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Loans and the Allowance for Loan Losses

6 Months Ended

Jun. 30, 2021

Loans and the Allowance for Loan Losses [Abstract]

Note 3. 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, 2021		December 31, 2020
Mortgage loans on real estate:
Residential 1-4 family	$	117,887	$	122,800
Commercial - owner occupied		171,881		153,955
Commercial - non-owner occupied		165,460		162,896
Multifamily		20,880		22,812
Construction		50,814		43,732
Second mortgages		9,707		11,178
Equity lines of credit		51,238		50,746
Total mortgage loans on real estate		587,867		568,119
Commercial and industrial loans		119,911		141,746
Consumer automobile loans		79,544		80,390
Other consumer loans		36,990		37,978
Other ⁽¹⁾		8,361		8,067
Total loans, net of deferred fees		832,673		836,300
Less: Allowance for loan losses		9,473		9,541
Loans, net of allowance and deferred fees ⁽²⁾	$	823,200	$	826,759

(1)	Overdrawn accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts, excluding internal use accounts, totaled $254 thousand and $271 thousand at June 30, 2021 and December 31, 2020, respectively.

(2)	Net deferred loan fees totaled $2.4 million and $2.1 million at June 30, 2021 and December 31, 2020, respectively.

Acquired Loans

The outstanding principal balance and the carrying amount of total acquired loans included in the consolidated balance sheets as of June 30, 2021 and December 31, 2020 are as follows:

(dollars in thousands)	June 30, 2021		December 31, 2020
Outstanding principal balance	$	6,500	$	8,671
Carrying amount		6,460		8,602

The Company did not have any outstanding principal balance or related carrying amount of purchased credit-impaired loans as of June 30, 2021 and December 31, 2020. 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, 2021 and 2020:

(dollars in thousands)	June 30, 2021		June 30, 2020
Balance at January 1	$	-	$	72
Accretion		-		(19	)
Balance at end of period	$	-	$	53

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 tables present credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information
As of June 30, 2021
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	117,714	$	-	$	173	$	-	$	117,887
Commercial - owner occupied		168,615		2,422		844		-		171,881
Commercial - non-owner occupied		164,549		726		185		-		165,460
Multifamily		20,880		-		-		-		20,880
Construction		49,574		1,110		130		-		50,814
Second mortgages		9,707		-		-		-		9,707
Equity lines of credit		51,238		-		-		-		51,238
Total mortgage loans on real estate	$	582,277	$	4,258	$	1,332	$	-	$	587,867
Commercial and industrial loans		119,607		304		-		-		119,911
Consumer automobile loans		79,263		-		281		-		79,544
Other consumer loans		36,990		-		-		-		36,990
Other		8,361		-		-		-		8,361
Total	$	826,498	$	4,562	$	1,613	$	-	$	832,673

Credit Quality Information
As of December 31, 2020
(dollars in thousands)	Pass		OAEM		Substandard		Doubtful		Total
Mortgage loans on real estate:
Residential 1-4 family	$	122,621	$	-	$	179	$	-	$	122,800
Commercial - owner occupied		148,738		2,462		2,755		-		153,955
Commercial - non-owner occupied		162,148		748		-		-		162,896
Multifamily		22,812		-		-		-		22,812
Construction		42,734		998		-		-		43,732
Second mortgages		11,178		-		-		-		11,178
Equity lines of credit		50,746		-		-		-		50,746
Total mortgage loans on real estate	$	560,977	$	4,208	$	2,934	$	-	$	568,119
Commercial and industrial loans		141,391		355		-		-		141,746
Consumer automobile loans		79,997		-		393		-		80,390
Other consumer loans		37,978		-		-		-		37,978
Other		8,067		-		-		-		8,067
Total	$	828,410	$	4,563	$	3,327	$	-	$	836,300

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, 2021
(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	$	-	$	14	$	-	$	-	$	245	$	117,628	$	117,887
Commercial - owner occupied		-		-		58		-		843		170,980		171,881
Commercial - non-owner occupied		-		-		-		-		185		165,275		165,460
Multifamily		-		-		-		-		-		20,880		20,880
Construction		65		-		-		-		130		50,619		50,814
Second mortgages		-		-		-		-		-		9,707		9,707
Equity lines of credit		-		-		-		-		-		51,238		51,238
Total mortgage loans on real estate	$	65	$	14	$	58	$	-	$	1,403	$	586,327	$	587,867
Commercial and industrial loans		-		-		-		-		-		119,911		119,911
Consumer automobile loans		591		132		306		-		-		78,515		79,544
Other consumer loans		539		201		626		-		-		35,624		36,990
Other		16		2		3		-		-		8,340		8,361
Total	$	1,211	$	349	$	993	$	-	$	1,403	$	828,717	$	832,673

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

(2)	For purposes of this table, if a loan is past due and on nonaccrual, it is included in the nonaccural column and not also in its respective past due column.

In the table above, the past due totals include student loans with principal and interest amounts that are 97 - 98% guaranteed by the federal government. The past due principal portion of these guaranteed loans totaled $1.0 million at June 30, 2021.

Age Analysis of Past Due Loans as of December 31, 2020
(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	$	478	$	164	$	-	$	-	$	311	$	121,847	$	122,800
Commercial - owner occupied		-		-		-		-		903		153,052		153,955
Commercial - non-owner occupied		-		-		-		-		-		162,896		162,896
Multifamily		-		-		-		-		-		22,812		22,812
Construction		-		88		-		-		-		43,644		43,732
Second mortgages		41		-		-		-		-		11,137		11,178
Equity lines of credit		-		-		-		-		-		50,746		50,746
Total mortgage loans on real estate	$	519	$	252	$	-	$	-	$	1,214	$	566,134	$	568,119
Commercial and industrial loans		753		-		-		-		-		140,993		141,746
Consumer automobile loans		1,159		190		196		-		-		78,845		80,390
Other consumer loans		1,120		555		548		-		-		35,755		37,978
Other		24		3		-		-		-		8,040		8,067
Total	$	3,575	$	1,000	$	744	$	-	$	1,214	$	829,767	$	836,300

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

(2)	For purposes of this table, if a loan is past due and on nonaccrual, it is included in the nonaccural column and not also in its respective past due column.

Although the portions of the student 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 loans in an amount ranging from 97% to 98% of the total principal and interest of the loans as of June 30, 2021, management does not expect significant increases in delinquencies of these loans to have a material effect on the Company.

Under the CARES Act, borrowers who were making payments as required and were not considered past due prior to becoming affected by COVID-19 and then received payment accommodations as a result of the effects of COVID-19 generally would not be reported as past due. If the Company agreed to a payment deferral for a borrower under the CARES Act, this may result in no contractual payments being past due, and the loans are not considered past due during the period of the deferral.

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:

Nonaccrual Loans by Class

(dollars in thousands)	June 30, 2021		December 31, 2020
Mortgage loans on real estate:
Residential 1-4 family	$	245	$	311
Commercial - owner occupied		843		903
Commercial - non-owner occupied		185		-
Construction		130		-
Total mortgage loans on real estate	$	1,403	$	1,214
Total	$	1,403	$	1,214

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)	2021			2020
Interest income that would have been recorded under original loan terms		$	61		$	118
Actual interest income recorded for the period			-			8
Reduction in interest income on nonaccrual loans		$	61		$	110

TROUBLED DEBT RESTRUCTURINGS

The Company’s loan portfolio includes certain loans that have been modified in a 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 no new TDRs in the six months ended June 30, 2021 and 2020.

At June 30, 2021 and 2020, the Company had no outstanding commitments to disburse additional funds on any TDR. The Company had no loans secured by residential 1 - 4 family real estate in the process of foreclosure at June 30, 2021 and 2020.

In the three and six months ended June 30, 2021 and 2020, 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 partial charge-offs and 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 these partial charge-offs did not occur and 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, 2021								For the Six Months Ended June 30, 2021
(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	$	412	$	72	$	311	$	36	$	387	$	-
Commercial		2,931		1,098		432		12		1,500		1
Construction		212		130		81		-		212		2
Second mortgages		131		-		129		3		130		3
Total mortgage loans on real estate		3,686		1,300		953		51		2,229		6
Commercial and industrial loans		4		3		-		-		4		-
Other consumer loans		12		11		-		-		11		-
Total	$	3,702	$	1,314	$	953	$	51	$	2,244	$	6

Impaired Loans by Class


	As of December 31, 2020								For the Year Ended December 31, 2020
(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	$	474	$	366	$	87	$	1	$	458	$	10
Commercial		3,490		1,306		121		1		2,559		46
Construction		83		-		83		-		84		5
Second mortgages		133		-		133		9		134		5
Total mortgage loans on real estate		4,180		1,672		424		11		3,235		66
Commercial and industrial loans		6		6		-		-		7		-
Other consumer loans		14		14		-		-		15		1
Total	$	4,200	$	1,692	$	424	$	11	$	3,257	$	67

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, 2021 and December 31, 2020 management used eight twelve-quarter migration periods.

Management also provides an allocated component of the allowance for loans that are specifically identified as 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 (including uncertainties associated with the COVID-19 pandemic), trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

Given the timing of the outbreak in the United States of the COVID-19 pandemic combined with government stimulus actions for both individuals and small businesses, management does not believe that the Company’s performance in relation to credit quality during 2020 or the first two quarters of 2021 was significantly impacted. The COVID-19 pandemic represents an unprecedented challenge to the global economy in general and the financial services sector in particular. However, there is still significant uncertainty regarding the overall length of the pandemic and the aggregate impact that it will have on global and regional economies, including uncertainties regarding the potential positive effects of governmental actions taken in response to the pandemic. With so much uncertainty, it is impossible for the Company to accurately predict the impact that the pandemic will have on the Company’s primary market and the overall extent to which it will affect the Company’s financial condition and results of operations. Based on capital levels, stress testing indications, prudent underwriting policies, watch credit processes, and loan concentration diversification, the Company currently expects to be able to manage the economic risks and uncertainties associated with the pandemic which may include additional provision for loan losses.

Acquired loans are recorded at their fair value at acquisition date without carryover of the acquiree’s previously established ALLL, 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 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 $9.5 million adequate to cover probable loan losses inherent in the loan portfolio at June 30, 2021.

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, 2021
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Real Estate - Commercial			Consumer ⁽²⁾			Other			Unallocated			Total
Allowance for loan losses:
Balance, beginning	$	650		$	339	$	2,560		$	4,434		$	1,302		$	123		$	133		$	9,541
Charge-offs		(4	)		-		(1	)		-			(434	)		(186	)		-			(625	)
Recoveries		21			-		56			1			250			79			-			407
Provision for loan losses		54			77		(150	)		(39	)		170			148			(110	)		150
Ending Balance	$	721		$	416	$	2,465		$	4,396		$	1,288		$	164		$	23		$	9,473

Individually evaluated for impairment	$	-		$	-	$	39		$	12		$	-		$	-		$	-		$	51
Collectively evaluated for impairment		721			416		2,426			4,384			1,288			164			23			9,422
Purchased credit-impaired loans		-			-		-			-			-			-						-

Ending Balance	$	721		$	416	$	2,465		$	4,396		$	1,288		$	164		$	23		$	9,473

Loans Balances:
Individually evaluated for impairment		3			211		512			1,530			11			-			-			2,267
Collectively evaluated for impairment		119,908			50,603		199,200			335,811			116,523			8,361			-			830,406
Purchased credit-impaired loans		-			-		-			-			-			-						-
Ending Balance	$	119,911		$	50,814	$	199,712		$	337,341		$	116,534		$	8,361		$	-		$	832,673

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

(2)	The consumer segment includes consumer automobile loans.

For the Year ended December 31, 2020
(Dollars in thousands)	Commercial and Industrial			Real Estate Construction		Real Estate - Mortgage ⁽¹⁾			Real Estate - Commercial			Consumer ⁽²⁾			Other			Unallocated		Total
Allowance for loan losses:
Balance, beginning	$	1,244		$	258	$	2,505		$	3,663		$	1,694		$	296		$	-	$	9,660
Charge-offs		(25	)		-		(149	)		(654	)		(822	)		(355	)		-		(2,005	)
Recoveries		47			10		69			317			377			66			-		886
Provision for loan losses		(616	)		71		135			1,108			53			116			133		1,000
Ending Balance	$	650		$	339	$	2,560		$	4,434		$	1,302		$	123		$	133	$	9,541

Individually evaluated for impairment	$	-		$	-	$	10		$	1		$	-		$	-		$	-	$	11
Collectively evaluated for impairment		650			339		2,550			4,433			1,302			123			133		9,530
Purchased credit-impaired loans		-			-		-			-			-			-					-

Ending Balance	$	650		$	339	$	2,560		$	4,434		$	1,302		$	123		$	133	$	9,541

Loans Balances:
Individually evaluated for impairment		6			83		586			1,427			14			-			-		2,116
Collectively evaluated for impairment		141,740			43,649		206,950			315,424			118,354			8,067			-		834,184
Purchased credit-impaired loans		-			-		-			-			-			-					-
Ending Balance	$	141,746		$	43,732	$	207,536		$	316,851		$	118,368		$	8,067		$	-	$	836,300

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

(2)	The consumer segment includes consumer automobile loans.