LOANS (Tables)

3 Months Ended

Mar. 31, 2014

LOANS [Abstract]

Composition of loan portfolio, by loan class

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

($ in thousands)	March 31, 2014			December 31, 2013
Commercial	$	112,778		$	110,644
Commercial Real Estate		243,945			235,296
Agriculture		40,926			51,730
Residential Mortgage		52,755			52,809
Residential Construction		9,387			10,444
Consumer		52,780			54,079
		512,571			515,002
Allowance for loan losses		(8,646	)		(9,353	)
Net deferred origination fees and costs		1,165			1,201
Loans, net	$	505,090		$	506,850

Non-accrual loans by loan class

The Company’s non-accrual loans by loan class, as of March 31, 2014 and December 31, 2013 were as follows:

($ in thousands)	March 31, 2014		December 31, 2013
Commercial	$	3,895	$	2,609
Commercial Real Estate		2,578		2,607
Agriculture		1,029		1,590
Residential Mortgage		2,123		2,166
Residential Construction		87		93
Consumer		564		505
	$	10,276	$	9,570

Age analysis of past due loans, segregated by loan class

An age analysis of past due loans, segregated by loan class, as of March 31, 2014 and December 31, 2013 is as follows:

($ in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or more Past Due		Total Past Due		Current		Total Loans
March 31, 2014
Commercial	$	430	$	1,997	$	530	$	2,957	$	109,821	$	112,778
Commercial Real Estate		1,085		—		1,019		2,104		241,841		243,945
Agriculture		—		476		—		476		40,450		40,926
Residential Mortgage		685		—		99		784		51,971		52,755
Residential Construction		121		—		—		121		9,266		9,387
Consumer		460		27		35		522		52,258		52,780
Total	$	2,781	$	2,500	$	1,683	$	6,964	$	505,607	$	512,571
December 31, 2013
Commercial	$	200	$	96	$	269	$	565	$	110,079	$	110,644
Commercial Real Estate		49		341		531		921		234,375		235,296
Agriculture		—		—		—		—		51,730		51,730
Residential Mortgage		207		—		99		306		52,503		52,809
Residential Construction		40		8		—		48		10,396		10,444
Consumer		26		—		23		49		54,030		54,079
Total	$	522	$	445	$	922	$	1,889	$	513,113	$	515,002

Impaired loans, segregated by loan class

Impaired loans, segregated by loan class, as of March 31, 2014 and December 31, 2013 were as follows:

($ in thousands)	Unpaid Contractual Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance
March 31, 2014
Commercial	$	5,230	$	3,887	$	615	$	4,502	$	54
Commercial Real Estate		3,710		2,578		1,114		3,692		56
Agriculture		1,029		1,029		—		1,029		—
Residential Mortgage		6,343		2,123		3,271		5,394		693
Residential Construction		1,103		87		844		931		118
Consumer		2,242		1,144		530		1,674		19
Total	$	19,657	$	10,848	$	6,374	$	17,222	$	940
December 31, 2013
Commercial	$	5,794	$	5,010	$	656	$	5,666	$	83
Commercial Real Estate		3,746		2,607		1,122		3,729		63
Agriculture		1,878		1,591		—		1,591		—
Residential Mortgage		6,524		2,166		3,409		5,575		701
Residential Construction		1,115		94		849		943		254
Consumer		1,621		563		690		1,253		24
Total	$	20,678	$	12,031	$	6,726	$	18,757	$	1,125

Interest income on impaired loans recognized using accrual basis method of accounting

The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the three-month periods ended March 31, 2014 and March 31, 2013 was as follows:

($ in thousands)	Three Months Ended March 31, 2014				Three Months Ended March 31, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	4,210	$	9	$	3,531	$	8
Commercial Real Estate		3,526		19		4,018		22
Agriculture		655		—		345		—
Residential Mortgage		5,640		32		4,592		27
Residential Construction		949		10		1,115		11
Consumer		1,180		14		1,009		8
Total	$	16,160	$	84	$	14,610	$	76

Loans modified as troubled debt restructurings

Loans modified as troubled debt restructurings during the three-month periods ended March 31, 2014 and March 31, 2013 were as follows:

($ in thousands)	Three Months Ended March 31, 2014
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer		2	$	498	$	498
Total		2	$	498	$	498

($ in thousands)	Three Months Ended March 31, 2013
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Commercial		1	$	244	$	244
Total		1	$	244	$	244

Risk ratings by loan class

The following table presents the risk ratings by loan class as of March 31, 2014 and December 31, 2013.

($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
March 31, 2014
Commercial	$	102,066	$	2,250	$	8,462	$	—	$	—	$	112,778
Commercial Real Estate		228,475		5,079		10,391		—		—		243,945
Agriculture		39,897		—		1,029		—		—		40,926
Residential Mortgage		49,058		—		3,697		—		—		52,755
Residential Construction		8,593		667		127		—		—		9,387
Consumer		47,162		2,497		3,121		—		—		52,780
Total	$	475,251	$	10,493	$	26,827	$	—	$	—	$	512,571
December 31, 2013
Commercial	$	98,755	$	2,762	$	9,127	$	—	$	—	$	110,644
Commercial Real Estate		218,884		5,978		10,434		—		—		235,296
Agriculture		50,139		—		1,591		—		—		51,730
Residential Mortgage		48,519		539		3,751		—		—		52,809
Residential Construction		7,823		1,167		1,454		—		—		10,444
Consumer		48,903		2,585		2,591		—		—		54,079
Total	$	473,023	$	13,031	$	28,948	$	—	$	—	$	515,002

Allowance for loan losses

The following table details activity in the allowance for loan losses by loan class for the three-month periods ended March 31, 2014 and March 31, 2013.

Three-month period ended March 31, 2014
($ in thousands)	Commercial			Commercial Real Estate			Agriculture			Residential Mortgage			Residential Construction			Consumer			Unallocated			Total
Balance as of December 31, 2013	$	3,199		$	2,290		$	557		$	1,216		$	441		$	1,023		$	627		$	9,353
Provision for (reversal of) loan losses		1,133			(140	)		(118	)		(43	)		(185	)		203			(250	)		600
Charge-offs		(1,062	)		—			—			—			—			(302	)		—			(1,364	)
Recoveries		12			—			—			—			2			43			—			57
Net charge-offs		(1,050	)		—			—			—			2			(259	)		—			(1,307	)
Balance as of March 31, 2014	$	3,282		$	2,150		$	439		$	1,173		$	258		$	967		$	377		$	8,646
Period-end amount allocated to:
Loans individually evaluated for impairment		54			56			—			693			118			19			—			940
Loans collectively evaluated for impairment		3,228			2,094			439			480			140			948			377			7,706
Balance as of March 31, 2014	$	3,282		$	2,150		$	439		$	1,173		$	258		$	967		$	377		$	8,846

Three-month period ended March 31, 2013
($ in thousands)	Commercial			Commercial Real Estate		Agriculture			Residential Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of December 31, 2012	$	2,899		$	1,723	$	915		$	1,148		$	724		$	1,110		$	35	$	8,554
Provision for (reversal of) loan losses		25			371		(104	)		(97	)		(175	)		(13	)		393		400
Charge-offs		(111	)		—		(1	)		(78	)		—			(58	)		—		(248	)
Recoveries		75			1		3			—			41			20			—		140
Net charge-offs		(36	)		1		2			(78	)		41			(38	)		—		(108	)
Balance as of March 31, 2013	$	2,888		$	2,095	$	813		$	973		$	590		$	1,059		$	428	$	8,846
Period-end amount allocated to:
Loans individually evaluated for impairment		82			22		—			448			370			103			—		1,025
Loans collectively evaluated for impairment		2,806			2,073		813			525			220			956			428		7,821
Balance as of March 31, 2013	$	2,888		$	2,095	$	813		$	973		$	590		$	1,059		$	428	$	8,846

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, 2013.

Year ended December 31, 2013
($ in thousands)	Commercial			Commercial Real Estate			Agriculture			Residential Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of December 31, 2012	$	2,899		$	1,723		$	915		$	1,148		$	724		$	1,110		$	35	$	8,554
Provision for (reversal of) loan losses		91			533			(360	)		244			(201	)		301			592		1,200
Charge-offs		(168	)		(17	)		(1	)		(333	)		(127	)		(572	)		—		(1,218	)
Recoveries		377			51			3			157			45			184			—		817
Net charge-offs		209			34			2			(176	)		(82	)		(388	)		—		(401	)
Ending Balance		3,199			2,290			557			1,216			441			1,023			627		9,353
Period-end amount allocated to:
Loans individually evaluated for impairment		83			63			—			701			254			24			—		1,125
Loans collectively evaluated for impairment		3,116			2,227			557			515			187			999			627		8,228
Balance as of December 31, 2013	$	3,199		$	2,290		$	557		$	1,216		$	441		$	1,023		$	627	$	9,353

The Company’s investment in loans as of March 31, 2014, March 31, 2013, and December 31, 2013 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
March 31, 2014
Loans individually evaluated for impairment	$	4,502	$	3,692	$	1,029	$	5,394	$	931	$	1,674	$	17,222
Loans collectively evaluated for impairment		108,276		240,253		39,897		47,361		8,456		51,106		495,349
Ending Balance	$	112,778	$	243,945	$	40,926	$	52,755	$	9,387	$	52,780	$	512,571
March 31, 2013
Loans individually evaluated for impairment	$	3,410	$	2,993	$	—	$	4,654	$	1,091	$	968	$	13,116
Loans collectively evaluated for impairment		90,843		193,088		40,012		47,106		6,893		56,585		434,527
Ending Balance	$	94,253	$	196,081	$	40,012	$	51,760	$	7,984	$	57,553	$	447,643
December 31, 2013
Loans individually evaluated for impairment	$	5,666	$	3,729	$	1,591	$	5,575	$	943	$	1,253	$	18,757
Loans collectively evaluated for impairment		104,978		231,567		50,139		47,234		9,501		52,826		496,245
Ending Balance	$	110,644	$	235,296	$	51,730	$	52,809	$	10,444	$	54,079	$	515,002