ce for credit losses (the “allowance”) is an estimate of probable incurred credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance-sheet date. The allowance is established through a provision for credit losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off credits is recorded as a recovery to the allowance. The overall allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.

For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

The following table shows the summary of activities for the allowance for credit losses as of and for the three months ended June 30, 2014 and 2013 by portfolio segment (in thousands):



	Commercial			Real Estate			Consumer			Unallocated		Total
Allowance for credit losses:
Beginning balance, April 1, 2014	$	2,012		$	4,672		$	1,391		$	246	$	8,321
Provision charged to operations	78			(340		)	(187		)	49		(400		)
Losses charged to allowance	(265		)	(183		)	(325		)	—		(773		)
Recoveries	49			8			102			—		159
Ending balance, June 30, 2014	$	1,874		$	4,157		$	981		$	295	$	7,307
Allowance for credit losses:
Beginning balance, April 1, 2013	$	2,261		$	5,536		$	1,315		$	377	$	9,489
Provision charged to operations	433			(479		)	(77		)	123		—
Losses charged to allowance	(4		)				(18		)	—		(22		)
Recoveries	102			—			32			—		134
Ending balance, June 30, 2013	$	2,792		$	5,057		$	1,252		$	500	$	9,601

The following table shows the summary of activities for the allowance for credit losses as of and for the six months

ended June 30, 2014 and 2013 by portfolio segment of loans (in thousands):



	Commercial			Real Estate			Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, January 1, 2014	$	2,444		$	5,174		$	1,168		$	422		$	9,208
Provision charged to operations	526			(850		)	51			(127		)	(400		)
Losses charged to allowance	(1,194		)	(183		)	(410		)	—			(1,787		)
Recoveries	98			16			172			—			286
Ending balance, June 30, 2014	$	1,874		$	4,157		$	981		$	295		$	7,307

Allowance for credit losses:
Beginning balance, January 1, 2013	$	2,676		$	5,877		$	1,541		$	39		$	10,133
Provision charged to operations	674			(820		)	(315		)	461			—
Losses charged to allowance	(702		)	—			(35		)	—			(737		)
Recoveries	144			—			61			—			205
Ending balance, June 30, 2013	$	2,792		$	5,057		$	1,252		$	500		$	9,601

The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of June 30, 2014 and December 31, 2013 (in thousands).



	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, June 30, 2014	$	1,874	$	4,157	981		$	295	$	7,307
Ending balance: individually evaluated for impairment	$	—	$	324	42		$	—	$	366
Ending balance: collectively evaluated for impairment	$	1,874	$	3,833	939		$	295	$	6,941

Ending balance, December 31, 2013	$	2,444	$	5,174	$	1,168	$	422	$	9,208
Ending balance: individually evaluated for impairment	$	469	$	465	$	73	$	—	$	1,007
Ending balance: collectively evaluated for impairment	$	1,975	$	4,709	$	1,095	$	422	$	8,201

The table above excludes ending balance of loans acquired with deteriorated quality of $2,465,000 with no allowance at December 31, 2013. There were no such loans at June 30, 2014.

The following table shows the ending balances of loans as of June 30, 2014 and December 31, 2013 by portfolio segment and by impairment methodology (in thousands):



	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, June 30, 2014	$	131,166	$	356,872	$	57,129	$	545,167
Ending balance: individually evaluated for impairment	$	38	$	8,072	$	2,037	$	10,147
Ending balance: collectively evaluated for impairment	$	131,128	$	348,800	$	55,092	$	535,020

Loans:
Ending balance, December 31, 2013	$	118,731	$	333,939	$	59,846	$	512,516
Ending balance: individually evaluated for impairment	$	1,527	$	9,540	$	2,290	$	13,357
Ending balance: collectively evaluated for impairment	$	117,204	$	324,399	$	57,556	$	499,159

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2014 (in thousands):



	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	83,572	$	2,649	$	2,924	$	—	$	89,145
Agricultural land and production	42,021		—		—		—		42,021
Real Estate:
Owner occupied	149,835		4,058		4,045		—		157,938
Real estate construction and other land loans	30,266		1,944		6,759		—		38,969
Commercial real estate	85,465		3,880		7,460		—		96,805
Agricultural real estate	55,598		2,508		—		—		58,106
Other real estate	5,054		—		—		—		5,054
Consumer:
Equity loans and lines of credit	40,985		1,970		4,780		—		47,735
Consumer and installment	9,368		—		26		—		9,394
Total	$	502,164	$	17,009	$	25,994	$	—	$	545,167

The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2013 (in thousands):



	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	81,732	$	2,244	$	3,106	$	—	$	87,082
Agricultural land and production	31,649		—		—		—		31,649
Real Estate:
Owner occupied	144,082		5,229		7,470		—		156,781
Real estate construction and other land loans	31,776		3,959		6,594		—		42,329
Commercial real estate	77,589		3,718		4,810		—		86,117
Agricultural real estate	42,151		2,013		—		—		44,164
Other real estate	4,548		—		—		—		4,548
Consumer:
Equity loans and lines of credit	41,999		2,400		4,195		—		48,594
Consumer and installment	10,946		46		260		—		11,252
Total	$	466,472	$	19,609	$	26,435	$	—	$	512,516

The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2014 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non-accrual
Commercial:
Commercial and industrial	$	69	$	—	$	—	$	69	$	89,076	$	89,145	$	—	$	38
Agricultural land and production	—		—		—		—		42,021		42,021		—		—
Real estate:	—						—		—		—
Owner occupied	—		256		58		314		157,624		157,938		—		1,068
Real estate construction and other land loans	—		—		—		—		38,969		38,969		—		1,358
Commercial real estate	—		—		—		—		96,805		96,805		—		134
Agricultural real estate	—		—		—		—		58,106		58,106		—		—
Other real estate	—		—		—		—		5,054		5,054		—		—
Consumer:							—		—		—
Equity loans and lines of credit	423		—		227		650		47,085		47,735		—		2,012
Consumer and installment	99		—		—		99		9,295		9,394		—		22
Total	$	591	$	256	$	285	$	1,132	$	544,035	$	545,167	$	—	$	4,632

The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2013 (in thousands):



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days Accruing		Non- accrual
Commercial:
Commercial and industrial	$	274	$	236	$	—	$	510	$	86,572	$	87,082	$	—	$	1,527
Agricultural land and production	—		—		—		—		31,649		31,649		—		—
Real estate:	—
Owner occupied	1,272		134		418		1,824		154,957		156,781		—		2,161
Real estate construction and other land loans	—		—		—		—		42,329		42,329		—		1,450
Commercial real estate	—		—		—		—		86,117		86,117		—		158
Agricultural real estate	—		—		—		—		44,164		44,164		—		—
Other real estate	—		—		—		—		4,548		4,548		—		—
Consumer:
Equity loans and lines of credit	10		147		252		409		48,185		48,594		—		2,286
Consumer and installment	86		—		—		86		11,166		11,252		—		4
Total	$	1,642	$	517	$	670	$	2,829	$	509,687	$	512,516	$	—	$	7,586

The following table shows information related to impaired loans by class at June 30, 2014 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	38	$	871	$	—
Real estate:
Owner occupied	2,427		2,691		—
Real estate construction and other land loans	1,358		1,307		—
Commercial real estate	469		490		—
Total real estate	4,254		4,488		—
Consumer:
Equity loans and lines of credit	1,741		2,411		—
Consumer and installment	25		28		—
Total consumer	1,766		2,439		—
Total with no related allowance recorded	6,058		7,798		—

With an allowance recorded:
Real estate:
Real estate construction and other land loans	3,818		3,817		324
Consumer:
Equity loans and lines of credit	271		277		42
Total with an allowance recorded	4,089		4,094		366
Total	$	10,147	$	11,892	$	366

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following table shows information related to impaired loans by class at December 31, 2013 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	350	$	385	$	—
Real estate:
Owner occupied	3,160		4,159		—
Real estate construction and other land loans	1,449		2,136		—
Commercial real estate	502		891		—
Total real estate	5,111		7,186		—
Consumer:
Equity loans and lines of credit	2,029		2,826		—
Consumer and installment	4		5		—
Total consumer	2,033		2,831		—
Total with no related allowance recorded	7,494		10,402		—

With an allowance recorded:
Commercial:
Commercial and industrial	1,177		1,222		469
Real estate:
Owner occupied	385		425		3
Real estate construction and other land loans	4,044		4,044		462
Total real estate	4,429		4,469		465
Consumer:
Equity loans and lines of credit	257		264		73
Total with an allowance recorded	5,863		5,955		1,007
Total	$	13,357	$	16,357	$	1,007

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.

The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2014 and 2013.



	Three Months Ended June 30, 2014				Three Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	155	$	—	$	—	$	—
Real estate:
Owner occupied	2,532		20		204		—
Real estate construction and other land loans	1,245		—		5,432		—
Commercial real estate	632		—		156		—
Total real estate	4,409		20		5,792		—
Consumer:
Equity loans and lines of credit	1,883		—		1,719		—
Consumer and installment	23		—		—		—
Total consumer	1,906		—		1,719		—
Total with no related allowance recorded	6,470		20		7,511		—

With an allowance recorded:
Commercial:
Commercial and industrial	—		—		1,589		32
Real estate:
Owner occupied	—		—		1,322		30
Real estate construction and other land loans	3,832		68		5,695		85
Total real estate	3,832		68		7,017		115
Consumer:
Equity loans and lines of credit	222		—		143		—
Total with an allowance recorded	4,054		68		8,749		147
Total	$	10,524	$	88	$	16,260	$	147



	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	255	$	—	$	—	$	—
Total commercial	255		—		—		—
Real estate:
Owner occupied	2,911		41		137		—
Real estate construction and other land loans	1,349		—		5,488		—
Commercial real estate	554		—		130		—
Total real estate	4,814		41		5,755		—
Consumer:
Equity loans and lines of credit	1,917		—		1,692		—
Consumer and installment	12		—		—		—
Total consumer	1,929		—		1,692		—
Total with no related allowance recorded	6,998		41		7,447		—

With an allowance recorded:
Commercial:
Commercial and industrial	498		—		1,803		65
Total commercial	498		—		1,803		65
Real estate:
Owner occupied	55		—		1,402		30
Real estate construction and other land loans	3,923		138		5,612		170
Total real estate	3,978		138		7,014		200
Consumer:
Equity loans and lines of credit	224		—		146		—
Consumer and installment	35		—		—		—
Total consumer	259		—		146		—
Total with an allowance recorded	4,735		138		8,963		265
Total	$	11,733	$	179	$	16,410	$	265

Foregone interest on nonaccrual loans totaled $185,000 and $378,000 for the six month periods ended June 30, 2014 and 2013, respectively. For the three month periods ended June 30, 2014 and 2013, foregone interest on nonaccrual loans totaled $95,000and $216,000, respectively.

Troubled Debt Restructurings:

As of June 30, 2014 and December 31, 2013, the Company has a recorded investment in troubled debt restructurings of $8,734,000 and $10,366,000, respectively. The Company has allocated $324,000 and $946,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2014 and December 31, 2013, respectively. The Company has committed to lend no additional amounts as of June 30, 2014 to customers with outstanding loans that are classified as troubled debt restructurings.

During the six month periods ended June 30, 2014 one loan was modified as a troubled debt restructuring. The modification of the terms of such loan included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower were forgiven.

The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2014 (in thousands):



Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)	Principal Modification (2)	Post Modification Outstanding Recorded Investment (3)	Outstanding Recorded Investment
Equity loans and line of credit	1	7	—	7	6


(1)	Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.


(2)	Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.


(3)	Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended June 30, 2014 (in thousands):



Troubled Debt Restructurings:	Number of Loans	Pre-Modification Outstanding Recorded Investment (1)	Principal Modification (2)	Post Modification Outstanding Recorded Investment (3)	Outstanding Recorded Investment
Equity loans and line of credit	1	7	—	7	6


(1)	Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.


(2)	Principal Modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.


(3)	Balance outstanding after principal modification, if any borrower reduction to recorded investment.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the six months ended June 30, 2014 and June 30, 2013.