TROUBLED DEBT RESTRUCTURES

12 Months Ended

Dec. 31, 2011

As a result of adopting the amendments in ASU 2011-02, the Bank reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered troubled debt restructurings (TDRs) under the amended guidance. The Bank identified as TDRs certain loans for which the allowance for loan losses had previously been measured under a general allowance methodology. Upon identifying those loans as TDRs, the Bank identified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-02 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired. At the end of the year of adoption (December 31, 2011), the recorded investment in loans for which the allowance was previously measured under a general allowance methodology and are now impaired under ASC 310-10-35 was $9,892,503, and the allowance for loan losses associated with those loans, on the basis of a current evaluation of loss was $381,039. During the year ended December 31, 2011, the Bank charged $494,997 to the allowance relating to impairment charges on restructured loans.


	For the year ended December 31, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial & Industrial		1	$	82,748	$	82,748
Consumer & other		—		—		—
Real estate:
Construction		—		—		—
Mortgage - residential		—		—		—
Mortgage - commercial		1		1,161,576		1,161,576
		2	$	1,244,324	$	1,244,324

During the year ended December 31, 2011, we modified two loans that were considered to be troubled debt restructurings. We shortened the terms for both of these loans and the interest rate was lowered for one of these loans. Restructured loans must perform for six months prior to being returned to accrual status. The Bank only modifies loans that are considered troubled debt restructurings, as no such loans were modified 2011 that were not considered troubled debt restructurings.

The following table, by loan category, presents loans determined to be troubled debt restructurings, which defaulted during the year ended December 31, 2011.


	For the year ended December 31, 2011
	Number of Contracts		Recorded Investment
Troubled Debt Restructurings That Subsequently Defaulted During the Period:
Commercial & Industrial		1	$	28,464
Consumer & other		1		7,841
Real estate:
Construction		2		375,253
Mortgage - residential		5		1,348,124
Mortgage - commercial		2		3,242,948

Total		11	$	5,002,630


	As of December 31, 2011
	Number of Contracts		Recorded Investment
Troubled Debt Restructurings at Period End:
Accruing:
Commercial & Industrial		3	$	406,567
Consumer & other		—		—
Real estate:
Construction		1		872,581
Mortgage - residential		1		254,115
Mortgage - commercial		4		5,274,597
Total			$	6,807,860
Nonaccruing:
Commercial & Industrial		1	$	27,984
Consumer & other		1		6,895
Real estate:
Construction		1		258,991
Mortgage - residential		3		811,929
Mortgage - commercial		4		1,978,844
Total		10	$	3,084,643

In the determination of the allowance for loan losses, all TDRs are reviewed to ensure that one of the three proper valuation methods (fair market value of the collateral, present value of cash flows, or observable market price) is adhered to. All nonaccrual loans are written down to their corresponding collateral value. All TDR nonaccruing loans and where the loan balance exceeds the present value of cash flow will have a specific allocation. All TDR loans are considered impaired. Under ASC 310-10, a loan is impaired when it is probable that the bank will be unable to collect all amounts due including both principal and interest according to the contractual terms of the loan agreement.

- Definition

Tabular disclosure of troubled debt restructuring which results when the debtor restructures the terms of its debt with a creditor due to the debtor's financial difficulties and the creditor grants certain concessions to obtain payment it might not otherwise receive. Includes a description of the principal changes in terms, the major features of settlement for each restructuring, the aggregate gain on restructuring and the related income tax effect, the per share amount of the total gain on restructuring, net of related income tax effect, and the total gain (loss) on transfers of assets recognized during the period. After the troubled debt restructuring has occurred debtors discuss the extent and amount to which amounts contingently payable are included in the carrying amount of restructured payables, and the conditions under which those amounts would become payable or would be forgiven when there is at least a reasonable possibility that a liability for contingent payments will be incurred.

+ References+ Details

AB&T Financial CORP 10-K