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Note 4 - Allowance for Loan Losses

6 Months Ended

Jun. 30, 2015

Disclosure Text Block Supplement [Abstract]

Allowance for Credit Losses [Text Block]

(4) Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the six month period ended June 30, 2015 and June 30, 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

June 30, 2015
	Beginning									Ending
	Balance		Charge-Offs			Recoveries		Provision		Balance

Commercial and Agricultural
Commercial	$	497	$	(185	)	$	23	$	11	$	346
Agricultural		304		-			2		3		309

Real Estate
Commercial Construction		1,223		(96	)		272		187		1,586
Residential Construction		138		-			-		-		138
Commercial		3,665		(166	)		128		195		3,822
Residential		2,425		(744	)		35		57		1,773
Farmland		104		-			-		2		106

Consumer and Other
Consumer		67		(90	)		30		35		42
Other		379		(25	)		3		1		358

	$	8,802	$	(1,306	)	$	493	$	491	$	8,480

June 30, 2014
	Beginning									Ending
	Balance		Charge-Offs			Recoveries		Provision		Balance

Commercial and Agricultural
Commercial	$	1,017	$	(373	)	$	58	$	18	$	720
Agricultural		294		-			1		5		300

Real Estate
Commercial Construction		1,782		(470	)		254		308		1,874
Residential Construction		138		-			-		-		138
Commercial		4,379		(753	)		43		323		3,992
Residential		3,278		(585	)		25		92		2,810
Farmland		312		(234	)		-		4		82

Consumer and Other
Consumer		243		(173	)		51		57		178
Other		363		-			12		1		376

	$	11,806	$	(2,588	)	$	444	$	808	$	10,470

The loss history period used at June 30, 2015 was based on the loss rate from the eight quarters ended March 31, 2015.

The Company determines its individual reserves during its quarterly review of substandard loans. This process involves reviewing all loans with a risk grade of 6 or greater and an outstanding balance of $250,000 or more, regardless of the loans impairment classification.

Since not all loans in the substandard category are considered impaired, this quarterly review process may result in the identification of specific reserves on nonimpaired loans. Management considers those loans graded substandard, but not classified as impaired, to be higher risk loans and, therefore, makes specific allocations to the allowance for those loans if warranted. The total of such loans is $8.6 million and $9.0 million as of June 30, 2015 and 2014, respectively. Specific allowance allocations were made for these loans totaling $569 thousand and $630 thousand as of June 30, 2015 and 2014, respectively. Since these loans are not considered impaired, both the loan balance and related specific allocation are included in the “Collectively Evaluated for Impairment” column of the following tables.

At June 30, 2015, there were impaired loans totaling $4.3 million below the $250,000 review threshold which were not individually reviewed for impairment. Those loans were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables. Likewise, at June 30, 2014, impaired loans totaling $3.93 million were below the $250,000 review threshold and were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.

The following tables present breakdowns of the allowance for loan losses, segregated by impairment methodology for June 30, 2015 and 2014:

June 30, 2015

Ending Allowance Balance

Ending Loan Balance

Individually

Collectively

Individually

Collectively

Evaluated for

Impairment

Total

Impairment

Total

Commercial and Agricultural

Commercial

254

346

52,415

52,506

Agricultural

309

24,011

24,019

Real Estate

Commercial Construction

1,568

1,586

3,313

43,386

46,699

Residential Construction

138

11,327

Commercial

278

3,544

3,822

20,537

320,630

341,167

Residential

320

1,453

1,773

3,432

199,373

202,805

Farmland

106

1,697

52,438

54,135

Consumer and Other

Consumer

21,371

Other

358

6,049

Total End of Period Balance

767

7,713

8,480

29,078

731,000

760,078

June 30, 2014
	Ending Allowance Balance						Ending Loan Balance

	Individually		Collectively				Individually		Collectively
	Evaluated for		Evaluated for				Evaluated for		Evaluated for
	Impairment		Impairment		Total		Impairment		Impairment		Total
Commercial and Agricultural
Commercial	$	102	$	618	$	720	$	1,068	$	40,772	$	41,840
Agricultural		-		300		300		-		18,568		18,568

Real Estate
Commercial Construction		1,082		792		1,874		4,812		45,368		50,180
Residential Construction		-		138		138		-		10,875		10,875
Commercial		772		3,220		3,992		26,204		306,691		332,895
Residential		310		2,500		2,810		4,815		196,698		201,513
Farmland		-		82		82		963		48,212		49,175

Consumer and Other
Consumer		-		178		178		-		23,548		23,548
Other		-		376		376		-		7,169		7,169

Total End of Period Balance	$	2,266	$	8,204	$	10,470	$	37,862	$	697,901	$	735,763