Allowance for Credit Losses

The following table shows the allocation of the allowance for credit losses as of and for the three-month period ended March 31, 2012 and 2011 by portfolio segment and by impairment methodology (in thousands):



	Commercial			Real Estate			Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, January 1, 2012	$	2,266		$	7,155		$	1,836		$	139		$	11,396
Provision charged to operations	485			(542		)	307			150			400
Losses charged to allowance	(106		)	(1,473		)	(90		)	—			(1,669		)
Recoveries	69			—			89			—			158
Ending balance, March 31, 2012	$	2,714		$	5,140		$	2,142		$	289		$	10,285
Ending balance: individually evaluated for impairment	$	577		$	477		$	183		—			$	1,237
Ending balance: collectively evaluated for impairment	$	2,137		$	4,663		$	1,959		$	289		$	9,048

Allowance for credit losses:
Beginning balance, January 1, 2011	$	2,437		$	5,836		$	2,503		$	238		$	11,014
Provision charged to operations	505			703			(1,417		)	309			100
Losses charged to allowance	(156		)	(26		)	(102		)	(37		)	(321		)
Recoveries	174			23			14			15			226
Ending balance, March 31, 2011	$	2,960		$	6,536		$	998		$	525		$	11,019
Ending balance: individually evaluated for impairment	$	1		$	1,681		$	20		$	—		$	1,702
Ending balance: collectively evaluated for impairment	$	2,959		$	4,855		$	978		$	525		$	9,317

The following table shows the ending balances as of March 31, 2012 and December 31, 2011 by portfolio segment and by impairment methodology (in thousands):



	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, March 31, 2012	$	101,325	$	251,145	$	56,682	$	409,152
Ending balance: individually evaluated for impairment	$	2,980	$	13,418	$	2,193	$	18,591
Ending balance: collectively evaluated for impairment	$	98,345	$	237,727	$	54,489	$	390,561

Loans:
Ending balance, December 31, 2011	$	108,047	$	259,241	$	60,871	$	428,159
Ending balance: individually evaluated for impairment	$	3,857	$	17,359	$	2,428	$	23,644
Ending balance: collectively evaluated for impairment	$	104,190	$	241,882	$	58,443	$	404,515

The following table shows the loan portfolio allocated by management’s internal risk ratings at March 31, 2012 (in thousands):



	Pass		Special Mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	72,876	$	2,681	$	4,416	$	—	$	79,973
Agricultural land and production	21,352		—		—		—		21,352
Real Estate:
Owner occupied	101,298		2,687		5,000		—		108,985
Real estate construction and other land loans	15,785		3,991		13,006		—		32,782
Commercial real estate	46,894		3,895		6,587		—		57,376
Agricultural real estate	41,256		2,362		—		—		43,618
Other real estate	8,384		—		—		—		8,384
Consumer:
Equity loans and lines of credit	43,006		1,024		3,089		—		47,119
Consumer and installment	9,330		98		135		—		9,563
Total	$	360,181	$	16,738	$	32,233	$	—	$	409,152

The following table shows the loan portfolio allocated by management’s internally assigned risk grade ratings at December 31, 2011 (in thousands):



	Pass		Special Mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	70,093	$	2,595	$	5,401	$	—	$	78,089
Agricultural land and production	29,958		—		—		—		29,958
Real Estate:
Owner occupied	105,308		3,125		4,750		—		113,183
Real estate construction and other land loans	15,717		4,056		13,274		—		33,047
Commercial real estate	47,323		5,035		10,165		—		62,523
Agricultural real estate	40,808		1,788		—		—		42,596
Other real estate	7,672		220		—		—		7,892
Consumer:
Equity loans and lines of credit	46,939		1,047		3,120		—		51,106
Consumer and installment	9,570		105		90		—		9,765
Total	$	373,388	$	17,971	$	36,800	$	—	$	428,159

The following table shows an aging analysis of the loan portfolio by the time past due at March 31, 2012 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	—	$	3	$	—	$	3	$	79,970	$	79,973	$	—	$	24
Agricultural land and production	—		—		—		—		21,352		21,352		—		—
Real estate:	—						—		—		—
Owner occupied	171		—		—		171		108,814		108,985		—		1,229
Real estate construction and other land loans	755		—		—		755		32,027		32,782		—		6,696
Commercial real estate	—		—		—		—		57,376		57,376		—		—
Agricultural real estate	—		—		—		—		43,618		43,618		—		—
Other real estate	—		—		—		—		8,384		8,384		—		—
Consumer:							—		—		—
Equity loans and lines of credit	108		—		—		108		47,011		47,119		—		2,120
Consumer and installment	33		—		72		105		9,458		9,563		—		73
Total	$	1,067	$	3	$	72	$	1,142	$	408,010	$	409,152	$	—	$	10,142

The following table shows an aging analysis of the loan portfolio by the time past due at December 31, 2011 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	57	$	—	$	236	$	293	$	77,796	$	78,089	$	—	$	267
Agricultural land and production	—		—		—		—		29,958		29,958		—		—
Real estate:	—
Owner occupied	—		—		122		122		113,061		113,183		—		1,372
Real estate construction and other land loans	1,532		—		—		1,532		31,515		33,047		—		6,823
Commercial real estate	—		—		3,544		3,544		58,979		62,523		—		3,544
Agricultural real estate	—		—		—		—		42,596		42,596		—		—
Other real estate	—		—		—		—		7,892		7,892		—		—
Consumer:
Equity loans and lines of credit	123		—		97		220		50,886		51,106		—		2,354
Consumer and installment	29		74		—		103		9,662		9,765		—		74
Total	$	1,741	$	74	$	3,999	$	5,814	$	422,345	$	428,159	$	—	$	14,434

The following table shows information related to impaired loans at March 31, 2012 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,480	$	1,502	$	—
Agricultural land and production	—		—		—
Total commercial	1,480		1,502		—
Real estate:
Owner occupied	226		241		—
Real estate construction and other land loans	6,696		7,774		—
Commercial real estate	—		—		—
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	6,922		8,015		—
Consumer:
Equity loans and lines of credit	1,858		2,097		—
Consumer and installment	—		—		—
Total consumer	1,858		2,097		—
Total with no related allowance recorded	10,260		11,614		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,500		1,501		577
Agricultural land and production	—		—		—
Total commercial	1,500		1,501		577
Real estate:
Owner occupied	1,004		1,082		104
Real estate construction and other land loans	5,492		5,492		373
Commercial real estate	—		—		—
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	6,496		6,574		477
Consumer:
Equity loans and lines of credit	263		286		173
Consumer and installment	72		74		10
Total consumer	335		360		183
Total with an allowance recorded	8,331		8,435		1,237
Total	$	18,591	$	20,049	$	1,237

The following table shows information related to impaired loans at December 31, 2011 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,140	$	2,160	$	—
Agricultural land and production	—		—		—
Total commercial	2,140		2,160		—
Real estate:
Owner occupied	231		243		—
Real estate construction and other land loans	1,532		1,906		—
Commercial real estate	1,801		1,801		—
Agricultural real estate	—		—		—
Total real estate	3,564		3,950		—
Consumer:
Equity loans and lines of credit	—		—		—
Consumer and installment	—		—		—
Total consumer	—		—		—
Total with no related allowance recorded	5,704		6,110		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,717		1,718		231
Agricultural land and production	—		—		—
Total commercial	1,717		1,718		231
Real estate:
Owner occupied	1,141		1,216		268
Real estate construction and other land loans	10,911		11,490		2,130
Commercial real estate	1,743		1,743		1,366
Agricultural real estate	—		—		—
Other real estate	—		—		—
Total real estate	13,795		14,449		3,764
Consumer:
Equity loans and lines of credit	2,354		2,581		350
Consumer and installment	74		74		23
Total consumer	2,428		2,655		373
Total with an allowance recorded	17,940		18,822		4,368
Total	$	23,644	$	24,932	$	4,368

The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2012 and 2011.



	Three Months Ended March 31, 2012				Three Months Ended March 31, 2011
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	1,666	$	—	$	1,225	$	—
Agricultural land and production	—		—		—		—
Total commercial	1,666		—		1,225		—
Real estate:
Owner occupied	227		—		763		—
Real estate construction and other land loans	4,990		—		1,852		—
Commercial real estate	—		—		1,811		—
Agricultural real estate	—		—		—		—
Other real estate	—		—		—		—
Total real estate	5,217		—		4,426		—
Consumer:
Equity loans and lines of credit	1,243		—		522		—
Consumer and installment	—		—		—		—
Total consumer	1,243		—		522		—
Total with no related allowance recorded	8,126		—		6,173		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,514		71		179		—
Agricultural land and production	—		—		—		—
Total commercial	1,514		71		179		—
Real estate:
Owner occupied	1,009		—		1,064		—
Real estate construction and other land loans	3,704		99		5,830		—
Commercial real estate	—		—		—		—
Agricultural real estate	—		—		—		—
Other real estate	—		—		2,261		—
Total real estate	4,713		99		9,155		—
Consumer:
Equity loans and lines of credit	176		—		—		—
Consumer and installment	73		—		82		—
Total consumer	249		—		82		—
Total with an allowance recorded	6,476		170		9,416		—
Total	$	14,602	$	170	$	15,589	$	—

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

Foregone interest on nonaccrual loans totaled $178,000 and $288,000 for the three month periods ended March 31, 2012 and 2011, respectively.

Included in the impaired and nonaccrual loans above at March 31, 2012 are 10 loans considered troubled debt restructurings totaling $17,764,000.

Troubled Debt Restructurings:

During the three month periods ending March 31, 2012 and 2011, no loans were modified as troubled debt restructurings.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the three months ended March 31, 2012.