(5) Allowance for Loan Losses

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan and lease losses, the Company has segmented certain loans in the portfolio by product type. Loss migration rates for each risk category are calculated and used as the basis for calculating loan loss allowance allocations. Loss migration rates are calculated over a three-year period for all portfolio segments. Management also considers certain economic factors for trends that management uses to account for the qualitative and environmental changes in risk, which affects the level of the reserve. The following qualitative factors are analyzed:

•

Changes in lending policies and procedures

•

Changes in experience and depth of lending and management staff

•

Changes in quality of credit review system

•

Changes in nature and volume of the loan portfolio

•

Changes in past due, classified and nonaccrual loans and TDRs

•

Changes in economic and business conditions

•

Changes in competition or legal and regulatory requirements

•

Changes in concentrations within the loan portfolio

•

Changes in the underlying collateral for collateral dependent loans

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $13,451 adequate to cover loan losses inherent in the loan portfolio, at September 30, 2016. The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three and nine months ended September 30, 2016 and 2015.

Allowance for loan losses:

For the nine months ended September 30, 2016


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,478	$	(870	)	$	79	$	1,023		$	1,710
Commercial Real Estate:
Owner Occupied		2,467		(166	)		53		(44	)		2,310
Non-Owner Occupied		4,657		(23	)		1,365		(1,456	)		4,543
Residential Real Estate		4,086		(280	)		384		(735	)		3,455
Real Estate Construction		371		(115	)		8		160			424
Farm Real Estate		538		—			—		(108	)		430
Consumer and Other		382		(85	)		40		—			337
Unallocated		382		—			—		(140	)		242

Total	$	14,361	$	(1,539	)	$	1,929	$	(1,300	)	$	13,451

For the nine months ended September 30, 2016, the increase in allowance for Commercial & Agriculture loans was due to an increase in general reserves as a result of higher balances and higher loss rates in criticized loans. The result was represented as an increase in the provision. The allowance for Commercial Real Estate – Owner Occupied loans was reduced not only by a decrease in specific reserves required for this type, but also by decreases in past due, classified and non-accrual loans for this type. The result of these changes was represented as a decrease in the provision. The decrease in allowance for Commercial Real Estate – Non-Owner Occupied loans was the result of a decrease in general reserves required as a result of lower loss rates and improvement in past due, classified and non-accrual loans for this type. In addition, a payoff on a previously charged down loan was received resulting in a recovery of approximately $1,303. The net result was represented as a decrease in the provision. The allowance for Residential Real Estate loans was reduced by a decrease in general reserves required for this type as a result of a decrease in loss rates, represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to an increase in loss rates for this type of loan, which was represented as an increase in the provision. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances and a decrease in loss rates. The result of these changes was represented as a decrease in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio.

Allowance for loan losses:

For the nine months ended September 30, 2015


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,819	$	(187	)	$	158	$	(412	)	$	1,378
Commercial Real Estate:
Owner Occupied		2,221		(362	)		162		661			2,682
Non-Owner Occupied		4,334		(81	)		105		581			4,939
Residential Real Estate		3,747		(779	)		289		965			4,222
Real Estate Construction		428		—			4		(4	)		428
Farm Real Estate		822		—			60		(224	)		658
Consumer and Other		200		(115	)		38		251			374
Unallocated		697		—			—		(618	)		79

Total	$	14,268	$	(1,524	)	$	816	$	1,200		$	14,760

For the nine months ended September 30, 2015, the allowance for Commercial & Agriculture loans was reduced due to decreases in specific reserves for impaired loans of $625. The decrease in specific reserves for impaired loans was the result of the resolution of an impaired loan. The Company did not incur losses with this resolution. In addition, criticized Commercial & Agriculture loan balances have decreased. The result was represented as a decrease in the provision. The increase in the allowance for Commercial Real Estate - Owner Occupied loans was the result of an increase in loss migration rates, which is attributable to the change in the look-back period to a three-year period. The increase in the allowance for Commercial Real Estate – Non–Owner Occupied loans was the result of an increase in loss migration rates, which is attributable to the change in the look-back period to a three-year period. The ending reserve balance for Residential Real Estate loans increased from the end of the previous year due to an increase in loss migration rates, which is attributable to the change in the look-back period to a three-year period. The increase in the allowance for Consumer and Other loans increased due to an increase in loss migration rates. Unallocated reserves declined due to a change in the Company’s look-back period. The Company changed from a two-year look-back period to a three-year look-back period when calculating all but one segment’s loss migration rates during the third quarter of 2015. The change in methodology resulted in a decline in the unallocated balance with a corresponding increase in allocated balances within the reserve calculation. While loan balances are up, loss rates continue to trend downward, exclusive of the change in methodology, resulting in a lower allowance balance. While criticized loans in total have increased slightly, we have seen significant improvement in nonperforming loan balances resulting in a decline in specific reserves for impaired loans. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio.

Allowance for loan losses:

For the three months ended September 30, 2016


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,557	$	(828	)	$	44	$	937		$	1,710
Commercial Real Estate:
Owner Occupied		2,393		(124	)		1		40			2,310
Non-Owner Occupied		4,969		(23	)		6		(409	)		4,543
Residential Real Estate		3,899		(55	)		23		(412	)		3,455
Real Estate Construction		366		(115	)		6		167			424
Farm Real Estate		476		—			—		(46	)		430
Consumer and Other		358		(38	)		7		10			337
Unallocated		529		—			—		(287	)		242

Total	$	14,547	$	(1,183	)	$	87	$	—		$	13,451

For the three months ended September 30, 2016, the increase in allowance for Commercial & Agriculture loans was due to an increase in general reserves as a result of higher loss rates and an increase in loan balances. The result was represented as an increase in the provision. The decrease in allowance for Commercial Real Estate – Non-Owner Occupied loans was the result of a decrease in general reserves required as a result of lower loss rates and improvement in past due, classified and non-accrual loans for this type. The net result was represented as a decrease in the provision. The allowance for Residential Real Estate loans was reduced by a decrease in general reserves required for this type as a result of a decrease in loss rates, represented by a decrease in the provision. The allowance for Real Estate Construction loans increased due to an increase in loss rates for this type of loan, which was represented as an increase in the provision. The allowance for Farm Real Estate loans was reduced by a decrease in general reserves required for this type as a result of lower outstanding loan balances, represented as a decrease in the provision. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio.

Allowance for loan losses:

For the three months ended September 30, 2015


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,395	$	(187	)	$	127	$	43		$	1,378
Commercial Real Estate:
Owner Occupied		5,073		(164	)		3		(2,230	)		2,682
Non-Owner Occupied		3,153		(17	)		15		1,788			4,939
Residential Real Estate		3,470		(238	)		124		866			4,222
Real Estate Construction		434		—			1		(7	)		428
Farm Real Estate		584		—			9		65			658
Consumer and Other		190		(28	)		8		204			374
Unallocated		408		—			—		(329	)		79

Total	$	14,707	$	(634	)	$	287	$	400		$	14,760

For the three months ended September 30, 2015, the decrease in the allowance for Commercial Real Estate – Owner Occupied was the result of a significant change in the Special Mention loss migration rate that had been adversely effected by a specific loss on one relationship that occurred in 2014. The effect of this loss as of this quarter end migrated to the Substandard pool and has less of an impact to the reserve. The ending reserve balance for Residential Real Estate loans increased due an increase in criticized loan balances and an increase in loss migration rates. The increase in the allowance for Consumer and other loans increased due to an increase in loss rates. Unallocated reserves declined due to a change in the Company’s lookback period. The Company changed from a two-year lookback period to a three-year lookback period when calculating all but one segment’s loss migration rates during the third quarter of 2015. The change in methodology is reflected in a decline in the unallocated balance with corresponding increase in allocated balances within the reserve calculation. While loan balances are up, loss rates continue to trend downward, exclusive of the change in methodology, resulting in a lower allowance balance. While criticized loans have increased slightly, we have seen significant improvement in nonperforming loan balances resulting in a decline in specific reserves for impaired loans. Management feels that the unallocated amount is appropriate and within the relevant range for the allowance that is reflective of the risk in the portfolio.

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of September 30, 2016 and December 31, 2015.


September 30, 2016	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:

Commercial & Agriculture	$	—	$	—	$	1,710	$	1,710
Commercial Real Estate:
Owner Occupied		—		4		2,306		2,310
Non-Owner Occupied		—		—		4,543		4,543
Residential Real Estate		97		113		3,245		3,455
Real Estate Construction		—		—		424		424
Farm Real Estate		—		—		430		430
Consumer and Other		—		—		337		337
Unallocated		—		—		242		242

Total	$	97	$	117	$	13,237	$	13,451


Outstanding loan balances:

Commercial & Agriculture	$	89	$	2,386	$	127,225	$	129,700
Commercial Real Estate:
Owner Occupied		—		1,939		165,625		167,564
Non-Owner Occupied		—		369		385,494		385,863
Residential Real Estate		177		1,854		245,143		247,174
Real Estate Construction		—		—		56,919		56,919
Farm Real Estate		—		665		41,197		41,862
Consumer and Other		—		1		17,884		17,885

Total	$	266	$	7,214	$	1,039,487	$	1,046,967


December 31, 2015	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:

Commercial & Agriculture	$	—	$	23	$	1,455	$	1,478
Commercial Real Estate:
Owner Occupied		—		103		2,364		2,467
Non-Owner Occupied		—		—		4,657		4,657
Residential Real Estate		123		137		3,826		4,086
Real Estate Construction		—		—		371		371
Farm Real Estate		—		—		538		538
Consumer and Other		—		—		382		382
Unallocated		—		—		382		382

Total	$	123	$	263	$	13,975	$	14,361


Outstanding loan balances:

Commercial & Agriculture	$	132	$	873	$	123,397	$	124,402
Commercial Real Estate:
Owner Occupied		—		2,141		165,756		167,897
Non-Owner Occupied		—		1,742		346,697		348,439
Residential Real Estate		131		1,642		234,565		236,338
Real Estate Construction		—		—		58,898		58,898
Farm Real Estate		—		953		46,040		46,993
Consumer and Other		—		3		18,557		18,560

Total	$	263	$	7,354	$	993,910	$	1,001,527

The following tables present credit exposures by internally assigned grades for the periods ended September 30, 2016 and December 31, 2015. The risk rating analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

•

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

•

Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

•

Substandard – loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that Civista will sustain some loss if the deficiencies are not corrected.

•

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

•

Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

Generally, Residential Real Estate, Real Estate Construction and Consumer and Other loans are not risk-graded, except when collateral is used for a business purpose.


September 30, 2016	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	121,273	$	4,569	$	3,858	$	—	$	129,700
Commercial Real Estate:
Owner Occupied		159,392		1,849		6,323		—		167,564
Non-Owner Occupied		380,064		4,054		1,745		—		385,863
Residential Real Estate		58,290		1,698		7,539		—		67,527
Real Estate Construction		50,391		17		27		—		50,435
Farm Real Estate		32,430		7,088		2,344		—		41,862
Consumer and Other		1,586		—		95		—		1,681

Total	$	803,426	$	19,275	$	21,931	$	—	$	844,632


December 31, 2015	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	117,739	$	3,090	$	3,573	$	—	$	124,402
Commercial Real Estate:
Owner Occupied		156,622		5,571		5,704		—		167,897
Non-Owner Occupied		339,734		6,100		2,605		—		348,439
Residential Real Estate		62,147		1,671		7,435		—		71,253
Real Estate Construction		52,399		216		29		—		52,644
Farm Real Estate		39,787		4,024		3,182		—		46,993
Consumer and Other		1,987		3		111		—		2,101

Total	$	770,415	$	20,675	$	22,639	$	—	$	813,729

The following tables present performing and nonperforming loans based solely on payment activity for the periods ended September 30, 2016 and December 31, 2015 that have not been assigned an internal risk grade. The types of loans presented here are not assigned a risk grade unless there is evidence of a problem. Payment activity is reviewed by management on a monthly basis to evaluate performance. Loans are considered to be nonperforming when they become 90 days past due or if management thinks that we may not collect all of our principal and interest. Nonperforming loans also include certain loans that have been modified in Troubled Debt Restructurings (TDRs) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities related to a borrower that is experiencing financial difficulties, and such concessions may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.


	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
September 30, 2016
Performing	$	179,647	$	6,484	$	16,171	$	202,302
Nonperforming		—		—		33		33

Total	$	179,647	$	6,484	$	16,204	$	202,335


	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
December 31, 2015
Performing	$	165,048	$	6,254	$	16,458	$	187,760
Nonperforming		37		—		1		38

Total	$	165,085	$	6,254	$	16,459	$	187,798

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of September 30, 2016 and December 31, 2015.


September 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing

Commercial & Agriculture	$	57	$	169	$	213	$	439	$	129,172	$	89	$	129,700	$	—
Commercial Real Estate:
Owner Occupied		642		59		303		1,004		166,560		—		167,564		—
Non-Owner Occupied		—		14		316		330		385,533		—		385,863		—
Residential Real Estate		230		384		1,299		1,913		245,084		177		247,174		—
Real Estate Construction		—		—		27		27		56,892		—		56,919		—
Farm Real Estate		21		—		—		21		41,841		—		41,862		—
Consumer and Other		157		37		33		227		17,658		—		17,885		33

Total	$	1,107	$	663	$	2,191	$	3,961	$	1,042,740	$	266	$	1,046,967	$	33


December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing

Commercial & Agriculture	$	9	$	32	$	37	$	78	$	124,192	$	132	$	124,402	$	—
Commercial Real Estate:
Owner Occupied		982		36		284		1,302		166,595		—		167,897		—
Non-Owner Occupied		269		330		123		722		347,717		—		348,439		—
Residential Real Estate		2,640		404		1,725		4,769		231,438		131		236,338		—
Real Estate Construction		8		—		—		8		58,890		—		58,898		—
Farm Real Estate		—		—		—		—		46,993		—		46,993		—
Consumer and Other		98		68		8		174		18,386		—		18,560		—

Total	$	4,006	$	870	$	2,177	$	7,053	$	994,211	$	263	$	1,001,527	$	—

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of September 30, 2016 and December 31, 2015.


	2016		2015
Commercial & Agriculture	$	2,008	$	1,185
Commercial Real Estate:
Owner Occupied		1,618		1,645
Non-Owner Occupied		459		1,428
Residential Real Estate		3,887		3,911
Real Estate Construction		27		29
Farm Real Estate		54		961
Consumer and Other		84		100

Total	$	8,137	$	9,259

Nonaccrual Loans: Loans are considered for nonaccrual status upon reaching 90 days delinquency, unless the loan is well secured and in the process of collection, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income. A loan may be returned to accruing status only if one of three conditions are met: the loan is well-secured and none of the principal and interest has been past due for a minimum of 90 days; the loan is a TDR and the borrower has made a minimum of six months payments under the modified terms; or the principal and interest payments are reasonably assured and a sustained period of performance has occurred, generally six months.

Modifications: A modification of a loan constitutes a TDR when the Company for economic or legal reasons related to a borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. The Company offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial Real Estate loans modified in a TDR often involve reducing the interest rate lower than the current market rate for new debt with similar risk. Real Estate loans modified in a TDR were primarily comprised of interest rate reductions where monthly payments were lowered to accommodate the borrowers’ financial needs.

Loans modified in a TDR are typically already on non-accrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. An allowance for impaired loans that have been modified in a TDR are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, less any selling costs, if the loan is collateral dependent. Management exercises significant judgment in developing these estimates. As of September 30, 2016, TDRs accounted for $214 of the allowance for loan losses. As of December 31, 2015, TDRs accounted for $286 of the allowance for loan losses.

Loan modifications that are considered TDRs completed during the periods ended September 30, 2016 and September 30, 2015 were as follows:


	For the Nine-Month Period Ended September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment

Commercial & Agriculture		4	$	529	$	529
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		2		308		308
Real Estate Construction		—		—		—
Farm Real Estate		3		700		700
Consumer and Other		—		—		—

Total Loan Modifications		9	$	1,537	$	1,537


	For the Nine-Month Period Ended September 30, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment

Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		—		—		—
Real Estate Construction		1		41		41
Farm Real Estate		—		—		—
Consumer and Other		—		—		—

Total Loan Modifications		1	$	41	$	41


	For the Three-Month Period Ended September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment

Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		—		—		—
Real Estate Construction		—		—		—
Farm Real Estate		1		86		86
Consumer and Other		—		—		—

Total Loan Modifications		1	$	86	$	86


	For the Three-Month Period Ended September 30, 2015
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment

Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		—		—		—
Real Estate Construction		—		—		—
Farm Real Estate		—		—		—
Consumer and Other		—		—		—

Total Loan Modifications		—	$	—	$	—

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans.

During both the three- and nine-month periods ended September 30, 2016 and September 30, 2015, there were no defaults on loans that were modified and considered TDRs during the respective twelve previous months.

Impaired Loans: Larger (greater than $350) Commercial & Agricultural and Commercial Real Estate loan relationships, all TDRs and Residential Real Estate and Consumer loans that are part of a larger relationship are tested for impairment on a quarterly basis. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

The following tables include the recorded investment and unpaid principal balances for impaired loans, excluding PCI loans, with the related allowance amount, if applicable, as of September 30, 2016 and December 31, 2015.


	September 30, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance

With no related allowance recorded:
Commercial & Agriculture	$	2,386	$	3,457			$	851	$	1,034
Commercial Real Estate:
Owner Occupied		1,697		1,842				1,224		1,343
Non-Owner Occupied		369		396				1,742		1,826
Residential Real Estate		1,376		1,912				965		1,591
Farm Real Estate		665		665				953		1,026
Consumer and Other		1		1				3		3

Total		6,494		8,273				5,738		6,823

With an allowance recorded:
Commercial & Agriculture		—		—	$	—		22		23	$	23
Commercial Real Estate:
Owner Occupied		242		242		4		917		999		103
Non-Owner Occupied		—		—		—		—		—		—
Residential Real Estate		478		497		113		808		683		260
Farm Real Estate		—		—		—		—		—		—

Total		720		739		117		1,747		1,705		386

Total:
Commercial & Agriculture		2,386		3,457		—		873		1,057		23
Commercial Real Estate:
Owner Occupied		1,939		2,084		4		2,141		2,342		103
Non-Owner Occupied		369		396		—		1,742		1,826		—
Residential Real Estate		1,854		2,409		113		1,773		2,274		260
Farm Real Estate		665		665		—		953		1,026		—
Consumer and Other		1		1		—		3		3		—

Total	$	7,214	$	9,012	$	117	$	7,485	$	8,528	$	386

The following tables include the average recorded investment and interest income recognized for impaired loans.


For the nine months ended:	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Commercial & Agriculture	$	1,453	$	147	$	1,680	$	41
Commercial Real Estate - Owner Occupied		1,954		101		2,887		120
Commercial Real Estate - Non-Owner Occupied		1,519		62		1,997		31
Residential Real Estate		1,699		89		2,640		78
Real Estate Construction		473		6		20		—
Farm Real Estate		1,123		33		620		42
Consumer and Other		2		—		5		—

Total	$	8,223	$	438	$	9,849	$	312


For the three months ended:	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Commercial & Agriculture	$	2,401	$	67	$	1,058	$	4
Commercial Real Estate - Owner Occupied		1,774		51		2,447		23
Commercial Real Estate - Non-Owner Occupied		556		36		1,870		12
Residential Real Estate		1,873		29		2,450		12
Real Estate Construction		—		6		20		—
Farm Real Estate		1,032		2		816		14
Consumer and Other		2		—		4		—

Total	$	7,638	$	191	$	8,665	$	65

Changes in the amortizable yield for PCI loans were as follows, since acquisition:


	For the Nine-Month			For the Nine-Month
	Period Ended			Period Ended
	September 30, 2016			September 30, 2015
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	82		$	—
Acquisition of PCI loans		—			140
Accretion		(24	)		—

Balance at end of period	$	58		$	140


	For the Three-Month			For the Three-Month
	Period Ended			Period Ended
	September 30, 2016			September 30, 2015
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	66		$	140
Acquisition of PCI loans		—			—
Accretion		(8	)		—

Balance at end of period	$	58		$	140

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:


	At September 30, 2016		At December 31, 2015
	Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)
	(In Thousands)
Outstanding balance	$	868	$	965
Carrying amount		266		263

There has been $97 and $123 in allowance for loan losses recorded for acquired loans with or without specific evidence of deterioration in credit quality as of September 30, 2016 and December 31, 2015, respectively.

Foreclosed Assets Held For Sale

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in other assets on the Consolidated Balance Sheet. As of September 30, 2016 and December 31, 2015, a total of $62 and $116, respectively, of foreclosed assets were included in other assets. As of September 30, 2016, included within the foreclosed assets is $62 of residential property acquired upon foreclosure of consumer residential mortgages or received via a deed in lieu transaction prior to the period end. As of September 30, 2016, the Company had initiated formal foreclosure procedures on $721 of consumer residential mortgages.