Note 6: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans

The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan's payment history, the borrower's current financial situation and value of the underlying collateral.

Impaired loans are those loans that have been modified in a troubled debt restructure ("TDR" or "restructure") and larger, non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate the probability that collection will not occur according to the loan's terms. Generally, impaired loans are risk rated "classified" or "other assets especially mentioned." Impaired loans are measured at the lower of the invested amount or the fair market value. Impaired loans with an impairment loss are designated nonaccrual. Please refer to Note 1 of the Company's 2012 Form 10-K, "Summary of Significant Accounting Policies" for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs.

Troubled debt restructurings impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal or accrued interest, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Further, restructured loans are individually evaluated for impairment, with amounts below fair value accrued in the allowance for loan losses. TDRs that experience a payment default are examined to determine whether the default indicates collateral dependency or cash flows below those that were included in the fair value measurement. TDRs as well as all impaired loans that are determined to be collateral dependent are charged down to fair value. Impairment accounts for TDR's that are not collateral dependent may be accrued in the allowance for loan losses or charged off if deemed appropriate.

The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment for application of the allowance for loan losses methodology. These characteristics include collateral type, repayment sources, and (if applicable) the borrower's business model.

Change in Portfolio Segments and Classes

During the first quarter of 2012, the Company revised its basis for determining segments and classes for the allowance for loan losses. In previous periods, the loan portfolio was segmented primarily by repayment source, whereas beginning with the first quarter of 2012 disaggregation is based primarily upon collateral type for secured loans and borrower type or repayment terms for unsecured loans. This aligns the allowance categories with those used for financial statements and other notes, providing greater uniformity and comparability. Consistent with accounting guidance, prior periods have not been restated and are shown as originally published using the segments and classes in effect for the period. These changes had an insignificant effect on the calculation of the balance in the allowance for loan losses.

The segments and classes used in determining the allowance for loan losses, beginning with 2012 are as follows.

Real Estate Construction

Construction, residential

Construction, other

Consumer Real Estate

Equity lines

Residential closed-end first liens

Residential closed-end junior liens

Commercial Real Estate

Multifamily real estate

Commercial real estate, owner occupied

Commercial real estate, other

Commercial Non Real Estate

Commercial and Industrial

Public Sector and IDA

Public sector and IDA

Consumer Non Real Estate

Credit cards

Automobile

Other consumer loans

Prior to the first quarter of 2012, the Company's segments and classes were as follows.

Consumer Real Estate

Equity lines

Closed-end consumer real estate

Consumer construction

Consumer, Non Real Estate

Credit cards

Consumer, general

Consumer overdraft

Commercial & Industrial

Construction, Development and Land

Residential

Commercial

Commercial Real Estate

College housing

Office/Retail space

Nursing homes

Hotels

Municipalities

Medical professionals

Religious organizations

Convenience stores

Entertainment and sports

Nonprofits

Restaurants

General contractors

Other commercial real estate

Risk factors are analyzed for each class to estimate collective reserves. Factors include allocations for the historical charge-off percentage and changes in national and local economic and business conditions, in the nature and volume of the portfolio, in loan officers' experience and in loan quality. Increased allocations for the risk factors applied to each class are made for special mention and classified loans. The Company allocates additional reserves for "high risk" loans, determined to be junior lien mortgages, high loan-to-value loans and interest-only loans.

An analysis of the allowance for loan losses follows:

	Years ended December 31,
	2012			2011			2010
Balance at beginning of year	$	8,068		$	7,664		$	6,926
Loans charged off		(2,953	)		(2,628	)		(2,810	)
Recoveries of loans previously charged off		100			83			139
Provision for loan losses		3,134			2,949			3,409
Balance at end of year	$	8,349		$	8,068		$	7,664

A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows:

	Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 2012
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate			Commercial Non Real Estate			Public Sector and IDA			Consumer Non Real Estate			Unallocated			Total
Balance, December 31, 2011	$	1,079		$	1,245		$	3,515		$	1,473		$	232		$	403		$	121		$	8,068
Charge-offs		(640	)		(370	)		(1,589	)		(109	)		---			(245	)		---			(2,953	)
Recoveries		13			8			---			2			---			77			---			100
Provision for loan losses		618			1,380			1,516			(407	)		(90	)		189			(72	)		3,134
Balance, December 31,2012	$	1,070		$	2,263		$	3,442		$	959		$	142		$	424		$	49		$	8,349

	Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 2011(1)
	Consumer Real Estate			Consumer Non-Real Estate			Commercial Real Estate			Commercial & Industrial			Construction, Development & Other Land			Unallocated			Total
Balance, December 31, 2010	$	1,059		$	586		$	4,033		$	1,108		$	749		$	129		$	7,664
Charge-offs		(461	)		(266	)		(457	)		(655	)		(789	)		---			(2,628	)
Recoveries		14			68			---			1			---			---			83
Provision for loan losses		440			13			935			581			988			(8	)		2,949
Balance, December 31, 2011	$	1,052		$	401		$	4,511		$	1,035		$	948		$	121		$	8,068

(1)	Segments reported for December 31, 2011 and December 31, 2010 are presented using the segmentation method in effect for 2011 and 2010. The Company began reporting under revised segments beginning 2012.

	Activity in the Allowance for Loan Losses by Segment for the year ended December 31, 2010(1)
	Consumer Real Estate			Consumer Non-Real Estate			Commercial Real Estate			Commercial & Industrial			Construction, Development & Land			Unallocated			Total
Balance, December 31, 2009	$	249		$	1,049		$	4,321		$	459		$	562		$	286		$	6,926
Charge-offs		(89	)		(358	)		(1,021	)		(927	)		(415	)		---			(2,810	)
Recoveries		10			67			61			1			---			---			139
Provision for loan losses		889			(172	)		672			1,575			602			(157	)		3,409
Balance, December 31, 2010	$	1,059		$	586		$	4,033		$	1,108		$	749		$	129		$	7,664

	Allowance for Loan Losses by Segment and Evaluation Method as of
	December 31, 2012
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate			Commercial Non Real Estate			Public Sector and IDA			Consumer Non Real Estate			Unallocated			Total
Individually evaluated for impairment		$	---		$	43		$	273		$	231		$	---		$	7		$	---		$	554
Collectively evaluated for impairment			1,070			2,220			3,169			728			142			417			49			7,795
Total		$	1,070		$	2,263		$	3,442		$	959		$	142		$	424		$	49		$	8,349

	Loans by Segment and Evaluation Method as of
	December 31, 2012
	Real Estate Construction			Consumer Real Estate			Commercial Real Estate			Commercial Non Real Estate			Public Sector and IDA			Consumer Non Real Estate			Unallocated			Total
Individually evaluated for impairment		$	6,643		$	864		$	10,329		$	574		$	---		$	46		$	---		$	18,456
Collectively evaluated for impairment			43,670			142,398			293,979			36,775			26,169			31,668			---			574,659
Total		$	50,313		$	143,262		$	304,308		$	37,349		$	26,169		$	31,714		$	---		$	593,115

	Allowance for Loan Losses by Segment and Evaluation Method as of
	December 31, 2011(1)
	Consumer Real Estate			Consumer Non-Real Estate			Commercial Real Estate			Commercial & Industrial			Construction, Development & Other Land			Unallocated			Total
Individually evaluated for impairment		$	---		$	---		$	1,014		$	62		$	47		$	---	$	1,123
Collectively evaluated for impairment			1,052			401			3,497			973			901			121		6,945
Total		$	1,052		$	401		$	4,511		$	1,035		$	948		$	121	$	8,068

(1)

Segments reported for December 31, 2011 and December 31, 2010 are presented using the segmentation method in effect for 2011 and 2010. The Company began reporting under revised segments beginning 2012.

	Loans by Segment and Evaluation Method as of
	December 31, 2011(1)
	Consumer Real Estate			Consumer Non-Real Estate			Commercial Real Estate			Commercial & Industrial			Construction, Development & Other Land			Unallocated			Total
Individually evaluated for impairment		$	238		$	---		$	9,067		$	139		$	3,152		$	---	$	12,596
Collectively evaluated for impairment			109,843			29,707			357,507			37,584			41,233			---		575,874
Total		$	110,081		$	29,707		$	366,574		$	37,723		$	44,385		$	---	$	588,470

(1)	Segments reported for December 31, 2011 and December 31, 2010 are presented using the segmentation method in effect for 2011 and 2010. The Company began reporting under revised segments beginning 2012.

A summary of ratios for the allowance for loan losses follows:

	December 31,
	2012			2011			2010
Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees		1.41	%		1.37	%		1.33	%
Ratio of net charge-offs to average loans, net of unearned income and deferred fees		0.49	%		0.43	%		0.46	%

A summary of nonperforming assets follows:

	December 31,
	2012			2011			2010
Nonperforming assets:
Nonaccrual loans	$	10,870		$	1,398		$	1,938
Restructured loans in nonaccrual		2,151			3,806			6,133
Total nonperforming loans		13,021			5,204			8,071
Other real estate owned, net		1,435			1,489			1,723
Total nonperforming assets	$	14,456		$	6,693		$	9,794
Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned		2.44	%		1.13	%		1.69	%
Ratio of allowance for loan losses to nonperforming loans(1)		64.12	%		155.03	%		94.96	%

(1)

The Company defines nonperforming loans as total nonaccrual and restructured loans that are nonaccrual. Loans 90 days past due and still accruing and accruing restructured loans are excluded.

A summary of loans past due 90 days or more and impaired loans follows:

	December 31,
	2012			2011			2010
Loans past due 90 days or more and still accruing	$	170		$	481		$	1,336
Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees		0.03	%		0.08	%		0.23	%
Accruing restructured loans	$	2,005		$	3,756		$	350
Impaired loans:
Impaired loans with no valuation allowance	$	16,974		$	5,505		$	1,115
Impaired loans with a valuation allowance		1,482			7,091			7,676
Total impaired loans		18,456			12,596			8,791
Valuation allowance		(554	)		(1,123	)		(1,200	)
Impaired loans, net of allowance	$	17,902		$	11,473		$	7,591
Average recorded investment in impaired loans(1)	$	13,540		$	8,734		$	7,526
Income recognized on impaired loans, after designation as impaired	$	9		$	141		$	17
Amount of income recognized on a cash basis	$	---		$	---		$	---

(1)

Recorded investment includes principal, accrued interest, and deferred fees and costs.

No interest income was recognized on nonaccrual loans for the years ended December 31, 2012, 2011 or 2010. Nonaccrual loans that meet the Company's balance thresholds are designated as impaired.

A detailed analysis of investment in impaired loans, associated reserves and interest income recognized, segregated by loan class follows:

	Impaired Loans as of December 31, 2012
	Principal Balance		(A) Total Recorded Investment(1)		Recorded Investment(1) in (A) for Which There is No Related Allowance		Recorded Investment(1) in (A) for Which There is a Related Allowance		Related Allowance
Real Estate Construction
Construction, residential	$	123	$	118	$	118	$	---	$	---
Construction, other		6,520		6,487		6,487		---		---

Consumer Real Estate
Equity lines		---		---		---		---		---
Residential closed-end first liens		783		785		634		151		43
Residential closed-end junior liens		81		81		81		---		---

Commercial Real Estate
Multifamily real estate		5,284		5,288		5,288		---		---
Commercial real estate, owner occupied		5,045		5,043		4,293		750		273
Commercial real estate, other		---		---		---		---		---

Commercial Non Real Estate
Commercial and Industrial		574		574		39		535		231

Public Sector and IDA
Public sector and IDA		---		---		---		---		---

Consumer Non Real Estate
Credit cards		---		---		---		---		---
Automobile		46		46		---		46		7
Other consumer loans		---		---		---		---		---
Total	$	18,456	$	18,422	$	16,940	$	1,482	$	554

(1)

Recorded investment includes the unpaid principal balance, accrued interest and any accrued interest and deferred fees.

	Impaired Loans as of December 31, 2011(3)
	Principal Balance		(A) Total Recorded Investment(1)		Recorded Investment(1) in (A) for Which There is No Related Allowance		Recorded Investment(1) in (A) for Which There is a Related Allowance		Related Allowance
Consumer Real Estate(2)
Closed-end Consumer Real Estate	$	237	$	237	$	237	$	---	$	---

Commercial Real Estate(2)
College housing		366		366		366		---		---
Office and Retail		3,500		3,500		---		3,500		57
Hotel		3,319		3,320		2,794		526		16
Medical Professionals		66		67		---		67		66
General contractors		703		703		176		527		402
Other commercial real estate		1,113		1,112		425		687		474

Commercial and Industrial(2)
Commercial and Industrial		139		139		---		139		62

Construction, Development and Land(2)
Residential		2,901		2,912		1,256		1,656		46
Commercial		252		252		252		---		---
Total	$	12,596	$	12,608	$	5,506	$	7,102	$	1,123

	(1)	Recorded investment includes the unpaid principal balance and any accrued interest and deferred fees.
	(2)	Only classes with impaired loans are shown.

(3)

Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.

	Impaired Loans as of December 31, 2010(3)
	Principal Balance		(A) Total Recorded Investment(1)		Recorded Investment(1) in (A) for Which There is No Related Allowance		Recorded Investment(1) in (A) for Which There is a Related Allowance		Related Allowance
Consumer Real Estate(2)
Closed-end Consumer Real Estate	$	505	$	505	$	---	$	505	$	26

Commercial Real Estate(2)
Hotel		3,509		3,509		287		3,222		267
Convenience stores		577		592		592		---		---
Other commercial real estate		1,065		1,066		---		1,066		299

Commercial and Industrial(2)
Commercial and Industrial		698		698		---		698		508

Construction, Development and Land(2)
Residential		2,185		2,185		---		2,185		100
Commercial		252		253		253		---		---
Total	$	8,791	$	8,808	$	1,132	$	7,676	$	1,200

(1)

Recorded investment includes the unpaid principal balance and any accrued interest and deferred fees.

(2)

Only classes with impaired loans are shown.

(3)

	Average Investment and Interest Income for Impaired Loans
	For the Year Ended December 31, 2012
	Average Recorded Investment(1)		Interest Income Recognized
Real Estate Construction
Construction, residential	$	1,171	$	---
Construction, other		4,290		1

Commercial Real Estate
Equity lines		101		---
Residential closed-end first liens		873		2
Residential closed-end junior liens		234		---

Commercial Real Estate
Multifamily real estate		1,466		5
Commercial real estate, owner occupied		4,806		1
Commercial real estate, other		---		---

Commercial Non Real Estate
Commercial and Industrial		570		---

Public Sector and IDA
Public sector and IDA		---		---

Consumer Non Real Estate
Credit cards		---		---
Automobile		4		---
Other consumer		25		---
Total	$	13,540	$	9

(1)

Recorded investment includes the unpaid principal balance and any accrued interest and deferred fees.

	Average Investment and Interest Income for Impaired Loans
	For the Year Ended December 31, 2011(3)				For the Year Ended December 31, 2010(3)
	Average Recorded Investment(1)		Interest Income Recognized		Average Recorded Investment(1)		Interest Income Recognized
Consumer Real Estate(2)
Closed-end Consumer Real Estate	$	450	$	3	$	337	$	---

Commercial Real Estate(2)
College Housing		281		7		---		---
Office and Retail		292		---		253		---
Hotels		3,445		41		2,767		---
Medical Professionals		67		5		---		---
Convenience Stores		---		---		49		15
General Contractors		112		4		---		---
Other Commercial Real Estate		1,139		24		337		1

Commercial & Industrial(2)
Commercial & Industrial		553		---		1,183		---

Construction, Development and Land(2)
Residential		2,143		49		2,579		---
Commercial		252		8		21		1
Total	$	8,734	$	141	$	7,526	$	17

(1)

Recorded investment includes the unpaid principal balance and any accrued interest and deferred fees and costs.

(2)

Only classes with impaired loans are shown.

(3)

An analysis of past due and nonaccrual loans follows:

December 31, 2012
	30 – 89 Days Past Due		90 or More Days Past Due		90 or More Days Past Due and Still Accruing		Nonaccruals (Including Impaired Nonaccruals)
Real Estate Construction
Construction, residential	$	---	$	123	$	---	$	123
Construction, other		31		89		---		3,109

Consumer Real Estate
Equity lines		22		30		30		98
Residential closed-end first liens		1,507		605		126		801
Residential closed-end junior liens		121		39		---		120

Commercial Real Estate
Multifamily real estate		671		261		---		4,624
Commercial real estate, owner occupied		1,113		---		---		3,536
Commercial real estate, other		40		2,089		---		---

Commercial Non Real Estate
Commercial and Industrial		291		505		---		561

Public Sector and IDA
Public sector and IDA		---		---		---		---

Consumer Non Real Estate
Credit cards		20		4		4		---
Automobile		142		10		10		49
Other consumer loans		132		---		---		---
Total	$	4,090	$	3,755	$	170	$	13,021

December 31, 2011(1)
	30 – 89 Days Past Due		90 or More Days Past Due		90 Days Past Due and Still Accruing		Nonaccruals (Including Impaired Nonaccruals)
Consumer Real Estate
Equity Lines	$	---	$	---	$	---	$	---
Closed-ended Consumer Real Estate		1,735		658		346		313
Consumer Construction		---		---		---		---

Consumer Non-Real Estate
Credit Cards		26		8		8		---
Consumer General		270		38		38		---
Consumer Overdraft		---		---		---		---

Commercial Real Estate
College Housing		452		250		---		250
Office/Retail		---		---		---		---
Nursing Homes		---		---		---		---
Hotels		616		526		---		1,397
Municipalities		---		---		---		---
Medical Professionals		---		---		---		---
Religious Organizations		---		---		---		---
Convenience Stores		---		---		---		---
Entertainment and Sports		---		---		---		---
Nonprofits		---		---		---		---
Restaurants		---		---		---		---
General Contractors		103		---		---		703
Other Commercial Real Estate		815		488		63		1,112

Commercial and Industrial
Commercial and Industrial		31		26		26		139

Construction, Development and Land
Residential		---		1,290		---		1,290
Commercial		252		---		---		---
Total	$	4,300	$	3,284	$	481	$	5,204

(1)	Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.

The estimate of credit risk for non-impaired loans is obtained by applying allocations for internal and external factors. The allocations are increased for loans that exhibit greater credit quality risk.

Credit quality indicators, which the Company terms risk grades, are assigned through the Company's credit review function for larger loans and selective review of loans that fall below credit review thresholds. Loans that do not indicate heightened risk are graded as "pass." Loans that appear to have elevated credit risk because of frequent or persistent past due status, which is less than 75 days, or that show weakness in the borrower's financial condition are risk graded "special mention." Loans with frequent or persistent delinquency exceeding 75 days or that have a higher level of weakness in the borrower's financial condition are graded "classified." Classified loans have regulatory risk ratings of "substandard" and "doubtful." Allocations are increased by 50% and by 100% for loans with grades of "special mention" and "classified," respectively.

Determination of risk grades was completed for the portfolio as of December 31, 2012, 2011 and 2010.

The following displays non-impaired loans by credit quality indicator:

December 31, 2012

	Pass		Special Mention		Classified (Excluding Impaired)
Real Estate Construction
Construction, 1-4 family residential	$	14,344	$	158	$	---
Construction, other		29,011		---		120

Consumer Real Estate
Equity lines		17,742		100		182
Closed-end first liens		113,893		652		2,413
Closed-end junior liens		6,713		119		138

Commercial Real Estate
Multifamily residential real estate		36,421		---		324
Commercial real estate owner-occupied		160,188		253		1,079
Commercial real estate other		92,628		3,112		---

Commercial Non Real Estate
Commercial and Industrial		36,372		99		318

Public Sector and IDA
States and political subdivisions		26,170		---		---

Consumer Non Real Estate
Credit cards		6,690		---		---
Automobile		12,344		101		56
Other consumer		11,815		45		105
Total	$	564,331	$	4,639	$	4,735

December 31, 2011(1)

	Pass		Special Mention		Classified (Excluding Impaired)
Consumer Real Estate
Equity Lines	$	17,971	$	---	$	14
Closed-ended Consumer Real Estate		87,882		595		1,332
Consumer Construction		2,050		---		---

Consumer Non-Real Estate
Credit Cards		6,594		---		1
Consumer General		22,679		42		105
Consumer Overdraft		285		---		1

Commercial Real Estate
College Housing		88,157		452		215
Office/Retail		73,106		420		267
Nursing Homes		16,173		---		---
Hotel		24,498		---		616
Municipalities		19,230		---		---
Medical Professionals		18,577		---		---
Religious Organizations		15,852		---		---
Convenience Stores		10,519		---		---
Entertainment and Sports		7,346		---		---
Nonprofit		3,265		3,170		---
Restaurants		6,138		---		387
General Contractors		4,550		109		247
Other Commercial Real Estate		63,422		---		790

Commercial and Industrial
Commercial and Industrial		37,252		196		137

Construction, Development and Land
Residential		15,732		---		---
Commercial		22,409		2,961		130
Total	$	563,687	$	7,945	$	4,242

(1)	Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.

Sales, Purchases and Reclassification of Loans

The Company finances mortgages under "best efforts" contracts with mortgage purchasers. The mortgages are designated as held for sale upon initiation. There have been no major reclassifications from portfolio loans to held for sale. Occasionally, the Company purchases or sells participations in loans. All participation loans purchased met the Company's normal underwriting standards at the time the participation was entered. Participation loans are included in the appropriate portfolio balances to which the allowance methodology is applied.

Troubled Debt Restructurings

From time to time the Company modifies loans in troubled debt restructurings ("TDRs"). The following tables present restructurings by class that occurred during the years ended December 31, 2012 and 2011.

Note: only classes with restructured loans are presented.

	Restructurings that occurred during the year ended December 31, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment(1)		Impairment Accrued as of 12/31/2012
Consumer Real Estate
Closed-end first liens		5	$	389	$	348	$	43
Closed-end junior liens		1		147		93		---

Commercial Real Estate
Commercial real estate owner-occupied		3		890		895		---

Commercial Non Real Estate
Commercial and Industrial		1		400		400		167
Total		10	$	1,826	$	1,736	$	210

(1)	Post-modification outstanding recorded investment considers amounts immediately following the modification. Amounts do not reflect balances at the end of the period.

	Restructurings that occurred during the year ended December 31, 2011(2)
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment(1)		Impairment Accrued as of 12/31/2011
Consumer Real Estate
Closed-end Consumer Real Estate		2	$	290	$	92	$	---

Commercial Real Estate
College housing		2		419		332		---
Medical professionals		3		79		79		66
General contractors		2		128		128		128
Other commercial real estate		3		680		726		474

Commercial and Industrial		1		50		50		50

Construction, Development and Land
Residential		3		2,474		1,645		47

Total		16	$	4,120	$	3,052	$	765

(1)	Post-modification outstanding recorded investment considers amounts immediately following the modification. Amounts do not reflect balances at the end of the period.

(2)	Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.

Loans restructured in 2012 received modifications that included partial charge-offs of $109 for two consumer real estate loans; providing payment relief primarily by extending maturity dates or changing amortization structures without reducing interest rates or amounts owed; and adding a co-borrower to one consumer real estate loan. Of the loans that were restructured in 2011, five received partial charge-offs totaling $1,143. One construction loan accounted for $789 of the amount. Partial charge-offs are included in the loss ratios applied in the determination of the allowance for collectively-evaluated loans.

Restructured loans are designated impaired and measured for impairment. The impairment measurement for restructured loans that occurred in 2012 resulted in an accrual to the allowance for loan losses of $210 at December 31, 2012. Restructurings in 2011 resulted in an accrual to the allowance for loan losses of $765 at December 31, 2011.

The following tables present restructured loans that were modified during 2012 and 2011 and that subsequently experienced payment default. The company defines default as one or more payments that occur more than 90 days past the due date.

	Restructurings that defaulted during the year ended December 31, 2012 that were modified within 12 months prior to default
	Number of Contracts		Recorded Investment		Impairment Accrued
Consumer Real Estate
Closed-end first liens		1		96		---
Closed-end junior liens		1		81		---

Commercial Real Estate
Commercial real estate owner occupied		2		861		---

Commercial Non Real Estate
Commercial and industrial		1		388		167
Total		5	$	1,426	$	167

	Restructurings that defaulted during the year ended December 31, 2011(1) that were modified within 12 months prior to default
	Number of Contracts		Recorded Investment		Impairment Accrued
Consumer Real Estate
Closed-end Consumer Real Estate		2	$	92	$	---

Commercial Real Estate
College housing		1		250		---
General contractors		2		128		128
Other commercial real estate		3		687		474

Commercial and Industrial		1		50		50

Construction, Development and Land
Residential		3		1,645		46
Total		12	$	2,852	$	698

(1)	Segments and classes at December 31, 2011 are reported using the segmentation method in effect for 2011. The Company began reporting under revised segments beginning in 2012.

Most of the restructured loans that experienced a payment default are secured by real estate, for which the impairment measurement is based upon the fair value of the underlying collateral. The amount of the loan balance that exceeds the collateral value is accrued in the allowance for loan losses. One loan reported in 2011 is unsecured and is fully accrued in the allowance for loan losses at December 31, 2011. Because fair value measurements are based upon fair value of collateral, the payment default did not significantly impact the measurement of impairment. Restructured loans that become more than 90 days past due are designated nonaccrual. Nonaccrual levels are factored into allowance methodology for collectively-evaluated loans.