Loans and Allowance for Loan Losses | Loans and Allowance for Loan Losses Loans are stated at the principal amount outstanding net of unearned discounts, unearned income and allowance for loan losses. Unearned income includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at September 30, 2015 and December 31, 2014 follows (in thousands): September 30, December 31, Construction and land development $ 33,426 $ 21,627 Agricultural real estate 120,431 110,158 1-4 Family residential properties 234,273 179,886 Multifamily residential properties 54,961 53,129 Commercial real estate 378,665 380,173 Loans secured by real estate 821,756 744,973 Agricultural loans 65,520 68,225 Commercial and industrial loans 296,334 223,633 Consumer loans 44,041 15,118 All other loans 11,202 8,736 Gross loans 1,238,853 1,060,685 Less: Net deferred loan fees, premiums and discounts 3,450 237 Allowance for loan losses 14,228 13,682 Net loans $ 1,221,175 $ 1,046,766 Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at the lower of aggregate cost or market value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties. The balance of loans held for sale, excluded from the balances above, were $1,346,000 and $1,958,000 at September 30, 2015 and December 31, 2014 , respectively. Most of the Company’s business activities are with customers located within central Illinois. At September 30, 2015 , the Company’s loan portfolio included $186.0 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $154.8 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $7.5 million from $178.5 million at December 31, 2014 while loans concentrated in other grain farming decreased $0.3 million from $155.1 million at December 31, 2014 due to seasonal paydowns based upon timing of cash flow requirements. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, the Company has $60.5 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $106.9 million of loans to lessors of non-residential buildings and $68.0 million of loans to lessors of residential buildings and dwellings. The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the Board of Directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation; however, limits well below the regulatory thresholds are generally observed. The vast majority of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments. The Company’s lending can be summarized into the following primary areas: Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x . Amortization periods for commercial real estate loans are generally limited to twenty years . The Company’s commercial real estate portfolio is well below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators. Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years . Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government-assisted lending programs through the Small Business Administration and U.S. Department of Agriculture. Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 65% and have amortization periods limited to twenty five years . Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate. Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells the vast majority of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. The Company retains all residential real estate loans with balloon payment features. Balloon periods are limited to five years . Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty five years or less. The Company does not originate subprime mortgage loans. Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral. Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality. Allowance for Loan Losses The allowance for loan losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for loan losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for loan losses. In determining the adequacy of the allowance for loan losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Once identified, the magnitude of exposure to individual borrowers is quantified in the form of specific allocations of the allowance for loan losses. The Company considers collateral values and guarantees in the determination of such specific allocations. Additional factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for loan losses by separately evaluating large impaired loans, large adversely classified loans and nonimpaired loans. Impaired loans The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns. This evaluation considers expected future cash flows, the value of collateral and also other factors that may impact the borrower’s ability to make payments when due. For loans greater than $250,000 in the commercial, commercial real estate, agricultural, agricultural real estate segments, impairment is individually measured each quarter using one of three alternatives: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral do not justify the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs. Adversely classified loans A detailed analysis is also performed on each adversely classified (substandard or doubtful rated) borrower with an aggregate, outstanding balance greater than $250,000 . This analysis includes commercial, commercial real estate, agricultural, and agricultural real estate borrowers who are not currently identified as impaired but pose sufficient risk to warrant in-depth review. Estimated collateral shortfalls are then calculated with allocations for each loan segment based on the five-year historical average of collateral shortfalls adjusted for environmental factors including changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of credit risk associated with specific industries and markets. Because the economic and business climate in any given industry or market, and its impact on any given borrower, can change rapidly, the risk profile of the loan portfolio is periodically assessed and adjusted when appropriate. Consumer loans are evaluated for adverse classification based primarily on the Uniform Retail Credit Classification and Account Management Policy established by the federal banking regulators. Classification standards are generally based on delinquency status, collateral coverage, bankruptcy and the presence of fraud. Non-classified and Watch loans For loans, in all segments of the portfolio, that are considered to possess levels of risk commensurate with a pass rating, management establishes base loss estimations which are derived from historical loss experience. Use of a five-year historical loss period eliminates the effect of any significant losses that can be attributed to a single event or borrower during a given reporting period. The base loss estimations for each loan segment are adjusted after consideration of several environmental factors influencing the level of credit risk in the portfolio. In addition, loans rated as watch are further segregated in the commercial / commercial real estate and agricultural / agricultural real estate segments. These loans possess potential weaknesses that, if unchecked, may result in deterioration to the point of becoming a problem asset. Due to the elevated risk inherent in these loans, an allocation of twice the adjusted base loss estimation of the applicable loan segment is determined appropriate. Due to weakened economic conditions during recent years, the Company established allocations for each of the loan segments at levels above the base loss estimations. Some of the economic factors included the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices and increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve. The Company has not materially changed any aspect of its overall approach in the determination of the allowance for loan losses. However, on an on-going basis the Company continues to refine the methods used in determining management’s best estimate of the allowance for loan losses. The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method for the three and nine -months ended September 30, 2015 and 2014 and for the year ended December 31, 2014 (in thousands): Commercial/ Commercial Real Estate Agricultural/ Agricultural Real Estate Residential Real Estate Consumer Unallocated Total Three months ended September 30, 2015 Allowance for loan losses: Balance, beginning of period $ 11,294 $ 1,312 $ 731 $ 382 $ 212 $ 13,931 Provision charged to expense 84 84 97 305 (89 ) 481 Losses charged off (174 ) — (24 ) (72 ) — (270 ) Recoveries 47 — — 39 — 86 Balance, end of period $ 11,251 $ 1,396 $ 804 $ 654 $ 123 $ 14,228 Ending balance: Individually evaluated for impairment $ 148 $ — $ — $ 194 $ — $ 342 Collectively evaluated for impairment $ 11,103 $ 1,396 $ 804 $ 460 $ 123 $ 13,886 Three months ended September 30, 2014 Allowance for loan losses: Balance, beginning of period $ 10,771 $ 524 $ 757 $ 368 $ 1,261 $ 13,681 Provision charged to expense (267 ) 775 87 58 (609 ) 44 Losses charged off (22 ) — (30 ) (81 ) — (133 ) Recoveries 66 1 4 42 — 113 Balance, end of period $ 10,548 $ 1,300 $ 818 $ 387 $ 652 $ 13,705 Ending balance: Individually evaluated for impairment $ 293 $ — $ 14 $ — $ — $ 307 Collectively evaluated for impairment $ 10,255 $ 1,300 $ 804 $ 387 $ 652 $ 13,398 Nine months ended September 30, 2015 Allowance for loan losses: Balance, beginning of year $ 10,914 $ 1,360 $ 790 $ 386 $ 232 $ 13,682 Provision charged to expense 319 35 77 567 (109 ) 889 Losses charged off (245 ) — (64 ) (432 ) — (741 ) Recoveries 263 1 1 133 — 398 Balance, end of period $ 11,251 $ 1,396 $ 804 $ 654 $ 123 $ 14,228 Ending balance: Individually evaluated for impairment $ 148 $ — $ — $ 194 $ — $ 342 Collectively evaluated for impairment $ 11,103 $ 1,396 $ 804 $ 460 $ 123 $ 13,886 Loans: Ending balance $ 772,388 $ 185,275 $ 234,761 $ 44,325 $ — $ 1,236,749 Ending balance: Individually evaluated for impairment $ 1,248 $ — $ 411 $ 224 $ — $ 1,883 Collectively evaluated for impairment $ 771,140 $ 185,275 $ 234,350 $ 44,101 $ — $ 1,234,866 Commercial/ Commercial Real Estate Agricultural/ Agricultural Real Estate Residential Real Estate Consumer Unallocated Total Nine months ended September 30, 2014 Allowance for loan losses: Balance, beginning of year $ 10,646 $ 533 $ 771 $ 377 $ 922 $ 13,249 Provision charged to expense (192 ) 765 98 94 (270 ) 495 Losses charged off (54 ) — (75 ) (186 ) — (315 ) Recoveries 148 2 24 102 — 276 Balance, end of period $ 10,548 $ 1,300 $ 818 $ 387 $ 652 $ 13,705 Ending balance: Individually evaluated for impairment $ 293 $ — $ 14 $ — $ — $ 307 Collectively evaluated for impairment $ 10,255 $ 1,300 $ 804 $ 387 $ 652 $ 13,398 Loans: Ending balance $ 667,656 $ 169,309 $ 188,521 $ 15,522 $ — $ 1,041,008 Ending balance: Individually evaluated for impairment $ 3,473 $ — $ 225 $ — $ — $ 3,698 Collectively evaluated for impairment $ 664,183 $ 169,309 $ 188,296 $ 15,522 $ — $ 1,037,310 Year ended December 31, 2014 Allowance for loan losses: Balance, beginning of year $ 10,646 $ 533 $ 771 $ 377 $ 922 $ 13,249 Provision charged to expense 192 825 135 167 (690 ) 629 Losses charged off (86 ) — (140 ) (311 ) — (537 ) Recoveries 162 2 24 153 — 341 Balance, end of year $ 10,914 $ 1,360 $ 790 $ 386 $ 232 $ 13,682 Ending balance: Individually evaluated for impairment $ 263 $ — $ — $ — $ — $ 263 Collectively evaluated for impairment $ 10,651 $ 1,360 $ 790 $ 386 $ 232 $ 13,419 Loans: Ending balance $ 684,552 $ 178,091 $ 184,661 $ 15,102 $ — $ 1,062,406 Ending balance: Individually evaluated for impairment $ 3,301 $ — $ — $ — $ — $ 3,301 Collectively evaluated for impairment $ 681,251 $ 178,091 $ 184,661 $ 15,102 $ — $ 1,059,105 Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. Credit Quality The Company 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, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings: Watch. Loans classified as watch 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 sound-worthiness 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. Doubtful. 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 factors, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. The following tables present the credit risk profile of the Company’s loan portfolio based on rating category and payment activity as of September 30, 2015 and December 31, 2014 (in thousands): Construction & Land Development Agricultural Real Estate 1-4 Family Residential Properties Multifamily Residential Properties 2015 2014 2015 2014 2015 2014 2015 2014 Pass $ 33,241 $ 20,842 $ 115,928 $ 107,976 $ 229,991 $ 177,764 $ 54,363 $ 52,793 Watch — — 2,231 1,036 2,591 1,187 246 — Substandard 148 785 2,155 1,181 2,195 2,970 323 336 Doubtful — — — — — — — — Total $ 33,389 $ 21,627 $ 120,314 $ 110,193 $ 234,777 $ 181,921 $ 54,932 $ 53,129 Commercial Real Estate (Nonfarm/Nonresidential) Agricultural Loans Commercial & Industrial Loans Consumer Loans 2015 2014 2015 2014 2015 2014 2015 2014 Pass $ 355,085 $ 357,873 $ 64,298 $ 67,619 $ 289,991 $ 218,193 $ 43,031 $ 15,105 Watch 21,622 18,817 255 — 4,810 4,647 30 9 Substandard 1,199 2,914 1,043 679 534 940 243 4 Doubtful — — — — — — — — Total $ 377,906 $ 379,604 $ 65,596 $ 68,298 $ 295,335 $ 223,780 $ 43,304 $ 15,118 All Other Loans Total Loans 2015 2014 2015 2014 Pass $ 11,196 $ 8,736 $ 1,197,124 $ 1,026,901 Watch — — 31,785 25,696 Substandard — — 7,840 9,809 Doubtful — — — — Total $ 11,196 $ 8,736 $ 1,236,749 $ 1,062,406 The following table presents the Company’s loan portfolio aging analysis at September 30, 2015 and December 31, 2014 (in thousands): 30-59 days Past Due 60-89 days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Total Loans > 90 days & Accruing September 30, 2015 Construction and land development $ — $ — $ — $ — $ 33,389 $ 33,389 $ — Agricultural real estate — — 106 106 120,208 120,314 — 1-4 Family residential properties 980 534 103 1,617 233,160 234,777 — Multifamily residential properties — — — — 54,932 54,932 — Commercial real estate 77 185 527 789 377,117 377,906 — Loans secured by real estate 1,057 719 736 2,512 818,806 821,318 — Agricultural loans 10 222 — 232 65,364 65,596 — Commercial and industrial loans 409 191 127 727 294,608 295,335 — Consumer loans 112 14 5 131 43,173 43,304 — All other loans — — — — 11,196 11,196 — Total loans $ 1,588 $ 1,146 $ 868 $ 3,602 $ 1,233,147 $ 1,236,749 $ — December 31, 2014 Construction and land development $ 297 $ 25 $ — $ 322 $ 21,305 $ 21,627 $ — Agricultural real estate — — — — 110,193 110,193 — 1-4 Family residential properties 201 224 385 810 181,111 181,921 — Multifamily residential properties — — — — 53,129 53,129 — Commercial real estate 60 32 945 1,037 378,567 379,604 — Loans secured by real estate 558 281 1,330 2,169 744,305 746,474 — Agricultural loans 16 20 — 36 68,262 68,298 — Commercial and industrial loans 228 10 98 336 223,444 223,780 — Consumer loans 331 10 5 346 14,772 15,118 — All other loans — — — — 8,736 8,736 — Total loans $ 1,133 $ 321 $ 1,433 $ 2,887 $ 1,059,519 $ 1,062,406 $ — Impaired Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status. The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be troubled debt restructurings is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. The following tables present impaired loans as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 December 31, 2014 Recorded Balance Unpaid Principal Balance Specific Allowance Recorded Balance Unpaid Principal Balance Specific Allowance Loans with a specific allowance: Construction and land development $ 148 $ 713 $ 20 $ 785 $ 2,960 $ 43 Agricultural real estate — — — — — — 1-4 Family residential properties 411 411 — 67 134 — Multifamily residential properties 323 323 — — — — Commercial real estate 532 603 29 472 986 136 Loans secured by real estate 1,414 2,050 49 1,324 4,080 179 Agricultural loans — — — — — — Commercial and industrial loans 246 380 99 83 181 84 Consumer loans 223 223 194 — — — All other loans — — — — — — Total loans $ 1,883 $ 2,653 $ 342 $ 1,407 $ 4,261 $ 263 Loans without a specific allowance: Construction and land development $ — $ — $ — $ — $ — $ — Agricultural real estate 25 29 — 73 235 — 1-4 Family residential properties 742 1,067 — 1,156 2,866 — Multifamily residential properties — — — — — — Commercial real estate 242 242 — 1,640 3,808 — Loans secured by real estate 1,009 1,338 — 2,869 6,909 — Agricultural loans — — — — — — Commercial and industrial loans 599 762 — 249 933 — Consumer loans 20 29 — 15 60 — All other loans — — — — — — Total loans $ 1,628 $ 2,129 $ — $ 3,133 $ 7,902 $ — Total loans: Construction and land development $ 148 $ 713 $ 20 $ 785 $ 2,960 $ 43 Agricultural real estate 25 29 — 73 235 — 1-4 Family residential properties 1,153 1,478 — 1,223 3,000 — Multifamily residential properties 323 323 — — — — Commercial real estate 774 845 29 2,112 4,794 136 Loans secured by real estate 2,423 3,388 49 4,193 10,989 179 Agricultural loans — — — — — — Commercial and industrial loans 845 1,142 99 332 1,114 84 Consumer loans 243 252 194 15 60 — All other loans — — — — — — Total loans $ 3,511 $ 4,782 $ 342 $ 4,540 $ 12,163 $ 263 The following tables present average recorded investment and interest income recognized on impaired loans for the three and nine -month periods ended September 30, 2015 and 2014 (in thousands): For the three months ended September 30, 2015 September 30, 2014 Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Construction and land development $ 148 $ — $ 817 $ — Agricultural real estate 25 — 34 — 1-4 Family residential properties 1,160 2 1,129 5 Multifamily residential properties 326 — — — Commercial real estate 777 1 2,349 1 Loans secured by real estate 2,436 3 4,329 6 Commercial and industrial loans 1,157 3 653 — Consumer loans 296 1 35 — Total loans $ 3,889 $ 7 $ 5,017 $ 6 For the nine months ended September 30, 2015 September 30, 2014 Average Investment in Impaired Loans Interest Income Recognized Average Investment in Impaired Loans Interest Income Recognized Construction and land development $ 148 $ — $ 1,004 $ — Agricultural real estate 92 2 35 — 1-4 Family residential properties 1,197 11 1,156 12 Multifamily residential properties 328 — — — Commercial real estate 784 2 2,379 2 Loans secured by real estate 2,549 15 4,574 14 Commercial and industrial loans 1,293 6 696 — Consumer loans 308 2 39 1 Total loans $ 4,150 $ 23 $ 5,309 $ 15 The amount of interest income recognized by the Company within the periods stated above was due to loans modified in a troubled debt restructuring that remained on accrual status. The balance of loans modified in a troubled debt restructuring included in the impaired loans stated above that were still accruing was $0 of Farm loans, $339,000 of 1-4 Family residential properties, $36,000 of commercial real estate, $149,000 of commercial & industrial loans and $20,000 of consumer loans at September 30, 2015 and $345,000 of 1-4 family residential properties, $38,000 commercial real estate and $12,000 of consumer loans at September 30, 2014 . For the nine months ended September 30, 2015 and 2014 , the amount of interest income recognized using a cash-basis method of accounting during the period that the loans were impaired was not material. Non Accrual Loans The following table presents the Company’s recorded balance of nonaccrual loans as September 30, 2015 and December 31, 2014 (in thousands). This table excludes purchased impaired loans and performing troubled debt restructurings. September 30, December 31, Construction and land development $ 148 $ 785 Agricultural real estate 25 29 1-4 Family residential properties 814 878 Multifamily resident |