(5) Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for September 30, 2011 and September 30, 2010. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

Transactions in the allowance for loan losses are summarized below for nine months ended September 30, 2011 as follows:

September 30, 2011
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance

Commercial and Industrial
Commercial	$	4,415	$	(718	)	$	124	$	(1,591	)	$	2,230
Industrial		698		(455	)		401		(257	)		387

Real Estate
Commercial Construction		4,126		(4,218	)		548		4,217			4,673
Residential Construction		520		--			--		(159	)		361
Commercial		8,030		(12,175	)		517		6,730			3,102
Residential		5,942		(1,291	)		120		(910	)		3,861
Farmland		944		(61	)		1		(317	)		567

Consumer and Other
Consumer		3,074		(192	)		123		(1,371	)		1,634
Other		531		(100	)		6		(342	)		95

	$	28,280	$	(19,210	)	$	1,840	$	6,000		$	16,910

September 30, 2011
	Ending Balance
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Commercial and Industrial
Commercial	$	686	$	1,544	$	2,230
Industrial		7		380		387

Real Estate
Commercial Construction		4,579		94		4,673
Residential Construction		--		361		361
Commercial		1,097		2,005		3,102
Residential		2,994		867		3,861
Farmland		11		556		567

Consumer and Other
Consumer		68		1,566		1,634
Other		--		95		95

Total End of Period Allowance Balance	$	9,442	$	7,468	$	16,910

Total End of Period Loan Balance	$	89,614	$	651,385	$	740,999

The Company determines its individual reserves during its quarterly review of substandard loans. Although not all loans in the substandard category are considered impaired, this quarterly reassessment often results in the identification of individual reserves which are placed against certain loans as part of management's allowance for loan loss calculation.

Transactions in the allowance for loan losses are summarized below for nine months ended September 30, 2010 as follows:

September 30, 2010
	Beginning										Ending
	Balance		Charge-Offs			Recoveries		Provision			Balance

Commercial and Industrial
Commercial	$	3,931	$	(428	)	$	75	$	30		$	3,608
Industrial		779		(252	)		1		27			555

Real Estate
Commercial Construction		7,402		(4,278	)		107		3,430			6,661
Residential Construction		448		--			--		(171	)		277
Commercial		8,790		(7,163	)		140		6,004			7,771
Residential		5,026		(2,280	)		435		1,260			4,441
Farmland		942		(233	)		--		123			832

Consumer and Other
Consumer		2,826		(365	)		230		(193	)		2,498
Other		1,257		(511	)		25		340			1,111

	$	31,401	$	(15,510	)	$	1,013	$	10,850		$	27,754

September 30, 2010
	Ending Balance
	Individually		Collectively
	Evaluated for		Evaluated for
	Impairment		Impairment		Total
Commercial and Industrial
Commercial	$	326	$	3,282	$	3,608
Industrial		--		555		555

Real Estate
Commercial Construction		3,496		3,165		6,661
Residential Construction		--		277		277
Commercial		4,216		3,555		7,771
Residential		1,799		2,642		4,441
Farmland		--		832		832

Consumer and Other
Consumer		74		2,424		2,498
Other		358		753		1,111

Total End of Period Allowance Balance	$	10,269	$	17,485	$	27,754

Total End of Period Loan Balance	$	96,486	$	753,497	$	849,983