LOANS AND THE ALLOWANCE FOR CREDIT LOSSES (Tables)

6 Months Ended

Jun. 30, 2016

LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

Schedule of composition of loan portfolio

(In thousands)	June 30, 2016		December 31, 2015
Commercial, financial and agricultural	$	260,167	$	237,451
Municipal loans		60,590		105,421
Real estate loans – residential		456,132		468,443
Real estate loans – commercial		560,056		558,004
Real estate loans – construction		50,788		34,802
Installment loans		7,629		10,115
All other loans		31		44
Total loans	$	1,395,393	$	1,414,280

Schedule of loan loss experience and activity in allowance for loan losses

The following table reflects our loan loss experience and activity in the allowance for loan losses for the three months ended June 30, 2016:

	Commercial,
	financial				Real		Real		Real
	and				estate-		estate-		estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All other		Totals
Allowance for loan losses:
Beginning balance	$	2,856	$	622	$	2,857	$	5,281	$	465	$	92	$	—	$	12,173
Charge-offs		(4)		—		—		—		—		(36)		—		(40)
Recoveries		2		—		11		—		—		20		—		33
Provision (credit)		344		(270)		(59)		142		84		13		—		254
Ending balance	$	3,198	$	352	$	2,809	$	5,423	$	549	$	89	$	—	$	12,420

The $254 thousand provision for loan losses includes a $200 thousand provision for credit losses plus$54 thousand of excess reserves from the reserve for undisbursed lines and letters.

The following table reflects our loan loss experience and activity in the allowance for loan losses for the three months ended June 30, 2015:

	Commercial,
	financial				Real		Real		Real
	and				estate-		estate-		estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All other		Totals
Allowance for loan losses:
Beginning balance	$	2,866	$	530	$	3,024	$	5,149	$	364	$	81	$	—	$	12,014
Charge-offs		(6)		—		—		—		—		(17)		—		(23)
Recoveries		14		—		26		—		—		10		—		50
Provision (credit)		51		(171)		(7)		150		113		(15)		—		121
Ending balance	$	2,925	$	359	$	3,043	$	5,299	$	477	$	59	$	—	$	12,162

The $121 thousand provision for loan losses includes a $100 thousand provision for credit losses plus $21 thousand of excess reserves to the reserve for undisbursed lines and letters.

The following table reflects our loan loss experience and activity in the allowance for loan losses for the six months ended June 30, 2016:

	Commercial,
	financial				Real		Real		Real
	and				estate-		estate-		estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All other		Totals
Allowance for loan losses:
Beginning balance	$	2,696	$	590	$	2,882	$	5,386	$	420	$	66	$	—	$	12,040
Charge-offs		(7)		—		(73)		—		—		(78)		—		(158)
Recoveries		4		—		22		4		—		39		—		69
Provision (credit)		505		(238)		(22)		33		129		62		—		469
Ending balance	$	3,198	$	352	$	2,809	$	5,423	$	549	$	89	$	—	$	12,420

The $469 thousand provision for loan losses consists of a $405 thousand provision for credit losses outstanding plus $64 thousand of excess reserves from the reserve for undisbursed lines and letters.

The following table reflects our loan loss experience and activity in the allowance for loan losses for the six months ended June 30, 2015:

	Commercial,
	financial				Real		Real		Real
	and				estate-		estate-		estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All Other		Total
Allowance for loan losses:
Beginning balance	$	2,583	$	623	$	3,038	$	5,209	$	325	$	13	$	42	$	11,833
Charge-offs		(17)		—		(55)		—		—		(43)		—		(115)
Recoveries		28		—		29		1		—		33		—		91
Provision (credit)		331		(264)		31		89		152		56		(42)		353
Ending balance	$	2,925	$	359	$	3,043	$	5,299	$	477	$	59	$	—	$	12,162

The $353 thousand provision for loan losses a consists of a $100 thousand provision for credit losses plus $253 thousand of excess reserves from the reserve for undisbursed lines and letters.

Schedule of allowance for loan losses and recorded investment in loans

The following presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based upon impairment method at June 30, 2016:

	Commercial,
	financial and				Real estate-		Real estate-		Real estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All other		Totals
Allowance for loan losses:
Ending balance individually evaluated for impairment	$	195	$	—	$	116	$	52	$	—	$	—	$	—	$	363
Ending balance collectively evaluated for impairment		3,003		352		2,693		5,371		549		89		—		12,057
Ending balance acquired with deteriorated credit quality		—		—		—		—		—		—		—		—
Totals	$	3,198	$	352	$	2,809	$	5,423	$	549	$	89	$	—	$	12,420
Financing receivables:
Ending balance individually evaluated for impairment	$	668	$	—	$	701	$	1,339	$	—	$	27	$	—	$	2,735
Ending balance collectively evaluated for impairment		258,824		60,590		455,431		556,742		50,788		7,602		31		1,390,008
Ending balance acquired with deteriorated credit quality		675		—		—		1,975		—		—		—		2,650
Totals	$	260,167	$	60,590	$	456,132	$	560,056	$	50,788	$	7,629	$	31	$	1,395,393

The following presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based upon impairment method at December 31, 2015:

	Commercial,
	financial and				Real estate-		Real estate-		Real estate-
(In thousands)	agricultural		Municipal		residential		commercial		construction		Installment		All other		Totals
Allowance for loan losses:
Ending balance individually evaluated for impairment	$	—	$	—	$	137	$	—	$	—	$	—	$	—	$	137
Ending balance collectively evaluated for impairment		2,696		590		2,745		5,386		420		66		—		11,903
Ending balance acquired with deteriorated credit quality		—		—				—		—		—		—		—
Totals	$	2,696	$	590	$	2,882	$	5,386	$	420	$	66	$	—	$	12,040
Financing receivables:
Ending balance individually evaluated for impairment	$	595	$	—	$	706	$	647	$	—	$	22	$	—	$	1,970
Ending balance collectively evaluated for impairment		235,652		105,421		467,737		555,323		34,802		10,093		44		1,409,072
Ending balance acquired with deteriorated credit quality		1,204		—		—		2,034		—		—		—		3,238
Totals	$	237,451	$	105,421	$	468,443	$	558,004	$	34,802	$	10,115	$	44	$	1,414,280

Schedule of recorded investment of loans, including nonaccrual and restructured loans

The table below presents the recorded investment of loans segregated by class, with delinquency aging as of June 30, 2016:

	31-60		61-90		91 Days		Total
	Days		Days		or More		Past
(In thousands)	Past Due		Past Due		Past Due		Due		Current			Nonperforming	Total
Commercial, financial and agricultural	$	—	$	—	$	—	$	—	$	258,942	$	1,225	$	260,167
Municipal		—		—		—		—		60,590		—		60,590
Real estate-residential:
First mortgage		702		—		—		702		414,053		701		415,456
Second mortgage		—		—		—		—		40,676		—		40,676
Real estate-commercial:
Owner occupied		—		—		—		—		214,080		2,155		216,235
Non-owner occupied		—		—		—		—		343,240		581		343,821
Real estate-construction:
Residential		—		—		—		—		2,446		—		2,446
Commercial		—		—		—		—		48,342		—		48,342
Installment		72		—		—		72		7,530		27		7,629
Other		—		—		—		—		31		—		31
Total	$	774	$	—	$	—	$	774	$	1,389,930	$	4,689	$	1,395,393

Of the total nonperforming loans in the aging table above, $2.31 million are past due of which $386 thousand are restructured loans and $0 were 91 days or more past due and accruing. 

The table below presents the recorded investment of loans segregated by class, with delinquency aging as of December 31, 2015:

	31-60		61-90		91 Days		Total
	Days		Days		or More		Past
(In thousands)	Past Due		Past Due		Past Due		Due		Current			Nonperforming	Total
Commercial, financial and agricultural	$	—	$	251	$	—	$	251	$	235,820	$	1,380	$	237,451
Municipal		—		—		—		—		105,421		—		105,421
Real estate-residential:
First mortgage		50		—		—		50		425,520		706		426,276
Second mortgage		—		8		—		8		42,159		—		42,167
Real estate-commercial:
Owner occupied		323		—		—		323		219,080		1,605		221,008
Non-owner occupied		—		—		—		—		336,514		482		336,996
Real estate-construction:
Residential		—		—		—		—		2,422		—		2,422
Commercial		—		—		—		—		32,380		—		32,380
Installment		61		9		—		70		10,023		22		10,115
Other		—		—		—		—		44		—		44
Total	$	434	$	268	$	—	$	702	$	1,409,383	$	4,195	$	1,414,280

Of the total nonperforming loans in the aging table above, $2.65 million are past due of which $471 thousand are restructured loans and $0 were 91 days or more past due and accruing.

Schedule of impaired loans by class

Impaired loans by class at June 30, 2016 and for the three and six months ended June 30, 2016 are as follows:

	Period Ended						Three Months Ended				Six Months Ended
	June 30, 2016						June 30, 2016				June 30, 2016
			Unpaid					Average	Interest			Average	Interest
	Recorded		Principal		Related			Recorded	Income			Recorded	Income
(In thousands)	Investment		Balance		Allowance			Investment	Recognized			Investment	Recognized
With no related allowance recorded
Commercial, financial and agricultural	$	97	$	97	$	—	$	99	$	1	$	245	$	2
Residential:
First mortgage		220		282		—		213		1		227		3
Second mortgage		—		—		—		—		—		1		—
Commercial Real Estate:
Owner occupied		698		691		—		623		—		512		—
Non-owner occupied		581		595		—		587		—		529		—
Construction:
Residential		—		—		—		—		—		—		—
Commercial		—		—		—		—		—		—		—
Installment		27		27		—		10		—		9		—
With related allowance recorded
Commercial, financial and agricultural		571		576		195		508		—		381		—
Residential:
First mortgage		481		496		116		421		—		423		—
Second mortgage		—		—		—		—		—		—		—
Commercial Real Estate:
Owner occupied		60		59		52		40		—		20		—
Total
Commercial, financial and agricultural		668		673		195		607		1		626		2
Residential		701		778		116		634		1		651		3
Commercial Real Estate		1,339		1,345		52		1,250		—		1,061		—
Construction		—		—		—		—		—		—		—
Installment		27		27		—		10		—		9		—
Total	$	2,735	$	2,823	$	363	$	2,501	$	2	$	2,347	$	5

Impaired loans by class at December 31, 2015 and for the three and six months ended June 30, 2015 are as follows:

	Period Ended						Three Months Ended				Six Months Ended
	December 31, 2015						June 30, 2015				June 30, 2015
			Unpaid				Average		Interest		Average		Interest
	Recorded		Principal		Related		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded
Commercial, financial and agricultural	$	595	$	599	$	—	$	229	$	2	$	169	$	2
Residential:
First mortgage		264		322		—		159		1		153		2
Second mortgage		—		—		—		79		—		79		—
Commercial Real Estate:
Owner occupied		165		165		—		10		—		5		—
Non-owner occupied		482		482		—		—		—		—		—
Installment		22		22		—		—		—		—		—
With related allowance recorded
Commercial, financial and agricultural		—		—		—		331		—		248		—
Residential:
First mortgage		442		442		137		512		—		475		—
Second mortgage		—		—		—		11		—		9		—
Commercial Real Estate:
Owner occupied		—		—		—		—		—		—		—
Installment		—		—		—		—		—		—		—
Total
Commercial, financial and agricultural		595		599		—		560		2		417		2
Residential		706		764		137		761		1		716		2
Commercial Real Estate		647		647		—		10		—		5		—
Installment		22		22		—		—		—		—		—
Total	$	1,970	$	2,032	$	137	$	1,331	$	3	$	1,138	$	4

Schedule of nonperforming loans

(In thousands)	June 30, 2016		December 31, 2015
Nonaccrual  loans	$	3,659	$	3,513
Loans greater than 90 days and accruing		—		—
Troubled debt restructurings ("TDRs")		1,030		682
Total nonperforming loans	$	4,689	$	4,195

Schedule of nonaccrual loans by class

(In thousands)	June 30, 2016		December 31, 2015
Commercial, financial and agricultural	$	757	$	823
Real estate - residential:
First mortgage		584		581
Second mortgage		—		—
Real estate - commercial:
Owner occupied		2,154		1,605
Non owner occupied		137		482
Installment		27		22
Total nonaccruing non-TDR loans	$	3,659	$	3,513
Nonaccruing TDR’s
Commercial, financial and agricultural		386		472
Real estate – residential:
First mortgage		—		—
Real estate - commercial:
Non owner occupied		444		—
Total nonaccrual loans including TDRs	$	4,489	$	3,985

Schedule of loans by credit quality indicator

Below is a summary of loans by credit quality indicator as of June 30, 2016:

					Pass-		Special		Sub-
(In thousands)	Unrated		Pass		Watch		Mention		Standard		Total
Commercial, financial and agricultural	$	530	$	205,435	$	35,778	$	304	$	18,120	$	260,167
Municipal		37		51,809		8,629		115		—		60,590
Real estate – residential:
First mortgage		406,892		6,293		1,590		—		681		415,456
Second mortgage		40,449		—		227		—		—		40,676
Real estate – commercial:
Owner occupied		227		169,987		29,684		1,867		14,470		216,235
Non-owner occupied		470		293,266		45,271		451		4,363		343,821
Real estate – construction:
Residential		3		2,108		335		—		—		2,446
Commercial		255		42,342		4,018		—		1,727		48,342
Installment		7,602		—		—		—		27		7,629
All other loans		31		—		—		—		—		31
Total	$	456,496	$	771,240	$	125,532	$	2,737	$	39,388	$	1,395,393

Below is a summary of loans by credit quality indicator as of December 31, 2015:

					Pass-		Special		Sub-
(In thousands)	Unrated		Pass		Watch		Mention		Standard		Total
Commercial, financial and agricultural	$	597	$	179,451	$	45,977	$	4,177	$	7,249	$	237,451
Municipal		58		92,011		13,352		—		—		105,421
Real estate – residential:
First mortgage		420,798		4,733		164		—		581		426,276
Second mortgage		42,167		—		—		—		—		42,167
Real estate – commercial:
Owner occupied		296		161,810		41,477		5,959		11,466		221,008
Non-owner occupied		166		290,337		44,485		444		1,564		336,996
Real estate – construction:
Residential		478		1,944		—		—		—		2,422
Commercial		145		27,299		3,136		—		1,800		32,380
Installment		10,093		—		—		—		22		10,115
All other loans		44		—		—		—		—		44
Total	$	474,842	$	757,585	$	148,591	$	10,580	$	22,682	$	1,414,280