ACCOUNTING FOR CERTAIN LOANS ACQUIRED IN A PURCHASE

The acquired loans detailed in the tables below are included in Note 4. LOANS AND ALLOWANCE, in the Notes to Consolidated Condensed Financial Statements of this Form 10-Q. As described in Note 4, loans purchased after December 31, 2008 are recorded at the acquisition date fair value, which could result in a fair value discount or premium. Purchased loans with evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the acquirer will not collect all contractually required principal and interest payments are accounted for under ASC 310-30, Loans Acquired with Deteriorated Credit Quality. The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the nonaccretable portion of the fair value discount or premium. The accretable portion of the fair value discount or premium is the difference between the expected cash flows and the net present value of expected cash flows, with such difference accreted into earnings over the term of the loans. All other loans not accounted for under ASC 310-30 are accounted for under ASC 310-20.

The following table includes the outstanding balance and carrying amount of loans acquired during the years 2012, 2013, 2014 and 2015, which are included in the balance sheet amounts of loans receivable at June 30, 2015, and December 31, 2014 as applicable.



	June 30, 2015
	C Financial		Community		CFS		SCB		Total
Commercial and industrial loans	$	114	$	7,245	$	59,166	$	5,272	$	71,797
Agricultural production financing and other loans to farmers			1,534		50		1,234		2,818
Real estate loans:
Construction	7,267		12,600		6,612				26,479
Commercial and farmland	28,287		63,460		224,675		14,575		330,997
Residential	61,188		25,337		128,972		6,643		222,140
Home Equity	10,407		8,805		35,327		14,241		68,780
Individuals' loans for household and other personal expenditures	14		711		642		81		1,448
Other commercial loans					83				83
Total	$	107,277	$	119,692	$	455,527	$	42,046	$	724,542

Carrying Amount	$	104,714	$	112,171	$	433,744	$	36,467	$	687,096
Allowance			193		160				353
Carrying Amount Net of Allowance	$	104,714	$	111,978	$	433,584	$	36,467	$	686,743



	December 31, 2014
	Community		CFS		SCB		Total
Commercial and industrial loans	$	8,168	$	64,897	$	6,059	$	79,124
Agricultural production financing and other loans to farmers	1,100				893		1,993
Real estate loans:
Construction	19,063		9,113				28,176
Commercial and farmland	74,600		251,002		15,593		341,195
Residential	28,863		144,396		7,384		180,643
Home Equity	9,881		39,244		15,758		64,883
Individuals' loans for household and other personal expenditures	1,314		922		121		2,357
Other commercial loans			86				86
Total	$	142,989	$	509,660	$	45,808	$	698,457

Carrying Amount	$	134,198	$	484,949	$	39,324	$	658,471
Allowance			650				650
Carrying Amount Net of Allowance	$	134,198	$	484,299	$	39,324	$	657,821

The balance in the allowance for loan losses for loans acquired and accounted for under ASC 310-30 was $353,000 and $650,000 at June 30, 2015 and December 31, 2014, respectively.

As customer cash flow expectations improve, nonaccretable yield can be reclassified to accretable yield. The accretable yield, or income expected to be collected, and reclassifications from nonaccretable yield, are identified in the table below. The table reflects only purchased loans accounted for under ASC 310-30 and not the entire portfolio of purchased loans.



	Three Months Ended June 30, 2015
	C Financial			Community			CFS			SCB			Total
Beginning balance				$	1,990		$	2,009		$	818		$	4,817
Additions	$	145											145
Accretion	(12		)	(353		)	(578		)	(304		)	(1,247		)
Reclassification from nonaccretable				181			309			244			734
Disposals							(8		)				(8		)
Ending balance	$	133		$	1,818		$	1,732		$	758		$	4,441



	Six Months Ended June 30, 2015
	C Financial			Community			CFS			SCB			Total
Beginning balance				$	2,122		$	2,400		$	868		$	5,390
Additions	$	145											145
Accretion	(12		)	(532		)	(1,919		)	(489		)	(2,952		)
Reclassification from nonaccretable				228			1,259			379			1,866
Disposals							(8		)				(8		)
Ending balance	$	133		$	1,818		$	1,732		$	758		$	4,441



	Three Months Ended June 30, 2014
	CFS			SCB			Total
Beginning balance	$	4,080		$	1,256		$	5,336
Additions
Accretion	(1,242		)	(215		)	(1,457		)
Reclassification from nonaccretable	650			129			779
Disposals
Ending balance	$	3,488		$	1,170		$	4,658



	Six Months Ended June 30, 2014
	CFS			SCB			Total
Beginning balance	$	4,164		$	1,388		$	5,552
Additions
Accretion	(1,543		)	(402		)	(1,945		)
Reclassification from nonaccretable	902			184			1,086
Disposals	(35		)				(35		)
Ending balance	$	3,488		$	1,170		$	4,658