XOTC:PCBS Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

      
FORM 10-Q
(Mark One)
 
 
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended June 30, 2012 
     
   
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the transition period from ______ to ______

COMMISSION FILE NUMBER 1-5735

PROVIDENT COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
 
Delaware 57-1001177
(State or other Jurisdiction of 
 Incorporation or Organization) 
(I.R.S. Employer
Identification No.)

2700 Celanese Road, Rock Hill, South Carolina 29732
(Address of Principal Executive Offices)
 
(803) 325-9400
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X    No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes X    No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer o Accelerated filer o
Non-accelerated filer o
Smaller Reporting Company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) 
Yes __   No X

The Corporation had 1,790,599 shares, $0.01 par value, of common stock issued and outstanding as of August 1, 2012.
 
 
 

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

INDEX
 
Page
 
   
 
   
 
3
 
   
 
4
 
   
 
5
 
   
 
6
 
   
 
7
 
 
8
 
   
 
27
 
   
 
50
 
 
50
 
 
 
 
50
 
 
50
 
 
51
 
 
51
 
 
51
 
 
51
 
 
51
 
 
52
 
 
 

 
 
Part 1.     Financial Information
           
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
           
CONSOLIDATED BALANCE SHEETS
           
June 30, 2012 and December 31, 2011
           
             
   
June 30,
   
December 31,
 
ASSETS
 
2012
   
2011
 
   
(Unaudited)
   
(Audited)
 
   
(DOLLARS IN THOUSANDS)
 
Cash and due from banks
  $ 4,118     $ 4,900  
Interest earning balances with the Federal Reserve
    5,408       4,241  
Federal funds sold
    35,780       14,752  
Cash and cash equivalents
    45,306       23,893  
                 
Investment and mortgage-backed securities-available for sale
    153,468       165,878  
                 
Loans, net of unearned fees
    145,033       160,568  
Allowance for loan losses (ALL)
    (4,576 )     (4,549 )
Loans, net of ALL
    140,457       156,019  
                 
Real estate acquired through foreclosure
    9,640       8,398  
Office properties and equipment, net
    4,669       4,787  
Federal Home Loan Bank stock, at cost
    3,095       3,363  
Federal Reserve Bank stock, at cost
    749       689  
Accrued interest receivable
    1,120       1,340  
Cash surrender value of life insurance
    8,066       7,923  
Other assets
    4,165       4,355  
TOTAL ASSETS
  $ 370,735     $ 376,645  
                 
LIABILITIES
               
                 
Demand and savings deposits
  $ 162,570     $ 158,372  
Time deposits
    118,705       124,877  
Total deposits
    281,275       283,249  
Advances from the Federal Home Loan Bank
    54,500       59,500  
Securities sold under agreements to repurchase
    5,839       5,268  
Floating rate junior subordinated deferrable interest debentures
    12,372       12,372  
Accrued interest payable
    1,136       1,028  
Other liabilities
    2,966       2,758  
TOTAL LIABILITIES
    358,088       364,175  
                 
Commitments and contingencies-Note 5
               
                 
SHAREHOLDERS' EQUITY
               
                 
Serial preferred stock - $0.01 par value
               
authorized - 500, 000 shares
               
issued and outstanding - 9,266 shares
               
at June 30, 2012 and December 31, 2011
    9,258       9,255  
Common stock - $0.01 par value,
               
authorized - 5,000,000 shares,
               
issued-2,192,958 and outstanding-1,790,599 shares at June 30, 2012
               
and December 31, 2011, respectively
    20       20  
Common stock warrant
    25       25  
Additional paid-in capital
    12,919       12,919  
Accumulated other comprehensive loss
    (269 )     (387 )
Retained deficit, substantially restricted
    (3,006 )     (3,062 )
Treasury stock, at cost
    (6,300 )     (6,300 )
TOTAL SHAREHOLDERS' EQUITY
    12,647       12,470  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 370,735     $ 376,645  
                 
See notes to consolidated financial statements.
               
 
 
3

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
 
 
                   
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                       
Three and Six Months Ended June 30, 2012 and 2011 (unaudited)
                       
                         
   
Three Months Ended
    Six Months Ended   
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
   
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
   
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
 
                         
Interest Income:
                       
Loans
  $ 1,805     $ 2,344     $ 3,781     $ 4,788  
Deposits and federal funds sold
    5       4       8       14  
Interest on mortgage-backed securities
    337       729       766       1,361  
Interest and dividends on investment securities
    646       633       1,244       1,149  
Total interest income
    2,793       3,710       5,799       7,312  
                                 
Interest Expense:
                               
Deposit accounts
    340       663       718       1,543  
Floating rate junior subordinated deferrable interest debentures
    70       119       141       237  
Advances from the FHLB and other borrowings
    569       624       1,175       1,243  
Total interest expense
    979       1,406       2,034       3,023  
                                 
Net Interest Income
    1,814       2,304       3,765       4,289  
Provision for loan losses
    195       --       630       --  
Net interest income after
                               
provision for loan losses
    1,619       2,304       3,135       4,289  
                                 
Non-Interest Income:
                               
Fees for financial services
    653       649       1,265       1,284  
Other fees, net
    5       11       10       22  
Other-than-temporary-impairment write-down on securities
    --       (191 )     --       (191 )
Net gain on sale of investments
    286       282       525       278  
Total non-interest income
    944       751       1,800       1,393  
                                 
Non-Interest Expense:
                               
Compensation and employee benefits
    1,037       1,044       2,126       2,107  
Occupancy and equipment
    674       657       1,280       1,288  
Deposit insurance premiums
    211       179       394       357  
Professional services
    192       174       355       310  
Advertising and public relations
    14       9       25       20  
OREO and loan operations
    (65 )     657       76       821  
Items processing
    69       75       137       151  
Telephone
    53       52       89       93  
Other
    223       193       382       398  
Total non-interest expense
    2,408       3,040       4,864       5,545  
                                 
Net income before income taxes
    155       15       71       137  
Expense for income taxes
    12       7       12       18  
Net income
    143       8       59       119  
Accretion of preferred stock to redemption value and preferred dividends accrued
    119       118       237       235  
Net income (loss) to common shareholders
  $ 24     $ (110 )   $ (178 )   $ (116 )
                                 
Net income (loss) per common share (basic)
  $ 0.01     $ (0.06 )   $ (0.10 )   $ (0.06 )
                                 
Net income (loss) per common share (diluted)
  $ 0.01     $ (0.06 )   $ (0.10 )   $ (0.06 )
                                 
Weighted average number of common shares outstanding
                               
                                 
Basic
    1,790,599       1,790,599       1,790,599       1,790,599  
                                 
Diluted
    1,790,599       1,790,599       1,790,599       1,790,599  
                                 
See notes to consolidated financial statements.
                               
 
 
4

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
 
 
                   
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                       
Three and Six Months Ended June 30, 2012 and 2011 (unaudited)
                       
                         
   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2012
   
2011
   
2012
   
2011
 
   
(DOLLARS IN THOUSANDS)
   
(DOLLARS IN THOUSANDS)
 
                         
Net income
  $ 143     $ 8     $ 59     $ 119  
                                 
Other comprehensive income, net of tax:
                               
unrealized holding losses on securities available for sale
                               
arising during period
    896       1,181       444       393  
                                 
Less reclassification adjustment for gains in net income
    (178 )     (52 )     (326 )     (54 )
                                 
Comprehensive income
  $ 861     $ 1,137     $ 177     $ 458  
 
 
5

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
           
CONSOLIDATED STATEMENTS OF CASH FLOWS
           
Six Months Ended June 30, 2012 and 2011 (unaudited)
           
             
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2012
   
2011
 
   
(IN THOUSANDS)
 
             
OPERATING ACTIVITIES:
           
             
Net income
  $ 59     $ 119  
Adjustments to reconcile net income to
               
net cash provided by operating activities:
               
Provision for loan losses
    630       --  
Amortization of securities
    543       346  
Depreciation expense
    182       196  
Recognition of deferred income, net of costs
    (127 )     (61 )
Deferral of fee income, net of costs
    129       72  
Other than temporary impairment charge on  AFS securities
    --       191  
Gain on investment transactions
    (525 )     (278 )
(Gain) loss on OREO sales
    (97 )     51  
OREO impairment
    119       498  
Changes in operating assets and liabilities:
               
Decrease in accrued interest receivable
    220       179  
Increase in cash surrender value of life insurance
    (143 )     (179 )
Decrease in other assets
    126       23  
Increase in other liabilities
    208       93  
Increase in accrued interest payable
    108       192  
                 
Net cash provided by operating activities
    1,432       1,442  
                 
INVESTING ACTIVITIES:
               
                 
Purchase of investment and mortgage-backed securities:
               
Available for sale
    (107,426 )     (33,443 )
Proceeds from sale of investment and mortgage-
               
backed securities:
               
Available for sale
    24,448       24,098  
Proceeds from maturity of investment and mortgage-
               
backed securities:
               
Available for sale
    86,954       36  
Principal repayments on mortgage-backed securities:
               
Available for sale
    8,598       4,988  
Net decrease in loans
    12,840       25,450  
Redemption of FHLB/FRB stock
    208       246  
Proceeds from sales of foreclosed assets, net of costs and improvements
    826       3,149  
Purchase of office properties and equipment
    (64 )     (7 )
                 
Net cash provided by investing activities
    26,384       24,517  
                 
FINANCING ACTIVITIES:
               
                 
Proceeds from redemption of life insurance
    --       1,032  
Decrease in other borrowings
    (4,429 )     (5,029 )
Decrease in deposit accounts
    (1,974 )     (17,559 )
                 
Net cash used by financing activities
    (6,403 )     (21,556 )
                 
NET INCREASE IN CASH
               
AND CASH EQUIVALENTS
    21,413       4,403  
                 
CASH AND CASH EQUIVALENTS
               
AT BEGINNING OF PERIOD
    23,893       24,865  
                 
CASH AND CASH EQUIVALENTS
               
AT END OF PERIOD
  $ 45,306     $ 29,268  
                 
SUPPLEMENTAL DISCLOSURES:
               
                 
Cash paid for:
               
Income taxes
  $ --       --  
Interest
    1,926       2,831  
                 
Non-cash transactions:
               
Loans foreclosed
  $ 2,090     $ 3,299  
Unrealized gain on securities available for sale, net of income tax
    444       393  
                 
See notes to consolidated financial statements.
               
 
 
6

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
 
Six Months Ended June 30, 2012 and 2011 (Unaudited)
 
                                                             
                                       
Retained
   
Accumulated
             
                                 
Additional
   
Earnings,
   
Other
    Treasury     
Total
 
   
Preferred Stock
   
Common Stock
         
Paid-in
   
Substantially
   
Comprehensive
   
 Stock
   
Shareholders'
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Warrants
   
Capital
   
Restricted
   
Income (loss)
   
at Cost
   
Equity
 
    (Dollars in Thousands, Except Share Data)  
BALANCE AT DECEMBER 31, 2010
    9,266     $ 9,250       1,790,599     $ 20     $ 25     $ 12,919     $ (2,867 )   $ (2,778 )   $ (6,300 )   $ 10,269  
                                                                                 
Net income
                                                    119                       119  
                                                                                 
Other comprehensive income, net of tax of $68 on
                                                                               
unrealized holding gains on securities available for sale
                                                                               
arising during period
                                                            393               393  
Less reclassification adjustment for gains and other than
                                                                               
temporary impairment charge in net income
                                                            (54 )             (54 )
                                                                                 
Accretion of Preferred Stock to redemption value
            3                                       (3 )                     --  
                                                                                 
BALANCE AT JUNE 30, 2011
    9,266     $ 9,253       1,790,599     $ 20     $ 25     $ 12,919     $ (2,751 )   $ (2,439 )   $ (6,300 )   $ 10,727  
                                                                                 
BALANCE AT DECEMBER 31, 2011
    9,266     $ 9,255       1,790,599     $ 20     $ 25     $ 12,919     $ (3,062 )   $ (387 )   $ (6,300 )   $ 12,470  
                                                                                 
Net income
                                                    59                       59  
                                                                                 
Other comprehensive income, net of tax of $155 on
                                                                               
unrealized holding losses on securities available for sale
                                                                               
arising during period
                                                            444               444  
                                                                                 
Less reclassification adjustment for gains in net income
                                                            (326 )             (326 )
                                                                                 
Accretion of Preferred Stock to redemption value
            3                                       (3 )                     --  
                                                                                 
BALANCE AT JUNE 30, 2012
    9,266     $ 9,258       1,790,599     $ 20     $ 25     $ 12,919     $ (3,006 )   $ (269 )   $ (6,300 )   $ 12,647  
 
See notes to consolidated financial statements.
 
 
7

 
 
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
 
1.  Presentation of Consolidated Financial Statements

The accompanying unaudited consolidated financial statements of Provident Community Bancshares, Inc. (the “Corporation”) and Provident Community Bank, N.A. (the “Bank”) were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments which are, in the opinion of management, necessary for the fair presentation of the interim consolidated financial statements have been included. All such adjustments are of a normal and recurring nature. The results of operations for the three and six months ended June 30, 2012 are not necessarily indicative of the results which may be expected for the entire calendar year or for any other period. This quarterly report should be read in conjunction with the Corporation’s annual report on Form 10-K for the year ended December 31, 2011. Certain amounts in the prior year’s financial statements have been reclassified to conform to current year classifications.

Recently Issued Accounting Standards

The following is a summary of recent authoritative pronouncements that may affect accounting, reporting, and disclosure of financial information by the Corporation.

In April 2011, the criteria used to determine effective control of transferred assets in the Transfers and Servicing topic of the Accounting Standards Codification (“ASC”) was amended by ASU 2011-03.  The requirement for the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms and the collateral maintenance implementation guidance related to that criterion were removed from the assessment of effective control. The other criteria to assess effective control were not changed.  The amendments were effective for the Corporation beginning January 1, 2012 and did not have a material effect on the financial statements.

ASU 2011-04 was issued in May 2011 to amend the Fair Value Measurement topic of the ASC by clarifying the application of existing fair value measurement and disclosure requirements and by changing particular principles or requirements for measuring fair value or for disclosing information about fair value measurements. The amendments were effective for the Corporation beginning January 1, 2012 and are reflected in Note 7.

The Comprehensive Income topic of the ASC was amended in June 2011.  The amendment eliminates the option to present other comprehensive income as a part of the statement of changes in stockholders’ equity.  The amendment requires consecutive presentation of the statement of net income and other comprehensive income and requires an entity to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The amendments were applied retrospectively. In December 2011, the topic was further amended to defer the effective date of presenting reclassification adjustments from other comprehensive income to net income on the face of the financial statements.

Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) or other standards-setting bodies are not expected to have a material impact on the Corporation’s financial position, results of operations or cash flows.

 
8

 
 
2.  Income (loss) Per Common Share
 
Basic income (loss) per common share amounts for the three and six months ended June 30, 2012 and 2011 were computed based on the weighted average number of common shares outstanding during the period. Diluted income (loss) per share adjusts for the dilutive effect of outstanding common stock options and warrants during the periods utilizing the treasury stock method. There were no common stock equivalents included in the diluted income (loss) per share calculation for the three and six months ended June 30, 2012 and 2011 as all outstanding options and warrants had a higher average exercise price than the average market price and were therefore anti-dilutive. Anti-dilutive common stock equivalents that were excluded in the diluted income (loss) per common share calculation for the six months ended June 30, 2012 and 2011 were 235,380 and 265,543, respectively.
 
3.  Assets Pledged

Approximately $77.3 million and $85.1 million of debt securities at June 30, 2012 and December 31, 2011, respectively, were pledged by the Bank as collateral to secure deposits of the State of South Carolina, and Union, Laurens and York counties along with additional borrowings and repurchase agreements. The Bank pledges as collateral for Federal Home Loan Bank (the “FHLB”) advances commercial and residential real estate mortgage loans under a collateral agreement with the FHLB whereby the Bank maintains, free of other encumbrances, qualifying mortgages (as defined) with unpaid principal balances equal to, when discounted at 75% of the unpaid principal balances, 100% of total advances. As part of the total assets pledged, the Bank will also pledge securities to cover additional advances from the FHLB that exceed the qualifying mortgages balance along with security repurchase lines with various brokerage houses.
 
 
9

 
 
4.  Loans, net

Loans receivable consisted of the following (dollars in thousands):
                                                                                                                                                           
       June 30,        December 31,  
       2012        2011  
Mortgage loans:
               
Fixed-rate residential
  $ 7,301     $ 8,063  
Adjustable-rate residential
    3,588       3,967  
Commercial real estate
    87,309       97,547  
Construction
      --        308  
Total mortgage loans
     98,198        109,885  
Commercial non-real estate
     10,392        12,939  
Consumer loans:
               
Home equity
    14,436       14,590  
Consumer and installment
    21,790       22,939  
Consumer lines of credit
     283        300  
Total consumer loans
     36,509        37,829  
Total loans
    145,099       160,653  
Less:
               
Unamortized loan discount
    (210 )     (231 )
Allowance for loan losses
    (4,576 )     (4,549 )
Net deferred loan origination costs
     144        146  
Total, net
  $ 140,457     $ 156,019  
Weighted-average interest rate of loans
    4.68 %     5.08 %
 
Information about impaired loans for the periods ended June 30, 2012 and December 31, 2011 is as follows (in thousands):

    June 30,     
 December 31,
 
   
2012
   
2011
 
             
Loans receivable for which there is a related allowance for credit losses determined in accordance with ASC 310-10/Statement No. 114
  $   1,636     $   1,923  
Other impaired loans                                                                  
    26,751       25,550  
Total impaired loans                                                                  
  $ 28,387     $ 27,473  
Average monthly balance of impaired loans
  $ 32,602     $ 29,916  
Specific allowance for credit losses                                                                   
  $ 692     $ 439  

 
10

 

Impaired Loans
 
For the Periods Ended June 30, 2012 and December 31, 2011
 
(in thousands)
 
   
 
Unpaid
         
Average
 
June 30, 2012
Principal
 
Recorded
 
Related
 
Recorded
 
 
Balance
 
Investment
 
Allowance
 
Investment
 
   
With no related allowance recorded:
               
   
Commercial
               
Commercial Real Estate
$ 20,113   $ 16,712   $ --   $ 18,412  
Commercial Non Real Estate
  2,727     2,408     --     2,568  
   
Consumer
                       
Consumer - other
  6,163     5,192     --     5,678  
Consumer - home equity
  517     490     --     504  
   
Residential Real Estate
                       
1-4 family
  2,020     1,949     --     1,984  
   
With an allowance recorded:
                       
   
Commercial
                       
Commercial Real Estate
$ 1,564   $ 1,403   $ 619   $ 1,483  
   
Consumer
                       
Consumer - other
  233     233     73     233  
   
Residential Real Estate
                       
1-4 family
  --     --     --     --  
   
Total:
$ 33,337   $ 28,387   $ 692   $ 30,862  
Commercial
  24,404     20,523     619     22,463  
Consumer
  6,913     5,915     73     6,415  
Residential
  2,020     1,949     --     1,984  

 
11

 
 
December 31, 2011
 
Unpaid
Principal
Balance
   
Recorded
Investment
   
Related
Allowance
   
Average
Recorded
Investment
 
                         
With no related allowance recorded:
                       
                         
Commercial
                       
Commercial Real Estate
  $ 22,454     $ 16,949     $ --     $ 19,702  
Commercial Non Real Estate
    2,376       2,075       --       2,225  
 
                               
Consumer
                               
Consumer - other
    5,135       4,203       --       4,669  
Consumer - home equity
    511       491       --       501  
                                 
Residential Real Estate
                               
1-4 Family
    1,891       1,832       --       1,862  
                                 
With a related allowance recorded:
                               
                                 
Commercial
                               
Commercial Real Estate
  $ 1,564     $ 1,403     $ 306     $ 1,483  
Commercial Non Real Estate
    282       281       60       282  
 
                               
Consumer
                               
Consumer - other
    239       239       73       239  
                                 
Total:
  $ 34,452     $ 27,473     $ 439     $ 30,963  
Commercial
    26,676       20,708       366       23,692  
Consumer
    5,885       4,933       73       5,409  
Residential
    1,891       1,832       --       1,862  

At June 30, 2012 and December 31, 2011, loans which are accounted for on a non-accrual basis:

Loans Receivable on Non-accrual Status
 
As of June 30, 2012 and December 31, 2011
 
(in thousands)
 
   
 
June 30,
 
December 31,
 
 
2012
 
2011
 
Commercial
       
Commercial real estate
$ 11,434   $ 11,338  
Commercial non real estate
  1,351     1,340  
   
Consumer
           
Consumer - other
  2,872     2,536  
Consumer - automobile
  39     65  
Consumer - home equity
  356     307  
   
Residential Real Estate
           
1-4 family
  1,171     1,220  
Total
$ 17,223   $ 16,806  

 
12

 
 
Allowance for Loan Losses and Recorded Investment in Loans Receivable
 
(in thousands)
 
   
The following tables present the activity in the allowance for loan losses by portfolio segment as of June 30, 2012 and 2011.
 
   
         
Commercial
                   
   
Commercial
   
Real Estate
   
Consumer
   
Residential
   
Total
 
   
June 30, 2012
                             
   
Allowance for loan losses:
                             
   
Beginning balance
  $ 1,887     $ 1,920     $ 484     $ 258     $ 4,549  
Charge-offs
    (48 )     (299 )     (286 )     (6 )     (639 )
Recoveries
    3       28       4       1       36  
Provisions
    185       383       54       8       630  
Ending balance
  $ 2,027     $ 2,032     $ 256     $ 261     $ 4,576  
   
June 30, 2011
                                       
   
Allowance for loan losses:
                                       
   
Beginning balance
  $ 2,166     $ 4,602     $ 335     $ 276     $ 7,379  
Charge-offs
    (295 )     (777 )     (181 )     (11 )     (1,264 )
Recoveries
    33       138       25       61       257  
Provisions
    --       --       --       --       --  
Ending balance
  $ 1,904     $ 3,963     $ 179     $ 326     $ 6,372  

The following tables present the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2012 and December 31, 2111.
 
         
Commercial
                   
   
Commercial
   
Real Estate
   
Consumer
   
Residential
   
Total
 
   
Allowance for loan losses:
                             
   
June 30, 2012
                             
   
Ending balances attributable
                             
to loans:
                             
Individually evaluated
                             
for impairment
  $ --     $ 619     $ 73     $ -- $       692  
   
Collectively evaluated
                                       
for impairment
    2,027       1,413       183       261       3,884  
   
Ending balance
  $ 2,027     $ 2,032     $ 256     $ 261     $ 4,576  
   
Loans receivable:
                                       
   
Ending balance - total
  $ 10,392     $ 87,309     $ 36,509     $ 10,889     $ 145,099  
   
Ending balances:
                                       
Individually evaluated
                                       
for impairment
  $ 2,408     $ 18,115     $ 5,915     $ 1,949     $ 28,387  
   
Collectively evaluated
                                       
for impairment
  $ 7,984     $ 69,194     $ 30,594     $ 8,940     $ 116,712  

 
13

 
 
         
Commercial
                   
   
Commercial
   
Real Estate
   
Consumer
   
Residential
   
Total
 
   
   
Allowance for loan losses:
                             
   
December 31, 2011