4. Loans, net and allowance for loan losses:

The major classifications of loans outstanding, net of deferred loan origination fees and costs at March 31, 2012 and December 31, 2011 are summarized as follows. Net deferred loan costs were $568 at March 31, 2012, and $563 at December 31, 2011.

	March 31, 2012		December 31, 2011
Commercial	$	172,807	$	160,828
Real estate:
Commercial		149,379		145,554
Residential		116,810		118,125
Consumer		20,227		20,596
Total	$	459,223	$	445,103

The changes in the allowance for loan losses account by major classification of loan for the three months ended March 31, 2012 and 2011, are summarized as follows:

				Real estate
March 31, 2012	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	2,047		$	1,515		$	761		$	198		$	828		$	5,349
Charge-offs		(202	)		(100	)		(21	)		(98	)					(421	)
Recoveries											16						16
Provisions		341			387			36			82			(201	)		645
Ending balance	$	2,186		$	1,802		$	776		$	198		$	627		$	5,589

				Real estate
March 31, 2011	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1,696		$	1,384		$	726		$	243		$	51		$	4,100
Charge-offs		(58	)		(56	)		(8	)		(54	)					(176	)
Recoveries					1						10						11
Provisions		57			139			14			85			126			421
Ending balance	$	1,695		$	1,468		$	732		$	284		$	177		$	4,356

The allocation of the allowance for loan losses and the related loans by major classifications of loans at March 31, 2012 and December 31, 2011 is summarized as follows:

			Real estate
March 31, 2012	Commercial		Commercial		Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Ending balance	$	2,186	$	1,802	$	776	$	198	$	627	$	5,589
Ending balance: individually evaluated for impairment		534		27		73						634
Ending balance: collectively evaluated for impairment	$	1,652	$	1,775	$	703	$	198	$	627	$	4,955
Loans receivable:
Ending balance	$	172,807	$	149,379	$	116,810	$	20,227			$	459,223
Ending balance: individually evaluated for impairment		7,277		4,725		1,133						13,135
Ending balance: collectively evaluated for impairment	$	165,530	$	144,654	$	115,677	$	20,227			$	446,088

			Real estate
December 31, 2011	Commercial		Commercial		Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Ending balance	$	2,047	$	1,515	$	761	$	198	$	828	$	5,349
Ending balance: individually evaluated for impairment		698		40		71		1				810
Ending balance: collectively evaluated for impairment	$	1,349	$	1,475	$	690	$	197	$	828	$	4,539
Loans receivable:
Ending balance	$	160,828	$	145,554	$	118,125	$	20,596			$	445,103
Ending balance: individually evaluated for impairment		8,433		7,832		1,226		1				17,492
Ending balance: collectively evaluated for impairment	$	152,395	$	137,722	$	116,899	$	20,595			$	427,611

The following tables present the major classifications 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 at March 31, 2012 and December 31, 2011:

March 31, 2012	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	160,627	$	5,232	$	2,537	$	4,411	$	172,807
Real estate:
Commercial		137,714		8,601		2,796		268		149,379
Residential		115,677						1,133		116,810
Consumer		20,218		9						20,227
Total	$	434,236	$	13,842	$	5,333	$	5,812	$	459,223

December 31, 2011	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	145,145	$	7,262	$	2,550	$	5,871	$	160,828
Real estate:
Commercial		136,166		3,223		4,995		1,170		145,554
Residential		117,236						889		118,125
Consumer		20,587		9						20,596
Total	$	419,134	$	10,494	$	7,545	$	7,930	$	445,103

Information concerning nonaccrual loans by major loan category at March 31, 2012 and December 31, 2011, is as follows:

	March 31, 2012		December 31, 2011
Commercial	$	4,411	$	5,871
Real estate:
Commercial		268		1,170
Residential		1,133		889
Consumer
Total	$	5,812	$	7,930

The major categories of the loan portfolio by past due status at March 31, 2012 and December 31, 2011, are summarized as follows:

March 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
Commercial	$	673			$	329	$	1,002	$	171,805	$	172,807	$	329
Real estate:
Commercial		1,818	$	94		22		1,934		147,445		149,379		22
Residential		1,269		214				1,483		115,327		116,810
Consumer		332		122		340		794		19,433		20,227		340
Total	$	4,092	$	430	$	691	$	5,213	$	454,010	$	459,223	$	691

December 31, 2011	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans		Loans > 90 Days and Accruing
Commercial	$	408	$	324	$	12	$	744	$	160,084	$	160,828	$	12
Real estate:
Commercial		2,177						2,177		143,377		145,554
Residential		976		217		362		1,555		116,570		118,125		337
Consumer		335		98		311		744		19,852		20,596		311
Total	$	3,896	$	639	$	685	$	5,220	$	439,883	$	445,103	$	660

The following tables summarize information in regards to impaired loans for the three months ended March 31, 2012 and 2011, and for the year ended December 31, 2011, by loan portfolio class:

							For the Quarter Ended
March 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial	$	4,541	$	4,541			$	4,545	$	16
Real estate:
Commercial		996		996				1,004		20
Residential		746		746				760
Consumer
Total		6,283		6,283				6,309		36

With an allowance recorded:
Commercial		2,736		2,736	$	534		4,075		4
Real estate:
Commercial		3,729		3,729		27		3,736		57
Residential		387		387		73		387
Consumer
Total		6,852		6,852		634		8,198		61

Commercial		7,277		7,277		534		8,620		20
Real estate:
Commercial		4,725		4,725		27		4,740		77
Residential		1,133		1,133		73		1,147
Consumer
Total	$	13,135	$	13,135	$	634	$	14,507	$	97

							For the Year Ended
December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial	$	4,316	$	4,316			$	5,759	$	198
Real estate:
Commercial		4,136		4,136				4,123		187
Residential		889		889				948
Consumer								10		1
Total		9,341		9,341				10,840		386

With an allowance recorded:
Commercial		4,117		4,117	$	698		3,504		46
Real estate:
Commercial		3,696		3,696		40		2,940		233
Residential		337		337		71		108		11
Consumer		1		1		1		8
Total		8,151		8,151		810		6,560		290

Commercial		8,433		8,433		698		9,263		244
Real estate:
Commercial		7,832		7,832		40		7,063		420
Residential		1,226		1,226		71		1,056		11
Consumer		1		1		1		18		1
Total	$	17,492	$	17,492	$	810	$	17,400	$	676

							For the Quarter Ended
March 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial	$	6,633	$	6,633			$	6,762	$	105
Real estate:
Commercial		3,837		3,837				3,882		36
Residential		783		783				826
Consumer		14		14				14
Total		11,267		11,267				11,484		141

With an allowance recorded:
Commercial		2,011		2,011	$	573		2,028		8
Real estate:
Commercial		2,219		2,219		62		2,227		33
Residential
Consumer
Total		4,230		4,230		635		4,255		41

Commercial		8,644		8,644		573		8,790		113
Real estate:
Commercial		6,056		6,056		62		6,109		69
Residential		783		783				826
Consumer		14		14				14
Total	$	15,497	$	15,497	$	635	$	15,739	$	182

Included in the commercial loan and commercial real estate categories are troubled debt restructurings that are classified as impaired. Trouble debt restructurings totaled $3,955 at March 31, 2012, and $3,961 at December 31, 2011.

The Company offers a variety of modifications to borrowers. The modification categories offered can generally be described in the following categories:

Rate Modification - A modification in which the interest rate is changed.

Term Modification - A modification in which the maturity date, timing of payments or frequency of payments is changed.

Interest Only Modification - A modification in which the loan is converted to interest only payments for a period of time.

Payment Modification - A modification in which the dollar amount of the payment is changed, other than an interest only modification described above.

Combination Modification - Any other type of modification, including the use of multiple categories above.

Information concerning trouble debt restructurings by major loan category at March 31, 2012 and December 31, 2011 is summarized as follows:

March 31, 2012	Number of Contracts		Accrual Status		Nonaccrual Status		Total Modifications
Commercial		2			$	2,294	$	2,294
Real estate:
Commercial		1	$	1,661			$	1,661
Residential
Consumer
Total		3	$	1,661	$	2,294	$	3,955

December 31, 2011	Number of Contracts		Accrual Status		Nonaccrual Status		Total Modifications
Commercial		2			$	2,294	$	2,294
Real estate:
Commercial		1	$	1,667			$	1,667
Residential
Consumer
Total		3	$	1,667	$	2,294	$	3,961

There were no defaults of loans considered troubled debt restructurings for the three month period ended March 31, 2012. There were no loans modified as troubled debt restructurings for the quarter ended March 31, 2012. There were no charge-offs as a result of the troubled debt restructurings and the impact on interest income was minimal.