ce for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. 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 (and in certain cases peer data) 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 as of and for the three months ended September 30, 2016 and 2015 by portfolio segment (in thousands):



	Commercial			Real Estate		Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, July 1, 2016	$	2,972		$	5,660	$	948		$	292		$	9,872
(Reversal) Provision charged to operations	(963		)	259		(23		)	(273		)	(1,000		)
Losses charged to allowance	(494		)	—		(36		)	—			(530		)
Recoveries	803			131		23			—			957
Ending balance, September 30, 2016	$	2,318		$	6,050	$	912		$	19		$	9,299

Allowance for credit losses:
Beginning balance, July 1, 2015	$	3,553		$	4,429	$	732		$	—		$	8,714
(Reversal) Provision charged to operations	(186		)	154		27			105			100
Losses charged to allowance	(11		)	—		(22		)	—			(33		)
Recoveries	267			8		37			—			312
Ending balance, September 30, 2015	$	3,623		$	4,591	$	774		$	105		$	9,093

The following table shows the summary of activities for the allowance for loan losses as of and for the nine months ended September 30, 2016 and 2015 by portfolio segment of loans (in thousands):



	Commercial			Real Estate			Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, January 1, 2016	$	3,562		$	5,204		$	734		$	110		$	9,610
(Reversal) Provision charged to operations	(5,787		)	(136		)	164			(91		)	(5,850		)
Losses charged to allowance	(499		)	—			(148		)	—			(647		)
Recoveries	5,042			982			162			—			6,186
Ending balance, September 30, 2016	$	2,318		$	6,050		$	912		$	19		$	9,299

Allowance for credit losses:
Beginning balance, January 1, 2015	$	3,130		$	4,058		$	1,078		$	42		$	8,308
Provision charged to operations	731			509			(703		)	63			600
Losses charged to allowance	(708		)	—			(95		)	—			(803		)
Recoveries	470			24			494			—			988
Ending balance, September 30, 2015	$	3,623		$	4,591		$	774		$	105		$	9,093

The following is a summary of the Allowance by impairment methodology and portfolio segment as of September 30, 2016 and December 31, 2015 (in thousands):



	Commercial		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses:
Ending balance, September 30, 2016	$	2,318	$	6,050	$	912	$	19	$	9,299
Ending balance: individually evaluated for impairment	$	13	$	96	$	83	$	—	$	192
Ending balance: collectively evaluated for impairment	$	2,305	$	5,954	$	829	$	19	$	9,107

Ending balance, December 31, 2015	$	3,562	$	5,204	$	734	$	110	$	9,610
Ending balance: individually evaluated for impairment	$	1	$	128	$	35	$	—	$	164
Ending balance: collectively evaluated for impairment	$	3,561	$	5,076	$	699	$	110	$	9,446

The following table shows the ending balances of loans as of September 30, 2016 and December 31, 2015 by portfolio segment and by impairment methodology (in thousands):



	Commercial		Real Estate		Consumer		Total
Loans:
Ending balance, September 30, 2016	$	114,637	$	449,759	$	64,458	$	628,854
Ending balance: individually evaluated for impairment	$	134	$	3,898	$	374	$	4,406
Ending balance: collectively evaluated for impairment	$	114,503	$	445,861	$	64,084	$	624,448

Loans:
Ending balance, December 31, 2015	$	132,669	$	410,226	$	54,799	$	597,694
Ending balance: individually evaluated for impairment	$	30	$	5,199	$	1,470	$	6,699
Ending balance: collectively evaluated for impairment	$	132,639	$	405,027	$	53,329	$	590,995

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at September 30, 2016 (in thousands):



	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	75,494	$	7,613	$	5,930	$	—	$	89,037
Agricultural land and production	19,631		4,209		1,760		—		25,600
Real Estate:
Owner occupied	164,295		3,982		1,178		—		169,455
Real estate construction and other land loans	40,384		—		2,255		—		42,639
Commercial real estate	128,184		804		703		—		129,691
Agricultural real estate	60,709		8,320		27,072		—		96,101
Other real estate	11,873		—		—		—		11,873
Consumer:
Equity loans and lines of credit	39,702		97		894		—		40,693
Consumer and installment	23,744		—		21		—		23,765
Total	$	564,016	$	25,025	$	39,813	$	—	$	628,854

The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2015 (in thousands):



	Pass		Special Mention		Sub-Standard		Doubtful		Total
Commercial:
Commercial and industrial	$	77,783	$	22,607	$	1,807	$	—	$	102,197
Agricultural land and production	20,422		—		10,050		—		30,472
Real Estate:
Owner occupied	163,570		3,785		1,555		—		168,910
Real estate construction and other land loans	34,916		644		3,125		—		38,685
Commercial real estate	110,833		1,683		4,728		—		117,244
Agricultural real estate	66,347		—		8,520		—		74,867
Other real estate	10,520		—		—		—		10,520
Consumer:
Equity loans and lines of credit	40,332		—		1,964		—		42,296
Consumer and installment	12,488		—		15		—		12,503
Total	$	537,211	$	28,719	$	31,764	$	—	$	597,694

The following table shows an aging analysis of the loan portfolio by class and the time past due at September 30, 2016 (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	$	—	$	—	$	—	$	—	$	89,037	$	89,037	$	—	$	92
Agricultural land and production	—		—		—		—		25,600		25,600		—		—
Real estate:	—						—		—		—
Owner occupied	—		92		—		92		169,363		169,455		—		112
Real estate construction and other land loans	—		—		—		—		42,639		42,639		—		166
Commercial real estate	—		—		—		—		129,691		129,691		—		530
Agricultural real estate	—		—		—		—		96,101		96,101		—		—
Other real estate	—		—		—		—		11,873		11,873		—		—
Consumer:							—		—		—
Equity loans and lines of credit	—		—		—		—		40,693		40,693		—		367
Consumer and installment	43		—		—		43		23,722		23,765		—		7
Total	$	43	$	92	$	—	$	135	$	628,719	$	628,854	$	—	$	1,274

The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2015 (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	$	—	$	—	$	—	$	—	$	102,197	$	102,197	$	—	$	29
Agricultural land and production	—		—		—		—		30,472		30,472		—		—
Real estate:	—
Owner occupied	—		—		—		—		168,910		168,910		—		347
Real estate construction and other land loans	—		—		—		—		38,685		38,685		—		—
Commercial real estate	98		—		—		98		117,146		117,244		—		567
Agricultural real estate	—		—		—		—		74,867		74,867		—		—
Other real estate	—		—		—		—		10,520		10,520		—		—
Consumer:
Equity loans and lines of credit	—		166		—		166		42,130		42,296		—		1,457
Consumer and installment	38		—		—		38		12,465		12,503		—		13
Total	$	136	$	166	$	—	$	302	$	597,392	$	597,694	$	—	$	2,413

The following table shows information related to impaired loans by class at September 30, 2016 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate:
Owner occupied	$	279	$	323	$	—
Real estate construction and other land loans	2,255		2,255		—
Commercial real estate	835		975		—
Total real estate	3,369		3,553		—
Consumer:
Consumer and installment	7		10		—
Total with no related allowance recorded	3,376		3,563		—

With an allowance recorded:
Commercial:
Commercial and industrial	134		134		13
Real estate:
Commercial real estate	529		565		96
Total real estate	529		565		96
Consumer:
Equity loans and lines of credit	367		370		83
Total with an allowance recorded	1,030		1,069		192
Total	$	4,406	$	4,632	$	192

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, 2015 (in thousands):



	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	1	$	—
Total commercial	—		1		—
Real estate:
Owner occupied	166		245		—
Real estate construction and other land loans	3,125		3,125		—
Commercial real estate	1,162		1,302		—
Total real estate	4,453		4,672		—
Consumer:
Equity loans and lines of credit	1,291		1,991		—
Total with no related allowance recorded	5,744		6,664		—

With an allowance recorded:
Commercial:
Commercial and industrial	30		33		1
Real estate:
Owner occupied	180		212		18
Commercial real estate	566		588		110
Total real estate	746		800		128
Consumer:
Equity loans and lines of credit	166		179		33
Consumer and installment	13		15		2
Total consumer	179		194		35
Total with an allowance recorded	955		1,027		164
Total	$	6,699	$	7,691	$	164

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

The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2016 and 2015.



	Three Months Ended September 30, 2016				Three Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	—	$	—	$	143	$	—
Real estate:
Owner occupied	108		—		556		—
Real estate construction and other land loans	2,686		51		1,064		57
Commercial real estate	838		14		2,020		—
Agricultural real estate	—		—		72		—
Total real estate	3,632		65		3,712		57
Consumer:
Equity loans and lines of credit	—		—		1,595		—
Consumer and installment	8		—		—		—
Total consumer	8		—		1,595		—
Total with no related allowance recorded	3,640		65		5,450		57

With an allowance recorded:
Commercial:
Commercial and industrial	519		1		55		—
Real estate:
Owner occupied	127		—		187		—
Real estate construction and other land loans	—		—		2,123		—
Commercial real estate	540		—		660		20
Total real estate	667		—		2,970		20
Consumer:
Equity loans and lines of credit	160		—		209		—
Consumer and installment	15		—		14		—
Total consumer	175		—		223		—
Total with an allowance recorded	1,361		1		3,248		20
Total	$	5,001	$	66	$	8,698	$	77



	Nine Months Ended September 30, 2016				Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Commercial and industrial	$	104	$	—	$	3,797	$	—
Real estate:
Owner occupied	189		—		950		—
Real estate construction and other land loans	2,884		156		706		175
Commercial real estate	997		41		2,171		—
Agricultural real estate	—		—		274		—
Total real estate	4,070		197		4,101		175
Consumer:
Equity loans and lines of credit	745		—		2,032		—
Consumer and installment	6		—		—		—
Total consumer	751		—		2,032		—
Total with no related allowance recorded	4,925		197		9,930		175

With an allowance recorded:
Commercial:
Commercial and industrial	559		2		307		—
Total commercial	559		2		307		—
Real estate:
Owner occupied	156		—		193		—
Real estate construction and other land loans	—		—		2,986		—
Commercial real estate	552		—		807		59
Total real estate	708		—		3,986		59
Consumer:
Equity loans and lines of credit	162		—		373		—
Consumer and installment	10		—		17		—
Total consumer	172		—		390		—
Total with an allowance recorded	1,439		2		4,683		59
Total	$	6,364	$	199	$	14,613	$	234

Foregone interest on nonaccrual loans totaled $104,000 and $366,000 for the nine month periods ended September 30, 2016 and 2015, respectively. For the three month periods ended September 30, 2016 and 2015, foregone interest on nonaccrual loans totaled $12,000 and $91,000, respectively.

Troubled Debt Restructurings:

As of September 30, 2016 and December 31, 2015, the Company has a recorded investment in troubled debt restructurings of $3,153,000 and $5,623,000, respectively. The Company has allocated $3,000 and $1,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of September 30, 2016 and December 31, 2015, respectively. The Company has committed to lend no additional amounts as of September 30, 2016 to customers with outstanding loans that are classified as troubled debt restructurings.

During the nine month period ended September 30, 2016 two loans were modified as troubled debt restructurings. The modification of the terms of such loans 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 was forgiven or which resulted in a charge-off or change to the allowance for loan losses.

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ended September 30, 2016 (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
Commercial and Industrial	2	$	45	$	—	$	45	$	42


(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 nine months ended September 30, 2015 (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
Commercial:
Commercial and Industrial	2	$	42	$	—	$	42	$	34

During the nine month period ended September 30, 2015 two loans were modified as troubled debt restructurings. The modification of the terms of such loans 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 was forgiven or which resulted in a charge-off or change to the allowance for loan losses.

During the quarter ended September 30, 2016 and 2015 no loans were modified as troubled debt restructuring. 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 nine months ended September 30, 2016 or September 30, 2015.