Loans (Tables)

3 Months Ended

Mar. 31, 2020

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, 2020 and December 31, 2019 (in thousands):

March 31, 2020	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality (PCI)		Collectively evaluated for impairment
Real estate loans:
Residential	$	216,179	$	1,220	$	23	$	214,936
Commercial		338,490		11,480		1,195		325,815
Agricultural		300,606		3,893		-		296,713
Construction		17,926		-		-		17,926
Consumer		9,533		3		-		9,530
Other commercial loans		71,038		1,842		30		69,166
Other agricultural loans		46,170		1,293		-		44,877
State and political subdivision loans		93,778		-		-		93,778
Total		1,093,720		19,731		1,248		1,072,741
Less: allowance for loan losses		14,247		753		-		13,494
Net loans	$	1,079,473	$	18,978	$	1,248	$	1,059,247

December 31 , 2019
Real estate loans:
Residential	$	217,088	$	1,166	$	23	$	215,899
Commercial		342,023		11,537		1,210		329,276
Agricultural		311,464		3,782		-		307,682
Construction		15,519		-		-		15,519
Consumer		9,947		4		-		9,943
Other commercial loans		69,970		1,902		49		68,019
Other agricultural loans		55,112		1,281		-		53,831
State and political subdivision loans		94,446		-		-		94,446
Total		1,115,569		19,672		1,282		1,094,615
Less: allowance for loan losses		13,845		735		-		13,110
Net loans	$	1,101,724	$	18,937	$	1,282	$	1,081,505

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, 2020 and 2019, respectively (in thousands):

	Three months ended
	March 31
	2020			2019
Balance at beginning of period	$	89		$	104
Accretion		(1	)		(2	)
Balance at end of period	$	88		$	102

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, 2020		December 31, 2019
Outstanding balance	$	4,057	$	4,072
Carrying amount		1,248		1,282

Impaired Loan Receivables with Associated Allowance Amount

The following table includes the recorded investment and unpaid principal balances for impaired loan 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, 2020	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	1,282	$	776	$	300	$	1,076	$	20
Home Equity		166		80		64		144		11
Commercial		12,000		10,668		812		11,480		335
Agricultural		4,046		1,549		2,344		3,893		86
Consumer		3		3		-		3		-
Other commercial loans		2,459		1,499		343		1,842		148
Other agricultural loans		1,381		129		1,164		1,293		153
Total	$	21,337	$	14,704	$	5,027	$	19,731	$	753

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
December 31, 2019	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	1,212	$	794	$	223	$	1,017	$	20
Home Equity		170		83		66		149		12
Commercial		12,070		10,723		814		11,537		251
Agricultural		3,900		1,580		2,202		3,782		151
Consumer		4		4		-		4		-
Other commercial loans		2,517		1,555		347		1,902		147
Other agricultural loans		1,347		126		1,155		1,281		154
Total	$	21,220	$	14,865	$	4,807	$	19,672	$	735

The following tables includes the average balance of impaired loan receivables by class and the income recognized on these receivables for the three month periods ended March 31, 2020 and 2019(in thousands):

	For the Three Months Ended
	March 31, 2020						March 31, 2019
					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	$	1,031	$	5	$	-	$	1,103	$	4	$	-
Home Equity		146		2		-		85		1		-
Commercial		11,486		104		2		12,548		119		6
Agricultural		3,777		21		-		5,575		32		-
Consumer		3		-		-		-		-		-
Other commercial loans		1,839		1		-		2,137		1		-
Other agricultural loans		1,276		2		-		1,431		2		-
Total	$	19,558	$	135	$	2	$	22,879	$	159	$	6

Financing Receivable Credit Exposures by Internally Assigned Grades

The following tables represent credit exposures by internally assigned grades as of March 31, 2020 and December 31, 2019 (in thousands):

March 31, 2020	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	326,415	$	4,256	$	7,780	$	39	$	-	$	338,490
Agricultural		276,091		14,648		9,867		-		-		300,606
Construction		17,926		-		-		-		-		17,926
Other commercial loans		68,042		986		1,948		62		-		71,038
Other agricultural loans		42,917		1,030		2,223		-		-		46,170
State and political
subdivision loans		93,369		-		409		-		-		93,778
Total	$	824,760	$	20,920	$	22,227	$	101	$	-	$	868,008

December 31, 2019	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	329,831	$	4,305	$	7,848	$	39	$	-	$	342,023
Agricultural		287,044		14,261		10,159		-		-		311,464
Construction		15,519		-		-		-		-		15,519
Other commercial loans		66,880		984		2,042		64		-		69,970
Other agricultural loans		51,711		1,077		2,324		-		-		55,112
State and political
subdivision loans		93,993		-		453		-		-		94,446
Total	$	844,978	$	20,627	$	22,826	$	103	$	-	$	888,534

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, 2020 and December 31, 2019 (in thousands):

March 31, 2020	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	156,630	$	915	$	23	$	157,568
Home Equity		58,555		56		-		58,611
Consumer		9,514		19		-		9,533
Total	$	224,699	$	990	$	23	$	225,712

December 31, 2019	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	156,151	$	904	$	23	$	157,078
Home Equity		59,950		60		-		60,010
Consumer		9,939		8		-		9,947
Total	$	226,040	$	972	$	23	$	227,035

Aging Analysis of Past Due Loan Receivables

The following table includes an aging analysis of the recorded investment of past due loan receivables as of March 31, 2020 and December 31, 2019

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Loan		Greater and
March 31, 2020	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	559	$	212	$	345	$	1,116	$	156,429	$	23	$	157,568	$	-
Home Equity		165		89		53		307		58,304		-		58,611		-
Commercial		2,044		350		3,905		6,299		330,996		1,195		338,490		55
Agricultural		201		-		413		614		299,992		-		300,606		98
Construction		-		-		-		-		17,926		-		17,926		-
Consumer		115		25		19		159		9,374		-		9,533		11
Other commercial loans		63		77		1,715		1,855		69,153		30		71,038		-
Other agricultural loans		50		-		20		70		46,100		-		46,170		-
State and political
subdivision loans		-		-		-		-		93,778		-		93,778		-
Total	$	3,197	$	753	$	6,470	$	10,420	$	1,082,052	$	1,248	$	1,093,720	$	164

Loans considered non-accrual	$	786	$	5	$	6,306	$	7,097	$	4,205	$	-	$	11,302
Loans still accruing		2,411		748		164		3,323		1,077,847		1,248		1,082,418
Total	$	3,197	$	753	$	6,470	$	10,420	$	1,082,052	$	1,248	$	1,093,720

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Loan		Greater and
December 31, 2019	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	581	$	57	$	319	$	957	$	156,098	$	23	$	157,078	$	1
Home Equity		334		11		56		401		59,609		-		60,010		1
Commercial		750		573		3,720		5,043		335,770		1,210		342,023		-
Agricultural		118		-		785		903		310,561		-		311,464		299
Construction		-		-		-		-		15,519		-		15,519		-
Consumer		113		10		8		131		9,816		-		9,947		2
Other commercial loans		217		71		1,946		2,234		67,687		49		69,970		184
Other agricultural loans		29		32		-		61		55,051		-		55,112		-
State and political
subdivision loans		-		-		-		-		94,446		-		94,446		-
Total	$	2,142	$	754	$	6,834	$	9,730	$	1,104,557	$	1,282	$	1,115,569	$	487

Loans considered non-accrual	$	90	$	95	$	6,347	$	6,532	$	5,004	$	-	$	11,536
Loans still accruing		2,052		659		487		3,198		1,099,553		1,282		1,104,033
Total	$	2,142	$	754	$	6,834	$	9,730	$	1,104,557	$	1,282	$	1,115,569

Loan Receivables on Nonaccrual Status

The following table reflects the loan receivables, excluding PCI loans, on non-accrual status as of March 31, 2020 and December 31, 2019, respectively. The balances are presented by class of loan receivable (in thousands):

	March 31, 2020		December 31, 2019
Real estate loans:
Mortgages	$	915	$	903
Home Equity		56		59
Commercial		5,038		5,080
Agricultural		2,464		2,578
Consumer		8		6
Other commercial loans		1,786		1,837
Other agricultural loans		1,035		1,073
	$	11,302	$	11,536

Troubled Debt Restructurings on Financing Receivables

Loan modifications that are considered TDRs completed during the three months ended March 31, 2020 and 2019 were as follows (dollars in thousands):

	For the Three Months Ended March 31, 2020
	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:
Agricultural		-		1	$	-	$	150	$	-	$	150
Total		-		1	$	-	$	150	$	-	$	150

	For the Three Months Ended March 31, 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	$	-	$	548	$	-	$	548
Total		-		1	$	-	$	548	$	-	$	548

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, 2020 and 2019 (3 month periods), respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

	For the Three Months Ended
	March 31, 2020				March 31, 2019
	Number of contracts		Recorded investment		Number of contracts		Recorded investment
Other agricultural loans		-	$	-		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, 2020 and December 31, 2019, respectively (in thousands):

	March 31, 2020						December 31, 2019
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	31	$	1,123	$	1,154	$	32	$	1,082	$	1,114
Commercial		335		4,394		4,729		251		4,298		4,549
Agricultural		86		4,792		4,878		151		4,871		5,022
Construction		-		56		56		-		43		43
Consumer		-		117		117		-		112		112
Other commercial loans		148		1,149		1,297		147		1,108		1,255
Other agricultural loans		153		682		835		154		807		961
State and political
subdivision loans		-		558		558		-		536		536
Unallocated		-		623		623		-		253		253
Total	$	753	$	13,494	$	14,247	$	735	$	13,110	$	13,845

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 months ended March 31, 2020 and 2019, respectively (in thousands):

	For the three months ended March 31, 2020
	Balance at December 31, 2019		Charge-offs			Recoveries		Provision			Balance at March 31, 2020
Real estate loans:
Residential	$	1,114	$	-		$	-	$	40		$	1,154
Commercial		4,549		(1	)		1		180			4,729
Agricultural		5,022		-			-		(144	)		4,878
Construction		43		-			-		13			56
Consumer		112		(8	)		8		5			117
Other commercial loans		1,255		-			2		40			1,297
Other agricultural loans		961		-			-		(126	)		835
State and political
subdivision loans		536		-			-		22			558
Unallocated		253		-			-		370			623
Total	$	13,845	$	(9	)	$	11	$	400		$	14,247

	For the three months ended March 31, 2019
	Balance at December 31, 2018		Charge-offs			Recoveries		Provision			Balance at March 31, 2019
Real estate loans:
Residential	$	1,105	$	-		$	-	$	(16	)	$	1,089
Commercial		4,115		(200	)		-		215			4,130
Agricultural		4,264		-					128			4,392
Construction		58		-			-		(26	)		32
Consumer		120		(14	)		11		7			124
Other commercial loans		1,354		-			3		(74	)		1,283
Other agricultural loans		752		-			-		4			756
State and political
subdivision loans		762		-			-		(197	)		565
Unallocated		354		-			-		359			713
Total	$	12,884	$	(214	)	$	14	$	400		$	13,084