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LOANS (Tables)
 9 Months Ended
Sep. 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)
 
September 30,
2014
  
December 31,
2013
 
     
Commercial
 
$
117,241
  
$
110,644
 
Commercial Real Estate
  
253,960
   
235,296
 
Agriculture
  
55,293
   
51,730
 
Residential Mortgage
  
49,471
   
52,809
 
Residential Construction
  
5,395
   
10,444
 
Consumer
  
50,498
   
54,079
 
         
   
531,858
   
515,002
 
Allowance for loan losses
  
(8,402
)
  
(9,353
)
Net deferred origination fees and costs
  
1,340
   
1,201
 
         
Loans, net
 
$
524,796
  
$
506,850
 
Non-accrual loans by loan class
The Company’s non-accrual loans by loan class, as of September 30, 2014 and December 31, 2013 were as follows:

($ in thousands)
 
September 30,
2014
  
December 31,
2013
 
     
Commercial
 
$
2,198
  
$
2,609
 
Commercial Real Estate
  
1,648
   
2,607
 
Agriculture
  
—
   
1,590
 
Residential Mortgage
  
2,039
   
2,166
 
Residential Construction
  
76
   
93
 
Consumer
  
675
   
505
 
         
  
$
6,636
  
$
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 September 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
 
September 30, 2014
            
Commercial
 
$
—
  
$
142
  
$
192
  
$
334
  
$
116,907
  
$
117,241
 
Commercial Real Estate
  
388
   
—
   
1,156
   
1,544
   
252,416
   
253,960
 
Agriculture
  
—
   
—
   
—
   
—
   
55,293
   
55,293
 
Residential Mortgage
  
1,069
   
655
   
119
   
1,843
   
47,628
   
49,471
 
Residential Construction
  
39
   
—
   
73
   
112
   
5,283
   
5,395
 
Consumer
  
76
   
—
   
571
   
647
   
49,851
   
50,498
 
Total
 
$
1,572
  
$
797
  
$
2,111
  
$
4,480  
$
527,378  
$
531,858
 
                         
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 September 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
 
September 30, 2014
          
Commercial
 
$
2,864
  
$
2,193
  
$
545
  
$
2,738
  
$
36
 
Commercial Real Estate
  
2,758
   
1,648
   
1,092
   
2,740
   
56
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
6,215
   
2,039
   
3,228
   
5,267
   
645
 
Residential Construction
  
1,077
   
76
   
832
   
908
   
111
 
Consumer
  
2,088
   
804
   
882
   
1,686
   
22
 
Total
 
$
15,002
  
$
6,760
  
$
6,579
  
$
13,339
  
$
870
 
                     
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
 
Average recorded investment and 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 September 30, 2014 and September 30, 2013 was as follows:
 
($ in thousands)
 
Three Months Ended
September 30, 2014
  
Three Months Ended
September 30, 2013
 
  
Average Recorded Investment
  
Interest Income Recognized
  
Average Recorded Investment
  
Interest Income Recognized
 
Commercial
 
$
2,993
  
$
9
  
$
3,335
  
$
10
 
Commercial Real Estate
  
2,930
   
20
   
3,341
   
22
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
5,293
   
32
   
5,796
   
42
 
Residential Construction
  
914
   
9
   
961
   
10
 
Consumer
  
1,500
   
11
   
896
   
14
 
Total
 
$
13,630
  
$
81
  
$
14,329
  
$
98
 

The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the nine-month periods ended September 30, 2014 and September 30, 2013 was as follows:
 
($ in thousands)
 
Nine Months Ended
September 30, 2014
  
Nine Months Ended
September 30, 2013
 
  
Average Recorded Investment
  
Interest Income Recognized
  
Average Recorded Investment
  
Interest Income Recognized
 
Commercial
 
$
4,039
  
$
19
  
$
3,342
  
$
29
 
Commercial Real Estate
  
3,320
   
58
   
3,180
   
65
 
Agriculture
  
655
   
—
   
—
   
—
 
Residential Mortgage
  
5,389
   
96
   
5,267
   
103
 
Residential Construction
  
925
   
29
   
1,027
   
33
 
Consumer
  
1,482
   
40
   
974
   
30
 
Total
 
$
15,810
  
$
242
  
$
13,790
  
$
260
 
Loans modified as troubled debt restructurings
There were no loans modified as troubled debt restructurings during the three-month period ended September 30, 2014.  Loans modified as troubled debt restructurings during the three-month period ended September 30, 2013 were as follows:
 
($ in thousands)
 
Three Months Ended September 30, 2013
 
 
Number of Contracts
  
Pre-modification outstanding recorded investment
  
Post-modification outstanding recorded investment
 
Commercial
  
1
  
$
149
  
$
149
 
Consumer
  
3
   
233
   
233
 
Total
  
4
  
$
382
  
$
382
 

Loans modified as troubled debt restructurings during the nine-month periods ended September 30, 2014 and September 30, 2013 were as follows:
 
($ in thousands)
 
Nine Months Ended September 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)
 
Nine Months Ended September 30, 2013
 
  
Number of Contracts
  
Pre-modification outstanding recorded investment
  
Post-modification outstanding recorded investment
 
Commercial
  
2
  
$
393
  
$
393
 
Residential Mortgage
  
1
   
568
   
377
 
Consumer
  
3
   
233
   
233
 
Total
  
6
  
$
1,194
  
$
1,003
 
Risk ratings by loan class
The following table presents the risk ratings by loan class as of September 30, 2014 and December 31, 2013:

($ in thousands)
 
Pass
  
Special Mention
  
Substandard
  
Doubtful
  
Loss
  
Total
 
September 30, 2014
            
Commercial
 
$
108,852
  
$
2,610
  
$
5,779
  
$
—
  
$
—
  
$
117,241
 
Commercial Real Estate
  
235,515
   
9,491
   
8,954
   
—
   
—
   
253,960
 
Agriculture
  
55,293
   
—
   
—
   
—
   
—
   
55,293
 
Residential Mortgage
  
45,143
   
198
   
4,130
   
—
   
—
   
49,471
 
Residential Construction
  
4,809
   
470
   
116
   
—
   
—
   
5,395
 
Consumer
  
46,394
   
944
   
3,160
   
—
   
—
   
50,498
 
Total
 
$
496,006
  
$
13,713
  
$
22,139
  
$
—
  
$
—
  
$
531,858
 
                         
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 and nine-month periods ended September 30, 2014:

Three-month period ended September 30, 2014
 
($ in thousands)
 
Commercial
  
Commercial Real Estate
  
Agriculture
  
Residential Mortgage
  
Residential Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of June 30, 2014
 
$
3,471
  
$
1,691
  
$
439
  
$
1,126
  
$
196
  
$
1,013
  
$
238
  
$
8,174
 
Provision for loan losses
  
314
   
(66
)
  
108
   
53
   
(77
)
  
(58
)
  
126
   
400
 
                                 
Charge-offs
  
(203
)
  
—
   
—
   
—
   
—
   
(50
)
  
—
   
(253
)
Recoveries
  
12
   
—
   
—
   
—
   
42
   
27
   
—
   
81
 
Net charge-offs
  
(191
)
  
—
   
—
   
—
   
42
   
(23
)
  
—
   
(172
)
Balance as of September 30, 2014
 
$
3,594
  
$
1,625
  
$
547
  
$
1,179
  
$
161
  
$
932
  
$
364
  
$
8,402
 

Nine-month period ended September 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
  
2,637
   
(596
)
  
(10
)
  
(37
)
  
(325
)
  
194
   
(263
)
  
1,600
 
                                 
Charge-offs
  
(2,288
)
  
(69
)
  
—
   
—
   
—
   
(378
)
  
—
   
(2,735
)
Recoveries
  
46
   
—
   
—
   
—
   
45
   
93
   
—
   
184
 
Net charge-offs
  
(2,242
)
  
(69
)
  
—
   
—
   
45
   
(285
)
  
—
   
(2,551
)
Balance as of September 30, 2014
 
$
3,594
  
$
1,625
  
$
547
  
$
1,179
  
$
161
  
$
932
  
$
364
  
$
8,402
 

The following table details the allowance for loan losses allocated to loans individually and collectively evaluated for impairment by loan class as of September 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
 
$
36
  
$
56
  
$
—
  
$
645
  
$
111
  
$
22
  
$
—
  
$
870
 
Loans collectively evaluated for impairment
  
3,558
   
1,569
   
547
   
534
   
50
   
910
   
364
   
7,532
 
Ending Balance
 
$
3,594
  
$
1,625
  
$
547
  
$
1,179
  
$
161
  
$
932
  
$
364
  
$
8,402
 

The following table details activity in the allowance for loan losses by loan class for the three-month and nine-month periods ended September 30, 2013:

Three-month period ended September 30, 2013
 
($ in thousands)
 
Commercial
  
Commercial Real Estate
  
Agriculture
  
Residential Mortgage
  
Residential Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of June, 30, 2013
 
$
2,869
  
$
2,037
  
$
748
  
$
1,054
  
$
503
  
$
1,041
  
$
474
  
$
8,726
 
Provision for loan losses
  
191
   
309
   
(137
)
  
(127
)
  
(70
)
  
126
   
(292
)
  
—
 
                                 
Charge-offs
  
(1
)
  
—
   
—
   
—
   
—
   
(115
)
  
—
   
(116
)
Recoveries
  
25
   
—
   
—
   
145
   
1
   
11
   
—
   
182
 
Net charge-offs
  
24
   
—
   
—
   
145
   
1
   
(104
)
  
—
   
66
 
Balance as of September 30, 2013
 
$
3,084
  
$
2,346
  
$
611
  
$
1,072
  
$
434
  
$
1,063
  
$
182
  
$
8,792
 

Nine-month period ended September 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
  
149
   
575
   
(306
)
  
100
   
(207
)
  
342
   
147
   
800
 
                                 
Charge-offs
  
(113
)
  
(3
)
  
(1
)
  
(333
)
  
(127
)
  
(491
)
  
—
   
(1,068
)
Recoveries
  
149
   
51
   
3
   
157
   
44
   
102
   
—
   
506
 
Net charge-offs
  
36
   
48
   
2
   
(176
)
  
(83
)
  
(389
)
  
—
   
(562
)
Balance as of September 30, 2013
 
$
3,084
  
$
2,346
  
$
611
  
$
1,072
  
$
434
  
$
1,063
  
$
182
  
$
8,792
 

The following table details the allowance for loan losses allocated to loans individually and collectively evaluated for impairment by loan class as of September 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
 
$
107
  
$
20
  
$
—
  
$
622
  
$
252
  
$
74
  
$
—
  
$
1,075
 
Loans collectively evaluated for impairment
  
2,977
   
2,326
   
611
   
450
   
182
   
989
   
182
   
7,717
 
Ending Balance
 
$
3,084
  
$
2,346
  
$
611
  
$
1,072
  
$
434
  
$
1,063
  
$
182
  
$
8,792
 

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 September 30, 2014, September 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
 
September 30, 2014
 
Loans individually evaluated for impairment
 
$
2,738
  
$
2,740
  
$
—
  
$
5,267
  
$
908
  
$
1,686
  
$
13,339
 
Loans collectively evaluated for impairment
  
114,503
   
251,220
   
55,293
   
44,204
   
4,487
   
48,812
   
518,519
 
Ending Balance
 
$
117,241
  
$
253,960
  
$
55,293
  
$
49,471
  
$
5,395
  
$
50,498
  
$
531,858
 
                             
September 30, 2013
 
Loans individually evaluated for impairment
 
$
3,410
  
$
3,078
  
$
—
  
$
5,647
  
$
955
  
$
903
  
$
13,993
 
Loans collectively evaluated for impairment
  
103,341
   
227,206
   
49,657
   
47,197
   
8,599
   
54,967
   
490,967
 
Ending Balance
 
$
106,751
  
$
230,284
  
$
49,657
  
$
52,844
  
$
9,554
  
$
55,870
  
$
504,960
 
                             
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