NOTE 7. ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for the nine month periods ended September 30, 2011 and 2010, and for the year ended December 31, 2010 is as follows:

	Nine Months Ended				Year Ended
	September 30,				December 31,
Dollars in thousands	2011		2010		2010
Balance, beginning of period	$	17,224	$	17,000	$	17,000
Losses:
Commercial		500		406		601
Commercial real estate		577		8,289		9,239
Construction and development		2,446		5,436		7,937
Residential real estate		3,856		2,490		3,836
Consumer		113		246		279
Other		83		123		233
Total		7,575		16,990		22,125
Recoveries:
Commercial		34		30		38
Commercial real estate		69		6		273
Construction and development		8		184		331
Residential real estate		53		125		164
Consumer		72		76		87
Other		63		88		106
Total		299		509		999
Net losses		7,276		16,481		21,126
Provision for loan losses		8,001		18,350		21,350
Balance, end of period	$	17,949	$	18,869	$	17,224

Activity in the allowance for loan losses by loan class during the first nine months of 2011 is as follows:


	Construction & Land Development
	Land &						Commercial Real Estate				Residential Real Estate
	Land								Non-
	Devlop-		Construc-		Commer-		Owner		Owner		Non-				Home		Con-
Dollars in thousands	ment		tion		cial		Occupied		Occupied		jumbo		Jumbo		Equity		sumer			Other		Total

Allowance for loan losses
Beginning balance	$	7,901	$	322	$	323	$	1,108	$	2,940	$	2,419	$	1,316	$	600	$	263		$	32	$	17,224
Charge-offs		2,447		-		500		501		76		2,524		1,098		234		130			65		7,575
Recoveries		8		-		34		37		32		46		6		1		98			37		299
Provision		1,418		45		812		829		224		2,971		1,289		461		(75	)		27		8,001
Ending balance	$	6,880	$	367	$	669	$	1,473	$	3,120	$	2,912	$	1,513	$	828	$	156		$	31	$	17,949

Allowance related to:
Loans individually
evaluated for impairment	$	1,933	$	-	$	103	$	465	$	493	$	823	$	513	$	166	$	-		$	-	$	4,496
Loans collectively
evaluated for impairment		4,947		367		566		1,008		2,627		2,089		1,000		662		156			31		13,453
Loans acquired with
deteriorated credit quality		-		-		-		-		-		-		-		-		-			-		-
Total	$	6,880	$	367	$	669	$	1,473	$	3,120	$	2,912	$	1,513	$	828	$	156		$	31	$	17,949

Loans
Loans individually
evaluated for impairment	$	27,885	$	-	$	3,043	$	13,204	$	13,188	$	6,336	$	14,894	$	409	$	-		$	-	$	78,959
Loans collectively
evaluated for impairment		66,138		9,445		87,379		157,988		240,350		218,163		47,361		50,616		22,988			2,911	$	903,339
Loans acquired with
deteriorated credit quality		-		-		-		-		-		-		-		-		-			-		-
Total	$	94,023	$	9,445	$	90,422	$	171,192	$	253,538	$	224,499	$	62,255	$	51,025	$	22,988		$	2,911	$	982,298