## Sources of Funds >. 

## Non-accruing Loans 

Residential Real Estate Loans - The Corporation classifies all real estate loans delinquent 90 days or more in non-accruing status. Even though these loans are in non-accruing status, Management considers based on the value of the underlying collateral and the loan to value ratios, that no material losses will be incurred in this portfolio. Management’s estimate is based on the historical experience of the Corporation. Non- accruing real estate loans amounted to $19 million (1.83% of total resi- dential real estate loans) at December 31, 2001, as compared to $16 mil- lion (2.14% of total residential real estate loans) and $9 million (1.82% of total residential real estate loans) at December 31, 2000 and 1999, respec- tively. 

Commercial Loans - The Corporation places all commercial loans (including commercial real estate and construction loans) 90 days delin- quent as to principal and interest in non-accruing status. The risk exposure of this portfolio is diversified. Non-accruing commercial loans amounted to $29 million (1.37% of total commercial loans) at December 31, 2001 as compared to $32 million (2.01% of total commercial loans) and $18 mil- lion (1.55% of total commercial loans) at December 31, 2000 and 1999, respectively. At December 31, 2001, there was only one non-accruing com- mercial loan of over $1 million (of $3.6 million). 

Finance Leases - Finance leases are classified as non-accruing when they are delinquent 90 days or more. Non-accruing finance leases amounted to $2 million (1.93% of total finance leases) at December 31, 2001, compared to $2 million (1.65% of total finance leases) at December 31, 2000, and $2 million (2.90% of total finance leases) at December 31, 1999. 

Consumer Loans - Consumer loans are classified as non-accruing when they are delinquent 90 days in auto, boat and home equity reserve loans, 120 days in personal loans (including small loans) and 180 days in credit cards and personal lines of credit. 

Non-accruing consumer loans amounted to $23 million (2.21% of the total consumer loan portfolio) at December 31, 2001, $18 million (or 1.71% of the total consumer loan portfolio) at December 31, 2000 and $25 million (or 2.41% of the total consumer loan portfolio) at December 31, 1999. 

## Other Real Estate Owned 

Other real estate owned acquired in settlement of loans is carried at the lower of cost (carrying value of the loan) or fair value less estimated cost to sell off the real estate at the date of acquisition. 

## Repossessed Property 

The Repossessed Property category includes repossessed boats and autos acquired in settlement of loans. Repossessed boats are recorded at the lower of cost or estimated fair value. Repossessed autos are recorded at the principal balance of the loans less an estimated loss on the disposition. 

## Past Due Loans 

Past due loans are accruing commercial and consumer loans, which are contractually delinquent 90 days or more. Past due commercial loans are current as to interest but delinquent in the payment of principal. Past due consumer loans include personal lines of credit and credit card loans delin- quent 90 days up to 179 days and personal loans (including small loans) delinquent 90 days up to 119 days. 

The Corporation’s principal funding sources are branch-based deposits, retail brokered deposits, institutional deposit, federal funds purchased, securities sold under agreements to repurchase, and FHLB advances. 

