines and Loans – The degree of risk in residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower's ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of loss than other real estate portfolio segments, although this is not always true as evidenced over the past several years. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers' capacity to repay their obligations may be deteriorating.
Consumer & Other – A consumer installment loan portfolio is usually comprised of a large number of small loans scheduled to be amortized over a specific period. Most installment loans are made for consumer purchases. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers' capacity to repay their obligations may be deteriorating.

 
At least quarterly, the Board of Directors and management review the adequacy of the allowance, including consideration of the relative risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company's and Bank's regulators, including the FRB, DFI and FDIC, as an integral part of their examination process, review the adequacy of the allowance. These regulatory agencies may require additions to the allowance based on their judgment about information available at the time of their examinations.

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures
The Company also maintains a separate allowance for off-balance-sheet commitments. Management estimates anticipated losses using historical data and utilization assumptions. The allowance for off-balance-sheet commitments is included in Interest Payable and Other Liabilities on the Company’s Consolidated Balance Sheet.

Premises and Equipment
Premises, equipment, and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is computed principally by the straight line method over the estimated useful lives of the assets. Estimated useful lives of buildings range from 30 to 40 years, and for furniture and equipment from 3 to 7 years. Leasehold improvements are amortized over the lesser of the terms of the respective leases, or their useful lives, which are generally 5 to 10 years. Remodeling and capital improvements are capitalized while maintenance and repairs are charged directly to occupancy expense.

Other Real Estate
Other real estate, which is included in other assets, is expected to be sold and is comprised of properties no longer utilized for business operations and property acquired through foreclosure in satisfaction of indebtedness. These properties are recorded at fair value less estimated selling costs upon acquisition. Revised estimates to the fair value less cost to sell are reported as adjustments to the carrying amount of the asset, provided that such adjusted value is not in excess of the carrying amount at acquisition. Initial losses on properties acquired through full or partial satisfaction of debt are treated as credit losses and charged to the allowance for loan losses at the time of acquisition. Subsequent declines in value from the recorded amounts, routine holding costs, and gains or losses upon disposition, if any, are included in non-interest income or expense as incurred.

Income Taxes
The Company uses the liability method of accounting for income taxes. This method results in the recognition of deferred tax assets and liabilities that are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The deferred provision for income taxes is the result of the net change in the deferred tax asset and deferred tax liability balances during the year. This amount, combined with the current taxes payable or refundable, results in the income tax expense for the current year.

The Company follows the standards set forth in the “Income Taxes” topic of the FASB Accounting Standards Codification (“ASC”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This standard prescribes a recognition threshold and measurement standard for the financial statement recognition and measurement of an income tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

 
Interest expense and penalties associated with unrecognized tax benefits, if any, are included in the provision for income taxes in the Consolidated Statements of Income.

Dividends and Basic Earnings Per Common Share
The Company’s common stock is not traded on any exchange. The shares are primarily held by local residents and are not actively traded. Basic earnings per common share amounts are computed by dividing net income by the weighted average number of common shares outstanding for the period. There are no common stock equivalent shares. Therefore, there is no presentation of diluted basic earnings per common share. See Note 6.

Segment Reporting
The “Segment Reporting” topic of the FASB ASC requires that public companies report certain information about operating segments. It also requires that public companies report certain information about their products and services, the geographic areas in which they operate, and their major customers. The Company is a holding company for a community bank, which offers a wide array of products and services to its customers. Pursuant to its banking strategy, emphasis is placed on building relationships with its customers, as opposed to building specific lines of business. As a result, the Company is not organized around discernable lines of business and prefers to work as an integrated unit to customize solutions for its customers, with business line emphasis and product offerings changing over time as needs and demands change. Therefore, the Company only reports one segment.

Derivative Instruments and Hedging Activities
The “Derivatives and Hedging” topic of the FASB ASC establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. Changes in the fair value of those derivatives are accounted for depending on the intended use of the derivative and the resulting designation under specified criteria. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, designed to minimize interest rate risk, the effective portions of the change in the fair value of the derivative are recorded in other comprehensive income (loss), net of related income taxes. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

From time to time, the Company utilizes derivative financial instruments such as interest rate caps, floors, swaps, and collars. These instruments are purchased and/or sold to reduce the Company’s exposure to changing interest rates. The Company marks to market the value of its derivative financial instruments and reflects gain or loss in earnings in the period of change or in other comprehensive income (loss). The Company was not utilizing any derivative instruments as of or for the period ended March 31, 2012, December 31, 2011 or March 31, 2011.

Comprehensive Income
The “Comprehensive Income” topic of the FASB ASC establishes standards for the reporting and display of comprehensive income and its components in the financial statements. Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that generally accepted accounting principles recognize as changes in value to an enterprise but are excluded from net income. For the Company, comprehensive income includes net income and changes in fair value of its available-for-sale investment securities.

Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.  Management does not believe there now are such matters that will have a material effect on the financial statements.

 
2. Investment Securities

The amortized cost, fair values, and unrealized gains and losses of the securities available-for-sale are as follows (in thousands):
 
   
Amortized
   
Gross Unrealized
   
Fair/Book
 
March 31, 2012
 
Cost
   
Gains
   
Losses
   
Value
 
Government Agency & Government-Sponsored Entities
  $ 66,995     $ 347     $ -     $ 67,342  
Obligations of States and Political Subdivisions
    5,753       -       -       5,753  
Mortgage Backed Securities (1)
    439,222       9,347       258       448,311  
Corporate Bonds
    344       -       -       344  
Other
    10,067       -       -       10,067  
Total
  $ 522,381     $ 9,694     $ 258     $ 531,817  
 
   
Amortized
   
Gross Unrealized
   
Fair/Book
 
December 31, 2011
 
Cost
   
Gains
   
Losses
   
Value
 
Government Agency & Government-Sponsored Entities
  $ 82,195     $ 413     $ 13     $ 82,595  
Obligations of States and Political Subdivisions
    5,782       -       -       5,782  
Mortgage Backed Securities (1)
    383,380       7,792       139       391,033  
Other
    410       -       -       410  
Total
  $ 471,767     $ 8,205     $ 152     $ 479,820  
 
   
Amortized
   
Gross Unrealized
   
Fair/Book
 
March 31, 2011
 
Cost
   
Gains
   
Losses
   
Value
 
Government Agency & Government-Sponsored Entities
  $ 252,834     $ 245     $ 2,201     $ 250,878  
Obligations of States and Political Subdivisions
    6,358       -       -       6,358  
Mortgage Backed Securities (1)
    200,365       5,415       1,911       203,869  
Other
    310       -       -       310  
Total
  $ 459,867     $ 5,660     $ 4,112     $ 461,415  
 
The book values, estimated fair values and unrealized gains and losses of investments classified as held-to-maturity are as follows (in thousands):
 
   
Book
   
Gross Unrealized
   
Fair
 
March 31, 2012
 
Value
   
Gains
   
Losses
   
Value
 
Obligations of States and Political Subdivisions
  $ 63,174     $ 2,565     $ -     $ 65,739  
Mortgage Backed Securities (1)
    1,003       37       -       1,040  
Other
    2,239       -       -       2,239  
Total
  $ 66,416     $ 2,602     $ -     $ 69,018  
 
   
Book
   
Gross Unrealized
   
Fair
 
December 31, 2011
 
Value
   
Gains
   
Losses
   
Value
 
Obligations of States and Political Subdivisions
  $ 59,640     $ 2,736     $ -     $ 62,376  
Mortgage Backed Securities (1)
    1,205       46       -       1,251  
Other
    2,247       -       -       2,247  
Total
  $ 63,092     $ 2,782     $ -     $ 65,874  
 
   
Book
   
Gross Unrealized
   
Fair
 
March 31, 2011
 
Value
   
Gains
   
Losses
   
Value
 
Obligations of States and Political Subdivisions
  $ 61,094     $ 1,644     $ 95     $ 62,643  
Mortgage Backed Securities (1)
    1,950       70       -       2,020  
Other
    2,272       -       -       2,272  
Total
  $ 65,316     $ 1,714     $ 95     $ 66,935  
 
(1) All Mortgage Backed Securities consist of securities collateralized by residential real estate and were issued by an agency or government sponsored entity of the U.S. government.

Fair values are based on quoted market prices or dealer quotes. If a quoted market price or dealer quote is not available, fair value is estimated using quoted market prices for similar securities.

 
The amortized cost and estimated fair values of investment securities at March 31, 2012 by contractual maturity are shown in the following tables (in thousands):
 
         
After 1
   
After 5
         
Total
 
Securities Available-for-Sale
 
Within
   
but
   
but
   
Over
   
Fair
 
March 31, 2012
 
1 Year
   
Within 5
   
Within 10
   
10 years
   
Value
 
Government Agency & Government-Sponsored Entities
  $ 20,192     $ 45,972     $ 1,178     $ -     $ 67,342  
Obligations of States and Political Subdivisions
    -       -       223       5,530       5,753  
Mortgage Backed Securities
    -       -       131,703       316,608       448,311  
Corporate Bonds
    -       344       -       -       344  
Other
    10,067       -       -       -       10,067  
Total
  $ 30,259     $ 46,316     $ 133,104     $ 322,138     $ 531,817  
 
         
After 1
   
After 5
         
Total
 
Securities Held-to-Maturity
 
Within
   
but
   
but
   
Over
   
Book
 
March 31, 2012
 
1 Year
   
Within 5
   
Within 10
   
10 years
   
Value
 
Obligations of States and Political Subdivisions
  $ 1,370     $ 7,379     $ 42,670     $ 11,755     $ 63,174  
Mortgage Backed Securities
    -       1,003       -       -       1,003  
Other
    -       6       2,233       -       2,239  
Total
  $ 1,370     $ 8,388     $ 44,903     $ 11,755     $ 66,416  
 
Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The following tables show those investments with gross unrealized losses and their market value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at the dates indicated (in thousands):
 
   
Less Than 12 Months
   
12 Months or More
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
March 31, 2012
 
Value
   
Loss
   
Value
   
Loss
   
Value
   
Loss
 
Mortgage Backed Securities
  $ 56,721     $ 258     $ -     $ -     $ 56,721     $ 258  
Total
  $ 56,721     $ 258     $ -     $ -     $ 56,721     $ 258  
 
   
Less Than 12 Months
   
12 Months or More
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
December 31, 2011
 
Value
   
Loss
   
Value
   
Loss
   
Value
   
Loss
 
Government Agency & Government-Sponsored Entities
  $ 4,987     $ 13     $ -     $ -     $ 4,987     $ 13  
Mortgage Backed Securities
    85,090       139       -       -       85,090       139  
Total
  $ 90,077     $ 152     $ -     $ -     $ 90,077     $ 152  
 
   
Less Than 12 Months
   
12 Months or More
   
Total
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
March 31, 2011
 
Value
   
Loss
   
Value
   
Loss
   
Value
   
Loss
 
Government Agency & Government-Sponsored Entities
  $ 160,473     $ 2,201     $ -     $ -     $ 160,473     $ 2,201  
Obligations of States and Political Subdivisions
    4,560       95       -       -       4,560       95  
Mortgage Backed Securities
    87,534       1,911       -       -       87,534       1,911  
Total
  $ 252,567     $ 4,207     $ -     $ -     $ 252,567     $ 4,207  
 
As of March 31, 2012, the Company held 333 investment securities of which 9 were in a loss position for less than twelve months.  No securities were in a loss position for twelve months or more.  Management periodically evaluates each investment security for other-than-temporary impairment relying primarily on industry analyst reports and observations of market conditions and interest rate fluctuations.  Management believes it will be able to collect all amounts due according to the contractual terms of the underlying investment securities.

 
Securities of U.S. Government Agency and Government Sponsored Entities
The unrealized losses on the Company's investments in securities of government agency and government sponsored entities were $0, $13,000, and $2.2 million at March 31, 2012, December 31, 2011, and March 31, 2011, respectively. Management believes that any unrealized losses were caused by interest rate increases. Repayment of these investments is guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company did not intend to sell the securities and it was more likely than not that the Company would not have to sell the securities before recovery of their cost basis, the Company did not consider these investments to be other-than-temporarily impaired at December 31, 2011 and March 31, 2011.
 
Mortgage Backed Securities
The unrealized losses on the Company's investments in securities of government agency and government sponsored entities were $258,000, $139,000, and $1.9 million at March 31, 2012, December 31, 2011, and March 31, 2011, respectively. The unrealized losses on the Company's investment in mortgage backed securities were caused by interest rate increases. The contractual cash flows of these investments are guaranteed by an agency or government sponsored entity of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company did not intend to sell the securities and it was more likely than not that the Company would not have to sell the securities before recovery of their cost basis, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2012, December 31, 2011, and March 31, 2011, respectively.

Obligations of States and Political Subdivisions
The continuing financial problems being experienced by certain municipalities, along with the financial stresses exhibited by some of the large monoline bond insurers have increased the overall risk associated with bank-qualified municipal bonds. As of March 31, 2012, over ninety-three percent of the Company’s bank-qualified municipal bond portfolio is rated at either the issue or issuer level, and all of these ratings are “investment grade.” The Company monitors the status of the seven percent of the portfolio that is not rated and at the current time does not believe any of them to be exhibiting financial problems that could result in a loss in any individual security.

The unrealized losses on the Company's investments in obligations of states and political subdivisions were $0 at March 31, 2012 and December 31, 2011 and $95,000 at March 31, 2011. Management believed that any unrealized losses on the Company’s investment in obligations of states and political subdivisions were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company did not intend to sell the securities and it was more likely than not that the Company would not have to sell the securities before recovery of their cost basis, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2011.

Pledged Securities
As of March 31, 2012, securities carried at $379.3 million were pledged to secure public deposits, FHLB borrowings, and other government agency deposits as required by law. This amount at December 31, 2011, was $373.2 million.
 
 
3. Allowance for Loan Losses

The following tables show the allocation of the allowance for loan losses by portfolio segment and by impairment methodology at the dates indicated (in thousands):
 
March 31, 2012
 
Commercial Real Estate
   
Agricultural Real Estate
   
Real Estate Construction
   
Residential 1st
Mortgages
   
Home Equity
Lines & Loans
   
Agricultural
   
Commercial
   
Consumer & Other
   
Unallocated
   
Total
 
                                                             
Year-To-Date Allowance for Credit Losses:
                                                       
Beginning Balance - January 1, 2012
  $ 5,823     $ 2,583     $ 1,933     $ 1,251     $ 3,746     $ 8,127     $ 8,733     $ 207     $ 614     $ 33,017  
Charge-Offs
    -       -       -       -       (69 )     -       (198 )     (64 )             (331 )
Recoveries
    -       -       -       -       8       2       8       18               36  
Provision
    (1,380 )     192       268       44       (133 )     628       94       1       506       220  
Ending Balance - March 31, 2012
  $ 4,443     $ 2,775     $ 2,201     $ 1,295     $ 3,552     $ 8,757     $ 8,637     $ 162     $ 1,120     $ 32,942  
Ending Balance Individually Evaluated for Impairment
    -       -       -       48       114       846       51       22       -       1,081  
Ending Balance Collectively Evaluated for Impairment
    4,443       2,775       2,201       1,247       3,438       7,911       8,586       140       1,120       31,861  
Loans:
                                                                               
Ending Balance
  $ 321,161     $ 277,631     $ 32,036     $ 111,660     $ 49,094     $ 200,034     $ 160,066     $ 6,601     $ -     $ 1,158,283  
Ending Balance Individually Evaluated for Impairment
    1,137       933       -       406       1,007       1,155       339       22       -       4,999  
Ending Balance Collectively Evaluated for Impairment
    320,024       276,698       32,036       111,254       48,087       198,879       159,727       6,579       -       1,153,284  
 
December 31, 2011
 
Commercial Real Estate
   
Agricultural Real Estate
   
Real Estate Construction
   
Residential 1st
Mortgages
   
Home Equity
Lines & Loans
   
Agricultural
   
Commercial
   
Consumer & Other
   
Unallocated
   
Total
 
                                                             
Year-To-Date Allowance for Credit Losses:
                                                       
Beginning Balance- January 1, 2011
  $ 7,631     $ 1,539     $ 2,160     $ 1,164     $ 3,724     $ 6,733     $ 9,084     $ 216     $ 10     $ 32,261  
Charge-Offs
    (25 )     (384 )     -       (449 )     (751 )     (3,559 )     (788 )     (190 )     -       (6,146 )
Recoveries
    -       18       -       4       13       10       21       61       -       127  
Provision
    (1,783 )     1,410       (227 )     532       760       4,943       416       120       604       6,775  
Ending Balance- December 31, 2011
  $ 5,823     $ 2,583     $ 1,933     $ 1,251     $ 3,746     $ 8,127     $ 8,733     $ 207     $ 614     $ 33,017  
Ending Balance Individually Evaluated for Impairment
    686       -       -       -       80       793       54       23       -       1,636  
Ending Balance Collectively Evaluated for Impairment
    5,137       2,583       1,933       1,251       3,666       7,334       8,679       184       614       31,381  
Loans:
                                                                               
Ending Balance
  $ 305,704     $ 280,139     $ 29,607     $ 107,421     $ 50,956     $ 217,227     $ 165,089     $ 6,935     $ -     $ 1,163,078  
Ending Balance Individually Evaluated for Impairment
    4,562       954       -       1,194       576       1,337       292       23       -       8,938  
Ending Balance Collectively Evaluated for Impairment
    301,142       279,185       29,607       106,227       50,380       215,890       164,797       6,912       -       1,154,140  
 
March 31, 2011
 
Commercial Real Estate
   
Agricultural Real Estate
   
Real Estate Construction
   
Residential 1st
Mortgages
   
Home Equity
Lines & Loans
   
Agricultural
   
Commercial
   
Consumer & Other
   
Unallocated
   
Total
 
                                                             
Year-To-Date Allowance for Credit Losses:
                                                       
Beginning Balance - January 1, 2011
  $ 7,631     $ 1,539     $ 2,160     $ 1,164     $ 3,724     $ 6,733     $ 9,084     $ 216     $ 10     $ 32,261  
Charge-Offs
    -       -       -       (304 )     (99 )     -       (36 )     (35 )             (474 )
Recoveries
    -       -       -       -       2       -       5       12               19  
Provision
    (1,801 )     932       547       228       18       551       (41 )     (2 )     93       525  
Ending Balance - March 31, 2011
  $ 5,830     $ 2,471     $ 2,707     $ 1,088     $ 3,645     $ 7,284     $ 9,012     $ 191     $ 103     $ 32,331  
Ending Balance Individually Evaluated for Impairment
    19       365       -       -       203       150       66       9       -       812  
Ending Balance Collectively Evaluated for Impairment
    5,811       2,106       2,707       1,088       3,442       7,134       8,946       182       103       31,519  
Loans:
                                                                               
Ending Balance
  $ 324,582     $ 255,961     $ 37,260     $ 106,612     $ 57,083     $ 210,886     $ 167,313     $ 7,920     $ -     $ 1,167,617  
Ending Balance Individually Evaluated for Impairment
    302       1,797       -       823       437       778       280       59       -       4,476  
Ending Balance Collectively Evaluated for Impairment
    324,280       254,164       37,260       105,789       56,646       210,108       167,033       7,861       -       1,163,141  
 
 
The following tables show the loan portfolio allocated by management’s internal risk ratings at the dates indicated (in thousands):
 
March 31, 2012
 
Pass
   
Special
Mention
   
Substandard
   
Total Loans
 
Loans:
                       
Commercial Real Estate
  $ 283,721     $ 29,510     $ 7,930     $ 321,161  
Agricultural Real Estate
    250,827       22,541       4,263       277,631  
Real Estate Construction
    23,876       3,217       4,943       32,036  
Residential 1st Mortgages
    109,453       1,454       753       111,660  
Home Equity Lines & Loans
    47,468       -       1,626       49,094  
Agricultural
    193,600       3,295       3,139       200,034  
Commercial
    157,953       1,614       499       160,066  
Consumer & Other
    6,348       -       253       6,601  
Total
  $ 1,073,246     $ 61,631     $ 23,406     $ 1,158,283  
 
December 31, 2011
 
Pass
   
Special
Mention
   
Substandard
   
Total Loans
 
Loans:
                       
Commercial Real Estate
  $ 265,201     $ 15,186     $ 25,317     $ 305,704  
Agricultural Real Estate
    254,181       21,657       4,301       280,139  
Real Estate Construction
    21,428       3,217       4,962       29,607  
Residential 1st Mortgages
    104,609       1,483       1,329       107,421  
Home Equity Lines & Loans
    49,631       -       1,325       50,956  
Agricultural
    209,555       4,083       3,589       217,227  
Commercial
    158,273       5,240       1,576       165,089  
Consumer & Other
    6,528       -       407       6,935  
Total
  $ 1,069,406     $ 50,866     $ 42,806     $ 1,163,078  
 
March 31, 2011
 
Pass
   
Special
Mention
   
Substandard
   
Total Loans
 
Loans:
                       
Commercial Real Estate
  $