NOTE 3: Loans

Major classifications of loans are summarized as follows:

(Dollars in thousands)	September 30, 2011			December 31, 2010
Real estate – residential mortgage	$	146,617		$	146,073
Real estate – construction 1		7,122			12,095
Commercial, financial and agricultural 2		215,964			219,226
Equity lines		32,576			32,187
Consumer		5,487			5,250
Consumer finance		247,745			220,753
		655,511			635,584
Less allowance for loan losses		(32,590	)		(28,840	)
Loans, net	$	622,921		$	606,744

1	Includes the Corporation's real estate construction lending and consumer real estate lot lending.

2	Includes the Corporation's commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending.

Consumer loans included $207,000 and $378,000 of demand deposit overdrafts at September 30, 2011 and December 31, 2010, respectively.

Loans on nonaccrual status were as follows:

(Dollars in thousands)	September 30, 2011		December 31, 2010
Real estate – residential mortgage	$	1,489	$	189
Real estate – construction:
Construction lending		-		-
Consumer lot lending		-		-
Commercial, financial and agricultural:
Commercial real estate lending		4,500		5,760
Land acquisition and development lending		-		-
Builder line lending		2,303		67
Commercial business lending		99		1,448
Equity lines		129		266
Consumer		-		35
Consumer finance		595		151
Total loans on nonaccrual status	$	9,115	$	7,916

The past due status of loans as of September 30, 2011 was as follows:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ Days Past Due and Accruing
Real estate – residential mortgage	$	1,246	$	166	$	848	$	2,260	$	144,357	$	146,617	$	-
Real estate – construction:
Construction lending		-		-		-		-		5,440		5,440		-
Consumer lot lending		-		-		-		-		1,682		1,682		-
Commercial, financial and agricultural:
Commercial real estate lending		5,770		542		1,175		7,487		108,785		116,272		-
Land acquisition and development lending		-		-		-		-		32,932		32,932		-
Builder line lending		-		18		-		18		18,597		18,615		-
Commercial business lending		154		139		-		293		47,852		48,145		-
Equity lines		108		195		-		303		32,273		32,576		-
Consumer		46		15		2		63		5,424		5,487		2
Consumer finance		4,930		913		595		6,438		241,307		247,745		-
Total	$	12,254	$	1,988	$	2,620	$	16,862	$	638,649	$	655,511	$	2

For the purposes of the above table, “Current” includes loans that are 1-29 days past due.

The past due status of loans as of December 31, 2010 was as follows:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans		90+ Days Past Due and Accruing
Real estate – residential mortgage	$	1,605	$	826	$	751	$	3,182	$	142,891	$	146,073	$	676
Real estate – construction:
Construction lending		-		-		-		-		10,744		10,744		-
Consumer lot lending		-		-		-		-		1,351		1,351		-
Commercial, financial and agricultural:
Commercial real estate lending		59		-		2,840		2,899		108,418		111,317		186
Land acquisition and development lending		-		-		-		-		34,314		34,314		-
Builder line lending		-		1,450		195		1,645		23,171		24,816		128
Commercial business lending		9		-		1,383		1,392		47,387		48,779		-
Equity lines		223		115		35		373		31,814		32,187		35
Consumer		1		11		38		50		5,200		5,250		5
Consumer finance		4,913		829		151		5,893		214,860		220,753		-
Total	$	6,810	$	3,231	$	5,393	$	15,434	$	620,150	$	635,584	$	1,030

For the purposes of the above table, “Current” includes loans that are 1-29 days past due.

Impaired loans, which included TDRs of $15.53 million, and the related allowance at September 30, 2011, as well as average impaired loans and interest income recognized for the first nine months of 2011, were as follows:

(Dollars in thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance-Impaired Loans		Interest Income Recognized
Real estate – residential mortgage	$	3,048	$	3,050	$	618	$	3,041	$	103
Real estate – construction:
Construction lending		-		-		-		-		-
Consumer lot lending		-		-		-		-		-
Commercial, financial and agricultural:
Commercial real estate lending		4,591		5,021		920		4,156		57
Land acquisition and development lending		5,678		6,014		600		5,851		282
Builder line lending		2,285		2,285		300		2,110		-
Commercial business lending		99		100		22		416		4
Equity lines		-		-		-		49		-
Consumer		324		324		49		331		11
Total	$	16,025	$	16,794	$	2,509	$	15,954	$	457

As a result of adopting the amendments in ASU 2011-02, the Corporation reassessed all loan modifications that occurred on or after January 1, 2011 to determine whether they should be considered TDRs. There were no additional TDRs identified in connection with this reassessment.

Loan modifications classified as TDRs during the three months and nine months ended September 30, 2011 were as follows:

(Dollars in thousands)	Three Months Ended September 30,2011		Nine Months Ended September 30, 2011
Real estate – residential mortgage – interest reduction	$	86	$	629
Real estate – residential mortgage – interest rate concession		285		306
Commercial, financial and agricultural:
Commercial real estate lending – interest reduction		-		176
Commercial real estate lending – interest rate concession		3,559		3,922
Builder line lending – interest rate concession		-		2,285
Commercial business lending – interest rate concession		99		99
Total	$	4,029	$	7,417

TDR additions during the first nine months of 2011 included two commercial relationships totaling $5.35 million for which modified repayment schedules were negotiated. While these relationships were also in nonaccrual status at September 30, 2011, the borrowers are servicing the loans in accordance with the modified terms. The Corporation has no obligation to fund additional advances on its impaired loans.

TDR payment defaults during the three months and nine months ended September 30, 2011 were as follows:

(Dollars in thousands)	Three Months Ended September 30,2011		Nine Months Ended September 30, 2011
Real estate – residential mortgage	$	-	$	176
Consumer		-		5
Total	$	-	$	181

For purposes of this disclosure, a TDR payment default occurs when, within 12 months of the original TDR modification, either a TDR becomes 90 days or more past due or a charge-off occurs prior to 90 days past due.

Impaired loans, which included TDRs of $9.77 million, and the related allowance at December 31, 2010 were as follows:

(Dollars in thousands)	Recorded Investment in Loans		Unpaid Principal Balance		Related Allowance		Average Balance-Impaired Loans		Interest Income Recognized
Real estate – residential mortgage	$	3,110	$	3,110	$	466	$	2,689	$	137
Real estate – construction:
Construction lending		-		-		-		-		-
Consumer lot lending		-		-		-		-		-
Commercial, financial and agricultural:
Commercial real estate lending		5,760		6,816		1,263		3,582		30
Land acquisition and development lending		5,919		5,919		400		1,038		30
Builder line lending		-		-		-		1,014		-
Commercial business lending		1,142		1,267		404		613		-
Equity lines		148		150		49		149		4
Consumer		338		338		51		333		14
Total	$	16,417	$	17,600	$	2,633	$	9,418	$	215