4. LOANS, NET AND ALLOWANCE FOR LOAN LOSSES

The major classifications of loans outstanding, net of deferred loan origination fees and costs at June 30, 2011 and December 31, 2010 are summarized as follows. Net deferred loan costs were $540 at June 30, 2011, and $523 at December 31, 2010.

	June 30, 2011		December 31, 2010
Commercial	$	144,911	$	112,526
Real estate:
Commercial		141,932		136,910
Residential		118,886		119,424
Consumer		20,926		21,912
Total	$	426,655	$	390,772

The changes in the allowance for loan losses account by major classification of loan for the three months and six months ended June 30, 2011 was as follows:


June 30, 2011	Commercial		Commercial real estate		Residential real estate		Consumer		Unallocated		Total
Beginning Balance, April 1, 2011	$	1,695	$	1,468	$	732	$	284	$	177	$	4,356
Charge-offs								23				23
Recoveries				1		1		14				16
Provisions		410		116		1		14		263		804
Ending balance	$	2,105	$	1,585	$	734	$	289	$	440	$	5,153

Beginning Balance, January 1. 2011	$	1,696	$	1,384	$	726	$	243	$	51	$	4,100
Charge-offs		58		56		8		77				199
Recoveries				2		1		24				27
Provisions		467		255		15		99		389		1,225
Ending balance	$	2,105	$	1,585	$	734	$	289	$	440	$	5,153
Ending balance: individually evaluated for impairment	$	1,136	$	52			$	9			$	1,197
Ending balance: collectively evaluated for impairment	$	969	$	1,533	$	734	$	280			$	3,516
Loans receivable:
Ending balance	$	144,911	$	141,932	$	118,886	$	20,926			$	426,655
Ending balance: individually evaluated for impairment	$	8,949	$	6,152	$	1,076	$	21			$	16,198
Ending balance: collectively evaluated for impairment	$	135,962	$	135,780	$	117,810	$	20,905			$	410,457
December 31, 2010
Allowance for loan losses:
Ending balance	$	1,696	$	1,384	$	726	$	243	$	51	$	4,100
Ending balance: individually evaluated for impairment	$	663	$	122	$	9	$	31			$	825
Ending balance: collectively evaluated for impairment	$	1,033	$	1,262	$	717	$	212	$	51	$	3,275
Loans receivable:
Ending balance	$	112,526	$	136,910	$	119,424	$	21,912			$	390,772
Ending balance: individually evaluated for impairment	$	5,916	$	8,923	$	674	$	47			$	15,560
Ending balance: collectively evaluated for impairment	$	106,610	$	127,987	$	118,750	$	21,865			$	375,212

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system:

June 30, 2011:

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	130,293	$	5,669	$	2,689	$	6,260	$	144,911
Real estate:
Commercial		135,154		626		5,155		997		141,932
Residential		117,810				11		1,065		118,886
Consumer		20,896		9		21				20,926
Total	$	404,153	$	6,304	$	7,876	$	8,322	$	426,655

December 31, 2010:

	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	105,869	$	986	$	181	$	5,490	$	112,526
Real estate:
Commercial		118,972		8,836		8,731		371		136,910
Residential		118,794						630		119,424
Consumer		21,890						22		21,912
Total	$	365,525	$	9,822	$	8,912	$	6,513	$	390,772

The following table presents nonaccrual loans by classes of the loan portfolio:

	June 30, 2011		December 31, 2010
Commercial	$	6,260	$	5,490
Real estate:
Commercial		997		371
Residential		1,065		630
Consumer				22
Total	$	8,322	$	6,513

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status:

June 30, 2011:

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivables		Loans Receivable > 90 Days and Accruing
Commercial	$	364		117	$	1,566	$	2,047	$	142,864	$	144,911	$	29
Real estate:
Commercial		953		312		997		2,262		139,670		141,932
Residential		905		551		1,076		2,532		116,354		118,886		11
Consumer		337		76		403		816		20,110		20,926		403
Total	$	2,559	$	1,056	$	4,042	$	7,657	$	418,998	$	426,655	$	443

December 31, 2010:

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivables		Loans Receivable > 90 Days and Accruing
Commercial	$	192	$	81	$	754	$	1,027	$	111,499	$	112,526	$	123
Real estate:
Commercial		1,431				1,049		2,480		134,430		136,910
Residential		1,260		358		626		2,244		117,180		119,424
Consumer		293		133		291		717		21,195		21,912		269
Total	$	3,176	$	572	$	2,720	$	6,468	$	384,304	$	390,772	$	392

The following tables summarize information in regards to impaired loans for the six months ended June 30, 2011, and for the year ended December 31, 2010, by loan portfolio class:

June 30, 2011:

							This Quarter				Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	4,996	$	4,996			$	5,796	$	65	$	6,276	$	170
Real estate:
Commercial		4,096		4,096				4,137		63		4,010		99
Residential		1,076		1,076				1,024				925
Consumer		12		12				12		1		13	$	1
Total		10,180		10,180				10,969		129		11,224		270

With an allowance recorded:
Commercial		3,953		3,953	$	1,136		3,036		13		2,535		21
Real estate:
Commercial		2,056		2,056		52		2,061		33		2,144		66
Residential
Consumer		9		9		9		9				9
Total		6,018		6,018		1,197		5,106		46		4,688		87

Commercial		8,949		8,949		1,136		8,832		78		8,811		191
Real estate:
Commercial		6,152		6,152		52		6,198		96		6,154		165
Residential		1,076		1,076				1,024				925
Consumer		21		21		9		21		1		22		1
Total	$	16,198	$	16,198	$	1,197	$	16,075	$	175	$	15,912	$	357

December 31, 2010:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	304	$	304			$	264	$	12
Real estate:
Commercial		6,263		6,263				6,394		392
Residential		383		383				384		2
Consumer		16		16				20		2
Total		6,966		6,966				7,062		408

With an allowance recorded:
Commercial		5,612		5,612	$	663		5,629		165
Real estate:
Commercial		2,660		2,660		122		2,714		166
Residential		291		291		9		292		5
Consumer		31		31		31		31
Total		8,594		8,594		825		8,666		336

Total:
Commercial		5,916		5,916		663		5,893		177
Real estate:
Commercial		8,923		8,923		122		9,108		558
Residential		674		674		9		676		7
Consumer		47		47		31		51		2
Total	$	15,560	$	15,560	$	825	$	15,728	$	744

Included in the commercial loan category are troubled debt restructurings that were classified as impaired. Trouble debt restructurings totaled $4,738 at June 30, 2011, and $4,185 at December 31, 2010.