5. Loans:

The composition of the loan portfolio at June 30, 2013 and December 31, 2012, is as follows (in thousands):


	June 30, 2013		December 31, 2012
Gaming	$	50,337	$	60,187
Residential and land development		27,083		27,338
Real estate, construction		49,947		52,586
Real estate, mortgage		233,158		246,420
Commercial and industrial		34,339		35,004
Other		8,234		9,548

Total	$	403,098	$	431,083

The age analysis of the loan portfolio, segregated by class of loans, as of June 30, 2013 and December 31, 2012, is as follows (in thousands):


													Loans Past
													Due Greater
	Number of Days Past Due												Than 90
					Greater		Total				Total		Days &
	30—59		60—89		Than 90		Past Due		Current		Loans		Still Accruing
June 30, 2013:
Gaming	$		$		$		$		$	50,337	$	50,337	$
Residential and land development						5,304		5,304		21,779		27,083
Real estate, construction		1,474				4,334		5,808		44,139		49,947		424
Real estate, mortgage		8,080		1,424		7,924		17,428		215,730		233,158		1,261
Commercial and industrial		3,930						3,930		30,409		34,339
Other		56		3		28		87		8,147		8,234		28

Total	$	13,540	$	1,427	$	17,590	$	32,557	$	370,541	$	403,098	$	1,713

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 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 June 30, 2013 and December 31, 2012, is as follows (in thousands):


	Loans With A Grade Of:
	A or B		C		D		E		F	Total
June 30, 2013:
Gaming	$	26,258	$	2,500	$	7,535	$	14,044	$	$	50,337
Residential and land development		4,505		1,607				20,971			27,083
Real estate, construction		40,999		1,151		2,684		5,113			49,947
Real estate, mortgage		198,510		4,146		17,356		13,146			233,158
Commercial and industrial		31,391		628		2,287		33			34,339
Other		8,117		44		69		4			8,234

Total	$	309,780	$	10,076	$	29,931	$	53,311	$	$	403,098

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 June 30, 2013 and December 31, 2012, are as follows (in thousands):


	June 30, 2013		December 31, 2012
Gaming	$	12,172	$	16,249
Residential and land development		20,971		21,083
Real estate, construction		4,954		5,171
Real estate, mortgage		11,571		11,174
Commercial and industrial				214

Total	$	49,668	$	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 June 30, 2013 and December 31, 2012 were as follows (in thousands except for number of contracts):


			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded		Related
	Contracts		Investment		Investment		Allowance
June 30, 2013:
Real estate, construction		2	$	892	$	892	$	276
Real estate, mortgage		3		9,120		9,120		827
Commercial and industrial		1		690		690

Total		6	$	10,702	$	10,702	$	1,103

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

Impaired loans, which include loans classified as nonaccrual and troubled debt restructurings, segregated by class of loans, as of June 30, 2013 and December 31, 2012, are as follows (in thousands):


	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
June 30, 2013:
With no related allowance recorded:
Gaming	$	10,933	$	10,933	$		$	12,150	$
Residential and land development		4,468		4,468				4,496
Real estate, construction		3,498		3,472				3,519		13
Real estate, mortgage		9,758		9,159				9,213		10
Commercial and industrial		690		690				696		11

Total	$	29,347	$	28,722	$		$	30,074	$	34

With a related allowance recorded:
Gaming	$	1,714	$	1,239	$	626	$	1,403	$
Residential and land development		17,606		16,503		3,143		16,555
Real estate, construction		2,410		2,374		1,132		2,410		11
Real estate, mortgage		11,566		11,532		1,702		10,877		140

Total	$	33,296	$	31,648	$	6,603	$	31,245	$	151

Total by class of loans:
Gaming	$	12,647	$	12,172	$	626	$	13,553	$
Residential and land development		22,074		20,971		3,143		21,051
Real estate, construction		5,908		5,846		1,132		5,929		24
Real estate, mortgage		21,324		20,691		1,702		20,090		150
Commercial and industrial		690		690				696		11

Total	$	62,643	$	60,370	$	6,603	$	61,319	$	185


	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