Note 4. Loans

The following table summarizes the components of the Company's loan portfolio as of March 31, 2012 and December 31, 2011:

	March 31, 2012					December 31, 2011
(in thousands)	Balance			As % of Category		Balance			As % of Category
Real Estate:
Construction & land development	$	65,332		11.3	%	$	78,614		13.7	%
Farmland		11,075		1.9	%		11,577		2.0	%
1- 4 Family		92,124		15.9	%		89,202		15.6	%
Multifamily		17,814		3.1	%		16,914		2.9	%
Non-farm non-residential		275,854		47.7	%		268,618		46.8	%
Total Real Estate	$	462,199		79.9	%	$	464,925		81.0	%
Non-real Estate:
Agricultural	$	17,281		3.0	%	$	17,338		3.0	%
Commercial and industrial		75,206		13.0	%		68,025		11.9	%
Consumer and other		23,535		4.1	%		23,455		4.1	%
Total Non-real Estate	$	116,022		20.1	%	$	108,818		19.0	%
Total loans before unearned income	$	578,221		100.0	%	$	573,743		100.0	%
Less: Unearned income		(988	)				(643	)
Total loans net of unearned income	$	577,233				$	573,100

The following table summarizes fixed and floating rate loans by maturity and repricing frequencies as of March 31, 2012 and December 31, 2011:

	March 31, 2012							December 31, 2011
(in thousands)	Fixed		Floating		Total			Fixed		Floating		Total
One year or less	$	87,377	$	126,238	$	213,615		$	108,276	$	124,052	$	232,328
One to five years		174,820		103,339		278,159			160,191		98,972		259,163
Five to 15 years		10,982		36,322		47,304			8,393		36,891		45,284
Over 15 years		8,685		6,104		14,789			8,464		6,054		14,518
Subtotal	$	281,864	$	272,003	$	553,867		$	285,324	$	265,969	$	551,293
Nonaccrual loans						24,354							22,450
Total loans before unearned income					$	578,221						$	573,743
Less: Unearned income						(988	)						(643	)
Total loans net of unearned income					$	577,233						$	573,100

The majority of floating rate loans have interest rate floors. As of March 31, 2012, $254.6million of these loans were at the floor rate. Nonaccrual loans have been excluded from the calculation.

The following tables present the age analysis of past due loans at March 31, 2012 and December 31, 2011:

	As of March 31, 2012
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real Estate:
Construction & land development	$	478	$	1,114	$	1,592	$	63,740	$	65,332		$	-
Farmland		-		872		872		10,203		11,075			-
1 - 4 family		3,066		6,765		9,831		82,293		92,124			378
Multifamily		-		617		617		17,197		17,814			-
Non-farm non-residential		3,224		12,146		15,370		260,484		275,854			-
Total Real Estate	$	6,768	$	21,514	$	28,282	$	433,917	$	462,199		$	378
Non-Real Estate:
Agricultural	$	19	$	1,059	$	1,078	$	16,203	$	17,281		$	-
Commercial and industrial		482		2,100		2,582		72,624		75,206			-
Consumer and other		129		60		189		23,346		23,535			-
Total Non-Real Estate	$	630	$	3,219	$	3,849	$	112,173	$	116,022		$	-
Total loans before unearned income	$	7,398	$	24,733	$	32,131	$	546,090	$	578,221		$	378
Less: unearned income										(988	)
Total loans net of unearned income									$	577,233

	As of December 31, 2011
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real estate:
Construction & land development	$	240	$	1,520	$,	1,760	$	76,854	$	78,614		$	-
Farmland		45		562		607		10,970		11,577			-
1 - 4 family		2,812		5,957		8,769		80,433		89,202			309
Multifamily		617		-		617		16,297		16,914			-
Non-farm non-residential		878		12,818		13,696		254,922		268,618			419
Total Real Estate	$	4,592	$	20,857	$	25,449	$	439,476	$	464,925		$	728
Non-Real Estate:
Agricultural	$	90	$	315	$	405	$	16,933	$	17,338		$	-
Commercial and industrial		147		1,986		2,133		65,892		68,025			-
Consumer and other		389		28		417		23,038		23,455			8
Total Non-Real Estate	$	626	$	2,329	$	2,955	$	105,863	$	108,818		$	8
Total loans before unearned income	$	5,218	$	23,186	$	28,404	$	545,339	$	573,743		$	736
Less: unearned income										(643	)
Total loans net of unearned income									$	573,100

The Company's management monitors the credit quality of its loans on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan.

For all loan classes, past due loans are reviewed on a monthly basis to identify loans for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest. When interest accruals are discontinued, unpaid interest recognized in income is reversed. The Company's method of income recognition for loans that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectability of principal is in doubt. Nonaccrual loans will not normally be returned to accrual status unless all past due principal and interest has been paid.

The following is a summary of nonaccrual loans by class:

(in thousands)	As of March 31, 2012		As of December 31, 2011
Real Estate:
Construction & land development	$	1,114	$	1,520
Farmland		872		562
1 - 4 family		6,387		5,647
Multifamily		617		-
Non-farm non-residential		12,145		12,400
Total Real Estate	$	21,135	$	20,129
Non-real Estate:
Agricultural	$	1,059	$	315
Commercial and industrial		2,100		1,986
Consumer and other		60		20
Total Non-Real Estate	$	3,219	$	2,321
Total Nonaccrual Loans	$	24,354	$	22,450

The Company assigns credit quality indicators of pass, special mention, substandard, and doubtful to its loans. For the Company's loans with a corporate credit exposure, the Company internally assigns a grade based on the creditworthiness of the borrower. For loans with a consumer credit exposure, the Bank internally assigns a grade based upon an individual loan's delinquency status. Loans included in the Pass category are performing loans with satisfactory debt coverage ratios, collateral, payment history, and documentation.

Special mention loans have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company's credit position at some future date. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices.

A substandard loan with a corporate credit exposure is inadequately protected by the current sound worth and paying 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 by the borrower. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These loans require more intensive supervision by management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigates. For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual. For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

Doubtful loans have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values.

The following table identifies the Credit Exposure of the Loan Portfolio by specific credit ratings:

Corporate Credit Exposure	As of March 31, 2012											As of December 31, 2011
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
Construction & land development	$	55,056	$	71	$	10,205	$	-	$	65,332		$	67,602	$	82	$	10,930	$	-	$	78,614
Farmland		10,287		386		402		-		11,075			11,485		-		92		-		11,577
1 - 4 family		81,010		3,097		8,017		-		92,124			80,053		1,770		7,379		-		89,202
Multifamily		9,851		25		7,938		-		17,814			9,545		-		7,369		-		16,914
Non-farm non-residential		238,056		5,240		32,558		-		275,854			235,448		372		32,798		-		268,618
Total real estate	$	394,260	$	8,819	$	59,120	$	-	$	462,199		$	404,133	$	2,224	$	58,568	$	-	$	464,925
Non-Real Estate:
Agricultural	$	16,610	$	100	$	571	$	-	$	17,281		$	17,304	$	-	$	34	$	-	$	17,338
Commercial and industrial		73,478		95		1,633		-		75,206			65,553		93		2,379		-		68,025
Consumer and other		23,471		7		57		-		23,535			23,345		43		67		-		23,455
Total Non-Real Estate	$	113,559	$	202	$	2,261	$	-	$	116,022		$	106,202	$	136	$	2,480	$	-	$	108,818
Total loans before unearned income	$	507,819	$	9,021	$	61,381	$	-	$	578,221		$	510,335	$	2,360	$	61,048	$	-	$	573,743
Less: unearned income										(988	)										(643	)
Total loans net of unearned income									$	577,233										$	573,100

ASC 310-30 Loans

The Company has loans that were acquired through the acquisition of Greensburg Bancshares, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that all contractually required payments would not be collected. These loans are subject to ASC Topic 310-30. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at March 31, 2012. The amounts of loans subject to ASC Topic 310-30 at March 31, 2012 are as follows:

	March 31, 2012
(in thousands)	Contractual Amount		Carrying Value
Real Estate:
Construction & land development	$	536	$	300
Farmland		-		-
1 - 4 family		499		443
Multifamily		-
Non-farm non-residential		139		139
Total real estate	$	1,174	$	882
Non-real Estate:
Agricultural	$	-	$	-
Commercial and industrial		-		-
Consumer and other		-		-
Total Non-Real Estate	$	-	$	-
Total	$	1,174	$	882

There have been no additional provisions made to the allowance for loan losses subsequent to acquisition of these loans. The loans acquired in the acquisition of Greensburg Bancshares, that are within the scope of Topic ASC 310-30, are not accounted for using the income recognition model of the Topic because the Company cannot reasonably estimate cash flows expected to be collected.