NOTE 6 – Allowance for Loan Losses

The table below shows the activity in and the composition of the allowance for loan losses by loan segment and class detail as of and for the three and nine months ended September 30, 2013 and 2012.



			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:

Balance, July 1, 2013	$	1,576	$	1,213	$	1,181	$	505	$	1,856	$	201	$	253	$	1,151	$	7,936
Charge-offs		0		0		(85)		0		0		0		0		0		(85)
Recoveries		0		0		0		0		25		0		0		16		41
Provisions		(400)		188		265		(13)		(1,239)		0		21		30		(1,148)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744

Balance, July 1, 2012	$	1,680	$	1,239	$	900	$	449	$	1,690	$	164	$	194	$	1,062	$	7,378
Charge-offs		(215)		0		(15)		0		0		0		0		(46)		(276)
Recoveries		0		0		0		0		3		0		0		0		3
Provisions		119		78		140		0		436		58		(3)		158		986
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091



							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:

Balance, July 1, 2013	$	77	$	236	$	276	$	589	$	934	$	9,459
Charge-offs		0		(25)		(106)		(131)		0		(216)
Recoveries		0		2		13		15		0		56
Provisions		(8)		24		124		140		1,158		150
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449

Balance, July 1, 2012	$	78	$	152	$	137	$	367	$	945	$	8,690
Charge-offs		(76)		(42)		(165)		(283)		0		(559)
Recoveries		0		1		2		3		0		6
Provisions		133		77		236		446		(782)		650
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787




			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:

Balance, January 1, 2013	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032
Charge-offs		(62)		0		(310)		0		(210)		0		0		0		(582)
Recoveries		0		0		0		0		47		0		0		17		64
Provisions		(333)		142		476		7		(1,108)		(36)		72		10		(770)
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744

Balance, January 1, 2012	$	2,170	$	2,003	$	505	$	394	$	1,806	$	151	$	184	$	907	$	8,120
Charge-offs		(217)		(68)		(15)		0		0		0		0		(309)		(609)
Recoveries		0		0		0		0		14		0		0		0		14
Provisions		(369)		(618)		535		55		309		71		7		576		566
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091



							Total
	Residential		Home				consumer
(dollars in thousands)	mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:

Balance, January 1, 2013	$	124	$	237	$	238	$	599	$	671	$	9,302
Charge-offs		(28)		(99)		(239)		(366)		0		(948)
Recoveries		1		8		52		61		0		125
Provisions		(28)		91		256		319		1,421		970
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449

Balance, January 1, 2012	$	88	$	86	$	171	$	345	$	237	$	8,702
Charge-offs		(115)		(170)		(241)		(526)		0		(1,135)
Recoveries		41		1		14		56		0		70
Provisions		121		271		266		658		(74)		1,150
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

The table below shows the allowance amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment at September 30, 2013 and 2012 and December 31, 2012.



			Commercial		Residential												Total
	Builder &		real estate		real estate		Hotel/		Wholesale &								commercial
(dollars in thousands)	developer		investor		investor		Motel		retail		Manufacturing		Agriculture		Other		related
Allowance for loan losses:

Individually evaluated for impairment	$	0	$	0	$	650	$	0	$	0	$	0	$	100	$	120	$	870
Collectively evaluated for impairment		1,176		1,401		711		492		642		201		174		1,077		5,874
Balance, September 30, 2013	$	1,176	$	1,401	$	1,361	$	492	$	642	$	201	$	274	$	1,197	$	6,744

Individually evaluated for impairment	$	147	$	0	$	700	$	0	$	0	$	0	$	100	$	215	$	1,162
Collectively evaluated for impairment		1,424		1,259		495		485		1,913		237		102		955		6,870
Balance, December 31, 2012	$	1,571	$	1,259	$	1,195	$	485	$	1,913	$	237	$	202	$	1,170	$	8,032

Individually evaluated for impairment	$	147	$	0	$	550	$	0	$	150	$	0	$	100	$	218	$	1,165
Collectively evaluated for impairment		1,437		1,317		475		449		1,979		222		91		956		6,926
Balance, September 30, 2012	$	1,584	$	1,317	$	1,025	$	449	$	2,129	$	222	$	191	$	1,174	$	8,091

Loans:

Individually evaluated for impairment	$	9,020	$	6,673	$	2,510	$	0	$	1,616	$	676	$	458	$	1,862	$	22,815
Collectively evaluated for impairment		94,092		129,808		70,482		65,940		72,863		33,474		34,852		149,878		651,389
Balance, September 30, 2013	$	103,112	$	136,481	$	72,992	$	65,940	$	74,479	$	34,150	$	35,310	$	151,740	$	674,204

Individually evaluated for impairment	$	12,467	$	5,736	$	2,731	$	0	$	3,048	$	699	$	471	$	2,455	$	27,607
Collectively evaluated for impairment		84,469		116,978		63,688		64,948		67,395		39,559		20,457		122,379		579,873
Balance, December 31, 2012	$	96,936	$	122,714	$	66,419	$	64,948	$	70,443	$	40,258	$	20,928	$	124,834	$	607,480

Individually evaluated for impairment	$	13,526	$	5,755	$	2,510	$	0	$	3,052	$	705	$	478	$	5,086	$	31,112
Collectively evaluated for impairment		85,660		122,313		61,068		60,187		65,099		37,015		18,196		123,739		573,277
Balance, September 30, 2012	$	99,186	$	128,068	$	63,578	$	60,187	$	68,151	$	37,720	$	18,674	$	128,825	$	604,389




								Total
		Residential		Home				consumer
(dollars in thousands)		mortgage		equity		Other		related		Unallocated		Total
Allowance for loan losses:

Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	870
Collectively evaluated for impairment		69		237		307		613		2,092		8,579
Balance, September 30, 2013	$	69	$	237	$	307	$	613	$	2,092	$	9,449

Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,162
Collectively evaluated for impairment		124		237		238		599		671		8,140
Balance, December 31, 2012	$	124	$	237	$	238	$	599	$	671	$	9,302

Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	0	$	1,165
Collectively evaluated for impairment		135		188		210		533		163		7,622
Balance, September 30, 2012	$	135	$	188	$	210	$	533	$	163	$	8,787

Loans:

Individually evaluated for impairment	$	151	$	387	$	585	$	1,123	$		$	23,938
Collectively evaluated for impairment		24,974		74,693		38,667		138,334				789,723
Balance, September 30, 2013	$	25,125	$	75,080	$	39,252	$	139,457	$		$	813,661

Individually evaluated for impairment	$	85	$	340	$	642	$	1,067	$		$	28,674
Collectively evaluated for impairment		23,426		65,518		39,643		128,587				708,460
Balance, December 31, 2012	$	23,511	$	65,858	$	40,285	$	129,654	$		$	737,134

Individually evaluated for impairment	$	86	$	314	$	485	$	885	$		$	31,997
Collectively evaluated for impairment		21,875		63,284		42,205		127,364				700,641
Balance, September 30, 2012	$	21,961	$	63,598	$	42,690	$	128,249	$		$	732,638