The loan portfolio consisted of the following (in thousands):

	December 31,
	2011			2010
Commercial, financial and agricultural	$	223,283		$	177,598
Lease financing receivable		4,276			4,748
Real estate – construction		52,712			54,164
Real estate – commercial		280,798			208,764
Real estate – residential		113,582			72,460
Installment loans to individuals		69,980			62,272
Other		1,674			806
		746,305			580,812
Less allowance for loan losses		(7,276	)		(8,813	)
	$	739,029		$	571,999

The amounts reported in other loans at December 31, 2011 and 2010 includes the DDA overdraft deposits and loans primarily made to non-profit entities reported for each period.

An analysis of the activity in the allowance for loan losses is as follows (in thousands):

	December 31,
	2011			2010			2009
Balance, beginning of year	$	8,813		$	7,995		$	7,586
Provision for loan losses		3,925			5,020			5,450
Recoveries		310			254			227
Loans charged-off		(5,772	)		(4,456	)		(5,268	)
Balance, end of year	$	7,276		$	8,813		$	7,995

During the years ended December 31, 2011, 2010, and 2009, there were approximately $7.3 million, $1.2 million, and $1.1 million, respectively, of transfers from loans to ORE. Included in the $7.3 million added to ORE in 2011 is one credit totaling $4.9 million secured by a condominium complex. The credit is currently producing positive cash flow from net rental income on a monthly basis.

In the opinion of management, all transactions entered into between the Company and such related parties have been and are made in the ordinary course of business, on substantially the same terms and conditions, including interest rates and collateral, as similar transactions with unaffiliated persons and do not involve more than the normal risk of collection.

An analysis of the 2011 activity with respect to these related party loans and commitments to extend credit is as follows (in thousands):

Balance, beginning of year	$	1,937
New loans		97
Repayments and adjustments		(54	)
Balance, end of year	$	1,980

The Company monitors loan concentrations and evaluates individual customer and aggregate industry leverage, profitability, risk rating distributions, and liquidity for each major standard industry classification segment. At December 31, 2011, one industry segment concentration, the oil and gas industry, aggregate more than 10% of the loan portfolio. The Company's exposure in the oil and gas industry, including related service and manufacturing industries, totaled approximately $112.3 million, or 15.1% of total loans. Additionally, the Company's exposure to loans secured by commercial real estate is monitored. At December 31, 2011, loans secured by commercial real estate (including commercial construction and multifamily loans) totaled approximately $322.3 million. Of the $322.3 million, $264.3 million represent CRE loans, 63% of which are secured by owner-occupied commercial properties. Of the $322.2 million in loans secured by commercial real estate, $3.2 million or 1.0% were on nonaccrual status at December 31, 2011 and consisted primarily of five credits totaling $2.6 million.

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment
For the Year Ended December 31, 2011 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction			Commercial			Residential			Consumer			Finance Leases Coml			Other		Total
Allowance for loan losses:
Beginning balance	$	1,664		$	2,963		$	2,565		$	862		$	730		$	29		$	-	$	8,813
Charge-offs		(1,109	)		(2,444	)		(1,246	)		(283	)		(671	)		(19	)		-		(5,772	)
Recoveries		152			14			1			4			138			1			-		310
Provision		1,027			1,128			895			353			513			8			1		3,925
Ending balance	$	1,734		$	1,661		$	2,215		$	936		$	710		$	19		$	1	$	7,276
Ending balance: individually evaluated for impairment	$	240		$	2		$	321		$	21		$	98		$	-		$	-	$	682

Loans:
Ending balance	$	223,283		$	52,712		$	280,798		$	113,582		$	69,980		$	4,276		$	1,674	$	746,305
Ending balance: individually evaluated for impairment	$	2,341		$	901		$	2,271		$	1,142		$	287		$	-		$	-	$	6,942

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment
For the Year Ended December 31, 2010 (in thousands)
				Real Estate
	Coml, Fin, and Agric			Construction			Commercial			Residential			Consumer			Finance Leases Coml			Other		Total
Allowance for loan losses:
Beginning balance	$	2,105		$	2,240		$	1,683		$	631		$	1,315		$	21		$	-	$	7,995
Charge-offs		(1,333	)		(1,478	)		(130	)		(146	)		(1,368	)		(1	)		-		(4,456	)
Recoveries		50			1			1			60			141			1			-		254
Provision		842			2,200			1,011			317			642			8			-		5,020
Ending balance	$	1,664		$	2,963		$	2,565		$	862		$	730		$	29		$	-	$	8,813
Ending balance: individually evaluated for impairment	$	27		$	2,024		$	827		$	84		$	91		$	-		$	-	$	3,053

Loans:
Ending balance	$	177,598		$	54,164		$	208,764		$	72,460		$	62,272		$	4,748		$	806	$	580,812
Ending balance: individually evaluated for impairment	$	3,549		$	10,813		$	8,780		$	1,761		$	275		$	-		$	-	$	25,178

Credit Quality Indicators by Class of Loans
As of December 31, 2011 (in thousands)

Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate – Other		Percentage of Total
Pass	$	216,465	$	36,631	$	264,542		94.88	%
Special mention		1,705		1,104		10,755		2.49	%
Substandard		4,809		3,728		5,501		2.57	%
Doubtful		304		-		-		0.06	%
	$	223,283	$	41,463	$	280,798		100.00	%

Consumer Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential – Construction		Residential – Prime		Residential – Subprime
Pass	$	9,041	$	104,965	$	-	91.33	%
Special mention		1,077		5,152		-	4.99	%
Substandard		1,131		3,465		-	3.68	%
	$	11,249	$	113,582	$	-	100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - Credit Card		Consumer – Other		Finance Leases Commercial		Other Loans
Performing	$	5,182	$	64,497	$	4,276	$	1,674	99.60	%
Nonperforming		18		283		-		-	0.40	%
	$	5,200	$	64,780	$	4,276	$	1,674	100.00	%

Credit Quality Indicators by Class of Loans
As of December 31, 2010 (in thousands)

Commercial Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Commercial, Financial, and Agricultural		Commercial Real Estate Construction		Commercial Real Estate – Other		Percentage of Total
Pass	$	165,581	$	32,061	$	191,089		89.50	%
Special mention		3,661		3,851		3,726		2.59	%
Substandard		8,356		12,077		13,949		7.91	%
	$	177,598	$	47,989	$	208,764		100.00	%

Consumer Credit Exposure
Credit Risk Profile by Creditworthiness Category
	Residential – Construction		Residential – Prime		Residential – Subprime
Pass	$	5,959	$	66,867	$	-	92.61	%
Special mention		-		2,501		-	3.18	%
Substandard		216		3,092		-	4.21	%
	$	6,175	$	72,460	$	-	100.00	%

Consumer and Commercial Credit Exposure
Credit Risk Profile Based on Payment Activity
	Consumer - Credit Card		Consumer – Other		Finance Leases Commercial		Other Loans
Performing	$	5,318	$	56,905	$	4,748	$	806	99.93	%
Nonperforming		-		49		-		-	0.07	%
	$	5,318	$	56,954	$	4,748	$	806	100.00	%

Age Analysis of Past Due Loans by Class of Loans
(in thousands)

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of December 31, 2011
Commercial, financial, and agricultural	$	622	$	242	$	1,856	$	2,720	$	220,563	$	223,283	$	64
Commercial real estate - construction		673		166		358		1,197		40,266		41,463		-
Commercial real estate - other		3,185		-		1,878		5,063		275,735		280,798		-
Consumer - credit card		79		-		19		98		5,102		5,200		19
Consumer - other		410		193		269		872		63,908		64,780		8
Residential - construction		-		-		-		-		11,249		11,249		-
Residential - prime		2,457		469		685		3,611		109,971		113,582		140
Residential - subprime		-		-		-		-		-		-		-
Other loans		118		-		-		118		1,556		1,674		-
Finance leases commercial		-		-		-		-		4,276		4,276		-
	$	7,544	$	1,070	$	5,065	$	13,679	$	732,626	$	746,305	$	231

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
As of December 31, 2010
Commercial, financial, and agricultural	$	1,298	$	114	$	2,405	$	3,817	$	173,781	$	177,598	$	17
Commercial real estate - construction		3,334		-		3,324		6,658		41,331		47,989		-
Commercial real estate - other		642		6,579		1,234		8,455		200,309		208,764		-
Consumer - credit card		50		23		-		73		5,245		5,318		-
Consumer - other		407		79		280		766		56,188		56,954		49
Residential - construction		-		-		-		-		6,175		6,175		-
Residential - prime		1,023		22		1,155		2,200		70,260		72,460		-
Residential - subprime		-		-		-		-		-		-		-
Other loans		102		3		-		105		701		806		-
Finance leases commercial		-		-		-		-		4,748		4,748		-
	$	6,856	$	6,820	$	8,398	$	22,074	$	558,738	$	580,812	$	66

Impaired Loans by Class of Loans
(in thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of December 31, 2011
With no related allowance recorded:
Commercial, financial, and agricultural	$	1,157	$	1,248	$	-	$	2,311	$	2
Commercial real estate – construction		897		963		-		4,511		9
Commercial real estate – other		1,029		1,029		-		2,958		31
Consumer – other		48		59		-		65		3
Residential – prime		851		851		-		1,334		28
Finance leases commercial		-		-		-		4		-
Other loans		-		-		-		3		-
Subtotal:		3,982		4,150		-		11,186		73
With an allowance recorded:
Commercial, financial, and agricultural		1,184		1,184		240		1,140		58
Commercial real estate – construction		4		4		2		1,580		-
Commercial real estate – other		1,242		1,242		321		1,639		98
Consumer – other		239		242		98		202		10
Residential – prime		291		291		21		255		1
Subtotal:		2,960		2,963		682		4,816		167
Totals:
Commercial		5,513		5,670		563		14,143		198
Consumer		287		301		98		267		13
Residential		1,142		1,142		21		1,589		29
Other		-		-		-		3		-
Grand total:	$	6,942	$	7,113	$	682	$	16,002	$	240

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
As of December 31, 2010
With no related allowance recorded:
Commercial, financial, and agricultural	$	3,291	$	3,538	$	-	$	4,036	$	85
Commercial real estate – construction		5,918		9,175		-		5,584		179
Commercial real estate – other		2,407		2,487		-		1,941		114
Consumer – other		90		90		-		80		8
Residential – prime		1,549		1,549		-		1,166		77
Subtotal:		13,255		16,839		-		12,807		463
With an allowance recorded:
Commercial, financial, and agricultural		258		258		27		1,671		6
Commercial real estate – construction		4,895		4,895		2,024		4,098		140
Commercial real estate – other		6,373		6,373		827		6,632		2
Consumer – other		185		185		91		262		3
Residential – prime		212		212		84		320		12
Subtotal:		11,923		11,923		3,053		12,983		163
Totals:
Commercial		23,142		26,726		2,878		23,962		526
Consumer		275		275		91		342		11
Residential		1,761		1,761		84		1,486		89
Grand total:	$	25,178	$	28,762	$	3,053	$	25,790	$	626

Modifications by Class of Loans
(in thousands)

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of December 31, 2011:
Commercial, financial, and agricultural		4	$	447	$	444
Consumer - other		1		14		12
			$	461	$	456

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings as of December 31, 2010:
Commercial, financial, and agricultural		1	$	194	$	194
Commercial real estate - other		1		446		446
Consumer - other		1		13		13
			$	653	$	653

Of the $456,000 of total TDRs, $266,000 occurred during the year ended December 31, 2011 through modification of the original loan terms. One loan identified as a TDR at December 31, 2010 was removed from TDR status during the second quarter of 2011 after the loan was returned to its original loan terms and payments were made as agreed for three months. For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result, is reviewed for specific impairment in accordance with the Company's allowance for loan loss methodology. If it is determined that losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans.

Loans on Nonaccrual Status by Class of Loans
(in thousands)

	December 31, 2011		December 31, 2010
Commercial, financial, and agricultural	$	1,897	$	2,589
Commercial real estate - construction		902		8,220
Commercial real estate - other		2,271		7,378
Consumer - credit card		-		-
Consumer - other		275		261
Residential - construction		-		-
Residential - prime		884		1,155
Residential - subprime		-		-
Other loans		-		-
Finance leases commercial		-		-
	$	6,229	$	19,603

The amount of interest that would have been recorded on nonaccrual loans, had the loans not been classified as nonaccrual, totaled approximately $749,000, $981,000, and $817,000 for the years ended December 31, 2011, 2010, and 2009. Interest actually received on nonaccrual loans at December 31, 2011 and 2010 was $256,000 and $384,000, respectively, and for the year ended December 31, 2009 was not material.