12 Years Ended December 31, 2011 and 2010 2011 2010 Cash Flows from Operating Activities Net income (loss)........................................................................................................................... $ 2,103 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for loan losses...................................................................................................  2,080  2,279 Depreciation and amortization of premises and equipment............................. 422 424 Net amortization of securities discounts ................................................................... 80 232 Amortization of deferred loan costs............................................................................ 199 41 Gains on sales of securities available for sale ........................................................... Origination of loans held for sale.................................................................................. Proceeds from sales of loans held for sale................................................................. 2,459 378 Gains on sales of loans held for sale ............................................................................ – Stock option expense ....................................................................................................... 62 15 Deferred taxes...................................................................................................................... – Bank-owned life insurance.............................................................................................. – (Increase) decrease in accrued interest receivable.................................................  106 (Increase) decrease in other assets............................................................................... 278 Increase (decrease) in accrued interest payable ..................................................... 45 Increase (decrease) in other liabilities......................................................................... 364 Net Cash Provided by Operating Activities........................................................ 3,398 1,516 Cash Flows from Investing Activities Net decrease (increase) in interest bearing time deposits with banks ........... 7,458 Net increase in loans ......................................................................................................... Purchases of securities available for sale ................................................................... Proceeds from maturities, calls and paydowns of securities available for sale.. 7,878 25,086 Proceeds from sales of securities available for sale ...................................................  10,460 47,848 Proceeds from maturities, calls and paydowns of securities held to maturity .....  – 3,500 Purchase of restricted stocks.......................................................................................... Purchase of other investments ...................................................................................... – Purchases of bank premises and equipment ........................................................... Purchase of bank-owned life insurance ..........................................................................  – Net Cash (Used in) Provided by Investing Activities ....................................... 15,976 Cash Flows from Financing Activities Net increase (decrease) in deposits .............................................................................  46,902  Proceeds from FHLB advances....................................................................................... 5,000 – Repayments of FHLB advances...................................................................................... Net proceeds from sale of common stock................................................................. – 2,348 (Repayments) proceeds from collateralized borrowings ..................................... 417 Net Cash Provided by (Used in) Financing Activities...................................... 50,286 Net Increase in Cash and Cash Equivalents........................................................ 4,778 11,056 Cash and Cash Equivalents - Beginning................................................................................ 17,051 5,995 Cash and Cash Equivalents - Ending ...................................................................................... $ 21,829  $ 17,051 Supplementary Cash Flows Information Transfers of loans to other real estate owned ..........................................................  $ 623 $ – Interest on deposits and borrowings ..........................................................................  $ 2,899 $ 3,461 Income taxes ........................................................................................................................  $ 2 $ 2 See Notes to Financial Statements. $ (1,108) (41) (In thousands) (640) (239) (1) (110) (12) (1,291) (7,910) (6,436) (1,199) (417) (24) (93) (32,184) (24,174) (147) (3,804) (55,037) (9,371) (5,000) (149) (5,000) (145) (149) (48,906) (2,220) (378) (1,787) STATEMENTS OF CASH FLOWS