Loans (Tables)

6 Months Ended

Jun. 30, 2014

Loans [Abstract]

Summary of loan portfolio and allowance for loan losses

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 June 30, 2014 and December 31, 2013 (in thousands):

June 30, 2014	Total Loans		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	187,183	$	330	$	186,853
Commercial and agricultural		210,786		7,069		203,717
Construction		3,474		-		3,474
Consumer		8,692		15		8,677
Other commercial and agricultural loans		58,090		2,323		55,767
State and political subdivision loans		71,652		-		71,652
Total		539,877	$	9,737	$	530,140
Allowance for loan losses		6,751
Net loans	$	533,126

December 31, 2013	Total Loans		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	187,101	$	342	$	186,759
Commercial and agricultural		215,088		8,310		206,778
Construction		8,937		-		8,937
Consumer		9,563		15		9,548
Other commercial and agricultural loans		54,029		1,733		52,296
State and political subdivision loans		65,894		-		65,894
Total		540,612	$	10,400	$	530,212
Allowance for loan losses		7,098
Net loans	$	533,514

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
June 30, 2014	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	226	$	131	$	68	$	199	$	14
Home Equity		132		64		67		131		13
Commercial		9,283		6,161		908		7,069		101
Agricultural		-		-		-		-		-
Construction		-		-		-		-		-
Consumer		15		15		-		15		-
Other commercial loans		2,535		1,434		889		2,323		30
Other agricultural loans		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-
Total	$	12,191	$	7,805	$	1,932	$	9,737	$	158
December 31, 2013
Real estate loans:
Mortgages	$	232	$	138	$	70	$	208	$	14
Home Equity		134		65		69		134		13
Commercial		9,901		6,335		1,975		8,310		305
Agricultural		-		-		-		-		-
Construction		-		-		-		-		-
Consumer		15		15		-		15		-
Other commercial loans		1,794		1,679		54		1,733		1
Other agricultural loans		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-
Total	$	12,076	$	8,232	$	2,168	$	10,400	$	333

The following tables includes the average balance of impaired financing receivables by class and the income recognized on impaired loans for the three and six month periods ended June 30, 2014 and 2013(in thousands):

	For the Six Months ended
	June 30, 2014						June 30, 2013
					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	$	202	$	4	$	-	$	330	$	4	$	-
Home Equity		132		2		-		137		2		-
Commercial		8,039		44		-		8,595		84		35
Agricultural		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Consumer		15		-		-		-		-		-
Other commercial loans		2,000		46		-		1,786		41		-
Other agricultural loans		-		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-		-
Total	$	10,388	$	96	$	-	$	10,848	$	131	$	35

	For the Three Months Ended
	June 30, 2014						June 30, 2013
					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	$	200	$	2	$	-	$	352	$	2	$	-
Home Equity		131		1		-		136		1		-
Commercial		7,544		18		-		8,406		39		21
Agricultural		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Consumer		15		-		-		-		-		-
Other commercial loans		2,108		13		-		1,916		22		-
Other agricultural loans		-		-		-		-		-		-
State and political subdivision loans		-		-		-		-		-		-
Total	$	9,998	$	34	$	-	$	10,810	$	64	$	21

Summary of financing receivable credit exposures by internally assigned grades

The following tables represent credit exposures by internally assigned grades as of June 30, 2014 and December 31, 2013 (in thousands):

June 30, 2014	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	162,474	$	9,735	$	14,768	$	-	$	-	$	186,977
Agricultural		18,657		2,991		2,161		-		-		23,809
Construction		3,474		-		-		-		-		3,474
Other commercial loans		39,143		5,233		3,574		58		-		48,008
Other agricultural loans		7,667		468		1,947		-		-		10,082
State and political subdivision loans		71,652		-		-		-		-		71,652
Total	$	303,067	$	18,427	$	22,450	$	58	$	-	$	344,002
December 31, 2013
Real estate loans:
Commercial	$	166,956	$	4,645	$	21,284	$	202	$	-	$	193,087
Agricultural		15,923		1,910		4,168		-		-		22,001
Construction		8,937		-		-		-		-		8,937
Other commercial loans		40,798		1,747		1,938		5		-		44,488
Other agricultural loans		7,431		153		1,957		-		-		9,541
State and political subdivision loans		65,894		-		-		-		-		65,894
Total	$	305,939	$	8,455	$	29,347	$	207	$	-	$	343,948

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 June 30, 2014 and December 31, 2013 (in thousands):

June 30, 2014	Performing		Non-performing		Total
Real estate loans:
Mortgages	$	121,682	$	793	$	122,475
Home Equity		64,557		151		64,708
Consumer		8,658		34		8,692
Total	$	194,897	$	978	$	195,875
December 31, 2013
Real estate loans:
Mortgages	$	119,075	$	809	$	119,884
Home Equity		66,989		228		67,217
Consumer		9,547		16		9,563
Total	$	195,611	$	1,053	$	196,664

Age analysis of past due financing receivables

The following table includes an aging analysis of the recorded investment of past due financing receivables as of June 30, 2014 and December 31, 2013 (in thousands):

	30-59 Days		60-89 Days		90 Days		Total Past				Total Financing		90 Days and
June 30, 2014	Past Due		Past Due		Or Greater		Due		Current		Receivables		Accruing
Real estate loans:
Mortgages	$	575	$	168	$	535	$	1,278	$	121,197	$	122,475	$	-
Home Equity		605		247		119		971		63,737		64,708		46
Commercial		88		12		2,021		2,121		184,856		186,977		301
Agricultural		-		-		-		-		23,809		23,809		-
Construction		-		-		-		-		3,474		3,474		-
Consumer		33		90		15		138		8,554		8,692		-
Other commercial loans		55		408		485		948		47,060		48,008		-
Other agricultural loans		437		-		-		437		9,645		10,082		-
State and political subdivision loans		-		-		-		-		71,652		71,652		-
Total	$	1,793	$	925	$	3,175	$	5,893	$	533,984	$	539,877	$	347
Loans considered non-accrual	$	112	$	407	$	2,828	$	3,347	$	4,214	$	7,561
Loans still accruing		1,681		518		347		2,546		529,770		532,316
Total	$	1,793	$	925	$	3,175	$	5,893	$	533,984	$	539,877
December 31, 2013
Real estate loans:
Mortgages	$	362	$	40	$	739	$	1,141	$	118,743	$	119,884	$	301
Home Equity		632		2		229		863		66,354		67,217		51
Commercial		88		319		3,091		3,498		189,589		193,087		344
Agricultural		-		-		-		-		22,001		22,001		-
Construction		-		-		-		-		8,937		8,937		-
Consumer		96		36		16		148		9,415		9,563		1
Other commercial loans		29		28		49		106		44,382		44,488		-
Other agricultural loans		-		-		-		-		9,541		9,541		-
State and political subdivision loans		-		-		-		-		65,894		65,894		-
Total	$	1,207	$	425	$	4,124	$	5,756	$	534,856	$	540,612	$	697
Loans considered non-accrual	$	98	$	164	$	3,427	$	3,689	$	4,408	$	8,097
Loans still accruing		1,109		261		697		2,067		530,448		532,515
Total	$	1,207	$	425	$	4,124	$	5,756	$	534,856	$	540,612

Summary of financing receivables on nonaccrual status

The following table reflects the financing receivables on non-accrual status as of June 30, 2014 and December 31, 2013, respectively. The balances are presented by class of financing receivable (in thousands):

	June 30 2014		December 31, 2013
Real estate loans:
Mortgages	$	793	$	508
Home Equity		105		177
Commercial		5,703		7,247
Agricultural		-		-
Construction		-		-
Consumer		34		15
Other commercial loans		926		150
Other agricultural loans		-		-
State and political subdivision		-		-
	$	7,561	$	8,097

Summary of troubled debt restructurings on financing receivables

There were no loan modifications that were considered TDRs during the three months ended June 30, 2013. Loan modifications that are considered TDRs completed during the six months ended June 30, 2014 and 2013 and the three months ended June 30, 2014, were as follows (dollars in thousands):

	For the Three Months Ended June 30, 2014
	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Commercial		-		1	$	-	$	28	$	-	$	28
Total		-		1	$	-	$	28	$	-	$	28

	For the Six Months Ended June 30, 2014
	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Commercial		-		2	$	-	$	153	$	-	$	153
Total		-		2	$	-	$	153	$	-	$	153

	For the Six Months Ended June 30, 2013
	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Mortgages		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

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. The following table presents the recorded investment in loans that were modified as TDRs during each 12-month period prior to the current reporting periods, which begin January 1, 2014 and 2013 (six month periods) and April 1, 2014 and 2013 (3 month periods), respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

	For the Three Months Ended								For the Six Months Ended
	June 30, 2014				June 30, 2013				June 30, 2014				June 30, 2013
	Number of contracts		Recorded investment		Number of contracts		Recorded investment		Number of contracts		Recorded investment		Number of contracts		Recorded investment
Real estate loans:
Commercial		-	$	-		1	$	535		1	$	483		-	$	-
Total recidivism		-	$	-		1	$	535		1	$	483		-	$	-

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 June 30, 2014 and December 31, 2013, respectively (in thousands):

	June 30, 2014						December 31, 2013
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	27	$	852	$	879	$	27	$	919	$	946
Commercial and agricultural		101		3,708		3,809		305		4,253		4,558
Construction		-		13		13		-		50		50
Consumer		-		86		86		-		105		105
Other commercial and agricultural loans		30		1,121		1,151		1		941		942
State and political subdivision loans		-		455		455		-		330		330
Unallocated		-		358		358		-		167		167
Total	$	158	$	6,593	$	6,751	$	333	$	6,765	$	7,098

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 and six month periods ended June 30, 2014 and 2013, respectively (in thousands):

	Balance at March 31, 2014		Charge-offs			Recoveries		Provision			Balance at June 30, 2014
Real estate loans:
Residential	$	886	$	(7	)	$	-	$	-		$	879
Commercial and agricultural		4,530		(465	)		3		(259	)		3,809
Construction		8		-			-		5			13
Consumer		83		(6	)		6		3			86
Other commercial and agricultural loans		1,173		(163	)		-		141			1,151
State and political subdivision loans		396		-			-		59			455
Unallocated		157		-			-		201			358
Total	$	7,233	$	(641	)	$	9	$	150		$	6,751
	Balance at December 31, 2013		Charge-offs			Recoveries		Provision			Balance at June 30, 2014
Real estate loans:
Residential	$	946	$	(45	)	$	-	$	(22	)	$	879
Commercial and agricultural		4,558		(475	)		5		(279	)		3,809
Construction		50		-			-		(37	)		13
Consumer		105		(14	)		15		(20	)		86
Other commercial and agricultural loans		942		(163	)		-		372			1,151
State and political subdivision loans		330		-			-		125			455
Unallocated		167		-			-		191			358
Total	$	7,098	$	(697	)	$	20	$	330		$	6,751
	Balance at March 31, 2013		Charge-offs			Recoveries		Provision			Balance at June 30, 2013
Real estate loans:
Residential	$	913	$	(13	)	$	-	$	34		$	934
Commercial and agricultural		4,416		-			-		(176	)		4,240
Construction		78		-			-		13			91
Consumer		118		(10	)		9		(3	)		114
Other commercial and agricultural loans		700		-			-		257			957
State and political subdivision loans		303		-			-		7			310
Unallocated		400		-			-		(57	)		343
Total	$	6,928	$	(23	)	$	9	$	75		$	6,989
	Balance at December 31, 2012		Charge-offs			Recoveries		Provision			Balance at June 30, 2013
Real estate loans:
Residential	$	875	$	(13	)	$	2	$	70		$	934
Commercial and agricultural		4,437		-			-		(197	)		4,240
Construction		38		-			-		53			91
Consumer		119		(30	)		21		4			114
Other commercial and agricultural loans		728		-			-		229			957
State and political subdivision loans		271		-			-		39			310
Unallocated		316		-			-		27			343
Total	$	6,784	$	(43	)	$	23	$	225		$	6,989