NOTE C - LOANS:

The composition of the loan portfolio at December 31, 2014, 2013 and 2012 is as follows (in thousands):


December 31,	2014		2013		2012

Gaming	$	31,353	$	29,570	$	60,187

Residential and land development		10,119		19,403		27,338

Real estate, construction		34,010		44,987		52,586

Real estate, mortgage		240,341		237,158		246,420

Commercial and industrial		31,906		35,007		35,004

Other		14,678		9,224		9,548


Total	$	362,407	$	375,349	$	431,083

In the ordinary course of business, the Company’s bank subsidiary extends loans to certain officers and directors and their personal business interests at, in the opinion of Management, the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans of similar credit risk with persons not related to the Company or its subsidiaries. These loans do not involve more than normal risk of collectibility and do not include other unfavorable features. An analysis of the activity with respect to such loans to related parties is as follows (in thousands):


Years Ended December 31,	2014		2013		2012

Balance, January 1	$	6,761	$	6,310	$	5,681
New loans and advances		2,516		1,647		3,755
Repayments		(1,517)		(1,196)		(3,126)


Balance, December 31	$	7,760	$	6,761	$	6,310

As part of its evaluation of the quality of the loan portfolio, Management monitors the Company’s credit concentrations on a monthly basis. Total outstanding concentrations were as follows (in thousands):


December 31,	2014		2013		2012

Gaming	$	31,353	$	29,570	$	60,187
Hotel/motel		47,144		49,842		52,776
Out of area		19,179		24,945		25,413

The age analysis of the loan portfolio, segregated by class of loans, as of December 31, 2014, 2013 and 2012 is as follows (in thousands):


													Loans Past Due Greater Than 90 Days and

	Number of Days Past Due

					Greater		Total				Total
	30 - 59		60 - 89		Than 90		Past Due		Current		Loans		Still Accruing

December 31, 2014:
Gaming	$		$		$		$		$	31,353	$	31,353	$
Residential and land development						5,262		5,262		4,857		10,119
Real estate, construction		1,665		85		1,944		3,694		30,316		34,010		30
Real estate, mortgage		3,502		3,101		12,007		18,610		221,731		240,341		733
Commercial and industrial		909		7		205		1,121		30,785		31,906
Other		168		10				178		14,500		14,678


Total	$	6,244	$	3,203	$	19,418	$	28,865	$	333,542	$	362,407	$	763

December 31, 2013:
Gaming	$		$		$		$		$	29,570	$	29,570	$
Residential and land development		51				13,572		13,623		5,780		19,403
Real estate, construction		3,846				9,452		13,298		31,689		44,987		146
Real estate, mortgage		6,910		2,684		5,134		14,728		222,430		237,158		505
Commercial and industrial		1,192						1,192		33,815		35,007
Other		227		5				232		8,992		9,224


Total	$	12,226	$	2,689	$	28,158	$	43,073	$	332,276	$	375,349	$	651

December 31, 2012:
Gaming	$		$	1,721	$		$	1,721	$	58,466	$	60,187	$
Residential and land development						5,765		5,765		21,573		27,338
Real estate, construction		3,989		878		6,151		11,018		41,568		52,586		572
Real estate, mortgage		12,012		2,702		7,605		22,319		224,101		246,420		872
Commercial and industrial		1,804		79		107		1,990		33,014		35,004
Other		127		26		1		154		9,394		9,548		1


Total	$	17,932	$	5,406	$	19,629	$	42,967	$	388,116	$	431,083	$	1,445

The Company monitors the credit quality of its loan portfolio through the use of a loan grading system. A score of 1 – 5 is assigned to the loan based on factors including repayment ability, trends in net worth and/or financial condition of the borrower and guarantors, employment stability, management ability, loan to value fluctuations, the type and structure of the loan, conformity of the loan to bank policy and payment performance. Based on the total score, a loan grade of A—F is applied. A grade of A will generally be applied to loans for customers that are well known to the Company and that have excellent sources of repayment. A grade of B will generally be applied to loans for customers that have excellent sources of repayment which have no identifiable risk of collection. A grade of C will generally be applied to loans for customers that have adequate sources of repayment which have little identifiable risk of collection. Loans with a grade of C may be placed on the watch list if weaknesses are not resolved which could result in potential loss or for other circumstances that require monitoring. A grade of D will generally be applied to loans for customers that are inadequately protected by current sound net worth, paying capacity of the borrower, or pledged collateral. Loans with a grade of D have unsatisfactory characteristics such as cash flow deficiencies, bankruptcy filing by the borrower or dependence on the sale of collateral for the primary source of repayment, causing more than acceptable levels of risk. Loans 60 to 89 days past due receive a grade of D. A grade of E will generally be applied to loans for customers with weaknesses inherent in the D classification and in which collection or liquidation in full is questionable. In addition, on a monthly basis the Company determines which loans are 90 days or more past due and assigns a grade of E to them. A grade of F is applied to loans which are considered uncollectible and of such little value that their continuance in an active bank is not warranted. Loans with this grade are charged off, even though partial or full recovery may be possible in the future.

An analysis of the loan portfolio by loan grade, segregated by class of loans, as of December 31, 2014, 2013 and 2012 is as follows (in thousands):


	Loans With A Grade Of:

	A or B		C		D		E		F	Total

December 31, 2014:
Gaming	$	8,400	$	22,953	$		$		$	$	31,353

Residential and land development		3,520		1,319		17		5,263			10,119

Real estate, construction		27,474		723		2,496		3,317			34,010

Real estate, mortgage		197,086		4,051		16,591		22,613			240,341

Commercial and industrial		26,877		25		1,579		3,425			31,906

Other		14,583		6		89					14,678


Total	$	277,940	$	29,077	$	20,772	$	34,618	$	$	362,407


December 31, 2013:
Gaming	$	23,975	$	2,500	$		$	3,095	$	$	29,570

Residential and land development		4,236		1,544		51		13,572			19,403

Real estate, construction		38,808		781		2,220		3,178			44,987

Real estate, mortgage		204,569		4,495		17,852		10,242			237,158

Commercial and industrial		31,902		682		2,402		21			35,007

Other		9,131		24		50		19			9,224


Total	$	312,621	$	10,026	$	22,575	$	30,127	$	$	375,349


December 31, 2012:
Gaming	$	27,530	$	12,300	$	4,108	$	16,249	$	$	60,187

Residential and land development		4,630		1,544		81		21,083			27,338

Real estate, construction		43,318		1,001		2,701		5,566			52,586

Real estate, mortgage		209,479		3,093		21,167		12,681			246,420

Commercial and industrial		32,036		442		2,312		214			35,004

Other		9,449		27		72					9,548


Total	$	326,442	$	18,407	$	30,441	$	55,793	$	$	431,083

A loan may be impaired but not on nonaccrual status when the loan is well secured and in the process of collection. Total loans on nonaccrual as of December 31, 2014, 2013 and 2012 are as follows (in thousands):


December 31,	2014		2013		2012


Gaming	$		$	1,223	$	16,249

Residential and land development		8,233		13,572		21,083

Real estate, construction		3,287		2,588		5,171

Real estate, mortgage		21,398		8,788		11,174

Commercial and industrial		380				214


Total	$	33,298	$	26,171	$	53,891

The Company has modified certain loans by granting interest rate concessions to these customers. These loans are in compliance with their modified terms, are currently accruing and the Company has classified them as troubled debt restructurings. Troubled debt restructurings as of December 31, 2014, 2013 and 2012, were as follows (in thousands except for number of contracts):


	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Related Allowance

December 31, 2014:
Real estate, mortgage		2	$	837	$	837	$	50

Total		2	$	837	$	837	$	50


December 31, 2013:
Real estate, construction		2	$	891	$	891	$	270
Real estate, mortgage		6		10,012		10,012		994
Commercial and industrial		1		678		678

Total		9	$	11,581	$	11,581	$	1,264


December 31, 2012:
Real estate, construction		3	$	1,095	$	1,095	$	340
Real estate, mortgage		3		9,054		9,054		957
Commercial and industrial		1		702		702

Total		7	$	10,851	$	10,851	$	1,297

During 2013, the Company classified four additional loans as troubled debt restructurings. The loans are included in the real estate, mortgage segment and had a total balance of $1,652,903 when they were modified. During 2013, two loans which had been classified as troubled debt restructurings at December 31, 2012 became in default of their modified terms and were placed on nonaccrual. These loans included one loan that was included in the real estate, construction segment with a balance of $182,164 and one loan that was included in the real estate, mortgage segment with a balance of $527,677 as of December 31, 2012. During 2014, seven loans which had been classified as troubled debt restructurings at December 31, 2013 became in default of their modified terms and were placed on nonaccrual. These loans included two loans that were included in the real estate, construction segment with a total balance of $891,782, four loans that were included in the real estate, mortgage segment with a total balance of $9,136,954 and one loan that was included in the commercial and industrial segment with a balance of $677,901 as of December 31, 2013.

Impaired loans, which include loans classified as nonaccrual and troubled debt restructurings, segregated by class of loans, as of December 31, 2014, 2013 and 2012 were as follows (in thousands):


	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized

December 31, 2014:
With no related allowance recorded:
Residential and land development	$	9,513	$	8,233	$		$	8,380	$
Real estate, construction		2,198		2,178				2,222
Real estate, mortgage		19,517		16,243				18,258		26
Commercial and industrial		380		380				384


Total		31,608		27,034				29,244		26

With a related allowance recorded:
Real estate, construction		1,109		1,109		422		1,115
Real estate, mortgage		6,591		5,992		2,135		5,996		9


Total		7,700		7,101		2,557		7,111		9

Total by class of loans:
Residential and land development		9,513		8,233				8,380
Real estate, construction		3,307		3,287		422		3,337
Real estate, mortgage		26,108		22,235		2,135		24,254		35
Commercial and industrial		380		380				384


Total	$	39,308	$	34,135	$	2,557	$	36,355	$	35


	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized

December 31, 2013:
With no related allowance recorded:
Residential and land development	$	4,425	$	4,425	$		$	4,465	$
Real estate, construction		2,294		2,294				2,054		26
Real estate, mortgage		9,722		9,123				9,097		26
Commercial and industrial		678		678				689		24


Total		17,119		16,520				16,305		76


With a related allowance recorded:
Gaming		1,698		1,223		626		1,316
Residential and land development		17,576		9,147		471		15,909
Real estate, construction		1,185		1,185		337		1,239		23
Real estate, mortgage		9,677		9,677		1,110		8,801		306


Total		30,136		21,232		2,544		27,265		329


Total by class of loans:
Gaming		1,698		1,223		626		1,316
Residential and land development		22,001		13,572		471		20,374
Real estate, construction		3,479		3,479		337		3,293		49
Real estate, mortgage		19,399		18,800		1,110		17,898		332
Commercial and industrial		678		678				689		24


Total	$	47,255	$	37,752	$	2,544	$	43,570	$	405


	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized

December 31, 2012:
With no related allowance recorded:
Gaming	$	14,528	$	14,528	$		$	14,869	$
Residential and land development		21,837		20,733				21,288
Real estate, construction		4,635		4,580				3,833
Real estate, mortgage		9,971		9,935				9,821
Commercial and industrial		892		892				791		23


Total		51,863		50,668				50,602		23


With a related allowance recorded:
Gaming		1,721		1,721		1,100
Residential and land development		350		350		70		350
Real estate, construction		1,694		1,686		663		1,314		8
Real estate, mortgage		10,893		10,293		1,229		10,199		319
Commercial and industrial		24		24		12


Total		14,682		14,074		3,074		11,863		327


Total by class of loans:
Gaming		16,249		16,249		1,100		14,869
Residential and land development		22,187		21,083		70		21,638
Real estate, construction		6,329		6,266		663		5,147		8
Real estate, mortgage		20,864		20,228		1,229		20,020		319
Commercial and industrial		916		916		12		791		23


Total	$	66,545	$	64,742	$	3,074	$	62,465	$	350

Transactions in the allowance for loan losses for the years ended December 31, 2014, 2013 and 2012, and the balances of loans, individually and collectively evaluated for impairment, as of December 31, 2014, 2013 and 2012 are as follows (in thousands):


	Gaming			Residential and Land Development			Real Estate, Construction			Real Estate, Mortgage			Commercial and Industrial			Other			Total

December 31, 2014:
Allowance for Loan Losses:
Beginning Balance	$	977		$	776		$	695		$	5,553		$	632		$	301		$	8,934
Charge-offs		(992	)		(2,060	)		(127	)		(368	)		(3,948	)		(235	)		(7,730	)
Recoveries		260						35			193			20			90			598
Provision		328			1,535			257			1,231			3,883			170			7,404

Ending Balance	$	573		$	251		$	860		$	6,609		$	587		$	326		$	9,206


Allowance for Loan Losses:
Ending balance: individually evaluated for impairment	$			$			$	742		$	2,706		$	289		$	6		$	3,743

Ending balance: collectively evaluated for impairment	$	573		$	251		$	118		$	3,903		$	298		$	320		$	5,463


Total Loans:
Ending balance: individually
Ending Balance: Individually evaluated for impairment	$			$	7,232		$	6,830		$	39,204		$	2,035		$	89		$	55,390

Ending balance: collectively evaluated for impairment	$	31,353		$	2,887		$	27,180		$	201,137		$	29,871		$	14,589		$	307,017


December 31, 2013:
Allowance for Loan Losses:
Beginning Balance	$	1,541		$	200		$	967		$	5,273		$	593		$	283		$	8,857
Charge-offs		(474	)		(7,325	)		(1,013	)		(1,048	)		(24	)		(238	)		(10,122	)
Recoveries		110			67			97			150			26			88			538
Provision		(200	)		7,834			644			1,178			37			168			9,661

Ending Balance	$	977		$	776		$	695		$	5,553		$	632		$	301		$	8,934


Allowance for Loan Losses:
Ending balance: individually evaluated for impairment	$	626		$	471		$	615		$	1,698		$	342		$	33		$	3,785

Ending balance: collectively evaluated for impairment	$	351		$	305		$	80		$	3,855		$	290		$	268		$	5,149


Total Loans:
Ending balance: individually evaluated for impairment	$	3,095		$	13,624		$	5,399		$	28,094		$	2,423		$	69		$	52,704

Ending balance: collectively evaluated for impairment	$	26,475		$	5,779		$	39,588		$	209,064		$	32,584		$	9,155		$	322,645


	Gaming			Residential and Land Development			Real Estate, Construction			Real Estate, Mortgage			Commercial and Industrial			Other			Total

December 31, 2012:
Allowance for Loan Losses:
Beginning Balance	$	457		$	1,081		$	937		$	4,800		$	557		$	304		$	8,136
Charge-offs		(275	)		(1,103	)		(474	)		(1,348	)		(203	)		(273	)		(3,676	)
Recoveries											7			41			85			133
Provision		1,359			222			504			1,814			198			167			4,264

Ending Balance	$	1,541		$	200		$	967		$	5,273		$	593		$	283		$	8,857

Allowance for loan losses
Ending balance: individually evaluated for impairment	$	1,100		$			$	922		$	1,758		$	300		$	35		$	4,115

Ending balance: collectively evaluated for impairment	$	441		$	200		$	45		$	3,515		$	293		$	248		$	4,742


Total Loans
Ending balance: individually evaluated for impairment	$	20,357		$	21,165		$	8,267		$	33,848		$	2,525		$	72		$	86,234

Ending balance: collectively evaluated for impairment	$	39,830		$	6,173		$	44,319		$	212,572		$	32,479		$	9,476		$	344,849