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 (State or other jurisdiction of incorporation or organization)		55-0770610 (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:

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

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 April 30, 2011, the number of shares outstanding of the registrant’s only class of common stock was 8,515,368.

 

 

Centra Financial Holdings, Inc.

Table of Contents

Part I. Financial Information Page
Item 1. Financial Statements
Consolidated Balance Sheets: March 31, 2011 (unaudited) and December 31, 2010			1
Consolidated Statements of Income (unaudited) Three Months ended March 31, 2011 and March 31, 2010			2
Consolidated Statements of Stockholders’ Equity (unaudited) Three Months ended March 31, 2011 and March 31, 2010			3
Consolidated Statements of Cash Flows (unaudited) Three Months ended March 31, 2011 and March 31, 2010			4
Notes to Consolidated Financial Statements			5
Item 2. Management’s Discussion and Analysis of Financial Condition And Results of Operations			16
Item 3. Quantitative and Qualitative Disclosure of Market Risk			27
Item 4. Controls and Procedures			27
Part II. Other Information
Item 1. Legal Proceedings			27
Item 1a. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 3. Defaults Upon Senior Securities			27
Item 4. (Removed and Reserved)			27
Item 5. Other Information			27
Item 6. Exhibits			27
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Part I. Financial Information

Item 1.		Financial Statements

Centra Financial Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

		March 31				December 31
		2011				2010
(Dollars in Thousands, Except Per Share Data)		(Unaudited)				(Note B)
Assets
Cash and due from banks		$	5,357			$	4,815
Interest-bearing deposits in other banks			2,734				2,627
Federal funds sold			96,737				116,189
Total cash and cash equivalents			104,828				123,631
Available-for-sale securities, at fair value (amortized cost of $117,772 at March 31, 2011 and $128,493 at December 31, 2010)			119,203				129,957
Other investment securities, at cost			3,802				3,983
Loans, net of unearned income			1,053,086				1,051,857
Allowance for loan losses			(18,687	)			(18,586	)
Net loans			1,034,399				1,033,271
Premises and equipment, net			20,663				20,727
Loans held for sale			3,212				7,411
Goodwill and other intangible assets			14,631				14,816
Bank owned life insurance			19,420				19,248
Other assets			21,569				21,052
Total assets		$	1,341,727			$	1,374,096
Liabilities
Deposits
Non-interest bearing		$	172,768			$	160,092
Interest bearing			963,934				1,007,622
Total deposits			1,136,702				1,167,714
Short-term borrowings			32,468				37,622
Long-term debt			20,000				20,000
Other liabilities			13,917				12,912
Total liabilities			1,203,087				1,238,248
Stockholders’ equity
Preferred stock, $1 par value, 1,000,000 authorized, none issued			—				—
Common stock, $1 par value, 50,000,000 authorized, 8,500,571 and 8,451,444 issued and outstanding on March 31, 2011 and December 31, 2010, respectively			8,501				8,451
Additional paid-in capital			121,989				121,427
Accumulated earnings			7,274				5,074
Accumulated other comprehensive income			876				896
Total stockholders’ equity			138,640				135,848
Total liabilities and stockholders’ equity		$	1,341,727			$	1,374,096

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

Centra Financial Holdings, Inc. and Subsidiaries

Consolidated Statements of Income

		Three Months Ended
		March 31
(Unaudited) (Dollars in Thousands Except Per Share Data)		2011				2010
Interest income
Loans, including fees		$	13,967			$	14,552
Loans held for sale			45				20
Securities available-for-sale			567				831
Interest-bearing bank balances			—				1
Federal funds sold			55				39
Total interest income			14,634				15,443
Interest expense
Deposits			2,767				4,410
Short-term borrowings			26				44
Long-term debt			114				111
Total interest expense			2,907				4,565
Net interest income			11,727				10,878
Provision for credit losses			1,015				755
Net interest income after provision for credit losses			10,712				10,123
Other income
Service charges on deposit accounts			880				855
Other service charges and fees			768				666
Secondary market income			235				184
Other			344				223
Total other income			2,227				1,928
Other expense
Salary and employee benefits			4,359				4,586
Occupancy expense			813				863
Equipment expense			490				543
Advertising			239				384
Professional fees			334				246
Data processing			666				648
Other outside services			209				213
Regulatory assessment			455				398
Other			1,031				1,115
Total other expense			8,596				8,996
Net income before income tax			4,343				3,055
Income tax expense			1,506				1,003
Net income			2,837				2,052
Basic earnings per share		$	0.33			$	0.27
Diluted earnings per share		$	0.32			$	0.25
Basic weighted-average shares outstanding			8,481,475				7,694,931
Diluted weighted-average shares outstanding			8,810,992				8,148,610
Cash dividends declared per share		$	0.075			$	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 Three Months Ended March 31, 2011 and 2010

														Accumulated
						Additional								Other
		Common				Paid-in				Accumulated				Comprehensive
(Unaudited) (Dollars in Thousands)		Stock				Capital				Earnings				Income				Total
Balance, January 1, 2010		$	7,123			$	97,320			$	(838	)		$	1,539			$	105,144
Issuance of shares of common stock			1,047				19,827				—				—				20,874
Cash dividend declared on common stock, $0.05 per share			—				—				(419	)			—				(419	)
Stock based compensation expense			—				550				—				—				550
Exercise of 203,927 stock options			204				1,156				—				—				1,360
Shares issued through dividend reinvestment plan			24				465				—				—				489
Comprehensive income:
Net income			—				—				2,052				—				2,052
Other comprehensive income:
Change in unrealized gain on available-for-sale securities, net of income taxes of ($159)			—				—				—				(220	)			(220	)
Total comprehensive income			—				—				—				—				1,832
Balance, March 31, 2010		$	8,398			$	119,318			$	795			$	1,319			$	129,830
Balance, January 1, 2011		$	8,451			$	121,427			$	5,074			$	896			$	135,848
Cash dividend declared on common stock, $0.075 per share			—				—				(637	)			—				(637	)
Stock based compensation expense			—				12				—				—				12
Exercise of 49,126 stock options			50				550				—				—				600
Comprehensive income:
Net income			—				—				2,837				—				2,837
Other comprehensive income:
Change in unrealized gain on available-for-sale securities, net of income taxes of ($13)			—				—				—				(20	)			(20	)
Total comprehensive income																			2,817
Balance, March 31, 2011		$	8,501			$	121,989			$	7,274			$	876			$	138,640

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

Centra Financial Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

		Three Months Ended
		March 31
(Unaudited) (Dollars in Thousands)		2011				2010
Operating activities
Net income		$	2,837			$	2,052
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of discounts on securities			(13	)			(49	)
Amortization of premiums on securities			469				303
Amortization of intangibles			185				185
Provision for credit losses			1,015				755
Deferred income tax benefit			(325	)			(548	)
Depreciation			485				522
Loans originated for sale			(10,579	)			(13,072	)
Proceeds of loans sold			15,013				12,972
Gain on sale of loans			(235	)			(184	)
Stock option expense			12				550
Increase in cash surrender value of life insurance			(172	)			(174	)
Increase (decrease) in other liabilities			1,156				(293	)
(Increase) decrease in other assets			(473	)			1,184
Net cash provided by operating activities			9,375				4,203
Investing activities
Purchases of premises and equipment			(422	)			(157	)
Purchases of available-for-sale securities			(101	)			(5,408	)
Sales, calls and maturities of available-for-sale securities			10,547				9,675
Net (increase) decrease in loans made to customers			(2,156	)			4,162
Net cash provided by investing activities			7,868				8,272
Financing activities
Net (decrease) increase in deposits			(31,012	)			27,088
Net decrease in securities sold under agreement to repurchase			(5,154	)			(6,842	)
Cash received from exercise of stock options			463				1,360
Cash received from dividend reinvestment plan			—				324
Cash dividends paid on common stock			(343	)			(191	)
Proceeds of stock offering			—				20,873
Net cash (used in) provided by financing activities			(36,046	)			42,612
Net increase in cash and cash equivalents			(18,803	)			55,087
Cash and cash equivalents — beginning of period			123,631				74,564
Cash and cash equivalents — end of period		$	104,828			$	129,651

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.

After the close of business on December 15, 2010, Centra entered into an Agreement and Plan of Reorganization (the Agreement) with United Bankshares, Inc. (United), a West Virginia corporation headquartered in Charleston, West Virginia. In accordance with the Agreement, Centra will merge with and into a wholly-owned subsidiary of United (the Merger). At which time, Centra will cease, the wholly-owned subsidiary of United will survive and continue to exist as a West Virginia corporation.

The Agreement provides that upon consummation of the Merger, each outstanding share of common stock of Centra will be converted into the right to receive 0.7676 shares of United common stock, par value $2.50 per share.

Pursuant to the Agreement, at the effective time of the Merger, each outstanding option to purchase shares of Centra common stock under any and all plans of Centra shall receive cash consideration equal to the difference between the options’ strike price and $21.00 with respect to those options with a strike price less than $21.00. There will be no payment by United to any holder of Centra stock options with an exercise price equal to or greater than $21.00 and any such Centra stock options shall be terminated as of the effective time of the Merger.

The merger transaction, expected to close early third quarter of 2011, will be accounted for as a business combination pending approval of the stockholders of Centra and the receipt of all required regulatory approvals, as well as other customary conditions.

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 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 material adjustments considered necessary for a fair presentation, have been included and are of a normal, recurring nature. The balance sheet as of December 31, 2010, 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. Operating results for the three months ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in Centra’s December 31, 2010, 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 March 31, 2011 and 2010, stock options outstanding and available to be exercised were 1,161,448 and 1,156,379 shares at an average price of $13.41 and $11.16 respectively.

The calculation of basic and diluted earnings per common share was a follows:

		Three Months Ended
		March 31
(Dollars in Thousands except for per Share Data)		2011				2010
Net income		$	2,837			$	2,052
Weighted-average common shares outstanding			8,481,475				7,694,931
Effect of potentially dilutive common shares			329,517				453,679
Total weighted-average common shares outstanding			8,810,992				8,148,610
Earnings per Share
Basic		$	0.33			$	0.27
Diluted		$	0.32			$	0.25

Note D — Fair Value Measurements

Centra utilizes 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 under Fair Value Measurements 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 March 31, 2011 and December 31, 2010:

Fair Value Measurements at March 31, 2011 Using:

						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
(Unaudited) (Dollars in Thousands)		Balance as of				Assets				Inputs				Inputs
Description		March 31, 2011				(Level 1)				(Level 2)				(Level 3)
Assets
Available-for-sale securities
Debt securities:
U.S. Government sponsored agencies		$	90,232			$	—			$	90,232			$	—
State and municipal			27,803				—				27,803				—
Corporate			759				—				759				—
Equity securities:
Financial institution stock			409				409				—				—
Total		$	119,203			$	409			$	118,794			$	—

Fair Value Measurements at December 31, 2010 Using:

						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
(Dollars in Thousands)		Balance as of				Assets				Inputs				Inputs
Description		December 31, 2010				(Level 1)				(Level 2)				(Level 3)
Assets
Available-for-sale securities:
Debt securities:
U.S. Government sponsored agencies		$	99,785			$	—			$	99,785			$	—
State and municipal			29,008				—				29,008				—
Corporate			771				—				771				—
Equity securities:															—
Financial institution stock			393				393				—				—
Total		$	129,957			$	393			$	129,564			$	—

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 March 31, 2011:

Fair Value Measurements at March 31, 2011 Using:

						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
(Unaudited) (Dollars in Thousands)		Balance as of				Assets				Inputs				Inputs
Description		March 31, 2011				(Level 1)				(Level 2)				(Level 3)
Assets
Nonaccrual loans		$	18,209			$	—			$	—			$	18,209
Other real estate owned		$	3,328			$	—			$	—			$	3,328

Fair Value Measurements at December 31, 2010 Using:

						Quoted Prices
						in Active				Significant
						Markets for				Other				Significant
						Identical				Observable				Unobservable
(Dollars in Thousands)		Balance as of				Assets				Inputs				Inputs
Description		December 31, 2010				(Level 1)				(Level 2)				(Level 3)
Assets
Nonaccrual loans		$	18,220			$	—			$	—			$	18,220
Other real estate owned		$	2,826			$	—			$	—			$	2,826

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 months ended March 31, 2011 and 2010, no fair value adjustment was recorded related to loans held for sale.

Allowance for Credit Losses: 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. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company (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 receivable collateral are based on financial statement balances or aging reports (Level 3). Any fair value adjustments from the underlying collateral on impaired loans are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income. For the three months ended March 31, 2011 and 2010, no such fair value adjustment was recognized in earnings that related to the allowance for loan losses allocated to impaired loans.

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 on that date. 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 3). 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 months ended March 31, 2011 and 2010, no fair value adjustment was recorded.

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.

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:

		March 31, 2011								December 31, 2010
						Estimated								Estimated
		Carrying				Fair				Carrying				Fair
(Dollars in Thousands)		Amount				Value				Amount				Value
Financial assets:
Cash and cash equivalents		$	104,828			$	104,828			$	123,631			$	123,631
Investment securities			123,005				123,005				129,957				129,957
Loans			1,053,086				1,072,105				1,051,857				1,098,876
Loans Held for Sale			3,212				3,212				7,411				7,411
Financial liabilities:
Deposits		$	1,136,702			$	1,142,372			$	1,167,714			$	1,167,726
Short-term borrowings			32,468				32,468				37,622				37,622
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 March 31, 2011:
Debt securities:
U.S. Government sponsored agencies		$	89,720			$	513			$	(1	)		$	90,232
State and municipal			26,906				899				(2	)			27,803
Corporate			753				6				—				759
Equity securities:
Financial institution stock			393				16				—				409
Total available-for-sale securities		$	117,772			$	1,434			$	(3	)		$	119,203
At December 31, 2010:
Debt securities:
U.S. Government sponsored agencies		$	99,152			$	649			$	(16	)		$	99,785
State and municipal			28,192				817				(1	)			29,008
Corporate			756				15				—				771
Equity securities:
Financial institution stock			393				—				—				393
Total available-for-sale securities		$	128,493			$	1,481			$	(17	)		$	129,957

At March 31, 2011 and December 31, 2010, investment securities having a carrying value of $108.6 million and $114.1 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 March 31, 2011 and December 31, 2010. Two securities are in an unrealized loss position at March 31, 2011 compared to ten securities at December 31, 2010. 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 March 31, 2011:
Debt securities:
U.S. Government sponsored agencies		$	2,026			$	(1	)		$	—			$	—			$	2,026			$	(1	)
State and municipal			374				(2	)			—				—				374				(2	)
Corporate			—				—				—				—				—				—
Equity securities:
Financial institution stock			—				—				—				—				—				—
Total		$	2,400			$	(3	)		$	—			$	—			$	2,400			$	(3	)
At December 31, 2010:
Debt securities:
U.S. Government sponsored agencies		$	16,559			$	(16	)		$	—			$	—			$	16,559			$	(16	)
State and municipal			519				(1	)			—				—				519				(1	)
Corporate			—				—				—				—				—				—
Equity securities:
Financial institution stock			—				—				—				—				—				—
Total		$	17,078			$	(17	)		$	—			$	—			$	17,078			$	(17	)

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 March 31, 2011, 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 March 31, 2011 and December 31, 2010 by contractual maturity, are shown below:

		Fair Value Due:
										After 5
						After 1 year				years
		Within 1				through 5				through 10				Over 10
(Dollars in Thousands)		year				years				years				years				Total
At March 31, 2011:
Debt securities:
U.S. Government sponsored agencies		$	47,318			$	42,914			$	—			$	—			$	90,232
State and municipal			1,904				25,794				105				—				27,803
Corporate			759				—				—				—				759
Equity securities:
Financial institution stock			—				—				—				409				409
Total		$	49,981			$	68,708			$	105			$	409			$	119,203

		Fair Value Due:
										After 5
						After 1 year				years
		Within 1				through 5				through 10				Over 10
(Dollars in Thousands)		year				years				years				years				Total
At December 31, 2010:
Debt securities:
U.S. Government sponsored agencies		$	42,246			$	57,539			$	—			$	—			$	99,785
State and municipal			1,678				27,224				106				—				29,008
Corporate			771				—				—				—				771
Equity securities:
Financial institution stock			—				—				—				393				393
Total		$	44,695			$	84,763			$	106			$	393			$	129,957

As of March 31, 2011 and December 31, 2010, other investments at cost were equal to $3.8 million and $4.0 million, respectively, and consisted of Federal Home Loan Bank stock. These securities are carried at cost since they do not have readily determinable fair values due to their restricted nature and Centra does not exercise significant influence.

Note F — Loans and Allowance for Loan Losses

Centra’s lending is primarily focused in the north central and eastern panhandle areas of West Virginia, south western Pennsylvania and western Maryland, and consists principally of commercial lending, retail lending, which includes single-family residential mortgages, and other consumer lending. All credits were subjected to Centra’s normal commercial underwriting standards and did not present more than the normal amount of risk assumed in other lending areas.

The following is a detail of total loans outstanding:

		March 31,				December 31,
(Dollars in Thousands)		2011				2010
Commercial		$	158,209			$	160,526
Real estate, commercial			649,912				638,951
Real estate, mortgage			181,469				185,272
Consumer			63,496				67,108
Total loans		$	1,053,086			$	1,051,857

The allowance for loan losses represents an estimation of probable credit losses inherent in the loan portfolio. The allowance for loan losses and changes therein as of and for the years ended March 31, 2011 and December 31, 2010 include the following activity:

						Commercial
(Dollars in Thousands)		Commercial				Real Estate				Consumer				Residential				Total
Allowance for loan losses:
Beginning balance — December 31, 2010		$	2,482			$	9,966			$	2,487			$	3,651			$	18,586
Charge-offs			(103	)			(421	)			(302	)			(123	)			(949	)
Recoveries			2				10				10				2				24
Provision			(14	)			628				354				58				1,026
Ending balance — March 31, 2011		$	2,367			$	10,183			$	2,549			$	3,588			$	18,687

						Commercial
(Dollars in Thousands)		Commercial				Real Estate				Consumer				Residential				Total
Allowance for loan losses:
Beginning balance — December 31, 2009		$	2,177			$	9,582			$	2,248			$	4,003			$	18,010
Charge-offs			(759	)			(3,048	)			(313	)			(1,044	)			(5,164	)
Recoveries			35				141				116				73				365
Provision			1,029				3,291				436				619				5,375
Ending balance — December 31, 2010		$	2,482			$	9,966			$	2,487			$	3,651			$	18,586

The allowance for credit losses on lending related commitments represents an estimation of probable credit losses inherent in the off balance sheet unused commitments and is classified as other liabilities in the financial statements.

Activity in the allowance for loan losses on lending related commitments follows:

		March 31,				March 31,
(Dollars in Thousands)		2011				2010
Balance, January 1		$	1,174			$	1,460
Benefit			(11	)			(150	)
Ending Balance		$	1,163			$	1,310

The provisions for loan and credit losses are as follows:

		March 31,				March 31,
(Dollars in Thousands)		2011				2010
Provision for loan losses		$	1,026			$	905
Benefit for credit losses			(11	)			(150	)
Ending Balance		$	1,015			$	755

Loans are designated as non-performing when either principal or interest payments are 90 days or more past due, unless those loans are in the process of collection and, in management’s opinion, have a net realizable value of collateral that exceeds the principal and accrued interest. When a loan is placed on nonaccrual status, interest accruals are discontinued, previously accrued interest recognized in income in the current year is reversed, and interest accrued in prior years is charged against the allowance for loan losses. Interest received on non-performing loans is included in income only if principal recovery is reasonably assured. A non-performing loan is restored to accrual status when it is brought current, has performed in accordance with contractual terms for a reasonable period of time, and the collectability of the total contractual principal and interest is no longer in doubt.

Total nonaccrual loans are summarized as follows:

		March 31,				December 31,
(Dollars in Thousands)		2011				2010
Commercial		$	2,992			$	1,979
Commercial real estate:
Commercial real estate construction			—				1,860
Commercial real estate — other			11,323				10,796
Consumer:
Consumer — other			1,291				1,169
Consumer — auto			108				207
Residential			2,495				2,209
Total nonaccrual loans		$	18,209			$	18,220

As of March 31, 2011, total impaired loans were $25.1 million, which includes non-accrual loans of $18.2 million and two loans totaling $6.9 million that were deemed impaired due to management’s expectation that the borrowers would not be able to satisfy the contractual obligations due to a decline in the collateral values. Of the total impaired loans, $17.0 million required specific reserves due to shortfalls in collateral value. Centra reserved $4.2 million for impaired loans as of March 31, 2011.

Impaired Loans as of March 31, 2011

						Unpaid								Average				Interest
		Recorded				Principal				Related				Recorded				Income
(Dollars in Thousands)		Investment				Balance				Allowance				Investment				Recognized
With no related allowance recorded
Commercial		$	1,225			$	1,283			$	—			$	1,225			$	2
Commercial real estate:
Commercial real estate construction			—				—				—				—				—
Commercial real estate — other			3,454				4,624				—				3,539				6
Consumer:
Consumer — other			1,291				1,216				—				1,229				22
Consumer — auto			108				117				—				114				3
Residential			1,959				2,433				—				2,196				16
Total impaired without related allowance		$	8,307			$	9,673			$	—			$	8,303			$	49
With an allowance recorded:
Commercial		$	1,767			$	1,806			$	712			$	1,768			$	2
Commercial real estate:
Commercial real estate construction			1,816				1,816				301				1,808				24
Commercial real estate — other			12,910				14,361				3,060				12,924				75
Residential			536				536				93				536				1
Total impaired with related allowance		$	17,029			$	18,519			$	4,166			$	17,036			$	102
Total:
Commercial		$	21,172			$	23,890			$	4,073			$	21,264			$	109
Consumer			1,399				1,333				—				1,343				25
Residential			2,495				2,969				93				2,732				17
Total impaired loans		$	25,066			$	28,192			$	4,166			$	25,339			$	151