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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)
 12 Months Ended
Dec. 31, 2018
Loans and Leases Receivable Disclosure [Abstract]  
Composition of Loan Portfolio by Type
The composition of the loan portfolio, net of deferred loan fees is summarized as follows (in thousands):
 
December 31, 2018
 
December 31, 2017
Commercial and agricultural:
 
 
 
Commercial and industrial
$
202,526

 
$
198,463

Agricultural
328

 
544

Commercial mortgages:
 

 
 

Construction
54,476

 
45,558

Commercial mortgages
606,694

 
598,772

Residential mortgages
182,724

 
194,440

Consumer loans:
 

 
 

Credit cards
1,449

 
1,517

Home equity lines and loans
98,145

 
100,591

Indirect consumer loans
149,380

 
153,060

Direct consumer loans
16,184

 
18,879

Total loans, net of deferred loan fees
1,311,906

 
1,311,824

Interest receivable on loans
3,703

 
3,758

Total recorded investment in loans
$
1,315,609

 
$
1,315,582
Allowance for Loan Losses by Portfolio Segment
The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2018, 2017 and 2016, respectively (in thousands):
 
December 31, 2018
Allowance for loan losses
Commercial, and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Beginning balance:
$
6,976

 
$
8,514

 
$
1,316

 
$
4,355

 
$
21,161

Charge Offs:
(3,644
)
 
(213
)
 
(226
)
 
(1,836
)
 
(5,919
)
Recoveries:
47

 
3

 
5

 
494

 
549

Net (charge offs) recoveries
(3,597
)
 
(210
)
 
(221
)
 
(1,342
)
 
(5,370
)
Provision
2,004

 
(120
)
 
131

 
1,138

 
3,153

Ending balance
$
5,383

 
$
8,184

 
$
1,226

 
$
4,151

 
$
18,944


 
December 31, 2017
Allowance for loan losses
Commercial, and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Beginning balance:
$
1,589

 
$
7,270

 
$
1,523

 
$
3,871

 
$
14,253

Charge Offs:
(96
)
 
(419
)
 
(225
)
 
(1,831
)
 
(2,571
)
Recoveries:
109

 
5

 
30

 
313

 
457

Net recoveries (charge offs)
13

 
(414
)
 
(195
)
 
(1,518
)
 
(2,114
)
Provision
5,374

 
1,658

 
(12
)
 
2,002

 
9,022

Ending balance
$
6,976

 
$
8,514

 
$
1,316

 
$
4,355

 
$
21,161


 
December 31, 2016
Allowance for loan losses
Commercial, and Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Beginning balance:
$
1,831

 
$
7,112

 
$
1,464

 
$
3,853

 
$
14,260

Charge Offs:
(217
)
 
(911
)
 
(65
)
 
(1,637
)
 
(2,830
)
Recoveries:
92

 
10

 
—

 
284

 
386

Net recoveries (charge offs)
(125
)
 
(901
)
 
(65
)
 
(1,353
)
 
(2,444
)
Provision
(117
)
 
1,059

 
124

 
1,371

 
2,437

Ending balance
$
1,589

 
$
7,270

 
$
1,523

 
$
3,871

 
$
14,253
Allowance for Loan Losses and Recorded Investment in Loans Based on Impairment Method
The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2018 and December 31, 2017 (in thousands):

 
December 31, 2018
Allowance for loan losses
Commercial
and
Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,743

 
$
446

 
$
—

 
$
—

 
$
2,189

Collectively evaluated for impairment
3,640

 
7,738

 
1,226

 
4,151

 
16,755

Loans acquired with deteriorated credit quality
—

 
—

 
—

 
—

 
—

Total ending allowance balance
$
5,383

 
$
8,184

 
$
1,226

 
$
4,151

 
$
18,944


 
December 31, 2017
Allowance for loan losses
Commercial
and
Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Ending allowance balance attributable to loans:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
5,135

 
$
802

 
$
—

 
$
—

 
$
5,937

Collectively evaluated for impairment
1,841

 
7,683

 
1,316

 
4,355

 
15,195

Loans acquired with deteriorated credit quality
—

 
29

 
—

 
—

 
29

Total ending allowance balance
$
6,976

 
$
8,514

 
$
1,316

 
$
4,355

 
$
21,161


 
December 31, 2018
Loans:
Commercial
and
Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Loans individually evaluated for impairment
$
2,128

 
$
6,146

 
$
402

 
$
55

 
$
8,731

Loans collectively evaluated for impairment
201,284

 
656,842

 
182,823

 
265,929

 
1,306,878

Loans acquired with deteriorated credit quality
—

 
—

 
—

 
—

 
—

Total ending loans balance
$
203,412

 
$
662,988

 
$
183,225

 
$
265,984

 
$
1,315,609


 
December 31, 2017
Loans:
Commercial
and
Agricultural
 
Commercial Mortgages
 
Residential Mortgages
 
Consumer Loans
 
Total
Loans individually evaluated for impairment
$
6,133

 
$
7,302

 
$
427

 
$
64

 
$
13,926

Loans collectively evaluated for impairment
193,443

 
638,080

 
194,510

 
274,831

 
1,300,864

Loans acquired with deteriorated credit quality
—

 
792

 
—

 
—

 
792

Total ending loans balance
$
199,576

 
$
646,174

 
$
194,937

 
$
274,895

 
$
1,315,582
Summary of Impaired Financing Receivables
The following tables present loans individually evaluated for impairment recognized by class of loans as of December 31, 2018 and December 31, 2017, the average recorded investment and interest income recognized by class of loans as of the years ended December 31, 2018, 2017 and 2016 (in thousands):

 
December 31, 2018
 
December 31, 2017
 
Unpaid Principal Balance
 
Recorded Investment
 
Allowance for Loan Losses Allocated
 
Unpaid Principal Balance
 
Recorded Investment
 
Allowance for Loan Losses Allocated
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
345

 
$
346

 
$
—

 
$
861

 
$
867

 
$
—

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Construction
307

 
308

 
—

 
364

 
365

 
—

Commercial mortgages
4,007

 
3,935

 
—

 
4,135

 
4,138

 
—

Residential mortgages
424

 
402

 
—

 
450

 
427

 
—

Consumer loans:
 

 
 

 
 

 
 

 
 

 
 

Home equity lines and loans
54

 
55

 
—

 
64

 
64

 
—

With an allowance recorded:
 

 
 

 
 

 
 

 
 

 
 

Commercial and agricultural:
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
1,780

 
1,782

 
1,743

 
5,231

 
5,266

 
5,135

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgages
1,902

 
1,903

 
446

 
2,989

 
2,799

 
802

Consumer loans:
 

 
 

 
 

 
 

 
 

 
 

Home equity lines and loans
—

 
—

 
—

 
—

 
—

 
—

Total
$
8,819

 
$
8,731

 
$
2,189

 
$
14,094

 
$
13,926

 
$
5,937


 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
Average Recorded Investment
 
Interest Income Recognized (1)
 
Average Recorded Investment
 
Interest Income Recognized (1)
 
Average Recorded Investment
 
Interest Income Recognized (1)
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
608

 
$
12

 
$
706

 
$
35

 
$
1,010

 
$
42

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Construction
337

 
11

 
830

 
12

 
320

 
14

Commercial mortgages
4,193

 
21

 
5,606

 
78

 
6,793

 
240

Residential mortgages
416

 
7

 
418

 
8

 
366

 
5

Consumer loans:
 

 
 

 
 

 
 

 
 

 
 

Home equity lines & loans
60

 
3

 
74

 
3

 
102

 
5

With an allowance recorded:
 

 
 

 
 

 
 

 
 

 
 

Commercial and agricultural:
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
3,043

 
3

 
1,170

 
6

 
33

 
—

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgages
2,315

 
4

 
3,751

 
12

 
4,749

 
6

Consumer loans:
 

 
 

 
 

 
 

 
 

 
 

Home equity lines and loans
—

 
—

 
144

 
—

 
362

 
—

Total
$
10,972

 
$
61

 
$
12,699

 
$
154

 
$
13,735

 
$
312


(1)  Cash basis interest income approximates interest income recognized.
Recorded Investment in Past Due and Non-Accrual Status by Class of Loans
The following tables present the recorded investment in non-accrual and loans past due 90 days or more and still accruing by class of loans as of December 31, 2018 and December 31, 2017 (in thousands):

 
Non-accrual
 
Loans Past Due 90 Days or More and Still Accruing
 
2018
 
2017
 
2018
 
2017
Commercial and agricultural:
 
 
 
 
 
 
 
Commercial and industrial
$
2,048

 
$
5,250

 
$
10

 
$
5

Commercial mortgages:
 
 
 
 
 
 
 
Construction
109

 
135

 
—

 
—

Commercial mortgages
5,529

 
6,520

 
—

 
—

Residential mortgages
2,655

 
3,160

 
—

 
—

Consumer loans:
 
 
 
 
 
 
 
Credit cards
—

 
—

 
9

 
24

Home equity lines and loans
1,183

 
1,310

 
—

 
—

Indirect consumer loans
693

 
935

 
—

 
—

Direct consumer loans
37

 
14

 
—

 
—

Total
$
12,254

 
$
17,324

 
$
19

 
$
29


The following tables present the aging of the recorded investment in loans as of December 31, 2018 and December 31, 2017 (in thousands):

 
December 31, 2018
 
30 - 59 Days Past Due
 
60 - 89 Days Past Due
 
90 Days or More Past Due
 
Total Past Due
 
Loans Acquired with Deteriorated Credit Quality
 
Loans Not Past Due
 
Total
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
284

 
$
61

 
$
71

 
$
416

 
$
—

 
$
202,667

 
$
203,083

Agricultural
16

 
—

 
—

 
16

 
—

 
313

 
329

Commercial mortgages:
 
 
 
 
 
 
 
 
 
 
 
 
 

Construction
—

 
—

 
—

 
—

 
—

 
54,626

 
54,626

Commercial mortgages
6,273

 
158

 
169

 
6,600

 
—

 
601,762

 
608,362

Residential mortgages
2,204

 
516

 
1,026

 
3,746

 
—

 
179,479

 
183,225

Consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
 

Credit cards
1

 
3

 
9

 
13

 
—

 
1,437

 
1,450

Home equity lines and loans
279

 
97

 
730

 
1,106

 
—

 
97,360

 
98,466

Indirect consumer loans
1,511

 
319

 
436

 
2,266

 
—

 
147,540

 
149,806

Direct consumer loans
120

 
53

 
31

 
204

 
—

 
16,058

 
16,262

Total
$
10,688

 
$
1,207

 
$
2,472

 
$
14,367

 
$
—

 
$
1,301,242

 
$
1,315,609



 
December 31, 2017
 
30 - 59 Days Past Due
 
60 - 89 Days Past Due
 
90 Days or More Past Due
 
Total Past Due
 
Loans Acquired with Deteriorated Credit Quality
 
Loans Not Past Due
 
Total
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
1,689

 
$
999

 
$
20

 
$
2,708

 
$
—

 
$
196,322

 
$
199,030

Agricultural
—

 
—

 
—

 
—

 
—

 
546

 
546

Commercial mortgages:
 

 
 

 
 

 


 
 

 
 
 


Construction
—

 
—

 
—

 
—

 
—

 
45,688

 
45,688

Commercial mortgages
2,399

 
115

 
748

 
3,262

 
792

 
596,432

 
600,486

Residential mortgages
1,399

 
939

 
1,474

 
3,812

 
—

 
191,125

 
194,937

Consumer loans:
 

 
 

 
 

 


 
 

 
 
 


Credit cards
17

 
9

 
24

 
50

 
—

 
1,466

 
1,516

Home equity lines and loans
265

 
31

 
983

 
1,279

 
—

 
99,599

 
100,878

Indirect consumer loans
1,822

 
484

 
581

 
2,887

 
—

 
150,645

 
153,532

Direct consumer loans
48

 
28

 
2

 
78

 
—

 
18,891

 
18,969

Total
$
7,639

 
$
2,605

 
$
3,832

 
$
14,076

 
$
792

 
$
1,300,714

 
$
1,315,582
Loans by Class Modified as Troubled Debt Restructurings
The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2018, 2017 and 2016 (in thousands):

December 31, 2018
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment
 
Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
Commercial and industrial
 
2
 
$
491

 
$
491

Total
 
2
 
$
491

 
$
491


The TDRs described above increased the allowance for loan losses by $0.4 million and resulted in no charge offs during the year ended December 31, 2018.

December 31, 2017
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment
 
Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
Commercial and industrial
 
3
 
$
677

 
$
677

Commercial mortgages:
 
 
 
 

 
 

Commercial mortgages
 
1
 
166

 
166

Residential mortgages
 
1
 
105

 
105

Total
 
5
 
$
948

 
$
948


The TDRs described above increased the allowance for loan losses by $0.1 million and resulted in no charge offs during the year ended December 31, 2017.
December 31, 2016
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment
 
Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
 
 
 
 
 
 
Commercial mortgages:
 
 
 
 

 
 

Commercial mortgages
 
6
 
$
485

 
$
388

Residential mortgages
 
2
 
295

 
307

Consumer loans:
 
 
 
 
 
 
Home equity lines and loans
 
1
 
74

 
74

Total
 
9
 
$
854

 
$
769



The TDRs described above did not increase the allowance for loan losses and resulted in no charge offs during the year ended December 31, 2016.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no payment defaults on any loans previously modified as troubled debt restructurings during the year ended December 31, 2018, within twelve months following the modification.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the year ended December 31, 2017:

December 31, 2017
 
Number of Loans
 
Recorded Investment
Commercial mortgages:
 
 
 
 
Commercial mortgages
 
1
 
$
164

Total
 
1
 
$
164


There were no payment defaults on any loans previously modified as troubled debt restructurings during the year ended December 31, 2016, within twelve months following the modification.

Risk Category of Recorded Investment of Loans by Class of Loans
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Loans listed as not rated are included in groups of homogeneous loans.  Based on the analyses performed as of December 31, 2018 and 2017, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):

 
December 31, 2018
 
Not Rated
 
Pass
 
Loans
acquired with deteriorated credit quality
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
—

 
$
190,666

 
$
—

 
$
4,452

 
$
6,222

 
$
1,743

 
$
203,083

Agricultural
—

 
329

 
—

 
—

 
—

 
—

 
329

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction
—

 
54,517

 
—

 
—

 
109

 
—

 
54,626

Commercial mortgages
—

 
574,221

 
—

 
16,830

 
15,948

 
1,363

 
608,362

Residential mortgages
180,570

 
—

 
—

 
—

 
2,655

 
—

 
183,225

Consumer loans
 

 
 

 
 

 
 

 
 

 
 

 
 

Credit cards
1,450

 
—

 
—

 
—

 
—

 
—

 
1,450

Home equity lines and loans
97,283

 
—

 
—

 
—

 
1,183

 
—

 
98,466

Indirect consumer loans
149,113

 
—

 
—

 
—

 
693

 
—

 
149,806

Direct consumer loans
16,225

 
—

 
—

 
—

 
37

 
—

 
16,262

Total
$
444,641

 
$
819,733

 
$
—

 
$
21,282

 
$
26,847

 
$
3,106

 
$
1,315,609



 
December 31, 2017
 
Not Rated
 
Pass
 
Loans
acquired with deteriorated credit quality
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
—

 
$
186,556

 
$
—

 
$
4,447

 
$
6,605

 
$
1,422

 
$
199,030

Agricultural
—

 
546

 
—

 
—

 
—

 
—

 
546

Commercial mortgages:
 

 
 

 
 

 
 

 
 

 
 

 
 

Construction
—

 
45,553

 
—

 
—

 
135

 
—

 
45,688

Commercial mortgages
—

 
575,321

 
792

 
9,665

 
13,331

 
1,377

 
600,486

Residential mortgages
191,777

 
—

 
—

 
—

 
3,160

 
—

 
194,937

Consumer loans
 

 
 

 
 

 
 

 
 

 
 

 
 

Credit cards
1,516

 
—

 
—

 
—

 
—

 
—

 
1,516

Home equity lines and loans
99,568

 
—

 
—

 
—

 
1,310

 
—

 
100,878

Indirect consumer loans
152,598

 
—

 
—

 
—

 
934

 
—

 
153,532

Direct consumer loans
18,955

 
—

 
—

 
—

 
14

 
—

 
18,969

Total
$
464,414

 
$
807,976

 
$
792

 
$
14,112

 
$
25,489

 
$
2,799

 
$
1,315,582
Recorded Investment in Residential and Consumer Loans Based on Payment Activity
The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2018 and 2017 (in thousands):

 
December 31, 2018
 
 
 
Consumer Loans
 
Residential Mortgages
 
Credit Card
 
Home Equity Lines and Loans
 
Indirect Consumer Loans
 
Other Direct Consumer Loans
Performing
$
180,570

 
$
1,450

 
$
97,283

 
$
149,113

 
$
16,225

Non-Performing
2,655

 
—

 
1,183

 
693

 
37

Total
$
183,225

 
$
1,450

 
$
98,466

 
$
149,806

 
$
16,262


 
December 31, 2017
 
 
 
Consumer Loans
 
Residential Mortgages
 
Credit Card
 
Home Equity Lines and Loans
 
Indirect Consumer Loans
 
Other Direct Consumer Loans
Performing
$
191,777

 
$
1,516

 
$
99,568

 
$
152,598

 
$
18,955

Non-Performing
3,160

 
—

 
1,310

 
934

 
14

Total
$
194,937

 
$
1,516

 
$
100,878

 
$
153,532

 
$
18,969