Loans

Outstanding loans are summarized as follows:



Loan Type (Dollars in thousands)	September 30, 2013			% of Total Loans		December 31, 2012			% of Total Loans
Commercial:
Commercial and industrial	$	89,991		17.5	%	$	77,956		19.7	%
Agricultural land and production	43,670			8.5	%	26,599			6.7	%
Total commercial	133,661			26.0	%	104,555			26.4	%
Real estate:
Owner occupied	155,171			30.0	%	114,444			28.9	%
Real estate construction and other land loans	35,327			6.9	%	33,199			8.4	%
Commercial real estate	85,457			16.6	%	53,797			13.6	%
Agricultural real estate	39,857			7.7	%	28,400			7.2	%
Other real estate	3,926			0.8	%	8,098			2.0	%
Total real estate	319,738			62.0	%	237,938			60.1	%
Consumer:
Equity loans and lines of credit	51,293			10.0	%	42,932			10.9	%
Consumer and installment	10,777			2.0	%	10,346			2.6	%
Total consumer	62,070			12.0	%	53,278			13.5	%
Deferred loan fees, net	(236		)			(453		)
Total gross loans	515,233			100.0	%	395,318			100.0	%
Allowance for credit losses	(9,732		)			(10,133		)
Total loans	$	505,501				$	385,185

The table above includes loans acquired at fair value on July 1, 2013 with outstanding balances of $108 million as of September 30, 2013.

At September 30, 2013 and December 31, 2012, loans originated under Small Business Administration (SBA) programs totaling $6,315,000 and $5,586,000, respectively, were included in the real estate and commercial categories.

Purchased Credit Impaired Loans

The Company has loans that were acquired in an acquisition, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected.

These purchased credit impaired loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2013 and December 31, 2012. The amounts of loans at September 30, 2013 and December 31, 2012 are as follows.



	September 30, 2013		December 31, 2012
Real estate	$	2,489,000	$	—
Outstanding balance	$	2,489,000	$	—
Carrying amount, net of allowance of $0	$	2,489,000	$	—

Accretable yield, or income expected to be collected for the three and nine months ended September 30, 2013 and 2012 is as follows (in thousands):



	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2013			2012		2013			2012
Balance at beginning of period	$	—		$	—	$	—		$	—
Additions	105,000			—		105,000			—
Accretion	(70,000		)	—		(70,000		)	—
Reclassification from (to) non-accretable difference	77,000			—		77,000			—
Disposals	—			—		—			—
Balance at end of period	$	112,000		$	—	$	112,000		$	—

During the three and nine months ended September 30, 2013, the Company did not increase or decrease the allowance for loan losses with respect to these loans.

Loans acquired during each period or year for which it was probable at acquisition that all contractually required payments would not be collected are as follows:



	September 30, 2013		December 31, 2012
Contractually required payments receivable at acquisition:
Real estate	$	6,912,000	$	—
Total	$	6,912,000	$	—
Cash flows expected to be collected at acquisition	$	2,681,000	$	—
Fair value of in acquired loans at acquisition	$	2,576,000	$	—

Certain of the loans acquired by the Company that are within the scope of Topic ASC 310-30 are not accounted for using the income recognition model of the Topic because the Company cannot reliably estimate cash flows expected to be collected. The carrying amounts of such loans (which are included in the carrying amount, net of allowance, described above) are as follows.



	September 30, 2013		December 31, 2012
Loans acquired during the period	$	1,411,000	$	—
Loans at the end of the period	$	1,411,000	$	—