Loans | Loans Classes of loans are as follows: September 30, December 31, (Amounts In Thousands) Agricultural $ 79,155 $ 88,580 Commercial and financial 214,681 218,632 Real estate: Construction, 1 to 4 family residential 65,932 69,738 Construction, land development and commercial 106,012 109,595 Mortgage, farmland 230,032 215,286 Mortgage, 1 to 4 family first liens 899,937 831,591 Mortgage, 1 to 4 family junior liens 149,312 144,200 Mortgage, multi-family 347,660 336,810 Mortgage, commercial 381,966 361,196 Loans to individuals 27,946 26,417 Obligations of state and political subdivisions 53,149 57,626 $ 2,555,782 $ 2,459,671 Net unamortized fees and costs 948 894 $ 2,556,730 $ 2,460,565 Less allowance for loan losses 31,010 29,400 $ 2,525,720 $ 2,431,165 Changes in the allowance for loan losses, the allowance for loan losses applicable to impaired loans and the related loan balance of impaired loans for the three and nine months ended September 30, 2018 were as follows: Three Months Ended September 30, 2018 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,071 $ 5,040 $ 3,054 $ 3,475 $ 8,902 $ 5,697 $ 1,271 $ 29,510 Charge-offs (68 ) (241 ) — — (280 ) (107 ) (197 ) (893 ) Recoveries 74 415 2 10 187 80 32 800 Provision (47 ) (133 ) (188 ) 50 1,756 193 (38 ) 1,593 Ending balance $ 2,030 $ 5,081 $ 2,868 $ 3,535 $ 10,565 $ 5,863 $ 1,068 $ 31,010 Nine Months Ended September 30, 2018 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,294 $ 4,837 $ 2,989 $ 3,669 $ 8,668 $ 5,700 $ 1,243 $ 29,400 Charge-offs (72 ) (447 ) — — (607 ) (161 ) (420 ) (1,707 ) Recoveries 102 856 147 29 433 97 114 1,778 Provision (294 ) (165 ) (268 ) (163 ) 2,071 227 131 1,539 Ending balance $ 2,030 $ 5,081 $ 2,868 $ 3,535 $ 10,565 $ 5,863 $ 1,068 $ 31,010 Ending balance, individually evaluated for impairment $ 118 $ 1,165 $ 3 $ — $ 91 $ 40 $ 48 $ 1,465 Ending balance, collectively evaluated for impairment $ 1,912 $ 3,916 $ 2,865 $ 3,535 $ 10,474 $ 5,823 $ 1,020 $ 29,545 Loans: Ending balance $ 79,155 $ 214,681 $ 171,944 $ 230,032 $ 1,049,249 $ 729,626 $ 81,095 $ 2,555,782 Ending balance, individually evaluated for impairment $ 2,342 $ 3,288 $ 927 $ 3,729 $ 6,728 $ 8,217 $ 48 $ 25,279 Ending balance, collectively evaluated for impairment $ 76,813 $ 211,393 $ 171,017 $ 226,303 $ 1,042,521 $ 721,409 $ 81,047 $ 2,530,503 Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 were as follows: Three Months Ended September 30, 2017 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,341 $ 4,586 $ 3,165 $ 4,009 $ 8,340 $ 5,414 $ 1,095 $ 28,950 Charge-offs (27 ) (21 ) — (3 ) (55 ) (86 ) (113 ) (305 ) Recoveries 56 219 33 — 203 7 57 575 Provision 92 (43 ) (182 ) 2 98 107 56 130 Ending balance $ 2,462 $ 4,741 $ 3,016 $ 4,008 $ 8,586 $ 5,442 $ 1,095 $ 29,350 Nine Months Ended September 30, 2017 Agricultural Commercial and Financial Real Estate: Construction and land development Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family Real Estate: Mortgage, multi- family and commercial Other Total (Amounts In Thousands) Allowance for loan losses: Beginning balance $ 2,947 $ 4,531 $ 2,890 $ 3,417 $ 7,677 $ 4,045 $ 1,023 $ 26,530 Charge-offs (66 ) (478 ) (114 ) (3 ) (263 ) (130 ) (410 ) (1,464 ) Recoveries 123 882 443 — 570 236 203 2,457 Provision (542 ) (194 ) (203 ) 594 602 1,291 279 1,827 Ending balance $ 2,462 $ 4,741 $ 3,016 $ 4,008 $ 8,586 $ 5,442 $ 1,095 $ 29,350 Ending balance, individually evaluated for impairment $ 653 $ 913 $ 46 $ 784 $ 110 $ 409 $ 85 $ 3,000 Ending balance, collectively evaluated for impairment $ 1,809 $ 3,828 $ 2,970 $ 3,224 $ 8,476 $ 5,033 $ 1,010 $ 26,350 Loans: Ending balance $ 76,484 $ 214,199 $ 180,574 $ 208,982 $ 960,800 $ 694,771 $ 84,084 $ 2,419,894 Ending balance, individually evaluated for impairment $ 6,181 $ 2,985 $ 1,161 $ 8,179 $ 7,097 $ 8,097 $ 85 $ 33,785 Ending balance, collectively evaluated for impairment $ 70,303 $ 211,214 $ 179,413 $ 200,803 $ 953,703 $ 686,674 $ 83,999 $ 2,386,109 The following table presents the credit quality indicators by type of loans in each category as of September 30, 2018 and December 31, 2017 , respectively (amounts in thousands): Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial September 30, 2018 Grade: Excellent $ 2,466 $ 2,858 $ — $ 393 Good 13,521 46,227 11,782 22,648 Satisfactory 37,824 118,659 39,457 57,043 Monitor 19,630 33,612 13,516 24,687 Special Mention 901 7,095 782 178 Substandard 4,813 6,230 395 1,063 Total $ 79,155 $ 214,681 $ 65,932 $ 106,012 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi- family September 30, 2018 Grade: Excellent $ 3,700 $ 2,360 $ 524 $ 22,139 Good 52,301 33,045 3,931 70,444 Satisfactory 123,898 741,877 136,420 176,519 Monitor 36,890 91,612 4,930 59,380 Special Mention 3,983 11,031 1,549 12,910 Substandard 9,260 20,012 1,958 6,268 Total $ 230,032 $ 899,937 $ 149,312 $ 347,660 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total September 30, 2018 Grade: Excellent $ 34,798 $ — $ 8,329 $ 77,567 Good 92,947 119 15,623 362,588 Satisfactory 181,337 26,800 18,522 1,658,356 Monitor 58,165 705 10,675 353,802 Special Mention 10,842 206 — 49,477 Substandard 3,877 116 — 53,992 Total $ 381,966 $ 27,946 $ 53,149 $ 2,555,782 Agricultural Commercial and Financial Real Estate: Construction, 1 to 4 family residential Real Estate: Construction, land development and commercial December 31, 2017 Grade: Excellent $ 2,585 $ 10,264 $ — $ 2,548 Good 15,755 51,620 4,710 27,296 Satisfactory 40,886 116,375 47,995 35,749 Monitor 17,009 29,392 15,188 39,760 Special Mention 6,898 5,576 1,845 3,358 Substandard 5,447 5,405 — 884 Total $ 88,580 $ 218,632 $ 69,738 $ 109,595 Real Estate: Mortgage, farmland Real Estate: Mortgage, 1 to 4 family first liens Real Estate: Mortgage, 1 to 4 family junior liens Real Estate: Mortgage, multi- family December 31, 2017 Grade: Excellent $ 4,751 $ 2,392 $ 489 $ 16,564 Good 54,409 30,094 4,527 75,768 Satisfactory 109,724 689,645 130,451 195,652 Monitor 32,655 76,766 4,881 42,373 Special Mention 5,306 12,072 1,834 — Substandard 8,441 20,622 2,018 6,453 Total $ 215,286 $ 831,591 $ 144,200 $ 336,810 Real Estate: Mortgage, commercial Loans to individuals Obligations of state and political subdivisions Total December 31, 2017 Grade: Excellent $ 30,355 $ 1 $ 8,794 $ 78,743 Good 98,434 118 30,607 393,338 Satisfactory 179,417 25,445 14,693 1,586,032 Monitor 43,786 500 3,532 305,842 Special Mention 6,303 182 — 43,374 Substandard 2,901 171 — 52,342 Total $ 361,196 $ 26,417 $ 57,626 $ 2,459,671 The below are descriptions of the credit quality indicators: Excellent – Excellent rated loans are prime quality loans covered by highly liquid collateral with generous margins or supported by superior current financial conditions reflecting substantial net worth, relative to total credit extended, and based on assets of a stable and non-speculative nature whose values can be readily verified. Identified repayment source or cash flow is abundant and assured. Good – Good rated loans are adequately secured by readily marketable collateral or good financial condition characterized by liquidity, flexibility and sound net worth. Loans are supported by sound primary and secondary payment sources and timely and accurate financial information. Satisfactory – Satisfactory rated loans are loans to borrowers of average financial means not especially vulnerable to changes in economic or other circumstances, where the major support for the extension is sufficient collateral of a marketable nature, and the primary source of repayment is seen to be clear and adequate. Monitor – Monitor rated loans are identified by management as warranting special attention for a variety of reasons that may bear on ultimate collectability. This may be due to adverse trends, a particular industry, loan structure, or repayment that is dependent on projections, or a one-time occurrence. Special Mention – Special mention rated loans are supported by a marginal payment capacity and are marginally protected by collateral. There are identified weaknesses that if not monitored and corrected may adversely affect the Company’s credit position. A special mention credit would typically have a weakness in one of the general categories (cash flow, collateral position or payment history) but not in all categories. Substandard – Substandard loans are not adequately supported by the paying capacity of the borrower and may be inadequately collateralized. These loans have a well-defined weakness or weaknesses. For these loans, it is more probable than not that the Company could sustain some loss if the deficiency(ies) is not corrected. Past due loans as of September 30, 2018 and December 31, 2017 were as follows: 30 - 59 Days Past Due 60 - 89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Accruing Loans Past Due 90 Days or More (Amounts In Thousands) September 30, 2018 Agricultural $ 474 $ 84 $ 158 $ 716 $ 78,439 $ 79,155 $ — Commercial and financial 991 545 — 1,536 213,145 214,681 — Real estate: Construction, 1 to 4 family residential 566 437 — 1,003 64,929 65,932 — Construction, land development and commercial 458 — — 458 105,554 106,012 — Mortgage, farmland 240 751 — 991 229,041 230,032 — Mortgage, 1 to 4 family first liens 780 2,225 2,604 5,609 894,328 899,937 338 Mortgage, 1 to 4 family junior liens 59 88 — 147 149,165 149,312 — Mortgage, multi-family — 152 — 152 347,508 347,660 — Mortgage, commercial 135 349 — 484 381,482 381,966 — Loans to individuals 149 53 1 203 27,743 27,946 — Obligations of state and political subdivisions — — — — 53,149 53,149 — $ 3,852 $ 4,684 $ 2,763 $ 11,299 $ 2,544,483 $ 2,555,782 $ 338 December 31, 2017 Agricultural $ 324 $ — $ 269 $ 593 $ 87,987 $ 88,580 $ — Commercial and financial 447 20 93 560 218,072 218,632 — Real estate: Construction, 1 to 4 family residential — — — — 69,738 69,738 — Construction, land development and commercial 246 — — 246 $ 109,349 109,595 — Mortgage, farmland 269 — — 269 215,017 215,286 — Mortgage, 1 to 4 family first liens 5,143 1,750 2,939 9,832 $ 821,759 831,591 971 Mortgage, 1 to 4 family junior liens 579 116 — 695 143,505 144,200 — Mortgage, multi-family — — — — $ 336,810 336,810 — Mortgage, commercial 307 178 16 501 360,695 361,196 — Loans to individuals 206 55 6 267 $ 26,150 26,417 — Obligations of state and political subdivisions — — — — 57,626 57,626 — $ 7,521 $ 2,119 $ 3,323 $ 12,963 $ 2,446,708 $ 2,459,671 $ 971 The Company does not have a material amount of loans that are past due less than 90 days where there are serious doubts as to the ability of the borrowers to comply with the loan repayment terms. Certain impaired loan information by loan type at September 30, 2018 and December 31, 2017 , was as follows: September 30, 2018 December 31, 2017 Non-accrual loans (1) Accruing loans past due 90 days or more TDR loans Non- accrual loans (1) Accruing loans past due 90 days or more TDR loans (Amounts In Thousands) (Amounts In Thousands) Agricultural $ 1,401 $ — $ 72 $ 1,651 $ — $ 2,309 Commercial and financial 489 — 1,845 825 — 1,943 Real estate: Construction, 1 to 4 family residential — — — — — — Construction, land development and commercial — — 330 — — 339 Mortgage, farmland 1,167 — 3,313 1,391 — 1,451 Mortgage, 1 to 4 family first liens 5,064 338 1,302 4,407 971 1,357 Mortgage, 1 to 4 family junior liens — — 25 7 — 25 Mortgage, multi-family 152 — — 218 — — Mortgage, commercial 1,049 — 948 597 — 1,046 $ 9,322 $ 338 $ 7,835 $ 9,096 $ 971 $ 8,470 (1) There were $4.15 million and $3.62 million of TDR loans included within nonaccrual loans as of September 30, 2018 and December 31, 2017 , respectively. Loans 90 days or more past due that are still accruing interest decreased $0.63 million from December 31, 2017 to September 30, 2018 due to a decrease in the number of accruing loans past due 90 days or more and a decrease in the average accruing balance of loans past due greater than 90 days. As of September 30, 2018 there were 3 accruing loans past due 90 days or more. The average accruing loans past due as of September 30, 2018 are $0.11 million . There were 8 accruing loans past due 90 days or more as of December 31, 2017 and the average loan balance was $0.12 million . The accruing loans past due 90 days or more balances are believed to be adequately collateralized and the Company expects to collect all principal and interest as contractually due under these loans. The Company may modify the terms of a loan to maximize the collection of amounts due. Such a modification is considered a troubled debt restructuring (“TDR”). In most cases, the modification is either a reduction in interest rate, conversion to interest only payments or an extension of the maturity date. The borrower is experiencing financial difficulties or is expected to experience difficulties in the near-term, so a concessionary modification is granted to the borrower that would otherwise not be considered. TDR loans accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance at a level commensurate with the modified terms over several payment cycles. Below is a summary of information for TDR loans as of September 30, 2018 and December 31, 2017 : September 30, 2018 December 31, 2017 Number of contracts Recorded investment Commitments outstanding Number of contracts Recorded investment Commitments outstanding (Amounts In Thousands) (Amounts In Thousands) Agricultural 4 $ 1,306 $ 582 9 $ 3,628 $ 321 Commercial and financial 13 2,269 85 14 2,575 169 Real estate: Construction, 1 to 4 family residential — — — — — 16 Construction, land development and commercial 2 330 — 2 339 — Mortgage, farmland 8 4,407 — 7 2,761 — Mortgage, 1 to 4 family first liens 17 1,760 — 13 1,442 — Mortgage, 1 to 4 family junior liens 1 25 — 1 25 24 Mortgage, multi-family — — — — — — Mortgage, commercial 9 1,885 — 8 1,324 — Loans to individuals — — — — — — 54 $ 11,982 $ 667 54 $ 12,094 $ 530 The following is a summary of TDR loans that were modified during the three and nine months ended September 30, 2018 : Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Number of contracts Pre-modification recorded investment Post-modification recorded investment Number of contracts Pre-modification recorded investment Post-modification recorded investment (Amounts In Thousands) (Amounts In Thousands) Agricultural — $ — $ — — $ — $ — Commercial and financial 2 80 80 4 541 541 Real estate: Construction, 1 to 4 family residential — — — — — — Construction, land development and commercial — — — — — — Mortgage, farmland — — — 2 4,944 4,944 Mortgage, 1 to 4 family first lien — — — 6 627 627 Mortgage, 1 to 4 family junior liens — — — — — — Mortgage, multi-family — — — — — — Mortgage, commercial 1 578 578 2 852 852 3 $ 658 $ 658 14 $ 6,964 $ 6,964 The Company had commitments to lend $0.67 million in additional borrowings to restructured loan customers as of September 30, 2018 . The Company had commitments to lend $0.53 million in additional borrowings to restructured loan customers as of December 31, 2017 . These commitments were in the normal course of business. The additional borrowings were not used to facilitate payments on these loans. There were no TDR loans that were in payment default (defined as past due 90 days or more) during the period ended September 30, 2018 and none for the year ended December 31, 2017 . Information regarding impaired loans as of and for the three and nine months ended September 30, 2018 is as follows: September 30, 2018 Three Months Ended Nine Months Ended September 30, 2018 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: (Amounts In Thousands) Agricultural $ 2,224 $ 2,525 $ — $ 2,850 $ 15 $ 1,905 $ 14 Commercial and financial 1,515 2,208 — 1,633 14 1,781 44 Real estate: Construction, 1 to 4 family residential 111 148 — 111 1 113 4 Construction, land development and commercial 330 347 — 331 3 334 10 Mortgage, farmland 3,729 4,147 — 3,744 32 3,126 67 Mortgage, 1 to 4 family first liens 5,562 7,162 — 5,708 10 5,827 29 Mortgage, 1 to 4 family junior liens — 256 — — — — — Mortgage, multi-family 152 218 — 153 — 156 — Mortgage, commercial 1,922 2,510 — 2,041 10 1,965 32 Loans to individuals — 14 — — — — — $ 15,545 $ 19,535 $ — $ 16,571 $ 85 $ 15,207 $ 200 With an allowance recorded: Agricultural $ 118 $ 118 $ 118 $ 118 $ 2 $ 184 $ 8 Commercial and financial 1,773 1,873 1,165 1,821 22 2,028 74 Real estate: Construction, 1 to 4 family residential — — — — — — — Construction, land development and commercial 486 486 3 492 6 495 17 Mortgage, farmland — — — — — — — Mortgage, 1 to 4 family first liens 1,142 1,198 88 1,147 10 1,169 30 Mortgage, 1 to 4 family junior liens 24 24 3 25 — 25 1 Mortgage, multi-family 6,067 6,067 39 6,083 69 6,123 207 Mortgage, commercial 76 76 1 76 1 77 3 Loans to individuals 48 48 48 54 2 66 6 $ 9,734 $ 9,890 $ 1,465 $ 9,816 $ 112 $ 10,167 $ 346 Total: Agricultural $ 2,342 $ 2,643 $ 118 $ 2,968 $ 17 $ 2,089 $ 22 Commercial and financial 3,288 4,081 1,165 3,454 36 3,809 118 Real estate: Construction, 1 to 4 family residential 111 148 — 111 1 113 4 Construction, land development and commercial 816 833 3 823 9 829 27 Mortgage, farmland 3,729 4,147 — 3,744 32 3,126 67 Mortgage, 1 to 4 family first liens 6,704 8,360 88 6,855 20 6,996 59 Mortgage, 1 to 4 family junior liens 24 280 3 25 — 25 1 Mortgage, multi-family 6,219 6,285 39 6,236 69 6,279 207 Mortgage, commercial 1,998 2,586 1 2,117 11 2,042 35 Loans to individuals 48 62 48 54 2 66 6 $ 25,279 $ 29,425 $ 1,465 $ 26,387 $ 197 $ 25,374 $ 546 Information regarding impaired loans as of December 31, 2017 is as follows: Recorded Investment Unpaid Principal Balance Related Allowance With no related allowance recorded: (Amounts In Thousands) Agricultural $ 1,822 $ 2,193 $ — Commercial and financial 1,725 2,487 — Real estate: Construction, 1 to 4 family residential 114 150 — Construction, land development and commercial 338 371 — Mortgage, farmland 2,523 2,902 — Mortgage, 1 to 4 family first liens 6,045 7,507 — Mortgage, 1 to 4 family junior liens 7 482 — Mortgage, multi-family 218 355 — Mortgage, commercial 1,564 2,274 — Loans to individuals — 14 — $ 14,356 $ 18,735 $ — With an allowance recorded: Agricultural $ 3,094 $ 3,149 $ 133 Commercial and financial 1,043 1,043 1,018 Real estate: Construction, 1 to 4 family residential — — — Construction, land development and commercial 505 505 39 Mortgage, farmland 5,439 5,439 238 Mortgage, 1 to 4 family first liens 577 593 63 Mortgage, 1 to 4 family junior liens 25 25 3 Mortgage, multi-family 6,179 6,179 480 Mortgage, commercial 79 79 2 Loans to individuals 190 190 190 $ 17,131 $ 17,202 $ 2,166 Total: Agricultural $ 4,916 $ 5,342 $ 133 Commercial and financial 2,768 3,530 1,018 Real estate: Construction, 1 to 4 family residential 114 150 — Construction, land development and commercial 843 876 39 Mortgage, farmland 7,962 8,341 238 Mortgage, 1 to 4 family first liens 6,622 8,100 63 Mortgage, 1 to 4 family junior liens 32 507 3 Mortgage, multi-family 6,397 6,534 480 Mortgage, commercial 1,643 2,353 2 Loans to individuals 190 204 190 $ 31,487 $ 35,937 $ 2,166 Impaired loans decreased $6.21 million from December 31, 2017 to September 30, 2018 . Impaired loans include any loan that has been placed on nonaccrual status, accruing loans past due 90 days or more and TDR loans. Impaired loans also include loans that, based on management’s evaluation of current information and events, the Company expects to be unable to collect in full according to the contractual terms of the original loan agreement. Impaired loans were 0.99% of loans held for investment as of September 30, 2018 and 1.28% as of December 31, 2017 . The decrease in impaired loans is due mainly to a decrease of $7.40 million in relationships with a specific allowance for losses, a $0.63 million decrease in 90 days or more accruing loans and a decrease in TDR loans of $0.11 million , and is offset by an increase in impaired loans without a specific allowance for losses of $1.19 million and an increase in nonaccrual loans of $0.23 million from December 31, 2017 to September 30, 2018 . The Company regularly reviews a substantial portion of the loans in the portfolio and assesses whether the loans are impaired in accordance with ASC 310. If the loans are impaired, the Company determines if a specific allowance is appropriate. In addition, the Company's management also reviews and, where determined necessary, provides allowances for particular loans based upon (1) reviews of specific borrowers and (2) management’s assessment of areas that management considers are of higher credit risk, including loans that have been restructured. Loans that are determined not to be impaired and for which there are no specific allowances are classified into one or more risk categories. Based upon the risk category assigned, the Company allocates a percentage, as determined by management, for a required allowance needed. The determination of the appropriate percentage begins with historical loss experience factors, which are then adjusted for levels and trends in past due loans, levels and trends in charged-off and recovered loans, trends in volume growth, trends in problem and watch loans, trends in restructured loans, local economic trends and conditions, industry and other conditions, and effects of changing interest rates. Specific allowances for losses on impaired loans are established if the loan balances exceed the net present value of the relevant future cash flows or the fair value of the relevant collateral based on updated appraisals and/or updated collateral analysis for the properties if the loan is collateral dependent. The Company may recognize a charge off or record a specific allowance related to an impaired loan if there is a collateral shortfall or it is unlikely the borrower can make all principal and interest payments as contractually due. For loans that are collateral dependent, losses are evaluated based on the portion of a loan that exceeds the fair market value of the collateral. In general, this is the amount that the carrying value of the loan exceeds the related appraised value less estimated costs to sell the collateral. Generally, it is the Company’s policy not to rely on appraisals that are older than one year prior to the date the impairment is being measured. The most recent appraisal values may be adjusted if, in the Company’s judgment, experience and other market data indicate that the property’s value, use, condition, exit market or other variable affecting its value may have changed since the appraisal was performed, consistent with the December 2006 joint interagency guidance on the allowance for loan losses. The charge off or loss adjustment supported by an appraisal is considered the minimum charge off. Any adjustments made to the appraised value are to provide an additional charge off or specific reserve based on the applicable facts and circumstances. In instances where there is an estimated decline in value, a specific reserve may be provided or a charge off taken pending confirmation of the amount of the loss from an updated appraisal. Upon receipt of the new appraisals, an additional specific reserve may be provided or charge off taken based on the appraised value of the collateral. On average, appraisals are obtained within one month of order. |