Credit Quality Indicators:

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, credit documentation, public information, and current economic trends, among other factors. The Company establishes a risk rating at origination for all commercial loan and commercial real estate relationships. For relationships over $750 thousand, management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt. Management also affirms the risk ratings for the loans and leases in their respective portfolios on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

Substandard. Loans classified as substandard are inadequately protected by the current net worth 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. Substandard loans are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

As of March 31, 2015 and December 31, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(In Thousands of Dollars)	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
March 31, 2015
Commercial real estate
Owner occupied	$	70,516	$	1,022	$	5,967	$	0	$	0	$	77,505
Non-owner occupied		121,781		487		2,661		0		0		124,929
Other		28,572		0		314		0		0		28,886
Commercial		118,227		1,519		2,677		0		0		122,423
Total	$	339,096	$	3,028	$	11,619	$	0	$	0	$	353,743

(In Thousands of Dollars)	Pass		Special Mention		Sub standard		Doubtful		Not Rated		Total
December 31, 2014
Commercial real estate
Owner occupied	$	66,036	$	2,534	$	6,061	$	0	$	0	$	74,631
Non-owner occupied		115,159		3,760		2,994		0		0		121,913
Other		25,710		0		319		0		0		26,029
Commercial		114,409		1,566		4,175		0		0		120,150
Total	$	321,314	$	7,860	$	13,549	$	0	$	0	$	342,723

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential, consumer indirect and direct loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

The following table presents the recorded investment in residential, consumer indirect and direct auto loans based on payment activity as of March 31, 2015 and December 31, 2014. Nonperforming loans are loans past due 90 days or more and still accruing interest and nonaccrual loans.

	Residential Real Estate				Consumer
(In Thousands of Dollars)	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
March 31, 2015
Performing	$	150,388	$	32,062	$	121,379	$	8,856	$	3,547
Nonperforming		3,235		249		288		32		5
Total	$	153,623	$	32,311	$	121,667	$	8,888	$	3,552

	Residential Real Estate				Consumer
(In Thousands of Dollars)	1-4 Family Residential		Home Equity Lines of Credit		Indirect		Direct		Other
December 31, 2014
Performing	$	149,661	$	31,076	$	124,296	$	9,035	$	3,625
Nonperforming		2,937		179		283		36		1
Total	$	152,598	$	31,255	$	124,579	$	9,071	$	3,626