United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

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

Commission File number 000-49699

Centra Financial Holdings, Inc.

(Exact name of registrant as specified in its charter)

West Virginia		55-0770610
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No)

990 Elmer Prince Drive
P. O. Box 656
Morgantown, West Virginia 26507-0656
(Address of principal executive offices, zip code)

304-598-2000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, address, and fiscal year, if changed since last report)

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 if 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:

Indicate by check mark if 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:

As of October 29, 2010, the number of shares outstanding of the registrant’s only class of common stock was 8,441,458.

 

 

Centra Financial Holdings, Inc.

Table of Contents

		Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets: September 30, 2010 (unaudited) and December 31, 2009			1
Consolidated Statements of Income (unaudited) Nine and Three Months ended September 30, 2010 and September 30, 2009			2
Consolidated Statements of Stockholders’ Equity (unaudited) Nine Months ended September 30, 2010 and September 30, 2009			3
Consolidated Statements of Cash Flows (unaudited) Nine Months ended September 30, 2010 and September 30, 2009			4
Notes to Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition And Results of Operations			11
Item 3. Quantitative and Qualitative Disclosure of Market Risk			26
Item 4. Controls and Procedures			26
Part II. Other Information			26
Item 1. Legal Proceedings			26
Item 1a. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon Senior Securities			26
Item 4. (Removed and Reserved)			27
Item 5. Other Information			27
Item 6. Exhibits			27
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Part I. Financial Information

Item 1. Financial Statements

Centra Financial Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets

		September 30				December 31
		2010				2009
(Dollars in Thousands, Except Per Share Data)		(Unaudited)				(Note B)
Assets
Cash and due from banks		$	6,508			$	3,961
Interest-bearing deposits in other banks			1,605				1,996
Federal funds sold			177,730				68,607
Total cash and cash equivalents			185,843				74,564
Available-for-sale securities, at fair value (amortized cost of $123,813 at September 30, 2010 and $128,966 at December 31, 2009)			125,933				131,531
Other investment securities, at cost			3,900				2,922
Loans, net of unearned income			1,031,716				1,022,852
Allowance for loan losses			(18,306	)			(18,010	)
Net loans			1,013,410				1,004,842
Premises and equipment, net			21,113				22,362
Loans held for sale			5,448				2,593
Goodwill and other intangible assets			15,002				15,557
Other assets			40,152				38,186
Total assets		$	1,410,801			$	1,292,557
Liabilities
Deposits
Non-interest bearing		$	158,417			$	155,690
Interest bearing			1,049,421				958,656
Total deposits			1,207,838				1,114,346
Short-term borrowings			35,982				40,781
Long-term debt			20,000				20,000
Other liabilities			11,910				12,286
Total liabilities			1,275,730				1,187,413
Stockholders’ equity
Preferred stock, $1 par value, 1,000,000 authorized, none issued			—				—
Common stock, $1 par value, 50,000,000 authorized, 8,427,409 and 7,122,525 issued and outstanding on September 30, 2010 and December 31, 2009, respectively			8,427				7,123
Additional paid-in capital			120,865				97,320
Accumulated earnings (deficit)			4,482				(838	)
Accumulated other comprehensive income			1,297				1,539
Total stockholders’ equity			135,071				105,144
Total liabilities and stockholders’ equity		$	1,410,801			$	1,292,557

Notes to consolidated financial statements are an integral part of these statements.

Centra Financial Holdings, Inc. and Subsidiaries
Consolidated Statements of Income

		Nine Months Ended								Three Months Ended
		September 30								September 30
(Unaudited) (Dollars in Thousands Except Per Share Data)		2010				2009				2010				2009
Interest income
Loans, including fees		$	43,310			$	45,652			$	14,329			$	15,223
Loans held for sale			88				126				40				27
Securities available-for-sale			2,422				3,066				765				977
Interest-bearing bank balances			1				1				—				—
Federal funds sold			197				10				86				6
Total interest income			46,018				48,855				15,220				16,233
Interest expense
Deposits			12,292				16,103				3,669				5,082
Short-term borrowings			136				242				42				58
Long-term debt			353				459				127				130
Total interest expense			12,781				16,804				3,838				5,270
Net interest income			33,237				32,051				11,382				10,963
Provision for credit losses			2,589				2,506				1,019				1,186
Net interest income after provision for credit losses			30,648				29,545				10,363				9,777
Other income
Service charges on deposit accounts			3,036				2,712				1,128				952
Other service charges and fees			2,128				1,858				735				644
Secondary market income			583				1,067				195				281
Security losses			—				(336	)			—				—
Other			850				540				312				153
Total other income			6,597				5,841				2,370				2,030
Other expense
Salary and employee benefits			13,505				11,501				4,424				4,019
Occupancy expense			2,360				2,025				743				745
Equipment expense			1,638				1,741				542				578
Advertising			1,241				1,122				346				431
Professional fees			741				669				258				188
Data processing			1,932				1,880				620				617
Other outside services			682				761				199				246
Regulatory assessment			1,275				1,526				440				389
Other			3,464				3,370				1,310				1,217
Total other expense			26,838				24,595				8,882				8,430
Net income before income tax			10,407				10,791				3,851				3,377
Income tax expense			3,406				3,709				1,260				1,223
Net income			7,001				7,082				2,591				2,154
Dividends and accretion on preferred stock and warrants			—				923				—				—
Net income available to common stockholders		$	7,001			$	6,159			$	2,591			$	2,154
Basic earnings per share		$	0.86			$	0.89			$	0.31			$	0.31
Diluted earnings per share		$	0.82			$	0.85			$	0.30			$	0.29
Basic weighted-average shares outstanding			8,180,579				6,912,570				8,424,891				6,970,533
Diluted weighted-average shares outstanding			8,545,037				7,284,451				8,758,909				7,327,725
Cash dividends declared per share		$	0.20			$	0.15			$	0.08			$	0.05

Notes to consolidated financial statements are an integral part of these statements.

Centra Financial Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity

For the Nine Months Ended September 30, 2010 and 2009

																		Accumulated
										Additional								Other
		Preferred				Common				Paid-in				Accumulated				Comprehensive
(Unaudited) (Dollars in Thousands)		Stock				Stock				Capital				(Deficit)Earnings				Income				Total
Balance, January 1, 2009		$	—			$	6,804			$	93,887			$	(6,535	)		$	1,086			$	95,242
Issuance of Series A Preferred Stock			15				—				14,235				—				—				14,250
Issuance of Series B Preferred Stock			1				—				749				—				—				750
Accretion of discount on Series A Preferred Stock			—				—				43				(43	)			—				—
Redemption of Series A Preferred Stock			(15	)			—				(14,278	)			(707	)			—				(15,000	)
Redemption of Series B Preferred Stock			(1	)			—				(749	)			—				—				(750	)
Exercise of 126,217 stock options			—				126				859				—				—				985
Stock Based Compensation			—				—				218				—				—				218
Cash dividend declared on common stock, $0.15 per share			—				—				—				(1,042	)			—				(1,042	)
Cash dividends on Series A and B Preferred Stock			—				—				—				(173	)			—				(173	)
Sale of shares issued through dividend reinvestment plan			—				65				937				—				—				1,002
Comprehensive income:
Net income			—				—				—				7,082				—				7,082
Other comprehensive income:
Change in unrealized gain on available-for-sale securities, net of income taxes of $265			—				—				—				—				465				465
Reclassification adjustment for net losses included in net income, net of income tax of $135			—				—				—				—				202				202
Net unrealized gain on available-for-sale securities, net of income tax of $130			—				—				—				—								667
Total comprehensive income			—				—				—				—				—				7,749
Balance, September 30, 2009		$	—			$	6,995			$	95,901			$	(1,418	)		$	1,753			$	103,231
Balance, January 1, 2010		$	—			$	7,123			$	97,320			$	(838	)		$	1,539			$	105,144
Issuance of shares of common stock			—				1,034				19,580				—				—				20,614
Cash dividend declared on common stock, $0.20 per share			—				—				—				(1,681	)			—				(1,681	)
Stock based compensation expense			—				—				593				—				—				593
Exercise of 226,804 stock options			—				227				2,551				—				—				2,778
Shares issued through dividend reinvestment plan			—				43				821				—				—				864
Comprehensive income:
Net income			—				—				—				7,001				—				7,001
Other comprehensive income:
Change in unrealized gain on available-for-sale securities, net of income taxes of ($173)			—				—				—				—				(242	)			(242	)
Total comprehensive income			—				—				—				—				—				6,759
Balance, September 30, 2010		$	—			$	8,427			$	120,865			$	4,482			$	1,297			$	135,071

Notes to consolidated financial statements are an integral part of these statements.

Centra Financial Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

		Nine Months Ended
		September 30
(Unaudited) (Dollars in Thousands)		2010				2009
Operating activities
Net income		$	7,001			$	7,082
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of discounts on securities			(96	)			(194	)
Amortization of premiums on securities			1,064				815
Loss on impairment and sale of investment securities			—				336
Amortization of intangibles			555				555
Provision for credit losses			2,589				2,506
Deferred income tax benefit			(604	)			(484	)
Loss on disposal of fixed assets			—				50
Depreciation			1,634				1,563
Loans originated for sale			(38,735	)			(74,756	)
Proceeds from loans sold			36,463				75,058
Gain on sale of loans			(583	)			(1,065	)
Stock option expense			593				218
Increase in cash surrender value of life insurance			(612	)			(340	)
Increase in other liabilities			813				1,902
Decrease (increase)in other assets			931				(2,114	)
Net cash provided by operating activities			11,013				11,132
Investing activities
Purchases of premises and equipment			(388	)			(2,974	)
Purchase of life insurance			(2,008	)			(1,380	)
Purchases of available-for-sale securities			(45,328	)			(53,209	)
Sales, calls and maturities of available-for-sale securities			48,535				42,717
Net increase in loans made to customers			(11,196	)			(8,087	)
Net cash used in investing activities			(10,385	)			(22,933	)
Financing activities
Net increase in deposits			93,492				91,615
Net decrease in securities sold under agreement to repurchase			(4,799	)			(41,055	)
Cash received from exercise of stock options			1,589				985
Cash received from dividend reinvestment plan			509				736
Cash payment in lieu of fractional shares			—				(8	)
Cash dividends paid on common stock			(754	)			(933	)
Proceeds of stock offering			20,614				—
Net proceeds from issuance of Series A and B Preferred Stock			—				15,000
Repayment of Series A Preferred Stock			—				(15,750	)
Cash dividends paid on preferred stock and warrants			—				(173	)
Net cash provided by financing activities			110,651				50,417
Net increase in cash and cash equivalents			111,279				38,616
Cash and cash equivalents — beginning of period			74,564				20,296
Cash and cash equivalents — end of period		$	185,843			$	58,912

Notes to consolidated financial statements are an integral part of these statements.

Centra Financial Holdings, Inc.
Notes to Consolidated Financial Statements

Note A — Organization

Centra Bank, Inc. (the Bank or Centra) is a full service commercial bank that was chartered on September 27, 1999, under the laws of the State of West Virginia and commenced operations on February 14, 2000. Centra Financial Holdings, Inc. (Centra) was formed on October 25, 1999, for the purpose of becoming a one-bank holding company to own all of the outstanding stock of Centra Bank.

Management has evaluated all significant events and transactions that occurred after September 30, 2010 and the date these financial statements were issued, for potential recognition or disclosure in these financial statements.

Note B — Basis of Presentation

Centra’s consolidated financial statements have been prepared in accordance with Centra’s accounting and reporting policies, which are in conformity with U. S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ significantly from management’s estimates. Also, they do not include all the information and footnotes required by U. S. generally accepted accounting principles for annual year-end financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, have been included and are of a normal, recurring nature. The balance sheet as of December 31, 2009, has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U. S. generally accepted accounting principles (“U.S. GAAP”). Operating results for the nine months ended September 30, 2010, are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in Centra’s December 31, 2009, Form 10-K filed with the Securities and Exchange Commission.

Note C — Net Income Per Common Share

Centra determines basic earnings per share by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by dividing net income available to common shareholders by the weighted average number of common shares outstanding increased by the number of shares that would be issued assuming the exercise of stock options. At September 30, 2010 and 2009, stock options outstanding and available to be exercised were 1,220,398 and 1,352,611 shares at an average price of $13.20 and $10.77, respectively. The calculation of basic and diluted earnings per common share was a follows:

		Nine Months Ended								Three Months Ended
		September 30								September 30
(Dollars in Thousands except for per Share Data)		2010				2009				2010				2009
Net income		$	7,001			$	7,082			$	2,591			$	2,154
Dividends and accretion on preferred stock and warrants			—				923				—				—
Net income available to common stockholders		$	7,001			$	6,159			$	2,591			$	2,154
Weighted-average common shares outstanding			8,180,579				6,912,570				8,424,891				6,970,533
Effect of potentially dilutive common shares			364,458				371,881				334,018				357,192
Total weighted-average common shares outstanding			8,545,037				7,284,451				8,758,909				7,327,725
Earnings per Share
Basic		$	0.86			$	0.89			$	0.31			$	0.31
Diluted		$	0.82			$	0.85			$	0.30			$	0.29

Note D — Fair Value Measurements

A hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Centra’s market assumptions. The three levels of the fair value hierarchy based on these two types of inputs are as follows:

	•		Level 1 — Valuation is based on quoted prices in active markets for identical assets and liabilities.
	•		Level 2 — Valuation is based on observable inputs other than quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in nonactive markets, and model-based valuation techniques for which all significant assumptions are observable in the market.
	•		Level 3 — Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.

When determining the fair value measurements for assets and liabilities, Centra looks to active and observable markets to price identical assets or liabilities whenever possible and classifies such items in Level 1. When identical assets and liabilities are not traded in active markets, Centra looks to market observable data for similar assets and liabilities and classifies such items as Level 2. Nevertheless, when certain assets and liabilities are not actively traded in observable markets and Centra must use alternative valuation techniques using unobservable inputs to determine a fair value and classifies such items as Level 3. The level within the fair value hierarchy is based on the lowest level of input that is significant in the fair value measurement.

The following tables present the balances of financial assets measured at fair value on a recurring basis as of September 30, 2010 and December 31, 2009:

(Unaudited) (Dollars in Thousands)

						Fair Value Measurements at September 30, 2010 Using:
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Balance as of				Assets				Inputs				Inputs
Description		September 30, 2010				(Level 1)				(Level 2)				(Level 3)
Assets
Available-for-sale securities
Debt securities:
U.S. Government sponsored agencies		$	94,591			$	—			$	94,591			$	—
State and municipal			30,183				—				30,183				—
Corporate			782				—				782				—
Equity securities:
Financial institution stock			377				377				—				—
Total		$	125,933			$	377			$	125,556			$	—

						Fair Value Measurements at December 31, 2009 Using:
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Balance as of				Assets				Inputs				Inputs
Description		December 31, 2009				(Level 1)				(Level 2)				(Level 3)
Assets
Available-for-sale securities:
Debt securities:
U.S. Government sponsored agencies		$	97,106			$	—			$	97,106			$	—
State and municipal			32,406				—				32,406				—
Corporate			1,630				—				1,630				—
Equity securities:															—
Financial institution stock			389				389				—				—
Total		$	131,531			$	389			$	131,142			$	—

Available for sale securities are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities. Third party vendors compile prices from various sources and may apply such techniques as matrix pricing to determine the value of identical or similar securities (Level 2). Any securities available for sale not valued based upon the methods above are considered Level 3.

The following table summarizes financial assets, including impaired loans that have been written down and other real estate owned recorded at the lower of cost or market, that were measured at fair value on a nonrecurring basis as of September 30, 2010:

(Unaudited) (Dollars in Thousands)

						Fair Value Measurements at September 30, 2010 Using:
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Balance as of				Assets				Inputs				Inputs
Description		September 30, 2010				(Level 1)				(Level 2)				(Level 3)
Assets
Impaired loans		$	25,059			$	—			$	7,961			$	17,098
Other real estate owned		$	2,797			$	—			$	—			$	2,797

(Dollars in Thousands)

						Fair Value Measurements at December 31, 2009 Using:
						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
		Balance as of				Assets				Inputs				Inputs
Description		December 31, 2009				(Level 1)				(Level 2)				(Level 3)
Assets
Impaired loans		$	7,197			$	—			$	1,147			$	6,050
Other real estate owned		$	2,261			$	—			$	60			$	2,201

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with generally accepted accounting principles (GAAP.) Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

Loans held for sale: Loans held for sale are carried at the lower of cost or market value. These loans currently consist of one-to-four family residential loans originated for sale in the secondary market. Fair value is based on the price secondary markets are currently offering for similar loans which is not materially different than cost due to the short duration between origination and sale (Level 2). As such, Centra records any fair value adjustments on a nonrecurring basis. Gains and losses on the sale of loans are recorded within secondary market income on the Consolidated Statements of Income. For the three and nine months ended September 30, 2010, no fair value adjustment was recorded related to loans held for sale.

Impaired loans: Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. For such loans, impairment is measured based on the present value of expected future cash flows to be received from the borrower, or alternatively, the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent. Impairment is typically measured based on the fair value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the collateral is real estate. When the fair value of the collateral is based on an observable market price or a current appraised value, Centra records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, Centra records the impaired loan as nonrecurring Level 3.

The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Impaired loans allocated to the Allowance for Loan Losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for credit losses expense on the Consolidated Statements of Income.

Other real estate owned: Other real estate owned (OREO) is measured at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Appraisals for property may be conducted on the property and are based on consideration of comparable property sales (Level 2). Some valuations may require some degree of professional judgment. In conducting an appraisal for ongoing construction property, the appraiser develops two appraised amounts: an “as is” appraised value and a “completed” value. Based on professional judgment and their knowledge of the particular situation, management determines the appropriate fair value to be utilized for such property (Level 3). Income and expenses from operations and changes in valuation allowance are included in the net expenses from OREO.

Goodwill and Core Deposit Intangible: Goodwill is carried at cost basis and is reviewed annually for impairment. Core Deposit Intangible is recorded at cost and amortized monthly and reviewed annually for impairment or earlier if indicators of impairment exist. If impairment exists, the measurement of loss is based on the fair value of the reporting unit (goodwill) and the core deposit intangible. For the three and nine months ended September 30, 2010 and 2009, no indication of impairment was noted.

Financial Instruments: The following methods and assumptions were used by Centra in estimating its fair value disclosures for financial instruments:

Cash and Cash Equivalents: The carrying amounts reported in the balance sheet approximate their fair values.

Loans: The fair value of performing variable rate loans that reprice frequently and performing demand loans, with no significant change in credit risk, is based on carrying value. The fair value of certain mortgage loans is based on quoted market prices of similar loans sold adjusted for differences in loan characteristics. The fair value of other performing loans (e.g., commercial real estate, commercial, and consumer loans) is estimated using discounted cash flow analyses and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Loans Held for Sale: The estimated fair value of loans held for sale is based upon the market price of similar loans which is not materially different than cost due to the short time duration between origination and sale.

Deposits: The carrying amounts of demand deposits, savings accounts, and certain money market deposits approximate their fair values. The fair value of fixed maturity certificates of deposit is estimated using a discounted cash flow calculation that applies current rates offered for deposits of similar remaining maturities.

Short-Term Borrowings: The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Debt: The carrying amounts of long-term debt approximate their fair value because the debt is a variable rate instrument repricing quarterly.

Off-Balance Sheet Financial Instruments: The fair value of loan commitments is estimated using the fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the counter parties’ credit standing. The estimated fair value of these commitments approximates their carrying value.

The estimated fair values of Centra’s financial instruments are as follows:

		September 30, 2010								December 31, 2009
						Estimated								Estimated
		Carrying				Fair				Carrying				Fair
(Dollars in Thousands)		Amount				Value				Amount				Value
Financial assets:
Cash and cash equivalents		$	185,843			$	185,843			$	74,564			$	74,564
Investment securities			129,833				129,833				131,531				131,531
Loans			1,031,716				1,079,439				1,022,852				1,077,091
Loans Held for Sale			5,448				5,448				2,593				2,593
Financial liabilities:
Deposits		$	1,207,838			$	1,216,022			$	1,114,346			$	1,126,781
Short-term borrowings			35,982				35,982				40,781				40,781
Long-term debt			20,000				20,000				20,000				20,000

Note E — Investment Securities

		Securities Classified as Available-for-Sale
						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
(Dollars in Thousands)		Cost				Gains				Losses				Value
At September 30, 2010:
Debt securities:
U.S. Government sponsored agencies		$	93,631			$	960			$	—			$	94,591
State and municipal			28,958				1,225				—				30,183
Corporate			759				23				—				782
Equity securities:
Financial institution stock			465				—				(88	)			377
Total available-for-sale securities		$	123,813			$	2,208			$	(88	)		$	125,933
At December 31, 2009:
Debt securities:
U.S. Government sponsored agencies		$	95,752			$	1,397			$	(43	)		$	97,106
State and municipal			31,253				1,168				(15	)			32,406
Corporate			1,572				58				—				1,630
Equity securities:
Financial institution stock			389				—				—				389
Total available-for-sale securities		$	128,966			$	2,623			$	(58	)		$	131,531

As of September 30, 2010, other investments at cost were $3.9 million compared to $2.9 million as of December 31, 2009, and consisted of Federal Home Loan Bank (“FHLB”) stock. FHLB stock is classified as a restricted investment, carried at cost and valued based on the ultimate recoverability of par value. Cash and stock dividends received on stock are reported as interest income. There are no identified events or changes in circumstances that may have a significant adverse effect on these investments carried at cost.

At September 30, 2010 and December 31, 2009, investment securities having a carrying value of $106.5 million and $108.5 million, respectively were pledged to secure public deposits and repurchase agreements in accordance with federal and state requirements.

Provided below is a summary of securities available-for-sale which were in an unrealized loss position at September 30, 2010 and December 31, 2009. One security was in an unrealized loss position as of September 30, 2010 compared to ten securities at December 31, 2009, respectively. Centra has the intent to hold these securities and it is more likely than not that Centra will not be required to sell the securities before the anticipated recovery in fair value or by the time these securities mature. Further, Centra believes the deterioration in fair value is attributable to changes in market interest rates and not credit quality of the issuer.

		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Dollars in Thousands)		Value				Losses				Value				Losses				Value				Losses
At September 30, 2010:
Debt securities:
U.S. Government sponsored agencies		$	—			$	—			$	—			$	—			$	—			$	—
State and municipal			—				—				—				—				—				—
Corporate			—				—				—				—				—				—
Equity securities:
Financial institution stock			377				(88	)			—				—				377				(88	)
Total		$	377			$	(88	)		$	—			$	—			$	377			$	(88	)
At December 31, 2009:
Debt securities:
U.S. Government sponsored agencies		$	15,213			$	(43	)		$	—			$	—			$	15,213			$	(43	)
State and municipal			1,275				(15	)			—				—				1,275				(15	)
Corporate			—				—				—				—				—				—
Equity securities:
Financial institution stock			—				—				—				—				—				—
Total		$	16,488			$	(58	)		$	—			$	—			$	16,488			$	(58	)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of Centra to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. As of September 30, 2010, Centra determined that no other-than-temporary impairments existed within the available-for-sale securities portfolio.

The estimated maturities presented in the tables below may differ from the contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties. The portfolio contains no single issue (excluding U.S. government and U.S. agency securities) that exceeds 10% of stockholders’ equity.

The fair value of the available-for-sale securities portfolio as of September 30, 2010 and December 31, 2009 by contractual maturity, are shown below:

		Fair Value Due:
						After 1				After 5
						year				years
		Within 1				through 5				through				Over 10
(Dollars in Thousands		year				years				10 years				year				Total
At September 30, 2010:
Debt Securities:
U.S. Government sponsored agencies		$	43,221			$	51,370			$	—			$	—			$	94,591
State and municipal			2,325				27,414				444				—				30,183
Corporate			782				—				—				—				782
Equity Securities:
Financial institution stock			—				—				—				377				377
Total		$	46,328			$	78,784			$	444			$	377			$	125,933

		Fair Value Due:
						After 1				After 5
						year				years
		Within 1				through 5				through				Over 10
(Dollars in Thousands		year				years				10 years				year				Total
At December 31, 2009:
Debt Securities:
U.S. Government sponsored agencies		$	32,712			$	64,394			$	—			$	—			$	97,106
State and municipal			869				30,688				849				—				32,406
Corporate			820				810				—				—				1,630
Equity Securities:
Financial institution stock			—				—				—				389				389
Total		$	34,401			$	95,892			$	849			$	389			$	131,531

Note F — Recent Accounting Pronouncements

In July 2010, FASB issued an accounting pronouncement to improve disclosures about the credit quality of financing receivables and the allowance for credit losses. Companies will be required to provide more information about the credit quality of their financing receivables in the disclosures to financial statements, such as aging information and credit quality indicators. Both new and existing disclosures must be disaggregated by portfolio segment or class. The disaggregation of information is based on how a company develops its allowance for credit losses and how it manages its credit exposure. Required disclosures as of the end of a reporting period are effective for periods ending on or after December 15, 2010, while required disclosures about activity that occurs during a reporting period are effective for periods beginning on or after December 15, 2010. Centra does not believe that this statement will have a material impact on its consolidated financial statements.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Private Securities Litigation Reform Act of 1995 indicates that the disclosure of forward-looking information is desirable for investors and encourages such disclosure by providing a safe harbor for forward-looking statements that involve risk and uncertainty. All statements other than statements of historical fact included in this Form 10-Q including statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. When considering forward-looking statements, you should keep in mind cautionary statements in this document and other SEC filings including the “Risk Factors” section of Item 1A of our 2009 Annual Report on Form 10-K. In order to comply with the terms of the safe harbor, the corporation notes that a variety of factors, (e.g., changes in the national and local economies, changes in the interest rate environment, competition, changes in governmental regulation including rules and regulations adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, additional FDIC special assessments, etc.) could cause Centra’s actual results and experience to differ materially from the anticipated results or other expectations expressed in those forward-looking statements.

Recent Legislation Impacting the Financial Services Industry

On July 21, 2010, sweeping financial regulatory reform legislation entitled the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (the “Dodd-Frank Act”) was signed into law. Generally, the Dodd-Frank Act is effective the day after it was signed into law, but different effective dates apply to specific sections of the law. The Dodd-Frank Act implements far-reaching changes across the financial regulatory landscape, including provisions that, among other things, will:

	•		Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which will have rulemaking authority for a wide range of consumer protection laws that would apply to all banks and have broad powers to supervise and enforce consumer protection laws;
	•		Changes standards for Federal preemption of state laws related to federally chartered institutions and their subsidiaries;

	•		After a three-year phase-in period which begins January 1, 2013, removes trust preferred securities as a permitted component of a holding company’s tier 1 capital;
	•		Requires the Office of the Comptroller of the Currency to seek to make its capital requirements for national banks countercyclical so that capital requirements increase in times of economic expansion and decrease in times of economic contraction;
	•		Requires financial holding companies to be well-capitalized and well-managed as of July 21, 2011. Bank holding companies and banks must also be both well-capitalized and well-managed in order to acquire banks located outside their domiciled state;
	•		Provides for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the deposit insurance fund from 1.15% to 1.35% and changes in the basis for determining FDIC premiums from deposits to assets;
	•		Requires large, publicly traded bank holding companies with assets of $10 billion or more to establish a risk committee responsible for the oversight of enterprise risk management;
	•		Provides for new disclosure and other requirements relating to executive compensation and corporate governance. These disclosures and requirements apply to all public companies, not just financial institutions;
	•		Permanently increases the $250 thousand limit for federal deposit insurance and increases the cash limit of Securities Investor Protection Corporation protection from $100 thousand to $250 thousand and provides unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions;
	•		Repeals the federal prohibitions on the payment of interest on demand deposits;
	•		Amends the Electronic Fund Transfer Act (EFTA) to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer; and
	•		Increases the authority of the Federal Reserve to examine the Bank and its non-bank subsidiaries.