Loans (Tables)

9 Months Ended

Sep. 30, 2016

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 September 30, 2016 and December 31, 2015 (in thousands):

September 30, 2016	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	205,092	$	969	$	35	$	204,088
Commercial and agricultural		339,704		5,567		2,748		331,389
Construction		18,774		-		-		18,774
Consumer		11,226		-		4		11,222
Other commercial and agricultural loans		78,258		5,428		778		72,052
State and political subdivision loans		98,239		-		-		98,239
Total		751,293		11,964		3,565		735,764
Allowance for loan losses		8,194		482		-		7,712
Net loans	$	743,099	$	11,482	$	3,565	$	728,052
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 PCI loans were as follows for the three and nine months ended September 30, 2016 (in thousands):

	Three Months Ended			Nine months Ended
Balance at beginning of period	$	464		$	637
Accretion		(88	)		(261	)
Balance at end of period	$	376		$	376

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):

	September 30, 2016		December 31, 2015
Outstanding balance	$	6,774	$	6,950
Carrying amount		3,565		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, excluding PCI loans, with the associated allowance amount, if applicable (in thousands):

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
September 30, 2016	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	959	$	574	$	337	$	911	$	28
Home Equity		58		-		58		58		11
Commercial		7,722		5,437		130		5,567		46
Agricultural		-		-		-		-		-
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		5,591		4,494		934		5,428		397
Other agricultural loans		-		-		-		-		-
State and political
subdivision loans		-		-		-		-		-
Total	$	14,330	$	10,505	$	1,459	$	11,964	$	482
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 tables includes the average balance of impaired financing receivables by class and the income recognized on these receivables for the three and nine month periods ended September 30, 2016 and 2015(in thousands):

	For the Nine Months ended
	September 30, 2016						September 30, 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	$	486	$	10	$	-	$	239	$	8	$	5
Home Equity		59		3		-		97		3		-
Commercial		6,088		87		-		5,728		46		-
Agricultural		110		7		-		19		1		-
Construction		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Other commercial loans		5,743		187		5		2,488		64		4
Other agricultural loans		70		3		-		13		1		-
State and political
subdivision loans		-		-		-		-		-		-
Total	$	12,556	$	297	$	5	$	8,584	$	123	$	9
	For the Three Months Ended
	September 30, 2016						September 30, 2015
Real estate loans:
Mortgages	$	607	$	1	$	-	$	269	$	4	$	-
Home Equity		58		1		-		62		1		-
Commercial		5,980		35		-		5,462		14		-
Agricultural		-		2		-		57		1		-
Construction		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Other commercial loans		5,298		53		2		2,107		15		1
Other agricultural loans		-		-		-		38		1		-
State and political
subdivision loans		-		-		-		-		-		-
Total	$	11,943	$	92	$	2	$	7,995	$	36	$	1

Summary of financing receivable credit exposures by internally assigned grades

The following tables represent credit exposures by internally assigned grades as of September 30, 2016 and December 31, 2015 (in thousands):

September 30, 2016	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	221,715	$	13,935	$	15,471	$	28	$	-	$	251,149
Agricultural		76,500		8,969		3,086		-		-		88,555
Construction		18,774		-		-		-		-		18,774
Other commercial loans		49,987		1,964		4,980		131		-		57,062
Other agricultural loans		17,383		2,350		1,463		-		-		21,196
State and political
subdivision loans		84,541		13,698		-		-		-		98,239
Total	$	468,900	$	40,916	$	25,000	$	159	$	-	$	534,975
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 September 30, 2016 and December 31, 2015 (in thousands):

September 30, 2016	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	144,249	$	1,846	$	35	$	146,130
Home Equity		58,845		117		-		58,962
Consumer		11,146		76		4		11,226
Total	$	214,240	$	2,039	$	39	$	216,318

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 September 30, 2016 and December 31, 2015 (in thousands):

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Financing		Greater and
September 30, 2016	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	720	$	153	$	1,128	$	2,001	$	144,094	$	35	$	146,130	$	173
Home Equity		398		15		67		480		58,482		-		58,962		17
Commercial		2,151		251		4,065		6,467		242,675		2,007		251,149		259
Agricultural		2,415		177		58		2,650		85,164		741		88,555		58
Construction		-		-		-		-		18,774		-		18,774		-
Consumer		149		42		52		243		10,979		4		11,226		34
Other commercial loans		303		-		4,015		4,318		51,966		778		57,062		-
Other agricultural loans		1,151		260		-		1,411		19,785		-		21,196		-
State and political
subdivision loans		-		-		-		-		98,239		-		98,239		-
Total	$	7,287	$	898	$	9,385	$	17,570	$	730,158	$	3,565	$	751,293	$	541
Loans considered non-accrual	$	331	$	19	$	8,844	$	9,194	$	837	$	-	$	10,031
Loans still accruing		6,956		879		541		8,376		729,321		3,565		741,262
Total	$	7,287	$	898	$	9,385	$	17,570	$	730,158	$	3,565	$	751,293
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, excluding PCI loans, on non-accrual status as of September 30, 2016 and December 31, 2015, respectively. The balances are presented by class of financing receivable (in thousands):

	September 30, 2016		December 31, 2015
Real estate loans:
Mortgages	$	1,673	$	949
Home Equity		100		59
Commercial		4,056		4,422
Agricultural		26		34
Consumer		42		55
Other commercial loans		4,134		1,012
	$	10,031	$	6,531

Summary of troubled debt restructurings on financing receivables

Loan modifications that are considered TDRs completed during the three and nine months ended September 30, 2016 and for the nine months ended September 30, 2015 were as follows (dollars in thousands). There were no loan modifications that were considered TDRs during the three months ended September 30, 2015:

	For the Three Months Ended September 30, 2016
	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	$	-	$	750	$	-	$	750
Other commercial loans		-		3		-		3,076		-		3,076
Total		-		4	$	-	$	3,826	$	-	$	3,826

	For the Nine Months Ended September 30, 2016
	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		-		4	$	-	$	1,188	$	-	$	1,188
Other commercial loans		-		3		-		3,076		-		3,076
Total		-		7	$	-	$	4,264	$	-	$	4,264

	For the Nine months Ended September 30, 2015
	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		1	$	71	$	19	$	71	$	19
Total		1		1	$	71	$	19	$	71	$	19

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 September 30, 2016 and December 31, 2015, respectively (in thousands):

	September 30, 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	$	39	$	974	$	1,013	$	37	$	868	$	905
Commercial and agricultural		46		4,560		4,606		62		3,723		3,785
Construction		-		34		34		-		24		24
Consumer		-		109		109		-		102		102
Other commercial and agricultural loans		397		1,245		1,642		256		1,049		1,305
State and political
subdivision loans		-		771		771		-		593		593
Unallocated		-		19		19		-		392		392
Total	$	482	$	7,712	$	8,194	$	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 and nine month periods ended September 30, 2016 and 2015, respectively (in thousands):

	For the three months ended September 30, 2016
	Balance at June 30, 2016		Charge-offs			Recoveries		Provision			Balance at September 30, 2016
Real estate loans:
Residential	$	990	$	(9	)	$	-	$	32		$	1,013
Commercial and agricultural		3,919		(100	)		467		320			4,606
Construction		18		-			-		16			34
Consumer		104		(27	)		16		16			109
Other commercial and agricultural loans		1,564		(37	)		25		90			1,642
State and political									-
subdivision loans		764		-			-		7			771
Unallocated		-		-			-		19			19
Total	$	7,359	$	(173	)	$	508	$	500		$	8,194
	For the three months ended September 30, 2015
	Balance at June 30, 2015		Charge-offs			Recoveries		Provision			Balance at September 30, 2015
Real estate loans:
Residential	$	931	$	-		$	-	$	(18	)	$	913
Commercial and agricultural		3,679		-			4		120			3,803
Construction		14		-			-		3			17
Consumer		89		(11	)		13		-			91
Other commercial and agricultural loans		1,502		(40	)		-		(17	)		1,445
State and political									-
subdivision loans		568		-			-		18			586
Unallocated		176		-			-		14			190
Total	$	6,959	$	(51	)	$	17	$	120		$	7,045
	For the nine months ended September 30, 2016
	Balance at December 31, 2015		Charge-offs			Recoveries		Provision			Balance at September 30, 2016
Real estate loans:
Residential	$	905	$	(52	)	$	-	$	160		$	1,013
Commercial and agricultural		3,785		(100	)		475		446			4,606
Construction		24		-			-		10			34
Consumer		102		(65	)		84		(12	)		109
Other commercial and agricultural loans		1,305		(55	)		31		361			1,642
State and political									-
subdivision loans		593		-			-		178			771
Unallocated		392		-			-		(373	)		19
Total	$	7,106	$	(272	)	$	590	$	770		$	8,194
	For the nine months ended September 30, 2015
	Balance at December 31, 2014		Charge-offs			Recoveries		Provision			Balance at September 30, 2015
Real estate loans:
Residential	$	878	$	(34	)	$	-	$	69		$	913
Commercial and agricultural		3,870		(56	)		11		(22	)		3,803
Construction		26		-			-		(9	)		17
Consumer		84		(35	)		25		17			91
Other commercial and agricultural loans		1,224		(41	)		-		262			1,445
State and political									-
subdivision loans		545		-			-		41			586
Unallocated		188		-			-		2			190
Total	$	6,815	$	(166	)	$	36	$	360		$	7,045