				March 31,		December 31,
(In thousands)				2012		2011
Commercial and industrial			$	56,804	$	54,988
Construction and land development				34,350		39,814
Commercial real estate:
	Owner occupied			74,444		70,202
	Other			98,821		92,233
		Total commercial real estate		173,265		162,435
Residential real estate:
	Consumer mortgage			60,497		57,958
	Investment property			44,686		43,767
		Total residential real estate		105,183		101,725
Consumer installment				10,953		11,454
		Total loans		380,555		370,416
Less: unearned income				(178)		(153)
		Loans, net of unearned income	$	380,377	$	370,263

Loans secured by real estate were approximately 82.2% of the total loan portfolio at March 31, 2012. Due to declines in economic indicators and real estate values, loans secured by real estate may have a greater risk of non-collection than other loans. At March 31, 2012, the Company's geographic loan distribution was concentrated primarily in Lee County, Alabama and surrounding areas.

In accordance with ASC 310, a portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for loan losses. As part of the Company's quarterly assessment of the allowance, the loan portfolio is disaggregated into the following portfolio segments: commercial and industrial, construction and land development, commercial real estate, residential real estate and consumer installment. Where appropriate, the Company's loan portfolio segments are further disaggregated into classes. A class is generally determined based on the initial measurement attribute, risk characteristics of the loan, and an entity's method for monitoring and determining credit risk.

The following describe the risk characteristics relevant to each of the portfolio segments and classes.

Commercial and industrial (“C&I”) — includes loans to finance business operations, equipment purchases, or other needs for small and medium-sized commercial customers. Also included in this category are loans to finance agricultural production. Generally the primary source of repayment is the cash flow from business operations and activities of the borrower.

Construction and land development (“C&D”) — includes both loans and credit lines for the purpose of purchasing, carrying and developing land into commercial developments or residential subdivisions. Also included are loans and lines for construction of residential, multi-family and commercial buildings. Generally the primary source of repayment is dependent upon the sale or refinance of the real estate collateral.

Commercial real estate (“CRE”) — includes loans disaggregated into two classes: (1) owner occupied and (2) other.

Consumer installment — includes loans to individuals both secured by personal property and unsecured. Loans include personal lines of credit, automobile loans, and other retail loans. These loans are underwritten in accordance with the Bank's general loan policies and procedures which require, among other things, proper documentation of each borrower's financial condition, satisfactory credit history, and if applicable, property value.

The following is a summary of current, accruing past due and nonaccrual loans by portfolio class as of March 31, 2012, and December 31, 2011

					Accruing	Accruing	Total
					30-89 Days	Greater than	Accruing	Non-		Total
(In thousands)			Current		Past Due	90 days	Loans	Accrual		Loans
March 31, 2012:
Commercial and industrial			$	56,341	174	209	56,724	80	$	56,804
Construction and land development				29,846	—	—	29,846	4,504		34,350
Commercial real estate:
	Owner occupied			72,542	258	—	72,800	1,644		74,444
	Other			97,103	—	—	97,103	1,718		98,821
		Total commercial real estate		169,645	258	—	169,903	3,362		173,265
Residential real estate:
	Consumer mortgage			59,108	262	22	59,392	1,105		60,497
	Investment property			43,120	395	—	43,515	1,171		44,686
		Total residential real estate		102,228	657	22	102,907	2,276		105,183
Consumer installment				10,846	99	—	10,945	8		10,953
		Total	$	368,906	1,188	231	370,325	10,230	$	380,555


December 31, 2011:
Commercial and industrial			$	53,721	1,191	—	54,912	76	$	54,988
Construction and land development				34,402	317	—	34,719	5,095		39,814
Commercial real estate:
	Owner occupied			68,551	—	—	68,551	1,651		70,202
	Other			90,427	—	—	90,427	1,806		92,233
		Total commercial real estate		158,978	—	—	158,978	3,457		162,435
Residential real estate:
	Consumer mortgage			56,610	400	—	57,010	948		57,958
	Investment property			42,144	845	—	42,989	778		43,767
		Total residential real estate		98,754	1,245	—	99,999	1,726		101,725
Consumer installment				11,397	57	—	11,454	—		11,454
		Total	$	357,252	2,810	—	360,062	10,354	$	370,416

The Company assesses the adequacy of its allowance for loan losses prior to the end of each calendar quarter. The level of the allowance is based upon management's evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect a borrower's ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan loss rates and other pertinent factors, including regulatory recommendations. This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. Loan losses are charged off when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a “confirming event” has occurred which serves to validate that full repayment pursuant to the terms of the loan is unlikely. Allocation of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, is deemed to be uncollectible.

The Company deems loans impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collection of all amounts due according to the contractual terms means that both the interest and principal payments of a loan will be collected as scheduled in the loan agreement.

An impairment allowance is recognized if the fair value of the loan is less than the recorded investment in the loan. The impairment is recognized through the allowance. Loans that are impaired are recorded at the present value of expected future cash flows discounted at the loan's effective interest rate, or if the loan is collateral dependent, impairment measurement is based on the fair value of the collateral, less estimated disposal costs.

The level of allowance maintained is believed by management to be adequate to absorb probable losses inherent in the portfolio at the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries of amounts previously charged-off.

In assessing the adequacy of the allowance, the Company also considers the results of its ongoing independent loan review process. The Company's loan review process assists in determining whether there are loans in the portfolio whose credit quality has weakened over time and evaluating the risk characteristics of the entire loan portfolio. The Company's loan review process includes the judgment of management, the input from our independent loan reviewers, and reviews that may have been conducted by bank regulatory agencies as part of their examination process. The Company incorporates loan review results in the determination of whether or not it is probable that it will be able to collect all amounts due according to the contractual terms of a loan.

As part of the Company's quarterly assessment of the allowance, management divides the loan portfolio into five segments: commercial and industrial loans, construction and land development loans, commercial real estate, residential real estate, and consumer installment loans. The Company analyzes each segment and estimates an allowance allocation for each loan segment.

The allocation of the allowance for loan losses begins with a process of estimating the probable losses inherent for these types of loans. The estimates for these loans are established by category and based on the Company's internal system of credit risk ratings and historical loss data. The estimated loan loss allocation rate for the Company's internal system of credit risk grades is based on its experience with similarly graded loans. For loan segments where the Company believes it does not have sufficient historical loss data, the Company may make adjustments based, in part, on loss rates of peer bank groups. At March 31, 2012 and December 31, 2011, and for the periods then ended, the Company adjusted its historical loss rates for one segment, the commercial real estate portfolio segment, based in part, on loss rates of peer bank groups.

The estimated loan loss allocation for all five loan portfolio segments is then adjusted for management's estimate of probable losses for several “qualitative and environmental” factors. The allocation for qualitative and environmental factors is particularly subjective and does not lend itself to exact mathematical calculation. This amount represents estimated probable inherent credit losses which exist, but have not yet been identified, as of the balance sheet date, and are based upon quarterly trend assessments in delinquent and nonaccrual loans, credit concentration changes, prevailing economic conditions, changes in lending personnel experience, changes in lending policies or procedures and other influencing factors. These qualitative and environmental factors are considered for each of the five loan segments and the allowance allocation, as determined by the processes noted above, is increased or decreased based on the incremental assessment of these factors.

The Company periodically re-evaluates its practices in determining the allowance for loan losses. During the fourth quarter of 2011, the Company's management decided to eliminate a previously unallocated component of the allowance. As a result, the Company had no unallocated amount included in the allowance at March 31, 2012 and December 31, 2011, respectively.

The following table details the changes in the allowance for loan losses by portfolio segment.

			March 31, 2012
(In thousands)			Commercial and industrial	Construction and land development	Commercial real estate	Residential real estate	Consumer installment	Unallocated		Total
Quarter ended:
Beginning balance		$	948	1,470	3,009	1,363	129	—	$	6,919
Charge-offs			—	—	—	(33)	(7)	—		(40)
Recoveries			3	—	—	6	8	—		17
	Net (charge-offs) recoveries		3	—	—	(27)	1	—		(23)
Provision			(106)	(31)	807	(4)	(66)	—		600
Ending balance		$	845	1,439	3,816	1,332	64	—	$	7,496

			March 31, 2011
(In thousands)			Commercial and industrial	Construction and land development	Commercial real estate	Residential real estate	Consumer installment	Unallocated		Total
Quarter ended:
Beginning balance		$	972	2,223	2,893	1,336	141	111	$	7,676
Charge-offs			(56)	(33)	(339)	(57)	(1)	—		(486)
Recoveries			11	1	—	49	4	—		65
	Net (charge-offs) recoveries		(45)	(32)	(339)	(8)	3	—		(421)
Provision			215	66	143	(44)	58	162		600
Ending balance		$	1,142	2,257	2,697	1,284	202	273	$	7,855

The following table presents an analysis of the allowance for loan losses and recorded investment in loans by portfolio segment and impairment methodology as of March 31, 2012 and December 31, 2011.

			Collectively evaluated (1)		Individually evaluated (2)		Total
			Allowance	Recorded	Allowance	Recorded	Allowance	Recorded
			for loan	investment	for loan	investment	for loan	investment
(In thousands)			losses	in loans	losses	in loans	losses	in loans
March 31, 2012:
Commercial and industrial		$	845	56,598	—	206	845	56,804
Construction and land development			1,118	29,960	321	4,390	1,439	34,350
Commercial real estate			2,509	169,051	1,307	4,214	3,816	173,265
Residential real estate			996	103,596	336	1,587	1,332	105,183
Consumer installment			64	10,953	—	—	64	10,953
	Total	$	5,532	370,158	1,964	10,397	7,496	380,555

December 31, 2011:
Commercial and industrial		$	948	54,772	—	216	948	54,988
Construction and land development			1,323	34,719	147	5,095	1,470	39,814
Commercial real estate			2,201	158,053	808	4,382	3,009	162,435
Residential real estate			1,097	100,432	266	1,293	1,363	101,725
Consumer installment			129	11,454	—	—	129	11,454
	Total	$	5,698	359,430	1,221	10,986	6,919	370,416

(1)	Represents loans collectively evaluated for impairment in accordance with ASC 450-20, Loss Contingencies (formerly FAS 5), and
	pursuant to amendments by ASU 2010-20 regarding allowance for unimpaired loans.
(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-30, Receivables (formerly FAS 114), and
	pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan portfolio segments and classes. These categories are utilized to develop the associated allowance for loan losses using historical losses adjusted for current economic conditions and are defined as follows:

				March 31, 2012
(In thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
Commercial and industrial			$	55,694	242	788	80	$	56,804
Construction and land development				28,446	405	995	4,504		34,350
Commercial real estate:
	Owner occupied			66,836	4,910	1,054	1,644		74,444
	Other			88,283	617	8,203	1,718		98,821
		Total commercial real estate		155,119	5,527	9,257	3,362		173,265
Residential real estate:
	Consumer mortgage			52,684	1,881	4,827	1,105		60,497
	Investment property			39,768	1,561	2,186	1,171		44,686
		Total residential real estate		92,452	3,442	7,013	2,276		105,183
Consumer installment				10,589	221	135	8		10,953
		Total	$	342,300	9,837	18,188	10,230	$	380,555

				December 31, 2011
(In thousands)				Pass	Special Mention	Substandard Accruing	Nonaccrual		Total loans
Commercial and industrial			$	52,834	1,359	719	76	$	54,988
Construction and land development				33,373	266	1,080	5,095		39,814
Commercial real estate:
	Owner occupied			62,543	4,951	1,057	1,651		70,202
	Other			81,584	622	8,221	1,806		92,233
		Total commercial real estate		144,127	5,573	9,278	3,457		162,435
Residential real estate:
	Consumer mortgage			50,156	1,575	5,279	948		57,958
	Investment property			38,732	2,225	2,032	778		43,767
		Total residential real estate		88,888	3,800	7,311	1,726		101,725
Consumer installment				11,078	248	128	—		11,454
		Total	$	330,300	11,246	18,516	10,354	$	370,416

The following tables present details related to the Company's impaired loans. Loans which have been fully charged-off do not appear in the following table. The related allowance generally represents the following components which correspond to impaired loans:

The following tables set forth certain information regarding the Company's impaired loans that were individually evaluated for impairment at March 31, 2012 and December 31, 2011.


				March 31, 2012
(In thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial and industrial			$	206	—	206
Construction and land development				2,879	(1,572)	1,307
Commercial real estate:
	Owner occupied			361	(11)	350
	Other			510	(53)	457
		Total commercial real estate		871	(64)	807
Residential real estate:
	Consumer mortgages			—	—	—
	Investment property			—	—	—
		Total residential real estate		—	—	—
Consumer installment				—	—	—
		Total	$	3,956	(1,636)	2,320
With allowance recorded:
Commercial and industrial			$	—	—	—	$	—
Construction and land development				3,288	(205)	3,083		321
Commercial real estate:
	Owner occupied			2,252	(36)	2,216		761
	Other			1,242	(51)	1,191		546
		Total commercial real estate		3,494	(87)	3,407		1,307
Residential real estate:
	Consumer mortgages			992	(106)	886		80
	Investment property			715	(14)	701		256
		Total residential real estate		1,707	(120)	1,587		336
Consumer installment				—	—	—		—
		Total	$	8,489	(412)	8,077	$	1,964
		Total impaired loans	$	12,445	(2,048)	10,397	$	1,964

(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

				December 31, 2011
(In thousands)				Unpaid principal balance (1)	Charge-offs and payments applied (2)	Recorded investment (3)		Related allowance
With no allowance recorded:
Commercial and industrial			$	216	—	216
Construction and land development				3,958	(1,572)	2,386
Commercial real estate:
	Owner occupied			361	(11)	350
	Other			655	(50)	605
		Total commercial real estate		1,016	(61)	955
Residential real estate:
	Consumer mortgages			—	—	—
	Investment property			—	—	—
		Total residential real estate		—	—	—
Consumer installment				—	—	—
		Total	$	5,190	(1,633)	3,557
With allowance recorded:
Commercial and industrial			$	—	—	—	$	—
Construction and land development				2,882	(173)	2,709		147
Commercial real estate:
	Owner occupied			2,255	(29)	2,226		544
	Other			1,242	(41)	1,201		264
		Total commercial real estate		3,497	(70)	3,427		808
Residential real estate:
	Consumer mortgages			1,707	(797)	910		103
	Investment property			390	(7)	383		163
		Total residential real estate		2,097	(804)	1,293		266
Consumer installment				—	—	—		—
		Total	$	8,476	(1,047)	7,429	$	1,221
		Total impaired loans	$	13,666	(2,680)	10,986	$	1,221

(1) Unpaid principal balance represents the contractual obligation due from the customer.
(2) Charge-offs and payments applied represents cumulative charge-offs taken, as well as interest payments that have been
	applied against the outstanding principal balance subsequent to the loans being placed on nonaccrual status.
(3) Recorded investment represents the unpaid principal balance less charge-offs and payments applied; it is shown before
	any related allowance for loan losses.

The following table provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans after impairment by portfolio segment and class during the respective period.

			Quarter ended March 31, 2012				Quarter ended March 31, 2011
				Average	Total interest			Average	Total interest
				recorded	income			recorded	income
(In thousands)				investment	recognized			investment	recognized
Impaired loans:
Commercial and industrial			$	211	$	4	$	514	$	—
Construction and land development				4,902		—		4,072		—
Commercial real estate:
	Owner occupied			2,570		17		3,010		3
	Other			1,691		—		1,524		—
		Total commercial real estate		4,261		17		4,534		3
Residential real estate:
	Consumer mortgages			894		—		1,943		—
	Investment property			463		—		89		—
		Total residential real estate		1,357		—		2,032		—
Consumer installment				—		—		—		—
		Total	$	10,731	$	21	$	11,152	$	3

Impaired loans also include troubled debt restructurings (“TDRs”). In the normal course of business, management grants concessions to borrowers, which would not otherwise be considered where the borrowers are experiencing financial difficulty. A concession may include, but is not limited to, reduction of the stated interest rate of the loan, reduction of accrued interest, extension of the maturity date or reduction of the face amount or maturity amount of the debt. A concession has been granted when, as a result of the restructuring, the Bank does not expect to collect all amounts due, including interest at the original stated rate. A concession may have also been granted if the debtor is not able to access funds elsewhere at a market rate for debt with similar risk characteristics as the restructured debt. The Company's determination of whether a loan modification is a TDR considers the individual facts and circumstances surrounding each modification. As part of the credit approval process, the restructured loans are evaluated for adequate collateral protection in determining the appropriate accrual status at the time of restructure.

Similar to other impaired loans, TDRs are measured for impairment based on the present value of expected payments using the loan's original effective interest rate as the discount rate, or the fair value of the collateral, less selling costs if the loan is collateral dependent. If the recorded investment in the loan exceeds the measure of fair value, impairment is recognized by establishing a valuation allowance as part of the allowance for loan losses or a charge-off to the allowance for loan losses. In periods subsequent to the modification, all TDRs are evaluated, including those that have payment defaults, for possible impairment.

At March 31, 2012 and December 31, 2011, the Company had impaired loans classified as TDRs of $8.3 million and $9.6 million, respectively. The Company had $1.1 million in accruing TDRs at both March 31, 2012 and December 31, 2011. For impaired loans classified as TDRs, the related allowance for loan losses was approximately $1.4 million and $1.0 million at March 31, 2012 and December 31, 2011, respectively. At March 31, 2012, there were no significant outstanding commitments to advance additional funds to customers whose loans had been restructured.

Effective July 1, 2011, the Company adopted ASU 2011-02, A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring. As such, the Company reassessed all restructurings that occurred on or after January 1, 2011 for identification and disclosure as TDRs.

The following table summarizes the recorded investment in loans modified in a TDR both before and after their modification during the

			Quarter ended March 31, 2012				Quarter ended March 31, 2011
					Pre-	Post -			Pre-	Post -
					modification	modification			modification	modification
			Number		outstanding	outstanding	Number		outstanding	outstanding
			of		recorded	recorded	of		recorded	recorded
(Dollars in thousands)			contracts		investment	investment	contracts		investment	investment
TDRs:
Commercial and industrial			—	$	—	—	—	$	—	—
Construction and land development			2		2,842	1,753	—		—	—
Commercial real estate:
	Owner occupied		1		818	818	2		1,098	811
	Other		2		1,804	1,657	—		—	—
		Total commercial real estate	3		2,622	2,475	2		1,098	811
Residential real estate:
	Consumer mortgages		—		—	—	—		—	—
	Investment property		—		—	—	—		—	—
		Total residential real estate	—		—	—	—		—	—
Consumer installment			—		—	—	—		—	—
		Total	5	$	5,464	4,228	2	$	1,098	811

The majority of the loans modified in a TDR during the quarter ended March 31, 2012 and 2011, respectively, included delays in required payments of principal and/or interest or where the only concession granted by the Company was that the interest rate at renewal was not considered to be a market rate. For the quarter ended March 31, 2012, decreases in the post modification outstanding recorded investment were due to principal payments made by borrowers at the date of modification. For the quarter ended March 31, 2011, one of the modifications was an A/B note restructuring, where the B note was charged off. Total charge-offs related to B notes during the quarter ended March 31, 2011 were approximately $0.3 million.

The following table summarizes the recorded investment in loans modified in a TDR within the previous 12 months for which there was a payment default (defined as 90 days or more past due) during the

				Quarter ended March 31, 2012				Quarter ended March 31, 2011
			Number of			Recorded		Number of		Recorded
(Dollars in thousands)			Contracts			investment	(1)	Contracts		investment	(1)
TDRs:
Commercial and industrial				—	$	—		—	$	—
Construction and land development				1		2,386		—		—
Commercial real estate:
	Owner occupied			—		—		—		—
	Other			—		—		—		—
		Total commercial real estate		—		—		—		—
Residential real estate:
	Consumer mortgages			—		—		1		204
	Investment property			—		—		—		—
		Total residential real estate		—		—		1		204
Consumer installment				—		—		—		—
		Total		1	$	2,386		1	$	204

(1) Amount as of applicable month end during the respective period for which there was a payment default.