Note 7 – Loans by Type

A summary of loan categories by segment and class is as follows:

(In thousands)	June 30, 2011		December 31, 2010
Commercial and industrial	$	161,099	$	135,061
Real estate:
Mortgage – Commercial		134,787		151,201
Mortgage – Church & related		362,711		365,378
Construction – Commercial		15,454		18,434
Construction – Church & related		43,492		36,318
Industrial revenue bonds		869		1,014
Other		374		1,227
Total loans	$	718,786	$	708,633

The following tables present the aging of loans by loan classification at June 30, 2011 and December 31, 2010:

					90 Days		Total
	30-59		60-89		and		Past				Total
(In thousands)	Days		Days		Over		Due		Current		Loans
June 30, 2011
Commercial and industrial	$	—	$	742	$	—	$	742	$	160,357	$	161,099
Real estate:
Mortgage – Commercial		—		1,059		463		1,522		133,265		134,787
Mortgage – Church & related		656		—		—		656		362,055		362,711
Construction – Commercial		—		—		—		—		15,454		15,454
Construction – Church & related		—		—		—		—		43,492		43,492
Industrial revenue bonds		—		—		—		—		869		869
Other		—		—		—		—		374		374
Total	$	656	$	1,801	$	463	$	2,920	$	715,866	$	718,786
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 June 30, 2011 and December 31, 2010:

			Unpaid		Related
	Recorded		Principal		Allowance for
(In thousands)	Investment		Balance		Loan Losses
June 30, 2011
Commercial and industrial:
Nonaccrual	$	1,200	$	1,200	$	926
Troubled debt restructurings continuing to accrue interest		90		90		45
Real estate – mortgage:
Nonaccrual		2,178		2,178		130
Troubled debt restructurings continuing to accrue interest		4,396		4,396		766
Total impaired loans	$	7,864	$	7,864	$	1,867
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 June 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. There were no loans delinquent 90 days or more and still accruing interest at June 30, 2011 and December 31, 2010. At June 30, 2011 there were two loans totaling $4,486,000 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 a book value of $1,910,000 which have been reclassified as other real estate owned (included in other assets) as of June 30, 2011 and December 31, 2010.

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

	Commercial		Real
	and		Estate		Real Estate
(In thousands)	Industrial		Mortgage		Construction		Other		Total
June 30, 2011
Loans subject to normal monitoring1	$	156,629	$	468,047	$	58,946	$	1,243	$	684,865
Loans subject to special monitoring2 :
Performing		3,270		27,273		—		—		30,543
Nonperforming		1,200		2,178		—		—		3,378
Total	$	161,099	$	497,498	$	58,946	$	1,243	$	718,786
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 obligation.
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 June 30, 2011:

	December 31,		Charge						June 30,
( In thousands)	2010		-Offs	Recoveries		Provision			2011
Commercial and industrial	$	2,728	—	$	36	$	1,040		$	3,804
Real estate - mortgage		8,491	—		1		230			8,722
Real estate - construction		656	—		—		40			696
Other		16	—		—		(10	)		6
Total	$	11,891	—	$	37	$	1,300		$	13,228