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 December 31, 2011 and 2010, and for the years then ended, the Company adjusted its historical loss rates for 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 constantly 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 December 31, 2011, compared to an  unallocated amount of $0.1 million, or 1.4% of the total allowance, at December 31, 2010. The following table details the changes in the allowance for loan losses by portfolio segment for the year ended  December 31, 2011.  Year ended December 31, 2011 (In thousands) Commercial and industrial Construction  and land  development Commercial  real estate Residential  real estate Consumer  installment Unallocated Total Allowance for loan losses: Beginning balance $ 972 2,223 2,893 1,336 141 111 $ 7,676 Charge-offs (679) (1,758) (422) (533) (21) — (3,413) Recoveries 34 2 — 155 15 206 Net (charge-offs) recoveries (645) (1,756) (422) (378) (6) — (3,207) Provision 621 1,003 538 405 (111) 2,450 Ending balance $ 948 1,470 3,009 1,363 129 — $ 6,919 page 54