NOTE

– LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of

March

31,

2017

and

December

31,

2016

is presented as follows:

	As of March 31,			As of December 31,
	2017			2016

C&I loans	$	851,578,347		$	827,637,263
CRE loans
Owner-occupied CRE		316,902,218			332,387,621
Commercial construction, land development, and other land		171,901,708			165,149,491
Other non owner-occupied CRE		618,037,795			595,921,748
		1,106,841,721			1,093,458,860

Direct financing leases *		159,368,425			165,419,360
Residential real estate loans **		231,325,899			229,233,104
Installment and other consumer loans		78,770,847			81,665,695
		2,427,885,239			2,397,414,282
Plus deferred loan/lease origination costs, net of fees		7,965,176			8,072,703
		2,435,850,415			2,405,486,985
Less allowance		(32,059,150	)		(30,757,448	)
	$	2,403,791,265		$	2,374,729,537


* Direct financing leases:
Net minimum lease payments to be received	$	177,088,295		$	184,274,802
Estimated unguaranteed residual values of leased assets		1,085,154			1,085,154
Unearned lease/residual income		(18,805,024	)		(19,940,596	)
		159,368,425			165,419,360
Plus deferred lease origination costs, net of fees		5,730,479			5,881,778
		165,098,904			171,301,138
Less allowance		(2,978,260	)		(3,111,898	)
	$	162,120,644		$	168,189,240

Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management’s expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The large majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal. There were

losses related to residual values for the

three

months ended

March

31,

2017

and

2016.

**Includes residential real estate loans h

eld for sale totaling

$1,051,000

and

$1,135,500

as of

March

31,

2017,

and

December

31,

2016,

respectively.

Changes in accretable yield for acquired loans were as follows:

	For the three months ended March 31, 2017
	PCI			Performing
	Loans			Loans			Total
Balance at the beginning of the period	$	(194,306	)	$	(9,115,614	)	$	(9,309,920	)
Accretion recognized		66,690			2,171,540			2,238,230
Balance at the end of the period	$	(127,616	)	$	(6,944,074	)	$	(7,071,690	)

The aging of the loan/lease portfolio by classe

s of loans/leases as of

March

31,

2017

and

December

31,

2016

is presented as follows:

	As of March 31, 2017
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total

C&I	$	846,264,365		$	108,148		$	165,831		$	575,066		$	4,464,937		$	851,578,347
CRE
Owner-Occupied CRE		316,508,674			61,156			-			240			332,148			316,902,218
Commercial Construction, Land Development, and Other Land		167,552,441			-			-			-			4,349,267			171,901,708
Other Non Owner-Occupied CRE		616,480,649			304,500			-			-			1,252,646			618,037,795
Direct Financing Leases		154,874,086			1,428,446			666,661			-			2,399,232			159,368,425
Residential Real Estate		228,282,091			1,587,945			-			255,942			1,199,921			231,325,899
Installment and Other Consumer		77,719,561			662,626			57,833			123,676			207,151			78,770,847
	$	2,407,681,867		$	4,152,821		$	890,325		$	954,924		$	14,205,302		$	2,427,885,239

As a percentage of total loan/lease portfolio		99.17	%		0.17	%		0.04	%		0.04	%		0.59	%		100.00	%

	As of December 31, 2016
Classes of Loans/Leases	Current			30-59 Days Past Due			60-89 Days Past Due			Accruing Past Due 90 Days or More			Nonaccrual Loans/Leases			Total

C&I	$	821,637,507		$	1,455,185		$	10,551		$	346,234		$	4,187,786		$	827,637,263
CRE
Owner-Occupied CRE		331,812,571			-			242,902			-			332,148			332,387,621
Commercial Construction, Land Development, and Other Land		160,760,034			35,638			-			-			4,353,819			165,149,491
Other Non Owner-Occupied CRE		594,384,926			100,673			-			-			1,436,149			595,921,748
Direct Financing Leases		161,452,627			730,627			574,700			215,225			2,446,181			165,419,360
Residential Real Estate		227,023,552			473,478			365,581			294,854			1,075,639			229,233,104
Installment and Other Consumer		81,199,766			204,973			63,111			110,501			87,344			81,665,695
	$	2,378,270,983		$	3,000,574		$	1,256,845		$	966,814		$	13,919,066		$	2,397,414,282

As a percentage of total loan/lease portfolio		99.20	%		0.13	%		0.05	%		0.04	%		0.58	%		100.00	%

NPLs

by classes of loans/leases as of

March

31,

2017

and

December

31,

2016

are presented as follows:

	As of March 31, 2017
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases *		Accruing TDRs		Total NPLs		Percentage of Total NPLs

C&I	$	575,066	$	4,464,937	$	4,766,131	$	9,806,134		45.85	%
CRE
Owner-Occupied CRE		240		332,148		-		332,388		1.55	%
Commercial Construction, Land Development, and Other Land		-		4,349,267		-		4,349,267		20.33	%
Other Non Owner-Occupied CRE		-		1,252,646		-		1,252,646		5.86	%
Direct Financing Leases		-		2,399,232		864,169		3,263,401		15.26	%
Residential Real Estate		255,942		1,199,921		580,853		2,036,716		9.52	%
Installment and Other Consumer		123,676		207,151		17,576		348,403		1.63	%
	$	954,924	$	14,205,302	$	6,228,729	$	21,388,955		100.00	%

*Nonaccrual loans/leases include

$2,444,944

of TDRs, including

$278,391

in C&I loans,

$1,353,634

in CRE loans,

$759,346

in direct financing leases,

$42,525

in residential real estate loans, and

$11,048

in installment loans.

	As of December 31, 2016
Classes of Loans/Leases	Accruing Past Due 90 Days or More		Nonaccrual Loans/Leases **		Accruing TDRs		Total NPLs		Percentage of Total NPLs

C&I	$	346,234	$	4,187,786	$	4,733,997		9,268,017		43.65	%
CRE
Owner-Occupied CRE		-		332,148		-		332,148		1.56	%
Commercial Construction, Land Development, and Other Land		-		4,353,819		-		4,353,819		20.51	%
Other Non Owner-Occupied CRE		-		1,436,149		-		1,436,149		6.77	%
Direct Financing Leases		215,225		2,446,181		1,008,244		3,669,650		17.28	%
Residential Real Estate		294,854		1,075,639		585,541		1,956,034		9.21	%
Installment and Other Consumer		110,501		87,344		18,746		216,591		1.02	%
	$	966,814	$	13,919,066	$	6,346,528	$	21,232,408		100.00	%

Nonaccrual loans/leases included

$2,300,479

of TDRs, including

$48,501

in C&I loans,

$1,380,047

in CRE loans,

$816,149

in direct financing leases,

$43,579

in residential real estate loans, and

$12,203

in installment loans.

Changes in the allowance by

portfolio segment for the

three

months ended

March

31,

2017

and

2016,

respectively, are presented as follows:

	Three Months Ended March 31, 2017
	C&I			CRE		Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Balance, beginning	$	12,545,110		$	11,670,609	$	3,111,898		$	2,342,344		$	1,087,487		$	30,757,448
Provisions (credits) charged to expense		593,359			966,271		505,015			43,520			(3,056	)		2,105,109
Loans/leases charged off		(218,273	)		-		(658,684	)		(13,623	)		(2,046	)		(892,626	)
Recoveries on loans/leases previously charged off		33,894			6,386		20,031			3,623			25,285			89,219
Balance, ending	$	12,954,090		$	12,643,266	$	2,978,260		$	2,375,864		$	1,107,670		$	32,059,150

	Three Months Ended March 31, 2016
	C&I			CRE		Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Balance, beginning	$	10,484,080		$	9,375,117	$	3,395,088		$	1,790,150		$	1,096,471		$	26,140,906
Provisions charged to expense		739,831			715,450		478,245			62,656			76,803			2,072,985
Loans/leases charged off		(243,566	)		-		(600,938	)		(16,184	)		(7,596	)		(868,284	)
Recoveries on loans/leases previously charged off		11,634			-		14,836			-			23,365			49,835
Balance, ending	$	10,991,979		$	10,090,567	$	3,287,231		$	1,836,622		$	1,189,043		$	27,395,442

The allowance by impairment evaluation and by portfolio

segment as of

March

31,

2017

and

December

31,

2016

is presented as follows:

	As of March 31, 2017
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Allowance for impaired loans/leases	$	1,751,774		$	888,445		$	795,840		$	274,566		$	37,932		$	3,748,557
Allowance for nonimpaired loans/leases		11,202,316			11,754,821			2,182,420			2,101,298			1,069,738			28,310,593
	$	12,954,090		$	12,643,266		$	2,978,260		$	2,375,864		$	1,107,670		$	32,059,150

Impaired loans/leases	$	9,188,454		$	5,924,061		$	3,082,068		$	1,780,774		$	224,727		$	20,200,084
Nonimpaired loans/leases		842,389,893			1,100,917,660			156,286,357			229,545,125			78,546,120			2,407,685,155
	$	851,578,347		$	1,106,841,721		$	159,368,425		$	231,325,899		$	78,770,847		$	2,427,885,239

Allowance as a percentage of impaired loans/leases		19.06	%		15.00	%		25.82	%		15.42	%		16.88	%		18.56	%
Allowance as a percentage of nonimpaired loans/leases		1.33	%		1.07	%		1.40	%		0.92	%		1.36	%		1.18	%
Total allowance as a percentage of total loans/leases		1.52	%		1.14	%		1.87	%		1.03	%		1.41	%		1.31	%

	As of December 31, 2016
	C&I			CRE			Direct Financing Leases			Residential Real Estate			Installment and Other Consumer			Total

Allowance for impaired loans/leases	$	1,771,537		$	693,919		$	848,919		$	289,112		$	39,481		$	3,642,968
Allowance for nonimpaired loans/leases		10,773,573			10,976,690			2,262,979			2,053,232			1,048,006			27,114,480
	$	12,545,110		$	11,670,609		$	3,111,898		$	2,342,344		$	1,087,487		$	30,757,448

Impaired loans/leases	$	8,936,451		$	6,112,114		$	3,256,264		$	1,661,180		$	106,090		$	20,072,099
Nonimpaired loans/leases		818,700,812			1,087,346,746			162,163,096			227,571,924			81,559,605			2,377,342,183
	$	827,637,263		$	1,093,458,860		$	165,419,360		$	229,233,104		$	81,665,695		$	2,397,414,282

Allowance as a percentage of impaired loans/leases		19.82	%		11.35	%		26.07	%		17.40	%		37.21	%		18.15	%
Allowance as a percentage of nonimpaired loans/leases		1.32	%		1.01	%		1.40	%		0.90	%		1.28	%		1.14	%
Total allowance as a percentage of total loans/leases		1.52	%		1.07	%		1.88	%		1.02	%		1.33	%		1.28	%

Information for impaired loans/leases is presented in the tables below. The recorded investment represents customer balances net of any partial charge-offs recognized on the loan/lease. The unpaid principal balance represents the recorded balance outstanding on the loan/lease prior to any partial charge-offs.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the

three

months ended

March

31,

2017

are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received

Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	835,955	$	846,392	$	-	$	927,387	$	7,352	$	7,352
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		1,174,260		1,174,260		-		1,183,813		-		-
Direct Financing Leases		1,593,104		1,593,104		-		1,868,355		18,895		18,895
Residential Real Estate		1,147,434		1,222,215		-		1,025,656		1,161		1,161
Installment and Other Consumer		175,957		175,957		-		115,846		-		-
	$	4,926,710	$	5,011,928	$	-	$	5,121,057	$	27,408	$	27,408

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	8,352,499	$	8,356,338	$	1,751,774	$	8,110,658	$	62,666	$	62,666
CRE
Owner-Occupied CRE		322,148		322,148		57,398		322,148		-		-
Commercial Construction, Land Development, and Other Land		4,349,267		4,349,267		823,061		4,351,542		-		-
Other Non Owner-Occupied CRE		78,386		78,386		7,986		39,193		-		-
Direct Financing Leases		1,488,964		1,488,964		795,840		1,300,811		-		-
Residential Real Estate		633,340		633,340		274,566		636,134		4,240		4,240
Installment and Other Consumer		48,770		48,770		37,932		49,563		112		112
	$	15,273,374	$	15,277,213	$	3,748,557	$	14,810,049	$	67,018	$	67,018

Total Impaired Loans/Leases:
C&I	$	9,188,454	$	9,202,730	$	1,751,774	$	9,038,045	$	70,018	$	70,018
CRE
Owner-Occupied CRE		322,148		322,148		57,398		322,148		-		-
Commercial Construction, Land Development, and Other Land		4,349,267		4,349,267		823,061		4,351,542		-		-
Other Non Owner-Occupied CRE		1,252,646		1,252,646		7,986		1,223,006		-		-
Direct Financing Leases		3,082,068		3,082,068		795,840		3,169,166		18,895		18,895
Residential Real Estate		1,780,774		1,855,555		274,566		1,661,790		5,401		5,401
Installment and Other Consumer		224,727		224,727		37,932		165,409		112		112
	$	20,200,084	$	20,289,141	$	3,748,557	$	19,931,106	$	94,426	$	94,426

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management

’s current estimates.

Loans/leases, by classes of financing receivable, considered to be impaired as of and for the

three

months ended

March

31,

2016

are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized for Cash Payments Received

Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	286,508	$	477,450	$	-	$	347,369	$	1,824	$	1,824
CRE
Owner-Occupied CRE		242,887		336,661		-		244,824		-		-
Commercial Construction, Land Development, and Other Land		-		-		-		-		-		-
Other Non Owner-Occupied CRE		1,512,198		1,512,198		-		1,545,334		-		-
Direct Financing Leases		1,314,779		1,314,779		-		1,176,588		11,603		11,603
Residential Real Estate		585,186		624,387		-		585,981		1,038		1,038
Installment and Other Consumer		47,480		47,480		-		212,392		-		-
	$	3,989,038	$	4,312,955	$	-	$	4,112,488	$	14,465	$	14,465

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	4,891,938	$	4,895,777	$	2,168,454	$	4,885,096	$	-	$	-
CRE
Owner-Occupied CRE		-		-		-		-		-		-
Commercial Construction, Land Development, and Other Land		191,366		203,366		82,296		192,585		-		-
Other Non Owner-Occupied CRE		-		-		-		-		-		-
Direct Financing Leases		938,267		938,267		483,193		800,606		-		-
Residential Real Estate		911,050		946,628		199,498		871,531		1,958		1,958
Installment and Other Consumer		402,120		402,120		246,413		306,279		1,500		1,500
	$	7,334,741	$	7,386,158	$	3,179,854	$	7,056,097	$	3,458	$	3,458

Total Impaired Loans/Leases:
C&I	$	5,178,446	$	5,373,227	$	2,168,454	$	5,232,465	$	1,824	$	1,824
CRE
Owner-Occupied CRE		242,887		336,661		-		244,824		-		-
Commercial Construction, Land Development, and Other Land		191,366		203,366		82,296		192,585		-		-
Other Non Owner-Occupied CRE		1,512,198		1,512,198		-		1,545,334		-		-
Direct Financing Leases		2,253,046		2,253,046		483,193		1,977,194		11,603		11,603
Residential Real Estate		1,496,236		1,571,015		199,498		1,457,512		2,996		2,996
Installment and Other Consumer		449,600		449,600		246,413		518,671		1,500		1,500
	$	11,323,779	$	11,699,113	$	3,179,854	$	11,168,585	$	17,923	$	17,923

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management

’s current estimates.

Loans/leases, by classes of financing receivable, considered to be impaired as of

December

31,

2016

are presented as follows:

Classes of Loans/Leases	Recorded Investment		Unpaid Principal Balance		Related Allowance

Impaired Loans/Leases with No Specific Allowance Recorded:
C&I	$	841,895	$	951,600	$	-
CRE
Owner-Occupied CRE		-		93,774		-
Commercial Construction, Land Development, and Other Land		-		-		-
Other Non Owner-Occupied CRE		1,196,549		1,196,549		-
Direct Financing Leases		1,690,121		1,690,121		-
Residential Real Estate		853,294		892,495		-
Installment and Other Consumer		55,734		55,734		-
	$	4,637,593	$	4,880,273	$	-

Impaired Loans/Leases with Specific Allowance Recorded:
C&I	$	8,094,556	$	8,098,395	$	1,771,537
CRE
Owner-Occupied CRE		322,148		322,148		57,398
Commercial Construction, Land Development, and Other Land		4,353,819		4,353,817		577,611
Other Non Owner-Occupied CRE		239,600		239,600		58,910
Direct Financing Leases		1,566,141		1,566,143		848,919
Residential Real Estate		807,886		882,018		289,112
Installment and Other Consumer		50,356		50,356		39,481
	$	15,434,506	$	15,512,477	$	3,642,968

Total Impaired Loans/Leases:
C&I	$	8,936,451	$	9,049,995	$	1,771,537
CRE
Owner-Occupied CRE		322,148		415,922		57,398
Commercial Construction, Land Development, and Other Land		4,353,819		4,353,817		577,611
Other Non Owner-Occupied CRE		1,436,149		1,436,149		58,910
Direct Financing Leases		3,256,262		3,256,264		848,919
Residential Real Estate		1,661,180		1,774,513		289,112
Installment and Other Consumer		106,090		106,090		39,481
	$	20,072,099	$	20,392,750	$	3,642,968

Impaired loans/leases for which no allowance has been provided have adequate collateral, based on management

’s current estimates.

For

C&I and CRE loans, the Company’s credit quality indicator consists of internally assigned risk ratings. Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every

months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

For direct financing leases, residential real estate loans, and installment and other consumer loans, the Company

’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

For each class of financing receivable, the following presents the recorded investment by credit quality indicator as of

March

31,

2017

and

December

31,

2016:

	As of March 31, 2017
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total

Pass (Ratings 1 through 5)	$	816,089,950	$	298,438,590	$	164,958,396	$	605,282,623	$	1,884,769,559		96.24	%
Special Mention (Rating 6)		7,820,608		8,839,425		1,780,000		4,400,764		22,840,797		1.17	%
Substandard (Rating 7)		27,667,789		9,624,203		5,163,312		8,354,408		50,809,712		2.59	%
Doubtful (Rating 8)		-		-		-		-		-		0.00	%
	$	851,578,347	$	316,902,218	$	171,901,708	$	618,037,795	$	1,958,420,068		100.00	%

	As of March 31, 2017
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total

Performing	$	156,105,024	$	229,289,183	$	78,422,444	$	463,816,651		98.80	%
Nonperforming		3,263,401		2,036,716		348,403		5,648,520		1.20	%
	$	159,368,425	$	231,325,899	$	78,770,847	$	469,465,171		100.00	%

	As of December 31, 2016
			CRE
					Non Owner-Occupied
Internally Assigned Risk Rating	C&I		Owner-Occupied CRE		Commercial Construction, Land Development, and Other Land		Other CRE		Total		As a % of Total

Pass (Ratings 1 through 5)	$	796,568,451	$	314,447,662	$	158,108,465	$	582,854,048	$	1,851,978,626		96.40	%
Special Mention (Rating 6)		6,305,772		7,559,380		1,780,000		4,437,122		20,082,274		1.05	%
Substandard (Rating 7)		24,763,040		10,380,369		5,261,026		8,630,578		49,035,013		2.55	%
Doubtful (Rating 8)		-		210		-		-		210		0.00	%
	$	827,637,263	$	332,387,621	$	165,149,491	$	595,921,748	$	1,921,096,123		100.00	%

	As of December 31, 2016
Delinquency Status *	Direct Financing Leases		Residential Real Estate		Installment and Other Consumer		Total		As a % of Total

Performing	$	161,749,710	$	227,277,070	$	81,449,104	$	470,475,884		98.77	%
Nonperforming		3,669,650		1,956,034		216,591		5,842,275		1.23	%
	$	165,419,360	$	229,233,104	$	81,665,695	$	476,318,159		100.00	%

*Performing = loans/leases accruing and less than

days past due. Nonperforming

= loans/leases on nonaccrual, accruing loans/leases that are greater than or equal to

days past due, and accruing TDRs.

As of

March

31,

2017

and

December

31,

2016,

TDRs totaled

$8,673,673

and

$8,647,007,

respectively.

For each class of financing receivable, the following presents the number and recorded investment of

TDRs, by type of concession, that were restructured during the

three

months ended

March

31,

2017

and

2016.

The difference between the pre-modification recorded investment and the post-modification recorded investment would be any partial charge-offs at the time of the restructuring.

	For the three months ended March 31, 2017								For the three months ended March 31, 2016
Classes of Loans/Leases	Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance		Number of Loans / Leases		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Specific Allowance

CONCESSION - Extension of Maturity
Direct Financing Leases		1	$	6,263	$	6,263	$	-		4	$	410,653	$	410,653	$	-
		1	$	6,263	$	6,263	$	-		4	$	410,653	$	410,653	$	-

CONCESSION - Significant Payment Delay
C&I		2	$	133,689	$	133,689	$	-		-	$	-	$	-	$	-
Direct Financing Leases		8		669,861		669,861		-		1		45,939		45,939		-
		10	$	803,550	$	803,550	$	-		1	$	45,939	$	45,939	$	-

TOTAL		11	$	809,813	$	809,813	$	-		5	$	456,592	$	456,592	$	-

Of the

TDRs reported above,

none

were on nonaccrual as of

March

31,

2017.

For the

three

months ended

March

31,

2017,

two

of the Company’s TDRs redefaulted within

months subsequent to restructure where default is defined as delinquency of

days or more and/or placement on nonaccrual status. These

two

TDRs were related to the same customer and were restructured in the

fourth

quarter of

2016

with pre-modification balances totaling

$195

thousand.

For the

three

month ended

March

31,

2016

none

of the Company’s TDRs had redefaulted within

months subsequent to restructure.