Note 3: Loans and Allowance for Loan Losses

The Company's lending activities are principally conducted in downeast and midcoast Maine. The following table summarizes the composition of the loan portfolio as of December 31, 2011 and 2010:


	2011			2010

Commercial real estate mortgages	$	285,484		$	283,799
Commercial and industrial		62,450			57,323
Commercial construction and land development		30,060			32,114
Agricultural and other loans to farmers		26,580			24,359
Total commercial loans		404,574			397,595

Residential real estate mortgages		239,799			231,434
Home equity loans		51,462			54,289
Other consumer loans		22,906			4,417
Total consumer loans		314,167			290,140

Tax exempt loans		9,700			12,126

Deferred origination costs, net		562			809
Total loans		729,003			700,670
Allowance for loan losses		(8,221	)		(8,500	)
Total loans net of allowance for loan losses	$	720,782		$	692,170

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Company's board of directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing loans and potential problem loans. Diversification in the loan portfolio is also a means of managing risk associated with fluctuations in economic conditions.

Commercial Real Estate Mortgages: The Bank's commercial real estate mortgage loans are collateralized by liens on real estate, typically have variable interest rates (or five year or less fixed rates) and amortize over a 15 to 20 year period. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Payments on loans secured by such properties are largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Accordingly, repayment of these loans may be subject to adverse economic conditions to a greater extent than other types of loans. The Company seeks to minimize these risks in a variety of ways, including giving careful consideration to the property's operating history, future operating projections, current and projected occupancy, location and physical condition in connection with underwriting these loans. The underwriting analysis also includes credit verification, analysis of global cash flows, appraisals and a review of the financial condition of the borrower. Reflecting the Bank's business region, approximately 33.8% of the commercial real estate mortgage portfolio is represented by loans to the lodging industry. The Bank underwrites hotel loans as operating businesses, lending primarily to seasoned establishments with stabilized cash flows.

Commercial and Industrial Loans: Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitability, and prudently expand its business. In nearly all cases, commercial and industrial loans are made in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. As a general practice, the Bank takes as collateral a lien on any available real estate, equipment or other assets owned by the borrower and obtains a personal guaranty of the borrower or principal. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial and industrial loans involve more credit risk than residential mortgage loans and commercial mortgage loans and, therefore, usually yield a higher return. The increased risk in commercial and industrial loans is principally due to the type of collateral securing these loans. The increased risk also derives from the expectation that commercial and industrial loans generally will be serviced principally from the operations of the business, and those operations may not be successful. As a result of these additional complexities, variables and risks, commercial and industrial loans generally require more thorough underwriting and servicing than other types of loans.

Construction and Land Development Loans: The Company makes loans to finance the construction of residential and, to a lesser extent, nonresidential properties. Construction loans generally are collateralized by first liens on real estate. The Company conducts periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Underwriting guidelines similar to those described above are also used in the Company's construction lending activities. Construction loans involve additional risks attributable to the fact that loan funds are advanced against a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. In many cases the success of the project can also depend upon the financial support/strength of the sponsorship. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company will be able to recover the entire unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time. While the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.

Residential Real Estate Mortgages: The Company originates first-lien, adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a single family residential property. These loans are principally collateralized by owner-occupied properties, substantially all of which are located in the Company's market area, and are amortized over 10 to 30 years. All residential real estate loans were originated by the Company. From time to time the Company will sell longer-term, low rate, residential mortgage loans to the FHLMC with servicing rights retained. This practice allows the Company to better manage interest rate risk and liquidity risk. In an effort to manage risk of loss and strengthen secondary market liquidity opportunities, management typically uses secondary market underwriting, appraisal, and servicing guidelines for all loans, including those held in its portfolio. Loans on one-to-four-family residential real estate are mostly originated in amounts of no more than 80% of appraised value or have private mortgage insurance. Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including inspections at each loan draw period.

Home Equity Loans: The Company originates home equity lines of credit and second mortgage loans (loans secured by a junior lien position on one-to-four-family residential real estate). These loans carry a higher risk than first mortgage residential loans as they are in a second position relating to collateral. Risk is reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.

Non-performing Loans: The following table sets forth information regarding non-accruing loans and accruing loans 90 days or more overdue at December 31, 2011, 2010 and 2009.


	2011			2010			2009

Commercial real estate mortgages	$	2,676		$	3,572		$	3,096
Commercial and industrial loans		1,078			778			237
Commercial construction and land development		3,753			5,899			392
Agricultural and other loans to farmers		595			254			1,848
Total commercial loans		8,102			10,503			5,573

Residential real estate mortgages		4,266			3,022			2,522
Home equity loans		266			146			304
Other consumer loans		273		-	--			5
Total consumer loans		4,805			3,168			2,831

Total non-accrual loans		12,907			13,671			8,404
Accruing loans contractually past due 90 days or more	-	--			6			772
Total non-performing loans	$	12,907		$	13,677		$	9,176

Allowance for loan losses to non-performing loans		64	%		62	%		85	%
Non-performing loans to total loans		1.77	%		1.95	%		1.37	%
Allowance to total loans		1.13	%		1.21	%		1.17	%

During the years ended December 31, 2011, 2010 and 2009, the foregone interest on non-accrual loans amounted to $783, $536, and $382, respectively.

At December 31, 2011, total other real estate owned amounted to $2,699 compared with $656 and $854 at December 31, 2010 and 2009.

At December 31, 2011, the Company had no firm commitments to lend additional funds to borrowers with loans in non-accrual status.

Past Due Loans: Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables set forth information regarding past due loans at December 31, 2011 and December 31, 2010. Amounts shown exclude deferred loan origination fees and costs.


	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		>90 Days Past Due and Accruing


December 31, 2011
Commercial real estate mortgages	$	264	$	284	$	2,504	$	3,052	$	282,432	$	285,484	$ ---
Commercial and industrial		294		201		996		1,491		60,959		62,450	---
Commercial construction and land development		91		142		2,993		3,226		26,834		30,060	---
Agricultural and other loans to farmers		162	-	--		526		688		25,892		26,580	---
Residential real estate mortgages		1,690		644		2,553		4,887		234,912		239,799	---
Home equity		40	-	--		266		306		51,156		51,462	---
Other consumer loans		87		22		257		366		22,540		22,906	---
Tax exempt	-	--	-	--	-	--	-	--		9,700		9,700
Total	$	2,628	$	1,293	$	10,095	$	14,016	$	714,425	$	728,441	$ ---


	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans		>90 Days Past Due and Accruing


December 31, 2010
Commercial real estate mortgages	$	374	$	663	$	2,833	$	3,870	$	279,929	$	283,799	$	2
Commercial and industrial		37		5		483		525		56,798		57,323	-	--
Commercial construction and land development	-	--	-	--		704		704		31,410		32,114
Agricultural and other loans to farmers		85		48		90		223		24,136		24,359	-	--
Residential real estate mortgages		2,117		290		2,376		4,783		226,651		231,434		4
Home equity		68		32		68		168		54,121		54,289	-	--
Consumer loans		34		16	-	--		50		4,367		4,417	-	--
Tax exempt	-	--	-	--	-	--	-	--		12,126		12,126
Total	$	2,715	$	1,054	$	6,554	$	10,323	$	689,538	$	699,861	$	6

Impaired Loans: Impaired loans are commercial and commercial real estate loans for which the Company believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement, as well as all loans modified into a troubled debt restructure, if any. Allowances for losses on impaired loans are determined by the lower of the present value of the expected cash flows related to the loan, using the original contractual interest rate, and its recorded value, or in the case of collateral dependent loans, the lower of the fair value of the collateral, less costs to dispose, and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral less cost to sell.

Summary information pertaining to impaired loans follows:


	2011		2010		2009

Investment in impaired loans at December 31,	$	9,015	$	10,503	$	5,573
Portion of impaired loan balance for which an allowance is allocated at December 31,	$	1,072	$	9,020	$	4,416
Portion of impaired loan losses allocated to the impaired loan balance at December 31,	$	335	$	1,327	$	702
Interest not recorded on impaired loans at December 31,	$	783	$	536	$	382
Average investment in impaired loans for the year ended
December 31,	$	10,432	$	10,239	$	3,861

Details of impaired commercial loans as of December 31, 2011 follows:


	Recorded Investment		Unpaid Principal Balance		Related Allowance


With no related allowance:
Commercial real estate mortgages	$	2,500	$	2,630	$	--
Commercial and industrial		943		1,013		--
Commercial construction and land development		2,992		4,893
Agricultural and other loans to farmers		595		595		--
Subtotal	$	7,030	$	9,131	$	--

With an allowance:
Commercial real estate mortgages	$	176	$	176	$	100
Commercial and industrial		135		135		135
Commercial construction and land development		761		761		100
Agricultural and other loans to farmers	-	--	-	--		--
Subtotal	$	1,072	$	1,072	$	335

Total	$	8,102	$	10,203	$	335

Details of impaired commercial loans for the year ended December 31, 2011 follows:


	Average Recorded Investment		Interest Recorded


With no related allowance:
Commercial real estate mortgages	$	2,706	$	96
Commercial and industrial		1,180		3
Commercial construction and land development		4,857	-	--
Agricultural and other loans to farmers		213		14
Subtotal	$	8,956	$	113

With an allowance:
Commercial real estate mortgages	$	396	$	---
Commercial and industrial		70	-	--
Commercial construction and land development		150	-	--
Agricultural and other loans to farmers	-	--	-	--
Subtotal	$	616	$	---

Total	$	9,572	$	113

Troubled Debt Restructures: A Troubled Debt Restructure ("TDR") results from a modification to a loan to a borrower who is experiencing financial difficulty in which the Bank grants a concession to the debtor that it would not otherwise consider but for the debtor's financial difficulties. Financial difficulty arises when a debtor is bankrupt or contractually past due, or is likely to become so, based upon its ability to pay. A concession represents an accommodation not generally available to other customers, including a below-market interest rate, deferment of principal payments, extension of maturity dates, etc. Such accommodations extended to customers who are not experiencing financial difficulty do not result in TDR classification.

As of December 31, 2011, the Bank had four real estate secured loans to two relationships totaling $913 that were classified as TDRs. There were no TDRs as of December 31, 2010. At December 31, 2011, one TDR in the amount of $82 was past due and classified as non-performing.

Summary information pertaining to the TDRs at December 31, 2011 follows:


	# of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment




Commercial real estate mortgages	2	$	801	$	801
Commercial and industrial	1		30		30
Total commercial loans	3		831		831
Residential real estate mortgages	1		82		82
Total consumer loans	1		82		82
Total	4	$	913	$	913

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator to all categories of commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Loans rated one through five are consistent with the regulators' Pass ratings, and are generally allocated a lesser percentage allocation in the allowance for loan losses than loans rated from six through nine.

Consistent with regulatory guidelines, the Bank provides for the classification of loans which are considered to be of lesser quality as substandard, doubtful, or loss. The Bank considers a loan substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal if the deficiencies are not corrected.

Loans that the Bank classifies as doubtful have all of the weaknesses inherent in those loans that are classified as substandard but also have the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loans that the Bank classifies as loss are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged off. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they surface as uncollectible.

Loans that do not expose the Bank to risk sufficient to warrant classification in one of the aforementioned categories, but which possess some weaknesses, are designated special mention. A special mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. This might include loans which the lending officer may be unable to supervise properly because of: lack of expertise, inadequate loan agreement, the poor condition of or lack of control over collateral, failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized may be included in this classification. Special mention assets are not adversely classified and do not expose an institution to sufficient risks to warrant classification.

The following tables summarize the commercial loan portfolio as of December 31, 2011 and December 31, 2010 by credit quality indicator. Credit quality indicators are reassessed for each applicable commercial loan at least annually, or upon receipt and analysis of the borrower's financial statements, when applicable. Consumer loans, which principally consist of residential mortgage loans, are not rated, but are evaluated for credit quality after origination based on delinquency status (see past due aging and non-performing loan tables above).


	Commercial real estate mortgages		Commercial and industrial		Commercial construction and land development		Agricultural and other loans to farmers		Total


December 31, 2011

Pass	$	255,945	$	50,866	$	23,615	$	25,295	$	355,721
Other Assets Especially
Mentioned		19,787		7,183		2,692		469		30,131
Substandard		9,752		4,401		3,520		816		18,489
Doubtful	-	--	-	--		233	-	--		233
Loss	-	--	-	--	-	--	-	--	-	--
Total	$	285,484	$	62,450	$	30,060	$	26,580	$	404,574


	Commercial real estate mortgages		Commercial and industrial		Commercial construction and land development		Agricultural and other loans to farmers		Total


December 31, 2010
Pass	$	251,996	$	46,124	$	24,661	$	22,735	$	345,516
Other Assets Especially
Mentioned		25,898		8,231		794		1,066		35,989
Substandard		5,905		2,968		6,659		558		16,090
Doubtful	-	--	-	--	-	--	-	--	-	--
Loss	-	--	-	--	-	--	-	--	-	--
Total	$	283,799	$	57,323	$	32,114	$	24,359	$	397,595

Allowance For Loan Losses: The allowance for loan losses (the "allowance") is a reserve established through a provision for loan losses (the "provision) charged to expense, which represents management's best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to provide for estimated loan losses and risks inherent in the loan portfolio. The Company's allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, "Receivables" and allowance allocations calculated in accordance with ASC Topic 450, "Contingencies." Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company's process for determining the appropriate level of the allowance is designed to account for credit deterioration as it occurs. The provision reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance reflects management's continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management's judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company's control, including, among other things, the performance of the Company's loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company's allowance for loan losses consists of three principal elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor's ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship level for all commercial loans. When a loan has a calculated grade of seven or higher, the Company analyzes the loan to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance to the loan. Specific valuation allowances are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other observable considerations.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool, net of any loans for which reserves are already established. The Company's pools of similar loans include similarly risk-graded groups of, commercial real estate loans, commercial and industrial loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the bank's lending management and staff; (ii) the effectiveness of the Company's loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. The results are then used to determine an appropriate general valuation allowance.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements.

A summary of activity in the allowance for loan losses for each of the three years ended December 31 follows:


Balance, beginning of the year	$	8,500		$	7,814		$	5,446
Provision for loan losses		2,395			2,327			3,207
Less: loans charged-off		2,927			1,874			995
Recoveries on loans previously charged-off		(253	)		(233	)		(156	)
Net (recoveries) charge-offs		2,674			1,641			839

Balance end of period	$	8,221		$	8,500		$	7,814

The following tables detail activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2011 and December 31, 2010. The tables also provide details regarding the Company's recorded investment in loans related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of the Company's impairment methodology. Allocation of a portion of the Allowance to one category of loans does not preclude its availability to absorb losses in other categories.


December 31, 2011	Commercial Real Estate			Commercial and Industrial			Commercial Construction and land development			Agricultural		Residential Real Estate			Consumer			Home Equity			Tax Exempt			Total

Beginning Balance	$	4,260		$	1,237		$	999		$	223	$	1,322		$	73		$	276		$	110		$	8,500
Charged Off		(423	)		(123	)		(1,943	)		--		(254	)		(90	)		(94	)		--			(2,927	)
Recoveries		8			82			77			45		--			41		-	--			--			253
Provision		55			125			1,461			64		368			262			84			(24	)		2,395
Ending Balance	$	3,900		$	1,321		$	594		$	332	$	1,436		$	286		$	266		$	86		$	8,221

																								-
of which:

Amount for loans individually evaluated for impairment	$	100		$	135		$	100		$	--	$	--		$	---		$	---		$	--		$	335

Amount for loans collectively evaluated for impairment	$	3,800		$	1,186		$	494		$	332	$	1,436		$	286		$	266		$	86		$	7,886

Loans individually evaluated for impairment	$	2,676		$	1,078		$	3,753		$	595	$	--		$	---		$	---		$	--		$	8,102

Loans collectively evaluated for impairment	$	282,808		$	61,372		$	26,307		$	25,985	$	239,799		$	22,906		$	51,462		$	9,700		$	720,339


December 31, 2010	Commercial Real Estate			Commercial and Industrial			Commercial Construction and Land Development			Agricultural			Residential Real Estate			Consumer			Home Equity			Tax Exempt			Total

Beginning Balance	$	4,094		$	1,570		$	349		$	242		$	1,146		$	122		$	137		$	154		$	7,814
Charged Off		(296	)		(652	)		(167	)		(396	)		(160	)		(103	)		(100	)		--			(1,874	)
Recoveries		3			10			--			5			106			69			40			--			233
Provision		459			309			817			372			230			(15	)		199			(44	)		2,327
Ending Balance	$	4,260		$	1,237		$	999		$	223		$	1,322		$	73		$	276		$	110		$	8,500

of which:

Amount for loans Individually evaluated for impairment	$	591		$	159		$	577		$	---		$	---		$	--		$	---		$	--		$	1,327

Amount for loans collectively evaluated for impairment	$	3,669		$	1,078		$	422		$	223		$	1,322		$	73		$	276		$	110		$	7,173

Loans individually evaluated for impairment	$	3,572		$	778		$	5,899		$	254		$	---		$	--		$	---		$	--		$	10,503

Loans collectively evaluated for impairment	$	280,227		$	56,545		$	26,215		$	24,105		$	231,434		$	4,417		$	54,289		$	12,126		$	689,358

Loan Concentrations: Because of the Company's proximity to Acadia National Park, a large part of the economic activity in the Bank's area is generated from the hospitality business associated with tourism. At December 31, 2011 and 2010, loans to the lodging industry amounted to approximately $99,345 and $86,142, respectively.

Loans to Related Parties: In the ordinary course of business, the Bank has made loans at prevailing rates and terms to directors, officers and other related parties. In management's opinion, such loans do not present more than the normal risk of collectability or incorporate other unfavorable features, and were made under terms that are consistent with the Company's lending policies.

Loan to related parties at December 31 are summarized below. Balances have been adjusted to reflect changes in status of directors and officers for each year presented.


	2011			2010
Beginning balance	$	3,522		$	4,360
Changes in composition		234		-	--
New loans		65			16
Less: repayments		(744	)		(854	)
Ending balance	$	3,077		$	3,522

As of December 31, 2011, and 2010, there were no non-performing loans to related parties.