NOTE E - LOANS

Information relating to loans is summarized as follows:

	March 31,		December 31,
(Dollars in thousands)	2014		2013
Construction and land development	$	67,197	$	67,450
Commercial real estate		528,444		520,382
Residential real estate		592,583		592,746
Commercial and financial		79,401		78,636
Consumer		44,601		44,713
Other loans		230		280
NET LOAN BALANCES	$	1,312,456	$	1,304,207

(1)

Net loan balances as of March 31, 2014 and December 31, 2013 are net of deferred costs of $2,818,000 and $2,618,000, respectively.

The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2014 and December 31, 2013:

March 31, 2014

					Accruing
	Accruing		Accruing		Greater						Total
	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables
Construction & land development	$	0	$	0	$	0	$	1,230	$	65,967	$	67,197
Commercial real estate		746		458		0		3,911		523,329		528,444
Residential real estate		2,091		151		0		20,604		569,737		592,583
Commercial and financial		0		0		0		11		79,390		79,401
Consumer		491		0		0		464		43,646		44,601
Other		0		0		0		0		230		230
Total	$	3,328	$	609	$	0	$	26,220	$	1,282,299	$	1,312,456

December 31, 2013

					Accruing
	Accruing		Accruing		Greater						Total
	30-59 Days		60-89 Days		Than						Financing
(Dollars in thousands)	Past Due		Past Due		90 Days		Nonaccrual		Current		Receivables
Construction & land development	$	3	$	0	$	0	$	1,302	$	66,145	$	67,450
Commercial real estate		684		345		0		5,111		514,242		520,382
Residential real estate		974		909		160		20,705		569,998		592,746
Commercial and financial		353		0		0		13		78,270		78,636
Consumer		33		27		0		541		44,112		44,713
Other		0		0		0		0		280		280
Total	$	2,047	$	1,281	$	160	$	27,672	$	1,273,047	$	1,304,207

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company's risk rating system, the Company classifies problem and potential problem loans as "Special Mention," "Substandard," and "Doubtful" and these loans are monitored on an ongoing basis. Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as substandard may require a specific allowance, but generally does not exceed 30% of the principal balance. Loans classified as Doubtful, have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The principal balance of loans classified as doubtful are generally charged off. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention. Risk ratings are updated any time the situation warrants.

Loans not meeting the criteria above are considered to be pass-rated loans and risk grades are recalculated at least annually by the loan relationship manager. The following tables present the risk category of loans by class of loans based on the most recent analysis performed as of March 31, 2014 and December 31, 2013:

March 31, 2014

	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	63,161	$	502,604	$	555,613	$	79,174	$	42,692	$	1,243,244
Special mention		560		6,422		457		24		823		8,286
Substandard		0		8,274		1,386		40		469		10,169
Doubtful		0		0		0		0		0		0
Nonaccrual		1,230		3,911		20,604		11		464		26,220
Pass-Troubled debt restructures		1,713		5,532		27		0		0		7,272
Troubled debt restructures		533		1,701		14,496		152		383		17,265
	$	67,197	$	528,444	$	592,583	$	79,401	$	44,831	$	1,312,456

December 31, 2013

	Construction						Commercial
	& Land		Commercial		Residential		and		Consumer
(Dollars in thousands)	Development		Real Estate		Real Estate		Financial		Loans		Total
Pass	$	63,186	$	485,268	$	554,681	$	77,840	$	43,267	$	1,224,242
Special mention		583		6,810		824		382		300		8,899
Substandard		0		15,886		1,670		248		453		18,257
Doubtful		0		0		0		0		0		0
Nonaccrual		1,302		5,111		20,705		13		541		27,672
Pass-Troubled debt restructures		1,838		5,584		30		0		0		7,452
Troubled debt restructures		541		1,723		14,836		153		432		17,685
	$	67,450	$	520,382	$	592,746	$	78,636	$	44,993	$	1,304,207