NOTE 4

LOANS

The Company had $1.8 million in loans held for sale at June 30, 2016 as compared to $1.2 million in loans held for sale at December 31, 2015. Due to materiality, these loans are included in the Consumer Real Estate and Agricultural Real Estate loan numbers.

Loan balances as of June 30, 2016 and December 31, 2015:


	(In Thousands)
	June 30, 2016			December 31, 2015
Loans:
Consumer Real Estate	$	89,090		$	88,189
Agricultural Real Estate		61,403			58,525
Agricultural		83,287			82,654
Commercial Real Estate		357,838			322,762
Commercial and Industrial		104,336			100,125
Consumer		30,458			27,770
Industrial Development Bonds		5,952			6,491

		732,364			686,516
Less: Net deferred loan fees and costs		(673	)		(638	)

		731,691			685,878
Less: Allowance for loan losses		(6,493	)		(6,057	)

Loans - Net	$	725,198		$	679,821

The following is a maturity schedule by major category of loans as of June 30, 2016:


	(In Thousands)
	Within One Year		After One Year Within Five Years		After Five Years
Consumer Real Estate	$	1,428	$	12,371	$	75,291
Agricultural Real Estate		284		3,305		57,814
Agricultural		53,956		23,328		6,003
Commercial Real Estate		15,117		78,393		264,328
Commercial and Industrial		45,681		37,640		21,015
Consumer		5,808		18,331		6,319
Industrial Development Bonds		1,000		185		4,767

The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of June 30, 2016. Variable rate loans whose current rates are equal to their floor or ceiling are classified as fixed in this table.


	(In Thousands)
	Fixed		Variable
	Rate		Rate
Consumer Real Estate	$	55,672	$	33,418
Agricultural Real Estate		44,680		16,723
Agricultural		51,164		32,123
Commercial Real Estate		225,756		132,082
Commercial and Industrial		66,330		38,006
Consumer		26,215		4,243
Industrial Development Bonds		5,952		—

As of June 30, 2016 and December 31, 2015 one to four family residential mortgage loans amounting to $19.1 and $20.0 million, respectively, have been pledged as security for future loans the Bank has received from the Federal Home Loan Bank.

Unless listed separately, 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 thousands) in past due loans by portfolio classification of loans as of June 30, 2016 and December 31, 2015, net of deferred loan fees and costs:


June 30, 2016	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
Consumer Real Estate	$	414	$	176	$	336	$	926	$	87,865	$	88,791	$	0
Agricultural Real Estate		—		—		163		163		61,190		61,353		—
Agricultural		—		—		3		3		83,430		83,433		—
Commercial Real Estate		—		—		231		231		357,012		357,243		—
Commercial and Industrial		49		—		—		49		110,337		110,386		—
Consumer		10		25		—		35		30,450		30,485		—

Total	$	473	$	201	$	733	$	1,407	$	730,284	$	731,691	$	0


December 31, 2015	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
Consumer Real Estate	$	303	$	47	$	357	$	707	$	87,240	$	87,947	$	0
Agricultural Real Estate		—		—		162		162		58,301		58,463		—
Agricultural		—		145		—		145		82,617		82,762		—
Commercial Real Estate		236		—		841		1,077		321,153		322,230		—
Commercial and Industrial		51		—		20		71		106,618		106,689		—
Consumer		19		9		—		28		27,759		27,787		—

Total	$	609	$	201	$	1,380	$	2,190	$	683,688	$	685,878	$	0

The following table presents the recorded investment in nonaccrual loans by class of loans as of June 30, 2016 and December 31, 2015:


	(In Thousands)
	June 30, 2016		December 31, 2015
Consumer Real Estate	$	1,013	$	1,155
Agricultural Real Estate		162		162
Agricultural		—		—
Commercial Real Estate		232		484
Commercial		118		202
Consumer		3		38

Total	$	1,528	$	2,041

Following are the characteristics and underwriting criteria for each major type of loan the Bank offers:

Commercial Real Estate – Construction, purchase, and refinance of business purpose real estate. Risks discussed during the approval process include construction delays and overruns, vacancies, collateral value subject to market value fluctuations, interest rate, market demands, borrower’s ability to repay in a timely fashion, and others. The Bank does employ stress testing on higher balance loans to mitigate risk by ensuring the customer’s ability to repay in a changing rate environment.

Agricultural Real Estate – Purchase of farm real estate or for permanent improvements to the farm real estate. Cash flow from the farm operation is the repayment source and is therefore subject to the financial success of the farm operation.

Consumer Real Estate – Purchase, refinance, or equity financing of one to four family owner occupied dwelling. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment, and others.

Commercial and Industrial – Loans to proprietorships, partnerships, or corporations to provide temporary working capital and seasonal loans as well as long term loans for capital asset acquisition. Risks include adequacy of cash flow, reasonableness of projections, financial leverage, economic trends, management ability and estimated capital expenditures during the fiscal year. The Bank does employ stress testing on higher balance loans to mitigate risk by ensuring the customer’s ability to repay in a changing rate environment before granting loan approval.

Agricultural – Loans for the production and housing of crops, fruits, vegetables, and livestock or to fund the purchase or re-finance of capital assets such as machinery and equipment and livestock. The production of crops and livestock is especially vulnerable to commodity prices and weather. The vulnerability to commodity prices is offset by the farmer’s ability to hedge their position by the use of the future contracts. The risk related to weather is often mitigated by requiring federal crop insurance.

Consumer – Funding for individual and family purposes. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment, and others.

Industrial Development Bonds – Funds for public improvements in the Bank’s service area. Repayment ability is based on the continuance of the taxation revenue as the source of repayment.

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 portfolio class, net of deferred fees and costs, based on the most recent analysis performed as of June 30, 2016 and December 31, 2015:


	(In Thousands)
	Agricultural Real Estate		Agricultural		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
June 30, 2016
1-2	$	4,826	$	6,846	$	1,424	$	696	$	—
3		19,001		28,329		26,336		17,836		2,770
4		36,432		47,737		326,125		85,015		3,182
5		739		521		1,532		291		—
6		355		—		1,736		478		—
7		—		—		90		118		—
8		—		—		—		—		—

Total	$	61,353	$	83,433	$	357,243	$	104,434	$	5,952


	Agricultural Real Estate		Agricultural		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
December 31, 2015
1-2	$	5,841	$	12,025	$	597	$	261	$	—
3		16,593		21,247		24,264		22,300		3,100
4		35,475		49,220		293,381		76,855		3,391
5		192		250		1,738		57		—
6		362		—		1,828		543		—
7		—		20		422		182		—
8		—		—		—		—		—

Total	$	58,463	$	82,762	$	322,230	$	100,198	$	6,491

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 June 30, 2016 and December 31, 2015.


	(In Thousands)
	Consumer Real Estate		Consumer Real Estate
	June 30, 2016		December 31, 2015
Grade
Pass	$	87,977	$	87,292
Special Mention (5)		72		48
Substandard (6)		328		332
Doubtful (7)		414		275

Total	$	88,791	$	87,947


	(In Thousands)
	Consumer - Credit				Consumer - Other
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Performing	$	3,626	$	3,901	$	26,831	$	23,863
Nonperforming		—		—		28		23

Total	$	3,626	$	3,901	$	26,859	$	23,886

Information about impaired loans as of June 30, 2016, December 31, 2015 and June 30, 2015 are as follows:


	(In Thousands)
	June 30, 2016		December 31, 2015		June 30, 2015
Impaired loans without a valuation allowance	$	997	$	1,257	$	3,239

Impaired loans with a valuation allowance		622		879		1,783

Total impaired loans	$	1,619	$	2,136	$	5,022

Valuation allowance related to impaired loans	$	217	$	330	$	475
Total non-accrual loans	$	1,528	$	2,041	$	3,063
Total loans past-due ninety days or more and still accruing	$	—	$	—	$	—

Quarter ended average investment in impaired loans	$	1,899	$	2,207	$	3,435

Year to date average investment in impaired loans	$	1,995	$	2,509	$	2,451

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

The Bank had approximately $656 thousand of its impaired loans classified as troubled debt restructured (TDR) as of June 30, 2016, $1.1 million as of December 31, 2015 and $1.3 million as of June 30, 2015. During the year-to-date 2016, one new loan was considered TDR. This loan is making interest-only payments.

The following table represents three and six months ended June 30, 2016.

Three Months

June 30, 2016

(in thousands)

Troubled Debt Restructurings

Number of
Contracts
Modified in the
Last 3 Months

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment

Six Months
June 30, 2016
(in thousands)
Troubled Debt Restructurings

Number of
Contracts
Modified in the
Last 6 Months

Pre-
Modification
Outstanding
Recorded
Investment

Post-
Modification
Outstanding
Recorded
Investment

Consumer Real Estate

—

Consumer Real Estate

138

The following table represents three and six months ended June 30, 2015.


Three Months June 30, 2015 (in thousands) Troubled Debt Restructurings	Number of Contracts Modified in the Last 3 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Six Months June 30, 2015 (in thousands) Troubled Debt Restructurings		Number of Contracts Modified in the Last 6 Months	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate		—	$	—	$	—		Commercial Real Estate	1	$	528	$	430
Commercial and Industrial		—		—		—		Commercial and Industrial	1		25		24

For the three and six month period ended June 30, 2016 and 2015, there were no TDRs that subsequently defaulted after modification.

For the majority of the Bank’s impaired loans, the Bank will apply the fair value of collateral or use a measurement incorporating the present value of expected future cash flows discounted at the loan’s effective rate of interest. To determine fair value of collateral, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of 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. 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 tables present loans individually evaluated for impairment by class of loans for three months ended June 30, 2016 and June 30, 2015.


	(In Thousands)
Three Months Ended June 30, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		QTD Average Recorded Investment		QTD Interest Income Recognized		QTD Interest Income Recognized Cash Basis
With no related allowance recorded:
Consumer Real Estate	$	40	$	40	$	—	$	25	$	—	$	—
Agricultural Real Estate		162		162		—		162		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		346		346		—		346		6		6
Commercial and Industrial		449		449		—		450		6		—
Consumer		—		—		—		—		—		—
With a specific allowance recorded:
Consumer Real Estate		414		414		61		478		7		6
Agricultural Real Estate		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		90		90		90		311		—		—
Commercial and Industrial		118		118		66		127		—		—
Consumer		—		—		—		—		—		—

Totals:
Consumer Real Estate	$	454	$	454	$	61	$	503	$	7	$	6

Agricultural Real Estate	$	162	$	162	$	—	$	162	$	—	$	—

Agricultural	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	436	$	436	$	90	$	657	$	6	$	6

Commercial and Industrial	$	567	$	567	$	66	$	577	$	6	$	—

Consumer	$	—	$	—	$	—	$	—	$	—	$	—


	(In Thousands)
Three Months Ended June 30, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance		QTD Average Recorded Investment		QTD Interest Income Recognized		QTD Interest Income Recognized Cash Basis
With no related allowance recorded:
Consumer Real Estate	$	557	$	557	$	—	$	145	$	—	$	—
Agricultural Real Estate		222		222		—		74		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		1,460		1,546		—		634		—		9
Commercial and Industrial		1,000		1,364		—		798		13		—
Consumer		—		—		—		—		—		—
With a specific allowance recorded:
Consumer Real Estate		121		121		39		120		—		1
Agricultural Real Estate		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		1,339		1,339		235		1,340		7		—
Commercial and Industrial		323		323		201		324		—		—
Consumer		—		—		—		—		—		—

Totals:
Consumer Real Estate	$	678	$	678	$	39	$	265	$	—	$	1

Agricultural Real Estate	$	222	$	222	$	—	$	74	$	—	$	—

Agricultural	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	2,799	$	2,885	$	235	$	1,974	$	7	$	9

Commercial and Industrial	$	1,323	$	1,687	$	201	$	1,122	$	13	$	—

Consumer	$	—	$	—	$	—	$	—	$	—	$	—

The following tables present loans individually evaluated for impairment by class of loans for six months ended June 30, 2016 and June 30, 2015.


	(In Thousands)
Six Months Ended June 30, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Recorded Investment		YTD Interest Income Recognized		YTD Interest Income Recognized Cash Basis
With no related allowance recorded:
Consumer Real Estate	$	40	$	40	$	—	$	91	$	—	$	—
Agricultural Real Estate		162		162		—		162		1		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		346		346		—		378		14		13
Commercial and Industrial		449		449		—		452		12		—
Consumer		—		—		—		—		—		—
With a specific allowance recorded:
Consumer Real Estate		414		414		61		392		11		9
Agricultural Real Estate		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		90		90		90		366		—		—
Commercial and Industrial		118		118		66		154		—		—
Consumer		—		—		—		—		—		—

Totals:
Consumer Real Estate	$	454	$	454	$	61	$	483	$	11	$	9

Agricultural Real Estate	$	162	$	162	$	—	$	162	$	1	$	—

Agricultural	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	436	$	436	$	90	$	744	$	14	$	13

Commercial and Industrial	$	567	$	567	$	66	$	606	$	12	$	—

Consumer	$	—	$	—	$	—	$	—	$	—	$	—


	(In Thousands)
Six Months Ended June 30, 2015	Recorded Investment		Unpaid Principal 222		Related Allowance		YTD Average Recorded Investment		YTD Interest Income Recognized		YTD Interest Income Recognized Cash Basis
With no related allowance recorded:
Consumer Real Estate	$	557	$	557	$	—	$	159	$	—	$	—
Agricultural Real Estate		222		222		—		37		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		1,460		1,546		—		317		—		9
Commercial and Industrial		1,000		1,364		—		399		13		—
Consumer		—		—		—		—		—		—
With a specific allowance recorded:
Consumer Real Estate		121		121		39		108		—		4
Agricultural Real Estate		—		—		—		—		—		—
Agricultural		—		—		—		—		—		—
Commercial Real Estate		1,339		1,339		235		1,096		8
Commercial and Industrial		323		323		201		331		—		—
Consumer		—		—		—		4		—		—

Totals:
Consumer Real Estate	$	678	$	678	$	39	$	267	$	—	$	4

Agricultural Real Estate	$	222	$	222	$	—	$	37	$	—	$	—

Agricultural	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	2,799	$	2,885	$	235	$	1,413	$	8	$	9

Commercial and Industrial	$	1,323	$	1,687	$	201	$	730	$	13	$	—

Consumer	$	—	$	—	$	—	$	4	$	—	$	—

As of June 30, 2016, the Company had $673 thousand of foreclosed residential real estate property obtained by physical possession and $512 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process according to local jurisdictions. As of June 30, 2015, the Company had $452 thousand of foreclosed residential real estate property obtained by physical possession and $138 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process according to local jurisdictions.

The Allowance for Loan and Lease Losses (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)
	Six Months Ended			Twelve Months Ended
	June 30, 2016			December 31, 2015
Allowance for Loan & Lease Losses
Balance at beginning of year	$	6,057		$	5,905
Provision for loan loss		616			625
Loans charged off		(258	)		(1,030	)
Recoveries		78			557

Allowance for Loan & Lease Losses	$	6,493		$	6,057

Allowance for Unfunded Loan Commitments & Letters of Credit	$	219		$	208

Total Allowance for Credit Losses	$	6,712		$	6,265

The Company segregates its 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.

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The following table breaks down the activity within ACL for each loan portfolio classification 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, presented in thousands, related to the allowance for credit losses for three months ended June 30, 2016 and June 30, 2015 is as follows:


	Consumer Real Estate			Agricultural Real Estate			Agricultural			Commercial Real Estate		Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit			Unallocated		Total
Three Months Ended June 30, 2016
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	457		$	272		$	548		$	2,678	$	1,251		$	335		$	220		$	744	$	6,505
Charge Offs		(63	)		—			(18	)		—		—			(93	)		—			—		(174	)
Recoveries		19			—			1			3		3			17			—			—		43
Provision (Credit)		—			(43	)		60			36		(39	)		106			—			219		339
Other Non-interest expense related to unfunded		—			—			—			—		—			—			(1	)		—		(1	)

Ending Balance	$	413		$	229		$	591		$	2,717	$	1,215		$	365		$	219		$	963	$	6,712

Ending balance: individually evaluated for impairment	$	61		$	—		$	—		$	90	$	66		$	—		$	—		$	—	$	217

Ending balance: collectively evaluated for impairment	$	352		$	229		$	591		$	2,627	$	1,149		$	365		$	219		$	963	$	6,495

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

FINANCING RECEIVABLES:
Ending balance	$	88,791		$	61,353		$	83,433		$	357,243	$	110,386		$	30,485		$	—		$	—	$	731,691

Ending balance: individually evaluated for impairment	$	454		$	162		$	—		$	436	$	567		$	—		$	—		$	—	$	1,619

Ending balance: collectively evaluated for impairment	$	88,337		$	61,191		$	83,433		$	356,807	$	109,819		$	30,485		$	—		$	—	$	730,072

Ending balance: loans acquired with deteriorated credit quality	$	410		$	—		$	—		$	—	$	—		$	—		$	—		$	—	$	410


	Consumer Real Estate			Agricultural Real Estate		Agricultural			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit			Unallocated		Total
Three Months Ended June 30, 2015
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	497		$	187	$	524		$	2,212		$	1,419		$	284		$	202		$	854	$	6,179
Charge Offs		—			—		—			(85	)		(389	)		(55	)		—			—		(529	)
Recoveries		25			—		2			201			17			51			—			—		296
Provision (Credit)		(213	)		2		(7	)		(42	)		241			29			—			173		183
Other Non-interest expense related to unfunded		—			—		—			—			—			—			(1	)		—		(1	)

Ending Balance	$	309		$	189	$	519		$	2,286		$	1,288		$	309		$	201		$	1,027	$	6,128

Ending balance: individually evaluated for impairment	$	39		$	—	$	—		$	235		$	201		$	—		$	—		$	—	$	475

Ending balance: collectively evaluated for impairment	$	270		$	189	$	519		$	2,051		$	1,087		$	309		$	201		$	1,027	$	5,653

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

FINANCING RECEIVABLES:
Ending balance	$	86,641		$	52,614	$	74,352		$	279,002		$	102,822		$	25,160		$	—		$	—	$	620,591

Ending balance: individually evaluated for impairment	$	678		$	222	$	—		$	2,799		$	1,323		$	—		$	—		$	—	$	5,022

Ending balance: collectively evaluated for impairment	$	85,963		$	52,392	$	74,352		$	276,203		$	101,499		$	25,160		$	—		$	—	$	615,569

Ending balance: loans acquired with deteriorated credit quality	$	517		$	—	$	—		$	—		$	—		$	—		$	—		$	—	$	517

Additional analysis, presented in thousands, related to the allowance for credit losses for six months ended June 30, 2016 and June 30, 2015 is as follows:


	Consumer Real Estate			Agricultural Real Estate		Agricultural			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total
Six Months Ended June 30, 2016
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	338		$	211	$	582		$	2,516		$	1,229		$	337		$	208	$	844	$	6,265
Charge Offs		(64	)		—		(18	)		(3	)		(20	)		(153	)		—		—		(258	)
Recoveries		21			—		5			5			5			42			—		—		78
Provision (Credit)		117			18		22			199			2			139			—		119		616
Other Non-interest expense related to unfunded		—			—		—			—			—			—			11		—		11

Ending Balance	$	412		$	229	$	591		$	2,717		$	1,216		$	365		$	219	$	963	$	6,712

Ending balance: individually evaluated for impairment	$	61		$	—	$	—		$	90		$	66		$	—		$	—	$	—	$	217

Ending balance: collectively evaluated for impairment	$	351		$	229	$	591		$	2,627		$	1,150		$	365		$	219	$	963	$	6,495

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

FINANCING RECEIVABLES:
Ending balance	$	88,791		$	61,353	$	83,433		$	357,243		$	110,386		$	30,485		$	—	$	—	$	731,691

Ending balance: individually evaluated for impairment	$	454		$	162	$	—		$	436		$	567		$	—		$	—	$	—	$	1,619

Ending balance: collectively evaluated for impairment	$	88,337		$	61,191	$	83,433		$	356,807		$	109,819		$	30,485		$	—	$	—	$	730,072

Ending balance: loans acquired with deteriorated credit quality	$	410		$	—	$	—		$	—		$	—		$	—		$	—	$	—	$	410


	Consumer Real Estate			Agricultural Real Estate		Agricultural			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit			Unallocated		Total
Six Months Ended June 30, 2015
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	537		$	184	$	547		$	2,367		$	1,421		$	323		$	207		$	526	$	6,112
Charge Offs		—			—		—			(85	)		(390	)		(146	)		—			—		(621	)
Recoveries		27			—		3			202			23			91			—			—		346
Provision (Credit)		(255	)		5		(31	)		(198	)		234			41			—			501		297
Other Non-interest expense related to unfunded		—			—		—			—			—			—			(6	)		—		(6	)

Ending Balance	$	309		$	189	$	519		$	2,286		$	1,288		$	309		$	201		$	1,027	$	6,128

Ending balance: individually evaluated for impairment	$	39		$	—	$	—		$	235		$	201		$	—		$	—		$	—	$	475

Ending balance: collectively evaluated for impairment	$	270		$	189	$	519		$	2,051		$	1,087		$	309		$	201		$	1,027	$	5,653

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

FINANCING RECEIVABLES:
Ending balance	$	86,641		$	52,614	$	74,352		$	279,002		$	102,822		$	25,160		$	—		$	—	$	620,591

Ending balance: individually evaluated for impairment	$	678		$	222	$	—		$	2,799		$	1,323		$	—		$	—		$	—	$	5,022

Ending balance: collectively evaluated for impairment	$	85,963		$	52,392	$	74,352		$	276,203		$	101,499		$	25,160		$	—		$	—	$	615,569

Ending balance: loans acquired with deteriorated credit quality	$	517		$	—	$	—		$	—		$	—		$	—		$	—		$	—	$	517