Note 4 – Allowance for Loan Losses

For the September 30, 2015, allowance for loan loss determination, management implemented changes in the process used to determine the required loan loss reserve to update the Bank’s reserve methodology. The estimated impact of this methodology change in the required reserve was approximately $1.4 million. These changes, and a $2.1 million loan loss reserve release for the third quarter of 2015, are more fully discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Changes in the allowance for loan losses by segment of loans based on method of impairment for three and nine months ending September 30, 2015, were as follows:


Allowance for loan losses:			Real Estate		Real Estate		Real Estate
	Commercial		Commercial		Construction		Residential		Consumer		Unallocated		Total
Three months ended September 30, 2015
Beginning balance	$	1,632	$	10,201	$	662	$	1,860	$	1,249	$	2,717	$	18,321
Charge-offs		101		21		-		342		112		-		576
Recoveries		213		275		204		192		84		-		968
Provision (Release)		340		(1,296)		(421)		(42)		(68)		(613)		(2,100)
Ending balance	$	2,084	$	9,159	$	445	$	1,668	$	1,153	$	2,104	$	16,613

Nine months ended September 30, 2015
Beginning balance	$	1,644	$	12,577	$	1,475	$	1,981	$	1,454	$	2,506	$	21,637
Charge-offs		991		1,547		2		1,119		323		-		3,982
Recoveries		437		1,570		270		819		262		-		3,358
Provision (Release)		994		(3,441)		(1,298)		(13)		(240)		(402)		(4,400)
Ending balance	$	2,084	$	9,159	$	445	$	1,668	$	1,153	$	2,104	$	16,613

Ending balance: Individually evaluated for impairment	$	5	$	-	$	-	$	20	$	-	$	-	$	25
Ending balance: Collectively evaluated for impairment	$	2,079	$	9,159	$	445	$	1,648	$	1,153	$	2,104	$	16,588

Loans:
Ending balance	$	129,733	$	609,937	$	23,461	$	354,106	$	4,005	$	11,670	$	1,132,912
Ending balance: Individually evaluated for impairment	$	532	$	4,974	$	3,803	$	15,823	$	-	$	-	$	25,132
Ending balance: Collectively evaluated for impairment	$	129,201	$	604,963	$	19,658	$	338,283	$	4,005	$	11,670	$	1,107,780

Changes in the allowance for loan losses by segment of loans based on method of impairment for three and nine months ending September 30, 2014, were as follows:


Allowance for loan losses:			Real Estate		Real Estate		Real Estate
	Commercial		Commercial		Construction		Residential		Consumer		Unallocated		Total
Three months ended September 30, 2014
Beginning balance	$	1,991	$	13,228	$	1,754	$	2,373	$	1,464	$	3,046	$	23,856
Charge-offs		512		545		1		925		174		-		2,157
Recoveries		6		878		3		646		98		-		1,631
Provision (Release)		41		(744)		141		7		16		539		-
Ending balance	$	1,526	$	12,817	$	1,897	$	2,101	$	1,404	$	3,585	$	23,330

Nine months ended September 30, 2014
Beginning balance	$	2,250	$	16,763	$	1,980	$	2,837	$	1,439	$	2,012	$	27,281
Charge-offs		519		1,634		174		2,752		423		-		5,502
Recoveries		56		1,106		507		1,585		297		-		3,551
(Release) provision		(261)		(3,418)		(416)		431		91		1,573		(2,000)
Ending balance	$	1,526	$	12,817	$	1,897	$	2,101	$	1,404	$	3,585	$	23,330

Ending balance: Individually evaluated for impairment	$	-	$	167	$	107	$	267	$	-	$	-	$	541
Ending balance: Collectively evaluated for impairment	$	1,526	$	12,650	$	1,790	$	1,834	$	1,404	$	3,585	$	22,789

Loans:
Ending balance	$	114,990	$	600,649	$	41,936	$	365,602	$	3,142	$	14,563	$	1,140,882
Ending balance: Individually evaluated for impairment	$	1,645	$	19,515	$	2,585	$	17,041	$	-	$	-	$	40,786
Ending balance: Collectively evaluated for impairment	$	113,345	$	581,134	$	39,351	$	348,561	$	3,142	$	14,563	$	1,100,096