TABLE 2 - LOAN MATURITIES BY TYPE One Year  One Through After Five  (dollars in thousands) or Less Five Years  Years  Total  Commercial real estate $ 50,622  $175,239  $ 28,827  $ 254,688  Commercial other 60,050  71,591  27,698  159,339  Mortgage residential 1-4 family 3,254  11,198  192,678  207,130  Mortgage construction – – 16,470  16,470  Consumer 83,080  235,831  87,954  406,865  Total $197,006  $493,859  $353,627  $1,044,492  ASSET QUALITY. Management has stated to shareholders that it will quickly recognize and disclose significant problem loans, and address material weaknesses in those credits. Historically, management feels that this has been evidenced by actions taken and plans to continue to do so in the future as efforts are made to improve the risk adjusted level of return within the loan portfolio. The Company has also worked assertively in transitioning the loan portfolio to be more representative of a commercial bank. Commercial bank loan portfolios typically have higher charge-off and nonperforming levels, but produce higher returns for investors. The Company has significantly increased the allowance for loan losses, tightened underwriting guidelines and procedures, improved the underwriting risk/return dynamics, adopted more conservative consumer loan charge-off and nonaccrual guidelines, rewritten the loan policy and established an internal loan review function.  The lending activities of the Company are subject to written underwriting standards established by the Board of Directors and management. The Company provides centralized underwriting of all residential mortgage, construction and consumer loans. The commercial credit department, in conjunction with senior lending personnel, underwrites all commercial business and commercial real estate loans. Established loan origination procedures include obtaining appropriate documentation, such as credit reports. For loans secured by real property, the Company generally requires property appraisals, title insurance or a title opinion, hazard insurance and flood insurance, where appropriate. The Company monitors the payment performance on all loans and late charges are assessed on past due accounts. A centralized department collects delinquent consumer, residential mortgage and construction loans. Every effort is made to minimize any potential loss, including instituting legal proceedings, as necessary. Commercial loans of the Company are periodically reviewed through a loan review process. All other loans are also subject to loan review through a periodic sampling process. In compliance with guidelines established by the Federal Reserve Board, the Company utilizes an asset classification system as part of its efforts to improve commercial asset quality. In connection with examinations of insured institutions, both federal and state examiners also have the authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: "substandard," "doubtful" and "loss." Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as loss is not considered collectable and of such little value that continuance as an asset of the institution is not warranted. Commercial loans with adverse classifications are reviewed by the Loan Committee of the Board of Directors on at least a monthly basis. Loans are placed on nonaccrual status when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income.  At December 31, 2002, the Company had $3.5 million of assets classified as substandard, $271,000 of assets classified as doubtful, and no assets classified as loss. At such date, the aggregate of the Company's classified assets amounted to 0.24% of total assets. 21