NOTE 7. ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for the three month periods ended March 30, 2013 and 2012, and for the year ended December 31, 2012 is as follows:


		Three Months Ended				Year Ended
		March 31,				December 31,
Dollars in thousands		2013		2012		2012

Balance, beginning of year	$	17,933	$	17,712	$	17,712
Losses:
Commercial		17		31		1,273
Commercial real estate
Owner occupied		63		283		636
Non-owner occupied		3		395		806
Construction and development
Land and land development		2,062		365		3,390
Construction		-		-		367
Residential real estate
Non-jumbo		228		126		1,372
Jumbo		60		87		737
Home equity		20		-		5
Consumer		22		32		136
Other		22		20		95
Total		2,497		1,339		8,817
Recoveries:
Commercial		2		2		13
Commercial real estate
Owner occupied		2		3		33
Non-owner occupied		-		8		31
Construction and development
Land and land development		5		5		61
Construction		-		-		-
Real estate - mortgage
Non-jumbo		19		19		81
Jumbo		1		9		86
Home equity		-		60		61
Consumer		21		14		95
Other		34		29		77
Total		84		149		538
Net losses		2,413		1,190		8,279
Provision for loan losses		1,500		2,001		8,500
Balance, end of year	$	17,020	$	18,523	$	17,933

Activity in the allowance for loan losses by loan class during the first three months of 2013 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	$	5,220	$	138	$	782	$	1,387	$	3,269		$	2,617		$	3,942	$	425		$	132		$	21		$	17,933
Charge-offs		2,062		-		17		63		3			228			60		20			22			22			2,497
Recoveries		5		-		2		2		-			19			1		-			21			34			84
Provision		742		140		256		53		(18	)		(76	)		632		(179	)		(26	)		(24	)		1,500
Ending balance	$	3,905	$	278	$	1,023	$	1,379	$	3,248		$	2,332		$	4,515	$	226		$	105		$	9		$	17,020

Allowance related to:
Loans individually
evaluated for impairment	$	1,421	$	-	$	403	$	437	$	152		$	303		$	3,707	$	28		$	14		$	-		$	6,465
Loans collectively
evaluated for impairment		2,484		278		620		942		3,096			2,029			808		198			91			9			10,555
Loans acquired with
deteriorated credit quality		-		-		-		-		-			-			-		-			-			-			-
Total	$	3,905	$	278	$	1,023	$	1,379	$	3,248		$	2,332		$	4,515	$	226		$	105		$	9		$	17,020

Loans
Loans individually
evaluated for impairment	$	28,051	$	-	$	10,486	$	16,007	$	6,858		$	6,019		$	21,450	$	213		$	62		$	-		$	89,146
Loans collectively
evaluated for impairment		48,226		5,782		76,391		135,935		281,617			207,946			41,399		53,552			19,576			3,191		$	873,615
Loans acquired with
deteriorated credit quality		-		-		-		-		-			-			-		-			-			-			-
Total	$	76,277	$	5,782	$	86,877	$	151,942	$	288,475		$	213,965		$	62,849	$	53,765		$	19,638		$	3,191		$	962,761