Note 7 – Loans by Type

The following tables present a summary of loan categories by segment and aging of loans by loan classification at September 30, 2011 and December 31, 2010:

					90 Days		Total
	30-59		60-89		and		Past				Total
(In thousands)	Days		Days		Over		Due		Current		Loans
September 30, 2011
Commercial and industrial	$	—	$	—	$	—	$	—	$	151,808	$	151,808
Real estate:
Mortgage – Commercial		—		—		451		451		146,262		146,713
Mortgage – Church & related		—		25		—		25		346,340		346,365
Construction – Commercial		—		—		—		—		6,796		6,796
Construction – Church & related		—		—		—		—		39,497		39,497
Industrial revenue bonds		—		—		—		—		806		806
Other		—		—		—		—		400		400
Total	$	—	$	25	$	451	$	476	$	691,909	$	692,385
December 31, 2010
Commercial and industrial	$	105	$	—	$	—	$	105	$	134,956	$	135,061
Real estate:
Mortgage – Commercial		145		—		490		635		150,566		151,201
Mortgage – Church & related		1,954		—		—		1,954		363,424		365,378
Construction – Commercial		—		—		—		—		18,434		18,434
Construction – Church & related		—		—		—		—		36,318		36,318
Industrial revenue bonds		—		—		—		—		1,014		1,014
Other		—		—		—		—		1,227		1,227
Total	$	2,204	$	—	$	490	$	2,694	$	705,939	$	708,633

The following tables present the recorded investment and unpaid principal balance for impaired loans at September 30, 2011 and December 31, 2010:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
September 30, 2011
Commercial and industrial:
Nonaccrual	$	442	$	442	$	430
Troubled debt restructurings continuing to accrue interest		87		87		45
Real estate – mortgage:
Nonaccrual		1,483		1,483		65
Troubled debt restructurings continuing to accrue interest		4,396		4,396		766
Total impaired loans	$	6,408	$	6,408	$	1,306
December 31, 2010
Commercial and industrial:
Nonaccrual	$	46	$	46	$	4
Real estate – mortgage:
Nonaccrual		519		519		116
Total impaired loans	$	565	$	565	$	120

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest, and troubled debt restructurings continuing to accrue interest. Management measures impairment in accordance with FASB ASC 310, “Allowance for Credit Losses.” At September 30, 2011 and December 31, 2010, all impaired loans were evaluated based on the fair value of the collateral. The fair value of the collateral is based upon an observable market price or current appraised value and therefore, the Company classifies these assets as nonrecurring Level 2. No loans were put on non-accrual that were modified within the last 12 months. There were no loans delinquent 90 days or more and still accruing interest at September 30, 2011 and December 31, 2010. At September 30, 2011 there were two loans totaling $4,483,000 classified as troubled debt restructurings, with a total pre-modification loan balance of $4,486,000. There were no troubled debt restructurings at December 31, 2010. There are two foreclosed loans with an aggregate book value of $1,910,000 which have been recorded as other real estate owned (included in other assets) as of September 30, 2011 and December 31, 2010.

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of September 30, 2011 and December 31, 2010:

	Commercial		Real
	and		Estate		Real Estate
(In thousands)	Industrial		Mortgage		Construction		Other		Total
September 30, 2011
Loans subject to normal
monitoring1	$	148,118	$	467,157	$	46,293	$	1,206	$	662,774
Loans subject to special
monitoring2:
Performing		3,248		24,438		—		—		27,686
Nonperforming		442		1,483		—		—		1,925
Total	$	151,808	$	493,078	$	46,293	$	1,206	$	692,385
December 31, 2010
Loans subject to normal
monitoring1	$	130,148	$	495,573	$	54,752	$	2,241	$	682,714
Loans subject to special
monitoring2:
Performing		4,867		20,487		—		—		25,354
Nonperforming		46		519		—		—		565
Total	$	135,061	$	516,579	$	54,752	$	2,241	$	708,633

1		Loans subject to normal monitoring involve borrowers of acceptable-to-strong credit quality and risk, who have the apparent ability to satisfy their loan obligations.
2		Loans subject to special monitoring possess some credit deficiency or potential weakness which requires a high level of management attention.

The following table provides information regarding the changes in the allowance for loan losses by segment from December 31, 2010 to September 30, 2011:

	December 31,		Charge							September 30,
(In thousands)	2010		-Offs		Recoveries		Provision			2011
Commercial and industrial	$	2,728	$	741	$	37	$	1,435		$	3,459
Real estate - mortgage		8,491		28		1		535			8,999
Real estate - construction		656		—		—		(108	)		548
Other		16		—		—		(12	)		4
Total	$	11,891	$	769	$	38	$	1,850		$	13,010