Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses

NOTE 4 — Allowance for Loan Losses

The following tables summarize the activity in the allowance for loan losses for the periods presented:

	Nine Months Ended, September 30, 2012			Year Ended, December 31, 2011
	Amount			Amount
(Dollars in thousands)	(Unaudited)
Balance at beginning of period	$	4,932		$	3,447
Provision charged to operations		2,586			2,302
Loan charge-offs		(1,406	)		(853	)
Recoveries of loans previously charged off		46			36
Balance at end of period	$	6,158		$	4,932

For the three months end September 30, 2012 and 2011, respectively, the Company recognized $0.1 million and $0.1 million in charge-offs.

	Nine Months Ended September 30, 2012
	(Unaudited)
(Dollars in thousands)	Commercial & Industrial			Construction & Development			Commercial Real Estate			Residential Real Estate		Consumer Loans			Total
Beginning Balance:	$	899		$	1,048		$	2,313		$	633	$	39		$	4,932
Provision		773			450			1,323			64		(24	)		2,586
Charge-offs		(200	)		(508	)		(693	)		—		(5	)		(1,406	)
Recoveries		11			—			17			18		—			46
Loan Allowance Ending Balance:	$	1,483		$	990		$	2,960		$	715	$	10		$	6,158
Individually Evaluated for Impairment	$	926		$	225		$	1,400		$	432	$	—		$	2,983
Collectively Evaluated for Impairment	$	557		$	765		$	1,560		$	283	$	10		$	3,175
Loan Ending Balance:	$	93,893		$	66,709		$	250,160		$	49,841	$	1,941		$	462,544
Individually Evaluated for Impairment	$	5,291		$	672		$	14,000		$	1,723	$	19		$	21,705
Collectively Evaluated for Impairment	$	88,602		$	66,037		$	236,160		$	48,118	$	1,922		$	440,839

	Twelve Months Ended December 31, 2011
(Dollars in thousands)	Commercial & Industrial			Construction & Development			Commercial Real Estate			Residential Real Estate			Consumer Loans			Total
Beginning Balance:	$	825		$	785		$	1,049		$	753		$	35		$	3,447
Provision		211			563			1,460			57			11			2,302
Charge-offs		(148	)		(300	)		(196	)		(202	)		(7	)		(853	)
Recoveries		11			—			—			25			—			36
Loan Allowance Ending Balance:	$	899		$	1,048		$	2,313		$	633		$	39		$	4,932
Individually Evaluated for Impairment	$	407		$	529		$	1,078		$	142		$	—		$	2,156
Collectively Evaluated for Impairment	$	492		$	519		$	1,235		$	491		$	39		$	2,776
Loan Ending Balance:	$	94,876		$	51,078		$	231,819		$	40,826		$	2,037		$	420,636
Individually Evaluated for Impairment	$	5,123		$	2,391		$	15,661		$	142		$	—		$	23,317
Collectively Evaluated for Impairment	$	89,753		$	48,687		$	216,158		$	40,684		$	2,037		$	397,319

The following tables show the allocation of the allowance for loan losses among various categories of loans and certain other information as of the dates indicated. The allocation is made for analytical purposes and is not necessarily indicative of the categories in which future losses may occur. The total allowance is available to absorb losses from any loan category.

	September 30, 2012					December 31, 2011
(Dollars in thousands)	Amount		% Total			Amount		% Total
	(Unaudited)
Commercial and Industrial	$	1,483		24.1	%	$	899		18.2	%
Construction and Development		990		16.1	%		1,048		21.3	%
Commercial Real Estate		2,960		48.0	%		2,313		46.9	%
Residential Real Estate		715		11.6	%		633		12.8	%
Consumer		10		0.2	%		39		0.8	%
Total Allowance for Loan Losses	$	6,158		100.0	%	$	4,932		100.0	%

The following table represents specific allocation for impaired loans by class as of the dates indicated:

	September 30, 2012						December 31, 2011
(Dollars in thousands)	(Unaudited)
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Unpaid Principal Balance		Recorded Investment		Related Allowance
with no related allowance
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Construction		—		—		—		—		—		—
Commercial Real Estate		—		—		—		—		—		—
Residential Real Estate		103		103		—		—		—		—
Consumer		—		—		—		—		—		—
Sub-total	$	103	$	103	$	—	$	—	$	—	$	—
with an allowance recorded
Commercial	$	1,133	$	1,133	$	551	$	1,170	$	1,170	$	301
Construction		551		409		61		1,392		1,237		355
Commercial Real Estate		5,030		5,030		356		3,755		3,755		48
Residential Real Estate		865		865		218		142		142		142
Consumer		294		294		274		—		—		—
Sub-total	$	7,873	$	7,731	$	1,460	$	6,459	$	6,304	$	846
Total	$	7,976	$	7,834	$	1,460	$	6,459	$	6,304	$	846