The following table presents the activity of the allowance for loan losses by portfolio segment for the three months

ended September 30.



Allowance for Loan Losses:	September 30, 2017
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Unallocated			Total
Beginning balance	$	10,223		$	1,514		$	6,218		$	1,725		$	19,680
Provision for loan losses	(227		)	14			1,415			(17		)	1,185
Loans charged -off	(281		)	(100		)	(1,583		)	—			(1,964		)
Recoveries	222			91			588			—			901
Ending Balance	$	9,937		$	1,519		$	6,638		$	1,708		$	19,802



Allowance for Loan Losses:	September 30, 2016
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Unallocated			Total
Beginning balance	$	10,244		$	1,595		$	5,258		$	2,407		$	19,504
Provision for loan losses	571			40			1,275			(795		)	1,091
Loans charged -off	(1,029		)	(211		)	(1,484		)	—			(2,724		)
Recoveries	479			154			570			—			1,203
Ending Balance	$	10,265		$	1,578		$	5,619		$	1,612		$	19,074

The following table presents the activity of the allowance for loan losses by portfolio segment for the nine months

ended September 30.



Allowance for Loan Losses:	September 30, 2017
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Unallocated			Total
Beginning balance	$	9,731		$	1,553		$	5,767		$	1,722		$	18,773
Provision for loan losses	176			(166		)	3,825			(14		)	3,821
Loans charged -off	(1,059		)	(564		)	(4,705		)	—			(6,328		)
Recoveries	1,089			696			1,751			—			3,536
Ending Balance	$	9,937		$	1,519		$	6,638		$	1,708		$	19,802



Allowance for Loan Losses:	September 30, 2016
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Unallocated			Total
Beginning balance	$	11,482		$	1,834		$	4,945		$	1,685		$	19,946
Provision for loan losses	(520		)	143			2,811			(73		)	2,361
Loans charged -off	(1,851		)	(682		)	(3,673		)	—			(6,206		)
Recoveries	1,154			283			1,536			—			2,973
Ending Balance	$	10,265		$	1,578		$	5,619		$	1,612		$	19,074

The following table presents the allocation of the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method at September 30, 2017 and December 31, 2016.



Allowance for Loan Losses	September 30, 2017
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Individually evaluated for impairment	$	409	$	27	$	—	$	—	$	436
Collectively evaluated for impairment	9,528		1,492		6,638		1,708		19,366
Acquired with deteriorated credit quality	—		—		—		—		—
Ending Balance	$	9,937	$	1,519	$	6,638	$	1,708	$	19,802



Loans:	September 30, 2017
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Total
Individually evaluated for impairment	$	9,915	$	484	$	—	$	10,399
Collectively evaluated for impairment	1,104,154		430,101		326,356		1,860,611
Acquired with deteriorated credit quality	1,897		—		—		1,897
Ending Balance	$	1,115,966	$	430,585	$	326,356	$	1,872,907



Allowance for Loan Losses:	December 31, 2016
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Unallocated		Total
Individually evaluated for impairment	242		89		—		—		331
Collectively evaluated for impairment	9,489		1,464		5,767		1,722		18,442
Acquired with deteriorated credit quality	—		—		—		—		—
Ending Balance	$	9,731	$	1,553	$	5,767	$	1,722	$	18,773



Loans	December 31, 2016
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Total
Individually evaluated for impairment	8,051		549		—		8,600
Collectively evaluated for impairment	1,101,269		423,099		307,226		1,831,594
Acquired with deteriorated credit quality	3,415		1,431		—		4,846
Ending Balance	$	1,112,735	$	425,079	$	307,226	$	1,845,040

In the second quarter of 2017, the Corporation revised its historical loss period from four years to seven years as the Corporation believes the longer period is more appropriate as net charge-offs have been lower in recent years. The impact of this change was not material to the overall allowance for loan losses balance, however the unallocated portion was reduced by the change.

The following tables present loans individually evaluated for impairment by class of loans.



					September 30, 2017
	Unpaid Principal		Recorded		Allowance for Loan Losses		Average Recorded		Interest Income		Cash Basis Interest
(Dollar amounts in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial
Commercial & Industrial	$	813	$	813	$	—	$	1,013	$	—	$	—
Farmland	3,639		3,639		—		1,349		—		—
Non Farm, Non Residential	2,662		2,662		—		2,861		—		—
Agriculture	214		214		—		268		—		—
All Other Commercial	1,283		1,283		—		1,325		—		—
Residential
First Liens	22		22		—		24		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial
Commercial & Industrial	502		502		150		519		—		—
Farmland	312		312		54		78		—		—
Non Farm, Non Residential	—		—		—		164		—		—
Agriculture	691		490		205		215		—		—
All Other Commercial	—		—		—		—		—		—
Residential
First Liens	462		462		27		493		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
TOTAL	$	10,600	$	10,399	$	436	$	8,309	$	—	$	—



					December 31, 2016
	Unpaid Principal		Recorded		Allowance for Loan Losses		Average Recorded		Interest Income		Cash Basis Interest Income
(Dollar amounts in thousands)	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial
Commercial & Industrial	$	1,181	$	1,181	$	—	$	981	$	—	$	—
Farmland	826		826		—		770		—		—
Non Farm, Non Residential	3,368		2,996		—		3,096		—		—
Agriculture	622		487		—		351		—		—
All Other Commercial	1,367		1,367		—		1,477		—		—
Residential
First Liens	25		25		—		27		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial
Commercial & Industrial	537		537		36		819		—		—
Farmland	—		—		—		—		—		—
Non Farm, Non Residential	657		657		206		1,016				—
Agriculture	—		—		—		114		—		—
All Other Commercial	—		—		—		45		—		—
Residential
First Liens	524		524		89		647		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
TOTAL	$	9,107	$	8,600	$	331	$	9,343	$	—	$	—



	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	Average Recorded		Interest Income		Cash Basis Interest Income		Average Recorded		Interest Income		Cash Basis Interest Income
(Dollar amounts in thousands)	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial
Commercial & Industrial	$	891	$	—	$	—	$	1,013	$	—	$	—
Farmland	2,285		—		—		1,349		—		—
Non Farm, Non Residential	3,218		—		—		2,861		—		—
Agriculture	107		—		—		268		—		—
All Other Commercial	1,297		—		—		1,325		—		—
Residential
First Liens	23		—		—		24		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial
Commercial & Industrial	508		—		—		519		—		—
Farmland	156		—		—		78		—		—
Non Farm, Non Residential	—		—		—		164		—		—
Agriculture	430		—		—		215		—		—
All Other Commercial	—		—		—		—		—		—
Residential
First Liens	473		—		—		493		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
TOTAL	$	9,388	$	—	$	—	$	8,309	$	—	$	—



	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	Average Recorded		Interest Income		Cash Basis Interest Income		Average Recorded		Interest Income		Cash Basis Interest Income
(Dollar amounts in thousands)	Investment		Recognized		Recognized		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial
Commercial & Industrial	$	719	$	—	$	—	$	931	$	—	$	—
Farmland	1,513		—		—		757		—		—
Non Farm, Non Residential	3,064		—		—		3,121		—		—
Agriculture	635		—		—		318		—		—
All Other Commercial	1,410		—		—		1,504		—		—
Residential
First Liens	27		—		—		28		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial
Commercial & Industrial	980		—		—		890		—		—
Farmland	—		—		—		—		—		—
Non Farm, Non Residential	915		—		—		1,105		—		—
Agriculture	286		—		—		143		—		—
All Other Commercial	—		—		—		56		—		—
Residential
First Liens	576		—		—		677		—		—
Home Equity	—		—		—		—		—		—
Junior Liens	—		—		—		—		—		—
Multifamily	—		—		—		—		—		—
All Other Residential	—		—		—		—		—		—
Consumer
Motor Vehicle	—		—		—		—		—		—
All Other Consumer	—		—		—		—		—		—
TOTAL	$	10,125	$	—	$	—	$	9,530	$	—	$	—

The tables below presents the recorded investment in non-performing loans.



	September 30, 2017
	Loans Past Due Over 90 Day Still		Troubled Debt				Nonaccrual Excluding
(Dollar amounts in thousands)	Accruing		Accruing		Nonaccrual		TDR
Commercial
Commercial & Industrial	$	—	$	2	$	212	$	1,900
Farmland	—		—		—		4,145
Non Farm, Non Residential	—		1		2,694		185
Agriculture	—		—		—		890
All Other Commercial	—		—		—		1,310
Residential
First Liens	997		3,262		630		4,161
Home Equity	44		—		—		268
Junior Liens	26		—		—		167
Multifamily	—		—		—		—
All Other Residential	—		—		—		94
Consumer
Motor Vehicle	390		12		—		255
All Other Consumer	7		211		470		590
TOTAL	$	1,464	$	3,488	$	4,006	$	13,965



	December 31, 2016
	Loans Past Due Over 90 Day Still		Troubled Debt				Nonaccrual Excluding
(Dollar amounts in thousands)	Accruing		Accruing		Nonaccrual		TDR
Commercial
Commercial & Industrial	$	45	$	3	$	383	$	2,405
Farmland	—		—		—		978
Non Farm, Non Residential	—		60		2,941		1,027
Agriculture	—		—		—		744
All Other Commercial	—		—		—		1,380
Residential
First Liens	276		3,525		995		5,496
Home Equity	—		—		—		285
Junior Liens	55		—		—		202
Multifamily	—		—		—		—
All Other Residential	—		—		—		94
Consumer
Motor Vehicle	293		60		—		140
All Other Consumer	—		150		517		741
TOTAL	$	669	$	3,798	$	4,836	$	13,492

There were $141 thousand of loans covered by loss share agreements with the FDIC included in loans past due over 90 days still on accrual at September 30, 2017 and there were $80 thousand at December 31, 2016. There were $63 thousand of covered loans included in non-accrual loans at September 30, 2017 and there were $112 thousand at December 31, 2016. There were no covered loans at September 30, 2017 or December 31, 2016 that were deemed impaired.

Non-performing loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following tables presents the aging of the recorded investment in loans by past due category and class of loans.



	September 30, 2017
	30-59 Days		60-89 Days		Greater than 90 days		Total
(Dollar amounts in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial
Commercial & Industrial	$	289	$	403	$	815	$	1,507	$	463,408	$	464,915
Farmland	—		—		3,639		3,639		105,088		108,727
Non Farm, Non Residential	—		—		—		—		198,916		198,916
Agriculture	502		87		671		1,260		147,209		148,469
All Other Commercial	—		—		27		27		194,912		194,939
Residential
First Liens	608		872		1,440		2,920		255,766		258,686
Home Equity	116		10		56		182		36,059		36,241
Junior Liens	200		136		113		449		40,111		40,560
Multifamily	—		—		—		—		82,828		82,828
All Other Residential	—		—		12		12		12,258		12,270
Consumer
Motor Vehicle	3,287		602		427		4,316		296,607		300,923
All Other Consumer	107		15		8		130		25,303		25,433
TOTAL	$	5,109	$	2,125	$	7,208	$	14,442	$	1,858,465	$	1,872,907



	December 31, 2016
	30-59 Days		60-89 Days		Greater than 90 days		Total
(Dollar amounts in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Total
Commercial
Commercial & Industrial	$	370	$	114	$	1,199	$	1,683	$	474,406	$	476,089
Farmland	235		22		46		303		110,897		111,200
Non Farm, Non Residential	153		—		215		368		195,120		195,488
Agriculture	246		—		467		713		151,059		151,772
All Other Commercial	15		—		—		15		178,171		178,186
Residential
First Liens	3,862		954		1,516		6,332		264,446		270,778
Home Equity	186		64		27		277		35,782		36,059
Junior Liens	271		—		224		495		36,912		37,407
Multifamily	—		—		—		—		67,799		67,799
All Other Residential	42		12		—		54		12,982		13,036
Consumer
Motor Vehicle	4,048		732		313		5,093		277,604		282,697
All Other Consumer	143		22		3		168		24,361		24,529
TOTAL	$	9,571	$	1,920	$	4,010	$	15,501	$	1,829,539	$	1,845,040

During the three and nine months ended September 30, 2017 and 2016, the terms of certain loans were modified as troubled debt restructurings (TDRs). The following tables present the activity for TDR's.



				2017
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Total
July 1,	$	3,061		$	4,198		$	725		$	7,984
Added	—			—			42			42
Charged Off	—			(155		)	(17		)	(172		)
Payments	(153		)	(222		)	(55		)	(430		)
September 30,	$	2,908		$	3,821		$	695		$	7,424



				2017
(Dollar amounts in thousands)	Commercial			Residential			Consumer			Total
January 1,	$	3,386		$	4,447		$	732		$	8,565
Added	—			227			251			478
Charged Off	—			(195		)	(88		)	(283		)
Payments	(478		)	(658		)	(200		)	(1,336		)
September 30,	$	2,908		$	3,821		$	695		$	7,424



			2016
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Total
July 1,	3,453		5,033		669		9,155
Added	—		—		109		109
Charged Off	—		—		(13	)	(13	)
Payments	(71	)	(239	)	(55	)	(365	)
September 30,	3,382		4,794		710		8,886



			2016
(Dollar amounts in thousands)	Commercial		Residential		Consumer		Total
January 1,	3,584		5,593		683		9,860
Added	—		123		259		382
Charged Off	—		(181	)	(39	)	(220	)
Payments	(202	)	(741	)	(193	)	(1,136	)
September 30,	3,382		4,794		710		8,886

Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. No modification in 2017 or 2016 resulted in the permanent reduction of the recorded investment in the loan. Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from twelve months to five years. Modifications involving an extension of the maturity date were for periods ranging from twelve months to ten years. Troubled debt restructurings during the three and nine months ended September 30, 2017 and 2016 did not result in any material charge-offs or additional provision expense.

The Corporation has no allocations of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2017 and 2016. The Corporation has not committed to lend additional amounts as of September 30, 2017 and 2016 to customers with outstanding loans that are classified as troubled debt restructurings. None of the charge-offs during the three and nine months ended September 30, 2017 and 2016 were of restructurings that had occurred in the previous 12 months.

Credit Quality Indicators:

The Corporation 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 Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance greater than $100 thousand. Any consumer loans outstanding to a borrower who had commercial loans analyzed will be similarly risk rated. This analysis is performed on a quarterly basis. The Corporation 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.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and debt service capacity of the borrower or of any pledged collateral. These loans have a well-defined weakness or weaknesses which have clearly jeopardized repayment of principal and interest as originally intended. They are characterized by the distinct possibility that the institution will sustain some future loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those graded substandard, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values.

Furthermore, non-homogeneous loans which were not individually analyzed, but are 90+ days past due or on non-accrual are classified as substandard. Loans included in homogeneous pools, such as residential or consumer may be classified as substandard due to 90+ days delinquency, non-accrual status, bankruptcy, or loan restructuring.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either those with an outstanding balance less than $100 thousand or are included in groups of homogeneous loans. As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans are as follows:



	September 30, 2017
(Dollar amounts in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
Commercial
Commercial & Industrial	$	424,500	$	12,758	$	17,983	$	203	$	8,095	$	463,539
Farmland	87,650		11,537		7,528		—		26		106,741
Non Farm, Non Residential	174,709		9,529		14,240		—		—		198,478
Agriculture	112,100		21,831		12,113		—		288		146,332
All Other Commercial	182,009		2,819		7,673		—		1,507		194,008
Residential
First Liens	44,959		881		3,979		8		207,990		257,817
Home Equity	324		—		117		—		35,726		36,167
Junior Liens	1,954		79		239		101		38,094		40,467
Multifamily	82,552		—		—		—		77		82,629
All Other Residential	—		—		49		—		12,182		12,231
Consumer
Motor Vehicle	—		—		542		—		299,173		299,715
All Other Consumer	—		—		63		—		25,257		25,320
TOTAL	$	1,110,757	$	59,434	$	64,526	$	312	$	628,415	$	1,863,444



	December 31, 2016
(Dollar amounts in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
Commercial
Commercial & Industrial	$	427,262	$	16,286	$	25,177	$	449	$	5,730	$	474,904
Farmland	95,115		8,300		5,238		—		532		109,185
Non Farm, Non Residential	172,739		5,745		16,601		—		—		195,085
Agriculture	121,983		13,885		12,301		—		1,366		149,535
All Other Commercial	163,492		596		10,058		76		3,251		177,473
Residential
First Liens	43,674		1,541		4,466		18		220,249		269,948
Home Equity	363		—		86		—		35,554		36,003
Junior Liens	1,826		85		401		26		34,977		37,315
Multifamily	66,133		1,430		15		—		65		67,643
All Other Residential	—		—		—		—		13,002		13,002
Consumer
Motor Vehicle	—		—		331		—		281,134		281,465
All Other Consumer	—		—		25		—		24,391		24,416
TOTAL	$	1,092,587	$	47,868	$	74,699	$	569	$	620,251	$	1,835,974