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Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2016
Allowance for Credit Losses [Abstract]  
Allowance for Credit Losses
6.
Allowance for Credit Losses

The following tables show the allocation of the allowance for credit losses at December 31, 2016 and December 31, 2015 by portfolio segment and by impairment methodology (in thousands):

December 31, 2016
 
Commercial Real Estate
  
Agricultural
Real Estate
  
Real Estate
Construction
  
Residential 1st
Mortgages
  
Home Equity
Lines & Loans
  
Agricultural
  
Commercial
  
Consumer
& Other
  
Leases
  
Unallocated
  
Total
 
                                  
Year-To-Date Allowance for Credit Losses:
                            
Beginning Balance- January 1, 2016
 
$
10,063
  
$
6,881
  
$
2,485
  
$
789
  
$
2,146
  
$
6,308
  
$
7,836
  
$
175
  
$
3,294
  
$
1,546
  
$
41,523
 
Charge-Offs
  
-
   
-
   
-
   
(21
)
  
(46
)
  
-
   
-
   
(105
)
  
-
   
-
   
(172
)
Recoveries
  
2
   
-
   
-
   
26
   
103
   
-
   
47
   
55
   
-
   
-
   
233
 
Provision
  
1,045
   
2,569
   
738
   
71
   
(63
)
  
1,073
   
632
   
75
   
292
   
(97
)
  
6,335
 
Ending Balance- December 31, 2016
 
$
11,110
  
$
9,450
  
$
3,223
  
$
865
  
$
2,140
  
$
7,381
  
$
8,515
  
$
200
  
$
3,586
  
$
1,449
  
$
47,919
 
Ending Balance Individually Evaluated for Impairment
  
-
   
-
   
-
   
70
   
18
   
128
   
608
   
7
   
-
   
-
   
831
 
Ending Balance Collectively Evaluated for Impairment
  
11,110
   
9,450
   
3,223
   
795
   
2,122
   
7,253
   
7,907
   
193
   
3,586
   
1,449
   
47,088
 
Loans & Leases:
                                            
Ending Balance
 
$
668,046
  
$
467,685
  
$
176,462
  
$
242,247
  
$
31,625
  
$
295,325
  
$
217,577
  
$
6,913
  
$
71,721
  
$
-
  
$
2,177,601
 
Ending Balance Individually Evaluated for Impairment
  
1,932
   
1,304
   
-
   
2,126
   
402
   
625
   
4,464
   
10
   
-
   
-
   
10,863
 
Ending Balance Collectively Evaluated for Impairment
  
666,114
   
466,381
   
176,462
   
240,121
   
31,223
   
294,700
   
213,113
   
6,903
   
71,721
   
-
   
2,166,738
 

December 31, 2015
 
Commercial
Real Estate
  
Agricultural
Real Estate
  
Real Estate
Construction
  
Residential 1st
Mortgages
  
Home Equity
Lines & Loans
  
Agricultural
  
Commercial
  
Consumer
& Other
  
Leases
  
Unallocated
  
Total
 
                                  
Year-To-Date Allowance for Credit Losses:
                            
Beginning Balance- January 1, 2015
 
$
7,842
  
$
4,185
  
$
1,669
  
$
1,022
  
$
2,426
  
$
6,104
  
$
8,195
  
$
218
  
$
2,211
  
$
1,529
  
$
35,401
 
Charge-Offs
  
-
   
-
   
-
   
-
   
-
   
-
   
(12
)
  
(84
)
  
-
   
-
   
(96
)
Recoveries
  
2,939
   
-
   
2,225
   
8
   
87
   
4
   
136
   
69
   
-
   
-
   
5,468
 
Provision
  
(718
)
  
2,696
   
(1,409
)
  
(241
)
  
(367
)
  
200
   
(483
)
  
(28
)
  
1,083
   
17
   
750
 
Ending Balance- December 31, 2015
 
$
10,063
  
$
6,881
  
$
2,485
  
$
789
  
$
2,146
  
$
6,308
  
$
7,836
  
$
175
  
$
3,294
  
$
1,546
  
$
41,523
 
Ending Balance Individually Evaluated for Impairment
  
61
   
-
   
-
   
69
   
35
   
115
   
905
   
28
   
-
   
-
   
1,213
 
Ending Balance Collectively Evaluated for Impairment
  
10,002
   
6,881
   
2,485
   
720
   
2,111
   
6,193
   
6,931
   
147
   
3,294
   
1,546
   
40,310
 
Loans & Leases:
                                            
Ending Balance
 
$
603,650
  
$
424,034
  
$
151,974
  
$
206,405
  
$
33,056
  
$
293,966
  
$
210,804
  
$
6,592
  
$
65,878
  
$
-
  
$
1,996,359
 
Ending Balance Individually Evaluated for Impairment
  
3,420
   
-
   
-
   
2,010
   
1,214
   
606
   
4,760
   
34
   
-
   
-
   
12,044
 
Ending Balance Collectively Evaluated for Impairment
  
600,230
   
424,034
   
151,974
   
204,395
   
31,842
   
293,360
   
206,044
   
6,558
   
65,878
   
-
   
1,984,315
 

The ending balance of loans individually evaluated for impairment includes restructured loans in the amount of $3.3 million and $4.9 million at December 31, 2016 and 2015, respectively, which are no longer disclosed or classified as TDR’s.
 
The following tables show the loan & lease portfolio allocated by management’s internal risk ratings at December 31, 2016 and December 31, 2015 (in thousands):

December 31, 2016
 
Pass
  
Special
Mention
  
Substandard
  
Total Loans
 
Loans & Leases:
            
Commercial Real Estate
 
$
659,694
  
$
6,817
  
$
1,535
  
$
668,046
 
Agricultural Real Estate
  
464,997
   
1,384
   
1,304
   
467,685
 
Real Estate Construction
  
176,462
   
-
   
-
   
176,462
 
Residential 1st Mortgages
  
241,816
   
47
   
384
   
242,247
 
Home Equity Lines and Loans
  
31,558
   
-
   
67
   
31,625
 
Agricultural
  
283,525
   
11,366
   
434
   
295,325
 
Commercial
  
208,172
   
6,974
   
2,431
   
217,577
 
Consumer & Other
  
6,705
   
-
   
208
   
6,913
 
Leases
  
71,721
   
-
   
-
   
71,721
 
Total
 
$
2,144,650
  
$
26,588
  
$
6,363
  
$
2,177,601
 

December 31, 2015
 
Pass
  
Special
Mention
  
Substandard
  
Total Loans
 
Loans & Leases:
            
Commercial Real Estate
 
$
595,011
  
$
7,917
  
$
722
  
$
603,650
 
Agricultural Real Estate
  
424,034
   
-
   
-
   
424,034
 
Real Estate Construction
  
150,379
   
1,595
   
-
   
151,974
 
Residential 1st Mortgages
  
205,135
   
413
   
857
   
206,405
 
Home Equity Lines and Loans
  
32,419
   
75
   
562
   
33,056
 
Agricultural
  
293,325
   
9
   
632
   
293,966
 
Commercial
  
199,467
   
8,160
   
3,177
   
210,804
 
Consumer & Other
  
6,411
   
-
   
181
   
6,592
 
Leases
  
65,878
   
-
   
-
   
65,878
 
Total
 
$
1,972,059
  
$
18,169
  
$
6,131
  
$
1,996,359
 
 
See Note 1. Significant Accounting Policies – Allowance for Credit Losses for a description of the internal risk ratings used by the Company. There were no loans & leases outstanding at December 31, 2016 and 2015 rated doubtful or loss.
 
The following tables show an aging analysis of the loan & lease portfolio by the time past due at December 31, 2016 and December 31, 2015 (in thousands):

December 31, 2016
 
30-59 Days
Past Due
  
60-89 Days
Past Due
  
90 Days and
Still Accruing
  
Nonaccrual
  
Total Past
Due
  
Current
  
Total
Loans & Leases
 
Loans & Leases:
                     
Commercial Real Estate
 
$
-
  
$
-
  
$
-
  
$
-
  
$
-
  
$
668,046
  
$
668,046
 
Agricultural Real Estate
  
-
   
-
   
-
   
1,304
   
1,304
   
466,381
   
467,685
 
Real Estate Construction
  
-
   
-
   
-
   
-
   
-
   
176,462
   
176,462
 
Residential 1st Mortgages
  
-
   
-
   
-
   
95
   
95
   
242,152
   
242,247
 
Home Equity Lines and Loans
  
-
   
-
   
-
   
-
   
-
   
31,625
   
31,625
 
Agricultural
  
-
   
-
   
-
   
243
   
243
   
295,082
   
295,325
 
Commercial
  
-
   
-
   
-
   
1,425
   
1,425
   
216,152
   
217,577
 
Consumer & Other
  
10
   
-
   
-
   
7
   
17
   
6,896
   
6,913
 
Leases
  
-
   
-
   
-
   
-
   
-
   
71,721
   
71,721
 
Total
 
$
10
  
$
-
  
$
-
  
$
3,074
  
$
3,084
  
$
2,174,517
  
$
2,177,601
 

December 31, 2015
 
30-59 Days
Past Due
  
60-89 Days
Past Due
  
90 Days and
Still Accruing
  
Nonaccrual
  
Total Past
Due
  
Current
  
Total
Loans & Leases
 
Loans & Leases:
                     
Commercial Real Estate
 
$
705
  
$
-
  
$
-
  
$
19
  
$
724
  
$
602,926
  
$
603,650
 
Agricultural Real Estate
  
-
   
-
   
-
   
-
   
-
   
424,034
   
424,034
 
Real Estate Construction
  
-
   
-
   
-
   
-
   
-
   
151,974
   
151,974
 
Residential 1st Mortgages
  
97
   
194
   
-
   
65
   
356
   
206,049
   
206,405
 
Home Equity Lines and Loans
  
-
   
-
   
-
   
538
   
538
   
32,518
   
33,056
 
Agricultural
  
-
   
-
   
-
   
-
   
-
   
293,966
   
293,966
 
Commercial
  
-
   
-
   
-
   
1,524
   
1,524
   
209,280
   
210,804
 
Consumer & Other
  
7
   
-
   
-
   
10
   
17
   
6,575
   
6,592
 
Leases
  
-
   
-
   
-
   
-
   
-
   
65,878
   
65,878
 
Total
 
$
809
  
$
194
  
$
-
  
$
2,156
  
$
3,159
  
$
1,993,200
  
$
1,996,359
 

Non-accrual loans & leases at December 31, 2016 and 2015 were $3.1 million and $2.2 million, respectively. Interest income forgone on loans & leases placed on non-accrual status was $127,000, $109,000, and $92,000 for the years ended December 31, 2016, 2015, and 2014, respectively.
 
The following tables show information related to impaired loans & leases at and for the year ended December 31, 2016 and December 31, 2015 (in thousands):

December 31, 2016
 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
               
Commercial Real Estate
 
$
184
  
$
184
  
$
-
  
$
354
  
$
7
 
Agricultural Real Estate
  
1,305
   
1,305
   
-
   
569
   
3
 
Residential 1st Mortgages
  
451
   
504
   
-
   
404
   
10
 
Home Equity Lines and Loans
  
-
   
-
   
-
   
181
   
-
 
Agricultural
  
-
   
-
   
-
   
144
   
5
 
Commercial
  
3,023
   
3,023
   
-
   
3,053
   
133
 
  
$
4,963
  
$
5,016
  
$
-
  
$
4,705
  
$
158
 
With an allowance recorded:
                    
Residential 1st Mortgages
 
$
430
  
$
469
  
$
21
  
$
336
  
$
13
 
Home Equity Lines and Loans
  
90
   
97
   
5
   
123
   
4
 
Agricultural
  
625
   
625
   
128
   
581
   
22
 
Commercial
  
1,441
   
1,640
   
608
   
1,536
   
8
 
Consumer & Other
  
6
   
13
   
6
   
12
   
-
 
  
$
2,592
  
$
2,844
  
$
768
  
$
2,588
  
$
47
 
Total
 
$
7,555
  
$
7,860
  
$
768
  
$
7,293
  
$
205
 

December 31, 2015
 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
With no related allowance recorded:
               
Commercial Real Estate
 
$
102
  
$
104
  
$
-
  
$
479
  
$
7
 
Residential 1st Mortgages
  
551
   
618
   
-
   
560
   
16
 
Home Equity Lines and Loans
  
581
   
646
   
-
   
620
   
3
 
Agricultural
  
193
   
193
   
-
   
105
   
3
 
Commercial
  
3,103
   
3,103
   
-
   
2,349
   
85
 
  
$
4,530
  
$
4,664
  
$
-
  
$
4,113
  
$
114
 
With an allowance recorded:
                    
Residential 1st Mortgages
 
$
348
  
$
420
  
$
17
  
$
354
  
$
16
 
Home Equity Lines and Loans
  
134
   
151
   
7
   
136
   
5
 
Agricultural
  
412
   
413
   
115
   
431
   
28
 
Commercial
  
1,657
   
1,798
   
905
   
2,456
   
31
 
Consumer & Other
  
34
   
40
   
29
   
39
   
3
 
  
$
2,585
  
$
2,822
  
$
1,073
  
$
3,416
  
$
83
 
Total
 
$
7,115
  
$
7,486
  
$
1,073
  
$
7,529
  
$
197
 
 
Total recorded investment shown in the prior table will not equal the total ending balance of loans & leases individually evaluated for impairment on the allocation of allowance table. This is because the calculation of recorded investment takes into account charge-offs, net unamortized loan & lease fees & costs, unamortized premium or discount, and accrued interest. This table also excludes impaired loans that were previously modified in a troubled debt restructuring, are currently performing and are no longer disclosed or classified as TDR’s.
 
At December 31, 2016, the Company allocated $736,000 of specific reserves to $5.9 million of troubled debt restructured loans, of which $4.5 million were performing. At December 31, 2015, the Company allocated $1.1 million of specific reserves to $6.6 million of troubled debt restructured loans, of which $5.0 million were performing. The Company had no commitments at December 31, 2016 and December 31, 2015 to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

During the period ending December 31, 2016, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan were for 5 years. Modifications involving an extension of the maturity date were for 10 years.

The following table presents loans by class modified as troubled debt restructured loans for the period ended December 31, 2016 (in thousands):
 
  
December 31, 2016
 
Troubled Debt Restructurings
 
Number of
Loans
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
 
Commercial Real Estate
  
1
  
$
112
  
$
112
 
Residential 1st Mortgages
  
2
   
289
   
281
 
Home Equity Lines and Loans
  
2
   
305
   
286
 
Total
  
5
  
$
706
  
$
679
 

The troubled debt restructurings described above had no impact on the allowance for credit losses and resulted in charge-offs of $27,000 for the twelve months ended December 31, 2016.

During the period ended December 31, 2016, there were no payment defaults on loans modified as troubled debt restructurings within twelve months following the modification. The Company considers a loan to be in payment default once it is greater than 90 days contractually past due under the modified terms.

During the period ending December 31, 2015, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 5 to 10 years. Modifications involving an extension of the maturity date were for periods ranging from 5 to 10 years.
 
The following table presents loans by class modified as troubled debt restructured loans for the period ended December 31, 2015 (in thousands):

  
December 31, 2015
 
Troubled Debt Restructurings
 
Number of
Loans
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
 
Agricultural
  
1
  
$
194
  
$
194
 
Commercial
  
1
   
131
   
119
 
Total
  
2
  
$
325
  
$
313
 

The troubled debt restructurings described above increased the allowance for credit losses by $70,000 and resulted in charge-offs of $12,000 for the twelve months ended December 31, 2015.

During the period ended December 31, 2015, there were no payment defaults on loans modified as troubled debt restructurings within twelve months following the modification. The Company considers a loan to be in payment default once it is greater than 90 days contractually past due under the modified terms.