Loans (Tables)

3 Months Ended

Mar. 31, 2017

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, 2017 and December 31, 2016 (in thousands):

March 31, 2017	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	203,817	$	945	$	35	$	202,837
Commercial		267,097		6,347		1,965		258,785
Agricultural		156,299		3,476		737		152,086
Construction		26,118		-		-		26,118
Consumer		10,508		2		1		10,505
Other commercial loans		59,800		5,281		863		53,656
Other agricultural loans		24,227		1,612		-		22,615
State and political subdivision loans		97,441		-		-		97,441
Total		845,307		17,663		3,601		824,043
Allowance for loan losses		9,405		404		-		9,001
Net loans	$	835,902	$	17,259	$	3,601	$	815,042

December 31, 2016
Real estate loans:
Residential	$	207,423	$	957	$	35	$	206,431
Commercial		252,577		5,742		1,969		244,866
Agricultural		123,624		3,346		738		119,540
Construction		25,441		-		-		25,441
Consumer		11,005		-		4		11,001
Other commercial loans		58,639		5,994		621		52,024
Other agricultural loans		23,388		1,654		-		21,734
State and political subdivision loans		97,514		-		-		97,514
Total		799,611		17,693		3,367		778,551
Allowance for loan losses		8,886		487		-		8,399
Net loans	$	790,725	$	17,206	$	3,367	$	770,152

Accretable yield for purchased credit impaired loans

Changes in the accretable yield for PCI loans were as follows for the three months ended March 31, 2017 and 2016, respectively (in thousands):

	March 31, 2017			March 31, 2016
Balance at beginning of period	$	389		$	637
Accretion		(114	)		(86	)
Balance at end of period	$	275		$	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, 2017		December 31, 2016
Outstanding balance	$	6,688	$	6,487
Carrying amount		3,601		3,367

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
March 31, 2017	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	949	$	568	$	322	$	890	$	28
Home Equity		55		-		55		55		10
Commercial		8,628		5,937		410		6,347		47
Agricultural		3,487		2,146		1,330		3,476		103
Construction		-		-		-		-		-
Consumer		2		-		2		2		2
Other commercial loans		5,797		4,806		475		5,281		195
Other agricultural loans		1,612		1,593		19		1,612		19
State and political
subdivision loans		-		-		-		-		-
Total	$	20,530	$	15,050	$	2,613	$	17,663	$	404

December 31, 2016
Real estate loans:
Mortgages	$	953	$	570	$	330	$	900	$	22
Home Equity		57		-		57		57		10
Commercial		7,958		5,697		45		5,742		45
Agricultural		3,347		2,000		1,347		3,347		54
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		6,159		5,135		859		5,994		326
Other agricultural loans		1,653		1,629		24		1,653		30
State and political
subdivision loans		-		-		-		-		-
Total	$	20,127	$	15,031	$	2,662	$	17,693	$	487

The following tables includes the average balance of impaired financing receivables by class and the income recognized on these receivables for the three month periods ended March 31, 2017 and 2016(in thousands):

	For the Three Months Ended
	March 31, 2017						March 31, 2016
					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	$	894	$	3	$	-	$	391	$	4	$	-
Home Equity		56		1		-		60		1		-
Commercial		5,793		24		3		6,179		26		-
Agricultural		3,382		31		-		165		2		-
Construction		-		-		-		-		-		-
Consumer		1		-		-		-		-		-
Other commercial loans		5,597		40		10		5,952		66		1
Other agricultural loans		1,627		23		-		105		1		-
State and political
subdivision loans		-		-		-		-		-		-
Total	$	17,350	$	122	$	13	$	12,852	$	100	$	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, 2017 and December 31, 2016 (in thousands):

March 31, 2017	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	240,229	$	14,732	$	12,136	$	-	$	-	$	267,097
Agricultural		143,715		7,835		4,749		-		-		156,299
Construction		26,118		-		-		-		-		26,118
Other commercial loans		53,657		1,560		4,498		85		-		59,800
Other agricultural loans		21,218		1,300		1,709		-		-		24,227
State and political
subdivision loans		83,548		13,095		798		-		-		97,441
Total	$	568,485	$	38,522	$	23,890	$	85	$	-	$	630,982

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	225,185	$	14,045	$	13,347	$	-	$	-	$	252,577
Agricultural		110,785		8,231		4,608		-		-		123,624
Construction		25,441		-		-		-		-		25,441
Other commercial loans		51,396		2,049		5,105		89		-		58,639
Other agricultural loans		20,178		1,733		1,477		-		-		23,388
State and political
subdivision loans		83,620		13,066		828		-		-		97,514
Total	$	516,605	$	39,124	$	25,365	$	89	$	-	$	581,183

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, 2017 and December 31, 2016 (in thousands):

March 31, 2017	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	145,446	$	1,539	$	35	$	147,020
Home Equity		56,566		231		-		56,797
Consumer		10,395		112		1		10,508
Total	$	212,407	$	1,882	$	36	$	214,325

December 31, 2016
Real estate loans:
Mortgages	$	147,047	$	1,648	$	35	$	148,730
Home Equity		58,438		255		-	$	58,693
Consumer		10,892		109		4	$	11,005
Total	$	216,377	$	2,012	$	39	$	218,428

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, 2017 and December 31, 2016 (in thousands):

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Financing		Greater and
March 31, 2017	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	315	$	49	$	988	$	1,352	$	145,633	$	35	$	147,020	$	230
Home Equity		156		85		188		429		56,368		-		56,797		146
Commercial		301		645		3,973		4,919		260,213		1,965		267,097		58
Agricultural		22		-		1,338		1,360		154,202		737		156,299		334
Construction		-		-		-		-		26,118		-		26,118		-
Consumer		90		35		110		235		10,272		1		10,508		22
Other commercial loans		161		2		2,597		2,760		56,177		863		59,800		-
Other agricultural loans		774		-		225		999		23,228		-		24,227		225
State and political
subdivision loans		-		-		-		-		97,441		-		97,441		-
Total	$	1,819	$	816	$	9,419	$	12,054	$	829,652	$	3,601	$	845,307	$	1,015

Loans considered non-accrual	$	77	$	10	$	8,404	$	8,491	$	1,991	$	-	$	10,482
Loans still accruing		1,742		806		1,015		3,563		827,661		3,601		834,825
Total	$	1,819	$	816	$	9,419	$	12,054	$	829,652	$	3,601	$	845,307

December 31, 2016
Real estate loans:
Mortgages	$	630	$	36	$	1,109	$	1,775	$	146,920	$	35	$	148,730	$	173
Home Equity		384		49		209		642		58,051		-		58,693		160
Commercial		1,757		58		4,302		6,117		244,491		1,969		252,577		-
Agricultural		-		-		1,145		1,145		121,741		738		123,624		-
Construction		-		-		-		-		25,441		-		25,441		-
Consumer		115		40		83		238		10,763		4		11,005		67
Other commercial loans		95		35		4,004		4,134		53,884		621		58,639		-
Other agricultural loans		43		34		5		82		23,306		-		23,388		5
State and political
subdivision loans		-		-		-		-		97,514		-		97,514		-

Total	$	3,024	$	252	$	10,857	$	14,133	$	782,111	$	3,367	$	799,611	$	405

Loans considered non-accrual	$	172	$	105	$	10,452	$	10,729	$	725	$	-	$	11,454
Loans still accruing		2,852		147		405		3,404		781,386		3,367		788,157
Total	$	3,024	$	252	$	10,857	$	14,133	$	782,111	$	3,367	$	799,611

Summary of financing receivables on nonaccrual status

The following table reflects the financing receivables, excluding PCI loans, on non-accrual status as of March 31, 2017 and December 31, 2016, respectively. The balances are presented by class of financing receivable (in thousands):

	March 31, 2017		December 31, 2016
Real estate loans:
Mortgages	$	1,309	$	1,475
Home Equity		85		95
Commercial		4,448		4,445
Agricultural		1,322		1,340
Consumer		90		42
Other commercial loans		3,228		4,057
	$	10,482	$	11,454

Summary of troubled debt restructurings on financing receivables

Loan modifications that are considered TDRs completed during the three months ended March 31, 2017 were as follows (dollars in thousands):

	For the Three Months Ended March 31, 2017
	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	$	-	$	703	$	-	$	703
Total		-		2	$	-	$	703	$	-	$	703

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, 2017 and December 31, 2016, respectively (in thousands):

	March 31, 2017						December 31, 2016
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	38	$	1,004	$	1,042	$	32	$	1,032	$	1,064
Commercial		47		3,618		3,665		45		3,544		3,589
Agricultural		103		1,849		1,952		54		1,440		1,494
Construction		-		46		46		-		47		47
Consumer		2		121		123		-		122		122
Other commercial loans		195		1,020		1,215		326		1,001		1,327
Other agricultural loans		19		287		306		30		282		312
State and political
subdivision loans		-		824		824		-		833		833
Unallocated		-		232		232		-		98		98
Total	$	404	$	9,001	$	9,405	$	487	$	8,399	$	8,886

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, 2017 and 2016, respectively (in thousands):

	For the three months ended March 31, 2017
	Balance at December 31, 2016		Charge-offs			Recoveries		Provision			Balance at March 31, 2017
Real estate loans:
Residential	$	1,064	$	(45	)	$	-	$	23		$	1,042
Commercial		3,589		(41	)		4		113			3,665
Agricultural		1,494							458			1,952
Construction		47		-			-		(1	)		46
Consumer		122		(28	)		10		19			123
Other commercial loans		1,327		-			9		(121	)		1,215
Other agricultural loans		312		(5	)				(1	)		306
State and political
subdivision loans		833		-			-		(9	)		824
Unallocated		98		-			-		134			232
Total	$	8,886	$	(119	)	$	23	$	615		$	9,405

	For the three months ended March 31, 2016
	Balance at December 31, 2015		Charge-offs			Recoveries		Provision			Balance at March 31, 2016
Real estate loans:
Residential	$	905	$	-		$	-	$	61		$	966
Commercial		3,376		-			4		153			3,533
Agricultural		409							(4	)		405
Construction		24		-			-		(10	)		14
Consumer		102		(15	)		39		(30	)		96
Other commercial loans		1,183		-			6		33			1,222
Other agricultural loans		122							3			125
State and political									-
subdivision loans		593		-			-		73			666
Unallocated		392		-			-		(144	)		248
Total	$	7,106	$	(15	)	$	49	$	135		$	7,275