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The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans ninety days delinquent and accruing interest at December 31, 2012 or December 31, 2011. The increase in non-accrual loans during 2012 did not require an increase in the Company’s allowance for loan losses, as the evaluation of the collateral securing those loans indicated that an increase in the specific allowances was not required. The following tables present information on the Company’s past due and non-accrual loans by loan class: 

(Dollars in thousands) 

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Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the years 2012, 2011 and 2010, would have increased interest income by $164,000, $47,000 and $217,000, respectively. 

