NOTE 4: Allowance for Loan Losses

The following table presents the changes in the allowance for loan losses by major classification during the nine months ended September 30, 2016.


	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Balance at December 31, 2015	$	2,471	$	94	$	7,755	$	1,052	$	243	$	23,954	$	35,569
Provision charged (credited) to operations		(293)		305		(85)		39		34		13,125		13,125
Loans charged off		(82)		—		(87)		(55)		(208)		(14,650)		(15,082)
Recoveries of loans previously charged off		93		—		200		—		200		2,965		3,458
Balance at September 30, 2016	$	2,189	$	399	$	7,783	$	1,036	$	269	$	25,394	$	37,070

The following table presents the changes in the allowance for loan losses by major classification during the nine months ended September 30, 2015.


	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Balance at December 31, 2014	$	2,313	$	434	$	7,744	$	812	$	211	$	24,092	$	35,606
Provision charged (credited) to operations		43		(340)		78		197		67		9,767		9,812
Loans charged off		(93)		—		(22)		—		(213)		(13,051)		(13,379)
Recoveries of loans previously charged off		243		—		24		—		231		3,189		3,687
Balance at September 30, 2015	$	2,506	$	94	$	7,824	$	1,009	$	296	$	23,997	$	35,726

The following table presents, as of September 30, 2016, the total allowance for loan losses, the allowance by impairment methodology (individually evaluated for impairment, collectively evaluated for impairment or PCI loans), the total loans and loans by impairment methodology (individually evaluated for impairment, collectively evaluated for impairment or PCI loans).


	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Ending balance at September 30, 2016	$	2,189	$	399	$	7,783	$	1,036	$	269	$	25,394	$	37,070
Ending balance: individually evaluated for impairment	$	364	$	—	$	343	$	—	$	78	$	—	$	785
Ending balance: collectively evaluated for impairment	$	1,825	$	399	$	7,405	$	1,036	$	191	$	25,394	$	36,250
Ending balance: acquired loans - PCI	$	—	$	—	$	35	$	—	$	—	$	—	$	35
Loans:
Ending balance at September 30, 2016	$	185,451	$	33,283	$	390,863	$	50,278	$	8,636	$	304,157	$	972,668
Ending balance: individually evaluated for impairment	$	3,428	$	—	$	1,946	$	30	$	520	$	—	$	5,924
Ending balance: collectively evaluated for impairment	$	180,798	$	33,283	$	379,678	$	49,971	$	8,116	$	304,157	$	956,003
Ending balance: acquired loans - PCI	$	1,225	$	—	$	9,239	$	277	$	—	$	—	$	10,741

The following table presents, as of December 31, 2015, the total allowance for loan losses, the allowance by impairment methodology (individually evaluated for impairment,collectively evaluated for impairment, or PCI loans), the total loans and loans by impairment methodology (individually evaluated for impairment, collectively evaluated for impairment or PCI loans).


	Real Estate				Commercial,
	Residential		Real Estate		Financial &		Equity				Consumer
(Dollars in thousands)	Mortgage		Construction		Agricultural		Lines		Consumer		Finance		Total
Allowance for loan losses:
Ending balance at December 31, 2015	$	2,471	$	94	$	7,755	$	1,052	$	243	$	23,954	$	35,569
Ending balance: individually evaluated for impairment	$	360	$	—	$	466	$	—	$	23	$	—	$	849
Ending balance: collectively evaluated for impairment	$	2,111	$	94	$	7,254	$	1,052	$	220	$	23,954	$	34,685
Ending balance: acquired loans - PCI	$	—	$	—	$	35	$	—	$	—	$	—	$	35
Loans:
Ending balance at December 31, 2015	$	186,763	$	7,759	$	356,062	$	50,111	$	9,011	$	291,755	$	901,461
Ending balance: individually evaluated for impairment	$	2,689	$	—	$	2,418	$	30	$	207	$	—	$	5,344
Ending balance: collectively evaluated for impairment	$	182,769	$	7,759	$	341,327	$	49,795	$	8,804	$	291,755	$	882,209
Ending balance: acquired loans - PCI	$	1,305	$	—	$	12,317	$	286	$	—	$	—	$	13,908

Loans by credit quality indicators as of September 30, 2016 were as follows:


			Special				Substandard
(Dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total1
Real estate – residential mortgage	$	179,373	$	1,499	$	2,832	$	1,747	$	185,451
Real estate – construction:
Construction lending		25,873		—		—		—		25,873
Consumer lot lending		7,410		—		—		—		7,410
Commercial, financial and agricultural:
Commercial real estate lending		220,137		5,643		11,855		1,656		239,291
Land acquisition and development lending		58,416		710		1,223		—		60,349
Builder line lending		21,569		563		367		—		22,499
Commercial business lending		57,006		44		11,532		142		68,724
Equity lines		48,699		632		182		765		50,278
Consumer		8,103		6		524		3		8,636
	$	626,586	$	9,097	$	28,515	$	4,313	$	668,511

At September 30, 2016, the Corporation did not have any loans classified as Doubtful or Loss.

Included in the table above are loans purchased in connection with the acquisition of CVB of $58.12 million pass rated, $4.67 million special mention, $4.10 million substandard and $187,000 substandard nonaccrual.


			Non-
(Dollars in thousands)	Performing		Performing		Total
Consumer finance	$	303,662	$	495	$	304,157

Loans by credit quality indicators as of December 31, 2015 were as follows:


			Special				Substandard
(Dollars in thousands)	Pass		Mention		Substandard		Nonaccrual		Total1
Real estate – residential mortgage	$	181,107	$	1,276	$	2,083	$	2,297	$	186,763
Real estate – construction:
Construction lending		5,924		72		—		—		5,996
Consumer lot lending		1,763		—		—		—		1,763
Commercial, financial and agricultural:
Commercial real estate lending		195,479		6,089		13,533		2,515		217,616
Land acquisition and development lending		45,061		856		394		—		46,311
Builder line lending		19,252		829		531		359		20,971
Commercial business lending		57,928		1,306		11,844		86		71,164
Equity lines		48,392		617		221		881		50,111
Consumer		8,760		116		116		19		9,011
	$	563,666	$	11,161	$	28,722	$	6,157	$	609,706

At December 31, 2015, the Corporation did not have any loans classified as Doubtful or Loss.

Included in the table above are loans purchased in connection with the acquisition of CVB of $71.14 million pass rated, $4.09 million special mention, $5.15 million substandard and $542,000 substandard nonaccrual.


			Non-
(Dollars in thousands)	Performing		Performing		Total
Consumer finance	$	290,925	$	830	$	291,755