Loans are stated at the principal amount outstanding net of unearned discounts, unearned income and allowance for loan losses. Unearned income includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at June 30, 2011 and December 31, 2010 follows (in thousands):

	June 30, 2011		December 31, 2010
Construction and land development	$	23,087	$	20,382
Farm loans		63,190		65,036
1-4 Family residential properties		183,102		179,535
Multifamily residential properties		20,231		22,159
Commercial real estate		309,637		302,220
Loans secured by real estate		599,247		589,332
Agricultural loans		50,713		58,246
Commercial and industrial loans		121,728		126,391
Consumer loans		17,476		19,668
All other loans		12,333		12,464
Gross loans		801,497		806,101
Less:
Net deferred loan fees, premiums and discounts		1,005		1,520
Allowance for loan losses		10,695		10,393
Net loans	$	789,797	$	794,188

Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at the lower of aggregate cost or market value, taking into consideration future commitments to sell the loans. The 1-4 family residential properties balance in the above table includes loans held for sale of $1,254,000 and $114,000 at June 30, 2011 and December 31, 2010, respectively.

The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the Board of Directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation; however, limits well below the regulatory thresholds are generally observed. The vast majority of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments.

Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x. Amortization periods for commercial real estate loans are generally limited to twenty years. The Company’s commercial real estate portfolio is well below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators.

Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years. Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government-assisted lending programs through the Small Business Administration and U.S. Department of Agriculture.

Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 80% and have amortization periods limited to twenty five years. Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate.

Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells substantially all of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. The Company retains all residential real estate loans with balloon payment features. Balloon periods are limited to five years. Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty five years or less. The Company does not originate subprime mortgage loans.

Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral.

Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater than $100,000 and non-homogenous loans, such as commercial and commercial real estate loans. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings:

Substandard. Loans classified as substandard are inadequately protected by the current sound-worthiness and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

	Construction & Land Development				Farm Loans				1-4 Family Residential Properties				Multifamily Residential Properties
	2011		2010		2011		2010		2011		2010		2011		2010
Pass	$	19,036	$	15,778	$	57,851	$	58,751	$	179,102	$	174,782	$	20,015	$	10,381
Watch		2,194		2,219		2,155		4,710		659		267		-		6,204
Substandard		1,857		1,494		3,165		1,531		3,381		4,478		211		5,561
Doubtful		-		888		-		-		-		-		-		-
Total	$	23,087	$	20,379	$	63,171	$	64,992	$	183,142	$	179,527	$	20,226	$	22,146

	Commercial Real Estate (Nonfarm/Nonresidential)				Agricultural Loans				Commercial & Industrial Loans				Consumer Loans
	2011		2010		2011		2010		2011		2010		2011		2010
Pass	$	274,953	$	276,174	$	44,357	$	53,293	$	118,001	$	120,284	$	17,469	$	19,655
Watch		25,062		14,598		2,543		3,269		483		2,519		-		-
Substandard		8,508		10,053		3,891		1,745		3,285		3,516		-		-
Doubtful		-		-		-		-		-		-		-		-
Total	$	308,523	$	300,825	$	50,791	$	58,307	$	121,769	$	126,319	$	17,469	$	19,655

June 30, 2011	30-59 days Past Due		60-89 days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 days & Accruing
Construction and land development	$	-	$	-	$	332	$	332	$	22,755	$	23,087	$	-
Farm loans		336		-		757		1,093		62,078		63,171		-
1-4 Family residential properties		763		533		1,523		2,819		180,323		183,142		-
Multifamily residential properties		-		-		-		-		20,226		20,226		-
Commercial real estate		366		281		1,676		2,323		306,200		308,523		-
Loans secured by real estate		1,465		814		4,288		6,567		591,582		598,149		-
Agricultural loans		-		-		745		745		50,046		50,791		-
Commercial and industrial loans		407		5		861		1,273		120,496		121,769		-
Consumer loans		188		14		-		202		17,267		17,469		-
All other loans		-		-		-		-		12,314		12,314		-
Total loans	$	2,060	$	833	$	5,894	$	8,787	$	791,705	$	800,492	$	-

June 30, 2011	30-59 days Past Due		60-89 days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 days & Accruing
Construction and land development	$	-	$	-	$	332	$	332	$	22,755	$	23,087	$	-
Farm loans		336		-		757		1,093		62,078		63,171		-
1-4 Family residential properties		763		533		1,523		2,819		180,323		183,142		-
Multifamily residential properties		-		-		-		-		20,226		20,226		-
Commercial real estate		366		281		1,676		2,323		306,200		308,523		-
Loans secured by real estate		1,465		814		4,288		6,567		591,582		598,149		-
Agricultural loans		-		-		745		745		50,046		50,791		-
Commercial and industrial loans		407		5		861		1,273		120,496		121,769		-
Consumer loans		188		14		-		202		17,267		17,469		-
All other loans		-		-		-		-		12,314		12,314		-
Total loans	$	2,060	$	833	$	5,894	$	8,787	$	791,705	$	800,492	$	-

Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status.

The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be troubled debt restructurings is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

	June 30, 2011						December 31, 2010
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans with a specific allowance:
Construction and land development	$	1,430	$	1,706	$	264	$	1,804	$	1,804	$	478
Farm loans		-		-		-		-		-		-
1-4 Family residential properties		472		472		82		917		917		273
Multifamily residential properties		-		-		-		573		669		69
Commercial real estate		650		650		147		1,120		1,120		79
Loans secured by real estate		2,552		2,828		493		4,414		4,510		899
Agricultural loans		-		-		-		-		-		-
Commercial and industrial loans		413		508		168		231		231		187
Consumer loans		-		-		-		-		-		-
All other loans		-		-		-		-		-		-
Total loans	$	2,965	$	3,336	$	661	$	4,645	$	4,741	$	1,086

	June 30, 2011						December 31, 2010
	Recorded Balance		Unpaid Principal Balance		Specific Allowance		Recorded Balance		Unpaid Principal Balance		Specific Allowance
Loans without a specific allowance:
Construction and land development	$	-	$	-	$	-	$	151	$	151	$	-
Farm loans		534		534		-		540		540		-
1-4 Family residential properties		1,856		1,930		-		1,648		1,678		-
Multifamily residential properties		-		-		-		-		-		-
Commercial real estate		3,815		5,112		-		1,916		3,095		-
Loans secured by real estate		6,205		7,576		-		4,255		5,464		-
Agricultural loans		745		745		-		828		828		-
Commercial and industrial loans		725		1,027		-		692		804		-
Consumer loans		-		-		-		14		14		-
All other loans		-		-		-		0		-		-
Total loans	$	7,675	$	9,348	$	-	$	5,789	$	7,110	$	-

Total loans:
Construction and land development	$	1,430	$	1,706	$	264	$	1,955	$	1,955	$	478
Farm loans		534		534		-		540		540		-
1-4 Family residential properties		2,328		2,402		82		2,565		2,595		273
Multifamily residential properties		-		-		-		573		669		69
Commercial real estate		4,465		5,762		147		3,036		4,215		79
Loans secured by real estate		8,757		10,404		493		8,669		9,974		899
Agricultural loans		745		745		-		828		828		-
Commercial and industrial loans		1,138		1,535		168		923		1,035		187
Consumer loans		-		-		-		14		14		-
All other loans		-		-		-		-		-		-
Total loans	$	10,640	$	12,684	$	661	$	10,434	$	11,851	$	1,086

	For the three months ended
	June 30, 2011				June 30, 2010
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Construction and land development	$	1,430	$	-	$	1,680	$	-
Farm loans		535		-		1,027		-
1-4 Family residential properties		2,320		-		2,102		-
Multifamily residential properties		-		-		188		-
Commercial real estate		4,074		1		5,184		14
Loans secured by real estate		8,359		1		10,181		14
Agricultural loans		752		-		986		-
Commercial and industrial loans		1,366		-		1,137		5
Consumer loans		-		-		24		-
All other loans		-		-		-		-
Total loans	$	10,477	$	1	$	12,328	$	19

	For the six months ended
	June 30, 2011				June 30, 2010
	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Construction and land development	$	1,422	$	-	$	1,680	$	-
Farm loans		536		-		1,397		-
1-4 Family residential properties		2,331		-		2,111		-
Multifamily residential properties		-		-		188		-
Commercial real estate		4,483		7		5,187		28
Loans secured by real estate		8,772		7		10,563		28
Agricultural loans		756		-		1,038		-
Commercial and industrial loans		1,171		-		1,140		6
Consumer loans		-		-		24		-
All other loans		-				-		-
Total loans	$	10,699	$	7	$	12,765	$	34

For the three and six months ended June 30, 2011, the amount of interest income recognized by the Company within the period that the loans were impaired was related to loans modified in a troubled debt restructuring that remained on accrual status. The balance of loans modified in a troubled debt restructuring included in the impaired loan stated above that were still accruing was $398,000 of commercial real estate at June 30, 2011 and $888,000 of commercial real estate and $218,000 of commercial and industrial at June 30, 2010. For the three and six months ended June 30, 2011, the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material.

	June 30, 2011		December 31, 2010
Construction and land development	$	1,430	$	1,955
Farm loans		534		540
1-4 Family residential properties		2,328		2,565
Multifamily residential properties		-		573
Commercial real estate		4,067		2,149
Loans secured by real estate		8,359		7,782
Agricultural loans		745		828
Commercial and industrial loans		1,138		708
Consumer loans		-		14
All other loans		-		-
Total loans	$	10,242	$	9,332

Most of the Company’s business activities are with customers located within central Illinois. At June 30, 2011, the Company’s loan portfolio included $113.9 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $103.1 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture decreased $14.6 million from $123.3 million at December 31, 2010 while loans concentrated in other grain farming decreased $9.4 million from $123.3 million at December 31, 2010 primarily due to seasonal cash flow paydowns. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio.

In addition, the Company has $48.9 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $87.8 million of loans to lessors of non-residential buildings and $45.9 million of loans to lessors of residential buildings and dwellings.

The allowance for loan losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for loan losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for loan losses. In determining the adequacy of the allowance for loan losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Once identified, the magnitude of exposure to individual borrowers is quantified in the form of specific allocations of the allowance for loan losses. The Company considers collateral values and guarantees in the determination of such specific allocations. Additional factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates.

Impaired loans. The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns. This evaluation considers expected future cash flows, the value of collateral and also other factors that may impact the borrower’s ability to make payments when due. For loans greater than $100,000 in the commercial, commercial real estate, agricultural, agricultural real estate segments, impairment is individually measured each quarter using one of three alternatives: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral do not justify the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs.

Adversely classified loans. A detailed analysis is also performed on each adversely classified (substandard or doubtful rated) borrower with an aggregate, outstanding balance of $100,000 or more. This analysis includes commercial, commercial real estate, agricultural, and agricultural real estate borrowers who are not currently identified as impaired but pose sufficient risk to warrant in-depth review. Estimated collateral shortfalls are then calculated with allocations for each loan segment based on the five-year historical average of collateral shortfalls adjusted for environmental factors including changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of credit risk associated with specific industries and markets. Because the economic and business climate in any given industry or market, and its impact on any given borrower, can change rapidly, the risk profile of the loan portfolio is periodically assessed and adjusted when appropriate.

Non-classified and Watch loans. For loans, in all segments of the portfolio, that are considered to possess levels of risk commensurate with a pass rating, management establishes base loss estimations which are derived from the historical loss experience over the past five years. Use of a five-year historical loss period eliminates the effect of any significant losses that can be attributed to a single event or borrower during a given reporting period. The base loss estimations for each loan segment are adjusted after consideration of several environmental factors influencing the level of credit risk in the portfolio. In addition, loans rated as watch are further segregated in the commercial / commercial real estate and agricultural / agricultural real estate segments. These loans possess potential weaknesses that, if go unchecked, may result in deterioration to the point of becoming a problem asset. Due to the elevated risk inherent in these loans, an allocation of twice the adjusted base loss estimation of the applicable loan segment is determined appropriate.

Due to weakened economic conditions during recent years, the Company established allocations for each of the loan segments at levels above the base loss estimations. Some of the economic factors included the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices and increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve.

	Three months ended
	June 30, 2011																June 30, 2010
	Commercial/ Commercial Real Estate			Agricultural/ Agricultural Real Estate		Residential Real Estate			Consumer			Unallocated		Total			Total
Allowance for loan losses:
Balance, beginning of year	$	8,737		$	360	$	448		$	403		$	703	$	10,651		$	9,529
Provision charged to expense		377			196		63			14			266		916			1,083
Losses charged off		(877	)		-		(49	)		(40	)		-		(966	)		(582	)
Recoveries		75			-		-			19			-		94			35
Balance, end of period	$	8,312		$	556	$	462		$	396		$	969	$	10,695		$	10,065
Ending balance:
Individually evaluated for impairment	$	661		$	-	$	-		$	-		$	-	$	661		$	657
Collectively evaluated for impairment	$	7,651		$	556	$	462		$	396		$	969	$	10,034		$	9,408
Loans acquired with deteriorated
credit quality	$	-		$	-	$	-		$	-		$	-	$	-		$	-

Loans:
Ending balance	$	466,332		$	109,788	$	186,522		$	17,471		$	20,379	$	800,492		$	804,581
Ending balance:
Individually evaluated for impairment	$	7,411		$	1,149	$	-		$	-		$	-	$	8,560		$	9,986
Collectively evaluated for impairment	$	458,921		$	108,639	$	186,522		$	17,471		$	20,379	$	791,932		$	794,595
Loans acquired with deteriorated
credit quality	$	-		$	-	$	-		$	-		$	-	$	-		$	-

	Six months ended
	June 30, 2011																June 30, 2010
	Commercial/ Commercial Real Estate			Agricultural/ Agricultural Real Estate		Residential Real Estate			Consumer			Unallocated		Total			Total
Allowance for loan losses:
Balance, beginning of year	$	8,307		$	404	$	440		$	392		$	850	$	10,393		$	9,462
Provision charged to expense		1,468			152		84			33			119		1,856			1,843
Losses charged off		(1,569	)		-		(63	)		(76	)		-		(1,708	)		(1,318	)
Recoveries		106			-		1			47			-		154			78
Balance, end of period	$	8,312		$	556	$	462		$	396		$	969	$	10,695		$	10,065
Ending balance:
Individually evaluated for impairment	$	661		$	-	$	-		$	-		$	-	$	661		$	657
Collectively evaluated for impairment	$	7,651		$	556	$	462		$	396		$	969	$	10,034		$	9,408
Loans acquired with deteriorated
credit quality	$	-		$	-	$	-		$	-		$	-	$	-		$	-

Loans:
Ending balance	$	466,332		$	109,788	$	186,522		$	17,471		$	20,379	$	800,492		$	804,581
Ending balance:
Individually evaluated for impairment	$	7,411		$	1,149	$	-		$	-		$	-	$	8,560		$	9,986
Collectively evaluated for impairment	$	458,921		$	108,639	$	186,522		$	17,471		$	20,379	$	791,932		$	794,595
Loans acquired with deteriorated
credit quality	$	-		$	-	$	-		$	-		$	-	$	-		$	-

	December 31, 2010
	Commercial/ Commercial Real Estate			Agricultural/ Agricultural Real Estate			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses:
Balance, beginning of year	$	7,428		$	315		$	488		$	410		$	821	$	9,462
Provision charged to expense		3,473			89			(118	)		264			29		3,737
Losses charged off		(2,770	)		(3	)		(65	)		(284	)		-		(3,122	)
Recoveries		176			3			135			2			-		316
Balance, end of year	$	8,307		$	404		$	440		$	392		$	850	$	10,393
Ending balance:
Individually evaluated for impairment	$	1,086		$	-		$	-		$	-		$	-	$	1,086
Collectively evaluated for impairment	$	7,221		$	404		$	440		$	392		$	850	$	9,307
Loans acquired with deteriorated
credit quality	$	-		$	-		$	-		$	-		$	-	$	-

Loans:
Ending balance	$	465,390		$	118,973		$	183,000		$	20,486		$	16,732	$	804,581
Ending balance:
Individually evaluated for impairment	$	7,332		$	1,152		$	-		$	-		$	-	$	8,484
Collectively evaluated for impairment	$	358,421		$	111,304		$	164,065		$	19,675		$	142,632	$	796,097
Loans acquired with deteriorated
credit quality	$	-		$	-		$	-		$	-		$	-	$	-

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.