Loans | Loans The major classifications of loans follow: Aggregate Principal Amount December 31, 2016 December 31, 2015 Commercial $ 80,287 67,360 Agricultural & AGRE 49,121 50,121 Construction, land & development 28,771 26,016 Commercial RE 439,326 391,918 1-4 family mortgages 85,152 95,227 Consumer 3,118 2,905 Total Loans $ 685,775 633,547 Allowance for loan losses (8,904 ) (8,591 ) Loans, net $ 676,871 624,956 The Company sold three branches during 2016. Loans totaling $11.5 million had been identified to be included in this sale and had been excluded from the December 31, 2015 amounts in the table above. See Note 19 for further information. The credit quality indicator utilized by the Company to internally analyze the loan portfolio is the internal risk rating. Internal risk ratings of 0 to 5 are considered pass credits, a risk rating of a 6 is special mention, a risk rating of a 7 is substandard, and a risk rating of an 8 is doubtful. Loans classified as pass credits have no well defined weaknesses and are performing as agreed. 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. 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. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. 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. The following table presents the commercial loan portfolio by internal risk rating: December 31, 2016 Commercial Commercial Real Estate Internal Risk Rating Closed-end Lines of Credit Agriculture & AG RE Construction, Land & Development Owner- Occupied Non-Owner Occupied Total Pass $ 24,984 $ 53,256 $ 49,121 $ 28,652 $ 194,458 $ 236,423 $ 586,894 Special Mention 687 764 — — 1,390 3,824 6,665 Substandard 175 421 — 119 151 3,080 3,946 Doubtful — — — — — — — Total $ 25,846 $ 54,441 $ 49,121 $ 28,771 $ 195,999 $ 243,327 $ 597,505 December 31, 2015 Commercial Commercial Real Estate Internal Risk Rating Closed-end Lines of Credit Agriculture & AG RE Construction, Land & Development Owner- Occupied Non-Owner Occupied Total Pass $ 24,303 $ 42,374 $ 50,121 $ 25,825 $ 164,538 $ 203,679 $ 510,840 Special Mention 304 250 — 64 7,701 11,512 19,831 Substandard 129 — — 127 412 4,076 4,744 Doubtful — — — — — — — Total $ 24,736 $ 42,624 $ 50,121 $ 26,016 $ 172,651 $ 219,267 $ 535,415 The following table presents the retail residential loan portfolio by internal risk rating: Residential -- 1-4 family Senior Lien Jr. Lien & Lines of Credit Total December 31, 2016 Unrated $ 42,772 $ 37,561 $ 80,333 Special mention 89 13 102 Substandard 3,969 748 4,717 Doubtful — — — Total $ 46,830 $ 38,322 $ 85,152 Residential -- 1-4 family Senior Lien Jr. Lien & Lines of Credit Total December 31, 2015 Unrated $ 48,319 $ 41,380 $ 89,699 Special mention 4,011 168 4,179 Substandard 1,036 313 1,349 Doubtful — — — Total $ 53,366 $ 41,861 $ 95,227 The retail residential loan portfolio is generally unrated. Delinquency is a typical factor in adversely risk rating a credit to a special mention or substandard. An analysis of activity in the allowance for loan losses follows: Commercial Agriculture & AG RE Construction, Land & Development Commercial RE 1-4 Family Residential Consumer Total December 31, 2016 Beginning Balance $ 648 $ 97 $ 523 $ 5,681 $ 1,628 $ 14 $ 8,591 Charge-offs (38 ) — — (754 ) (237 ) (4 ) (1,033 ) Recoveries 252 86 32 540 133 3 1,046 Provision 369 (63 ) 90 (299 ) 212 (9 ) 300 Ending Balance $ 1,231 $ 120 $ 645 $ 5,168 $ 1,736 $ 4 $ 8,904 Commercial Agriculture & AG RE Construction, Land & Development Commercial RE 1-4 Family Residential Consumer Total December 31, 2015 Beginning Balance $ 1,117 $ 69 $ 711 $ 3,999 $ 2,075 $ 10 $ 7,981 Charge-offs (384 ) — (4 ) (702 ) (667 ) (6 ) (1,763 ) Recoveries 197 3 52 1,663 52 31 1,998 Provision (282 ) 25 (236 ) 721 168 (21 ) 375 Ending Balance $ 648 $ 97 $ 523 $ 5,681 $ 1,628 $ 14 $ 8,591 The following is an analysis on the balance in the allowance for loan losses and the recorded investment in impaired loans by portfolio segment based on impairment method as of December 31, 2016 and December 31, 2015 : December 31, 2016 Commercial Agriculture & AG RE Construction, Land & Development Commercial RE 1-4 Family Residential Consumer Total Allowance for loan losses: Loans individually evaluated for impairment $ 493 $ — $ 60 $ 92 $ 488 $ — $ 1,133 Loans collectively evaluated for impairment 738 120 585 5,076 1,248 4 7,771 Total ending allowance balance: $ 1,231 $ 120 $ 645 $ 5,168 $ 1,736 $ 4 $ 8,904 Loan balances: Loans individually evaluated for impairment $ 598 $ — $ 129 $ 451 $ 1,709 $ — $ 2,887 Loans collectively evaluated for impairment 79,689 49,121 28,642 438,875 83,443 3,118 682,888 Loans with an allowance recorded: $ 80,287 $ 49,121 $ 28,771 $ 439,326 $ 85,152 $ 3,118 $ 685,775 December 31, 2015 Commercial Agriculture & AG RE Construction, Land & Development Commercial RE 1-4 Family Residential Consumer Total Allowance for loan losses: Loans individually evaluated for impairment $ 80 $ — $ 10 $ 1,178 $ 325 $ 1 $ 1,594 Loans collectively evaluated for impairment 568 97 513 4,503 1,303 13 6,997 Total ending allowance balance: $ 648 $ 97 $ 523 $ 5,681 $ 1,628 $ 14 $ 8,591 Loan balances: Loans individually evaluated for impairment $ 129 $ — $ 127 $ 4,488 $ 1,348 $ 1 $ 6,093 Loans collectively evaluated for impairment 67,231 50,121 25,889 387,430 93,879 2,904 627,454 Loans with an allowance recorded: $ 67,360 $ 50,121 $ 26,016 $ 391,918 $ 95,227 $ 2,905 $ 633,547 Troubled Debt Restructurings: The Company had troubled debt restructurings (“TDRs”) of $0.15 million and $0.24 million as of December 31, 2016 and December 31, 2015 , respectively. Specific reserves were immaterial at December 31, 2016 and December 31, 2015 . At December 31, 2016 , nonaccrual TDR loans were $0.13 million , as compared to $0.24 million at December 31, 2015 . At December 31, 2016 there were $0.02 million of loans on accrual status, while there were none on accrual status at December 31, 2015 . The Company had no commitments to lend additional amounts to a customer with an outstanding loan that is classified as TDR as of December 31, 2016 and December 31, 2015 . In the course of a year the terms of certain loans may be modified as troubled debt restructurings. The modification of the terms of such loans may include one or a combination of the following: a reduction of the stated interest rate of the loan to a below market rate or the payment modification to interest only. A modification involving a reduction of the stated interest rate of the loan would be for periods ranging from 6 months to 16 months . During the year ended December 31, 2016 , there was one TDR loan added in the amount of $0.02 million compared to the year ended December 31, 2015 in which three loans were added as TDRs in the amount of $0.2 million . The following tables present loans by class modified as troubled debt restructurings that occurred during the years ending December 31, 2016 and 2015 : For the Twelve Months Ended December 31, 2016 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment 1-4 family residential Senior lien 1 $ 20 $ 20 Total 1 $ 20 $ 20 The troubled debt restructurings described above did not have a material impact to the allowance for loan losses and did not result in any additional charge-off’s during the year ended December 31, 2016 . For the Twelve Months Ended December 31, 2015 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment 1-4 family residential Senior lien 3 $ 241 $ 241 Total 3 $ 241 $ 241 The troubled debt restructurings described above did not have a material impact to the allowance for loan losses and did not result in any additional charge-off’s during the year ended December 31, 2015 . A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In the years ended December 31, 2016 and December 31, 2015 there were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification. The Company evaluates loan modifications to determine if the modification constitutes a troubled debt restructure. A loan modification constitutes a troubled debt restructure if the borrower is experiencing financial difficulty and the Company grants a concession it would not otherwise consider. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its loans with the Company’s debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting guidelines. TDRs are separately identified for impairment disclosures. If a loan is considered to be collateral dependent loan, the TDR is reported, net, at the fair value of the collateral. The following tables present data on impaired loans: December 31, 2016 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Cash Basis Interest Recognized Loans with no related allowance recorded: Commercial Closed-end $ — $ — $ — $ — $ — $ — Line of credit — — — — — — Agricultural & AG RE — — — 85 — — Construction, land & development 57 235 — 19 — — CRE - all other Owner occupied 134 134 — 9 7 9 Non-owner occupied — — — — — — 1-4 family residential Senior lien 331 349 — 180 — — Jr. lien & lines of credit 433 433 — 116 7 7 Consumer — — — — — — Subtotal 955 1,151 — 409 14 16 Loans with an allowance recorded: Commercial Closed-end $ 175 $ 175 $ 110 $ 135 $ 4 $ 4 Line of credit 423 422 383 293 26 25 Agricultural & AG RE — — — 80 — — Construction, land & development 72 72 60 84 4 1 CRE - all other Owner occupied 17 17 17 313 — — Non-owner occupied 300 300 75 1,110 — — 1-4 family residential Senior lien 629 629 298 862 19 19 Jr. lien & lines of credit 316 316 190 349 14 14 Consumer — — — 1 — — Subtotal 1,932 1,931 1,133 3,227 67 63 Total $ 2,887 $ 3,082 $ 1,133 $ 3,636 $ 81 $ 79 December 31, 2015 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Cash Basis Interest Recognized Loans with no related allowance recorded: Commercial Closed-end $ 2 $ 2 $ — $ 15 $ 1 $ 1 Line of credit — — — — — — Agricultural & AG RE — — — — — — Construction, land & development — — — 299 — — CRE - all other Owner occupied 6 6 — 78 — — Non-owner occupied — — — — — — 1-4 family residential Senior lien 176 176 — 277 — — Jr. lien & lines of credit 71 71 — 88 3 3 Consumer — — — — — — Subtotal 255 255 — 757 4 4 Loans with an allowance recorded: Commercial Closed-end $ 127 $ 127 $ 80 $ 199 $ 2 $ 2 Line of credit — — — — — — Agricultural & AG RE — — — — — — Construction, land & development 127 419 10 120 — — CRE - all other Owner occupied 406 541 100 586 11 9 Non-owner occupied 4,076 4,955 1,078 4,101 17 17 1-4 family residential Senior lien 859 984 215 1,003 14 10 Jr. lien & lines of credit 242 242 110 230 5 5 Consumer 1 — 1 — — — Subtotal 5,838 7,268 1,594 6,239 49 43 Total $ 6,093 $ 7,523 $ 1,594 $ 6,996 $ 53 $ 47 The Company determined that there were $1.3 million of loans that were classified as impaired but were considered to be performing (i.e., loans which are accruing interest) loans at December 31, 2016 compared to $0.1 million at December 31, 2015 . The following table represents activity related to loan portfolio aging: December 31, 2016 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days Past Due or Nonaccrual Total Past Due Current Total Loans Commercial Closed-end $ 20 $ — $ 122 $ 142 $ 25,704 $ 25,846 Line of credit — — — — 54,441 54,441 Agricultural & AG RE — — — — 49,121 49,121 Construction, land & development 133 — 57 190 28,581 28,771 CRE - all other Owner occupied — — 151 151 195,848 195,999 Non-owner occupied 588 — — 588 242,739 243,327 1-4 family residential Senior lien 664 152 577 1,393 45,437 46,830 Jr. lien & lines of credit 432 19 705 1,156 37,166 38,322 Consumer — — — — 3,118 3,118 Total $ 1,837 $ 171 $ 1,612 $ 3,620 $ 682,155 $ 685,775 December 31, 2015 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days Past Due or Nonaccrual Total Past Due Current Total Loans Commercial Closed-end $ 58 $ — $ 130 $ 188 $ 24,548 $ 24,736 Line of credit — — — — 42,624 42,624 Agricultural & AG RE — — — — 50,121 50,121 Construction, land & development — — 127 127 25,889 26,016 CRE - all other Owner occupied 985 — 412 1,397 171,254 172,651 Non-owner occupied — — 4,076 4,076 215,191 219,267 1-4 family residential Senior lien 1,481 21 994 2,496 50,870 53,366 Jr. lien & lines of credit 230 258 268 756 41,105 41,861 Consumer 1 1 — 2 2,903 2,905 Total $ 2,755 $ 280 $ 6,007 $ 9,042 $ 624,505 $ 633,547 Nonperforming loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. There were no loans past due over 90 days and still accruing interest at the years ending December 31, 2016 and December 31, 2015 . Loans made to executive officers, directors, and their affiliates during 2016 were as follows: Beginning balance $ 46 New loans, extensions, and modification 343 Repayments (17 ) Effect of changes in composition of related parties — Ending balance $ 372 |