Note 6 – Loans by Type

A summary of loan categories is as follows:

	September 30,		December 31,
*(In thousands)*	2014		2013
Commercial and industrial	$	200,951	$	171,304
Real estate
Commercial:
Mortgage		130,816		128,358
Construction		--		6,632
Church, church-related:
Mortgage		306,925		326,832
Construction		14,275		9,817
Industrial Revenue Bond		24,417		9,167
Other		197		67
Total loans	$	677,581	$	652,177

The following table presents the aging of loans by loan categories at September 30, 2014 and December 31, 2013:

	Performing						Nonperforming
							90 Days
				30-59		60-89		and		Non-		Total
*(In thousands)*	Current		Days		Days		Over		accrual		Loans
September 30, 2014
Commercial and industrial	$	200,951	$	—	$	—	$	—	$	—	$	200,951
Real estate
Commercial:
Mortgage		130,453		—		—		—		363		130,816
Construction		--		—		—		—		—		--
Church, church-related:
Mortgage		305,811		—		—		—		1,114		306,925
Construction		14,275		—		—		—		—		14,275
Industrial Revenue Bond		24,417		—		—		—		—		24,417
Other		197		—		—		—		—		197
Total	$	676,104	$	—	$	—	$	—	$	1,477	$	677,581
December 31, 2013
Commercial and industrial	$	171,293	$	—	$	—	$	—	$	11	$	171,304
Real estate
Commercial:
Mortgage		127,879		—		—		—		479		128,358
Construction		6,632		—		—		—		—		6,632
Church, church-related:
Mortgage		325,091		434		—		—		1,307		326,832
Construction		9,817		—		—		—		—		9,817
Industrial Revenue Bond		9,167		—		—		—		—		9,167
Other		67		—		—		—		—		67
Total	$	649,946	$	434	$	—	$	—	$	1,797	$	652,177

The following table presents the credit exposure of the loan portfolio by internally assigned credit grade as of September 30, 2014 and December 31, 2013:

	Loans Subject to Normal		Performing Loans Subject to Special		Nonperforming Loans Subject to Special
*(In thousands)*	Monitoring¹		Monitoring²		Monitoring²		Total Loans
September 30, 2014
Commercial and industrial	$	195,283	$	5,668	$	—	$	200,951
Real estate
Commercial:
Mortgage		114,123		16,220		363		130,816
Construction		--		—		—		--
Church, church-related:
Mortgage		305,312		499		1,114		306,925
Construction		14,275		—		—		14,275
Industrial Revenue Bond		24,417		—		—		24,417
Other		197		—		—		197
Total	$	653,607	$	22,497	$	1,477	$	677,581
December 31, 2013
Commercial and industrial	$	167,878	$	3,415	$	11	$	171,304
Real estate
Commercial:
Mortgage		119,521		8,358		479		128,358
Construction		6,632		—		—		6,632
Church, church-related:
Mortgage		323,291		2,234		1,307		326,832
Construction		9,817		—		—		9,817
Industrial Revenue Bond		9,167		—		—		9,167
Other		67		—		—		67
Total	$	636,373	$	14,007	$	1,797	$	652,177

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.

Impaired loans consist primarily of nonaccrual loans, loans greater than 90 days past due and still accruing interest and troubled debt restructurings, both performing and nonperforming. Troubled debt restructuring involves the granting of a concession to a borrower experiencing financial difficulty resulting in the modification of terms of the loan, such as changes in payment schedule or interest rate. Management measures impairment in accordance with FASB ASC 310, “Allowance for Credit Losses.” At September 30, 2014 and December 31, 2013, 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 3. There were no loans delinquent 90 days or more and still accruing interest at September 30, 2014 and December 31, 2013. There were no loans classified as troubled debt restructuring at September 30, 2014 and December 31, 2013.

There were no foreclosed loans recorded as other real estate owned (included in other assets) as of September 30, 2014, and December 31, 2013.

The following table presents the recorded investment and unpaid principal balance for impaired loans at September 30, 2014 and December 31, 2013:

			Unpaid		Related
	Recorded		Principal		Allowance for
*(In thousands)*	Investment		Balance		Loan Losses
September 30, 2014
Commercial and industrial:
Nonaccrual	$	—	$	—	$	—
Real estate
Commercial – Mortgage:
Nonaccrual		363		363		—
Church – Mortgage:
Nonaccrual		1,114		1,114		232
Total impaired loans	$	1,477	$	1,477	$	232
December 31, 2013
Commercial and industrial:
Nonaccrual	$	11	$	11	$	6
Real estate
Commercial – Mortgage:
Nonaccrual		479		479		89
Church – Mortgage:
Nonaccrual		1,307		1,307		223
Total impaired loans	$	1,797	$	1,797	$	318

A summary of the activity in the allowance for loan losses from December 31, 2013 to September 30, 2014 is as follows:

	December 31,		Charge-							September 30,
*(In thousands)*	2013		Offs		Recoveries		Provision			2014
Commercial and industrial	$	3,036	$	3	$	34	$	230		$	3,297
Real estate
Commercial:
Mortgage		3,946		—		222		235			4,403
Construction		151		—		—		(151	)		--
Church, church-related:
Mortgage		4,354		76		3		(494	)		3,787
Construction		124		—		—		45			169
Industrial Revenue Bond		68		—		—		133			201
Other		—		—		—		2			2
Total	$	11,679	$	79	$	259	$	--		$	11,859