Loans (Tables)

3 Months Ended

Mar. 31, 2013

Loans [Abstract]

Summary of loan portfolio and allowance for loan losses

The Company grants loans primarily to customers throughout North Central Pennsylvania and Southern New York.  Although the Company had a diversified loan portfolio at March 31, 2013 and December 31, 2012, a substantial portion of its debtors' ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio and how those segments are analyzed within the allowance for loan losses as of March 31, 2013 and December 31, 2012 (in thousands):

March 31, 2013	Total Loans		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	178,461	$	491	$	177,970
Commercial and agricultural		195,083		8,550		186,533
Construction		11,697		-		11,697
Consumer		10,094		-		10,094
Other commercial and agricultural loans		49,192		1,985		47,207
State and political subdivision loans		59,196		-		59,196
Total		503,723	$	11,026	$	492,697
Allowance for loan losses		6,928
Net loans	$	496,795
December 31, 2012	Total Loans		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	178,080	$	424	$	177,656
Commercial and agricultural		194,725		9,093		185,632
Construction		12,011		-		12,011
Consumer		10,559		-		10,559
Other commercial and agricultural loans		47,880		901		46,979
State and political subdivision loans		59,208		-		59,208
Total		502,463	$	10,418	$	492,045
Allowance for loan losses		6,784
Net loans	$	495,679

Impaired financing receivables with associated allowance amount

The following table includes the recorded investment and unpaid principal balances for impaired financing receivables by class, with the associated allowance amount, if applicable (in thousands):

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
March 31, 2013	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	378	$	146	$	208	$	354	$	24
Home Equity		137		-		137		137		14
Commercial		10,157		5,911		2,639		8,550		528
Agricultural		-		-		-		-		-
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		2,036		1,676		309		1,985		-
Other agricultural loans		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-
Total	$	12,708	$	7,733	$	3,293	$	11,026	$	566
December 31, 2012
Real estate loans:
Mortgages	$	309	$	150	$	136	$	286	$	8
Home Equity		138		-		138		138		14
Commercial		10,669		6,476		2,617		9,093		559
Agricultural		-		-		-		-		-
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		950		592		309		901		1
Other agricultural loans		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-
Total	$	12,066	$	7,218	$	3,200	$	10,418	$	582

The following table includes the average balance of impaired financing receivables by class and the income recognized on impaired loans for the three months ended March 31, 2013 and 2012 (in thousands):

	March 31, 2013						March 31, 2012
					Interest						Interest
	Average		Interest		Income		Average		Interest		Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		Cash Basis		Investment		Recognized		Cash Basis
Real estate loans:
Mortgages	$	284	$	2	$	-	$	-	$	-	$	-
Home Equity		137		1		-		93		1		1
Commercial		8,785		45		14		8,228		18		18
Agricultural		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Other commercial loans		1,656		19		-		479		-		-
Other agricultural loans		-		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-		-
Total	$	10,862	$	67	$	14	$	8,800	$	19	$	19

Summary of financing receivable credit exposures by internally assigned grades

The following tables represent credit exposures by internally assigned grades as of March 31, 2013 and December 31, 2012 (in thousands):

March 31, 2013	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	150,863	$	6,964	$	18,646	$	214	$	-	$	176,687
Agricultural		14,107		2,374		1,915		-		-		18,396
Construction		11,697		-		-		-		-		11,697
Other commercial loans		39,223		707		2,561		-		-		42,491
Other agricultural loans		5,141		740		820		-		-		6,701
State and political subdivision loans		58,128		-		1,068		-		-		59,196
Total	$	279,159	$	10,785	$	25,010	$	214	$	-	$	315,168
December 31, 2012	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	149,892	$	7,616	$	19,127	$	75	$	-	$	176,710
Agricultural		13,690		2,386		1,939		-		-		18,015
Construction		12,011		-		-		-		-		12,011
Other commercial loans		39,239		826		1,555		-		-		41,620
Other agricultural loans		4,833		589		838		-		-		6,260
State and political subdivision loans		58,120		-		1,088		-		-		59,208
Total	$	277,785	$	11,417	$	24,547	$	75	$	-	$	313,824

For residential real estate mortgages, home equity and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail below and all loans past due 90 or more days. The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2013 and December 31, 2012 (in thousands):

March 31, 2013	Performing		Non-performing		Total
Real estate loans:
Mortgages	$	108,005	$	592	$	108,597
Home Equity		69,670		194		69,864
Consumer		10,057		37		10,094
Total	$	187,732	$	823	$	188,555
December 31, 2012	Performing		Non-performing		Total
Real estate loans:
Mortgages	$	105,822	$	726	$	106,548
Home Equity		71,263		269		71,532
Consumer		10,555		4		10,559
Total	$	187,640	$	999	$	188,639

Age analysis of past due financing receivables

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due financing receivables as of March 31, 2013 and December 31, 2012 (in thousands):

	30-59 Days		60-89 Days		90 Days		Total Past				Total Financing		90 Days and
March 31,2013	Past Due		Past Due		Or Greater		Due		Current		Receivables		Accruing
Real estate loans:
Mortgages	$	229	$	106	$	400	$	735	$	107,862	$	108,597	$	93
Home Equity		481		7		168		656		69,208		69,864		65
Commercial		1,267		24		1,974		3,265		173,422		176,687		171
Agricultural		50		-		-		50		18,346		18,396		-
Construction		-		-		-		-		11,697		11,697		-
Consumer		5		25		37		67		10,027		10,094		37
Other commercial loans		260		16		309		585		41,906		42,491		-
Other agricultural loans		-		-		-		-		6,701		6,701		-
State and political subdivision loans		-		-		-		-		59,196		59,196		-
Total	$	2,292	$	178	$	2,888	$	5,358	$	498,365	$	503,723	$	366
Loans considered non-accrual	$	20	$	93	$	2,522	$	2,635	$	5,240	$	7,875
Loans still accruing		2,272		85		366		2,723		493,125		495,848
Total	$	2,292	$	178	$	2,888	$	5,358	$	498,365	$	503,723

	30-59 Days		60-89 Days		90 Days		Total Past				Total Financing		90 Days and
December 31, 2012	Past Due		Past Due		Or Greater		Due		Current		Receivables		Accruing
Real estate loans:
Mortgages	$	636	$	294	$	493	$	1,423	$	105,125	$	106,548	$	244
Home Equity		267		17		222		506		71,026		71,532		88
Commercial		602		-		2,149		2,751		173,959		176,710		152
Agricultural		54		-		-		54		17,961		18,015		-
Construction		-		-		-		-		12,011		12,011		-
Consumer		45		43		4		92		10,467		10,559		4
Other commercial loans		962		-		317		1,279		40,341		41,620		18
Other agricultural loans		-		-		-		-		6,260		6,260		-
State and political subdivision loans		-		-		-		-		59,208		59,208		-
Total	$	2,566	$	354	$	3,185	$	6,105	$	496,358	$	502,463	$	506
Loans considered non-accrual	$	73	$	69	$	2,679	$	2,821	$	5,246	$	8,067
Loans still accruing		2,493		285		506		3,284		491,112		494,396
Total	$	2,566	$	354	$	3,185	$	6,105	$	496,358	$	502,463

Summary of financing receivables on nonaccrual status

The following table reflects the financing receivables on non-accrual status as of March 31, 2013 and December 31, 2012, respectively. The balances are presented by class of financing receivable (in thousands):

	March 31, 2013		December 31, 2012
Real estate loans:
Mortgages	$	499	$	482
Home Equity		129		181
Commercial		6,890		7,042
Agricultural		-		-
Construction		-		-
Consumer		-		-
Other commercial loans		357		362
Other agricultural loans		-		-
State and political subdivision		-		-
	$	7,875	$	8,067

Summary of troubled debt restructurings on financing receivables

Loan modifications that are considered TDR's completed during the three months ended March 31, 2013 and 2012 were as follows (dollars in thousands):

	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
March 31, 2013	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Residential		1		-	$	72	$	-	$	72	$	-
Commercial		-		2		-		1,365		-		1,365
Other commercial loans		-		2		-		1,530		-		1,530
Total		1		4	$	72	$	2,895	$	72	$	2,895

March 31, 2012
Real estate loans:
Commercial	-	2	$	-	$	98	$	-	$	98
Total	-	2	$	-	$	98	$	-	$	98

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. Loan modifications considered TDR's made during the twelve months ended March 31, 2013 and 2012, that defaulted during the three month periods ended March 31, 2013 and 2012 were as follows (dollars in thousands):

	For the Three Months Ended
	March 31, 2013				March 31, 2012
	Number of contracts		Recorded investment		Number of contracts		Recorded investment
Real estate loans:
Commercial		-	$	-		1	$	48
Total recidivism		-	$	-		1	$	48

Allowance for loan losses by impairment method

The following table segregates the allowance for loan losses (ALLL) into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of March 31, 2013 and December 31, 2012, respectively (in thousands):

	March 31, 2013						December 31, 2012
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	38	$	875	$	913	$	22	$	853	$	875
Commercial and agricultural		528		3,888		4,416		559		3,878		4,437
Construction		-		78		78		-		38		38
Consumer		-		118		118		-		119		119
Other commercial and agricultural loans		-		700		700		1		727		728
State and political subdivision loans		-		303		303		-		271		271
Unallocated		-		400		400		-		316		316
Total	$	566	$	6,362	$	6,928	$	582	$	6,202	$	6,784

Roll forward of allowance for loan losses by portfolio segment

The following tables roll forward the balance of the ALLL by portfolio segment for the three month period ended March 31, 2013 and 2012, respectively (in thousands):

	Balance at December 31, 2012		Charge-offs			Recoveries		Provision			Balance at March 31, 2013
Real estate loans:
Residential	$	875	$	-		$	2	$	36		$	913
Commercial and agricultural		4,437		-			-		(21	)		4,416
Construction		38		-			-		40			78
Consumer		119		(20	)		12		7			118
Other commercial and agricultural loans		728		-			-		(28	)		700
State and political subdivision loans		271		-			-		32			303
Unallocated		316		-			-		84			400
Total	$	6,784	$	(20	)	$	14	$	150		$	6,928

	Balance at December 31, 2011		Charge-offs			Recoveries		Provision			Balance at March 31, 2012
Real estate loans:
Residential	$	805	$	(49	)	$	-	$	(3	)	$	753
Commercial and agricultural		4,132		(2	)		-		206			4,336
Construction		15		-			-		1			16
Consumer		111		(8	)		9		(16	)		96
Other commercial and agricultural loans		674		-			3		(6	)		671
State and political subdivision loans		235		-			-		10			245
Unallocated		515		-			-		(87	)		428
Total	$	6,487	$	(59	)	$	12	$	105		$	6,545