Note 4: Loans and Allowance for Loan Losses

The Company's lending activities are principally conducted in downeast, midcoast and central Maine. The following table summarizes the composition of the loan portfolio as of December 31, 2013 and 2012:

LOAN PORTFOLIO SUMMARY


		2013			2012

Commercial real estate mortgages	$	336,542		$	324,493
Commercial and industrial		73,972			59,373
Commercial construction and land development		18,129			22,120
Agricultural and other loans to farmers		26,929			24,922
Total commercial loans		455,572			430,908

Residential real estate mortgages		317,115			297,103
Home equity loans		49,565			53,303
Other consumer loans		14,523			19,001
Total consumer loans		381,203			369,407

Tax exempt loans		16,355			15,244

Net deferred loan costs and fees		(273	)		(555	)
Total loans		852,857			815,004
Allowance for loan losses		(8,475	)		(8,097	)
Total loans net of allowance for loan losses	$	844,382		$	806,907

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. The Company's Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing loans and potential problem loans. The Company seeks to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Commercial Real Estate Mortgages: The Bank's commercial real estate mortgage loans are collateralized by liens on real estate, typically have variable interest rates (or five year or less fixed rates) and amortize over a 15 to 20 year period. These loans are underwritten primarily as cash flow loans and secondarily as loans secured by real estate. Payments on loans secured by such properties are largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Accordingly, repayment of these loans may be subject to adverse economic conditions to a greater extent than other types of loans. The Company seeks to minimize these risks in a variety of ways, including giving careful consideration to the property's operating history, future operating projections, current and projected occupancy, location and physical condition in connection with underwriting these loans. The underwriting analysis also includes credit verification, analysis of global cash flows, appraisals and a review of the financial condition of the borrower. Reflecting the Bank's business region, at December 31, 2013, approximately 32.6% of the commercial real estate mortgage portfolio was represented by loans to the lodging industry. The Bank underwrites lodging industry loans as operating businesses, lending primarily to seasonal establishments with stabilized cash flows.

Commercial and Industrial Loans: Commercial and industrial loans are underwritten after evaluating and understanding the borrower's ability to operate profitability, and prudently expand its business. Commercial and industrial loans are primarily made in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. As a general practice, the Bank takes as collateral a lien on any available real estate, equipment or other assets owned by the borrower and obtains a personal guaranty of the borrower or principal. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial and industrial loans involve more credit risk than residential mortgage loans and commercial mortgage loans and, therefore, usually yield a higher return. The increased risk in commercial and industrial loans is principally due to the type of collateral securing these loans. The increased risk also derives from the expectation that commercial and industrial loans generally will be serviced principally from the operations of the business, and, if not successful, these loans are primarily secured by tangible, non-real estate collateral. As a result of these additional complexities, variables and risks, commercial and industrial loans generally require more thorough underwriting and servicing than other types of loans.

Construction and Land Development Loans: The Company makes loans to finance the construction of residential and, to a lesser extent, non-residential properties. Construction loans generally are collateralized by first liens on real estate. The Company conducts periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Underwriting guidelines similar to those described immediately above are also used in the Company's construction lending activities. Construction loans involve additional risks attributable to the fact that loan funds are advanced against a project under construction and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. In many cases the success of the project can also depend upon the financial support/strength of the sponsorship. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company will be able to recover the entire unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time. While the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.

Residential Real Estate Mortgages: The Company originates first-lien, adjustable-rate and fixed-rate, one-to-four-family residential real estate loans for the construction, purchase or refinancing of a single family residential property. These loans are principally collateralized by owner-occupied properties, and are amortized over 10 to 30 years. From time to time the Company will sell longer-term, low rate, residential mortgage loans to the Federal Home Loan Mortgage Corporation ("FHLMC") with servicing rights retained. This practice allows the Company to better manage interest rate risk and liquidity risk. In an effort to manage risk of loss and strengthen secondary market liquidity opportunities, management typically uses secondary market underwriting, appraisal, and servicing guidelines for all loans, including those held in its portfolio. Loans on one-to-four-family residential real estate are mostly originated in amounts of no more than 80% of appraised value or have private mortgage insurance. Mortgage title insurance and hazard insurance are required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through more stringent underwriting standards, including regular inspections throughout the construction period.

Home Equity Loans: The Company originates home equity lines of credit and second mortgage loans (loans which are secured by a junior lien position on one-to-four-family residential real estate). These loans carry a higher risk than first mortgage residential loans as they are in a second position relating to collateral. Risk is reduced through underwriting criteria, which include credit verification, appraisals and evaluations, a review of the borrower's financial condition, and personal cash flows. A security interest, with title insurance when necessary, is taken in the underlying real estate.

Troubled Debt Restructures: A Troubled Debt Restructure ("TDR") results from a modification to a loan to a borrower who is experiencing financial difficulty in which the Bank grants a concession to the debtor that it would not otherwise consider but for the debtor's financial difficulties. Financial difficulty arises when a debtor is bankrupt or contractually past due, or is likely to become so, based upon its ability to pay. A concession represents an accommodation not generally available to other customers, including a below-market interest rate, deferment of principal payments, extension of maturity dates, etc. Such accommodations extended to customers who are not experiencing financial difficulty do not result in TDR classification.

As of December 31, 2013, the Bank had six real estate secured, six commercial and industrial loans, and one other consumer loan, to eight relationships totaling $1,454 that were classified as TDRs. At December 31, 2013, seven TDRs totaling $416 were past due or classified as non-performing.

As of December 31, 2012, the Bank had four real estate secured and three commercial and industrial loans to four relationships totaling $934 that were classified as TDRs. At December 31, 2012, three TDRs totaling $114 were past due or classified as non-performing.

As of December 31, 2011, the Bank had four real estate secured loans totaling $913 that were classified as TDRs, of which one in the amount of $82 was past due and classified as non-performing.

Summary information pertaining to the TDRs granted during the years ended December 31, 2013 and 2012 follows:


	For the Twelve Months Ended					For the Twelve Months Ended
	December 31, 2013					December 31, 2012
			Pre-		Post-			Pre-		Post-
			Modification		Modification			Modification		Modification
			Outstanding		Outstanding			Outstanding		Outstanding
	Number		Recorded		Recorded	Number		Recorded		Recorded
	of Loans		Investment		Investment	of Loans		Investment		Investment

Commercial and industrial loans	3	$	173	$	166	2	$	60	$	60
Total commercial loans	3		173		166	2		60		60

Residential real estate mortgages	1	$	166	$	164	2	$	77	$	77
Home equity loans	1		16		20	0	-	--		--
Other consumer loans	1		14		13	0	-	--		--
Total consumer loans	3		196		197	2		77		77

Total	6	$	369	$	363	4	$	137	$	137

The following table shows the Company's post-modification balance of TDRs listed by type of modification for the twelve months ended December 31, 2013 and 2012:


		2013		2012

Extended maturity and adjusted interest rate	$	79	$	23
Temporary payment amount adjustment		---		54
Court ordered concession		284		60
Total	$	363	$	137

Past Due Loans: Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following tables set forth information regarding past due loans at December 31, 2013 and December 31, 2012. Amounts shown exclude deferred loan origination fees and costs.


																>90 Days
		30-59		60-89		90										Past Due
December 31, 2013		Days		Days		Days or		Total				Total		Non-		and
		Past Due		Past Due		Greater		Past Due		Current		Loans		Accrual		Accruing
Commercial real
estate mortgages	$	786	$	361	$	698	$	1,845		334,697	$	336,542	$	2,046	$	---
Commercial and industrial		29		20		456		505		73,467		73,972		793		---
Commercial construction
and land development		---		---		1,845		1,845		16,284		18,129		1,913		---
Agricultural and other
loans to farmers		22		---		---		22		26,907		26,929		56		---
Residential real
estate mortgages		2,170		1,864		1,649		5,683		311,432		317,115		3,227		---
Home equity		67		---		---		67		49,498		49,565		745		---
Other consumer loans		57		80		41		178		14,345		14,523		60		---
Tax exempt		---		---		---		---		16,355		16,355		---		---
Total	$	3,131	$	2,325	$	4,689	$	10,145	$	842,985	$	853,130	$	8,840	$	---


																>90 Days
December 31, 2012		30-59		60-89		90										Past Due
		Days Past		Days Past		Days or		Total				Total		Non-		and
		Due		Due		Greater		Past Due		Current		Loans		Accrual		Accruing
Commercial real
estate mortgages	$	228	$	238	$	1,041	$	1,507	$	322,986	$	324,493	$	1,888	$	---
Commercial and industrial		22		61		990		1,073		58,300		59,373		818		216
Commercial construction
and land development		---		---		2,359		2,359		19,761		22,120		2,359		---
Agricultural and other
loans to farmers		203		12		490		705		24,217		24,922		664		---
Residential real
estate mortgages		2,452		769		1,951		5,172		291,931		297,103		3,017		---
Home equity		219		---		274		493		52,810		53,303		814		---
Other consumer loans		75		97		77		249		18,752		19,001		72		19
Tax exempt		---		---		---		---		15,244		15,244		---		---
Total	$	3,199	$	1,177	$	7,182	$	11,558	$	804,001	$	815,559	$	9,632	$	235

At December 31, 2013, total other real estate owned amounted to $1,625 compared with $2,780 and $2,699 at December 31, 2012 and 2011.

At December 31, 2013, the Company had no firm commitments to lend additional funds to borrowers with loans in non-accrual status.

Impaired Loans: Impaired loans are all commercial loans for which the Company believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan agreement, as well as all loans modified into a troubled debt restructure, if any. Allowances for losses on impaired loans are determined by the lower of the present value of the expected cash flows related to the loan, using the original contractual interest rate, and its recorded value, or in the case of collateral dependent loans, the lower of the fair value of the collateral, less estimated costs to dispose, and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral less estimated costs to sell.

Details of impaired loans as of December 31, 2013 and December 31, 2012 follows:


		December 31, 2013						December 31, 2012
				Unpaid						Unpaid
		Recorded		Principal		Related		Recorded		Principal		Related
		Investment		Balance		Allowance		Balance		Investment		Allowance
With no related allowance:
Commercial real estate mortgages	$	1,949	$	2,103	$	---	$	2,662	$	3,072	$	---
Commercial and industrial		660		770		---		841		966		----
Commercial construction
and land development		68		68		---		----		---		----
Agricultural and other loans to farmers		56		56		---		664		748		----
Residential real estate loans		442		442		---		77		77		----
Home equity loans		21		21		---		----		----		----
Other consumer		13		13		---	-	----		----		----
Subtotal	$	3,209	$	3,473	$	---	$	4,244	$	4,863	$	---

With an allowance:
Commercial real estate mortgages	$	854	$	854	$	100	$	---	$	---	$	---
Commercial and industrial		150		150		150		---		---		---
Commercial construction
and land development		1,845		3,770		20		2,359		4,329		120
Agricultural and other loans to farmers		---		---		---		---		---		---
Residential real estate loans		---		---		---		---		---		---
Home equity loans		---		---		---		---		---		---
Other consumer		---		---		---		---		---		---
Subtotal	$	2,849	$	4,774	$	270	$	2,359	$	4,329	$	120
Total	$	6,058	$	8,247	$	270	$	6,603	$	9,192	$	120

Details of impaired loans as of December 31, 2013, 2012, and 2011 follows:


		December 31, 2013				December 31, 2012				December 31, 2011
		For the Twelve Months				For the Twelve Months				For the Twelve Months
		Ended				Ended				Ended
		Average				Average				Average
		Recorded		Interest		Recorded		Interest		Recorded		Interest
		Investment		Recorded		Investment		Recorded		Investment		Recorded

With no related allowance:
Commercial real estate mortgages	$	2,387	$	74	$	3,391	$	146	$	3,452	$	105
Commercial and industrial		689		6		813		8		1,212		4
Commercial construction
and land development		133		--		147		--		4,857		--
Agricultural and other loans to farmers		270		--		604		--		213		14
Residential real estate mortgages		323		21		137		5		82		--
Home equity loans		17		2		--		--		--		--
Other consumer		11		1		--		--		--		--
Subtotal	$	3,830	$	104	$	5,092	$	159	$	9,816	$	123

With an allowance:
Commercial real estate mortgages	$	---	$	---	$	---	$	---	$	396	$	---
Commercial and industrial		--		--		--		--		70		--
Commercial construction
and land development		1,967		--		3,172		--		150		--
Agricultural and other loans to farmers		--		--		--		--		--		--
Residential real estate mortgages		--		--		--		--		--		--
Home equity loans		--		--		--		--		--		--
Other consumer		--		--		--		--		--		--
Subtotal	$	1,967	$	---	$	3,172	$	---	$	616	$	---

Total	$	5,797	$	104	$	8,264	$	159	$	10,432	$	123

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator to all categories of commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Loans rated one through five are consistent with the regulators' Pass ratings, and are generally allocated a lesser percentage allocation in the allowance for loan losses than loans rated from six through nine.

Consistent with regulatory guidelines, the Bank provides for the classification of loans which are considered to be of lesser quality as substandard, doubtful, or loss. The Bank considers a loan substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Loans that the Bank classifies as doubtful have all of the weaknesses inherent in those loans that are classified as substandard but also have the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loans that the Bank classifies as loss are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged off. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they surface as uncollectible.

Loans that do not expose the Bank to risk sufficient to warrant classification in one of the aforementioned categories, but which possess some weaknesses, are designated special mention. A special mention loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. This might include loans which the lending officer may be unable to supervise properly because of: lack of expertise, inadequate loan agreement, the poor condition of or lack of control over collateral, failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized may be included in this classification. Special mention assets are not adversely classified and do not expose an institution to sufficient risks to warrant classification.

The following tables summarize the commercial loan portfolio as of December 31, 2013 and December 31, 2012, by credit quality indicator. Credit quality indicators are reassessed for each applicable commercial loan at least annually, or upon receipt and analysis of the borrower's financial statements, when applicable. Consumer loans, which principally consist of residential mortgage loans, are not rated, but are evaluated for credit quality after origination based on delinquency status (see past due loan aging table above).


						Commercial		Agricultural
		Commercial		Commercial		construction		and other
		real estate		and		and land		loans to
December 31, 2013		mortgages		industrial		development		farmers		Total
Pass	$	307,486	$	60,330	$	14,403	$	26,447	$	408,666
Other Assets
Especially Mentioned		19,768		10,568		437		182		30,955
Substandard		9,288		3,074		3,289		300		15,951
Doubtful		--		--		--		--		--
Loss		--		--		--		--		--
Total	$	336,542	$	73,972	$	18,129	$	26,929	$	455,572


						Commercial		Agricultural
		Commercial		Commercial		construction		and other
		real estate		and		and land		loans to
December 31, 2012		mortgages		industrial		development		farmers		Total
Pass	$	293,505	$	46,872	$	17,469	$	23,806	$	381,652
Other Assets
Especially Mentioned		21,522		9,112		2,292		242		33,168
Substandard		9,466		3,389		2,359		874		16,088
Doubtful		--		--		--		--		--
Loss		--		--		--		--		--
Total	$	324,493	$	59,373	$	22,120	$	24,922	$	430,908

Allowance for Loan Losses: The allowance for loan losses (the "allowance") is a reserve established through a provision for loan losses (the "provision") charged to expense, which represents management's best estimate of probable losses inherent within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to provide for estimated loan losses and risks inherent in the loan portfolio. The Company's allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, "Receivables" and allowance allocations calculated in accordance with ASC Topic 450, "Contingencies." Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company's process for determining the appropriate level of the allowance is designed to account for credit deterioration as it occurs. The provision reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance reflects management's continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company's control, including, among other things, the performance of the Company's loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company's allowance for loan losses consists of three principal elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor's ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship level for all commercial loans. When a loan has a classification of seven or higher, the Company analyzes the loan to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance to the loan. Specific valuation allowances are determined by analyzing the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower's industry, among other observable considerations.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are reviewed quarterly based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool, net of any loans for which reserves are already established. The

Company's pools of similar loans include similarly risk-graded groups of, commercial real estate loans, commercial and industrial loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank's lending management and staff; (ii) the effectiveness of the Bank's loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. The results are then used to determine an appropriate general valuation allowance.

Loans identified as losses by management, internal loan review and/or bank examiners, are charged-off. Furthermore, consumer loan accounts are charged-off based on regulatory requirements.

The following tables detail activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2013, 2012, and 2011. The tables also provide details regarding the Company's recorded investment in loans related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of the Company's impairment methodology. Allocation of a portion of the Allowance to one category of loans does not preclude its availability to absorb losses in other categories.


								Commercial
Twelve Months Ended		Commercial						Construction
December 31, 2013		Real			Commercial			and land						Residential						Home			Tax
		Estate			and Industrial			development			Agricultural			Real Estate			Consumer			Equity			Exempt		Total
Beginning Balance	$	4,320		$	1,026		$	515		$	303		$	1,330		$	207		$	255		$	141	$	8,097
Charged Off		(214	)		(405	)		--			(81	)		(406	)		(120	)		(29	)		--		(1,255	)
Recoveries		105			23			--			37			7			23			20			--		215
Provision		614			622			(201	)		76			235			27			18			27		1,418
Ending Balance	$	4,825		$	1,266		$	314		$	335		$	1,166		$	137		$	264		$	168	$	8,475

of which:

Amount for loans
Individually
evaluated for
impairment	$	100		$	150		$	20		$	---		$	---		$	---		$	---		$	---	$	270

Amount for loans
Collectively
evaluated for
impairment	$	4,725		$	1,116		$	294		$	335		$	1,166		$	137		$	264		$	168	$	8,205

Loans individually
Evaluated for
impairment	$	2,046		$	793		$	1,913		$	56		$	---		$	---		$	---		$	---	$	4,808

Loans collectively
Evaluated for
impairment	$	334,496		$	73,179		$	16,216		$	26,873		$	317,115		$	14,523		$	49,565		$	16,355	$	848,322


								Commercial
Twelve Months					Commercial			Construction
Ended		Commercial			and			and land						Residential						Home			Tax
December 31, 2012		Real Estate			Industrial			development			Agricultural			Real Estate			Consumer			Equity			Exempt		Total
Beginning Balance	$	3,900		$	1,321		$	594		$	332		$	1,436		$	286		$	266		$	86	$	8,221
Charged Off		(474	)		(102	)		(344	)		(160	)		(568	)		(294	)		(92	)		--		(2,034	)
Recoveries		9			25			--			82			104			38			--			--		258
Provision		885			(218	)		265			49			358			177			81			55		1,652
Ending Balance	$	4,320		$	1,026		$	515		$	303		$	1,330		$	207		$	255		$	141	$	8,097

of which:

Amount for loans
individually
evaluated for
impairment	$	---		$	--		$	120		$	---		$	--		$	---		$	---		$	---	$	120

Amount for loans
collectively
evaluated for
impairment	$	4,320		$	1,026		$	395		$	303		$	1,330		$	207		$	255		$	141	$	7,977

Loans individually
evaluated for
impairment	$	1,888		$	818		$	2,359		$	664		$	--		$	---		$	---		$	---	$	5,729

Loans collectively
evaluated for
impairment	$	322,605		$	58,555		$	19,761		$	24,258		$	297,103		$	19,001		$	53,303		$	15,244	$	809,830


								Commercial
Twelve Months					Commercial			Construction
Ended		Commercial			and			and land					Residential						Home			Tax
December 31, 2011		Real Estate			Industrial			development			Agricultural		Real Estate			Consumer			Equity			Exempt			Total
Beginning Balance	$	4,260		$	1,237		$	999		$	223	$	1,322		$	73		$	276		$	110		$	8,500
Charged Off		(423	)		(123	)		(1,943	)		--		(254	)		(90	)		(94	)		--			(2,927	)
Recoveries		8			82			77			45		--			41			--		-	--			253
Provision		55			125			1,461			64		368			262			84			(24	)		2,395
Ending Balance	$	3,900		$	1,321		$	594		$	332	$	1,436		$	286		$	266		$	86		$	8,221

of which:

Amount for loans
individually
evaluated for
impairment	$	100		$	135		$	100		$	--	$	---		$	---		$	---		$	---		$	335

Amount for loans
collectively
evaluated for
impairment	$	3,800		$	1,186		$	494		$	332	$	1,436		$	286		$	266		$	86		$	7,886

Loans individually
evaluated for
impairment	$	2,676		$	1,078		$	3,753		$	595	$	---		$	---		$	---		$	---		$	8,102

Loans collectively
evaluated for
impairment	$	282,808		$	61,372		$	26,307		$	25,985	$	239,799		$	22,906		$	51,462		$	9,700		$	720,339

Loan Concentrations: Because of the Company's proximity to Acadia National Park, a large part of the economic activity in the Bank's area is generated from the lodging and hospitality business associated with tourism. At December 31, 2013 and 2012, loans to the lodging and hospitality industry amounted to approximately $114,982 and $105,699, respectively.

Loans to Related Parties: In the ordinary course of business, the Bank has made loans at prevailing rates and terms to directors, officers and other related parties. In management's opinion, such loans do not present more than the normal risk of collectability or incorporate other unfavorable features, and were made under terms that are consistent with the Bank's lending policies.

Loan to related parties at December 31 are summarized below. Balances have been adjusted to reflect changes in status of directors and officers for each year presented.


		2013			2012
Beginning balance	$	2,491		$	3,077
Changes in composition		203			---
New loans		1,017			779
Less: repayments		(377	)		(1,365	)
Ending balance	$	3,334		$	2,491

As of December 31, 2013, and 2012, there were no past due or non-performing loans to related parties.