Note 3. Loans

Loans at December 31, 2016 and 2015 are summarized as follows (in thousands):


	2016			2015
Real estate loans:
Construction and land development	$	34,699		$	33,135
Secured by 1-4 family residential		198,763			189,286
Other real estate		211,210			181,447
Commercial and industrial loans		29,981			24,048
Consumer and other loans		11,414			11,083

Total loans	$	486,067		$	438,999
Allowance for loan losses		(5,321	)		(5,524	)

Loans, net	$	480,746		$	433,475

Net deferred loan fees included in the above loan categories were $142 thousand at December 31, 2016 and net deferred loan costs included in the above loan categories were $54 thousand at December 31, 2015. Consumer and other loans included $264 thousand and $257 thousand of demand deposit overdrafts at December 31, 2016 and 2015, respectively.

The following tables provide a summary of loan classes and an aging of past due loans as of December 31, 2016 and 2015 (in thousands):


	December 31, 2016
	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	$	—	$	40	$	—	$	40	$	34,659	$	34,699	$	1,033	$	—
1-4 family residential		980		170		410		1,560		197,203		198,763		413		84
Other real estate loans		321		701		—		1,022		210,188		211,210		74		—
Commercial and industrial		36		309		32		377		29,604		29,981		—		32
Consumer and other loans		19		7		—		26		11,388		11,414		—		—

Total	$	1,356	$	1,227	$	442	$	3,025	$	483,042	$	486,067	$	1,520	$	116


	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

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 Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses 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, 2016 and 2015 (in thousands):


	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful		Total
Real estate loans:
Construction and land development	$	29,416	$	2,402	$	2,881	$	—	$	34,699
Secured by 1-4 family residential		193,395		3,295		2,073		—		198,763
Other real estate loans		200,009		6,990		4,211		—		211,210
Commercial and industrial		29,456		386		139		—		29,981
Consumer and other loans		11,414		—		—		—		11,414

Total	$	463,690	$	13,073	$	9,304	$	—	$	486,067


	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