LOANS (Tables)

6 Months Ended

Jun. 30, 2012

LOANS [Abstract]

Loan portfolio

The composition of the Company's loan portfolio, by loan class, is as follows:

($ in thousands)	June 30, 2012			December 31, 2011
Commercial	$	95,106		$	91,914
Commercial Real Estate		186,180			175,793
Agriculture		45,632			52,064
Residential Mortgage		50,912			51,586
Residential Construction		7,731			7,492
Consumer		61,491			64,150
		447,052			442,999
Allowance for loan losses		(9,784	)		(10,408	)
Net deferred origination fees and costs		673			198
Loans, net	$	437,941		$	432,789

Non-accrual loans by loan class

Non-accrual and Past Due Loans

The Company's non-accrual loans by loan class, as of June 30, 2012 and December 31, 2011 were as follows:

($ in thousands)	June 30, 2012		December 31, 2011
Commercial	$	3,042	$	2,905
Commercial Real Estate		4,057		3,071
Agriculture		899		992
Residential Mortgage		1,006		1,334
Residential Construction		42		48
Consumer		236		360
	$	9,282	$	8,710

Aging analysis of past due loans, by loan class

An age analysis of past due loans, segregated by loan class, as of June 30, 2012 and December 31, 2011 is as follows:

($ in thousands)	30-59 Days Pas t Due		60-8  Days Pas t Due		90 Days  or more  Past Due		Total Past Due		Current		Total  Loans
June 30, 2012
Commercial	$	187	$	-	$	2,809	$	2,996	$	92,110	$	95,106
Commercial Real Estate		192		-		3,865		4,057		182,123		186,180
Agriculture		9		-		899		908		44,724		45,632
Residential Mortgage		1,237		543		129		1,909		49,003		50,912
Residential Construction		41		-		42		83		7,648		7,731
Consumer		100		-		157		257		61,234		61,491
Total	$	1,766	$	543	$	7,901	$	10,210	$	436,842	$	447,052
December 31, 2011
Commercial	$	1,051	$	166	$	113	$	1,330	$	90,584	$	91,914
Commercial Real Estate		-		2,746		446		3,192		172,601		175,793
Agriculture		-		-		991		991		51,073		52,064
Residential Mortgage		792		420		426		1,638		49,948		51,586
Residential Construction		273		-		48		321		7,171		7,492
Consumer		20		212		225		457		63,693		64,150
Total	$	2,136	$	3,544	$	2,249	$	7,929	$	435,070	$	442,999

Impaired loans by loan class

Impaired Loans

Impaired loans, segregated by loan class, as of June 30, 2012 and December 31, 2011 were as follows:

($ in thousands)	Unpaid Contractual  Principal  Balance		Recorded  Investmen t with no Allowance		Recorded  Investment with Allowance		Total Recorded  Investment		Related Allowance
June 30, 2012
Commercial	$	4,094	$	2,982	$	840	$	3,822	$	151
Commercial Real Estate		5,991		4,057		1,181		5,238		16
Agriculture		1,721		1,379		-		1,379		-
Residential Mortgage		4,227		1,006		2,981		3,987		1,148
Residential Construction		1,288		42		1,085		1,127		573
Consumer		1,287		274		798		1,072		138
Total	$	18,608	$	9,740	$	6,885	$	16,625	$	2,026
December 31, 2011
Commercial	$	4,694	$	2,919	$	569	$	3,488	$	101
Commercial Real Estate		4,856		3,071		1,198		4,269		22
Agriculture		3,847		3,598		-		3,598		-
Residential Mortgage		5,336		1,875		3,194		5,069		731
Residential Construction		1,147		48		1,099		1,147		668
Consumer		985		309		346		655		126
Total	$	20,865	$	11,820	$	6,406	$	18,226	$	1,648

Impaired loans, interest income recognized using cash basis accounting

Impaired Loans

Impaired loans, segregated by loan class, as of June 30, 2012 and December 31, 2011 were as follows:

($ in thousands)	Unpaid Contractual  Principal  Balance		Recorded  Investmen t with no Allowance		Recorded  Investment with Allowance		Total Recorded  Investment		Related Allowance
June 30, 2012
Commercial	$	4,094	$	2,982	$	840	$	3,822	$	151
Commercial Real Estate		5,991		4,057		1,181		5,238		16
Agriculture		1,721		1,379		-		1,379		-
Residential Mortgage		4,227		1,006		2,981		3,987		1,148
Residential Construction		1,288		42		1,085		1,127		573
Consumer		1,287		274		798		1,072		138
Total	$	18,608	$	9,740	$	6,885	$	16,625	$	2,026
December 31, 2011
Commercial	$	4,694	$	2,919	$	569	$	3,488	$	101
Commercial Real Estate		4,856		3,071		1,198		4,269		22
Agriculture		3,847		3,598		-		3,598		-
Residential Mortgage		5,336		1,875		3,194		5,069		731
Residential Construction		1,147		48		1,099		1,147		668
Consumer		985		309		346		655		126
Total	$	20,865	$	11,820	$	6,406	$	18,226	$	1,648

Loans modified as troubled debt restructurings

Loans modified as troubled debt restructurings during the three-month periods ended June 30, 2012 and June 30, 2011 were as follows:

($ in thousands)	Three Months Ended June 30, 2012
	Number of Contracts		Pre-modification  outstanding recorded  investment		Post-modification  outstanding recorded  investment
Commercial		2	$	141	$	141
Consumer		2		279		279
Total		4	$	420	$	420

($ in thousands)	Three Months Ended June 30, 2011
	Number of  Contracts		Pre-modification  outstanding recorded investment		Post-modification  outstanding recorded investment
Residential Construction		1	$	86	$	27
Total		1	$	86	$	27

Loans modified as troubled debt restructurings during the six-month periods ended June 30, 2012 and June 30, 2011 were as follows:

($ in thousands)	Six Months Ended June 30, 2012
	Number of Contracts		Pre-modification outstanding recorded  investment		Post-modification outstanding recorded investment
CommercialA		4	$	361	$	361
Consumer		4		430		430
Total		8	$	791	$	791

($ in thousands)	Six Months Ended June 30, 2011
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification  outstanding recorded  investment
Commercial		1	$	48	$	48
Residential Mortgage		1		404		404
Residential Construction		2		221		162
Total		4	$	673	$	614

Loans by risk rating

The following table presents the risk ratings by loan class as of June 30, 2012 and December 31, 2011.

($ in thousands)	Pass		Special  Mention		Substandard		Doubtful		Loss		Total
June 30, 2012
Commercial	$	85,002	$	3,427	$	6,677	$	-	$	-	$	95,106
Commercial Real Estate		160,817		12,010		13,353		-		-		186,180
Agriculture		43,039		1,214		1,379		-		-		45,632
Residential Mortgage		41,924		1,936		7,052		-		-		50,912
Residential Construction		5,613		385		1,733		-		-		7,731
Consumer		54,721		3,156		3,540		74		-		61,491
Total	$	391,116	$	22,128	$	33,734	$	74	$	-	$	447,052
December 31, 2011
Commercial	$	71,229	$	8,444	$	11,804	$	437	$	-	$	91,914
Commercial Real Estate		148,317		16,492		10,984		-		-		175,793
Agriculture		48,330		-		3,734		-		-		52,064
Residential Mortgage		42,845		1,830		6,911		-		-		51,586
Residential Construction		5,140		927		1,425		-		-		7,492
Consumer		58,239		2,824		3,087		-		-		64,150
Total	$	374,100	$	30,517	$	37,945	$	437	$	-	$	442,999

Allowance for loan losses

Allowance for Loan Losses

The following table details activity in the allowance for loan losses by loan class for the three-month and six-month periods ended June 30, 2012.

Three-month period ended June 30, 2012
($ in thousands)	Commercial			Commercial  Real Estate			Agriculture			Residential  Mortgage		Residential Construction			Consumer			Unallocated			Total
Balance as of March 31, 2012	$	3,582		$	1,715		$	1,167		$	1,194	$	1,125		$	1,340		$	234		$	10,357
Provision for loan losses		(294	)		689			73			422		(253	)		110			(71	)		676
Charge-offs		(537	)		(342	)		(115	)		-		(161	)		(370	)		-			(1,525	)
Recoveries		31			-			1			-		223			21			-			276
Net charge-offs		(506	)		(342	)		(114	)		-		62			(349	)		-			(1,249	)
Balance as of June 30, 2012		2,782			2,062			1,126			1,616		934			1,101			163			9,784

Six-month period ended June 30, 2012
($ in thousands)	Commercial			Commercial Real Estate			Agriculture			Residential  Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of December 31, 2011	$	3,598		$	1,747		$	1,934		$	1,135		$	1,198		$	796		$	-	$	10,408
Provision for loan losses		26			657			(696	)		512			(327	)		891			163		1,226
Charge-offs		(1,079	)		(342	)		(115	)		(31	)		(161	)		(634	)		-		(2,362	)
Recoveries		237			-			3			-			224			48			-		512
Net charge-offs		(842	)		(342	)		(112	)		(31	)		63			(586	)		-		(1,850	)
Balance as of June 30, 2012		2,782			2,062			1,126			1,616			934			1,101			163		9,784

The following table details the allowance for loan losses allocated to loans individually and collectively evaluated for impairment by loan class as of June 30, 2012.

($ in thousands)	Commercial		Commercial Real Estate		Agriculture		Residential Mortgage		Residential Construction		Consumer		Unallocated		Total
Period-end amount allocated to:
Loans individually evaluated for impairment		151		16		-		1,148		573		138		-		2,026
Loans collectively evaluated for impairment		2,631		2,046		1,126		468		361		963		163		7,758
Ending Balance	$	2,782	$	2,062	$	1,126	$	1,616	$	934	$	1,101	$	163	$	9,784

The following table details activity in the allowance for loan losses by loan class for the three-month and six-month periods ended June 30, 2011.

Three-month period ended June 30, 2011
($ in thousands)	Commercial			Commercial  Real Estate			Agriculture			Residential  Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of March 31, 2011	$	3,403		$	2,870		$	2,120		$	1,030		$	1,401		$	689		$	199	$	11,712
Provision for loan losses		681			15			639			83			(16	)		9			79		1,490
Charge-offs		(458	)		(1,406	)		(320	)		(173	)		(198	)		(228	)		-		(2,783	)
Recoveries		3			147			116			10			51			38			-		365
Net charge-offs		(455	)		(1,259	)		(204	)		(163	)		(147	)		(190	)		-		(2,418	)
Balance as of June 30, 2011		3,629			1,626			2,555			950			1,238			508			278		10,784

Six-month period ended June 30, 2011
($ in thousands)	Commercial			Commercial  Real Estate			Agriculture			Residential  Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of December 31, 2010	$	3,761		$	1,957		$	2,141		$	830		$	1,719		$	556		$	75	$	11,039
Provision for loan losses		482			935			618			300			(334	)		276			203		2,480
Charge-offs		(636	)		(1,413	)		(320	)		(191	)		(198	)		(448	)		-		(3,206	)
Recoveries		22			147			116			11			51			124			-		471
Net charge-offs		(614	)		(1,266	)		(204	)		(180	)		(147	)		(324	)		-		(2,735	)
Balance as of June 30, 2011		3,629			1,626			2,555			950			1,238			508			278		10,784

The following table details the allowance for loan losses allocated to loans individually and collectively evaluated for impairment by loan class as of June 30, 2011.

($ in thousands)	Commercial		Commercial  Real Estate		Agriculture		Residential  Mortgage		Residential Construction		Consumer		Unallocated		Total
Period-end amount allocated to:
Loans individually evaluated for impairment		277		221		-		622		606		2		-		1,728
Loans collectively evaluated for impairment		3,352		1,405		2,555		328		632		506		278		9,056
Ending Balance	$	3,629	$	1,626	$	2,555	$	950	$	1,238	$	508	$	278	$	10,784

The following table details activity in the allowance for loan losses and the amount allocated to loans individually and collectively evaluated for impairment as of and for the period ended December 31, 2011.

($ in thousands)	Commercial			Commercial  Real Estate			Agriculture			Residential  Mortgage			Residential Construction			Consumer			Unallocated			Total
Balance as of December 31, 2010	$	3,761		$	1,957		$	2,141		$	830		$	1,719		$	556		$	75		$	11,039
Provision for loan losses		2,033			1,502			511			566			(395	)		996			(75	)		5,138
Charge-offs		(2,381	)		(2,000	)		(860	)		(272	)		(197	)		(932	)		-			(6,642	)
Recoveries		185			288			142			11			71			176			-			873
Net charge-offs		(2,196	)		(1,712	)		(718	)		(261	)		(126	)		(756	)		-			(5,769	)
Balance as of December 31, 2011		3,598			1,747			1,934			1,135			1,198			796			-			10,408
Period-end amount allocated to:
Loans individually evaluated for impairment		101			22			-			731			668			126			-			1,648
Loans collectively evaluated for impairment		3,497			1,725			1,934			404			530			670			-			8,760
Ending Balance	$	3,598		$	1,747		$	1,934		$	1,135		$	1,198		$	796		$	-		$	10,408

 The Company's investment in loans as of June 30, 2012, June 30, 2011, and December 31, 2011 related to each balance in the allowance for loan losses by loan class and disaggregated on the basis of the Company's impairment methodology was as follows:

($ in thousands)	Commercial		Commercial Real Estate		Agriculture		Residential  Mortgage		Residential Construction		Consumer		Total
June 30, 2012
Loans individually evaluated for impairment	$	3,822	$	5,238	$	1,379	$	3,987	$	1,127	$	1,072	$	16,625
Loans collectively evaluated for impairment		91,284		180,942		44,253		46,925		6,604		60,419		430,427
Ending Balance	$	95,106	$	186,180	$	45,632	$	50,912	$	7,731	$	61,491	$	447,052
June 30, 2011
Loans individually evaluated for impairment	$	3,760	$	12,202	$	1,843	$	5,751	$	1,396	$	301	$	25,253
Loans collectively evaluated for impairment		77,628		169,798		50,121		45,688		6,535		67,108		416,878
Ending Balance	$	81,388	$	182,000	$	51,964	$	51,439	$	7,931	$	67,409	$	442,131
December 31, 2011
Loans individually evaluated for impairment	$	3,488	$	4,269	$	3,598	$	5,069	$	1,147	$	655	$	18,226
Loans collectively evaluated for impairment		88,426		171,524		48,466		46,517		6,345		63,495		424,773
Ending Balance	$	91,914	$	175,793	$	52,064	$	51,586	$	7,492	$	64,150	$	442,999