Loans (Tables)

9 Months Ended

Sep. 30, 2019

Loans [Abstract]

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, 2019 and December 31, 2018 (in thousands):

September 30, 2019	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	215,717	$	1,195	$	24	$	214,498
Commercial		349,269		11,921		1,213		336,135
Agricultural		305,948		4,781		-		301,167
Construction		11,448		-		-		11,448
Consumer		9,709		6		-		9,703
Other commercial loans		76,785		2,042		91		74,652
Other agricultural loans		50,334		1,407		-		48,927
State and political subdivision loans		95,824		-		-		95,824
Total		1,115,034		21,352		1,328		1,092,354
Allowance for loan losses		13,679		810		-		12,869
Net loans	$	1,101,355	$	20,542	$	1,328	$	1,079,485
December 31, 2018	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	215,305	$	890	$	28	$	214,387
Commercial		319,265		13,327		1,321		304,617
Agricultural		284,520		5,592		-		278,928
Construction		33,913		-		-		33,913
Consumer		9,858		-		-		9,858
Other commercial loans		74,118		2,206		510		71,402
Other agricultural loans		42,186		1,435		-		40,751
State and political subdivision loans		102,718		-		-		102,718
Total		1,081,883		23,450		1,859		1,056,574
Allowance for loan losses		12,884		676		-		12,208
Net loans	$	1,068,999	$	22,774	$	1,859	$	1,044,366

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, 2019 and 2018, respectively (in thousands):

	Three months ended						Nine months ended
	September 30,						September 30,
	2019			2018			2019			2018
Balance at beginning of period	$	100		$	59		$	104		$	106
Accretion		(10	)		(24	)		(14	)		(71	)
Reclassification of non-accretable discount		-			93			-			93
Balance at end of period	$	90		$	128		$	90		$	128

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, 2019		December 31, 2018
Outstanding balance	$	4,076	$	4,529
Carrying amount		1,328		1,859

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, 2019	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	1,220	$	814	$	227	$	1,041	$	10
Home Equity		174		85		69		154		12
Commercial		12,466		10,469		1,452		11,921		342
Agricultural		4,811		1,617		3,164		4,781		145
Consumer		6		6		-		6		-
Other commercial loans		2,621		1,715		327		2,042		144
Other agricultural loans		1,464		98		1,309		1,407		157
Total	$	22,762	$	14,804	$	6,548	$	21,352	$	810

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
December 31, 2018	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	932	$	515	$	288	$	803	$	10
Home Equity		106		12		75		87		14
Commercial		16,326		11,933		1,394		13,327		216
Agricultural		5,598		2,386		3,206		5,592		84
Consumer		-		-		-		-		-
Other commercial loans		2,711		1,836		370		2,206		193
Other agricultural loans		1,487		120		1,315		1,435		159
Total	$	27,160	$	16,802	$	6,648	$	23,450	$	676

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, 2019 and 2018(in thousands):

	For the Nine Months Ended
	September 30, 2019						September 30, 2018
					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	$	1,075	$	12	$	-	$	988	$	10	$	-
Home Equity		108		4		-		98		4		-
Commercial		11,768		342		11		13,915		372		14
Agricultural		5,068		61		-		4,472		124		-
Consumer		2		-		-		2		-		-
Other commercial loans		2,088		1		-		3,906		73		-
Other agricultural loans		1,419		4		-		1,388		21		-
Total	$	21,528	$	424	$	11	$	24,769	$	604	$	14

	For the Three Months Ended
	September 30, 2019						September 30, 2018
					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	$	1,048	$	3	$	-	$	896	$	3	$	-
Home Equity		143		2		-		92		2		-
Commercial		11,906		112		-		14,116		130		6
Agricultural		4,795		5		-		5,146		24		-
Consumer		4		-		-		-		-		-
Other commercial loans		2,073		-		-		3,495		21		-
Other agricultural loans		1,408		-		-		1,453		2		-
Total	$	21,377	$	122	$	-	$	25,198	$	182	$	6

Financing Receivable Credit Exposures by Internally Assigned Grades

The following tables represent credit exposures by internally assigned grades as of September 30, 2019 and December 31, 2018 (in thousands):

September 30, 2019	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	331,075	$	9,945	$	8,210	$	39	$	-	$	349,269
Agricultural		283,074		14,987		7,887		-		-		305,948
Construction		11,448		-		-		-		-		11,448
Other commercial loans		73,502		964		2,253		66		-		76,785
Other agricultural loans		47,026		1,710		1,598		-		-		50,334
State and political subdivision loans		95,349		-		475		-		-		95,824
Total	$	841,474	$	27,606	$	20,423	$	105	$	-	$	889,608

December 31, 2018	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	297,690	$	10,792	$	10,743	$	40	$	-	$	319,265
Agricultural		264,732		10,017		9,771		-		-		284,520
Construction		33,913		-		-		-		-		33,913
Other commercial loans		70,425		777		2,800		116		-		74,118
Other agricultural loans		38,628		1,724		1,834		-		-		42,186
State and political subdivision loans		92,666		9,481		571		-		-		102,718
Total	$	798,054	$	32,791	$	25,719	$	156	$	-	$	856,720

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, 2019 and December 31, 2018 (in thousands):

September 30, 2019	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	154,924	$	935	$	24	$	155,883
Home Equity		59,742		92		-		59,834
Consumer		9,687		22		-		9,709
Total	$	224,353	$	1,049	$	24	$	225,426
December 31, 2018	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	155,360	$	1,099	$	28	$	156,487
Home Equity		58,736		82		-	$	58,818
Consumer		9,832		26		-	$	9,858
Total	$	223,928	$	1,207	$	28	$	225,163

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, 2019 and December 31, 2018

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Financing		Greater and
September 30, 2019	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	155	$	205	$	334	$	694	$	155,165	$	24	$	155,883	$	19
Home Equity		224		86		88		398		59,436		-		59,834		-
Commercial		957		263		3,394		4,614		343,442		1,213		349,269		21
Agricultural		1,113		-		3,164		4,277		301,671		-		305,948		-
Construction		-		-		-		-		11,448		-		11,448		-
Consumer		64		14		22		100		9,609		-		9,709		22
Other commercial loans		15		4		1,941		1,960		74,734		91		76,785		41
Other agricultural loans		60		-		1,196		1,256		49,078		-		50,334		-
State and political
subdivision loans		-		-		-		-		95,824		-		95,824		-
Total	$	2,588	$	572	$	10,139	$	13,299	$	1,100,407	$	1,328	$	1,115,034	$	103
Loans considered non-accrual	$	258	$	230	$	10,036	$	10,524	$	2,699	$	-	$	13,223
Loans still accruing		2,330		342		103		2,775		1,097,708		1,328		1,101,811
Total	$	2,588	$	572	$	10,139	$	13,299	$	1,100,407	$	1,328	$	1,115,034

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Financing		Greater and
December 31, 2018	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	483	$	789	$	686	$	1,958	$	154,501	$	28	$	156,487	$	20
Home Equity		257		108		63		428		58,390		-		58,818		-
Commercial		999		631		4,706		6,336		311,608		1,321		319,265		36
Agricultural		121		-		3,184		3,305		281,215		-		284,520		-
Construction		-		-		-		-		33,913		-		33,913		-
Consumer		37		14		12		63		9,795		-		9,858		12
Other commercial loans		141		53		2,061		2,255		71,353		510		74,118		-
Other agricultural loans		-		-		1,201		1,201		40,985		-		42,186		-
State and political
subdivision loans		-		-		-		-		102,718		-		102,718		-
Total	$	2,038	$	1,595	$	11,913	$	15,546	$	1,064,478	$	1,859	$	1,081,883	$	68
Loans considered non-accrual	$	72	$	253	$	11,845	$	12,170	$	1,554	$	-	$	13,724
Loans still accruing		1,966		1,342		68		3,376		1,062,924		1,859		1,068,159
Total	$	2,038	$	1,595	$	11,913	$	15,546	$	1,064,478	$	1,859	$	1,081,883

Financing Receivables on Nonaccrual Status

The following table reflects the financing receivables, excluding PCI loans, on non-accrual status as of September 30, 2019 and December 31, 2018, respectively. The balances are presented by class of financing receivable (in thousands):

	September 30, 2019		December 31, 2018
Real estate loans:
Mortgages	$	916	$	1,079
Home Equity		92		82
Commercial		5,413		5,957
Agricultural		3,549		3,206
Consumer		-		14
Other commercial loans		2,009		2,185
Other agricultural loans		1,244		1,201
	$	13,223	$	13,724

Troubled Debt Restructurings on Financing Receivables

Loan modifications that are considered TDRs completed during the three and nine months ended September 30, 2019 and 2018 were as follows (dollars in thousands):

	For the Three Months Ended September 30, 2019
	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	$	-	$	118	$	-	$	118
Consumer		-		1		-		3		-		3
Total		-		2	$	-	$	121	$	-	$	121

	For the Nine Months Ended September 30, 2019
	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	$	-	$	4	$	-	$	4
Home Equity		-		1		-		40		-		40
Commercial		-		5		-		918		-		918
Consumer		-		1		-		3		-		3
Total		-		8	$	-	$	965	$	-	$	965

	For the Three Months Ended September 30, 2018
	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	$	-	$	106	$	-	$	106
Agricultural		-		2		-		1,302		-		1,302
Total		-		3	$	-	$	1,408	$	-	$	1,408

	For the Nine Months Ended September 30, 2018
	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	$	-	$	7	$	-	$	7
Home Equity		-		1		-		1		-		1
Commercial		-		2		-		683		-		683
Agricultural		-		3		-		2,825		-		2,825
Other agricultural loans		-		4		-		176		-		176
Total		-		11	$	-	$	3,692	$	-	$	3,692

Subsequent Default Recorded Investment

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 began January 1, 2019 and 2018 (9 month periods) and July 1, 2019 and 2018 (3 month periods), respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

	For the Three Months Ended								For the Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
	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	$	542		-	$	-
Agricultural		-		-		2		1,302		1		1,439		2		1,302
Other agricultural loans		-		-		1		124		4		261		1		124
Total recidivism		-	$	-		3	$	1,426		6	$	2,242		3	$	1,426

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, 2019 and December 31, 2018, respectively (in thousands):

	September 30, 2019						December 31, 2018
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	22	$	1,069	$	1,091	$	24	$	1,081	$	1,105
Commercial		342		4,299		4,641		216		3,899		4,115
Agricultural		145		4,567		4,712		84		4,180		4,264
Construction		-		19		19		-		58		58
Consumer		-		119		119		-		120		120
Other commercial loans		144		1,205		1,349		193		1,161		1,354
Other agricultural loans		157		712		869		159		593		752
State and political
subdivision loans		-		536		536		-		762		762
Unallocated		-		343		343		-		354		354
Total	$	810	$	12,869	$	13,679	$	676	$	12,208	$	12,884

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 months ended September 30, 2019 and 2018, respectively (in thousands):

	For the three months ended September 30, 2019
	Balance at June 30, 2019		Charge-offs			Recoveries		Provision (Credit)			Balance at September 30, 2019
Real estate loans:
Residential	$	1,066	$	(24	)	$	-	$	49		$	1,091
Commercial		4,400		-			-		241			4,641
Agricultural		4,532		-			-		180			4,712
Construction		36		-			-		(17	)		19
Consumer		118		(10	)		6		5			119
Other commercial loans		1,328		-			3		18			1,349
Other agricultural loans		741		-			-		128			869
State and political				-			-
subdivision loans		539		-			-		(3	)		536
Unallocated		544		-			-		(201	)		343
Total	$	13,304	$	(34	)	$	9	$	400		$	13,679
	For the nine months ended September 30, 2019
	Balance at December 31, 2018		Charge-offs			Recoveries		Provision (Credit)			Balance at September 30, 2019
Real estate loans:
Residential	$	1,105	$	(24	)	$	-	$	10		$	1,091
Commercial		4,115		(293	)		-		819			4,641
Agricultural		4,264		-			-		448			4,712
Construction		58		-			-		(39	)		19
Consumer		120		(32	)		24		7			119
Other commercial loans		1,354		(38	)		8		25			1,349
Other agricultural loans		752		-			-		117			869
State and political
subdivision loans		762		-			-		(226	)		536
Unallocated		354		-			-		(11	)		343
Total	$	12,884	$	(387	)	$	32	$	1,150		$	13,679

	For the three months ended September 30, 2018
	Balance at June 30, 2018		Charge-offs			Recoveries		Provision (Credit)			Balance at September 30, 2018
Real estate loans:
Residential	$	1,045	$	(10	)	$	1	$	16		$	1,052
Commercial		3,794		(25	)		-		156			3,925
Agricultural		3,673							256			3,929
Construction		44		-			-		5			49
Consumer		115		(13	)		9		12			123
Other commercial loans		1,266		-			5		(52	)		1,219
Other agricultural loans		589		-			-		110			699
State and political
subdivision loans		767		-			-		(16	)		751
Unallocated		648		-			-		(12	)		636
Total	$	11,941	$	(48	)	$	15	$	475		$	12,383
	For the nine months ended September 30, 2018
	Balance at December 31, 2017		Charge-offs			Recoveries		Provision (Credit)			Balance at September 30, 2018
Real estate loans:
Residential	$	1,049	$	(27	)	$	70	$	(40	)	$	1,052
Commercial		3,867		(25	)		3		80			3,925
Agricultural		3,143		-					786			3,929
Construction		23		-			-		26			49
Consumer		124		(32	)		26		5			123
Other commercial loans		1,272		(91	)		19		19			1,219
Other agricultural loans		492		(50	)		-		257			699
State and political
subdivision loans		816		-			-		(65	)		751
Unallocated		404		-			-		232			636
Total	$	11,190	$	(225	)	$	118	$	1,300		$	12,383