Note 4. Allowance for Loan Losses

The following tables present, as of December 31, 2015 and 2014, the total allowance for loan losses, the allowance by impairment methodology and loans by impairment methodology (in thousands).


	December 31, 2015
	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, 2014	$	1,403		$	1,204		$	3,658		$	310		$	143		$	6,718
Charge-offs		—			(142	)		(1,125	)		(59	)		(512	)		(1,838	)
Recoveries		4			373			2			72			293			744
Provision for (recovery of) loan losses		125			(496	)		(1	)		(17	)		289			(100	)

Ending Balance, December 31, 2015	$	1,532		$	939		$	2,534		$	306		$	213		$	5,524

Ending Balance:
Individually evaluated for impairment		326			23			195			—			—			544
Collectively evaluated for impairment		1,206			916			2,339			306			213			4,980
Loans:
Ending Balance		33,135			189,286			181,447			24,048			11,083			438,999
Individually evaluated for impairment		2,544			2,044			3,023			94			—			7,705
Collectively evaluated for impairment		30,591			187,242			178,424			23,954			11,083			431,294

	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

Impaired loans and the related allowance at December 31, 2015 and 2014, were as follows (in thousands):


	December 31, 2015
	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	$	2,741	$	2,206	$	338	$	2,544	$	326	$	2,967	$	60
Secured by 1-4 family		2,116		2,021		23		2,044		23		2,526		107
Other real estate loans		3,492		2,463		560		3,023		195		4,933		58
Commercial and industrial		107		94		—		94		—		118		—
Consumer and other loans		—		—		—		—		—		—		—

Total	$	8,456	$	6,784	$	921	$	7,705	$	544	$	10,544	$	225


	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

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, 2015, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $982 thousand. At December 31, 2015, $317 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, 2014, $790 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 were no loans modified under TDRs during the year ended December 31, 2015. There was one loan modified under a TDR during the year ended December 31, 2014 because the loan term was extended at a below market rate of interest. The recorded investment for this loan prior to the modification totaled $283 thousand and the recorded investment after the modification totaled $344 thousand. The Bank disbursed an additional $61 thousand to the borrower at modification for improvements to the collateral for the loan, which enabled the borrower to secure a tenant, thus improving their cash flow and their ability to repay the loan. The following table provides further information regarding loans modified under TDRs during the year ended December 31, 2014 (dollars in thousands):


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

Total		1	$	283	$	344

For the years ended December 31, 2015 and 2014, 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, 2015 and December 31, 2014. Had non-accrual loans performed in accordance with their original contract terms, the Company would have recognized additional interest income in the amount of $243 thousand and $423 thousand during the years ended December 31, 2015 and 2014, respectively.