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, 2012 and December 31, 2011 are summarized as follows. Net deferred loan costs were $585 at June 30, 2012, and $563 at December 31, 2011.

	June 30, 2012		December 31, 2011
Commercial	$	167,724	$	160,828
Real estate:
Commercial		154,442		145,554
Residential		115,033		118,125
Consumer		19,855		20,596
Total	$	457,054	$	445,103

The changes in the allowance for loan losses account by major classification of loan for the three and six months ended June 30, 2012 and 2011 are summarized as follows:

				Real estate
June 30, 2012	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance April 1, 2012	$	2,186		$	1,802		$	776		$	198		$	627		$	5,589
Charge-offs		(5	)								(79	)					(84	)
Recoveries		1									20						21
Provisions		(65	)		168			43			58			186			390
Ending balance	$	2,117		$	1,970		$	819		$	197		$	813		$	5,916

				Real estate
June 30, 2012	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance January 1, 2012	$	2,047		$	1,515		$	761		$	198		$	828		$	5,349
Charge-offs		(207	)		(100	)		(21	)		(177	)					(505	)
Recoveries		1									36						37
Provisions		276			555			79			140			(15	)		1,035
Ending balance	$	2,117		$	1,970		$	819		$	197		$	813		$	5,916

				Real estate
June 30, 2011	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
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

				Real estate
June 30, 2011	Commercial			Commercial			Residential			Consumer			Unallocated			Total
Allowance for loan losses:
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

The allocation of the allowance for loan losses and the related loans by major classifications of loans at June 30, 2012 and December 31, 2011 is summarized as follows:

			Real estate
June 30, 2012	Commercial		Commercial		Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Ending balance	$	2,117	$	1,970	$	819	$	197	$	813	$	5,916
Ending balance: individually evaluated for impairment	$	485	$	122	$	118	$	1			$	726
Ending balance: collectively evaluated for impairment	$	1,632	$	1,848	$	701	$	196	$	813	$	5,190
Loans receivable:
Ending balance	$	167,724	$	154,442	$	115,033	$	19,855			$	457,054
Ending balance: individually evaluated for impairment	$	6,650	$	4,799	$	1,418	$	1			$	12,868
Ending balance: collectively evaluated for impairment	$	161,074	$	149,643	$	113,615	$	19,854			$	444,186

			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 June 30, 2012 and December 31, 2011:

June 30, 2012	Pass		Special Mention		Substandard		Doubtful		Total
Commercial	$	155,333	$	5,743	$	2,505	$	4,143	$	167,724
Real estate:
Commercial		142,570		8,727		2,886		259		154,442
Residential		113,912						1,121		115,033
Consumer		19,841		14						19,855
Total	$	431,656	$	14,484	$	5,391	$	5,523	$	457,054

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 June 30, 2012 and December 31, 2011, is as follows:

	June 30, 2012		December 31, 2011
Commercial	$	4,143	$	5,871
Real estate:
Commercial		259		1,170
Residential		1,121		889
Consumer
Total	$	5,523	$	7,930

The major categories of the loan portfolio by past due status at June 30, 2012 and December 31, 2011, are summarized as follows:

June 30, 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	$	1,143	$	100	$	2	$	1,245	$	166,479	$	167,724	$	2
Real estate:
Commercial		1,228		318		22		1,568		152,874		154,442		22
Residential		1,269		397		297		1,950		113,083		115,033		297
Consumer		174		126		416		470		19,385		19,855		416
Total	$	3,814	$	941	$	737	$	5,233	$	451,821	$	457,054	$	737

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 and six months ended June 30, 2012 and 2011, and for the year ended December 31, 2011, by loan portfolio class:

							This Quarter				Year to Date
June 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial	$	3,965	$	3,965				4,220	$	16	$	4,382	$	32
Real estate:
Commercial		980		980				1,006		58		1,005		78
Residential		706		706				803				782
Consumer
Total		5,651		5,651				6,029		74		6,169		110

With an allowance recorded:
Commercial		2,685		2,685	$	485		2,776		41		3,425		45
Real estate:
Commercial		3,819		3,819		122		3,741		7		3,739		64
Residential		712		712		118		763				575
Consumer		1		1		1		1				1
Total		7,217		7,217		726		7,281		48		7,740		109

Commercial		6,650		6,650		485		6,996		57		7,807		77
Real estate:
Commercial		4,799		4,799		122		4,747		65		4,744		142
Residential		1,418		1,418		118		1,566				1,357
Consumer		1		1		1		1				1
Total	$	12,868	$	12,868	$	726	$	13,310	$	122	$	13,909	$	219

							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

							This Quarter				Year to Date
June 30, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
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

Included in the commercial loan and commercial real estate categories are troubled debt restructurings that are classified as impaired. Trouble debt restructurings totaled $3,852 at June 30, 2012, $3,961 at December 31, 2011 and $4,738 at June 30, 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 June 30, 2012 and December 31, 2011 is summarized as follows:

June 30, 2012	Number of Contracts		Accrual Status		Nonaccrual Status		Total Modifications
Commercial		2			$	2,198	$	2,198
Real estate:
Commercial		1	$	1,654			$	1,654
Residential
Consumer
Total		3	$	1,654	$	2,198	$	3,852

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 and six months ended June 30, 2012. There were no loans modified as troubled debt restructurings for the three and six months ended June 30, 2012. There were no charge-offs as a result of the troubled debt restructurings.