NOTE 3: Loans

Major classifications of loans are summarized as follows:

	December 31,
(Dollars in thousands)	2012			2011
Real estate – residential mortgage	$	149,257		$	147,135
Real estate – construction	5,062			5,737
Commercial, financial and agricultural¹	205,052			212,235
Equity lines	33,324			33,192
Consumer	5,309			6,057
Consumer finance	278,186			246,305
	676,190			650,661
Less allowance for loan losses	(35,907		)	(33,677		)
Loans, net	$	640,283		$	616,984

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¹	Includes the Corporation's commercial real estate lending, land acquisition and development lending, builder line lending and commercial business lending.

Consumer loans included $293,000 and $299,000 of demand deposit overdrafts at December 31, 2012 and 2011, respectively.

Loans on nonaccrual status were as follows:

	December 31,
(Dollars in thousands)	2012		2011
Real estate – residential mortgage	$	1,805	$	2,440
Real estate – construction:
Construction lending¹	—		—
Consumer lot lending¹	—		—
Commercial, financial and agricultural:
Commercial real estate lending	3,426		5,093
Land acquisition & development lending	5,234		—
Builder line lending	15		2,303
Commercial business lending	759		673
Equity lines	31		123
Consumer	191		—
Consumer finance	655		381
Total loans on nonaccrual status	$	12,116	$	11,013

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¹	At December 31, 2012 and 2011 there were no real estate construction lending loans or real estate consumer lot lending loans on nonaccrual status.

If interest income had been recognized on nonaccrual loans at their stated rates during years 2012, 2011 and 2010, interest income would have increased by approximately $654,000, $651,000 and $624,000, respectively.

The past due status of loans as of December 31, 2012 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	$	1,402	$	456	$	641	$	2,499	$	146,758	$	149,257	$	—
Real estate – construction:
Construction lending	—		—		—		—		3,157		3,157		—
Consumer lot lending	—		—		—		—		1,905		1,905		—
Commercial, financial and agricultural:
Commercial real estate lending	7,650		496		324		8,470		111,177		119,647		—
Land acquisition & development lending	—		—		5,234		5,234		28,903		34,137		—
Builder line lending	—		—		—		—		15,948		15,948		—
Commercial business lending	794		—		40		834		34,486		35,320		—
Equity lines	270		—		22		292		33,032		33,324		—
Consumer	69		—		191		260		5,049		5,309		—
Consumer finance	10,111		2,052		655		12,818		265,368		278,186		—
Total	$	20,296	$	3,004	$	7,107	$	30,407	$	645,783	$	676,190	$	—

For the purposes of the above table, "Current" includes loans that are 1-29 days past due. In addition, the above table includes nonaccrual loans that are current of $1.2 million, 30-59 days past due of $3.4 million, 60-89 days past due of $421,000 and 90+ days past due of $7.1 million.

The past due status of loans as of December 31, 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	$	1,270	$	1,445	$	533	$	3,248	$	143,887	$	147,135	$	65
Real estate – construction:
Construction lending	—		—		—		—		5,084		5,084		—
Consumer lot lending	—		—		—		—		653		653		—
Commercial, financial and agricultural:
Commercial real estate lending	986		1,311		—		2,297		114,475		116,772		—
Land acquisition and development lending	—		—		—		—		32,645		32,645		—
Builder line lending	—		—		—		—		17,637		17,637		—
Commercial business lending	480		—		—		480		44,701		45,181		—
Equity lines	69		90		33		192		33,000		33,192		—
Consumer	13		—		—		13		6,044		6,057		3
Consumer finance	5,327		1,041		381		6,749		239,556		246,305		—
Total	$	8,145	$	3,887	$	947	$	12,979	$	637,682	$	650,661	$	68

For the purposes of the above table, "Current" includes loans that are 1-29 days past due. In addition, the above table includes nonaccrual loans that are current of $8.6 million, 30-59 days past due of $86,000, 60-89 days past due of $1.5 million and 90+ days past due of $882,000.

Loan modifications that were classified as TDRs during the years ended December 31, 2012 and 2011 were as follows:

	Year Ended December 31,
	2012				2011
(Dollars in thousands)	Number of Loans		Post-Modification Recorded Investment		Number of Loans		Post-Modification Recorded Investment
Real estate – residential mortgage – interest reduction		1	$	122		4	$	700
Real estate – residential mortgage – interest rate concession		—		—		3		235
Commercial, financial and agricultural:
Commercial real estate lending – interest reduction		3		278		1		176
Commercial real estate lending – interest rate concession		6		4,226		7		5,233
Commercial real estate lending – principal reduction		—		—		1		505
Builder line lending – interest rate concession		1		193		8		2,285
Commercial business lending – interest rate concession		—		—		4		652
Consumer – interest reduction		1		108		—		—
Total		12	$	4,927		28	$	9,786

TDR additions during the year ended December 31, 2012 included one commercial relationship totaling $3.85 million for which loan modifications were negotiated. This relationship was classified as substandard at December 31, 2012. TDR additions during the year ended December 31, 2011 included two commercial relationships totaling $7.14 million for which loan modifications were negotiated. While these relationships were also in nonaccrual status at December 31, 2012, the borrowers were 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 years ended December 31, 2012 and 2011 were as follows:

	Year Ended December 31,
	2012				2011
(Dollars in thousands)	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
Real estate – residential mortgage		1	$	84		2	$	153
Commercial, financial and agricultural:
Commercial real estate lending		5		1,386				—
Builder line lending		1		88				—
Consumer				—		1		4
Total		7	$	1,558		3	$	157

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

Impaired loans, which consist solely of TDRs, and the related allowance at December 31, 2012 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	$	2,230	$	2,283	$	433	$	2,266	$	124
Commercial, financial and agricultural:
Commercial real estate lending	7,892		8,190		1,775		8,260		254
Land acquisition & development lending	5,234		5,234		1,432		5,443		236
Builder line lending	—		—		—		1,407		—
Commercial business lending	812		817		112		827		13
Equity lines	—		—		—		—		—
Consumer	324		324		49		324		16
Total	$	16,492	$	16,848	$	3,801	$	18,527	$	643

Impaired loans, which include TDRs of $17.09 million, and the related allowance at December 31, 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	$	3,482	$	3,698	$	657	$	3,723	$	137
Commercial, financial and agricultural:
Commercial real estate lending	5,861		5,957		1,464		6,195		102
Land acquisition & development lending	5,490		5,814		1,331		6,116		372
Builder line lending	2,285		2,285		318		2,397		—
Commercial business lending	652		654		161		663		6
Equity lines	—		—		—		—		—
Consumer	324		324		49		324		14
Total	$	18,094	$	18,732	$	3,980	$	19,418	$	631