Loans (Tables)

3 Months Ended

Mar. 31, 2016

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 March 31, 2016 and December 31, 2015 (in thousands):

March 31, 2016	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	201,988	$	523	$	33	$	201,432
Commercial and agricultural		299,633		6,438		2,761		290,434
Construction		8,699		-		-		8,699
Consumer		11,125		-		8		11,117
Other commercial and agricultural loans		69,197		6,277		681		62,239
State and political subdivision loans		109,061		-		-		109,061
Total		699,703		13,238		3,483		682,982
Allowance for loan losses		7,275		475		-		6,800
Net loans	$	692,428	$	12,763	$	3,483	$	676,182

December 31, 2015
Real estate loans:
Residential	$	203,407	$	304	$	35	$	203,068
Commercial and agricultural		295,364		6,235		2,908		286,221
Construction		15,011		-		-		15,011
Consumer		11,543		-		9		11,534
Other commercial and agricultural loans		71,206		5,745		866		64,595
State and political subdivision loans		98,500		-		-		98,500
Total		695,031		12,284		3,818		678,929
Allowance for loan losses		7,106		355		-		6,751
Net loans	$	687,925	$	11,929	$	3,818	$	672,178

Accretable yield for purchased credit impaired loans

Changes in the accretable yield for purchased credit-impaired loans were as follows for the three months ended March 31, 2016:

(In Thousands)	March 31, 2016
Balance at beginning of period	$ 637
Accretion		(86)
Balance at end of period	$ 551

Loans acquired with specific evidence of deterioration in credit quality

The following table presents additional information regarding loans acquired with specific evidence of deterioration in credit quality under ASC 310-30:

(In Thousands)	March 31, 2016		December 31, 2015
Outstanding balance	$	6,516	$	6,950
Carrying amount		3,483		3,818

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, 2016	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	504	$	115	$	348	$	463	$	38
Home Equity		60		-		60		60		11
Commercial		8,922		6,064		209		6,273		103
Agricultural		165		165		-		165		-
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		6,295		5,122		1,051		6,173		323
Other agricultural loans		104		104		-		104		-
State and political
subdivision loans		-		-		-		-		-
Total	$	16,050	$	11,570	$	1,668	$	13,238	$	475

December 31, 2015
Real estate loans:
Mortgages	$	281	$	114	$	129	$	243	$	26
Home Equity		61		-		61		61		11
Commercial		8,654		5,843		225		6,068		62
Agricultural		167		167		-		167		-
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		5,535		4,653		987		5,640		256
Other agricultural loans		105		105		-		105		-
State and political
subdivision loans		-		-		-		-		-
Total	$	14,803	$	10,882	$	1,402	$	12,284	$	355

The following table includes the average balance of impaired financing receivables by class and the income recognized on impaired loans for the three month periods ended March 31, 2016 and 2015(in thousands):

	For the Three Months Ended
	March 31, 2016						March 31, 2015
					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	$	391	$	4	$	-	$	188	$	2	$	-
Home Equity		60		1		-		124		1		-
Commercial		6,179		26		-		6,023		13		-
Agricultural		165		2		-		-		-		-
Construction		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Other commercial loans		5,952		66		1		2,729		25		1
Other agricultural loans		105		1		-		-		-		-
State and political subdivision loans		-		-		-		-		-		-
Total	$	12,852	$	100	$	1	$	9,064	$	41	$	1

Summary of financing receivable credit exposures by internally assigned grades

The following tables represent credit exposures by internally assigned grades as of March 31, 2016 and December 31, 2015 (in thousands):

March 31, 2016	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	220,649	$	4,258	$	16,097	$	30	$	-	$	241,034
Agricultural		53,867		3,844		888		-		-		58,599
Construction		8,699		-		-		-		-		8,699
Other commercial loans		49,353		594		5,524		134		-		55,605
Other agricultural loans		13,093		395		104		-		-		13,592
State and political
subdivision loans		109,061		-		-		-		-		109,061
Total	$	454,722	$	9,091	$	22,613	$	164	$	-	$	486,590

December 31, 2015
Real estate loans:
Commercial	$	217,544	$	4,150	$	15,816	$	32	$	-	$	237,542
Agricultural		53,695		2,865		1,262		-		-		57,822
Construction		14,422		589		-		-		-		15,011
Other commercial loans		51,297		446		5,669		137		-		57,549
Other agricultural loans		13,318		234		105		-		-		13,657
State and political
subdivision loans		98,500		-		-		-		-		98,500
Total	$	448,776	$	8,284	$	22,852	$	169	$	-	$	480,081

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 and still accruing. The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2016 and December 31, 2015 (in thousands):

March 31, 2016	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	140,106	$	1,568	$	33	$	141,707
Home Equity		60,049		232		-		60,281
Consumer		11,055		62		8		11,125
Total	$	211,210	$	1,862	$	41	$	213,113


December 31, 2015	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	139,734	$	1,270	$	35	$	141,039
Home Equity		62,236		132		-	$	62,368
Consumer		11,470		64		9	$	11,543
Total	$	213,440	$	1,466	$	44	$	214,950

Aging analysis of past due financing receivables

The following table includes an aging analysis of the recorded investment of past due financing receivables as of March 31, 2016 and December 31, 2015 (in thousands):

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Financing		Greater and
March 31, 2016	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	551	$	96	$	728	$	1,375	$	140,299	$	33	$	141,707	$	173
Home Equity		370		64		176		610		59,671		-		60,281		71
Commercial		1,550		204		4,289		6,043		232,953		2,038		241,034		222
Agricultural		36		164		-		200		57,676		723		58,599		-
Construction		-		-		-		-		8,699		-		8,699		-
Consumer		180		51		51		282		10,835		8		11,125		11
Other commercial loans		77		209		1,053		1,339		53,585		681		55,605		143
Other agricultural loans		496		84		-		580		13,012		-		13,592		-
State and political
subdivision loans		-		-		-		-		109,061		-		109,061		-
Total	$	3,260	$	872	$	6,297	$	10,429	$	685,791	$	3,483	$	699,703	$	620

Loans considered non-accrual	$	140	$	-	$	5,677	$	5,817	$	1,166	$	-	$	6,983
Loans still accruing		3,120		872		620		4,612		684,625		3,483		692,720
Total	$	3,260	$	872	$	6,297	$	10,429	$	685,791	$	3,483	$	699,703

December 31, 2015
Real estate loans:
Mortgages	$	487	$	283	$	687	$	1,457	$	139,547	$	35	$	141,039	$	321
Home Equity		630		15		121		766		61,602		-		62,368		73
Commercial		824		57		4,139		5,020		230,352		2,170		237,542		60
Agricultural		177		167		-		344		56,740		738		57,822		-
Construction		-		-		-		-		15,011		-		15,011		-
Consumer		239		37		49		325		11,209		9		11,543		9
Other commercial loans		143		214		1,010		1,367		55,316		866		57,549		160
Other agricultural loans		9		-		-		9		13,648		-		13,657		-
State and political
subdivision loans		-		-		-		-		98,500		-		98,500		-
Total	$	2,509	$	773	$	6,006	$	9,288	$	681,925	$	3,818	$	695,031	$	623

Loans considered non-accrual	$	54	$	171	$	5,383	$	5,608	$	923	$	-	$	6,531
Loans still accruing		2,455		602		623		3,680		681,002		3,818		688,500
Total	$	2,509	$	773	$	6,006	$	9,288	$	681,925	$	3,818	$	695,031

Summary of financing receivables on nonaccrual status

The following table reflects the financing receivables on non-accrual status as of March 31, 2016 and December 31, 2015, respectively. The balances are presented by class of financing receivable (in thousands):

	March 31, 2016		December 31, 2015
Real estate loans:
Mortgages	$	1,395	$	949
Home Equity		161		59
Commercial		4,265		4,422
Agricultural		32		34
Consumer		51		55
Other commercial loans		1,079		1,012
	$	6,983	$	6,531

Summary of troubled debt restructurings on financing receivables

Loan modifications that are considered TDRs completed during the three months ended March 31, 2015 were as follows (dollars in thousands):

	For the Three Months Ended March 31, 2015
	Interest Rate Modification
	Number of contracts		Pre-modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate loans:
Mortgages		1	$	71	$	71
Total		1	$	71	$	71

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, 2016 and 2015 (three month periods), respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

	For the Three Months Ended
	March 31, 2016				March 31, 2015
	Number of contracts		Recorded investment		Number of contracts		Recorded investment
Real estate loans:
Commercial		-	$	-		1	$	124
Total recidivism		-	$	-		1	$	124

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, 2016 and December 31, 2015, respectively (in thousands):

	March 31, 2016						December 31, 2015
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	49	$	917	$	966	$	37	$	868	$	905
Commercial and agricultural		103		3,835		3,938		62		3,723		3,785
Construction		-		14		14		-		24		24
Consumer		-		96		96		-		102		102
Other commercial and agricultural loans		323		1,024		1,347		256		1,049		1,305
State and political
subdivision loans		-		666		666		-		593		593
Unallocated		-		248		248		-		392		392
Total	$	475	$	6,800	$	7,275	$	355	$	6,751	$	7,106

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 periods ended March 31, 2016 and 2015, respectively (in thousands):

	Balance at December 31, 2015		Charge-offs			Recoveries		Provision			Balance at March 31, 2016
Real estate loans:
Residential	$	905	$	-		$	-	$	61		$	966
Commercial and agricultural		3,785		-			4		149			3,938
Construction		24		-			-		(10	)		14
Consumer		102		(15	)		39		(30	)		96
Other commercial and agricultural loans		1,305		-			6		36			1,347
State and political									-
subdivision loans		593		-			-		73			666
Unallocated		392		-			-		(144	)		248
Total	$	7,106	$	(15	)	$	49	$	135		$	7,275

	Balance at December 31, 2014		Charge-offs			Recoveries		Provision			Balance at March 31, 2015
Real estate loans:
Residential	$	878	$	(17	)	$	-	$	62		$	923
Commercial and agricultural		3,870		-			4		(175	)		3,699
Construction		26		-			-		(15	)		11
Consumer		84		(7	)		8		(3	)		82
Other commercial and agricultural loans		1,224		(1	)		-		63			1,286
State and political									-
subdivision loans		545		-			-		27			572
Unallocated		188		-			-		161			349
Total	$	6,815	$	(25	)	$	12	$	120		$	6,922