During the first quarter of 2012, REO decreased by $2.7 million to $4.3 million at March 31, 2012, from $7.0 million at the end of 2011. At March 31, 2012 the Bank’s REO consisted of three one-to-four family residential properties and eight commercial real estate properties, six of which are church buildings. As part of our efforts to reduce non-performing assets, we sold five REO properties for total proceeds of $4.0 million, and recorded a corresponding net gain of $272 thousand, during the first quarter of 2012.
At March 31, 2012 our allowance for loan losses was $15.5 million, or 4.71% of our gross loans receivable, compared to $16.2 million, or 4.73% of our gross loans, at year-end 2011. The ratio of the allowance for loan losses to NPLs, excluding loans held for sale, decreased to 40.96% at March 31, 2012, compared to 42.85% at year-end 2011. Despite the decrease in the allowance ratio, management believes that the remaining loss potential has been reduced as certain losses inherent in our NPLs have been recognized as charge-offs which resulted in a lower ratio of the allowance for loan losses to NPLs. As of March 31, 2012, 67% of our NPLs had already been written down to their adjusted fair value less estimated selling costs, by establishing specific reserves or charged-off as necessary.
Impaired loans at March 31, 2012 were $57.3 million compared to $56.5 million at December 31, 2011. Specific reserves for impaired loans were $2.9 million, or 5.00% of the aggregate impaired loan amount at March 31, 2012, compared to $3.0 million, or 5.28%, at December 31, 2011. Excluding specific reserves for impaired loans, our coverage ratio (general allowance as a percentage of total non-impaired loans) was 4.65% at March 31, 2012, compared to 4.62% at December 31, 2011.
Net loan charge-offs during the first quarter of 2012 were $1.1 million, or 1.30% of average loans, compared to $707 thousand, or 0.66% of average loans, during the first quarter of 2011. Of the $1.3 million gross charge-offs during the first quarter of 2012, $85 thousand were specifically reserved for at year-end 2011. The $1.2 million of charge-offs that were not reserved for at year-end 2011 were primarily related to loans that are in foreclosure and the recent valuation of the underlying collateral reflected a decrease in values. Charge-offs in church loans totaled $643 thousand and represented 51% of charge-offs during 2012. Charge-offs in one-to-four family residential real estate loans totaled $425 thousand and represented 33% of charge-offs during 2012. Charge-offs in commercial real estate loans totaled $204 thousand and represented 16% of charge-offs during 2012.