Loans and Allowance for Loan Losses

The Bank's loan portfolio includes commercial, consumer, agricultural and residential loans originated primarily in its markets in central and north Mississippi, southwest Tennessee, central Alabama and the Florida panhandle. The following is a summary of the Bank's loans held for investment, net of unearned income of $1.748 million at March 31, 2012 and $2.045 million at December 31, 2011:



(Dollars in thousands)	March 31, 2012		December 31, 2011
Construction and land development loans	$	70,087	$	69,325
Other commercial real estate loans	498,724		505,180
Asset-based loans	35,909		37,540
Other commercial loans	108,410		117,790
Home equity loans	36,098		37,024
Other 1-4 family residential loans	188,891		186,815
Consumer loans	41,376		42,666
Total loans	$	979,495	$	996,340

The Bank uses loans as collateral for borrowings at the Federal Reserve Bank and a Federal Home Loan Bank. Approximately $13.021 million and $18.005 million of commercial and consumer loans were pledged to a line of credit with the Federal Reserve Bank at March 31, 2012 and December 31, 2011 respectively. Approximately $193.398 million and $216.201 million of individual real estate-secured loans were pledged to the Federal Home Loan Bank at March 31, 2012 and December 31, 2011, respectively.

During the first quarter of 2011 the Company purchased $821 thousand in commercial real estate loan participations. No loan purchases were made during the first quarter of 2012.

During the first quarter of 2012 the Company transferred $1.997 million of mortgage loans from held-for-sale status into the portfolio of loans held for investment. No loans were transferred from the held-for-sale portfolio into loans held for investment during the first quarter of 2011.

The following table presents a summary of the past due status of all loans, including nonaccrual loans, by type at March 31, 2012:



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
Construction and land development loans	$	157	$	105	$	4,235	$	4,497	$	65,590	$	70,087	$	23
Other commercial real estate loans	2,944		118		6,602		9,664		489,060		498,724		75
Asset based loans	—		—		—		—		35,909		35,909		—
Other commercial loans	412		91		430		933		107,477		108,410		50
Home equity loans	130		44		31		205		35,893		36,098		7
Other 1-4 family residential loans	1,939		928		1,419		4,286		184,605		188,891		80
Consumer loans	208		46		11		265		41,111		41,376		11
Total	$	5,790	$	1,332	$	12,728	$	19,850	$	959,645	$	979,495	$	246

Note 4: (Continued)

The following table presents a summary of the past due status of all loans, including nonaccrual loans, by type at December 31, 2011:



(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
Construction and land development loans	$	603	$	—	$	4,172	$	4,775	$	64,550	$	69,325	$	72
Other commercial real estate loans	2,194		679		9,792		12,665		492,515		505,180		279
Asset based loans	—		—		—		—		37,540		37,540		—
Other commercial loans	546		442		419		1,407		116,383		117,790		50
Home equity loans	121		37		141		299		36,725		37,024		—
Other 1-4 family residential loans	2,978		303		981		4,262		182,553		186,815		174
Consumer loans	214		67		41		322		42,344		42,666		27
Total	$	6,656	$	1,528	$	15,546	$	23,730	$	972,610	$	996,340	$	602

Loans are placed into nonaccrual status when, in management's opinion, the borrowers may be unable to meet their payment obligations, which typically occurs when principal or interest payments are more than 90 days past due. The following table presents a summary of the nonaccrual status of loans by type at March 31, 2012 and December 31, 2011 and other nonperforming assets:



(Dollars in thousands)	March 31, 2012		December 31, 2010
Construction and land development loans	$	4,519	$	4,398
Other commercial real estate loans	7,125		9,937
Asset based loans	43		—
Other commercial loans	551		913
Home equity loans	374		474
Other 1-4 family residential loans	1,978		1,422
Consumer loans	14		33
Total nonaccrual loans	$	14,604	$	17,177
Other real estate owned	34,636		36,952
Total nonperforming credit-related assets	$	49,240	$	54,129

The Company applies internal risk ratings to all loans. The risk ratings range from 10, which is the highest quality rating, to 70, which indicates an impending charge-off. The following definitions apply to the internal risk ratings:

Risk rating 10 – Excellent:

Commercial – Credits in this category are virtually risk-free and are well-collateralized by cash-equivalent instruments. The repayment program is well-defined and achievable. Repayment sources are numerous. No material documentation deficiencies or exceptions exist.

Consumer – This grade is reserved for loans secured by cash collateral on deposit at the Bank with no risk of principal deterioration.

Risk rating 20 – Strong:

Commercial and Consumer – This grade is reserved for loans secured by readily marketable collateral, or loans within guidelines to borrowers with liquid financial statements. A liquid financial statement is a financial statement with substantial liquid assets relative to debts. These loans have excellent sources of repayment, with no significant identifiable risk of collection, and conform in all respects to Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind).

Note 4: (Continued)

Risk rating 30 – Good:

Commercial – This grade is reserved for the Bank’s top quality loans. These loans have excellent sources of repayment, with no significant identifiable risk of collection. Generally, loans assigned this risk grade will demonstrate the following characteristics: (1) conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind), (2) documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources, and (3) adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

Consumer – This grade is reserved for the Bank’s top quality loans. These loans have excellent sources of repayment, with no significant identifiable risk of collection, and they: (1) conform to Bank policy, (2) conform to underwriting standards and (3) conform to product guidelines.

Risk rating 31 – Moderate:

Commercial – This grade is given to acceptable loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Loans assigned this risk grade will demonstrate the following characteristics: (1) general conformity to the Bank’s policy requirements, product guidelines and underwriting standards, with limited exceptions – any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors, (2) documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources and (3) adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor.

Consumer – This grade is given to acceptable loans. These loans have adequate sources of repayment, with little identifiable risk of collection. Consumer loans exhibiting this grade may have up to two mitigated guideline tolerances or exceptions.

Risk rating 32 – Fair:

Commercial – This grade is given to acceptable loans that show signs of weakness in either adequate sources of repayment or collateral, but have demonstrated mitigating factors that minimize the risk of delinquency or loss. Loans assigned this grade may demonstrate some or all of the following characteristics: (1) additional exceptions to the Bank’s policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank – although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors, (2) unproved, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time – repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance and (3) marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor.

Consumer – This grade is given to acceptable loans that show signs of weakness in either adequate sources of repayment or collateral, but have demonstrated mitigating factors that minimize the risk of delinquency or loss. Consumer loans exhibiting this grade generally have three or more mitigated guideline tolerances or exceptions.

Risk rating 40 – Special Mention:

Commercial – Special Mention loans include the following characteristics: (1) loans with underwriting guideline tolerances and/or exceptions and with no mitigating factors, (2) extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank’s position at some future date – potential weaknesses are the result of deviations from prudent lending practices, and (3) loans where adverse economic conditions that develop subsequent to the loan origination that don’t jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

Consumer - Special Mention loans include the following characteristics: (1) loans with guideline tolerances or exceptions of any kind that have not been mitigated by other economic or credit factors, (2) extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank’s position at some future date – potential weaknesses are the result of deviations from prudent lending practices, and (3) loans where adverse economic conditions that develop subsequent to the loan origination that do not jeopardize liquidation of the debt but do substantially increase the level of risk may also warrant this rating.

Note 4: (Continued)

Risk rating 50 – Substandard:

Commercial and Consumer – A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans consistently not meeting the repayment schedule should be downgraded to substandard. Loans in this category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses requiring corrective action. The weaknesses may include, but are not limited to: (1) high debt to worth ratios, (2) declining or negative earnings trends, (3) declining or inadequate liquidity, (4) improper loan structure, (5) questionable repayment sources, (6) lack of well-defined secondary repayment source and (7) unfavorable competitive comparisons. Such loans are no longer considered to be adequately protected due to the borrower’s declining net worth, lack of earnings capacity, declining collateral margins and/or unperfected collateral positions. A possibility of loss of a portion of the loan balance cannot be ruled out. The repayment ability of the borrower is marginal or weak and the loan may have exhibited excessive overdue status or extensions and/or renewals.

Risk rating 60 – Doubtful:

Commercial and Consumer – Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values highly questionable and improbable. However, these loans are not yet rated as loss because certain events may occur which would salvage the debt. Among these events are: (1) injection of capital, (2) alternative financing and (3) liquidation of assets or the pledging of additional collateral. The ability of the borrower to service the debt is extremely weak, overdue status is constant, the debt has been considered for non-accrual status, and the repayment schedule is questionable. Doubtful is a temporary grade where a loss is expected but is presently not quantified with any degree of accuracy. Once the loss position is determined, the amount is charged off.

Risk rating 70 – Loss:

Commercial and Consumer – Loans classified Loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this worthless loan even though partial recovery may be affected in the future. Probable Loss portions of Doubtful assets should be charged against the Reserve for Loan Losses. Loans may reside in this classification for administrative purposes for a period not to exceed the earlier of thirty (30) days or calendar quarter-end.

The following table presents a summary of loans by credit risk rating at March 31, 2012.



(Dollars in thousands)
	Construction		Other Commercial Real Estate		Asset-Based		Other Commercial
10 and 20	$	—	$	—	$	—	$	21,289
30-32	45,829		402,230		24,252		83,853
40	6,757		66,467		10,634		1,874
50	12,401		30,027		1,023		1,317
60	5,100		—		—		77
Total	$	70,087	$	498,724	$	35,909	$	108,410



(Dollars in thousands)
	Home Equity		Other 1-4 Family		Consumer		Total
10 and 20	$	—	$	117	$	13,638	$	35,044
30-32	34,694		173,283		27,014		791,155
40	757		8,683		567		95,739
50	647		6,716		154		52,285
60	—		92		3		5,272
Total	$	36,098	$	188,891	$	41,376	$	979,495

Note 4: (Continued)

The following table presents a summary of loans by credit risk rating at December 31, 2011.



(Dollars in thousands)
	Construction		Other Commercial Real Estate		Asset-Based		Other Commercial
10 and 20	$	—	$	—	$	—	$	11,085
30-32	45,982		406,498		29,296		103,359
40	5,185		57,912		7,096		1,802
50	13,059		40,770		1,148		1,466
60	5,099		—		—		78
Total	$	69,325	$	505,180	$	37,540	$	117,790



(Dollars in thousands)
	Home Equity		Other 1-4 Family		Consumer		Total
10 and 20	$	—	$	119	$	13,486	$	24,690
30-32	35,824		172,182		28,471		821,612
40	585		8,205		544		81,329
50	615		6,216		162		63,436
60	—		93		3		5,273
Total	$	37,024	$	186,815	$	42,666	$	996,340

Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of the collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

During 2011 the Company changed the way that it calculated the historical loss rates that were applied to the various risk pools of loans in determining the allowance for loan losses for loans not individually tested for impairment. Loss rates are calculated by loan type including the major categories of construction and land development, 1-4 family residential, commercial real estate secured, commercial and industrial and consumer loans. The Company has historically used a conservatively adjusted 13-year historical period for loss rates, believing that this time frame incorporated a broader range of economic and business cycles than a shorter time frame and gave a better estimate of expected losses. In September 2011, management began using a shorter historical period of five years, calculating a five year average loss rate by class of loan. This change was prompted by management and regulatory concerns about the current economic environment, observed industry changes and trends as well as management's view of the current business cycle and environment. Because of a conservative treatment of the former longer historic loss rate period - primarily by adjusting the 13-year average loss rate by two standard deviations in an attempt to include low probability events in the loss rate - there was no material difference between it and the new five year convention. The five year convention is a straight historical average which naturally includes recent high-loss years. Given the immaterial difference in the two calculations, no adjustment was required to the provision for loan losses. Management does believe that going forward the five year historical loss calculation will better reflect the risks inherent in the recent and current credit environment and that it is more appropriate than an even shorter historical period (e.g., three years) because a shorter period would too heavily weight improved periods and too quickly remove recent periods that included larger losses caused by factors that could still reasonably exist latent in the makeup of the loan class.

The Company uses environmental factors to adjust loss rates to reflect economic conditions and other circumstances that imply risk of loss in the current environment that is not necessarily reflected in the historical loss rates. At December 31, 2011 the Company adjusted the five-year loss rates by an economic environmental factor based on recessionary conditions and an illiquid market for undeveloped real estate collateral. The loss rate applied to commercial real estate loans was adjusted upward by 10 basis points. The loss rate applied to commercial, agricultural and municipal loans was adjusted upward by 50 basis points given their dependency on cash flows which are at risk absent a growing economy.

Note 4: (Continued)

During the first quarter of 2012 the Company removed the environmental factor in the loss rate applied to pools of commercial loans not individually reviewed for impairment. Due to the switch from a 13-year average loss calculation to a 5-year calculations, average loss rates applied to pools of commercial loans increased by 27 basis points from the calculation used at the end of 2011. This increase captured the risks that were manually adjusted into the 2011 loss rate calculations, therefore removing the need for the environmental factor. This adjustment resulted in a negative provision for the commercial loan class. The consumer loan class also experienced a negative provision due primarily to a reduction in loan balances and in overdraft balances.

The following table summarizes loans that were individually reviewed for impairment allowances at March 31, 2012:



(Dollars in thousands)
	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance:
Construction and land development loans	$	12,869	$	17,072	$	—
Other commercial real estate loans	33,625		36,738		—
Asset based loans	—		—		—
Other commercial loans	579		606		—
Home equity loans	322		322		—
Other 1-4 family residential loans	4,455		4,527		—
Consumer loans	119		130		—
Loans with a specific valuation allowance:
Construction and land development loans	$	4,632	$	7,307	$	1,689
Other commercial real estate loans	9,109		10,137		1,340
Asset based loans	—		—		—
Other commercial loans	814		814		361
Home equity loans	325		325		286
Other 1-4 family residential loans	2,353		2,353		420
Consumer loans	39		39		39
Total:
Construction and land development loans	$	17,501	$	24,379	$	1,689
Other commercial real estate loans	42,734		46,875		1,340
Asset based loans	—		—		—
Other commercial loans	1,393		1,420		361
Home equity loans	647		647		286
Other 1-4 family residential loans	6,808		6,880		420
Consumer loans	158		169		39

Note 4: (Continued)

The following table summarizes the average recorded investment in impaired loans and the amount of interest income recognized for the first quarter of 2012:



(Dollars in thousands)
	Average Investment In Impaired Loans Quarter-to-Date		Interest Income Recognized Quarter-to-Date
Loans without a specific valuation allowance:
Construction and land development loans	$	13,900	$	150
Other commercial real estate loans	34,382		408
Asset based loans	—		—
Other commercial loans	673		9
Home equity loans	325		1
Other 1-4 family residential loans	5,280		53
Consumer loans	130		2
Loans with a specific valuation allowance:
Construction and land development loans	$	4,634	$	32
Other commercial real estate loans	9,614		61
Asset based loans	—		—
Other commercial loans	822		6
Home equity loans	327		2
Other 1-4 family residential loans	2,356		31
Consumer loans	47		1
Total:
Construction and land development loans	$	18,534	$	182
Other commercial real estate loans	43,996		469
Asset based loans	—		—
Other commercial loans	1,495		15
Home equity loans	652		3
Other 1-4 family residential loans	7,636		84
Consumer loans	177		3

Note 4: (Continued)

The following table summarizes loans that were individually reviewed for impairment allowances at March 31, 2011:



(Dollars in thousands)
	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance:
Construction and land development loans	$	20,094	$	27,754	$	—
Other commercial real estate loans	48,496		52,858		—
Asset based loans	—		—		—
Other commercial loans	6,279		6,305		—
Home equity loans	708		708		—
Other 1-4 family residential loans	3,054		3,054		—
Consumer loans	515		526		—
Loans with a specific valuation allowance:
Construction and land development loans	$	12,798	$	13,960	$	2,821
Other commercial real estate loans	9,661		9,668		2,128
Asset based loans	—		—		—
Other commercial loans	1,305		1,458		908
Home equity loans	—		—		—
Other 1-4 family residential loans	2,850		2,872		953
Consumer loans	105		105		51
Total:
Construction and land development loans	$	32,892	$	41,714	$	2,821
Other commercial real estate loans	58,157		62,526		2,128
Asset based loans	—		—		—
Other commercial loans	7,584		7,763		908
Home equity loans	708		708		—
Other 1-4 family residential loans	5,904		5,926		953
Consumer loans	620		631		51

Note 4: (Continued)

The following table summarizes the average recorded investment in impaired loans and the amount of interest income recognized for the first quarter of 2011:



(Dollars in thousands)
	Average Investment In Impaired Loans Quarter-to-Date		Interest Income Recognized Quarter-to-Date
Loans without a specific valuation allowance:
Construction and land development loans	$	20,556	$	132
Other commercial real estate loans	48,583		484
Asset based loans	—		—
Other commercial loans	6,312		79
Home equity loans	708		—
Other 1-4 family residential loans	3,096		34
Consumer loans	527		7
Loans with a specific valuation allowance:
Construction and land development loans	$	12,795	$	96
Other commercial real estate loans	9,672		46
Asset based loans	—		—
Other commercial loans	1,312		9
Home equity loans	—		—
Other 1-4 family residential loans	2,852		4
Consumer loans	106		—
Total:
Construction and land development loans	$	33,351	$	228
Other commercial real estate loans	58,255		530
Asset based loans	—		—
Other commercial loans	7,624		88
Home equity loans	708		—
Other 1-4 family residential loans	5,948		38
Consumer loans	633		7

Note 4: (Continued)

The following table summarizes loans that were individually reviewed for impairment allowances at December 31, 2011:



(Dollars in thousands)
	Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific valuation allowance:
Construction and land development loans	$	9,539	$	13,915	$	—
Other commercial real estate loans	33,048		36,117		—
Asset based loans	—		—		—
Other commercial loans	433		460		—
Home equity loans	159		159		—
Other 1-4 family residential loans	4,466		4,732		—
Consumer loans	128		154		—
Loans with a specific valuation allowance:
Construction and land development loans	$	8,620	$	11,294	$	1,750
Other commercial real estate loans	7,722		8,471		894
Asset based loans	—		—		—
Other commercial loans	1,111		1,111		485
Home equity loans	456		456		166
Other 1-4 family residential loans	1,843		1,843		397
Consumer loans	37		37		37
Total:
Construction and land development loans	$	18,159	$	25,209	$	1,750
Other commercial real estate loans	40,770		44,588		894
Asset based loans	—		—		—
Other commercial loans	1,544		1,571		485
Home equity loans	615		615		166
Other 1-4 family residential loans	6,309		6,575		397
Consumer loans	165		191		37

Note 4: (Continued)

The following table summarizes activity in the allowance for loan losses for the three months ended March 31, 2012 by loan category:



(Dollars in thousands)
	Construction			Other CRE			Commercial			Residential			Consumer			Unallocated		Total
Allowance for loan losses:
Balance, beginning of period	$	4,131		$	4,073		$	3,347		$	2,607		$	795		$	—	$	14,953
Provision charged to expense	32			2,446			(355		)	258			(101		)	—		2,280
Losses charged off	(92		)	(1,353		)	(208		)	(239		)	(169		)	—		(2,061		)
Recoveries	355			114			72			320			51			—		912
Balance, end of period	$	4,426		$	5,280		$	2,856		$	2,946		$	576		$	—	$	16,084
Ending balance:
Individually evaluated for impairment	$	1,689		$	1,340		$	361		$	706		$	39		$	—	$	4,135
Ending balance:
Collectively evaluated for impairment	$	2,737		$	3,940		$	2,495		$	2,240		$	537		$	—	$	11,949
Ending balance:
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans:
Ending balance	$	70,087		$	498,724		$	144,319		$	224,989		$	41,376		$	—	$	979,495
Ending balance:
Individually evaluated for impairment	$	17,501		$	42,734		$	1,393		$	7,455		$	158		$	—	$	69,241
Ending balance:
Collectively evaluated for impairment	$	52,586		$	455,990		$	142,926		$	217,534		$	41,218		$	—	$	910,254
Ending balance:
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—	$	—

Note 4: (Continued)

The following table summarizes activity in the allowance for loan losses for the three months ended March 31, 2011 by loan category:



(Dollars in thousands)
	Construction			Other CRE			Commercial			Residential			Consumer			Unallocated		Total
Allowance for loan losses:
Balance, beginning of period	$	3,942		$	2,763		$	4,442		$	3,701		$	1,177		$	—	$	16,025
Provision charged to expense	114			797			1,377			200			92			—		2,580
Losses charged off	(220		)	(502		)	(840		)	(380		)	(205		)	—		(2,147		)
Recoveries	288			107			44			85			61			—		585
Balance, end of period	$	4,124		$	3,165		$	5,023		$	3,606		$	1,125		$	—	$	17,043
Ending balance:
Individually evaluated for impairment	$	2,821		$	2,128		$	908		$	953		$	51		$	—	$	6,861
Ending balance:
Collectively evaluated for impairment	$	1,303		$	1,037		$	4,115		$	2,653		$	1,074		$	—	$	10,182
Ending balance:
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans:
Ending balance	$	92,744		$	549,629		$	137,620		$	227,911		$	43,357		$	—	$	1,051,261
Ending balance:
Individually evaluated for impairment	$	32,892		$	58,157		$	7,584		$	6,612		$	620		$	—	$	105,865
Ending balance:
Collectively evaluated for impairment	$	59,852		$	491,472		$	130,036		$	221,299		$	42,737		$	—	$	945,396
Ending balance:
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—	$	—

The following table summarizes the balance in the allowance for loan losses at December 31, 2011 by loan category:



(Dollars in thousands)
	Construction		Other CRE		Commercial		Residential		Consumer		Unallocated		Total
Ending balance	$	4,131	$	4,073	$	3,347	$	2,607	$	795	$	—	$	14,953
Ending balance:
Individually evaluated for impairment	$	1,750	$	894	$	485	$	563	$	37	$	—	$	3,729
Ending balance:
Collectively evaluated for impairment	$	2,381	$	3,179	$	2,862	$	2,044	$	758	$	—	$	11,224
Ending balance:
Loans acquired with deteriorated credit quality	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Loans:
Ending balance	$	69,325	$	505,180	$	155,330	$	223,839	$	42,666	$	—	$	996,340
Ending balance:
Individually evaluated for impairment	$	18,159	$	40,770	$	1,544	$	6,924	$	165	$	—	$	67,562
Ending balance:
Collectively evaluated for impairment	$	51,166	$	464,410	$	153,786	$	216,915	$	42,501	$	—	$	928,778
Ending balance:
Loans acquired with deteriorated credit quality	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Note 4: (Continued)

Restructured loans are considered to be impaired loans. A troubled debt restructuring occurs when a creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. That concession either stems from an agreement between the creditor and the debtor or is imposed by law or a court. The following table presents information about the Company’s restructured loan portfolio as of March 31, 2012 and December 31, 2011:



(Dollars in thousands)	March 31, 2012				December 31, 2011
	Recorded Balance		Allowance		Recorded Balance		Allowance
Restructured loans with an allowance:
Construction and land development loans	$	136	$	61	$	136	$	61
Other commercial real estate loans	8,812		1,164		4,018		320
Other commercial loans	335		72		387		117
Other 1-4 family residential loans	199		76		199		76
Restructured loans without an allowance:
Construction and land development loans	2,566		—		2,725		—
Other commercial real estate loans	11,789		—		17,002		—
Other commercial loans	101		—		119		—
Other 1-4 family residential loans	623		—		1,194		—
Total restructured loans	$	24,561	$	1,373	$	25,780	$	574

At March 31, 2012, there were $175 thousand in available credit commitments for construction and land development restructured loans. At December 31, 2011, there were $356 thousand in available credit commitments for construction and land development restructured loans.

There were no loans restructured during the first quarter of 2012 or during the first quarter of 2011.

The following table presents loans modified under the terms of a TDR that became 90 days or more delinquent or were foreclosed on during the three months ended March 31, 2012, that were initially restructured within the prior twelve months.



(Dollars in thousands)	Three Months Ended March 31, 2012
	Number of Loans	Amortized Cost
Other commercial loans	1	$	335
Other 1-4 family residential loans	1	152
Total subsequent defaults	2	$	487

The first quarter of 2012 defaults were 90 day delinquenci