Loans (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Major Classifications of Loans

Major classifications of loans at September 30, 2016 and December 31, 2015 are as follows (in thousands):

	September 30, 2016		December 31, 2015
Commercial and industrial	$	40,097	45,275
Commercial, secured by real estate	467,512		419,633
Residential real estate	268,574		273,139
Consumer	18,752		18,510
Agricultural	15,872		13,479
Other loans, including deposit overdrafts	619		665
	811,426		770,701
Deferred net origination costs (fees)	236		237
	811,662		770,938
Less allowance for loan losses	3,798		3,129
Loans, net	$	807,864	767,809

Non-accrual, Past Due, and Accruing Restructured Loans

Non-accrual, past-due, and accruing restructured loans as of September 30, 2016 and December 31, 2015 are as follows (in thousands):

	September 30, 2016		December 31, 2015
Non-accrual loans:
Commercial and industrial	$	182	—
Commercial, secured by real estate	2,744		876
Residential real estate	1,309		799
Consumer	—		—
Agricultural	384		48
Total non-accrual loans	4,619		1,723
Past-due 90 days or more and still accruing	20		559
Total non-accrual and past-due 90 days or more and still accruing	4,639		2,282
Accruing restructured loans	13,598		13,723
Total	$	18,237	16,005

Allowance for Loan Losses and Recorded Investments in Loans

The allowance for loan losses for the three and nine months ended September 30, 2016 and 2015 are as follows (in thousands):

	Commercial & Industrial			Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural		Other		Total
Three Months Ended September 30, 2016
Allowance for loan losses:
Balance, beginning of period	$	273		2,071		885		80		62		2		3,373
Provision charged to expenses	162			193		(46	)	36		6		21		372
Losses charged off	—			(19	)	(21	)	(30	)	—		(33	)	(103	)
Recoveries	12			80		43		9		—		12		156
Balance, end of period	$	447		2,325		861		95		68		2		3,798
Nine Months Ended September 30, 2016
Allowance for loan losses:
Balance, beginning of year	$	244		1,908		854		54		66		3		3,129
Provision charged to expenses	236			478		19		85		2		38		858
Losses charged off	(49		)	(159	)	(63	)	(83	)	—		(75	)	(429	)
Recoveries	16			98		51		39		—		36		240
Balance, end of period	$	447		2,325		861		95		68		2		3,798
Three Months Ended September 30, 2015
Allowance for loan losses:
Balance, beginning of period	$	162		1,655		914		62		83		3		2,879
Provision charged to expenses	167			97		(60	)	14		9		13		240
Losses charged off	(89		)	(29	)	(46	)	(20	)	—		(26	)	(210	)
Recoveries	3			—		23		12		—		11		49
Balance, end of period	$	243		1,723		831		68		92		1		2,958
Nine Months Ended September 30, 2015
Allowance for loan losses:
Balance, beginning of year	$	129		1,990		926		63		11		2		3,121
Provision charged to expenses	209			612		57		1		81		26		986
Losses charged off	(100		)	(975	)	(243	)	(49	)	(67	)	(52	)	(1,486	)
Recoveries	5			96		91		53		67		25		337
Balance, end of period	$	243		1,723		831		68		92		1		2,958

A breakdown of the allowance for loan losses and the loan portfolio by loan segment at September 30, 2016 and December 31, 2015 are as follows (in thousands):

	Commercial & Industrial		Commercial, Secured by Real Estate	Residential Real Estate	Consumer	Agricultural	Other	Total
September 30, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	171	183	96	14	—	—	464
Collectively evaluated for impairment	276		1,846	765	81	68	2	3,038
Acquired credit impaired loans	—		296	—	—	—	—	296
Balance, end of period	$	447	2,325	861	95	68	2	3,798
Loans:
Individually evaluated for impairment	$	527	12,736	1,675	57	384	—	15,379
Collectively evaluated for impairment	38,260		448,252	264,726	18,767	15,495	130	785,630
Acquired credit impaired loans	1,325		6,181	2,640	18	—	489	10,653
Balance, end of period	$	40,112	467,169	269,041	18,842	15,879	619	811,662
December 31, 2015
Allowance for loan losses:
Individually evaluated for impairment	$	9	306	48	—	—	—	363
Collectively evaluated for impairment	235		1,602	806	54	66	3	2,766
Acquired credit impaired loans	—		—	—	—	—	—	—
Balance, end of period	$	244	1,908	854	54	66	3	3,129
Loans:
Individually evaluated for impairment	$	370	12,351	1,541	56	—	—	14,318
Collectively evaluated for impairment	43,726		399,092	269,001	18,516	13,438	179	743,952
Acquired credit impaired loans	1,191		7,877	3,039	27	48	486	12,668
Balance, end of period	$	45,287	419,320	273,581	18,599	13,486	665	770,938

Analysis of the Company's Loan Portfolio by Credit Quality Indicators

A breakdown of the loan portfolio by credit quality indicators at September 30, 2016 and December 31, 2015 is as follows (in thousands):

	Pass		OAEM	Substandard	Doubtful	Total
September 30, 2016
Commercial & industrial	$	39,237	318	557	—	40,112
Commercial, secured by real estate	438,732		1,400	27,037	—	467,169
Residential real estate	263,583		518	4,940	—	269,041
Consumer	18,779		—	63	—	18,842
Agricultural	14,331		—	1,548	—	15,879
Other	619		—	—	—	619
Total	$	775,281	2,236	34,145	—	811,662
December 31, 2015
Commercial & industrial	$	44,596	—	691	—	45,287
Commercial, secured by real estate	397,938		9,316	12,066	—	419,320
Residential real estate	267,567		1,935	4,079	—	273,581
Consumer	18,528		—	71	—	18,599
Agricultural	12,246		850	390	—	13,486
Other	665		—	—	—	665
Total	$	741,540	12,101	17,297	—	770,938

Loan Portfolio Aging Analysis

A loan portfolio aging analysis at September 30, 2016 and December 31, 2015 is as follows (in thousands):

	30-59 Days Past Due		60-89 Days Past Due	Greater Than 90 Days Past Due	Total Past Due	Current	Total Loans Receivable	Total Loans Greater Than 90 Days and Accruing
September 30, 2016
Commercial & industrial	$	—	—	—	—	40,112	40,112	—
Commercial, secured by real estate	266		1,217	278	1,761	465,408	467,169	—
Residential real estate	587		109	1,086	1,782	267,259	269,041	19
Consumer	50		4	1	55	18,787	18,842	1
Agricultural	—		—	—	—	15,879	15,879	—
Other	65		—	—	65	554	619	—
Total	$	968	1,330	1,365	3,663	807,999	811,662	20
December 31, 2015
Commercial & industrial	$	—	—	—	—	45,287	45,287	—
Commercial, secured by real estate	73		81	876	1,030	418,290	419,320	—
Residential real estate	777		198	1,124	2,099	271,482	273,581	516
Consumer	62		7	43	112	18,487	18,599	43
Agricultural	—		—	—	—	13,486	13,486	—
Other	109		—	—	109	556	665	—
Total	$	1,021	286	2,043	3,350	767,588	770,938	559

Impaired Loans

Impaired loans, including acquired credit impaired loans, at September 30, 2016 and December 31, 2015 are as follows (in thousands):

	Recorded Investment		Unpaid Principal Balance	Related Allowance
September 30, 2016
With no related allowance recorded:
Commercial & industrial	$	1,337	1,599	—
Commercial, secured by real estate	15,289		16,629	—
Residential real estate	3,624		4,784	—
Consumer	28		36	—
Agricultural	384		384	—
Other	489		665	—
Total	$	21,151	24,097	—
With an allowance recorded:
Commercial & industrial	$	515	515	171
Commercial, secured by real estate	3,628		3,999	479
Residential real estate	691		762	96
Consumer	47		47	14
Agricultural	—		—	—
Other	—		—	—
Total	$	4,881	5,323	760
Total:
Commercial & industrial	$	1,852	2,114	171
Commercial, secured by real estate	18,917		20,628	479
Residential real estate	4,315		5,546	96
Consumer	75		83	14
Agricultural	384		384	—
Other	489		665	—
Total	$	26,032	29,420	760
December 31, 2015
With no related allowance recorded:
Commercial & industrial	$	1,205	1,500	—
Commercial, secured by real estate	16,345		18,335	—
Residential real estate	3,734		5,055	—
Consumer	81		109	—
Agricultural	48		151	—
Other	486		701	—
Total	$	21,899	25,851	—
With an allowance recorded:
Commercial & industrial	$	356	356	9
Commercial, secured by real estate	3,883		4,014	306
Residential real estate	846		958	48
Consumer	2		1	—
Agricultural	—		—	—
Other	—		—	—
Total	$	5,087	5,329	363
Total:
Commercial & industrial	$	1,561	1,856	9
Commercial, secured by real estate	20,228		22,349	306
Residential real estate	4,580		6,013	48
Consumer	83		110	—
Agricultural	48		151	—
Other	486		701	—
Total	$	26,986	31,180	363

The following presents information related to the average recorded investment and interest income recognized on impaired loans, including acquired credit impaired loans, for the three and nine months ended September 30, 2016 and 2015 (in thousands):

	2016			2015
	Average Recorded Investment		Interest Income Recognized	Average Recorded Investment	Interest Income Recognized
Three Months Ended September 30,
With no related allowance recorded:
Commercial & industrial	$	1,356	34	1,609	34
Commercial, secured by real estate	15,594		236	18,841	270
Residential real estate	3,769		113	4,164	124
Consumer	29		7	110	7
Agricultural	384		—	110	11
Other	480		18	516	19
Total	$	21,612	408	25,350	465
With an allowance recorded:
Commercial & industrial	$	476	5	382	6
Commercial, secured by real estate	3,383		41	3,994	29
Residential real estate	695		8	808	10
Consumer	45		1	—	—
Agricultural	—		—	—	—
Other	—		—	—	—
Total	$	4,599	55	5,184	45
Total:
Commercial & industrial	$	1,832	39	1,991	40
Commercial, secured by real estate	18,977		277	22,835	299
Residential real estate	4,464		121	4,972	134
Consumer	74		8	110	7
Agricultural	384		—	110	11
Other	480		18	516	19
Total	$	26,211	463	30,534	510
Nine Months Ended September 30,
With no related allowance recorded:
Commercial & industrial	$	1,167	89	1,437	175
Commercial, secured by real estate	16,654		897	19,941	1,901
Residential real estate	3,809		306	4,295	364
Consumer	41		22	119	15
Agricultural	403		135	107	479
Other	488		58	515	58
Total	$	22,562	1,507	26,414	2,992
With an allowance recorded:
Commercial & industrial	$	400	15	389	17
Commercial, secured by real estate	2,960		82	3,977	85
Residential real estate	680		24	825	29
Consumer	43		2	—	—
Agricultural	—		—	—	—
Other	—		—	—	—
Total	$	4,083	123	5,191	131
Total:
Commercial & industrial	$	1,567	104	1,826	192
Commercial, secured by real estate	19,614		979	23,918	1,986
Residential real estate	4,489		330	5,120	393
Consumer	84		24	119	15
Agricultural	403		135	107	479
Other	488		58	515	58
Total	$	26,645	1,630	31,605	3,123

Troubled Debt Restructurings

Loan modifications that were classified as troubled debt restructurings during the three and nine months ended September 30, 2016 and 2015 are as follows (dollars in thousands):

	2016				2015
	Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance	Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance
Three Months Ended September 30,
Commercial & industrial	—	$	—	—	—	$	—	—
Commercial, secured by real estate	1	304		304	—	—		—
Residential real estate	1	27		27	—	—		—
Consumer	1	11		11	1	2		2
Total	3	$	342	342	1	$	2	2
Nine Months Ended September 30,
Commercial & industrial	—	$	—	—	1	$	72	74
Commercial, secured by real estate	2	$	603	676	—	—		—
Residential real estate	3	72		72	4	137		137
Consumer	3	38		38	1	2		2
Total	8	$	713	786	6	$	211	213