Note 4. Allowance for Loan Losses

The following tables present, as of September 30, 2016, December 31, 2015 and September 30, 2015, the total allowance for loan losses, the allowance by impairment methodology and loans by impairment methodology (in thousands):


	September 30, 2016
	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, 2015	$	1,532		$	939		$	2,534	$	306	$	213		$	5,524
Charge-offs		—			(53	)		—		—		(398	)		(451	)
Recoveries		4			290			1		10		232			537
Provision for (recovery of) loan losses		(1,084	)		(173	)		1,002		13		242			—

Ending Balance, September 30, 2016	$	452		$	1,003		$	3,537	$	329	$	289		$	5,610

Ending Balance:
Individually evaluated for impairment		—			33			223		—		—			256
Collectively evaluated for impairment		452			970			3,314		329		289			5,354
Loans:
Ending Balance		34,518			196,492			202,843		25,851		11,130			470,834
Individually evaluated for impairment		2,749			2,094			1,991		79		—			6,913
Collectively evaluated for impairment		31,769			194,398			200,852		25,772		11,130			463,921


	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

	September 30, 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		—			(47	)		(950	)		(59	)		(364	)		(1,420	)
Recoveries		3			90			2			69			213			377
Provision for (recovery of) loan losses		(150	)		(368	)		288			(68	)		198			(100	)

Ending Balance, September 30, 2015	$	1,256		$	879		$	2,998		$	252		$	190		$	5,575

Ending Balance:
Individually evaluated for impairment		132			22			596			—			—			750
Collectively evaluated for impairment		1,124			857			2,402			252			190			4,825
Loans:
Ending Balance		29,935			179,419			165,661			19,950			11,448			406,413
Individually evaluated for impairment		3,081			2,151			3,509			99			—			8,840
Collectively evaluated for impairment		26,854			177,268			162,152			19,851			11,448			397,573

Impaired loans and the related allowance at September 30, 2016, December 31, 2015 and September 30, 2015, were as follows (in thousands):


	September 30, 2016
	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	$	2,992	$	2,749	$	—	$	2,749	$	—	$	2,599	$	40
Secured by 1-4 family		2,114		2,006		88		2,094		33		2,045		73
Other real estate loans		2,596		1,447		544		1,991		223		2,808		24
Commercial and industrial		97		79		—		79		—		87		—
Consumer and other loans		—		—		—		—		—		—		—

Total	$	7,799	$	6,281	$	632	$	6,913	$	256	$	7,539	$	137


	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


	September 30, 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	$	3,256	$	2,416	$	665	$	3,081	$	132	$	3,127	$	45
Secured by 1-4 family		2,222		2,129		22		2,151		22		2,687		88
Other real estate loans		3,961		2,000		1,509		3,509		596		5,563		49
Commercial and industrial		111		99		—		99		—		126		—
Consumer and other loans		—		—		—		—		—		—		—

Total	$	9,550	$	6,644	$	2,196	$	8,840	$	750	$	11,503	$	182

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 September 30, 2016, loans classified as troubled debt restructurings (TDRs) and included in impaired loans in the disclosure above totaled $162 thousand. At September 30, 2016, $88 thousand of the loans classified as TDRs were performing under the restructured terms and were not considered non-performing assets. There were $982 thousand in TDRs at December 31, 2015, $317 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 loan secured by 1-4 family residential real estate classified as a TDR during the three and nine month periods ended September 30, 2016 because principal was forgiven as part of the loan modification. The recorded investment for this loan prior to modification totaled $138 thousand and the recorded investment after the modification totaled $88 thousand. There were no loans modified under TDRs during the three and nine month periods ended September 30, 2015.

For the three and nine months ended September 30, 2016 and 2015, 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 or charge-off of the loan during the twelve month period subsequent to the modification.