Note 4. Loans and the Allowance for Loan Losses

The following is a summary of the balances in each class of the Company’s portfolio of loans held for investment as of the dates indicated:

(dollars in thousands)	June 30, 2019		December 31, 2018
Mortgage loans on real estate:
Residential 1-4 family	$	114,776	$	110,009
Commercial - owner occupied		145,683		155,245
Commercial - non-owner occupied		129,922		131,287
Multifamily		28,516		28,954
Construction		38,599		32,383
Second mortgages		15,289		17,297
Equity lines of credit		52,964		57,649
Total mortgage loans on real estate		525,749		532,824
Commercial and industrial loans		74,707		63,398
Consumer automobile loans		109,423		120,796
Other consumer loans		42,154		48,342
Other		9,145		8,649
Total loans, net of deferred fees		761,178		774,009
Less: Allowance for loan losses		10,757		10,111
Loans, net of allowance and deferred fees ⁽¹⁾	$	750,421	$	763,898

⁽¹⁾ Net deferred loan fees totaled $748 thousand and $864 thousand at June 30, 2019 and December 31, 2018, respectively.

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts, excluding internal use accounts, totaled $535 thousand and $628 thousand at June 30, 2019 and December 31, 2018, respectively.

Acquired Loans

The outstanding principal balance and the carrying amount of total acquired loans included in the consolidated balance sheet as of June 30, 2019 and December 31, 2018 are as follows:

(dollars in thousands)	June 30, 2019		December 31, 2018
Outstanding principal balance	$	27,208	$	31,940
Carrying amount		26,842		31,497

The outstanding principal balance and related carrying amount of purchased credit-impaired loans, for which the Company applies FASB ASC 310-30 to account for interest earned, as of June 30, 2019 and December 31, 2018 are as follows:

(dollars in thousands)	June 30, 2019		December 31, 2018
Outstanding principal balance	$	237	$	246
Carrying amount		80		91

The following table presents changes in the accretable yield on purchased credit-impaired loans, for which the Company applies FASB ASC 310-30, at June 30, 2019:

(dollars in thousands)	June 30, 2019
Balance at January 1, 2019	$	12
Accretion		(2	)
Balance at end of period		10

CREDIT QUALITY INFORMATION

The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans. Credit risk grades are updated at least quarterly as additional information becomes available, at which time management analyzes the resulting scores to track loan performance.

The Company’s internally assigned risk grades are as follows:

•

Pass: Loans are of acceptable risk.

•

Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management’s close attention.

•

Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.

•

Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable.

•

Loss: Loans have been identified for charge-off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information

As of June 30, 2019

(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	113,004	$	-	$	1,772	$	-	$	114,776
Commercial - owner occupied		131,936		4,588		9,159		-		145,683
Commercial - non-owner occupied		122,273		3,975		3,674		-		129,922
Multifamily		28,516		-		-		-		28,516
Construction		38,529		70		-		-		38,599
Second mortgages		15,185		-		104		-		15,289
Equity lines of credit		52,957		-		7		-		52,964
Total mortgage loans on real estate	$	502,400	$	8,633	$	14,716	$	-	$	525,749
Commercial and industrial loans		73,115		1,157		435		-		74,707
Consumer automobile loans		108,827		-		596		-		109,423
Other consumer loans		42,112		-		42		-		42,154
Other		9,145		-		-		-		9,145
Total	$	735,599	$	9,790	$	15,789	$	-	$	761,178

As of December 31, 2018

(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	108,274	$	-	$	1,735	$	-	$	110,009
Commercial - owner occupied		140,664		4,067		10,514		-		155,245
Commercial - non-owner occupied		121,523		3,937		5,827		-		131,287
Multifamily		28,954		-		-		-		28,954
Construction		31,896		71		416		-		32,383
Second mortgages		17,007		-		290		-		17,297
Equity lines of credit		56,893		-		756		-		57,649
Total mortgage loans on real estate	$	505,211	$	8,075	$	19,538	$	-	$	532,824
Commercial and industrial loans		60,967		1,987		444		-		63,398
Consumer automobile loans		120,365		-		431		-		120,796
Other consumer loans		48,298		-		44		-		48,342
Other		8,649		-		-		-		8,649
Total	$	743,490	$	10,062	$	20,457	$	-	$	774,009

AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection.

Age Analysis of Past Due Loans as of June 30, 2019

(dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due and still Accruing		PCI		Nonaccrual (2)		Total Current Loans (1)		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	-	$	191	$	156	$	-	$	1,395	$	113,034	$	114,776
Commercial - owner occupied		-		-		-		80		5,590		140,013		145,683
Commercial - non-owner occupied		-		-		-		-		3,673		126,249		129,922
Multifamily		-		-		-		-		-		28,516		28,516
Construction		-		-		-		-		-		38,599		38,599
Second mortgages		-		-		-		-		104		15,185		15,289
Equity lines of credit		7		-		-		-		7		52,950		52,964
Total mortgage loans on real estate	$	7	$	191	$	156	$	80	$	10,769	$	514,546	$	525,749
Commercial and industrial loans		-		-		-		-		434		74,273		74,707
Consumer automobile loans		1,067		299		142		-		-		107,915		109,423
Other consumer loans		817		551		900		-		-		39,886		42,154
Other		111		12		24		-		-		8,998		9,145
Total	$	2,002	$	1,053	$	1,222	$	80	$	11,203	$	745,618	$	761,178

⁽¹⁾For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

⁽²⁾Includes past due loans in non-accrual status of $3.5 million.

In the table above, the past due totals include student loans and small business loans with principal and interest amounts that are 97 - 100% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $1.6 million at June 30, 2019.

Age Analysis of Past Due Loans as of December 31, 2018

(dollars in thousands)	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due and still Accruing		PCI		Nonaccrual (2)		Total Current Loans (1)		Total Loans
Mortgage loans on real estate:
Residential 1-4 family	$	1,165	$	553	$	180	$	-	$	1,386	$	106,725	$	110,009
Commercial - owner occupied		1,059		83		-		91		5,283		148,729		155,245
Commercial - non-owner occupied		-		-		-		-		4,371		126,916		131,287
Multifamily		-		-		-		-		-		28,954		28,954
Construction		-		-		205		-		417		31,761		32,383
Second mortgages		17		-		135		-		155		16,990		17,297
Equity lines of credit		60		-		-		-		231		57,358		57,649
Total mortgage loans on real estate	$	2,301	$	636	$	520	$	91	$	11,843	$	517,433	$	532,824
Commercial and industrial loans		1,595		-		-		-		298		61,505		63,398
Consumer automobile loans		1,645		291		114		-		-		118,746		120,796
Other consumer loans		1,333		621		1,851		-		-		44,537		48,342
Other		133		8		12		-		-		8,496		8,649
Total	$	7,007	$	1,556	$	2,497	$	91	$	12,141	$	750,717	$	774,009

⁽¹⁾For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

⁽²⁾Includes past due loans in non-accrual status of $3.9 million.

In the table above, the other consumer loans category includes student and small business loans with principal and interest amounts that are 97 - 100% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $4.0 million at December 31, 2018.

Although the portions of the student and small business loan portfolios that are 90 days or more past due would normally be considered impaired, the Company does not include these loans in its impairment analysis. Because the federal government has provided guarantees of repayment of these student and small business loans in an amount ranging from 97% to 100% of the total principal and interest of the loans, management does not expect significant increases in delinquencies of these loans to have a material effect on the Company.

NONACCRUAL LOANS

The Company generally places commercial and industrial loans (including construction loans and commercial loans secured and not secured by real estate) in nonaccrual status when the full and timely collection of interest or principal becomes uncertain, part of the principal balance has been charged off and no restructuring has occurred or the loan reaches 90 days past due, unless the credit is well-secured and in the process of collection.

Under regulatory rules, consumer loans, which are loans to individuals for household, family and other personal expenditures, and consumer loans secured by real estate (including residential 1 - 4 family mortgages, second mortgages, and equity lines of credit) are not required to be placed in nonaccrual status. Although consumer loans and consumer loans secured by real estate are not required to be placed in nonaccrual status, the Company may elect to place these loans in nonaccrual status, if necessary to avoid a material overstatement of interest income. Generally, consumer loans secured by real estate are placed in nonaccrual status only when payments are 120 days past due.

Generally, consumer loans not secured by real estate are placed in nonaccrual status only when part of the principal has been charged off. If a charge-off has not occurred sooner for other reasons, a consumer loan not secured by real estate will generally be placed in nonaccrual status when payments are 120 days past due. These loans are charged off or written down to the net realizable value of the collateral when deemed uncollectible, when classified as a “loss,” when repayment is unreasonably protracted, when bankruptcy has been initiated, or when the loan is 120 days or more past due unless the credit is well-secured and in the process of collection.

When management places a loan in nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and the loan is accounted for by the cost recovery method, until it qualifies for return to accrual status or is charged off. Generally, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments for at least six months.

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

(dollars in thousands)	June 30, 2019		December 31, 2018
Mortgage loans on real estate:
Residential 1-4 family	$	1,395	$	1,386
Commercial - owner occupied		5,590		5,283
Commercial - non-owner occupied		3,673		4,371
Construction		-		417
Second mortgages		104		155
Equity lines of credit		7		231
Total mortgage loans on real estate	$	10,769	$	11,843
Commercial and industrial loans		434		298
Total	$	11,203	$	12,141

No purchased credit-impaired loans were on nonaccrual status at June 30, 2019.

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Six Months Ended June 30,
(dollars in thousand)	2019		2018
Interest income that would have been recorded under original loan terms	$	132	$	235
Actual interest income recorded for the period		71		173
Reduction in interest income on nonaccrual loans	$	61	$	62

TROUBLED DEBT RESTRUCTURINGS

The Company’s loan portfolio includes certain loans that have been modified in a troubled debt restructuring (TDR), where economic concessions have been granted to borrowers who are experiencing financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The Company defines a TDR as nonperforming if the TDR is in nonaccrual status or is 90 days or more past due and still accruing interest at the report date.

When the Company modifies a loan, management evaluates any possible impairment as stated in the impaired loan section below.

There were three troubled debt restructurings in the six months ended June 30, 2019 and no troubled debt restructings in the six months ended June 30, 2018.

At June 30, 2019 and December 31, 2018, the Company had no outstanding commitments to disburse additional funds on any TDR. The Company had 1 loan totaling $32 thousand secured by residential 1 - 4 family real estate that was in the process of foreclosure at June 30, 2019, and no loans secured by residential 1 - 4 family real estate in the process of foreclosure at December 31, 2018.

In the three and six months ended June 30, 2019 and 2018, there were no defaulting TDRs where the default occurred within twelve months of restructuring. The Company considers a TDR in default when any of the following occurs: the loan, as restructured, becomes 90 days or more past due; the loan is moved to nonaccrual status following the restructure; the loan is restructured again under terms that would qualify it as a TDR if it were not already so classified; or any portion of the loan is charged off.

All TDRs are factored into the determination of the allowance for loan losses and included in the impaired loan analysis, as discussed below.

IMPAIRED LOANS

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts when due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans and loans modified in a TDR. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole or remaining source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, when foreclosure is probable, instead of the discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through a specific allocation in the allowance or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost-recovery method. For financial statement purposes, the recorded investment in the loan is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes.

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans, exclusive of purchased credit-impaired loans, with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class

	As of June 30, 2019								For the six months ended June 30, 2019
(Dollars in thousands)	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	1,752	$	1,457	$	89	$	44	$	1,754	$	-
Commercial		13,728		8,396		3,846		560		12,490		101
Construction		91		-		90		16		289		2
Second mortgages		307		160		145		145		308		5
Equity lines of credit		7		7		-		-		120		-
Total mortgage loans on real estate		15,885		10,020		4,170		765		14,961		108
Commercial and industrial loans		578		344		90		87		399		5
Other consumer loans		38		-		-		-		-		-
Total	$	16,501	$	10,364	$	4,260	$	852	$	15,360	$	113

Impaired Loans by Class

	As of December 31, 2018								For the Year Ended December 31, 2018
(Dollars in thousands)	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	2,057	$	1,686	$	239	$	51	$	2,073	$	66
Commercial		15,254		12,721		-		-		14,232		455
Construction		509		417		92		18		665		7
Second mortgages		496		347		148		33		508		15
Equity lines of credit		232		-		232		3		301		1
Total mortgage loans on real estate		18,548		15,171		711		105		17,779		544
Commercial and industrial loans		384		78		220		11		446		5
Other consumer loans		38		-		-		-		43		-
Total	$	18,970	$	15,249	$	931	$	116	$	18,268	$	549

ALLOWANCE FOR LOAN LOSSES

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and probable losses inherent in the loan portfolio. The Company segments the loan portfolio into categories as defined by Schedule RC-C of the Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income Form 041 (Call Report). Loans are segmented into the following pools: commercial, real estate-construction, real estate-mortgage, consumer and other loans. The Company also sub-segments the real estate-mortgage segment into six classes: residential 1-4 family, commercial real estate - owner occupied, commercial real estate - non-owner occupied, multifamily, second mortgages and equity lines of credit.

The Company uses an internally developed risk evaluation model in the estimation of the credit risk process. The model and assumptions used to determine the allowance are independently validated and reviewed to ensure that the theoretical foundation, assumptions, data integrity, computational processes and reporting practices are appropriate and properly documented.

Each portfolio segment has risk characteristics as follows:

•

Commercial and industrial: Commercial and industrial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision.

•

Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project.

•

Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts.

•

Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

•

Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, and loans to insurance, investment and finance companies. These loans carry risks associated with the successful operation of a business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, depend on interest rates or fluctuate in active trading markets.

Each segment of the portfolio is pooled by risk grade or by days past due. Consumer loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on days past due, while all other loans, including loans to consumers that are secured by real estate, are segmented by risk grades. A historical loss percentage is then calculated by migration analysis and applied to each pool. The migration analysis applied to all pools is able to track the risk grading and historical performance of individual loans throughout a number of periods set by management, which provides management with information regarding trends (or migrations) in a particular loan segment. At June 30, 2019 and December 31, 2018 management used eight twelve-quarter migration periods.

Management also provides an allocated component of the allowance for loans that are specifically identified that may be impaired, and are individually analyzed for impairment. An allocated allowance is established when the present value of expected future cash flows from the impaired loan (or the collateral value or observable market price of the impaired loan) is lower than the carrying value of that loan.

Based on credit risk assessments and management’s analysis of qualitative factors, additional loss factors are applied to loan balances. These additional qualitative factors include: economic conditions, trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

Acquired loans are recorded at their fair value at acquisition date without carryover of the acquiree’s previously established ALL, as credit discounts are included in the determination of fair value. The fair value of the loans is determined using market participant assumptions in estimating the amount and timing of both principal and interest cash flows expected to be collected on the loans and then applying a market-based discount rate to those cash flows. During evaluation upon acquisition, acquired loans are also classified as either purchased credit-impaired or purchased performing.

Purchased credit-impaired loans reflect credit quality deterioration since origination, as it is probable at acquisition that the Company will not be able to collect all contractually required payments. These purchased credit-impaired loans are accounted for under ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality. The purchased credit-impaired loans are segregated into pools based on loan type and credit risk. Loan type is determined based on collateral type, purpose, and lien position. Credit risk characteristics include risk rating groups, nonaccrual status, and past due status. For valuation purposes, these pools are further disaggregated by maturity, pricing characteristics, and re-payment structure. Purchased credit-impaired loans are written down at acquisition to fair value using an estimate of cash flows deemed to be collectible. Accordingly, such loans are no longer classified as nonaccrual even though they may be contractually past due because the Company expects to fully collect the new carrying values of such loans, which is the new cost basis arising from purchase accounting.

Purchased performing loans are accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. The difference between the fair value and unpaid principal balance of the loan at acquisition date (premium or discount) is amortized or accreted into interest income over the life of the loans. If the purchased performing loan has revolving privileges, it is accounted for using the straight-line method; otherwise, the effective interest method is used.

ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management’s estimate of losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $10.8 million adequate to cover probable loan losses inherent in the loan portfolio at June 30, 2019.

The following tables present, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT IN LOANS

For the six months ended June 30, 2019

(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Total
Allowance for loan losses:
Balance, beginning	$	2,340		$	156	$	5,956		$	1,354		$	305		$	10,111
Charge-offs		-			-		(144	)		(321	)		(243	)		(708	)
Recoveries		5			-		90			208			38			341
Provision for loan losses		(377	)		68		716			290			316			1,013
Ending Balance	$	1,968		$	224	$	6,618		$	1,531		$	416		$	10,757

Individually evaluated for impairment	$	87		$	16	$	749		$	-		$	-		$	852
Collectively evaluated for impairment		1,881			208		5,869			1,531			416			9,905
Purchased credit-impaired loans		-			-		-			-			-			-

Ending Balance	$	1,968		$	224	$	6,618		$	1,531		$	416		$	10,757

Loans Balances:
Individually evaluated for impairment		434			90		14,100			-			-			14,624
Collectively evaluated for impairment		74,193			38,509		473,050			151,577			9,145			746,474
Purchased credit-impaired loans		80			-		-			-			-			80
Ending Balance	$	74,707		$	38,599	$	487,150		$	151,577		$	9,145		$	761,178

For the Year ended December 31, 2018

(Dollars in thousands)	Commercial and Industrial			Real Estate Construction			Real Estate - Mortgage ⁽¹⁾			Consumer ⁽²⁾			Other			Total
Allowance for loan losses:
Balance, beginning	$	1,889		$	541		$	5,217		$	1,644		$	157		$	9,448
Charge-offs		(81	)		-			(1,625	)		(769	)		(367	)		(2,842	)
Recoveries		140			-			158			262			84			644
Provision for loan losses		392			(385	)		2,206			217			431			2,861
Ending Balance	$	2,340		$	156		$	5,956		$	1,354		$	305		$	10,111

Individually evaluated for impairment	$	11		$	18		$	87		$	-		$	-		$	116
Collectively evaluated for impairment		2,329			138			5,869			1,354			305			9,995
Purchased credit-impaired loans		-			-			-			-			-			-
Ending Balance	$	2,340		$	156		$	5,956		$	1,354		$	305		$	10,111

Loans Balances:
Individually evaluated for impairment		298			509			15,373			-			-			16,180
Collectively evaluated for impairment		63,009			31,874			485,068			169,138			8,649			757,738
Purchased credit-impaired loans		91			-			-			-			-			91
Ending Balance	$	63,398		$	32,383		$	500,441		$	169,138		$	8,649		$	774,009

⁽¹⁾ The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.

⁽²⁾ The consumer segment includes consumer automobile loans.