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LOANS (Tables)
 6 Months Ended
Jun. 30, 2018
LOANS [Abstract]  
Loan Portfolio, by Loan Class
The composition of the Company's loan portfolio, by loan class, as of June 30, 2018  and December 31, 2017, was as follows:
 
($ in thousands)
 
June 30, 2018
  
December 31, 2017
 
 
      
Commercial
 
$
131,471
  
$
135,015
 
Commercial Real Estate
  
392,073
   
398,346
 
Agriculture
  
112,457
   
113,555
 
Residential Mortgage
  
45,767
   
42,081
 
Residential Construction
  
22,694
   
21,299
 
Consumer
  
37,197
   
38,900
 
 
        
 
  
741,659
   
749,196
 
Allowance for loan losses
  
(11,807
)
  
(11,133
)
Net deferred origination fees and costs
  
979
   
1,049
 
 
        
Loans, net
 
$
730,831
  
$
739,112
 
Loans by Delinquency and Non-Accrual Status
The Company's loans by delinquency and non-accrual status, as of June 30, 2018 and December 31, 2017, 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, 2018
                  
Commercial
 
$
131,064
  
$
—
  
$
—
  
$
12
  
$
395
  
$
131,471
 
Commercial Real Estate
  
390,325
   
93
   
—
   
—
   
1,655
   
392,073
 
Agriculture
  
112,448
   
9
   
—
   
—
   
—
   
112,457
 
Residential Mortgage
  
45,311
   
—
   
345
   
—
   
111
   
45,767
 
Residential Construction
  
22,694
   
—
   
—
   
—
   
—
   
22,694
 
Consumer
  
36,922
   
38
   
—
   
—
   
237
   
37,197
 
Total
 
$
738,764
  
$
140
  
$
345
  
$
12
  
$
2,398
  
$
741,659
 
 
                        
December 31, 2017
                        
Commercial
 
$
133,913
  
$
—
  
$
—
  
$
45
  
$
1,057
  
$
135,015
 
Commercial Real Estate
  
396,521
   
101
   
—
   
—
   
1,724
   
398,346
 
Agriculture
  
113,555
   
—
   
—
   
—
   
—
   
113,555
 
Residential Mortgage
  
40,354
   
349
   
597
   
—
   
781
   
42,081
 
Residential Construction
  
21,299
   
—
   
—
   
—
   
—
   
21,299
 
Consumer
  
38,656
   
1
   
38
   
—
   
205
   
38,900
 
Total
 
$
744,298
  
$
451
  
$
635
  
$
45
  
$
3,767
  
$
749,196
 
Impaired Loans, Segregated by Loan Class
Impaired loans, segregated by loan class, as of June 30, 2018 and December 31, 2017 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, 2018
               
Commercial
 
$
3,241
  
$
395
  
$
2,140
  
$
2,535
  
$
45
 
Commercial Real Estate
  
2,074
   
1,655
   
267
   
1,922
   
35
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
1,819
   
111
   
1,474
   
1,585
   
304
 
Residential Construction
  
637
   
—
   
637
   
637
   
58
 
Consumer
  
455
   
237
   
209
   
446
   
4
 
Total
 
$
8,226
  
$
2,398
  
$
4,727
  
$
7,125
  
$
446
 
 
                    
December 31, 2017
                    
Commercial
 
$
3,882
  
$
1,057
  
$
2,603
  
$
3,660
  
$
53
 
Commercial Real Estate
  
2,114
   
1,724
   
272
   
1,996
   
36
 
Agriculture
  
—
   
—
   
—
   
—
   
—
 
Residential Mortgage
  
2,628
   
781
   
1,496
   
2,277
   
302
 
Residential Construction
  
651
   
—
   
650
   
650
   
76
 
Consumer
  
418
   
205
   
213
   
418
   
3
 
Total
 
$
9,693
  
$
3,767
  
$
5,234
  
$
9,001
  
$
470
 
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, 2018 and June 30, 2017 was as follows:
 
($ in thousands)
 
Three Months Ended
June 30, 2018
  
Three Months Ended
June 30, 2017
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
2,863
  
$
45
  
$
4,542
  
$
8
 
Commercial Real Estate
  
1,934
   
4
   
1,164
   
4
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
1,888
   
15
   
2,736
   
23
 
Residential Construction
  
641
   
9
   
808
   
10
 
Consumer
  
484
   
3
   
592
   
9
 
Total
 
$
7,810
  
$
76
  
$
9,842
  
$
54
 

The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the six months ended June 30, 2018 and June 30, 2017 was as follows:
 
($ in thousands)
 
Six Months Ended
June 30, 2018
  
Six Months Ended
June 30, 2017
 
 
 
Average
Recorded
Investment
  
Interest
Income
Recognized
  
Average
Recorded
Investment
  
Interest
Income
Recognized
 
Commercial
 
$
3,129
  
$
91
  
$
4,887
  
$
17
 
Commercial Real Estate
  
1,955
   
7
   
1,050
   
8
 
Agriculture
  
—
   
—
   
—
   
—
 
Residential Mortgage
  
2,018
   
30
   
2,835
   
54
 
Residential Construction
  
644
   
19
   
812
   
19
 
Consumer
  
462
   
6
   
630
   
17
 
Total
 
$
8,208
  
$
153
  
$
10,214
  
$
115
 
Risk Ratings by Loan Class
The following table presents the risk ratings by loan class as of June 30, 2018 and December 31, 2017:

($ in thousands)
 
Pass
  
Special Mention
  
Substandard
  
Doubtful
  
Loss
  
Total
 
June 30, 2018
                  
Commercial
 
$
128,183
  
$
845
  
$
2,443
  
$
—
  
$
—
  
$
131,471
 
Commercial Real Estate
  
369,512
   
7,071
   
15,490
   
—
   
—
   
392,073
 
Agriculture
  
107,254
   
5,203
   
—
   
—
   
—
   
112,457
 
Residential Mortgage
  
45,414
   
228
   
125
   
—
   
—
   
45,767
 
Residential Construction
  
22,694
   
—
   
—
   
—
   
—
   
22,694
 
Consumer
  
36,639
   
—
   
558
   
—
   
—
   
37,197
 
Total
 
$
709,696
  
$
13,347
  
$
18,616
  
$
—
  
$
—
  
$
741,659
 
 
                        
December 31, 2017
                        
Commercial
 
$
132,846
  
$
1,050
  
$
1,119
  
$
—
  
$
—
  
$
135,015
 
Commercial Real Estate
  
378,632
   
16,101
   
3,613
   
—
   
—
   
398,346
 
Agriculture
  
110,370
   
3,140
   
45
   
—
   
—
   
113,555
 
Residential Mortgage
  
39,142
   
2,147
   
792
   
—
   
—
   
42,081
 
Residential Construction
  
21,299
   
—
   
—
   
—
   
—
   
21,299
 
Consumer
  
38,157
   
500
   
243
   
—
   
—
   
38,900
 
Total
 
$
720,446
  
$
22,938
  
$
5,812
  
$
—
  
$
—
  
$
749,196
 
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, 2018.

Three months ended June 30, 2018
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of March 31, 2018
 
$
2,549
  
$
5,414
  
$
1,423
  
$
643
  
$
348
  
$
305
  
$
1,033
  
$
11,715
 
Provision for loan losses
  
654
   
(30
)
  
112
   
(28
)
  
12
   
—
   
(195
)
  
525
 
 
                                
Charge-offs
  
(475
)
  
—
   
—
   
—
   
—
   
(5
)
  
—
   
(480
)
Recoveries
  
36
   
—
   
—
   
4
   
1
   
6
   
—
   
47
 
Net (charge-offs) recoveries
  
(439
)
  
—
   
—
   
4
   
1
   
1
   
—
   
(433
)
Balance as of June 30, 2018
 
$
2,764
  
$
5,384
  
$
1,535
  
$
619
  
$
361
  
$
306
  
$
838
  
$
11,807
 

Six months ended June 30, 2018
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Balance as of December 31, 2017
 
$
2,625
  
$
5,460
  
$
1,547
  
$
628
  
$
360
  
$
342
  
$
171
  
$
11,133
 
Provision for loan losses
  
569
   
(76
)
  
(12
)
  
(29
)
  
(1
)
  
(68
)
  
667
   
1,050
 
 
                                
Charge-offs
  
(475
)
  
—
   
—
   
—
   
—
   
(11
)
  
—
   
(486
)
Recoveries
  
45
   
—
   
—
   
20
   
2
   
43
   
—
   
110
 
Net (charge-offs) recoveries
  
(430
)
  
—
   
—
   
20
   
2
   
32
   
—
   
(376
)
Balance as of June 30, 2018
 
$
2,764
  
$
5,384
  
$
1,535
  
$
619
  
$
361
  
$
306
  
$
838
  
$
11,807
 

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, 2018.
 
($ in thousands)
 
Commercial
  
Commercial
Real Estate
  
Agriculture
  
Residential
Mortgage
  
Residential
Construction
  
Consumer
  
Unallocated
  
Total
 
Period-end amount allocated to:
                        
Loans individually evaluated for impairment
 
$
45
  
$
35
  
$
—
  
$
304
  
$
58
  
$
4
  
$
—
  
$
446
 
Loans collectively evaluated for impairment
  
2,719
   
5,349
   
1,535
   
315
   
303
   
302
   
838
   
11,361
 
Ending Balance
 
$
2,764
  
$
5,384
  
$
1,535
  
$
619
  
$
361
  
$
306
  
$
838
  
$
11,807
 
 
The following table details 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 (charge-offs) 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 (charge-offs) 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 and the amount allocated to loans individually and collectively evaluated for impairment as of and for the year ended December 31, 2017.

Year ended December 31, 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
  
(567
)
  
1,550
   
285
   
(7
)
  
(85
)
  
(189
)
  
(387
)
  
600
 
 
                                
Charge-offs
  
(681
)
  
—
   
—
   
(121
)
  
—
   
(33
)
  
—
   
(835
)
Recoveries
  
302
   
—
   
—
   
96
   
5
   
66
   
—
   
469
 
Net (charge-offs) recoveries
  
(379
)
  
—
   
—
   
(25
)
  
5
   
33
   
—
   
(366
)
Ending Balance
 
$
2,625
  
$
5,460
  
$
1,547
  
$
628
  
$
360
  
$
342
  
$
171
  
$
11,133
 
Period-end amount allocated to:
                                
Loans individually evaluated for impairment
 
$
53
  
$
36
  
$
—
  
$
302
  
$
76
  
$
3
  
$
—
  
$
470
 
Loans collectively evaluated for impairment
  
2,572
   
5,424
   
1,547
   
326
   
284
   
339
   
171
   
10,663
 
Balance as of December 31, 2017
 
$
2,625
  
$
5,460
  
$
1,547
  
$
628
  
$
360
  
$
342
  
$
171
  
$
11,133
 

The Company's investment in loans as of June 30, 2018, June 30, 2017, and December 31, 2017, 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, 2018
 
Loans individually evaluated for impairment
 
$
2,535
  
$
1,922
  
$
—
  
$
1,585
  
$
637
  
$
446
  
$
7,125
 
Loans collectively evaluated for impairment
  
128,936
   
390,151
   
112,457
   
44,182
   
22,057
   
36,751
   
734,534
 
Ending Balance
 
$
131,471
  
$
392,073
  
$
112,457
  
$
45,767
  
$
22,694
  
$
37,197
  
$
741,659
 
 
                            
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
 
 
                            
December 31, 2017
 
Loans individually evaluated for impairment
 
$
3,660
  
$
1,996
  
$
—
  
$
2,277
  
$
650
  
$
418
  
$
9,001
 
Loans collectively evaluated for impairment
  
131,355
   
396,350
   
113,555
   
39,804
   
20,649
   
38,482
   
740,195
 
Ending Balance
 
$
135,015
  
$
398,346
  
$
113,555
  
$
42,081
  
$
21,299
  
$
38,900
  
$
749,196