Loans (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Major Classifications of Loans

Major classifications of loans at September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017		December 31, 2016
Commercial and industrial	$	36,049	$	41,878
Commercial, secured by real estate	510,158		477,275
Residential real estate	253,530		265,788
Consumer	17,956		19,173
Agricultural	15,677		14,802
Other loans, including deposit overdrafts	570		633
	833,940		819,549
Deferred origination costs (fees), net	264		254
	834,204		819,803
Less allowance for loan losses	3,407		3,575
Loans, net	$	830,797	$	816,228

Non-accrual, Past Due, and Accruing Restructured Loans

Non-accrual, past-due, and accruing restructured loans as of September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017		December 31, 2016
Non-accrual loans:
Commercial and industrial	$	—	$	—
Commercial, secured by real estate	2,840		4,312
Residential real estate	1,180		1,079
Consumer	—		—
Agricultural	367		334
Total non-accrual loans	4,387		5,725
Past-due 90 days or more and still accruing	95		23
Total non-accrual and past-due 90 days or more and still accruing	4,482		5,748
Accruing restructured loans	10,791		11,731
Total	$	15,273	$	17,479

Allowance for Loan Losses and Recorded Investments in Loans

The allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 are as follows (in thousands):

	Commercial & Industrial			Commercial, Secured by Real Estate			Residential Real Estate			Consumer			Agricultural		Other			Total
Three Months Ended September 30, 2017
Balance, beginning of period	$	273		$	2,136		$	822		$	86		$	61	$	4		$	3,382
Provision charged to expenses	8			(9		)	(139		)	(6		)	113		21			(12		)
Losses charged off	—			(118		)	—			(30		)	—		(37		)	(185		)
Recoveries	19			106			38			44			—		15			222
Balance, end of period	$	300		$	2,115		$	721		$	94		$	174	$	3		$	3,407
Nine Months Ended September 30, 2017
Balance, beginning of year	$	350		$	2,179		$	885		$	96		$	60	$	5		$	3,575
Provision charged to expenses	(84		)	287			(137		)	(3		)	114		48			225
Losses charged off	—			(462		)	(135		)	(84		)	—		(98		)	(779		)
Recoveries	34			111			108			85			—		48			386
Balance, end of period	$	300		$	2,115		$	721		$	94		$	174	$	3		$	3,407
Three Months Ended September 30, 2016
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
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

A breakdown of the allowance for loan losses and the loan portfolio by loan segment at September 30, 2017 and December 31, 2016 are as follows (in thousands):

	Commercial & Industrial		Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural		Other		Total
September 30, 2017
Allowance for loan losses:
Individually evaluated for impairment	$	7	$	182	$	49	$	9	$	121	$	—	$	368
Collectively evaluated for impairment	293		1,933		672		85		53		3		3,039
Acquired credit impaired loans	—		—		—		—		—		—		—
Balance, end of period	$	300	$	2,115	$	721	$	94	$	174	$	3	$	3,407
Loans:
Individually evaluated for impairment	$	311	$	12,416	$	1,519	$	50	$	367	$	—	$	14,663
Collectively evaluated for impairment	34,771		493,124		250,117		18,008		15,325		127		811,472
Acquired credit impaired loans	1,008		4,264		2,351		3		—		443		8,069
Balance, end of period	$	36,090	$	509,804	$	253,987	$	18,061	$	15,692	$	570	$	834,204
December 31, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	9	$	55	$	100	$	13	$	—	$	—	$	177
Collectively evaluated for impairment	341		1,832		785		83		60		5		3,106
Acquired credit impaired loans	—		292		—		—		—		—		292
Balance, end of period	$	350	$	2,179	$	885	$	96	$	60	$	5	$	3,575
Loans:
Individually evaluated for impairment	$	337	$	12,580	$	1,518	$	52	$	334	$	—	$	14,821
Collectively evaluated for impairment	41,466		458,059		262,266		19,192		14,475		178		795,636
Acquired credit impaired loans	98		6,305		2,471		17		—		455		9,346
Balance, end of period	$	41,901	$	476,944	$	266,255	$	19,261	$	14,809	$	633	$	819,803

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

A breakdown of the loan portfolio by credit quality indicators at September 30, 2017 and December 31, 2016 is as follows (in thousands):

	Pass		OAEM		Substandard		Doubtful		Total
September 30, 2017
Commercial & industrial	$	35,586	$	197	$	307	$	—	$	36,090
Commercial, secured by real estate	484,670		4,451		20,683		—		509,804
Residential real estate	251,393		—		2,594		—		253,987
Consumer	18,028		—		33		—		18,061
Agricultural	14,475		—		1,217		—		15,692
Other	570		—		—		—		570
Total	$	804,722	$	4,648	$	24,834	$	—	$	834,204
December 31, 2016
Commercial & industrial	$	41,178	$	304	$	419	$	—	$	41,901
Commercial, secured by real estate	443,781		5,479		27,684		—		476,944
Residential real estate	261,839		442		3,974		—		266,255
Consumer	19,182		—		79		—		19,261
Agricultural	13,311		—		1,498		—		14,809
Other	633		—		—		—		633
Total	$	779,924	$	6,225	$	33,654	$	—	$	819,803

Loan Portfolio Aging Analysis

A loan portfolio aging analysis at September 30, 2017 and December 31, 2016 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, 2017
Commercial & industrial	$	4	$	—	$	—	$	4	$	36,086	$	36,090	$	—
Commercial, secured by real estate	781		—		795		1,576		508,228		509,804		—
Residential real estate	514		26		1,178		1,718		252,269		253,987		95
Consumer	4		3		—		7		18,054		18,061		—
Agricultural	—		—		367		367		15,325		15,692		—
Other	69		—		—		69		501		570		—
Total	$	1,372	$	29	$	2,340	$	3,741	$	830,463	$	834,204	$	95
December 31, 2016
Commercial & industrial	$	19	$	—	$	—	$	19	$	41,882	$	41,901	$	—
Commercial, secured by real estate	99		69		127		295		476,649		476,944		—
Residential real estate	686		80		727		1,493		264,762		266,255		20
Consumer	59		16		3		78		19,183		19,261		3
Agricultural	125		—		—		125		14,684		14,809		—
Other	115		—		—		115		518		633		—
Total	$	1,103	$	165	$	857	$	2,125	$	817,678	$	819,803	$	23

Impaired Loans

Impaired loans, including acquired credit impaired loans, at September 30, 2017 and December 31, 2016 are as follows (in thousands):

	September 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial & industrial	$	1,016	$	1,154	$	—	$	109	$	263	$	—
Commercial, secured by real estate	13,722		14,854		—		14,195		15,522		—
Residential real estate	3,272		4,341		—		3,238		4,286		—
Consumer	10		10		—		26		27		—
Agricultural	190		190		—		334		334		—
Other	443		591		—		455		629		—
Total	$	18,653	$	21,140	$	—	$	18,357	$	21,061	$	—
With an allowance recorded:
Commercial & industrial	$	303	$	308	$	7	$	326	$	326	$	9
Commercial, secured by real estate	2,958		2,957		182		4,690		4,946		347
Residential real estate	598		624		49		751		751		100
Consumer	43		43		9		43		43		13
Agricultural	177		177		121		—		—		—
Other	—		—		—		—		—		—
Total	$	4,079	$	4,109	$	368	$	5,810	$	6,066	$	469
Total:
Commercial & industrial	$	1,319	$	1,462	$	7	$	435	$	589	$	9
Commercial, secured by real estate	16,680		17,811		182		18,885		20,468		347
Residential real estate	3,870		4,965		49		3,989		5,037		100
Consumer	53		53		9		69		70		13
Agricultural	367		367		121		334		334		—
Other	443		591		—		455		629		—
Total	$	22,732	$	25,249	$	368	$	24,167	$	27,127	$	469

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, 2017 and 2016 (in thousands):

	2017				2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three Months Ended September 30,
With no related allowance recorded:
Commercial & industrial	$	945	$	10	$	1,356	$	34
Commercial, secured by real estate	13,671		184		15,594		236
Residential real estate	3,268		45		3,769		113
Consumer	16		—		29		7
Agricultural	142		—		384		—
Other	438		12		480		18
Total	$	18,480	$	251	$	21,612	$	408
With an allowance recorded:
Commercial & industrial	$	306	$	4	$	476	$	5
Commercial, secured by real estate	2,970		11		3,383		41
Residential real estate	604		7		695		8
Consumer	43		1		45		1
Agricultural	178		—		—		—
Other	—		—		—		—
Total	$	4,101	$	23	$	4,599	$	55
Total:
Commercial & industrial	$	1,251	$	14	$	1,832	$	39
Commercial, secured by real estate	16,641		195		18,977		277
Residential real estate	3,872		52		4,464		121
Consumer	59		1		74		8
Agricultural	320		—		384		—
Other	438		12		480		18
Total	$	22,581	$	274	$	26,211	$	463
Nine Months Ended September 30,
With no related allowance recorded:
Commercial & industrial	$	603	$	46	$	1,167	$	89
Commercial, secured by real estate	14,099		685		16,654		897
Residential real estate	3,280		180		3,809		306
Consumer	24		2		41		22
Agricultural	57		—		403		135
Other	450		43		488		58
Total	$	18,513	$	956	$	22,562	$	1,507
With an allowance recorded:
Commercial & industrial	$	314	$	13	$	400	$	15
Commercial, secured by real estate	3,085		35		2,960		82
Residential real estate	634		23		680		24
Consumer	43		2		43		2
Agricultural	240		—		—		—
Other	—		—		—		—
Total	$	4,316	$	73	$	4,083	$	123
Total:
Commercial & industrial	$	917	$	59	$	1,567	$	104
Commercial, secured by real estate	17,184		720		19,614		979
Residential real estate	3,914		203		4,489		330
Consumer	67		4		84		24
Agricultural	297		—		403		135
Other	450		43		488		58
Total	$	22,829	1,029		$	26,645	$	1,630

Troubled Debt Restructurings

Loan modifications that were classified as troubled debt restructurings during the three and nine months ended September 30, 2017 and 2016 are as follows (dollars in thousands):

	2017					2016
	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
Total	—	$	—	$	—	3	$	342	$	342
Nine Months Ended September 30,
Commercial & industrial	—	$	—	$	—	—	$	—	$	—
Commercial, secured by real estate	—	—		—		2	603		676
Residential real estate	1	18		9		3	72		72
Consumer	1	14		14		3	38		38
Total	2	$	32	$	23	8	$	713	$	786

Schedule of Troubled Debt Restructurings by Modification Type

Post-modification balances of newly restructured troubled debt by type of modification for the three and nine months ended September 30, 2017 and 2016 were as follows (dollars in thousands):

	Term Modification		Rate Modification		Interest Only		Principal Forgiveness		Combination		Total Modifications
Three Months Ended September 30, 2017
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		—		—
Residential real estate	—		—		—		—		—		—
Consumer	—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—
Nine Months Ended September 30, 2017
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		—		—
Residential real estate	—		—		—		9		—		9
Consumer	14		—		—		—		—		14
Total	$	14	$	—	$	—	$	9	$	—	$	23
Three Months Ended September 30, 2016
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		304		—		—		304
Residential real estate	—		—		—		—		27		27
Consumer	—		—		—		—		11		11
Total	$	—	$	—	$	304	$	—	$	38	$	342
Nine Months Ended September 30, 2016
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		304		—		372		676
Residential real estate	18		27		—		—		27		72
Consumer	—		27		—		—		11		38
Total	$	18	$	54	$	304	$	—	$	410	$	786