LOANS (Tables)

6 Months Ended

Jun. 30, 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)	June 30, 2014			December 31, 2013
Commercial	$	119,590		$	110,644
Commercial Real Estate		247,920			235,296
Agriculture		50,374			51,730
Residential Mortgage		51,591			52,809
Residential Construction		7,893			10,444
Consumer		51,704			54,079
		529,072			515,002
Allowance for loan losses		(8,174	)		(9,353	)
Net deferred origination fees and costs		1,225			1,201
Loans, net	$	522,123		$	506,850

Non-accrual loans by loan class

The Company’s non-accrual loans by loan class, as of June 30, 2014 and December 31, 2013 were as follows:

($ in thousands)	June 30, 2014		December 31, 2013
Commercial	$	2,694	$	2,609
Commercial Real Estate		2,016		2,607
Agriculture		—		1,590
Residential Mortgage		2,071		2,166
Residential Construction		82		93
Consumer		212		505
	$	7,075	$	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 June 30, 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
June 30, 2014
Commercial	$	429	$	—	$	2,545	$	2,974	$	116,616	$	119,590
Commercial Real Estate		555		1,713		491		2,759		245,161		247,920
Agriculture		—		—		—		—		50,374		50,374
Residential Mortgage		1,033		—		119		1,152		50,439		51,591
Residential Construction		40		—		77		117		7,776		7,893
Consumer		14		8		19		41		51,663		51,704
Total	$	2,071	$	1,721	$	3,251	$	7,043	$	522,029	$	529,072
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 June 30, 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
June 30, 2014
Commercial	$	4,054	$	2,688	$	560	$	3,248	$	37
Commercial Real Estate		3,137		2,016		1,103		3,119		55
Agriculture		—		—		—		—		—
Residential Mortgage		6,269		2,071		3,250		5,321		652
Residential Construction		1,091		82		838		920		124
Consumer		1,682		342		973		1,315		25
Total	$	16,233	$	7,199	$	6,724	$	13,923	$	893
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 June 30, 2014 and June 30, 2013 was as follows:

($ in thousands)	Three Months Ended June 30, 2014				Three Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	3,875	$	7	$	3,335	$	10
Commercial Real Estate		3,406		24		3,299		22
Agriculture		515		—		—		—
Residential Mortgage		5,357		42		5,299		34
Residential Construction		925		12		1,028		12
Consumer		1,494		20		928		8
Total	$	15,572	$	105	$	13,889	$	86

The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the six-month periods ended June 30, 2014 and June 30, 2013 was as follows:

($ in thousands)	Six Months Ended June 30, 2014				Six Months Ended June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	4,207	$	15	$	3,390	$	19
Commercial Real Estate		3,404		43		3,610		43
Agriculture		655		—		—		—
Residential Mortgage		5,484		74		5,082		61
Residential Construction		937		22		1,075		23
Consumer		1,286		34		963		16
Total	$	15,973	$	188	$	14,120	$	162

Loans modified as troubled debt restructurings

Loans modified as troubled debt restructurings during the three-month periods ended June 30, 2014 and June 30, 2013 were as follows:

($ in thousands)	Three Months Ended June 30, 2014
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Commercial		1	$	49	$	49
Total		1	$	49	$	49

($ in thousands)	Three Months Ended June 30, 2013
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Residential Mortgage		1	$	568	$	377
Total		1	$	568	$	377

Loans modified as troubled debt restructurings during the six-month periods ended June 30, 2014 and June 30, 2013 were as follows:

($ in thousands)	Six Months Ended June 30, 2014
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Commercial		1	$	49	$	49
Consumer		2		498		498
Total		3	$	547	$	547

($ in thousands)	Six Months Ended June 30, 2013
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Commercial		1	$	244	$	244
Residential Mortgage		1		568		377
Total		2	$	812	$	621

Risk ratings by loan class

The following table presents the risk ratings by loan class as of June 30, 2014 and December 31, 2013.

($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
June 30, 2014
Commercial	$	110,591	$	2,221	$	6,778	$	—	$	—	$	119,590
Commercial Real Estate		228,350		10,176		9,394		—		—		247,920
Agriculture		50,374		—		—		—		—		50,374
Residential Mortgage		47,748		199		3,644		—		—		51,591
Residential Construction		7,299		473		121		—		—		7,893
Consumer		47,495		997		3,212		—		—		51,704
Total	$	491,857	$	14,066	$	23,149	$	—	$	—	$	529,072
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

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, 2014.

Three-month period ended June 30, 2014
($ in thousands)	Commercial			Commercial Real Estate			Agriculture		Residential Mortgage			Residential Construction			Consumer			Unallocated			Total
Balance as of March 31, 2014	$	3,282		$	2,150		$	439	$	1,173		$	258		$	967		$	377		$	8,646
Provision for loan losses		1,191			(390	)		—		(47	)		(64	)		49			(139	)		600
Charge-offs		(1,024	)		(69	)		—		—			—			(26	)		—			(1,118	)
Recoveries		22			—			—		—			2			23			—			47
Net charge-offs		(1,002	)		(69	)		—		—			2			(3	)		—			(1,072	)
Balance as of June 30, 2014	$	3,471		$	1,691		$	439	$	1,126		$	196		$	1,013		$	238		$	8,174

Six-month period ended June 30, 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 loan losses		2,323			(530	)		(118	)		(90	)		(248	)		252			(389	)		1,200
Charge-offs		(2,085	)		(69	)		—			—			—			(328	)		—			(2,482	)
Recoveries		34			—			—			—			3			66			—			103
Net charge-offs		(2,051	)		(69	)		—			—			3			(262	)		—			(2,379	)
Balance as of June 30, 2013	$	3,471		$	1,691		$	439		$	1,126		$	196		$	1,013		$	238		$	8,174

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, 2014.

($ in thousands)	Commercial		Commercial Real Estate		Agriculture		Residential Mortgage		Residential Construction		Consumer		Unallocated		Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$	37	$	55	$	—	$	652	$	124	$	25	$	—	$	893
Loans collectively evaluated for impairment		3,434		1,636		439		474		72		988		238		7,281
Ending Balance	$	3,471	$	1,691	$	439	$	1,126	$	196	$	1,013	$	238	$	8,174

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, 2013.

Three-month period ended June 30, 2013
($ in thousands)	Commercial			Commercial Real Estate			Agriculture			Residential Mortgage			Residential Construction			Consumer			Unallocated		Total
Balance as of March 31, 2013	$	2,888		$	2,095		$	813		$	973		$	590		$	1,059		$	428	$	8,846
Provision for loan losses		(67	)		(105	)		(65	)		324			38			229			46		400
Charge-offs		(1	)		(3	)		—			(255	)		(127	)		(318	)		—		(704	)
Recoveries		49			50			—			12			2			71			—		184
Net charge-offs		48			47			—			(243	)		(125	)		(247	)		—		(520	)
Balance as of June 30, 2013	$	2,869		$	2,037		$	748		$	1,054		$	503		$	1,041		$	474	$	8,726

Six-month period ended June 30, 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 loan losses		(42	)		266			(169	)		227			(137	)		216			439		800
Charge-offs		(112	)		(3	)		(1	)		(333	)		(127	)		(376	)		—		(952	)
Recoveries		124			51			3			12			43			91			—		324
Net charge-offs		12			48			2			(321	)		(84	)		(285	)		—		(628	)
Balance as of June 30, 2013	$	2,869		$	2,037		$	748		$	1,054		$	503		$	1,041		$	474	$	8,726

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, 2013.

($ in thousands)	Commercial		Commercial Real Estate		Agriculture		Residential Mortgage		Residential Construction		Consumer		Unallocated		Total
Period-end amount allocated to:
Loans individually evaluated for impairment	$	84	$	18	$	—	$	628	$	267	$	76	$	—	$	1,073
Loans collectively evaluated for impairment		2,785		2,019		748		426		236		965		474		7,653
Ending Balance	$	2,869	$	2,037	$	748	$	1,054	$	503	$	1,041	$	474	$	8,726

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 June 30, 2014, June 30, 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
June 30, 2014
Loans individually evaluated for impairment	$	3,248	$	3,119	$	—	$	5,321	$	920	$	1,315	$	13,923
Loans collectively evaluated for impairment		116,342		244,801		50,374		46,270		6,973		50,389		515,149
Ending Balance	$	119,590	$	247,920	$	50,374	$	51,591	$	7,893	$	51,704	$	529,072
June 30, 2013
Loans individually evaluated for impairment	$	3,259	$	3,606	$	—	$	5,945	$	966	$	889	$	14,665
Loans collectively evaluated for impairment		97,281		208,994		48,058		46,381		7,617		54,884		463,215
Ending Balance	$	100,540	$	212,600	$	48,058	$	52,326	$	8,583	$	55,773	$	447,880
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