				March 31,		December 31,
(In thousands)				2013		2012
Commercial and industrial			$	55,736	$	59,334
Construction and land development				41,104		37,631
Commercial real estate:
	Owner occupied			64,849		64,368
	Other			114,144		119,243
		Total commercial real estate		178,993		183,611
Residential real estate:
	Consumer mortgage			57,804		58,087
	Investment property			45,174		47,544
		Total residential real estate		102,978		105,631
Consumer installment				12,026		12,219
		Total loans		390,837		398,426
Less: unearned income				(267)		(233)
		Loans, net of unearned income	$	390,570	$	398,193

Loans secured by real estate were approximately 82.7% of the Company's total loan portfolio at March 31, 2013. At March 31, 2013, the Company's geographic loan distribution was concentrated primarily in Lee County, Alabama and surrounding areas.

In accordance with ASC 310, a portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for loan losses. As part of the Company's quarterly assessment of the allowance, the loan portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land development, commercial real estate, residential real estate and consumer installment. Where appropriate, the Company's loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity's method for monitoring and determining credit risk.

The following describe the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural production. Generally the primary source of repayment is the cash flow from business operations and activities of the borrower.

Construction and land development (“C&D”) — includes both loans and credit lines for the purpose of purchasing, carrying and developing land into commercial developments or residential subdivisions. Also included are loans and lines for construction of residential, multi-family and commercial buildings. Generally the primary source of repayment is dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) — includes loans disaggregated into two classes: (1) owner occupied and (2) other.

Consumer installment — includes loans to individuals both secured by personal property and unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank's general loan policies and procedures which require, among other things, proper documentation of each borrower's financial condition, satisfactory credit history, and if applicable, property value.

The following is a summary of current, accruing past due and nonaccrual loans by portfolio segment and class as of March 31, 2013, and December 31, 2012.

					Accruing	Accruing	Total
					30-89 Days	Greater than	Accruing	Non-		Total
(In thousands)			Current		Past Due	90 days	Loans	Accrual		Loans
March 31, 2013:
Commercial and industrial			$	55,630	47	—	55,677	59	$	55,736
Construction and land development				39,354	135	—	39,489	1,615		41,104
Commercial real estate:
	Owner occupied			63,668	—	—	63,668	1,181		64,849
	Other			113,715	—	—	113,715	429		114,144
		Total commercial real estate		177,383	—	—	177,383	1,610		178,993
Residential real estate:
	Consumer mortgage			56,557	190	—	56,747	1,057		57,804
	Investment property			44,559	213	—	44,772	402		45,174
		Total residential real estate		101,116	403	—	101,519	1,459		102,978
Consumer installment				11,985	36	—	12,021	5		12,026
		Total	$	385,468	621	—	386,089	4,748	$	390,837


December 31, 2012:
Commercial and industrial			$	59,101	173	—	59,274	60	$	59,334
Construction and land development				35,917	8	—	35,925	1,706		37,631
Commercial real estate:
	Owner occupied			63,323	—	—	63,323	1,045		64,368
	Other			113,344	230	—	113,574	5,669		119,243
		Total commercial real estate		176,667	230	—	176,897	6,714		183,611
Residential real estate:
	Consumer mortgage			55,521	1,202	58	56,781	1,306		58,087
	Investment property			46,460	335	—	46,795	749		47,544
		Total residential real estate		101,981	1,537	58	103,576	2,055		105,631
Consumer installment				12,157	62	—	12,219	—		12,219
		Total	$	385,823	2,010	58	387,891	10,535	$	398,426

The Company assesses the adequacy of its allowance for loan losses prior to the end of each calendar quarter. The level of the allowance is based upon management's evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect a borrower's ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan loss rates and other pertinent factors, including regulatory recommendations. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. Loans are charged off, in whole or in part, when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a “confirming event” has occurred which serves to validate that full repayment pursuant to the terms of the loan is unlikely.

The Company deems loans impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collection of all amounts due according to the contractual terms means that both the interest and principal payments of a loan will be collected as scheduled in the loan agreement.

An impairment allowance is recognized if the fair value of the loan is less than the recorded investment in the loan. The impairment is recognized through the allowance. Loans that are impaired are recorded at the present value of expected future cash flows discounted at the loan's effective interest rate, or if the loan is collateral dependent, impairment measurement is based on the fair value of the collateral, less estimated disposal costs.

The level of allowance maintained is believed by management to be adequate to absorb probable losses inherent in the portfolio at the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.

In assessing the adequacy of the allowance, the Company also considers the results of its ongoing internal and independent loan review processes. The Company's loan review process assists in determining whether there are loans in the portfolio whose credit quality has weakened over time and evaluating the risk characteristics of the entire loan portfolio. The Company's loan review process includes the judgment of management, the input from our independent loan reviewers, and reviews that may have been conducted by bank regulatory agencies as part of their examination process. The Company incorporates loan review results in the determination of whether or not it is probable that it will be able to collect all amounts due according to the contractual terms of a loan.

As part of the Company's quarterly assessment of the allowance, management divides the loan portfolio into five segments: commercial and industrial, construction and land development, commercial real estate, residential real estate, and consumer installment loans. The Company analyzes each segment and estimates an allowance allocation for each loan segment.

The allocation of the allowance for loan losses begins with a process of estimating the probable losses inherent for these types of loans. The estimates for these loans are established by category and based on the Company's internal system of credit risk ratings and historical loss data. The estimated loan loss allocation rate for the Company's internal system of credit risk grades is based on its experience with similarly graded loans. For loan segments where the Company believes it does not have sufficient historical loss data, the Company may make adjustments based, in part, on loss rates of peer bank groups. At March 31, 2013 and December 31, 2012, and for the periods then ended, the Company adjusted its historical loss rates for the commercial real estate portfolio segment based, in part, on loss rates of peer bank groups.

The estimated loan loss allocation for all five loan portfolio segments is then adjusted for management's estimate of probable losses for several “qualitative and environmental” factors. The allocation for qualitative and environmental factors is particularly subjective and does not lend itself to exact mathematical calculation. This amount represents estimated probable inherent credit losses which exist, but have not yet been identified, as of the balance sheet date, and are based upon quarterly trend assessments in delinquent and nonaccrual loans, credit concentration changes, prevailing economic conditions, changes in lending personnel experience, changes in lending policies or procedures and other influencing factors. These qualitative and environmental factors are considered for each of the five loan segments and the allowance allocation, as determined by the processes noted above, is increased or decreased based on the incremental assessment of these factors.

The following table details the changes in the allowance for loan losses by portfolio segment for the respective periods.

			March 31, 2013
(In thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	812	1,545	3,137	1,126	103	$	6,723
Charge-offs			(68)	(39)	—	(266)	(17)		(390)
Recoveries			12	—	5	13	6		36
	Net (charge-offs) recoveries		(56)	(39)	5	(253)	(11)		(354)
Provision			(187)	113	429	12	33		400
Ending balance		$	569	1,619	3,571	885	125	$	6,769

			March 31, 2012
(In thousands)		Commercial and industrial		Construction and land development	Commercial real estate	Residential real estate	Consumer installment		Total
Quarter ended:
Beginning balance		$	948	1,470	3,009	1,363	129		6,919
Charge-offs			—	—	—	(33)	(7)	$	(40)
Recoveries			3	—	—	6	8	$	17
	Net recoveries (charge-offs)		3	—	—	(27)	1		(23)
Provision			(106)	(31)	807	(4)	(66)	$	600
Ending balance		$	845	1,439	3,816	1,332	64	$	7,496

The following table presents an analysis of the allowance for loan losses and recorded investment in loans by portfolio segment and impairment methodology as of March 31, 2013 and 2012.

			Collectively evaluated (1)		Individually evaluated (2)		Total
			Allowance	Recorded	Allowance	Recorded	Allowance	Recorded
			for loan	investment	for loan	investment	for loan	investment
(In thousands)			losses	in loans	losses	in loans	losses	in loans
March 31, 2013:
Commercial and industrial		$	569	55,576	—	160	569	55,736
Construction and land development			1,498	39,489	121	1,615	1,619	41,104
Commercial real estate			3,327	176,492	244	2,501	3,571	178,993
Residential real estate			801	101,861	84	1,117	885	102,978
Consumer installment			125	12,026	—	—	125	12,026
	Total	$	6,320	385,444	449	5,393	6,769	390,837

March 31, 2012:
Commercial and industrial		$	845	56,598	—	206	845	56,804
Construction and land development			1,118	29,960	321	4,390	1,439	34,350
Commercial real estate			2,509	169,051	1,307	4,214	3,816	173,265
Residential real estate			996	103,596	336	1,587	1,332	105,183
Consumer installment			64	10,953	—	—	64	10,953
	Total	$	5,532	370,158	1,964	10,397	7,496	380,555

(1)	Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and
	pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.
(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-30, Receivables (formerly FAS 114), and
	pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan portfolio segments and classes. These categories are utilized to develop the associated allowance for loan losses using historical losses adjusted for current economic conditions and are defined as follows:

				March 31, 2013
(In thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
Commercial and industrial			$	54,954	168	555	59	$	55,736
Construction and land development				37,992	209	1,288	1,615		41,104
Commercial real estate:
	Owner occupied			61,393	767	1,508	1,181		64,849
	Other			111,875	505	1,335	429		114,144
		Total commercial real estate		173,268	1,272	2,843	1,610		178,993
Residential real estate:
	Consumer mortgage			49,616	1,159	5,972	1,057		57,804
	Investment property			41,781	1,024	1,967	402		45,174
		Total residential real estate		91,397	2,183	7,939	1,459		102,978
Consumer installment				11,797	27	197	5		12,026
		Total	$	369,408	3,859	12,822	4,748	$	390,837

				December 31, 2012
(In thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
Commercial and industrial			$	58,487	224	563	60	$	59,334
Construction and land development				34,490	310	1,125	1,706		37,631
Commercial real estate:
	Owner occupied			59,270	2,528	1,525	1,045		64,368
	Other			111,719	653	1,202	5,669		119,243
		Total commercial real estate		170,989	3,181	2,727	6,714		183,611
Residential real estate:
	Consumer mortgage			49,462	1,544	5,775	1,306		58,087
	Investment property			43,559	1,033	2,203	749		47,544
		Total residential real estate		93,021	2,577	7,978	2,055		105,631
Consumer installment				11,850	155	214	—		12,219
		Total	$	368,837	6,447	12,607	10,535	$	398,426

The following tables present details related to the Company's impaired loans. Loans which have been fully charged-off do not appear in the following table. The related allowance generally represents the following components which correspond to impaired loans:

The following tables set forth certain information regarding the Company's impaired loans that were individually evaluated for impairment at March 31, 2013 and December 31, 2012.


				March 31, 2013
(In thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial and industrial			$	160	—	160
Construction and land development				2,879	(1,682)	1,197
Commercial real estate:
	Owner occupied			354	(47)	307
	Other			513	(84)	429
		Total commercial real estate		867	(131)	736
Residential real estate:
	Consumer mortgages			966	(164)	802
	Investment property			211	(25)	186
		Total residential real estate		1,177	(189)	988
		Total	$	5,083	(2,002)	3,081
With allowance recorded:
Construction and land development			$	467	(49)	418	$	121
Commercial real estate:
	Owner occupied			1,765	—	1,765		244
		Total commercial real estate		1,765	—	1,765		244
Residential real estate:
	Investment property			132	(3)	129		84
		Total residential real estate		132	(3)	129		84
		Total	$	2,364	(52)	2,312	$	449
		Total impaired loans	$	7,447	(2,054)	5,393	$	449

(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

				December 31, 2012
(In thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial and industrial			$	169	—	169
Construction and land development				2,879	(1,682)	1,197
Commercial real estate:
	Owner occupied			787	(212)	575
	Other			7,914	(1,862)	6,052
		Total commercial real estate		8,701	(2,074)	6,627
Residential real estate:
	Consumer mortgages			971	(152)	819
	Investment property			508	(110)	398
		Total residential real estate		1,479	(262)	1,217
		Total	$	13,228	(4,018)	9,210
With allowance recorded:
Construction and land development			$	471	(45)	426	$	129
Commercial real estate:
	Owner occupied			899	—	899		134
		Total commercial real estate		899	—	899		134
Residential real estate:
		Total	$	1,370	(45)	1,325	$	263
		Total impaired loans	$	14,598	(4,063)	10,535	$	263

(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class during the respective periods.

			Quarter ended March 31, 2013				Quarter ended March 31, 2012
				Average	Total interest			Average	Total interest
				recorded	income			recorded	income
(In thousands)				investment	recognized			investment	recognized
Impaired loans:
Commercial and industrial			$	164	$	3	$	211	$	4
Construction and land development				1,619		—		4,902		—
Commercial real estate:
	Owner occupied			2,044		14		2,570		17
	Other			3,004		—		1,691		—
		Total commercial real estate		5,048		14		4,261		17
Residential real estate:
	Consumer mortgages			811		—		894		—
	Investment property			305		—		463		—
		Total residential real estate		1,116		—		1,357		—
		Total	$	7,947	$	17	$	10,731	$	21

Impaired loans also include troubled debt restructurings (“TDRs”). In the normal course of business, management may grant concessions to borrowers that are experiencing financial difficulty. A concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount or maturity amount of the debt. A concession has been granted when, as a result of the restructuring, the Bank does not expect to collect all amounts due, including interest at the original stated rate. A concession may have also been granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company's determination of whether a loan modification is a TDR, the Company considers the individual facts and circumstances surrounding each modification. As part of the credit approval process, the restructured loans are evaluated for adequate collateral protection in determining the appropriate accrual status at the time of restructure.

Similar to other impaired loans, TDRs are measured for impairment based on the present value of expected payments using the loan's original effective interest rate as the discount rate, or the fair value of the collateral, less selling costs if the loan is collateral dependent. If the recorded investment in the loan exceeds the measure of fair value, impairment is recognized by establishing a valuation allowance as part of the allowance for loan losses or a charge-off to the allowance for loan losses. In periods subsequent to the modification, all TDRs are evaluated, including those that have payment defaults, for possible impairment.

The following is a summary of accruing and nonaccrual TDRs, which are included in impaired loan totals, and the related allowance for loan losses, by portfolio segment and class as of March 31, 2013, and December 31, 2012.

				TDRs
								Related
(In thousands)				Accruing	Nonaccrual	Total		Allowance
March 31, 2013
Commercial and industrial			$	160	—	160	$	—
Construction and land development				—	1,615	1,615		121
Commercial real estate:
	Owner occupied			891	307	1,198		126
	Other			—	429	429		—
		Total commercial real estate		891	736	1,627		126
Residential real estate:
	Consumer mortgages			—	802	802		84
	Investment property			—	315	315		—
		Total residential real estate		—	1,117	1,117		84
		Total	$	1,051	3,468	4,519	$	331

December 31, 2012
Commercial and industrial			$	169	—	169	$	—
Construction and land development				—	1,623	1,623		129
Commercial real estate:
	Owner occupied			899	1,045	1,944		134
	Other			—	432	432		—
		Total commercial real estate		899	1,477	2,376		134
Residential real estate:
	Consumer mortgages			—	819	819		—
	Investment property			—	188	188		—
		Total residential real estate		—	1,007	1,007		—
		Total	$	1,068	4,107	5,175	$	263

At March 31, 2013, there were no significant outstanding commitments to advance additional funds to customers whose loans had been restructured.

The following table summarizes loans modified in a TDR during the respective periods both before and after their modification.

			Quarter ended March 31, 2013				Quarter ended March 31, 2012
					Pre-	Post -			Pre-	Post -
					modification	modification			modification	modification
			Number		outstanding	outstanding	Number		outstanding	outstanding
			of		recorded	recorded	of		recorded	recorded
(Dollars in thousands)			contracts		investment	investment	contracts		investment	investment
TDRs:
Construction and land development			—	$	—	—	2	$	2,842	1,753
Commercial real estate:
	Owner occupied		—		—	—	1		818	818
	Other		1		431	431	2		1,804	1,657
		Total commercial real estate	1		431	431	3		2,622	2,475
Residential real estate:
	Consumer mortgages		1		131	131	—		—	—
		Total residential real estate	1		131	131	—		—	—
		Total	2	$	562	562	5	$	5,464	4,228

The majority of the loans modified in a TDR during the quarters ended March 31, 2013 and 2012, respectively, included permitting delays in required payments of principal and/or interest or where the only concession granted by the Company was that the interest rate at renewal was considered to be less than a market rate.

For the quarter ended March 31, 2012, decreases in the post modification outstanding recorded investment were primarily due to principal payments made by borrowers at the date of modification for construction and land development loans.

The following table summarizes the recorded investment in loans modified in a TDR within the previous 12 months for which there was a payment default (defined as 90 days or more past due) during the respective periods.

		Quarter ended March 31, 2013			Quarter ended March 31, 2012
		Number of		Recorded	Number of		Recorded
(Dollars in thousands)		Contracts		investment⁽¹⁾	Contracts		investment⁽¹⁾
TDRs:
Construction and land development		1	$	1,197	1	$	2,386
	Total	1	$	1,197	1	$	2,386

(1) Amount as of applicable month end during the respective period for which there was a payment default.