Note 6 - Loans by Type

A summary of loan categories is as follows:

*(In thousands)*	March 31, 2014		December 31, 2013
Commercial and industrial	$	188,918	$	171,304
Real estate
Commercial:
Mortgage		126,770		128,358
Construction		6,712		6,632
Church, church-related:
Mortgage		317,837		326,832
Construction		16,117		9,817
Industrial Revenue Bond		8,717		9,167
Other		30		67
Total loans	$	665,101	$	652,177

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

	Performing						Nonperforming
*(In thousands)*	Current		30-59 Days		60-89 Days		90 Days and Over		Non- accrual		Total Loans
March 31, 2014
Commercial and industrial	$	188,883	$	28	$	-	$	-	$	7	$	188,918
Real estate
Commercial:
Mortgage		126,396		-		-		-		374		126,770
Construction		6,712		-		-		-		-		6,712
Church, church-related:
Mortgage		316,644		-		-		-		1,193		317,837
Construction		16,117		-		-		-		-		16,117
Industrial Revenue Bond		8,717		-		-		-		-		8,717
Other		30		-		-		-		-		30
Total	$	663,499	$	28	$	-	$	-	$	1,574	$	665,101
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 March 31, 2014 and December 31, 2013:

*(In thousands)*	Loans Subject to Normal Monitoring¹		Performing Loans Subject to Special Monitoring ²		Nonperforming Loans Subject to Special Monitoring ²		Total Loans
March 31, 2014
Commercial and industrial	$	186,308	$	2,603	$	7	$	188,918
Real estate
Commercial:
Mortgage		109,580		16,816		374		126,770
Construction		6,712		-		-		6,712
Church, church-related:
Mortgage		314,467		2,177		1,193		317,837
Construction		16,117		-		-		16,117
Industrial Revenue Bond		8,717		-		-		8,717
Other		30		-		-		30
Total	$	641,931	$	21,596	$	1,574	$	665,101
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 March 31, 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 March 31, 2014 and December 31, 2013. There were no loans classified as troubled debt restructuring at March 31, 2014 and December 31, 2013.

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

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

*(In thousands)*	Recorded Investment		Unpaid Principal Balance		Related Allowance for Loan Losses
March 31, 2014
Commercial and industrial:
Nonaccrual	$	7	$	7	$	3
Real estate
Commercial - Mortgage:
Nonaccrual		374		374		-
Church - Mortgage:
Nonaccrual		1,193		1,193		178
Total impaired loans	$	1,574	$	1,574	$	181
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 March 31, 2014 is as follows:

	December 31,		Charge-							March 31,
*(In thousands)*	2013		Offs		Recoveries		Provision			2014
Commercial and industrial	$	3,036	$	-	$	19	$	(267	)	$	2,788
Real estate
Commercial:
Mortgage		3,946		-		221		276			4,443
Construction		151		-		-		(4	)		147
Church, church-related:
Mortgage		4,354		76		1		(67	)		4,212
Construction		124		-		-		68			192
Industrial Revenue Bond		68		-		-		(6	)		62
Other		-		-		-		-			-
Total	$	11,679	$	76	$	241	$	-		$	11,844