LOANS (Tables)

3 Months Ended

Mar. 31, 2015

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, 2015			December 31, 2014

Commercial	$	115,933		$	120,751
Commercial Real Estate		264,880			256,955
Agriculture		54,719			61,144
Residential Mortgage		49,696			50,511
Residential Construction		10,096			5,963
Consumer		49,175			49,911

		544,499			545,235
Allowance for loan losses		(8,894	)		(8,583	)
Net deferred origination fees and costs		1,329			1,327

Loans, net	$	536,934		$	537,979

Non-accrual loans by loan class

The Company’s non-accrual loans by loan class, as of March 31, 2015 and December 31, 2014 were as follows:

($ in thousands)	March 31, 2015		December 31, 2014

Commercial	$	2,076	$	2,151
Commercial Real Estate		659		672
Agriculture		—		—
Residential Mortgage		1,665		1,691
Residential Construction		66		71
Consumer		599		652

	$	5,065	$	5,237

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, 2015 and December 31, 2014 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, 2015
Commercial	$	—	$	—	$	82	$	82	$	115,851	$	115,933
Commercial Real Estate		—		—		239		239		264,641		264,880
Agriculture		—		—		—		—		54,719		54,719
Residential Mortgage		1,787		—		456		2,243		47,453		49,696
Residential Construction		—		—		—		—		10,096		10,096
Consumer		77		6		423		506		48,669		49,175
Total	$	1,864	$	6	$	1,200	$	3,070	$	541,429	$	544,499

December 31, 2014
Commercial	$	—	$	—	$	82	$	82	$	120,669	$	120,751
Commercial Real Estate		—		—		239		239		256,716		256,955
Agriculture		—		—		—		—		61,144		61,144
Residential Mortgage		1,172		—		457		1,629		48,882		50,511
Residential Construction		—		—		—		—		5,963		5,963
Consumer		2		1		472		475		49,436		49,911
Total	$	1,174	$	1	$	1,250	$	2,425	$	542,810	$	545,235

Impaired loans, segregated by loan class

Impaired loans, segregated by loan class, as of March 31, 2015 and December 31, 2014 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, 2015
Commercial	$	2,704	$	2,073	$	505	$	2,578	$	31
Commercial Real Estate		974		659		301		960		45
Agriculture		—		—		—		—		—
Residential Mortgage		5,378		1,665		2,930		4,595		638
Residential Construction		1,012		66		819		885		105
Consumer		1,751		727		755		1,482		31
Total	$	11,819	$	5,190	$	5,310	$	10,500	$	850

December 31, 2014
Commercial	$	2,803	$	2,147	$	531	$	2,678	$	39
Commercial Real Estate		990		672		304		976		45
Agriculture		—		—		—		—		—
Residential Mortgage		5,666		1,691		2,956		4,647		646
Residential Construction		1,065		71		826		897		107
Consumer		1,506		780		726		1,506		23
Total	$	12,030	$	5,361	$	5,343	$	10,704	$	860

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 March 31, 2015 and March 31, 2014 was as follows:

($ in thousands)	Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial	$	2,628	$	8	$	5,084	$	9
Commercial Real Estate		968		4		3,711		19
Agriculture		—		—		1,310		—
Residential Mortgage		4,621		31		5,484		32
Residential Construction		891		9		937		10
Consumer		1,494		11		1,464		14
Total	$	10,602	$	63	$	17,990	$	84

Loans modified as troubled debt restructurings

Loans modified as troubled debt restructurings during the three-month period ended March 31, 2015 and March 31, 2014, were as follows:

($ in thousands)	Three Months Ended March 31, 2015
	Number of Contracts		Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment
Consumer		1		109		109
Total		1	$	109	$	109

($ 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

Risk ratings by loan class

The following table presents the risk ratings by loan class as of March 31, 2015 and December 31, 2014:

($ in thousands)	Pass		Special Mention		Substandard		Doubtful		Loss		Total
March 31, 2015
Commercial	$	109,143	$	2,485	$	4,305	$	—	$	—	$	115,933
Commercial Real Estate		248,550		10,843		5,487		—		—		264,880
Agriculture		54,719		—		—		—		—		54,719
Residential Mortgage		44,498		1,429		3,769		—		—		49,696
Residential Construction		9,528		464		104		—		—		10,096
Consumer		45,559		945		2,671		—		—		49,175
Total	$	511,997	$	16,166	$	16,336	$	—	$	—	$	544,499

December 31, 2014
Commercial	$	112,751	$	3,255	$	4,745	$	—	$	—	$	120,751
Commercial Real Estate		240,808		10,607		5,540		—		—		256,955
Agriculture		61,144		—		—		—		—		61,144
Residential Mortgage		46,043		997		3,471		—		—		50,511
Residential Construction		5,386		467		110		—		—		5,963
Consumer		46,234		944		2,733		—		—		49,911
Total	$	512,366	$	16,270	$	16,599	$	—	$	—	$	545,235

Allowance for loan losses

The following tables details activity in the allowance for loan losses by loan class for the three-month periods ended March 31, 2015 and March 31, 2014:

Three-month period ended March 31, 2015
($ in thousands)	Commercial			Commercial Real Estate		Agriculture		Residential Mortgage			Residential Construction		Consumer			Unallocated		Total
Balance as of December 31, 2014	$	3,581		$	1,825	$	580	$	1,181		$	161	$	886		$	369	$	8,583
Provision for loan losses		(268	)		660		66		(134	)		33		(8	)		1		350

Charge-offs		—			—		—		—			—		(67	)		—		(67	)
Recoveries		12			—		—		—			1		15			—		28
Net charge-offs		12			—		—		—			1		(52	)		—		(39	)
Balance as of March 31, 2015	$	3,325		$	2,485	$	646	$	1,047		$	195	$	826		$	370	$	8,894
Period-end amount allocated to:
Loans individually evaluated for impairment		31			45		—		638			105		31			—		850
Loans collectively evaluated for impairment		3,294			2,440		646		409			90		795			370		8,044
Balance as of March 31, 2015	$	3,325		$	2,485	$	646	$	1,047		$	195	$	826		$	370	$	8,894

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		$	8,646

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, 2014.

Year ended December 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			2,612			(396	)		23		36			(366	)		149			(258	)		1,800

Charge-offs			(2,288	)		(69	)		—		(71	)		—			(393	)		—			(2,821	)
Recoveries			58			—			—		—			86			107			—			251
Net charge-offs			(2,230	)		(69	)		—		(71	)		86			(286	)		—			(2,570	)
Ending Balance			3,581			1,825			580		1,181			161			886			369			8,583
Period-end amount allocated to:
Loans individually evaluated for impairment			39			45			—		646			107			23			—			860
Loans collectively evaluated for impairment			3,542			1,780			580		535			54			863			369			7,723
Balance as of December 31, 2014		$	3,581		$	1,825		$	580	$	1,181		$	161		$	886		$	369		$	8,583

The Company’s investment in loans as of March 31, 2015, March 31, 2014, and December 31, 2014 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, 2015
Loans individually evaluated for impairment	$	2,578	$	960	$	—	$	4,595	$	885	$	1,482	$	10,500
Loans collectively evaluated for impairment		113,355		263,920		54,719		45,101		9,211		47,693		533,999
Ending Balance	$	115,933	$	264,880	$	54,719	$	49,696	$	10,096	$	49,175	$	544,499

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

December 31, 2014
Loans individually evaluated for impairment	$	2,678	$	976	$	—	$	4,647	$	897	$	1,506	$	10,704
Loans collectively evaluated for impairment		118,073		255,979		61,144		45,864		5,066		48,405		534,531
Ending Balance	$	120,751	$	256,955	$	61,144	$	50,511	$	5,963	$	49,911	$	545,235