plbc20150630

10-Q 1 plbc20150630_10q.htm FORM 10-Q plbc20150630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒		QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015

☐		TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ___________

COMMISSION FILE NUMBER: 000-49883

PLUMAS BANCORP

(Exact Name of Registrant as Specified in Its Charter)

California		75-2987096
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


35 S. Lindan Avenue, Quincy, California		95971
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (530) 283-7305

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 3, 2015. 4,821,432 shares

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PLUMAS BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

	June 30, 2015			December 31, 2014

Assets
Cash and cash equivalents	$	41,333		$	45,574
Investment securities available for sale		90,024			90,320
Loans, less allowance for loan losses of $5,780 at June 30, 2015 and $5,451 at December 31, 2014		388,786			366,787
Premises and equipment, net		12,296			11,642
Bank owned life insurance		12,016			11,845
Real estate acquired through foreclosure		2,970			3,590
Accrued interest receivable and other assets		10,162			9,104
Total assets	$	557,587		$	538,862

Liabilities and Shareholders’ Equity

Deposits:
Non-interest bearing	$	190,932		$	180,649
Interest bearing		302,436			287,242
Total deposits		493,368			467,891
Repurchase agreements		3,915			9,626
Note payable		5,000			1,000
Subordinated debenture		-			7,454
Accrued interest payable and other liabilities		5,973			6,084
Junior subordinated deferrable interest debentures		10,310			10,310
Total liabilities		518,566			502,365

Commitments and contingencies (Note 5)

Shareholders’ equity:
Common stock, no par value; 22,500,000 shares authorized; issued and outstanding – 4,821,432 shares at June 30, 2015 and 4,799,139 at December 31, 2014		6,389			6,312
Retained earnings		32,815			30,245
Accumulated other comprehensive loss, net		(183	)		(60	)
Total shareholders’ equity		39,021			36,497
Total liabilities and shareholders’ equity	$	557,587		$	538,862

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2015		2014		2015		2014
Interest Income:
Interest and fees on loans	$	5,148	$	4,758	$	10,090	$	9,366
Interest on investment securities		418		381		816		755
Other		28		26		64		55
Total interest income		5,594		5,165		10,970		10,176
Interest Expense:
Interest on deposits		125		131		249		264
Interest on note payable		44		31		55		63
Interest on subordinated debenture		32		189		219		377
Interest on junior subordinated deferrable interest debentures		75		75		150		149
Other		1		1		3		3
Total interest expense		277		427		676		856
Net interest income before provision for loan losses		5,317		4,738		10,294		9,320
Provision for Loan Losses		300		300		600		450
Net interest income after provision for loan losses		5,017		4,438		9,694		8,870
Non-Interest Income:
Service charges		1,006		1,064		1,945		2,058
Gain on sale of loans		317		444		974		776
Gain on sale of investments		-		-		30		-
Other		499		385		918		748
Total non-interest income		1,822		1,893		3,867		3,582
Non-Interest Expenses:
Salaries and employee benefits		2,426		2,393		5,144		4,762
Occupancy and equipment		680		757		1,380		1,536
Other		1,523		1,314		2,811		2,727
Total non-interest expenses		4,629		4,464		9,335		9,025
Income before provision for income taxes		2,210		1,867		4,226		3,427
Provision for Income Taxes		855		742		1,656		1,360
Net income	$	1,355	$	1,125	$	2,570	$	2,067

Basic earnings per share	$	0.28	$	0.23	$	0.53	$	0.43
Diluted earnings per share	$	0.27	$	0.23	$	0.51	$	0.42

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	For the Three Months						For the Six Months
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014

Net income	$	1,355		$	1,125		$	2,570		$	2,067
Other comprehensive (loss) income :
Change in net unrealized gain		(832	)		984			(179	)		1,522
Less: reclassification adjustments for net gains included in net income		-			-			(30	)		-
Net unrealized holding gains (losses)		(832	)		984			(209	)		1,522
Related tax effect:
Change in net unrealized gain		343			(406	)		74			(628	)
Reclassification of net gains included in net income		-			-			12			-
Income tax effect		343			(406	)		86			(628	)
Other comprehensive (loss) income		(489	)		578			(123	)		894
Total comprehensive income	$	866		$	1,703		$	2,447		$	2,961

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Six Months
	Ended June 30,
	2015			2014
Cash Flows from Operating Activities:
Net income	$	2,570		$	2,067
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		600			450
Change in deferred loan origination costs/fees, net		(279	)		(399	)
Depreciation and amortization		618			649
Stock-based compensation expense		41			33
Gain on sale of Investments		(30	)		-
Amortization of investment security premiums		248			249
Gain on sale of OREO and other vehicles		(42	)		(123	)
Gain on sale of loans held for sale		(974	)		(776	)
Loans originated for sale		(16,530	)		(9,075	)
Proceeds from loan sales		13,971			11,769
Provision from change in OREO valuation		43			135
Earnings on bank-owned life insurance		(170	)		(172	)
Increase in accrued interest receivable and other assets		(290	)		(149	)
(Decrease) increase in accrued interest payable and other liabilities		(111	)		175
Net cash (used in) provided by operating activities		(335	)		4,833

Cash Flows from Investing Activities:
Proceeds from matured and called available-for-sale investment securities		1,000			16,044
Proceeds from principal repayments from available-for-sale government-sponsored mortgage-backed securities		5,780			4,576
Purchases of available-for-sale securities		(13,994	)		(19,767	)
Proceeds from sale of available-for-sale securities		6,669			-
Net increase in loans		(19,427	)		(20,756	)
Proceeds from sale of OREO		834			2,805
Proceeds from sale of other vehicles		128			160
Purchase of premises and equipment		(1,202	)		(81	)
Net cash used in investing activities		(20,212	)		(17,019	)

Continued on next page.

PLUMAS BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

(Continued)

	For the Six Months
	Ended June 30,
	2015			2014
Cash Flows from Financing Activities:
Net increase in demand, interest bearing and savings deposits	$	28,915		$	10,638
Net decrease in time deposits		(3,438	)		(3,361	)
Net decrease in securities sold under agreements to repurchase		(5,711	)		(5,038	)
Borrowing on note payable		4,000			-
Redemption of subordinated debenture		(7,500	)		-
Proceeds from exercise of stock options		40			22
Net cash provided by financing activities		16,306			2,261
Decrease in cash and cash equivalents		(4,241	)		(9,925	)
Cash and Cash Equivalents at Beginning of Year		45,574			49,917
Cash and Cash Equivalents at End of Period	$	41,333		$	39,992

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest expense	$	596		$	772
Income taxes	$	2,295		$	1,200

Non-Cash Investing Activities:
Real estate and vehicles acquired through foreclosure	$	412		$	432

Non-Cash Financing Activities:
Common stock retired in connection with the exercise of stock options	$	32		$	-

See notes to unaudited condensed consolidated financial statements.

PLUMAS BANCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. GENERAL

During 2002, Plumas Bancorp (the "Company") was incorporated as a bank holding company for the purpose of acquiring Plumas Bank (the "Bank") in a one bank holding company reorganization. This corporate structure gives the Company and the Bank greater flexibility in terms of operation, expansion and diversification. The Company formed Plumas Statutory Trust I ("Trust I") for the sole purpose of issuing trust preferred securities on September 26, 2002. The Company formed Plumas Statutory Trust II ("Trust II") for the sole purpose of issuing trust preferred securities on September 28, 2005.

The Bank operates eleven branches in California, including branches in Alturas, Chester, Fall River Mills, Greenville, Kings Beach, Portola, Quincy, Redding, Susanville, Tahoe City, and Truckee. The Bank’s administrative headquarters is in Quincy, California. In addition, the Bank operates a loan administrative and lending office in Reno, Nevada, lending offices specializing in government-guaranteed lending in Auburn, California and Beaverton, Oregon and a commercial/agricultural lending office in Chico, California. The Bank's primary source of revenue is generated from providing loans to customers who are predominately small and middle market businesses and individuals residing in the surrounding areas.

2. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated financial statements include the accounts of the Company and the accounts of its wholly-owned subsidiary, Plumas Bank. Plumas Statutory Trust I and Plumas Statutory Trust II are not consolidated into the Company’s consolidated financial statements and, accordingly, are accounted for under the equity method. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position at June 30, 2015 and the results of its operations and its cash flows for the three-month and six-month periods ended June 30, 2015 and 2014. Our condensed consolidated balance sheet at December 31, 2014 is derived from audited financial statements. Certain reclassifications have been made to prior period’s balances to conform to classifications used in 2015.

The unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting on Form 10-Q. Accordingly, certain disclosures normally presented in the notes to the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted. The Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2014 Annual Report to Shareholders on Form 10-K. The results of operations for the three-month and six-month periods ended June 30, 2015 may not necessarily be indicative of future operating results. In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the periods reported. Actual results could differ significantly from those estimates.

Management has determined that because all of the commercial banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No single customer accounts for more than 10% of the revenues of the Company or the Bank.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of investment securities at June 30, 2015 and December 31, 2014 consisted of the following, in thousands:

Available-for-Sale	June 30, 2015
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies	$	6,086	$	34	$	(5	)	$	6,115
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential		68,363		151		(537	)		67,977
Obligations of states and political subdivisions		15,886		127		(81	)		15,932
	$	90,335	$	312	$	(623	)	$	90,024

Net unrealized loss on available-for-sale investment securities totaling $311,000 were recorded, net of $128,000 in tax expense, as accumulated other comprehensive income within shareholders' equity at June 30, 2015. During the six months ended June 30, 2015 the Company sold eight available-for-sale investment securities for total proceeds of $6,669,000 recording a $30,000 gain on sale. The Company realized a gain on sale from five of these securities totaling $37,000 and a loss on sale on three securities of $7,000. No securities were sold during the three months ended June 30, 2015.

Available-for-Sale	December 31, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies	$	7,003	$	19	$	(20	)	$	7,002
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential		70,610		192		(522	)		70,280
Obligations of states and political subdivisions		12,307		234		(9	)		12,532
Corporate debt		502		4		-			506
	$	90,422	$	449	$	(551	)	$	90,320

Net unrealized loss on available-for-sale investment securities totaling $102,000 were recorded, net of $42,000 in tax benefits, as accumulated other comprehensive income within shareholders' equity at December 31, 2014. No securities were sold during the six months ended June 30, 2014.

There were no transfers of available-for-sale investment securities during the six months ended June 30, 2015 and twelve months ended December 31, 2014. There were no securities classified as held-to-maturity at June 30, 2015 or December 31, 2014.

Investment securities with unrealized losses at June 30, 2015 and December 31, 2014 are summarized and classified according to the duration of the loss period as follows, in thousands:

June 30, 2015
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government- sponsored agencies	$	993	$	5					$	993	$	5
U.S. Government agencies collateralized by mortgage obligations-residential		23,169		188	$	14,278	$	349		37,447		537
Obligations of states and political subdivisions		6,527		81		-		-		6,527		81
	$	30,689	$	274	$	14,278	$	349	$	44,967	$	623

December 31, 2014
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government- sponsored agencies	$	994	$	6	$	2,985	$	14	$	3,979	$	20
U.S. Government agencies collateralized by mortgage obligations-residential		4,504		17		28,643		505		33,147		522
Obligations of states and political subdivisions		2,014		9		-		-		2,014		9
	$	7,512	$	32	$	31,628	$	519	$	39,140	$	551

At June 30, 2015, the Company held 129 securities of which 59 were in a loss position. Of the securities in a loss position, 44 were in a loss position for less than twelve months. Of the 59 securities 1 is a U.S. Government-sponsored agency, 34 are U.S. Government-sponsored agencies collateralized by residential mortgage obligations and 24 were obligations of states and political subdivisions. The unrealized losses relate principally to market rate conditions. All of the securities continue to pay as scheduled. When analyzing an issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Company’s intent and ability to hold the security to recovery. As of June 30, 2015, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before the recovery of its amortized cost basis. Based on the Company’s evaluation of the above and other relevant factors, the Company does not believe the securities that are in an unrealized loss position as of June 30, 2015 are other than temporarily impaired.

The amortized cost and estimated fair value of investment securities at June 30, 2015 by contractual maturity are shown below, in thousands.

	Amortized Cost		Estimated Fair Value
Within one year	$	-	$	-
After one year through five years		6,086		6,115
After five years through ten years		12,164		12,226
After ten years		3,722		3,706
Investment securities not due at a single maturity date:
Government-sponsored mortgage-backed securities		68,363		67,977
	$	90,335	$	90,024

Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties. Investment securities with amortized costs totaling $57,518,000 and $57,793,000 and estimated fair values totaling $57,368,000 and $57,636,000 at June 30, 2015 and December 31, 2014, respectively, were pledged to secure deposits and repurchase agreements.

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Outstanding loans are summarized below, in thousands:

	June 30,			December 31,
	2015			2014

Commercial	$	36,458		$	31,465
Agricultural		38,542			35,355
Real estate - residential		27,346			29,284
Real estate – commercial		174,258			163,306
Real estate – construction and land development		26,594			24,572
Equity lines of credit		38,634			38,972
Auto		47,425			44,618
Other		3,315			2,818
		392,572			370,390
Deferred loan costs, net		1,994			1,848
Allowance for loan losses		(5,780	)		(5,451	)
	$	388,786		$	366,787

Changes in the allowance for loan losses, in thousands, were as follows:

	June 30,			December 31,
	2015			2014

Balance, beginning of year	$	5,451		$	5,517
Provision charged to operations		600			1,100
Losses charged to allowance		(450	)		(1,913	)
Recoveries		179			747
Balance, end of year	$	5,780		$	5,451

The recorded investment in impaired loans totaled $7,036,000 and $8,582,000 at June 30, 2015 and December 31, 2014, respectively. The Company had specific allowances for loan losses of $551,000 on impaired loans of $2,295,000 at June 30, 2015 as compared to specific allowances for loan losses of $564,000 on impaired loans of $2,401,000 at December 31, 2014. The balance of impaired loans in which no specific reserves were required totaled $4,741,000 and $6,181,000 at June 30, 2015 and December 31, 2014, respectively. The average recorded investment in impaired loans for the six months ended June 30, 2015 and June 30, 2014 was $7,096,000 and $8,982,000, respectively. The Company recognized $60,000 and $64,000 in interest income on impaired loans during the six months ended June 30, 2015 and 2014, respectively. No interest was recognized on impaired loans accounted for on a cash basis during the six months ended June 30, 2015 and 2014, respectively.

Included in impaired loans are troubled debt restructurings. A troubled debt restructuring is a formal restructure of a loan where the Company for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower. The concessions may be granted in various forms to include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The carrying value of troubled debt restructurings at June 30, 2015 and December 31, 2014 was $4,817,000 and $5,738,000, respectively. The Company has allocated $276,000 and $319,000 of specific reserves on loans to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2015 and December 31, 2014, respectively. The Company has not committed to lend additional amounts on loans classified as troubled debt restructurings at June 30, 2015 and December 31, 2014.

There were no troubled debt restructurings that occurred during the six months ended June 30, 2015 and 2014, respectively.

There were no troubled debt restructurings for which there was a payment default within twelve months following the modification during the six months ended June 30, 2015 and 2014, respectively.

At June 30, 2015 and December 31, 2014, nonaccrual loans totaled $5,078,000 and $6,625,000, respectively. Interest foregone on nonaccrual loans totaled $220,000 and $204,000 for the six months ended June 30, 2015 and 2014, respectively. Interest foregone on nonaccrual loans totaled $102,000 and $103,000 for the three months ended June 30, 2015 and 2014, respectively. No loans were past due 90 days or more and on accrual status at June 30, 2015 and December 31, 2014.

The Company assigns a risk rating to all loans, with the exception of automobile and other loans and periodically, but not less than annually, performs detailed reviews of all such loans over $100,000 to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by the Company and the Company’s regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The risk ratings can be grouped into five major categories, defined as follows:

Pass – A pass loan is a strong credit with no existing or known potential weaknesses deserving of management's close attention.

Watch – A Watch loan has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Watch loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard – A substandard loan is not adequately protected by the current sound worth and paying capacity of the borrower or the value of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well defined weaknesses include a project’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project's failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loss – Loans classified as loss are considered uncollectible and charged off immediately.

Other real estate owned totaled $2,970,000 and $3,590,000 at June 30, 2015 and December 31, 2014, respectively. Of these amount $117,000 at June 30, 2015 and $146,000 at December 31, 2014 represent foreclosed residential real estate property. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $99,000 at June 30, 2015 and $0 at December 31, 2014.

The following table shows the loan portfolio allocated by management's internal risk ratings at the dates indicated, in thousands:

June 30, 2015	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade

	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Grade:
Pass	$	35,199	$	37,805	$	26,830	$	168,886	$	25,020	$	38,175	$	331,915
Watch		496		354		83		1,278		665		146		3,022
Substandard		763		383		433		4,094		909		313		6,895
Doubtful		-		-		-		-		-		-		-
Total	$	36,458	$	38,542	$	27,346	$	174,258	$	26,594	$	38,634	$	341,832

December 31, 2014	Commercial Credit Exposure
	Credit Risk Profile by Internally Assigned Grade

	Commercial		Agricultural		Real Estate-Residential		Real Estate-Commercial		Real Estate-Construction		Equity LOC		Total
Grade:
Pass	$	30,176	$	34,609	$	28,048	$	156,329	$	22,924	$	38,373	$	310,459
Watch		789		355		233		2,297		537		146		4,357
Substandard		500		391		1,003		4,680		1,111		453		8,138
Doubtful		-		-		-		-		-		-		-
Total	$	31,465	$	35,355	$	29,284	$	163,306	$	24,572	$	38,972	$	322,954

	Consumer Credit Exposure						Consumer Credit Exposure
	Credit Risk Profile Based on Payment Activity						Credit Risk Profile Based on Payment Activity
	June 30, 2015						December 31, 2014
	Auto		Other		Total		Auto		Other		Total
Grade:
Performing	$	47,351	$	3,310	$	50,661	$	44,523	$	2,805	$	47,328
Non-performing		74		5		79		95		13		108
Total	$	47,425	$	3,315	$	50,740	$	44,618	$	2,818	$	47,436

The following tables show the allocation of the allowance for loan losses at the dates indicated, in thousands:

Six months ended June 30, 2015:	Commercial			Agricultural			Real Estate- Residential			Real Estate- Commercial			Real Estate- Construction			Equity LOC			Auto			Other			Total
Allowance for Loan Losses
Beginning balance	$	574		$	225		$	379		$	1,701		$	1,227		$	691		$	581		$	73		$	5,451
Charge-offs		(54	)		(3	)		(53	)		-			(55	)		(59	)		(204	)		(22	)		(450	)
Recoveries		90			-			4			-			-			3			55			27			179
Provision		18			20			69			439			(141	)		(101	)		285			11			600
Ending balance	$	628		$	242		$	399		$	2,140		$	1,031		$	534		$	717		$	89		$	5,780
Three months ended June 30, 2015:
Allowance for Loan Losses
Beginning balance	$	582		$	222		$	419		$	1,963		$	1,228		$	587		$	627		$	94		$	5,722
Charge-offs		(14	)		(3	)		(48	)		-			(54	)		(51	)		(93	)		(12	)		(275	)
Recoveries		9			-			2			-			-			1			12			9			33
Provision		51			23			26			177			(143	)		(3	)		171			(2	)		300
Ending balance	$	628		$	242		$	399		$	2,140		$	1,031		$	534		$	717		$	89		$	5,780
Six months ended June 30, 2014:
Allowance for Loan Losses
Beginning balance	$	785		$	164		$	638		$	1,774		$	944		$	613		$	449		$	150		$	5,517
Charge-offs		(93	)		-			(145	)		(679	)		-			(142	)		(105	)		(57	)		(1,221	)
Recoveries		27			-			27			1			491			13			21			32			612
Provision		(16	)		47			(97	)		590			(295	)		119			101			1			450
Ending balance	$	703		$	211		$	423		$	1,686		$	1,140		$	603		$	466		$	126		$	5,358
Three months ended June 30, 2014:
Allowance for Loan Losses
Beginning balance	$	542		$	177		$	604		$	1,962		$	1,166		$	711		$	429		$	124		$	5,715
Charge-offs		(7	)		-			(145	)		(679	)		-			(131	)		(34	)		(30	)		(1,026	)
Recoveries		14			-			8			-			329			1			9			8			369
Provision		154			34			(44	)		403			(355	)		22			62			24			300
Ending balance	$	703		$	211		$	423		$	1,686		$	1,140		$	603		$	466		$	126		$	5,358
June 30, 2015:
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	32		$	-		$	56		$	204		$	220		$	34		$	-		$	5		$	551
Ending balance: collectively evaluated for impairment	$	596		$	242		$	343		$	1,936		$	811		$	500		$	717		$	84		$	5,229
Loans
Ending balance	$	36,458		$	38,542		$	27,346		$	174,258		$	26,594		$	38,634		$	47,425		$	3,315		$	392,572
Ending balance: individually evaluated for impairment	$	92		$	594		$	1,657		$	3,288		$	1,048		$	278		$	74		$	5		$	7,036
Ending balance: collectively evaluated for impairment	$	36,366		$	37,948		$	25,689		$	170,970		$	25,546		$	38,356		$	47,351		$	3,310		$	385,536

December 31, 2014		Commercial		Agricultural		Real Estate- Residential		Real Estate- Commercial		Real Estate- Construction		Equity LOC		Auto		Other		Total
Allowance for Loan Losses
Ending balance: individually evaluated for impairment	$	-	$	-	$	51	$	65	$	274	$	174	$	-	$	-	$	564
Ending balance: collectively evaluated for impairment	$	574	$	225	$	328	$	1,636	$	953	$	517	$	581	$	73	$	4,887
Loans
Ending balance	$	31,465	$	35,355	$	29,284	$	163,306	$	24,572	$	38,972	$	44,618	$	2,818	$	370,390
Ending balance: individually evaluated for impairment	$	55	$	605	$	2,518	$	3,643	$	1,252	$	415	$	93	$	1	$	8,582
Ending balance: collectively evaluated for impairment	$	31,410	$	34,750	$	26,766	$	159,663	$	23,320	$	38,557	$	44,525	$	2,817	$	361,808

The following table shows an aging analysis of the loan portfolio by the time past due, in thousands:

June 30, 2015	30-89 Days		90 Days and				Total
	Past Due		Still Accruing		Nonaccrual		Past Due		Current			Total

Commercial	$	203	$	-	$	53	$	256	$	36,202	$	36,458
Agricultural		7		-		332		339		38,203		38,542
Real estate – residential		1,546		-		139		1,685		25,661		27,346
Real estate – commercial		179		-