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LOANS (Tables)
 6 Months Ended
Jun. 30, 2017
LOANS [Abstract]  
Composition of Loan Portfolio, by Loan Class
The composition of the Company's loan portfolio, by loan class, as of June 30, 2017 and December 31, 2015 was as follows:
 
($ in thousands)
 
June 30, 2017
  
December 31, 2016
 
 
      
Commercial
 
$
122,803
  
$
126,311
 
Commercial Real Estate
  
355,060
   
344,210
 
Agriculture
  
101,340
   
101,905
 
Residential Mortgage
  
41,347
   
40,237
 
Residential Construction
  
24,802
   
23,650
 
Consumer
  
40,412
   
43,250
 
 
        
 
  
685,764
   
679,563
 
Allowance for loan losses
  
(11,720
)
  
(10,899
)
Net deferred origination fees and costs
  
973
   
1,106
 
 
        
Loans, net
 
$
675,017
  
$
669,770
 
Non-accrual Loans by Loan Class
The Company's loans by delinquency and non-accrual status, as of June 30, 2017 and December 31, 2016, were as follows:
   
($ in thousands)
 
Current & Accruing
  
30-59 Days Past Due & Accruing
  
60-89 Days Past Due & Accruing
  
90 Days or
more Past Due & Accruing
  
Nonaccrual
  
Total Loans
 
June 30, 2017
                  
Commercial
 
$
119,766
  
$
535
  
$
102
  
$
—
  
$
2,400
  
$
122,803
 
Commercial Real Estate
  
353,805
   
—
   
755
   
—
   
500
   
355,060
 
Agriculture
  
101,340
   
—
   
—
   
—
   
—
   
101,340
 
Residential Mortgage
  
41,220
   
—
   
—
   
—
   
127
   
41,347
 
Residential Construction
  
24,387
   
415
   
—
   
—
   
—
   
24,802
 
Consumer
  
39,512
   
899
   
1
   
—
   
—
   
40,412
 
Total
 
$
680,030
  
$
1,849
  
$
858
  
$
—
  
$
3,027
  
$
685,764
 
 
                        
December 31, 2016
                        
Commercial
 
$
121,311
  
$
—
  
$
—
  
$
—
  
$
5,000
  
$
126,311
 
Commercial Real Estate
  
343,186
   
484
   
—
   
—
   
540
   
344,210
 
Agriculture
  
101,905
   
—
   
—
   
—
   
—
   
101,905
 
Residential Mortgage
  
39,463
   
—
   
120
   
—
   
654
   
40,237
 
Residential Construction
  
23,650
   
—
   
—
   
—
   
—
   
23,650
 
Consumer
  
43,106
   
—
   
41
   
—
   
103
   
43,250
 
Total
 
$
672,621
  
$
484
  
$
161
  
$
—
  
$
6,297
  
$
679,563
 
Impaired Loans, Segregated by Loan Class
Impaired loans, segregated by loan class, as of June 30, 2017 and December 31, 2016 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, 2017
               
Commercial
 
$
4,003
  
$
—
  
$
3,541
  
$
3,541
  
$
827
 
Commercial Real Estate
  
1,614
   
500
   
1,033
   
1,533
   
48
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
2,676
   
127
   
2,323
   
2,450
   
571
 
Residential Construction
  
805
   
—
   
805
   
805
   
87
 
Consumer
  
591
   
—
   
591
   
591
   
25
 
Total
 
$
9,689
  
$
627
  
$
8,293
  
$
8,920
  
$
1,558
 
 
                    
December 31, 2016
                    
Commercial
 
$
5,578
  
$
—
  
$
5,578
  
$
5,578
  
$
898
 
Commercial Real Estate
  
885
   
540
   
283
   
823
   
39
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
3,392
   
654
   
2,380
   
3,034
   
584
 
Residential Construction
  
820
   
—
   
820
   
820
   
98
 
Consumer
  
708
   
103
   
601
   
704
   
25
 
Total
 
$
11,383
  
$
1,297
  
$
9,662
  
$
10,959
  
$
1,644
 
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, 2017 and June 30, 2016 was as follows:
 
($ in thousands)
 
Three Months Ended
June 30, 2017
  
Three Months Ended
June 30, 2016
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
4,542
  
$
8
  
$
940
  
$
10
 
Commercial Real Estate
  
1,164
   
4
   
880
   
4
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
2,736
   
23
   
3,265
   
23
 
Residential Construction
  
808
   
10
   
992
   
11
 
Consumer
  
592
   
9
   
739
   
9
 
Total
 
$
9,842
  
$
54
  
$
6,816
  
$
57
 
 
The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the six months ended June 30, 2017 and June 30, 2016 was as follows:
 
($ in thousands)
 
Six Months Ended
June 30, 2017
  
Six Months Ended
June 30, 2016
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
4,887
  
$
17
  
$
933
  
$
22
 
Commercial Real Estate
  
1,050
   
8
   
1,006
   
8
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
2,835
   
54
   
3,369
   
47
 
Residential Construction
  
812
   
19
   
996
   
23
 
Consumer
  
630
   
17
   
933
   
53
 
Total
 
$
10,214
  
$
115
  
$
7,237
  
$
153
 
Loans Modified as TDR's


($ 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
 
Risk Ratings by Loan Class
The following table presents the risk ratings by loan class as of June 30, 2017 and December 31, 2016:

($ in thousands)
 
Pass
  
Special Mention
  
Substandard
  
Doubtful
  
Loss
  
Total
 
June 30, 2017
                  
Commercial
 
$
111,835
  
$
7,690
  
$
3,278
  
$
—
  
$
—
  
$
122,803
 
Commercial Real Estate
  
341,999
   
11,806
   
1,255
   
—
   
—
   
355,060
 
Agriculture
  
101,295
   
—
   
45
   
—
   
—
   
101,340
 
Residential Mortgage
  
40,111
   
1,107
   
129
   
—
   
—
   
41,347
 
Residential Construction
  
24,802
   
—
   
—
   
—
   
—
   
24,802
 
Consumer
  
39,393
   
500
   
519
   
—
   
—
   
40,412
 
Total
 
$
659,435
  
$
21,103
  
$
5,226
  
$
—
  
$
—
  
$
685,764
 
 
                        
December 31, 2016
                        
Commercial
 
$
112,656
  
$
7,294
  
$
6,361
  
$
—
  
$
—
  
$
126,311
 
Commercial Real Estate
  
331,653
   
11,058
   
1,499
   
—
   
—
   
344,210
 
Agriculture
  
101,820
   
—
   
85
   
—
   
—
   
101,905
 
Residential Mortgage
  
37,831
   
1,751
   
655
   
—
   
—
   
40,237
 
Residential Construction
  
23,070
   
436
   
144
   
—
   
—
   
23,650
 
Consumer
  
41,826
   
547
   
877
   
—
   
—
   
43,250
 
Total
 
$
648,856
  
$
21,086
  
$
9,621
  
$
—
  
$
—
  
$
679,563
 
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, 2017.

Three months ended June 30, 2017
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of March 31, 2017
 
$
3,808
  
$
4,723
  
$
1,287
  
$
701
  
$
454
  
$
381
  
$
145
  
$
11,499
 
Provision for loan losses
  
(869
)
  
160
   
88
   
(114
)
  
22
   
(12
)
  
725
   
—
 
 
                                
Charge-offs
  
—
   
—
   
—
   
—
   
—
   
(5
)
  
—
   
(5
)
Recoveries
  
121
   
—
   
—
   
90
   
1
   
14
   
—
   
226
 
Net recoveries
  
121
   
—
   
—
   
90
   
1
   
9
   
—
   
221
 
Balance as of June 30, 2017
 
$
3,060
  
$
4,883
  
$
1,375
  
$
677
  
$
477
  
$
378
  
$
870
  
$
11,720
 

Six months ended June 30, 2017
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of December 31, 2016
 
$
3,571
  
$
3,910
  
$
1,262
  
$
660
  
$
440
  
$
498
  
$
558
  
$
10,899
 
Provision for loan losses
  
(634
)
  
973
   
113
   
(73
)
  
35
   
(126
)
  
312
   
600
 
 
                                
Charge-offs
  
—
   
—
   
—
   
—
   
—
   
(16
)
  
—
   
(16
)
Recoveries
  
123
   
—
   
—
   
90
   
2
   
22
   
—
   
237
 
Net recoveries
  
123
   
—
   
—
   
90
   
2
   
6
   
—
   
221
 
Balance as of June 30, 2017
 
$
3,060
  
$
4,883
  
$
1,375
  
$
677
  
$
477
  
$
378
  
$
870
  
$
11,720
 

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, 2017.

($ in thousands)
Commercial
 
Commercial
Real Estate
 
Agriculture
 
Residential
Mortgage
 
Residential
Construction
 
Consumer
 
Unallocated
 
Total
 
Period-end amount allocated to:
                
Loans individually evaluated for impairment
 
$
827
  
$
48
  
$
—
  
$
571
  
$
87
  
$
25
  
$
—
  
$
1,558
 
Loans collectively evaluated for impairment
  
2,233
   
4,835
   
1,375
   
106
   
390
   
353
   
870
   
10,162
 
Ending Balance
 
$
3,060
  
$
4,883
  
$
1,375
  
$
677
  
$
477
  
$
378
  
$
870
  
$
11,720
 
 
The following table details 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 and the amount allocated to loans individually and collectively evaluated for impairment as of and for the year ended December 31, 2016.

Year ended December 31, 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
  
883
   
582
   
121
   
(67
)
  
101
   
(341
)
  
521
   
1,800
 
 
                                
Charge-offs
  
(446
)
  
(15
)
  
—
   
(13
)
  
—
   
(65
)
  
—
   
(539
)
Recoveries
  
37
   
—
   
81
   
1
   
5
   
263
   
—
   
387
 
Net charge-offs
  
(409
)
  
(15
)
  
81
   
(12
)
  
5
   
198
   
—
   
(152
)
Ending Balance
 
$
3,571
  
$
3,910
  
$
1,262
  
$
660
  
$
440
  
$
498
  
$
558
  
$
10,899
 
Period-end amount allocated to:
                                
Loans individually evaluated for impairment
 
$
898
  
$
39
  
$
—
  
$
584
  
$
98
  
$
25
  
$
—
  
$
1,644
 
Loans collectively evaluated for impairment
  
2,673
   
3,871
   
1,262
   
76
   
342
   
473
   
558
   
9,255
 
Balance as of December 31, 2016
 
$
3,571
  
$
3,910
  
$
1,262
  
$
660
  
$
440
  
$
498
  
$
558
  
$
10,899
 

The Company's investment in loans as of June 30, 2017, June 30, 2016, and December 31, 2016 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, 2017
 
Loans individually evaluated for impairment
 
$
3,541
  
$
1,533
  
$
—
  
$
2,450
  
$
805
  
$
591
  
$
8,920
 
Loans collectively evaluated for impairment
  
119,262
   
353,527
   
101,340
   
38,897
   
23,997
   
39,821
   
676,844
 
Ending Balance
 
$
122,803
  
$
355,060
  
$
101,340
  
$
41,347
  
$
24,802
  
$
40,412
  
$
685,764
 
 
                            
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
 
 
                            
December 31, 2016
 
Loans individually evaluated for impairment
 
$
5,578
  
$
823
  
$
—
  
$
3,034
  
$
820
  
$
704
  
$
10,959
 
Loans collectively evaluated for impairment
  
120,733
   
343,387
   
101,905
   
37,203
   
22,830
   
42,546
   
668,604
 
Ending Balance
 
$
126,311
  
$
344,210
  
$
101,905
  
$
40,237
  
$
23,650
  
$
43,250
  
$
679,563