Note 4.

Allowance for Loan Losses

Transactions in the allowance for loan losses for the years ended December 31, 2014, 2013 and 2012 were as follows (in thousands):


	2014			2013			2012
Balance at beginning of year	$	10,644		$	13,075		$	12,937
Provision for (recovery of) loan losses		(3,850	)		(425	)		3,555
Loan recoveries		851			2,486			376
Loan charge-offs		(927	)		(4,492	)		(3,793	)

Balance at end of year	$	6,718		$	10,644		$	13,075

The following tables present, as of December 31, 2014, 2013 and 2012, the total allowance for loan losses, the allowance by impairment methodology and loans by impairment methodology (in thousands).


	December 31, 2014
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2013	$	2,710		$	2,975		$	4,418		$	442		$	99		$	10,644
Charge-offs		(91	)		(272	)		(203	)		(43	)		(318	)		(927	)
Recoveries		80			15			509			18			229			851
Provision for (recovery of) loan losses		(1,296	)		(1,514	)		(1,066	)		(107	)		133			(3,850	)

Ending Balance, December 31, 2014	$	1,403		$	1,204		$	3,658		$	310		$	143		$	6,718


Ending Balance:
Individually evaluated for impairment		245			173			1,456			33			—			1,907
Collectively evaluated for impairment		1,158			1,031			2,202			277			143			4,811

Loans:
Ending Balance		29,475			163,727			151,802			21,166			12,240			378,410

Individually evaluated for impairment		3,205			3,414			7,183			120			—			13,922
Collectively evaluated for impairment		26,270			160,313			144,619			21,046			12,240			364,488


	December 31, 2013
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2012	$	2,481		$	3,712		$	6,163		$	608		$	111		$	13,075
Charge-offs		(2,962	)		(260	)		(1,070	)		(37	)		(163	)		(4,492	)
Recoveries		—			823			1,304			179			180			2,486
Provision for (recovery of) loan losses		3,191			(1,300	)		(1,979	)		(308	)		(29	)		(425	)

Ending Balance, December 31, 2013	$	2,710		$	2,975		$	4,418		$	442		$	99		$	10,644


Ending Balance:
Individually evaluated for impairment		882			190			263			44			—			1,379
Collectively evaluated for impairment		1,828			2,785			4,155			398			99			9,265

Loans:
Ending Balance		34,060			141,961			145,968			22,803			12,301			357,093

Individually evaluated for impairment		6,862			3,431			11,143			258			—			21,694
Collectively evaluated for impairment		27,198			138,530			134,825			22,545			12,301			335,399


	December 31, 2012
	Construction and Land Development			Secured by 1-4 Family Residential			Other Real Estate			Commercial and Industrial			Consumer and Other Loans			Total
Allowance for loan losses:
Beginning Balance, December 31, 2011	$	2,843		$	3,766		$	5,192		$	963		$	173		$	12,937
Charge-offs		(431	)		(761	)		(2,154	)		(261	)		(186	)		(3,793	)
Recoveries		1			68			64			35			208			376
Provision for (recovery of) loan losses		68			639			3,061			(129	)		(84	)		3,555

Ending Balance, December 31, 2012	$	2,481		$	3,712		$	6,163		$	608		$	111		$	13,075


Ending Balance:
Individually evaluated for impairment		567			306			930			35			—			1,838
Collectively evaluated for impairment		1,914			3,406			5,233			573			111			11,237

Loans:
Ending Balance		43,524			134,964			174,220			23,071			7,815			383,594

Individually evaluated for impairment		2,516			3,776			10,528			160			—			16,980
Collectively evaluated for impairment		41,008			131,188			163,692			22,911			7,815			366,614

Impaired loans and the related allowance at December 31, 2014, 2013 and 2012, were as follows (in thousands):


	December 31, 2014
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	3,299	$	2,800	$	405	$	3,205	$	245	$	5,532	$	40
Secured by 1-4 family		4,327		2,526		888		3,414		173		3,433		138
Other real estate loans		7,623		3,708		3,475		7,183		1,456		10,115		206
Commercial and industrial		127		5		115		120		33		159		1
Consumer and other loans		—		—		—		—		—		—		—

Total	$	15,376	$	9,039	$	4,883	$	13,922	$	1,907	$	19,239	$	385


	December 31, 2013
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	9,086	$	4,259	$	2,603	$	6,862	$	882	$	5,397	$	204
Secured by 1-4 family		4,341		2,515		916		3,431		190		2,864		146
Other real estate loans		12,385		9,455		1,688		11,143		263		7,079		441
Commercial and industrial		260		114		144		258		44		669		14
Consumer and other loans		—		—		—		—		—		—		—

Total	$	26,072	$	16,343	$	5,351	$	21,694	$	1,379	$	16,009	$	805


	December 31, 2012
	Unpaid Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Real estate loans:
Construction and land development	$	2,947	$	622	$	1,894	$	2,516	$	567	$	5,691	$	99
Secured by 1-4 family		4,706		1,690		2,086		3,776		306		4,821		163
Other real estate loans		14,861		4,886		5,642		10,528		930		10,148		276
Commercial and industrial		161		—		160		160		35		330		10
Consumer and other loans		—		—		—		—		—		—		—

Total	$	22,675	$	7,198	$	9,782	$	16,980	$	1,838	$	20,990	$	548

The “Recorded Investment” amounts in the table above represent the outstanding principal balance on each loan represented in the table. The “Unpaid Principal Balance” represents the outstanding principal balance on each loan represented in the table plus any amounts that have been charged off on each loan and/or payments that have been applied towards principal on non-accrual loans.

As of December 31, 2014, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $1.9 million. At December 31, 2014, $790 thousand of the loans classified as TDRs were performing under the restructured terms and were not considered non-performing assets. There were $1.9 million in TDRs at December 31, 2013, $829 thousand of which were performing under the restructured terms. Modified terms under TDRs may include rate reductions, extension of terms that are considered to be below market, conversion to interest only, and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. There was one new loan modified under a TDR during the year ended December 31, 2014. There were no loans modified under TDRs during the year ended December 31, 2013. The following table provides further information regarding loans modified under TDRs during the years ended December 31, 2014 and 2012 (dollars in thousands):


	For the year ended December 31, 2014						For the year ended December 31, 2012
	Number of Contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment		Number of Contracts		Pre- modification outstanding recorded investment		Post- modification outstanding recorded investment
Real estate loans:
Construction		—	$	—	$	—		—	$	—	$	—
Secured by 1-4 family		—		—		—		1		183		183
Other real estate loans		1		283		344		1		2,426		2,426
Commercial and industrial		—		—		—		—		—		—
Consumer and other loans		—		—		—		—		—		—

Total		1	$	283	$	344		2	$	2,609	$	2,609

For the years ended December 31, 2014, 2013 and 2012, there were no troubled debt restructurings that subsequently defaulted within twelve months of the loan modification.

Management defines default as over ninety days past due or the foreclosure and repossession of the collateral and charge-off of the loan during the twelve month period subsequent to the modification.

There were no non-accrual loans excluded from impaired loan disclosure at December 31, 2014. Non-accrual loans excluded from impaired loan disclosure amounted to $14 thousand and $13 thousand at December 31, 2013 and 2012, respectively. Had non-accrual loans performed in accordance with their original contract terms, the Company would have recognized additional interest income in the amount of $423 thousand, $483 thousand and $510 thousand during the years ended December 31, 2014, 2013 and 2012, respectively.