Note 3. Loans

Loans at December 31, 2011 and 2010 are summarized as follows:


	(in thousands)
	2011		2010
Real estate loans:
Construction and land development	$	48,363	$	52,591
Secured by 1-4 family residential		122,339		121,506
Other real estate loans		181,141		207,371
Commercial and industrial		29,446		40,683
Consumer and other loans		11,151		12,879

Total loans	$	392,440	$	435,030
Allowance for loan losses		12,937		16,036

Loans, net	$	379,503	$	418,994

Consumer and other loans included $325 thousand and $231 thousand of demand deposit overdrafts at December 31, 2011 and 2010, respectively.

The following tables provide a summary of loan classes and an aging of past due loans as of December 31, 2011 and 2010:


	December 31, 2011
	(in thousands)
	30-59 Days Past Due		60-89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing

Real estate loans:
Construction and land development	$	2,267	$	1,029	$	235	$	3,531	$	44,832	$	48,363	$	235	$	—
1-4 family residential		4,179		471		688		5,338		117,001		122,339		3,043		98
Other real estate loans		3,863		562		722		5,147		175,994		181,141		8,367		361
Commercial and industrial		950		93		5		1,048		28,398		29,446		163		—
Consumer and other loans		94		19		14		127		11,024		11,151		33		—

Total	$	11,353	$	2,174	$	1,664	$	15,191	$	377,249	$	392,440	$	11,841	$	459


	December 31, 2010
	(in thousands)
	30-59 Days Past Due		60-89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Loans		Non-Accrual Loans		90 Days or More Past Due and Accruing

Real estate loans:
Construction and land development	$	525	$	—	$	3,665	$	4,190	$	48,401	$	52,591	$	5,780	$	—
1-4 family residential		2,642		178		315		3,135		118,371		121,506		628		315
Other real estate loans		10,225		3,475		751		14,451		192,920		207,371		4,407		283
Commercial and industrial		1,033		3		—		1,036		39,647		40,683		—		—
Consumer and other loans		168		10		1		179		12,700		12,879		2		—

Total	$	14,593	$	3,666	$	4,732	$	22,991	$	412,039	$	435,030	$	10,817	$	598

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans. The Company utilizes a risk grading matrix to assign a rating to each of its loans. The loan ratings are summarized into the following categories: pass, special mention, substandard, doubtful and loss. Pass rated loans include all risk rated credits other than those included in special mention, substandard or doubtful. Loans classified as loss are charged-off. Loan officers assign risk grades to loans at origination and as renewals arise. The Bank's Credit Administration department reviews risk grades for accuracy on a quarterly basis and as delinquency issues arise. In addition, a certain amount of loans are reviewed each year through the Company's internal and external loan review process. A description of the general characteristics of the loan grading categories is as follows:

Special Mention – Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the Bank's credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weakness inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The Company considers all doubtful loans to be impaired and places the loan on non-accrual status.

The following tables provide an analysis of the credit risk profile of each loan class as of December 31, 2011 and 2010:


	December 31, 2011 (in thousands)
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	23,172	$	7,504	$	17,452	$	235	$	48,363
Secured by 1-4 family residential		108,240		5,645		8,266		188		122,339
Other real estate loans		138,255		17,123		22,348		3,415		181,141
Commercial and industrial		23,451		949		4,976		70		29,446
Consumer and other loans		11,058		79		—		14		11,151

Total	$	304,176	$	31,300	$	53,042	$	3,922	$	392,440


	December 31, 2010 (in thousands)
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	21,212	$	5,237	$	21,471	$	4,671	$	52,591
Secured by 1-4 family residential		106,722		4,435		10,349		—		121,506
Other real estate loans		143,874		17,915		43,443		2,139		207,371
Commercial and industrial		34,619		4,033		2,031		—		40,683
Consumer and other loans		12,864		13		1		1		12,879

Total	$	319,291	$	31,633	$	77,295	$	6,811	$	435,030