NOTE 4

LOANS

The Company had $689 thousand in loans held for sale as of September 30, 2013 as compared to $2.5 million in loans held for sale on December 31, 2012. Due to lack of materiality, these loans are included in the Consumer Real Estate loans below.

Loan balances as of September 30, 2013 and December 31, 2012:


	(In Thousands)
Loans:	September 30, 2013			December 31, 2012
Commercial real estate	$	232,104		$	199,999
Agricultural real estate		37,758			40,143
Consumer real estate		79,268			80,287
Commercial and industrial		92,340			101,624
Agricultural		56,752			57,770
Consumer		21,002			20,413
Industrial Development Bonds		4,303			1,299

		523,527			501,535
Less: Net deferred loan fees and costs		(201	)		(133	)

		523,326			501,402
Less: Allowance for loan losses		(5,030	)		(5,224	)


Loans - Net	$	518,296		$	496,178

The following is a maturity schedule by major category of loans as of September 30, 2013:


	Maturities (In Thousands)
	Within One Year		After One Year Within Five Years		After Five Years
Commercial Real Estate	$	36,687	$	100,596	$	94,821
Agricultural Real Estate		1,987		10,068		25,703
Consumer Real Estate		10,208		12,796		56,264
Commercial/Industrial		58,743		26,504		7,093
Agricultural		31,918		21,995		2,839
Consumer		4,956		12,966		2,879
Industrial Development Bonds		1,900		490		1,913

The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of September 30, 2013. Variable rate loans whose current rates are equal to their floor or ceiling are classified as fixed in this table.


	(In Thousands)
	Fixed Rate		Variable Rate
Commercial Real Estate	$	141,991	$	90,113
Agricultural Real Estate	$	28,277	$	9,481
Consumer Real Estate	$	66,464	$	12,804
Commercial/Industrial	$	72,385	$	19,955
Agricultural	$	51,662	$	5,090
Consumer	$	16,686	$	4,115
Industrial Development Bonds	$	4,303	$	—

As of September 30, 2013 and December 31, 2012 one to four family residential mortgage loans amounting to $25.3 and $26.8 million, respectively, have been pledged as security for loans the Bank has received from the Federal Home Loan Bank.

The percentage of delinquent loans has trended downward since the beginning of January 2010 from a high of 2.85% of total loans to a low of .62% as of September 30, 2013. These percentages do not include nonaccrual loans which are not past due (nonaccruals are not considered past due if current). This level of delinquency is due in part to an adherence to sound underwriting practices over the course of time, an improvement in the financial status of companies to which the Bank extends credit, continued financial stability in the agricultural loan portfolio, and the writing down of uncollectable credits in a timely manner.

Industrial Development Bonds are included in the commercial and industrial category for the remainder of the tables in this Note 4.

The following table represents the contractual aging of the recorded investment in past due loans by portfolio segment of loans as of September 30, 2013 and December 31, 2012, net of deferred fees:


	(In Thousands)
September 30, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing

Residential	$	847	$	106	$	339	$	1,292	$	77,976	$	79,268	$	—
Ag Real Estate	$	—	$	88	$	—		88		37,670	$	37,758	$	—
Ag	$	—	$	—	$	—		—		56,752	$	56,752	$	—
Commercial Real Estate	$	—	$	975	$	571		1,546		230,558	$	232,104	$	—
Commercial and Industrial	$	228	$	—	$	50		278		96,365	$	96,643	$	—
Consumer	$	14	$	18	$	—		32		20,769	$	20,801	$	—

Total	$	1,089	$	1,187	$	960	$	3,236	$	520,090	$	523,326	$	—


December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing

Residential	$	575	$	—	$	648	$	1,223	$	79,064	$	80,287	$	—
Ag Real Estate		—		—		—		—		40,143		40,143		—
Ag		11		—		—		11		57,759		57,770		—
Commercial Real Estate		—		—		877		877		199,122		199,999		—
Commercial and Industrial		78		—		2,567		2,645		100,278		102,923		—
Consumer		65		7		—		72		20,208		20,280		1

Total	$	729	$	7	$	4,092	$	4,828	$	496,574	$	501,402	$	1

The following table presents the recorded investment in nonaccrual loans by class of loans as of September 30, 2013 and December 31, 2012:


	(In Thousands)
	September 30 2013		December 31 2012

Consumer Real Estate	$	635	$	964
Agricultural Real Estate		88		—
Agriculture		—		—
Commercial Real Estate		1,751		877
Commercial and Industrial		434		2,987
Consumer		—		—

Total	$	2,908	$	4,828

The Bank uses a nine tier risk rating system to grade its loans. The grade of a loan may change during the life of the loan.

The risk ratings are described as follows.

Zero (0) Unclassified. Any loan which has not been assigned a classification.

One (1) Excellent. Credit to premier customers having the highest credit rating based on an extremely strong financial condition, which compares favorably with industry standards (upper quartile of Risk Management Association ratios). Financial statements indicate a sound earnings and financial ratio trend for several years with satisfactory profit margins and excellent liquidity exhibited. Prime credits may also be borrowers with loans fully secured by highly liquid collateral such as traded stocks, bonds, certificates of deposit, savings account, etc. No credit or collateral exceptions exist and the loan adheres to the Bank’s loan policy in every respect. Financing alternatives would be readily available and would qualify for unsecured credit. This grade is summarized by high liquidity, minimum risk, strong ratios, and low handling costs.

Two (2) Good. Desirable loans of somewhat less stature than Grade 1, but with strong financial statements. Loan supported by financial statements containing strong balance sheets, generally with a leverage position less than 1.50, and a history of profitability. Probability of serious financial deterioration is unlikely. Possessing a sound repayment source (and a secondary source), which would allow repayment in a reasonable period of time. Individual loans backed by liquid personal assets, established history and unquestionable character.

Three (3) Satisfactory. Satisfactory loans of average or slightly above average risk – having some deficiency or vulnerability to changing economic conditions, but still fully collectible. Projects should normally demonstrate acceptable debt service coverage. Generally, customers should have a leverage position less than 2.00. May be some weakness but with offsetting features of other support readily available. Loans that are meeting the terms of repayment.

Loans may be graded 3 when there is no recent information on which to base a current risk evaluation and the following conditions apply:

At inception, the loan was properly underwritten and did not possess an unwarranted level of credit risk:

At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss;

The loan exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance;

During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the business is in an industry which is known to be experiencing problems. If any of the credit weaknesses is observed, a lower risk grade is warranted.

Four (4) Satisfactory / Monitored. A “4” (Satisfactory/Monitored) risk grade may be established for a loan considered satisfactory but which is of average credit risk due to financial weakness or uncertainty. The loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in Satisfactory/Monitored classification is considered acceptable and within normal underwriting guidelines, so long as the loan is given management supervision.

Five (5) Special Mention. Loans that possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a 5 (Special Mention) classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential”, versus “defined”, impairments to the primary source of loan repayment and collateral.

Six (6) Substandard. One or more of the following characteristics may be exhibited in loans classified substandard:

Loans, which possess a defined credit weakness and the likelihood that a loan will be paid from the primary source, are uncertain. Financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss.

Loans are inadequately protected by the current net worth and paying capacity of the borrower.

The primary source of repayment is weakened, and the Bank is forced to rely on a secondary source of repayment such as collateral liquidation or guarantees.

Loans are characterized by the distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

Unusual courses of action are needed to maintain a high probability of repayment.

The borrower is not generating enough cash flow to repay loan principal; however, continues to make interest payments.

The lender is forced into a subordinate position or unsecured collateral position due to flaws in documentation.

Loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms.

The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.

There is significant deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

Seven (7) Doubtful. One or more of the following characteristics may be exhibited in loans classified Doubtful:

Loans have all of the weaknesses of those classified as Substandard. Additionally, however, these weaknesses make collection or liquidation in full based on existing conditions improbable.

The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

The possibility of loss is high, but, because of certain important pending factors which may strengthen the loan, loss classification is deferred until its exact status is known. A Doubtful classification is established deferring the realization of the loss.

Eight (8) Loss. Loans are considered uncollectable and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following table represents the risk category of loans by class based on the most recent analysis performed as of September 30, 2013 and December 31, 2012:


	(In Thousands
	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
September 30, 2013
1-2	$	3,620	$	5,792	$	2,506	$	2,234	$	—
3		13,749		23,382		56,952		22,392		3,959
4		19,523		27,578		161,927		64,002		344
5		743		—		5,065		2,142		—
6		35		—		5,184		1,143		—
7		88		—		470		427		—
8		—		—		—		—		—

Total	$	37,758	$	56,752	$	232,104	$	92,340	$	4,303


	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
December 31, 2012
1-2	$	2,719	$	5,022	$	4,046	$	750	$	97
3		15,111		23,525		42,467		21,750		859
4		21,481		29,188		137,537		71,228		343
5		794		35		8,984		3,385		—
6		38		—		6,295		2,202		—
7		—		—		670		2,309		—
8		—		—		—		—		—

Total	$	40,143	$	57,770	$	199,999	$	101,624	$	1,299

For consumer residential real estate, and other, the Company also evaluates credit quality based on the aging status of the loan, which was previously stated, and by payment activity. The following tables present the recorded investment in those classes based on payment activity and assigned risk grading as of September 30, 2013 and December 31, 2012.


	(In Thousands)
	Consumer Real Estate		Consumer Real Estate
	September 30 2013		December 31 2012
Grade
Pass	$	78,767	$	79,766
Special Mention (5)		—		—
Substandard (6)		216		110
Doubtful (7)		285		411

Total	$	79,268	$	80,287


	(In Thousands)
	Consumer - Credit				Consumer - Other
	September 30 2013		December 31 2012		September 30 2013		December 31 2012
Performing	$	3,412	$	3,470	$	17,364	$	16,775
Nonperforming		—		3		25		32

Total	$	3,412	$	3,473	$	17,389	$	16,807

Information about impaired loans as of September 30, 2013, December 31, 2012 and September 30, 2012 are as follows:


	(In Thousands)
	September 30, 2013		December 31, 2012		September 30, 2012

Impaired loans without a valuation allowance	$	253	$	730	$	1,145

Impaired loans with a valuation allowance		1,308		3,861		3,371

Total impaired loans	$	1,561	$	4,591	$	4,516


Valuation allowance related to impaired loans	$	423	$	865	$	453
Total non-accrual loans	$	2,908	$	4,828	$	5,260
Total loans past-due ninety days or more and still accruing	$	—	$	1	$	—

Quarter ended average investment in impaired loans	$	1,879	$	4,468	$	4,548

Year to date average investment in impaired loans	$	3,521	$	3,436	$	3,091

No additional funds are committed to be advanced in connection with impaired loans.

The Bank had approximately $378 thousand of its impaired loans classified as troubled debt restructured as of September 30, 2013, $627.3 thousand as of December 31, 2012 and as of September 30, 2012.

The following table represents three months and nine months ended September 30, 2013.


		(In Thousands)							(In Thousands)
Three Months September 30, 2013 Troubled Debt Restructurings	Number of Contracts Modified in the Last 3 Months	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Nine Months September 30, 2013 Troubled Debt Restructurings	Number of Contracts Modified in the Last 9 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate		$	—	$	—	Commercial Real Estate		—	$	—	$	—
Ag Real Estate		$	—	$	—	Ag Real Estate			$	—	$	—
Commercial and Industrial		$	—	$	—	Commercial and Industrial		1	$	81	$	43

Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts Modified in the Last 3 Months	Recorded Investment				Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts Modified in the Last 9 Months		Recorded Investment
Commercial Real Estate		$	—			Commercial Real Estate			$	—
Ag Real Estate		$	—			Ag Real Estate			$	—
Commercial and Industrial		$	—			Commercial and Industrial			$	—

The following table represents three months and nine months ended September 30, 2012.


			(In Thousands)							(In Thousands)
Three Months September 30, 2012 Troubled Debt Restructurings	Number of Contracts Modified in the Last 3 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Nine Months September 30, 2012 Troubled Debt Restructurings	Number of Contracts Modified in the Last 9 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate			$	—	$	—	Commercial Real Estate		1	$	1,937	$	1,937
Ag Real Estate			$	—	$	—	Ag Real Estate			$	—	$	—
Commercial and Industrial		2	$	420	$	420	Commercial and Industrial		2	$	420	$	420

Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts Modified in the Last 3 Months		Recorded Investment				Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts Modified in the Last 9 Months		Recorded Investment
Commercial Real Estate			$	—			Commercial Real Estate			$	—
Ag Real Estate			$	—			Ag Real Estate			$	—
Commercial and Industrial			$	—			Commercial and Industrial			$	—

For the majority of the Bank’s impaired loans, the Bank will apply the observable market price methodology. However, the Bank may also utilize a measurement incorporating the present value of expected future cash flows discounted at the loan’s effective rate of interest. To determine observable market price, collateral asset values securing an impaired loan are periodically evaluated. Maximum time for re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the collateral value used.

The Bank uses the following guidelines as stated in policy to determine when to realize a charge-off, whether a partial or full loan balance. A charge-off in whole or in part is realized when unsecured consumer loans, credit card credits and overdraft lines of credit reach 90 days delinquency. At 120 days delinquent, secured consumer loans are charged down to the value of the collateral, if repossession of the collateral is assured and/or in the process of repossession. Consumer mortgage loan deficiencies are charged down upon the sale of the collateral or sooner upon the recognition of collateral deficiency. Commercial and agricultural credits are charged down at 120 days delinquency, unless an established and approved work-out plan is in place or litigation of the credit will likely result in recovery of the loan balance. Upon notification of bankruptcy, unsecured debt is charged off. Additional charge-off may be realized as further unsecured positions are recognized.

The following table presents loans individually evaluated for impairment by class of loans for three months ended September 30, 2013.


	In Thousands
Three Months Ended September 30, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer real estate	$	152	$	224	$	—	$	224	$	6
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		101		101		—		364		—
Commercial and industrial		—		—		—		—		—
Consumer		—		—		—		—		—
With a specific allowance recorded:
Consumer real estate		372		372		114		273		1
Agriculture real estate		88		88		9		88		—
Agriculture		—		—		—		—		—
Commercial real estate		470		717		219		514		—
Commercial and industrial		378		378		81		416		—
Consumer		—		—		—		—		—

Totals:
Consumer real estate	$	524	$	596	$	114	$	497	$	7

Agriculture real estate	$	88	$	88	$	9	$	88	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial real estate	$	571	$	818	$	219	$	878	$	—

Commercial and industrial	$	378	$	378	$	81	$	416	$	—

Consumer	$	—	$	—	$	—	$	—	$	—


	In Thousands
Three Months Ended September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer real estate	$	573	$	645	$	—	$	485	$	2
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		207		384		—		207		—
Commercial and industrial		365		365		—		365		—
Consumer		—		4		—		—		—
With a specific allowance recorded:								—
Consumer real estate		391		391		69		489		1
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		600		847		—		620		—
Commercial and industrial		2,380		2,380		383		2,380		7
Consumer		—		—		—		—		—

Totals:
Consumer real estate	$	964	$	1,036	$	69	$	974	$	3

Agriculture real estate	$	—	$	—	$	—	$	—	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial real estate	$	807	$	1,231	$	—	$	827	$	—

Commercial and industrial	$	2,745	$	2,745	$	383	$	2,745	$	7

Consumer	$	—	$	4	$	—	$	—	$	—

The following table presents loans individually evaluated for impairment by class of loans for nine months ended September 30, 2013.


	In Thousands
Nine Months Ended September 30, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer Real Estate	$	152	$	224	$	—	$	162	$	7
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		101		101		—		536		—
Commercial and Industrial		—		—		—		198		—
Consumer		—		—		—		—		—
With a specific allowance recorded:
Consumer Real Estate		372		372		114		172		4
Agriculture Real Estate		88		88		9		66		—
Agriculture		—		—		—		—		—
Commercial Real Estate		470		717		219		393		—
Commercial and Industrial		378		378		81		1,940		1
Consumer		—		—		—		—		—

Totals:
Consumer Real Estate	$	524	$	596	$	114	$	334	$	11

Agriculture Real Estate	$	88	$	88	$	9	$	66	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	571	$	818	$	219	$	929	$	—

Commercial and Industrial	$	378	$	378	$	81	$	2,138	$	1

Consumer	$	—	$	—	$	—	$	—	$	—


	In Thousands
Nine Months Ended September 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer Real Estate	$	573	$	645	$	—	$	285	$	7
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		207		384		—		207		—
Commercial and Industrial		365		365		—		162		—
Consumer		—		4		—		—		—
With a specific allowance recorded:
Consumer Real Estate		391		391		69		427		1
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		600		847		—		662		—
Commercial and Industrial		2,380		2,380		383		1,345		10
Consumer		—		—		—		3		—

Totals:
Consumer Real Estate	$	964	$	1,036	$	69	$	712	$	8

Agriculture Real Estate	$	—	$	—	$	—	$	—	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	807	$	1,231	$	—	$	869	$	—

Commercial and Industrial	$	2,745	$	2,745	$	383	$	1,507	$	10

Consumer	$	—	$	4	$	—	$	3	$	—

The ALLL has a direct impact on the provision expense. An increase in the ALLL is funded through recoveries and provision expense. The following tables summarize the activities in the allowance for credit losses.


	(In Thousands)
	Nine Months Ended September 30, 2013			Twelve Months Ended December 31, 2012
Allowance for Loan Losses
Balance at beginning of year	$	5,224		$	5,091
Provision for loan loss		582			738
Loans charged off		(1,008	)		(891	)
Recoveries		232			286

Allowance for Loan & Leases Losses	$	5,030		$	5,224

Allowance for Unfunded Loan Commitments & Letters of Credit	$	169		$	162

Total Allowance for Credit Losses	$	5,199		$	5,386

The Company segregates its Allowance for Loan and Lease Losses (ALLL) into two reserves: The ALLL and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total Allowance for Credit Losses (ACL).

The AULC is reported within other liabilities on the balance sheet while the ALLL is netted within the loans, net asset line. The ACL presented above represents the full amount of reserves available to absorb possible credit losses.

The following table breaks down the activity within ACL for each loan portfolio segment and shows the contribution provided by both the recoveries and the provision along with the reduction of the allowance caused by charge-offs.

Additional analysis related to the allowance for credit losses for three months ended September 30, 2013 is as follows:


	(In Thousands)
	Consumer Real Estate			Agriculture Real Estate			Agriculture		Commercial Real Estate		Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit			Unallocated			Total

Three Months Ended September 30, 2013
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	361		$	115		$	277	$	1,460	$	2,138		$	266		$	187		$	680		$	5,484
Charge Offs		(12	)		—			—		—		(513	)		(122	)		—			—		$	(647	)
Recoveries		6			—			1		—		17			53			—			—		$	77
Provision		52			(1	)		4		523		(313	)		76			—			(38	)	$	303
Other Non-interest expense related to unfunded		—			—			—		—		—			—			(18	)		—		$	(18	)

Ending Balance	$	407		$	114		$	282	$	1,983	$	1,329		$	273		$	169		$	642		$	5,199

Ending balance: individually evaluated for impairment	$	114		$	9		$	—	$	219	$	80		$	—		$	—		$	—		$	422
Ending balance: collectively evaluated for impairment	$	293		$	105		$	282	$	1,764	$	1,249		$	273		$	169		$	642		$	4,777

Ending balance: loans acquired with deteriorated credit quality	$	2		$	—		$	—	$	—	$	—		$	—		$	—		$	—		$	2

FINANCING RECEIVABLES:
Ending balance	$	79,268		$	37,758		$	56,752	$	232,104	$	96,643		$	20,801		$	—		$	—		$	523,326

Ending balance: individually evaluated for impairment	$	525		$	88		$	—	$	571	$	378		$	—		$	—		$	—		$	1,562
Ending balance: collectively evaluated for impairment	$	78,743		$	37,670		$	56,752	$	231,533	$	96,265		$	20,801		$	—		$	—		$	521,764

Ending balance: loans acquired with deteriorated credit quality	$	539		$	—		$	—	$	—	$	—		$	—		$	—		$	—		$	539


	(In Thousands)
	Consumer Real Estate			Agriculture Real Estate			Agriculture			Commercial Real Estate		Commercial and Industrial		Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total

Three Months Ended September 30, 2012
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	460		$	92		$	275		$	1,722	$	1,856	$	283		$	141	$	348	$	5,177
Charge Offs		(92	)		—			(6	)		—		—		(142	)		—		—	$	(240	)
Recoveries		23			—			1			3		5		71			—		—	$	103
Provision		(38	)		(1	)		14			64		14		59			—		123	$	235
Other Non-interest expense related to unfunded		—			—			—			—		—		—			8		—	$	8

Ending Balance	$	353		$	91		$	284		$	1,789	$	1,875	$	271		$	149	$	471	$	5,283

Ending balance: individually evaluated for impairment	$	69		$	—		$	—		$	—	$	383	$	—		$	—	$	—	$	452
Ending balance: collectively evaluated for impairment	$	284		$	91		$	284		$	1,789	$	1,492	$	271		$	149	$	471	$	4,831

Ending balance: loans acquired with deteriorated credit quality	$	1		$	—		$	—		$	—	$	—	$	—		$	—	$	—	$	1

FINANCING RECEIVABLES:
Ending balance	$	81,041		$	32,221		$	56,581		$	198,856	$	101,553	$	21,052		$	—	$	—	$	491,304

Ending balance: individually evaluated for impairment	$	964		$	—		$	—		$	807	$	2,745	$	—		$	—	$	—	$	4,516
Ending balance: collectively evaluated for impairment	$	80,077		$	32,221		$	56,581		$	198,049	$	98,808	$	21,052		$	—	$	—	$	486,788

Ending balance: loans acquired with deteriorated credit quality	$	547		$	—		$	—		$	—	$	—	$	—		$	—	$	—	$	547

Additional analysis related to the allowance for credit losses for nine months ended September 30, 2013 is as follows:


	(In Thousands)
	Consumer Real Estate			Agriculture Real Estate		Agriculture			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total

Nine Months Ended September 30, 2013
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	368		$	113	$	290		$	1,749		$	2,183		$	268		$	162	$	253	$	5,386
Charge Offs		(112	)		—		—			(64	)		(513	)		(319	)					$	(1,008	)
Recoveries		15			—		5			1			73			139						$	233
Provision		136			1		(13	)		297			(414	)		185			—		389	$	581
Other Non-interest expense related to unfunded		—			—		—			—			—			—			7		—	$	7

Ending Balance	$	407		$	114	$	282		$	1,983		$	1,329		$	273		$	169	$	642	$	5,199

Ending balance: individually evaluated for impairment	$	114		$	9	$	—		$	219		$	80		$	—		$	—	$	—	$	422
Ending balance: collectively evaluated for impairment	$	293		$	105	$	282		$	1,764		$	1,249		$	273		$	169	$	642	$	4,777

Ending balance: loans acquired with deteriorated credit quality	$	2		$	—	$	—		$	—		$	—		$	—		$	—	$	—	$	2

FINANCING RECEIVABLES:
Ending balance	$	79,268		$	37,758	$	56,752		$	232,104		$	96,643		$	20,801		$	—	$	—	$	523,326

Ending balance: individually evaluated for impairment	$	525		$	88	$	—		$	571		$	378		$	—		$	—	$	—	$	1,562
Ending balance: collectively evaluated for impairment	$	78,743		$	37,670	$	56,752		$	231,533		$	96,265		$	20,801		$	—	$	—	$	521,764

Ending balance: loans acquired with deteriorated credit quality	$	539		$	—	$	—		$	—		$	—		$	—		$	—	$	—	$	539


	(In Thousands)
	Consumer Real Estate			Agriculture Real Estate			Agriculture			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total

Nine Months Ended September 30, 2012
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	261		$	140		$	266		$	2,088		$	1,947		$	315		$	130	$	74	$	5,221
Charge Offs		(185	)		—			(6	)		(97	)		—			(351	)		—		—	$	(639	)
Recoveries		52			—			11			5			24			148			—		—	$	240
Provision		225			(49	)		13			(207	)		(96	)		159			—		397	$	442
Other Non-interest expense related to unfunded		—			—			—			—			—			—			19		—	$	19

Ending Balance	$	353		$	91		$	284		$	1,789		$	1,875		$	271		$	149	$	471	$	5,283

Ending balance: individually evaluated for impairment	$	69		$	—		$	—		$	—		$	383		$	—		$	—	$	—	$	452
Ending balance: collectively evaluated for impairment	$	284		$	91		$	284		$	1,789		$	1,492		$	271		$	149	$	471	$	4,831

Ending balance: loans acquired with deteriorated credit quality	$	1		$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	1

FINANCING RECEIVABLES:
Ending balance	$	81,041		$	32,221		$	56,581		$	198,856		$	101,553		$	21,052		$	—	$	—	$	491,304

Ending balance: individually evaluated for impairment	$	964		$	—		$	—		$	807		$	2,745		$	—		$	—	$	—	$	4,516
Ending balance: collectively evaluated for impairment	$	80,077		$	32,221		$	56,581		$	198,049		$	98,808		$	21,052		$	—	$	—	$	486,788

Ending balance: loans acquired with deteriorated credit quality	$	547		$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	547