Note 3. Loans

Loans at December 31, 2015 and 2014 are summarized as follows (in thousands):


	2015			2014
Real estate loans:
Construction and land development	$	33,135		$	29,475
Secured by 1-4 family residential		189,286			163,727
Other real estate		181,447			151,802
Commercial and industrial loans		24,048			21,166
Consumer and other loans		11,083			12,240

Total loans	$	438,999		$	378,410
Allowance for loan losses		(5,524	)		(6,718	)

Loans, net	$	433,475		$	371,692

Net deferred loan costs included in the above loan categories were $54 thousand and $130 thousand at December 31, 2015 and 2014, respectively. Consumer and other loans included $257 thousand and $285 thousand of demand deposit overdrafts at December 31, 2015 and 2014, respectively.

The following tables provide a summary of loan classes and an aging of past due loans as of December 31, 2015 and 2014 (in thousands):


	December 31, 2015
	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	$	—	$	—	$	—	$	—	$	33,135	$	33,135	$	1,269	$	—
1-4 family residential		635		18		264		917		188,369		189,286		346		—
Other real estate loans		387		358		790		1,535		179,912		181,447		2,145		—
Commercial and industrial		—		—		92		92		23,956		24,048		94		92
Consumer and other loans		20		—		—		20		11,063		11,083		—		—

Total	$	1,042	$	376	$	1,146	$	2,564	$	436,435	$	438,999	$	3,854	$	92


	December 31, 2014
	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	$	2,441	$	71	$	—	$	2,512	$	26,963	$	29,475	$	1,787	$	—
1-4 family residential		504		323		754		1,581		162,146		163,727		1,342		—
Other real estate loans		554		800		2,519		3,873		147,929		151,802		4,756		—
Commercial and industrial		10		106		—		116		21,050		21,166		115		—
Consumer and other loans		14		—		—		14		12,226		12,240		—		—

Total	$	3,523	$	1,300	$	3,273	$	8,096	$	370,314	$	378,410	$	8,000	$	—

Credit Quality Indicators

As part of the ongoing 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 credit 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:

Pass – Loans classified as pass exhibit acceptable operating trends, balance sheet trends, and liquidity. Sufficient cash flow exists to service the loan. All obligations have been paid by the borrower as agreed.

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.

Loss – Loans classified as loss are considered uncollectable and of such little value that their continuance as bankable assets is not warranted.

The following tables provide an analysis of the credit risk profile of each loan class as of December 31, 2015 and 2014 (in thousands):


	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	26,371	$	2,587	$	4,177	$	—	$	33,135
Secured by 1-4 family residential		182,595		3,376		3,315		—		189,286
Other real estate loans		165,310		9,977		6,160		—		181,447
Commercial and industrial		23,351		432		265		—		24,048
Consumer and other loans		11,083		—		—		—		11,083

Total	$	408,710	$	16,372	$	13,917	$	—	$	438,999


	December 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	20,476	$	2,962	$	6,037	$	—	$	29,475
Secured by 1-4 family residential		152,004		5,058		6,665		—		163,727
Other real estate loans		126,211		14,776		10,815		—		151,802
Commercial and industrial		20,428		463		275		—		21,166
Consumer and other loans		12,240		—		—		—		12,240

Total	$	331,359	$	23,259	$	23,792	$	—	$	378,410