Note 4 - Allowance for Loan Losses

9 Months Ended

Sep. 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 nine month period ended September 30, 2015 and September 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.

September 30, 2015
	Beginning		Charge-							Ending
	Balance		Offs			Recoveries		Provision		Balance
Commercial and Agricultural
Commercial	$	497	$	(257	)	$	45	$	17	$	302
Agricultural		304		(5	)		3		4		306
Real Estate
Commercial Construction		1,223		(96	)		282		282		1,691
Residential Construction		138		-			-		-		138
Commercial		3,665		(275	)		138		296		3,824
Residential		2,425		(910	)		95		85		1,695
Farmland		104		(40	)		10		3		77
Consumer and Other
Consumer		67		(167	)		47		53		-
Other		379		(26	)		15		1		369
	$	8,802	$	(1,776	)	$	635	$	741	$	8,402

September 30, 2014
	Beginning		Charge-							Ending
	Balance		Offs			Recoveries		Provision		Balance
Commercial and Agricultural
Commercial	$	1,017	$	(453	)	$	69	$	29	$	662
Agricultural		294		-			2		8		304
Real Estate
Commercial Construction		1,782		(1,541	)		302		499		1,042
Residential Construction		138		-			-		-		138
Commercial		4,379		(761	)		109		522		4,249
Residential		3,278		(670	)		27		150		2,785
Farmland		312		(234	)		20		6		104
Consumer and Other
Consumer		243		(274	)		64		93		126
Other		363		-			14		1		378
	$	11,806	$	(3,933	)	$	607	$	1,308	$	9,788

The loss history period used at September 30, 2015 was based on the loss rate from the eight quarters ended June 30, 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 $14.03 million and $12.7 million as of September 30, 2015 and 2014, respectively. Specific allowance allocations were made for these loans totaling $1.3 million and $1.1 million as of September 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 September 30, 2015, there were impaired loans totaling $3.9 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 September 30, 2014, impaired loans totaling $4.41 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 September 30, 2015 and 2014:

September 30, 2015
	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	$	91	$	211	$	302	$	91	$	48,668	$	48,759
Agricultural		-		306		306		8		27,365		27,373
Real Estate
Commercial Construction		14		1,677		1,691		2,694		40,895		43,589
Residential Construction		-		138		138		-		10,465		10,465
Commercial		243		3,581		3,824		20,049		327,654		347,703
Residential		308		1,387		1,695		3,380		192,420		195,800
Farmland		57		20		77		1,695		59,856		61,551
Consumer and Other
Consumer		-		-		-		-		20,958		20,958
Other		-		369		369		-		8,006		8,006
Total End of Period Balance	$	713	$	7,689	$	8,402	$	27,917	$	736,287	$	764,204

September 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	$	99	$	563	$	662	$	100	$	46,381	$	46,481
Agricultural		-		304		304		-		23,017		23,017
Real Estate
Commercial Construction		59		983		1,042		3,039		47,416		50,455
Residential Construction		-		138		138		-		9,700		9,700
Commercial		283		3,966		4,249		21,348		306,150		327,498
Residential		605		2,180		2,785		5,522		198,791		204,313
Farmland		31		73		104		1,009		49,392		50,401
Consumer and Other
Consumer		-		126		126		-		23,448		23,448
Other		-		378		378		-		7,968		7,968
Total End of Period Balance	$	1,077	$	8,711	$	9,788	$	31,018	$	712,263	$	743,281