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LOANS (Tables)
 6 Months Ended
Jun. 30, 2016
LOANS [Abstract]  
Composition of Loan Portfolio, by Loan Class
The composition of the Company's loan portfolio, by loan class, as of June 30, 2016 and December 31, 2015 was as follows:
 
($ in thousands)
 
June 30, 2016
  
December 31, 2015
 
 
      
Commercial
 
$
132,347
  
$
136,095
 
Commercial Real Estate
  
313,533
   
292,316
 
Agriculture
  
92,766
   
84,813
 
Residential Mortgage
  
43,670
   
43,375
 
Residential Construction
  
17,554
   
12,110
 
Consumer
  
42,819
   
45,386
 
 
        
 
  
642,689
   
614,095
 
Allowance for loan losses
  
(10,030
)
  
(9,251
)
Net deferred origination fees and costs
  
1,099
   
1,009
 
 
        
Loans, net
 
$
633,758
  
$
605,853
 
Non-accrual Loans by Loan Class
The Company's non-accrual loans by loan class, as of June 30, 2016 and December 31, 2015 were as follows:
 
($ in thousands)
 
June 30, 2016
  
December 31, 2015
 
 
      
Commercial
 
$
56
  
$
112
 
Commercial Real Estate
  
580
   
964
 
Agriculture
  
—
   
—
 
Residential Mortgage
  
553
   
1,092
 
Residential Construction
  
—
   
—
 
Consumer
  
162
   
560
 
 
        
 
 
$
1,351
  
$
2,728
 
Aging Analysis of Past Due Loans, Segregated by Loan Class
An aging analysis of past due loans, segregated by loan class, as of June 30, 2016 and December 31, 2015, are 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, 2016
                  
Commercial
 
$
388
  
$
—
  
$
—
  
$
388
  
$
131,959
  
$
132,347
 
Commercial Real Estate
  
—
   
—
   
—
   
—
   
313,533
   
313,533
 
Agriculture
  
—
   
—
   
—
   
—
   
92,766
   
92,766
 
Residential Mortgage
  
361
   
—
   
—
   
361
   
43,309
   
43,670
 
Residential Construction
  
—
   
—
   
—
   
—
   
17,554
   
17,554
 
Consumer
  
65
   
—
   
107
   
172
   
42,647
   
42,819
 
Total
 
$
814
  
$
—
  
$
107
  
$
921
  
$
641,768
  
$
642,689
 
 
                        
December 31, 2015
                        
Commercial
 
$
218
  
$
—
  
$
57
  
$
275
  
$
135,820
  
$
136,095
 
Commercial Real Estate
  
130
   
—
   
232
   
362
   
291,954
   
292,316
 
Agriculture
  
—
   
—
   
—
   
—
   
84,813
   
84,813
 
Residential Mortgage
  
—
   
—
   
—
   
—
   
43,375
   
43,375
 
Residential Construction
  
—
   
—
   
—
   
—
   
12,110
   
12,110
 
Consumer
  
19
   
5
   
429
   
453
   
44,933
   
45,386
 
Total
 
$
367
  
$
5
  
$
718
  
$
1,090
  
$
613,005
  
$
614,095
 
Impaired Loans, Segregated by Loan Class
Impaired loans, segregated by loan class, as of June 30, 2016 and December 31, 2015 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, 2016
               
Commercial
 
$
950
  
$
56
  
$
762
  
$
818
  
$
36
 
Commercial Real Estate
  
912
   
580
   
289
   
869
   
40
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
3,351
   
553
   
2,433
   
2,986
   
598
 
Residential Construction
  
987
   
205
   
782
   
987
   
109
 
Consumer
  
1,042
   
244
   
529
   
773
   
36
 
Total
 
$
7,242
  
$
1,638
  
$
4,795
  
$
6,433
  
$
819
 
 
                    
December 31, 2015
                    
Commercial
 
$
933
  
$
97
  
$
821
  
$
918
  
$
43
 
Commercial Real Estate
  
1,292
   
964
   
294
   
1,258
   
42
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
3,968
   
1,092
   
2,484
   
3,576
   
615
 
Residential Construction
  
1,005
   
—
   
1,005
   
1,005
   
119
 
Consumer
  
1,625
   
631
   
690
   
1,321
   
33
 
Total
 
$
8,823
  
$
2,784
  
$
5,294
  
$
8,078
  
$
852
 
Average Recorded Investment and Interest Income in 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 months ended June 30, 2016 and June 30, 2015 was as follows:
 
($ in thousands)
 
Three Months Ended
June 30, 2016
  
Three Months Ended
June 30, 2015
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
940
  
$
10
  
$
2,650
  
$
12
 
Commercial Real Estate
  
880
   
4
   
1,084
   
4
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
3,265
   
23
   
4,205
   
27
 
Residential Construction
  
992
   
11
   
879
   
9
 
Consumer
  
739
   
9
   
1,428
   
9
 
Total
 
$
6,816
  
$
57
  
$
10,246
  
$
61
 
 
The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the six months ended June 30, 2016 and June 30, 2015 was as follows:
 
($ in thousands)
 
Six Months Ended
June 30, 2016
  
Six Months Ended
June 30, 2015
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
933
  
$
22
  
$
2,659
  
$
20
 
Commercial Real Estate
  
1,006
   
8
   
1,048
   
8
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
3,369
   
47
   
4,352
   
58
 
Residential Construction
  
996
   
23
   
885
   
18
 
Consumer
  
933
   
53
   
1,454
   
19
 
Total
 
$
7,237
  
$
153
  
$
10,398
  
$
123
 
Loans Modified as TDR's
Loans modified as TDRs during the three months ended June 30, 2015 were as follows:

($ in thousands)
Three Months Ended June 30, 2015
 
 
Number of
Contracts
 
Pre-modification
outstanding
recorded
investment
 
Post-
modification
outstanding
recorded
investment
 
Commercial
  
1
  
$
419
  
$
419
 
Total
  
1
  
$
419
  
$
419
 


Loans modified as TDRs during the six months ended June 30, 2016 and June 30, 2015 were as follows:

($ in thousands)
Six Months Ended June 30, 2016
 
 
Number of
Contracts
 
Pre-modification
outstanding
recorded
investment
 
Post-
modification
outstanding
recorded
investment
 
Commercial
  
1
  
$
180
  
$
180
 
Total
  
1
  
$
180
  
$
180
 

($ in thousands)
Six Months Ended June 30, 2015
 
 
Number of
Contracts
 
Pre-modification
outstanding
recorded
investment
 
Post-
modification
outstanding
recorded
investment
 
Commercial
  
1
  
$
419
  
$
419
 
Consumer
  
1
   
109
   
109
 
Total
  
2
  
$
528
  
$
528
 
Risk Ratings by Loan Class
The following table presents the risk ratings by loan class as of June 30, 2016 and December 31, 2015:

($ in thousands)
 
Pass
  
Special Mention
  
Substandard
  
Doubtful
  
Loss
  
Total
 
June 30, 2016
                  
Commercial
 
$
118,781
  
$
6,459
  
$
7,107
  
$
—
  
$
—
  
$
132,347
 
Commercial Real Estate
  
296,051
   
14,493
   
2,989
   
—
   
—
   
313,533
 
Agriculture
  
92,049
   
—
   
717
   
—
   
—
   
92,766
 
Residential Mortgage
  
41,180
   
1,802
   
688
   
—
   
—
   
43,670
 
Residential Construction
  
16,963
   
444
   
147
   
—
   
—
   
17,554
 
Consumer
  
40,963
   
841
   
1,015
   
—
   
—
   
42,819
 
Total
 
$
605,987
  
$
24,039
  
$
12,663
  
$
—
  
$
—
  
$
642,689
 
 
                        
December 31, 2015
                        
Commercial
 
$
125,562
  
$
6,842
  
$
3,691
  
$
—
  
$
—
  
$
136,095
 
Commercial Real Estate
  
268,707
   
8,301
   
15,308
   
—
   
—
   
292,316
 
Agriculture
  
84,813
   
—
   
—
   
—
   
—
   
84,813
 
Residential Mortgage
  
40,231
   
1,847
   
1,297
   
—
   
—
   
43,375
 
Residential Construction
  
11,593
   
452
   
65
   
—
   
—
   
12,110
 
Consumer
  
42,990
   
1,025
   
1,371
   
—
   
—
   
45,386
 
Total
 
$
573,896
  
$
18,467
  
$
21,732
  
$
—
  
$
—
  
$
614,095
 
Allowance for Loan Losses
The following tables detail activity in the allowance for loan losses by loan class for the three and six months ended June 30, 2016.

Three months ended June 30, 2016
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of March 31, 2016
 
$
2,980
  
$
3,636
  
$
965
  
$
702
  
$
401
  
$
589
  
$
334
  
$
9,607
 
Provision for loan losses
  
315
   
(52
)
  
104
   
(12
)
  
(12
)
  
(45
)
  
152
   
450
 
 
                                
Charge-offs
  
(130
)
  
—
   
—
   
—
   
—
   
(15
)
  
—
   
(145
)
Recoveries
  
10
   
—
   
81
   
—
   
1
   
26
   
—
   
118
 
Net charge-offs
  
(120
)
  
—
   
81
   
—
   
1
   
11
   
—
   
(27
)
Balance as of June 30, 2016
 
$
3,175
  
$
3,584
  
$
1,150
  
$
690
  
$
390
  
$
555
  
$
486
  
$
10,030
 

Six months ended June 30, 2016
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of December 31, 2015
 
$
3,097
  
$
3,343
  
$
1,060
  
$
739
  
$
334
  
$
641
  
$
37
  
$
9,251
 
Provision for loan losses
  
280
   
256
   
9
   
(50
)
  
54
   
(98
)
  
449
   
900
 
 
                                
Charge-offs
  
(230
)
  
(15
)
  
—
   
—
   
—
   
(35
)
  
—
   
(280
)
Recoveries
  
28
   
—
   
81
   
1
   
2
   
47
   
—
   
159
 
Net charge-offs
  
(202
)
  
(15
)
  
81
   
1
   
2
   
12
   
—
   
(121
)
Balance as of June 30, 2016
 
$
3,175
  
$
3,584
  
$
1,150
  
$
690
  
$
390
  
$
555
  
$
486
  
$
10,030
 

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, 2016.

($ 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
  
$
40
  
$
—
  
$
598
  
$
109
  
$
36
  
$
—
  
$
819
 
Loans collectively evaluated for impairment
  
3,139
   
3,544
   
1,150
   
92
   
281
   
519
   
486
   
9,211
 
Ending Balance
 
$
3,175
  
$
3,584
  
$
1,150
  
$
690
  
$
390
  
$
555
  
$
486
  
$
10,030
 
 
The following table details activity in the allowance for loan losses by loan class for the three and six months ended June 30, 2015.

Three months ended June 30, 2015
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of March 31, 2015
 
$
3,325
  
$
2,485
  
$
646
  
$
1,047
  
$
195
  
$
826
  
$
370
  
$
8,894
 
Provision for loan losses
  
(141
)
  
399
   
206
   
(297
)
  
(107
)
  
(173
)
  
113
   
—
 
 
                                
Charge-offs
  
—
   
—
   
—
   
(132
)
  
—
   
(18
)
  
—
   
(150
)
Recoveries
  
75
   
4
   
—
   
215
   
56
   
12
   
—
   
362
 
Net recoveries
  
75
   
4
   
—
   
83
   
56
   
(6
)
  
—
   
212
 
Balance as of June 30, 2015
 
$
3,259
  
$
2,888
  
$
852
  
$
833
  
$
144
  
$
647
  
$
483
  
$
9,106
 
 
Six months ended June 30, 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
  
(409
)
  
1,059
   
272
   
(431
)
  
(74
)
  
(181
)
  
114
   
350
 
 
                                
Charge-offs
  
—
   
—
   
—
   
(132
)
  
—
   
(85
)
  
—
   
(217
)
Recoveries
  
87
   
4
   
—
   
215
   
57
   
27
   
—
   
390
 
Net recoveries
  
87
   
4
   
—
   
83
   
57
   
(58
)
  
—
   
173
 
Balance as of June 30, 2015
 
$
3,259
  
$
2,888
  
$
852
  
$
833
  
$
144
  
$
647
  
$
483
  
$
9,106
 

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, 2015.

($ 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
  
$
43
  
$
—
  
$
628
  
$
107
  
$
17
  
$
—
  
$
831
 
Loans collectively evaluated for impairment
  
3,223
   
2,845
   
852
   
205
   
37
   
630
   
483
   
8,275
 
Ending Balance
 
$
3,259
  
$
2,888
  
$
852
  
$
833
  
$
144
  
$
647
  
$
483
  
$
9,106
 
 
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 year ended December 31, 2015.

Year ended December 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 (reversal of) loan losses
  
(542
)
  
1,507
   
480
   
(450
)
  
113
   
(126
)
  
(332
)
  
650
 
 
                                
Charge-offs
  
(44
)
  
(7
)
  
—
   
(211
)
  
—
   
(175
)
  
—
   
(437
)
Recoveries
  
102
   
18
   
—
   
219
   
60
   
56
   
—
   
455
 
Net recoveries
  
58
   
11
   
—
   
8
   
60
   
(119
)
  
—
   
18
 
Ending Balance
 
$
3,097
  
$
3,343
  
$
1,060
  
$
739
  
$
334
  
$
641
  
$
37
  
$
9,251
 
Period-end amount allocated to:
                                
Loans individually evaluated for impairment
 
$
43
  
$
42
  
$
—
  
$
615
  
$
119
  
$
33
  
$
—
  
$
852
 
Loans collectively evaluated for impairment
  
3,054
   
3,301
   
1,060
   
124
   
215
   
608
   
37
   
8,399
 
Balance as of December 31, 2015
 
$
3,097
  
$
3,343
  
$
1,060
  
$
739
  
$
334
  
$
641
  
$
37
  
$
9,251
 

The Company's investment in loans as of June 30, 2016, June 30, 2015, and December 31, 2015 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, 2016
 
Loans individually evaluated for impairment
 
$
818
  
$
869
  
$
—
  
$
2,986
  
$
987
  
$
773
  
$
6,433
 
Loans collectively evaluated for impairment
  
131,529
   
312,664
   
92,766
   
40,684
   
16,567
   
42,046
   
636,256
 
Ending Balance
 
$
132,347
  
$
313,533
  
$
92,766
  
$
43,670
  
$
17,554
  
$
42,819
  
$
642,689
 
 
                            
June 30, 2015
 
Loans individually evaluated for impairment
 
$
2,722
  
$
1,207
  
$
—
  
$
3,815
  
$
872
  
$
1,373
  
$
9,989
 
Loans collectively evaluated for impairment
  
123,067
   
282,877
   
68,199
   
41,073
   
8,495
   
44,741
   
568,452
 
Ending Balance
 
$
125,789
  
$
284,084
  
$
68,199
  
$
44,888
  
$
9,367
  
$
46,114
  
$
578,441
 
 
                            
December 31, 2015
 
Loans individually evaluated for impairment
 
$
918
  
$
1,258
  
$
—
  
$
3,576
  
$
1,005
  
$
1,321
  
$
8,078
 
Loans collectively evaluated for impairment
  
135,177
   
291,058
   
84,813
   
39,799
   
11,105
   
44,065
   
606,017
 
Ending Balance
 
$
136,095
  
$
292,316
  
$
84,813
  
$
43,375
  
$
12,110
  
$
45,386
  
$
614,095