Note 4 - Allowance for Loan and Lease Losses and Credit Disclosures

(Table amounts in $ 000s)

Activity in the allowance for loan and lease losses for the years ended December 31, 2011, 2010 and 2009 follows:


	2011			2010			2009

Balance at beginning of year	$	18,336		$	18,027		$	10,402
Provision charged to operating expense		6,900			9,668			22,778
Loans charged off		(6,396	)		(9,490	)		(16,134	)
Recoveries on loans previously charged off		144			131			981

Balance at end of year	$	18,984		$	18,336		$	18,027

Further detail as to the activity in the allowance for loan and lease losses by segment for the year ended December 31, 2011 follows:

For the year ended December 31, 2011	Allowance for Loan and Lease Losses
	Beginning										Ending
	Balance		Charge-offs			Recoveries		Provision			Balance

Commercial.	$	1,013	$	(911	)	$	51	$	639		$	792
Real estate-construction		2,842		(326	)		1		632			3,149
Real estate-mortgage 1-4 family		988		(531	)		7		401			865
Real estate-mortgage 5+ family		1,025		(3,121	)		0		3,742			1,646
Real estate-mortgage commercial		11,977		(1,326	)		82		1,285			12,018
Home equity		468		(175	)		0		207			500
Leases		0		0			0		0			0
Installment		23		(6	)		3		(6	)		14

Total	$	18,336	$	(6,396	)	$	144	$	6,900		$	18,984

Below shows the allocation of the allowance for loan and lease losses by segment to loans and leases individually and collectively evaluated for impairment at December 31, 2011 and 2010:

At December 31, 2011					Allowance				Allowance
					for Loan				for Loan
					Losses				Losses
	Ending				Allocated to				Allocated to
	Balance		Loans		Loans		Loans		Loans
`	Total		Individually		Individually		Collectively		Collectively
	Loans		Evaluated		Evaluated		Evaluated		Evaluated
	and		for		for		for		for
	Leases		Impairment		Impairment		Impairment		Impairment

Commercial	$	15,827	$	655	$	273	$	15,172	$	519
Real estate-construction		28,504		6,876		2,044		21,628		1,105
Real estate-mortgage 1-4 family		35,758		5,163		396		30,595		469
Real estate-mortgage 5+ family		35,977		3,987		0		31,990		1,646
Real estate-mortgage commercial		183,881		54,074		8,561		129,807		3,457
Home equity		21,266		443		141		20,823		359
Leases		295		0		0		295		0
Installment		1,476		0		0		1,476		14

Balance at December 31, 2011	$	322,984	$	71,198	$	11,415	$	251,786	$	7,569

At December 31, 2010					Allowance				Allowance
					for Loan				for Loan
					Losses				Losses
	Ending				Allocated to				Allocated to
	Balance		Loans		Loans		Loans		Loans
	Total		Individually		Individually		Collectively		Collectively
	Loans		Evaluated		Evaluated		Evaluated		Evaluated
	and		for		for		for		for
	Leases		Impairment		Impairment		Impairment		Impairment

Commercial	$	20,927	$	1,570	$	614	$	19,357	$	399
Real estate-construction		29,776		11,711		2,070		18,065		772
Real estate-mortgage 1-4 family		41,228		5,737		441		35,491		547
Real estate-mortgage 5+ family		44,021		8,594		491		35,427		534
Real estate-mortgage commercial		223,546		51,116		6,579		172,430		5,398
Home equity		23,392		1,816		274		21,576		194
		442		0		0		442		0
Installment		1,807		8		0		1,799		23

Balance at December 31, 2010	$	385,139	$	80,552	$	10,469	$	304,587	$	7,867

Below shows the age analysis of the past due loans and leases by segment and class at December 31, 2011 and 2010:

At December 31, 2011													Greater Than
													90 Days Past
							Greater				Total		Due and
			30-59 Days		60-89 Days		Than 90 Days		Total		Loans and		Still
	Current		Past Due		Past Due		Past Due		Past Due		Leases		Accruing

Commercial	$	15,273	$	6	$	0	$	548	$	554	$	15,827	$	0
Real estate-construction
1-4 family		14,084		0		0		2,716		2,716		16,800		152
Other		9,820		0		0		1,884		1,884		11,704		0
Real estate-mortgage
1-4 family		32,539		1,672		284		1,263		3,219		35,758		0
Real estate-mortgage
5+ family		32,227		0		0		3,750		3,750		35,977		0
Real estate-mortgage commercial
Owner occupied		53,911		265		471		7,850		8,586		62,497		0
Non-owner occupied		73,162		575		227		450		1,252		74,414		0
Hotel industry		46,970		0		0		0		0		46,970		0
Home equity		20,288		206		71		701		978		21,266		322
Leases		295		0		0		0		0		295		0
Installment		1,442		15		3		16		34		1,476		16

Balance at December 31, 2011	$	300,011	$	2,739	$	1,056	$	19,178	$	22,973	$	322,984	$	490

At December 31, 2010													Greater Than
													90 Days Past
							Greater				Total		Due and
			30-59 Days		60-89 Days		Than 90 Days		Total		Loans and		Still
	Current		Past Due		Past Due		Past Due		Past Due		Leases		Accruing

Commercial	$	20,178	$	78	$	158	$	513	$	749	$	20,927	$	513
Real estate-construction
1-4 family		14,234		0		0		2,886		2,886		17,120		0
Other		10,263		0		1,184		1,209		2,393		12,656		0
Real estate-mortgage
1-4 family		36,416		894		1,236		2,682		4,812		41,228		130
Real estate-mortgage
5+ family		35,426		164		0		8,431		8,595		44,021		0
Real estate-mortgage commercial
Owner occupied		65,485		749		2,181		414		3,344		68,829		0
Non-owner occupied		84,353		0		272		1,596		1,868		86,221		296
Hotel industry		62,072		0		0		6,424		6,424		68,496		0
Home equity		21,487		73		300		1,532		1,905		23,392		172
Leases		442		0		0		0		0		442		0
Installment		1,756		13		8		30		51		1,807		30

Balance at December 31, 2010	$	352,112	$	1,971	$	5,339	$	25,717	$	33,027	$	385,139	$	1,141

The Company utilizes a loan rating system as a means of identifying problem and potential problem loans. Below shows the loan ratings of loans and leases by segment and class at December 31, 2011and 2010:

At December 31,2011	Pass		Watch		Substandard		Nonaccrual		Doubtful		Total

Commercial	$	12,587	$	2,247	$	445	$	548	$	0	$	15,827
Real estate-construction
1-4 family		2,345		4,230		7,662		2,563		0		16,800
Other		277		6,602		2,941		1,884		0		11,704
Real estate-mortgage 1-4 family		25,430		4,968		4,097		1,263		0		35,758
Real estate-mortgage 5+ family		25,105		6,885		0		3,987		0		35,977
Real estate-mortgage commercial
Owner occupied		31,778		12,211		10,186		8,322		0		62,497
Non-owner occupied		41,096		20,031		12,837		450		0		74,414
Hotel industry		3,784		9,358		33,828		0		0		46,970
Home equity		19,527		792		504		443		0		21,266
Leases		247		48		0		0		0		295
Installment		1,476		0		0		0		0		1,476

Balance at December 31, 2011	$	163,652	$	67,372	$	72,500	$	19,460	$	0	$	322,984

At December 31, 2010	Pass		Watch		Substandard		Nonaccrual		Doubtful		Total

Commercial	$	17,470	$	1,887	$	1,570	$	0	$	0	$	20,927
Real estate-construction
1-4 family		6,587		1,181		6,466		2,886		0		17,120
Other		557		9,740		1,150		1,209		0		12,656
Real estate-mortgage 1-4 family		30,356		5,135		3,185		2,552		0		41,228
Real estate-mortgage 5+ family		25,341		10,086		0		8,594		0		44,021
Real estate-mortgage commercial
Owner occupied		39,757		17,282		9,985		1,805		0		68,829
Non-owner occupied		52,509		29,034		3,378		1,300		0		86,221
Hotel industry		19,207		14,641		28,224		6,424		0		68,496
Home equity		20,783		793		457		1,359		0		23,392
Leases		358		84		0		0		0		442
Installment		1,799		0		8		0		0		1,807

Balance at December 31, 2010	$	214,724	$	89,863	$	54,423	$	26,129	$	0	$	385,139

Management has defined recorded investment to be the borrower's principal balance less partial charge-offs. The following table presents loans and leases by segment and class individually evaluated for impairment at December 31, 2011 and 2010:

	At December 31. 2011						For the Year 2011
			Unpaid				Average		Investment
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized

With no related allowance recorded:
Commercial	$	0	$	0	$	0	$	152	$	0
Real estate-construction
1-4 family		34		34		0		4,607		176
Other		734		2,468		0		1,109		0
Real estate-mortgage 1-4 family		2,039		2,039		0		3,391		96
Real estate-mortgage 5+ family		3,987		3,987		0		8,856		38
Real estate-mortgage commercial
Owner occupied		5,254		5,254		0		6,333		185
Non-owner occupied		3,927		3,927		0		10,281		408
Hotel industry		3,034		3,034		0		2,758		132
Home equity		30		30		0		67		20
Leases		0		0		0		0		0
Installment		0		0		0		0		0
With an allowance recorded:
Commercial		655		1,416		273		1,026		1
Real estate-construction
1-4 family		4,958		4,958		1,960		4,861		103
Other		1,150		1,150		84		1,150		22
Real estate-mortgage 1-4 family		3,124		3,124		396		2,899		131
Real estate-mortgage 5+ family		0		0		0		0		0
Real estate-mortgage commercial
Owner occupied		10,319		10,319		2,974		9,549		97
Non-owner occupied		746		746		458		746		2
Hotel industry		30,794		34,393		5,129		31,523		1,139
Home equity		413		413		141		1,621		2
Leases		0		0		0		0		0
Installment		0		0		0		6		1

Total:
Commercial	$	655	$	1,416	$	273	$	1,178	$	1
Real estate-construction		6,876		8,610		2,044		11,727		301
Real estate-mortgage 1-4 family		5,163		5,163		396		6,290		227
Real estate-mortgage 5+ family		3,987		3,987		0		8,856		38
Real estate-mortgage commercial		54,074		57,673		8,561		61,190		1,963
Home equity		443		443		141		1,688		22
Leases		0		0		0		0		0
Installment		0		0		0		6		1

Total	$	71,198	$	77,292	$	11,415	$	90,935	$	2,553

	At December 31. 2010
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance

With no related allowance recorded:
Commercial	$	35	$	35	$	0
Real estate-construction
1-4 family		1,680		1,680		0
Other		734		2,468		0
Real estate-mortgage 1-4 family		3,454		3,454		0
Real estate-mortgage 5+ family		7,172		7,172		0
Real estate-mortgage commercial
Owner occupied		2,971		2,971		0
Non-owner occupied		1,768		1,768		0
Hotel industry		5,947		5,947		0
Home equity		525		525		0
Leases		0		0		0
Installment		8		8		0
With an allowance recorded:
Commercial		1,535		1,535		614
Real estate-construction
1-4 family		7,673		7,673		1,902
Other		1,624		1,624		168
Real estate-mortgage 1-4 family		2,283		2,283		441
Real estate-mortgage 5+ family		1,422		1,422		491
Real estate-mortgage commercial
Owner occupied		8,369		8,369		978
Non-owner occupied		3,360		3,567		239
Hotel industry		28,701		31,677		5,362
Home equity		1,291		1,291		274
Leases		0		0		0
Installment		0		0		0

Total:
Commercial	$	1,570	$	1,570	$	614
Real estate-construction		11,711		13,445		2,070
Real estate-mortgage 1-4 family		5,737		5,737		441
Real estate-mortgage 5+ family		8,594		8,594		491
Real estate-mortgage commercial		51,116		54,299		6,579
Home equity		1,816		1,816		274
Leases		0		0		0
Installment		8		8		0

Total	$	80,552	$	85,469	$	10,469

The following table presents number of loans and leases classified as troubled debt restructurings during 2011by segment. The pre-modification recorded investment balances of these loans and leases are shown by segment as of the date prior to classification as troubled debt restructurings. The post-modification recorded investment balances of these loans and leases by segment and class are shown as of December 31, 2011:

At December 31, 2011	Troubled Debt Restructurings
Troubled Debt Restructurings	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment

Commercial		1	$	109	$	108
Real estate-construction
1-4 family		2		1,177		1,181
Other		0		0		0
Real estate-mortgage 1-4 family		24		2,438		2,405
Real estate-mortgage 5+ family		0		0		0
Real estate-mortgage commercial
Owner occupied		9		6,894		6,852
Non-owner occupied		4		3,146		3,146
Hotel industry		1		5,433		5,500
Home equity		0		0		0
Leases		0		0		0
Installment		0		0		0

Total		41	$	19,197	$	19,192

The following table presents number and recorded investment of loans and leases classified as troubled debt restructurings during 2011 that subsequently defaulted:

At December 31, 2011	Troubled Debt Restructurings
	that Subsequently Defaulted
	Number of Loans		Recorded Investment

Commercial		0	$	0
Real estate-construction
1-4 family		0		0
Other		0		0
Real estate-mortgage 1-4 family		0		0
Real estate-mortgage 5+ family		0		0
Real estate-mortgage commercial
Owner occupied		3		765
Non-owner occupied		0		0
Hotel industry		0		0
Home equity		0		0
Leases.		0		0
Installment.		0		0

Total at December 31, 2011		3	$	765