Allowance for Loan Losses

The Company recorded a provision for loan losses of $184,000 for the three months ended June 30, 2013, compared to a provision for loan losses of $730,000 for the three months ended June 30, 2012. Non-accruals as a percentage of total loans have increased from 2.74% in the quarter ended June 30, 2012 to 2.88% in the quarter ended June 30, 2013. The reserve for loan losses ratio decreased to 1.93% of portfolio loans at June 30, 2013 from 2.02% at December 31, 2012.

The following tables present a rollforward of the changes in the allowance for loan losses balance by class of loan, the balances in the allowance for loan losses and the recorded investment in loans by class of loan and, for the ending loan balances, based on impairment evaluation method as of June 30, 2013 and December 31, 2012.



	June 30, 2013
							(In Thousands)
	Real Estate Construction			Real Estate Secured by Farmland			Real Estate Secured by 1-4 Family Residential			Other Real Estate Loans			Commercial			Consumer			Total
Allowance for loan losses:
Balances as of December 31, 2012	$	1,258		$	135		$	6,276		$	4,348		$	2,098		$	196		$	14,311
Chargeoffs	(123		)	—			(569		)	(97		)	(38		)	(22		)	(849		)
Recoveries	37			—			78			20			8			15			158
Provision (Recovery)	112			(18		)	531			(371		)	(266		)	8			(4		)
Balances as of June 30 2013	$	1,284		$	117		$	6,316		$	3,900		$	1,802		$	197		$	13,616
Ending allowance balance:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	493		$	—		$	3,128		$	913		$	271		$	35		$	4,840
Collectively evaluated for impairment	791			117			3,188			2,987			1,531			162			8,776
Total ending allowance balances	$	1,284		$	117		$	6,316		$	3,900		$	1,802		$	197		$	13,616
Ending loan recorded investment balances:
Individually evaluated for impairment	$	3,048		$	—		$	11,077		$	9,455		$	2,327		$	35		$	25,942
Collectively evaluated for impairment	44,992			11,575			247,001			249,010			114,908			13,571			681,057
Total ending loan balances	$	48,040		$	11,575		$	258,078		$	258,465		$	117,235		$	13,606		$	706,999



	December 31, 2012
						(In Thousands)
	Real Estate Construction			Real Estate Secured by Farmland		Real Estate Secured by 1-4 Family Residential			Other Real Estate Loans			Commercial			Consumer			Total
Allowance for loan losses:
Balances at December 31, 2011	$	897		$	110	$	7,465		$	4,385		$	1,621		$	145		$	14,623
Chargeoffs	(2,152		)	—		(893		)	(760		)	(394		)	(72		)	(4,271		)
Recoveries	2			—		388			86			12			33			521
Provision	2,511			25		(684		)	637			859			90			3,438
Balances at December 31, 2012	$	1,258		$	135	$	6,276		$	4,348		$	2,098		$	196		$	14,311
Ending allowance balance:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	166		$	—	$	2,724		$	1,045		$	338		$	30		$	4,303
Collectively evaluated for impairment	1,092			135		3,552			3,303			1,760			166			10,008
Total ending allowance balances	$	1,258		$	135	$	6,276		$	4,348		$	2,098		$	196		$	14,311
Ending loan recorded investment balances:
Individually evaluated for impairment	$	2,969		$	—	$	10,792		$	10,640		$	2,364		$	30		$	26,795
Collectively evaluated for impairment	47,249			11,876		249,828			244,290			116,209			13,230			682,682
Total ending loan balances	$	50,218		$	11,876	$	260,620		$	254,930		$	118,573		$	13,260		$	709,477