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Loans and Allowance for Credit Losses (Tables)
 12 Months Ended
Dec. 31, 2018
Receivables [Abstract]  
Outstanding loans
Outstanding loans are summarized as follows (in thousands):
Loan Type 
 
December 31,
2018
 
% of Total 
loans
 
December 31,
2017
 
% of Total 
loans
Commercial:
 
 

 
 

 
 

 
 

Commercial and industrial
 
$
101,533

 
11.1
%
 
$
100,856

 
11.2
%
Agricultural production
 
7,998

 
0.9
%
 
14,956

 
1.7
%
Total commercial
 
109,531

 
12.0
%
 
115,812

 
12.9
%
Real estate:
 
 
 
 
 
 
 
 
Owner occupied
 
183,169

 
19.9
%
 
204,452

 
22.7
%
Real estate construction and other land loans
 
101,606

 
11.1
%
 
96,460

 
10.7
%
Commercial real estate
 
305,118

 
33.2
%
 
269,254

 
29.9
%
Agricultural real estate
 
76,884

 
8.4
%
 
76,081

 
8.4
%
Other real estate
 
32,799

 
3.6
%
 
31,220

 
3.5
%
 
 
699,576

 
76.2
%
 
677,467

 
75.2
%
Consumer:
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
69,958

 
7.6
%
 
76,404

 
8.5
%
Consumer and installment
 
38,038

 
4.2
%
 
29,637

 
3.4
%
Total consumer
 
107,996

 
11.8
%
 
106,041

 
11.9
%
Net deferred origination costs
 
1,592

 
 
 
1,359

 
 
Total gross loans
 
918,695

 
100.0
%
 
900,679

 
100.0
%
Allowance for credit losses
 
(9,104
)
 
 

 
(8,778
)
 
 

Total loans
 
$
909,591

 
 

 
$
891,901

 
 
Allowance for credit losses
Changes in the allowance for credit losses were as follows (in thousands):
 
 
Years Ended December 31,
 
 
2018
 
2017
 
2016
Balance, beginning of year
 
$
8,778

 
$
9,326

 
$
9,610

Provision (reversal) charged to operations
 
50

 
(1,150
)
 
(5,850
)
Losses charged to allowance
 
(210
)
 
(464
)
 
(883
)
Recoveries
 
486

 
1,066

 
6,449

Balance, end of year
 
$
9,104

 
$
8,778

 
$
9,326


The following table shows the summary of activities for the allowance for credit losses as of and for the years ended December 31, 2018, 2017, and 2016 by portfolio segment (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2018
 
$
2,071

 
$
5,795

 
$
825

 
$
87

 
$
8,778

(Reversal) provision charged to operations
 
(513
)
 
642

 
(60
)
 
(19
)
 
50

Losses charged to allowance
 
(94
)
 
—

 
(116
)
 
—

 
(210
)
Recoveries
 
207

 
102

 
177

 
—

 
486

Ending balance, December 31, 2018
 
$
1,671

 
$
6,539

 
$
826

 
$
68

 
$
9,104

 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2017
 
$
2,180

 
$
6,200

 
$
852

 
$
94

 
$
9,326

(Reversal) provision charged to operations
 
(762
)
 
(449
)
 
68

 
(7
)
 
(1,150
)
Losses charged to allowance
 
(207
)
 
(22
)
 
(235
)
 
—

 
(464
)
Recoveries
 
860

 
66

 
140

 
—

 
1,066

Ending balance, December 31, 2017
 
$
2,071

 
$
5,795

 
$
825

 
$
87

 
$
8,778

 
 
 
 
 
 
 
 
 
 
 
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Beginning balance, January 1, 2016
 
$
3,562

 
$
5,204

 
$
734

 
$
110

 
$
9,610

(Reversal) provision charged to operations
 
(6,048
)
 
11

 
203

 
(16
)
 
(5,850
)
Losses charged to allowance
 
(621
)
 
—

 
(262
)
 
—

 
(883
)
Recoveries
 
5,287

 
985

 
177

 
—

 
6,449

Ending balance, December 31, 2016
 
$
2,180

 
$
6,200

 
$
852

 
$
94

 
$
9,326


The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2018 and December 31, 2017 (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Unallocated
 
Total
Allowance for credit losses:
 
 

 
 

 
 

 
 

 
 

Ending balance, December 31, 2018
 
$
1,671

 
$
6,539

 
$
826

 
$
68

 
$
9,104

Ending balance: individually evaluated for impairment
 
$
9

 
$
27

 
$
54

 
$
—

 
$
90

Ending balance: collectively evaluated for impairment
 
$
1,662

 
$
6,512

 
$
772

 
$
68

 
$
9,014

 
 
 
 
 
 
 
 
 
 
 
Ending balance, December 31, 2017
 
$
2,071

 
$
5,795

 
$
825

 
$
87

 
$
8,778

Ending balance: individually evaluated for impairment
 
$
1

 
$
1

 
$
34

 
$
—

 
$
36

Ending balance: collectively evaluated for impairment
 
$
2,070

 
$
5,794

 
$
791

 
$
87

 
$
8,742
Loans by impairment methdology
The following table shows the ending balances of loans as of December 31, 2018 and December 31, 2017 by portfolio segment and by impairment methodology (in thousands):
 
 
Commercial
 
Real Estate
 
Consumer
 
Total
Loans:
 
 

 
 

 
 

 
 

Ending balance, December 31, 2018
 
$
109,531

 
$
699,576

 
$
107,996

 
$
917,103

Ending balance: individually evaluated for impairment
 
$
348

 
$
4,215

 
$
1,346

 
$
5,909

Ending balance: collectively evaluated for impairment
 
$
109,183

 
$
695,361

 
$
106,650

 
$
911,194

 
 
 
 
 
 
 
 
 
Loans:
 
 

 
 

 
 

 
 

Ending balance, December 31, 2017
 
$
115,812

 
$
677,467

 
$
106,041

 
$
899,320

Ending balance: individually evaluated for impairment
 
$
377

 
$
4,846

 
$
1,143

 
$
6,366

Ending balance: collectively evaluated for impairment
 
$
115,435

 
$
672,621

 
$
104,898

 
$
892,954
Loan portfolio by internal risk rating
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at December 31, 2018 (in thousands):
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
86,876

 
$
12,072

 
$
2,585

 
$
—

 
$
101,533

Agricultural production
 
5,955

 
2,043

 
—

 
—

 
7,998

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
179,214

 
3,056

 
899

 
—

 
183,169

Real estate construction and other land loans
 
95,301

 
3,270

 
3,035

 
—

 
101,606

Commercial real estate
 
298,714

 
5,268

 
1,136

 
—

 
305,118

Agricultural real estate
 
57,544

 
165

 
19,175

 
—

 
76,884

Other real estate
 
32,799

 
—

 
—

 
—

 
32,799

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
68,016

 
380

 
1,562

 
—

 
69,958

Consumer and installment
 
38,036

 
—

 
2

 
—

 
38,038

Total
 
$
862,455

 
$
26,254

 
$
28,394

 
$
—

 
$
917,103


The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2017 (in thousands):
 
 
Pass
 
Special Mention
 
Substandard
 
Doubtful
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
84,745

 
$
8,217

 
$
7,894

 
$
—

 
$
100,856

Agricultural production
 
10,848

 
206

 
3,902

 
—

 
14,956

Real Estate:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
196,838

 
4,795

 
2,819

 
—

 
204,452

Real estate construction and other land loans
 
90,927

 
1,625

 
3,908

 
—

 
96,460

Commercial real estate
 
261,746

 
4,147

 
3,361

 
—

 
269,254

Agricultural real estate
 
48,274

 
1,270

 
26,537

 
—

 
76,081

Other real estate
 
29,867

 
1,165

 
188

 
—

 
31,220

Consumer:
 
 
 
 
 
 
 
 
 
 
Equity loans and lines of credit
 
74,535

 
483

 
1,386

 
—

 
76,404

Consumer and installment
 
29,634

 
—

 
3

 
—

 
29,637

Total
 
$
827,414

 
$
21,908

 
$
49,998

 
$
—

 
$
899,320
Loan portfolio by time past due
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2018 (in thousands):
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
255

 
$
—

 
$
—

 
$
255

 
$
101,278

 
$
101,533

 
$
—

 
$
298

Agricultural production
 
—

 
—

 
—

 
—

 
7,998

 
7,998

 
—

 
—

Real estate:
 
—

 
 

 
 

 


 
—

 
—

 
 

 
 
Owner occupied
 
215

 
—

 
—

 
215

 
182,954

 
183,169

 
—

 
215

Real estate construction and other land loans
 
—

 
—

 
1,439

 
1,439

 
100,167

 
101,606

 
—

 
1,439

Commercial real estate
 
—

 
—

 
—

 
—

 
305,118

 
305,118

 
—

 
418

Agricultural real estate
 
—

 
—

 
—

 
—

 
76,884

 
76,884

 
—

 
—

Other real estate
 
—

 
—

 
—

 
—

 
32,799

 
32,799

 
—

 
—

Consumer:
 
 
 
 

 
 

 


 
—

 
—

 
 

 
 
Equity loans and lines of credit
 
953

 
—

 
—

 
953

 
69,005

 
69,958

 
—

 
370

Consumer and installment
 
7

 
—

 
—

 
7

 
38,031

 
38,038

 
—

 
—

Total
 
$
1,430

 
$
—

 
$
1,439

 
$
2,869

 
$
914,234

 
$
917,103

 
$
—

 
$
2,740

 
The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2017 (in thousands):
 
 
30-59 Days
Past Due
 
60-89
Days Past
Due
 
Greater
Than
 90 Days
Past Due
 
Total Past
Due
 
Current
 
Total
Loans
 
Recorded
Investment
> 90 Days
Accruing
 
Non-
accrual
Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
—

 
$
—

 
$
—

 
$
—

 
$
100,856

 
$
100,856

 
$
—

 
$
356

Agricultural production
 
—

 
—

 
—

 
—

 
14,956

 
14,956

 
—

 
—

Real estate:
 
—

 
 

 
 

 
 
 
 

 
—

 
 

 
 
Owner occupied
 
—

 
—

 
—

 
—

 
204,452

 
204,452

 
—

 
—

Real estate construction and other land loans
 
—

 
—

 
1,397

 
1,397

 
95,063

 
96,460

 
—

 
1,397

Commercial real estate
 
—

 
—

 
—

 
—

 
269,254

 
269,254

 
—

 
976

Agricultural real estate
 
—

 
—

 
—

 
—

 
76,081

 
76,081

 
—

 
—

Other real estate
 
—

 
1,165

 
—

 
1,165

 
30,055

 
31,220

 
—

 
—

Consumer:
 
 

 
 

 
 

 
 
 
 

 
—

 
 

 
 
Equity loans and lines of credit
 
149

 
—

 
—

 
149

 
76,255

 
76,404

 
—

 
146

Consumer and installment
 
26

 
—

 
—

 
26

 
29,611

 
29,637

 
—

 
—

Total
 
$
175

 
$
1,165

 
$
1,397

 
$
2,737

 
$
896,583

 
$
899,320

 
$
—

 
$
2,875
Impaired loans
The following table shows information related to impaired loans by class at December 31, 2018 (in thousands):
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
259

 
$
493

 
$
—

Real estate:
 
 

 
 

 
 

Owner occupied
 
215

 
215

 
—

Real estate construction and other land loans
 
2,613

 
2,676

 
—

Commercial real estate
 
1,182

 
1,414

 
—

Total real estate
 
4,010

 
4,305

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
248

 
285

 
—

Total with no related allowance recorded
 
4,517

 
5,083

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
89

 
90

 
9

Real estate:
 
 

 
 

 
 

Commercial real estate
 
161

 
162

 
27

Agricultural real estate
 
44

 
44

 
—

Total real estate
 
205

 
206

 
27

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
1,098

 
1,103

 
54

Total with an allowance recorded
 
1,392

 
1,399

 
90

Total
 
$
5,909

 
$
6,482

 
$
90


The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
The following table shows information related to impaired loans by class at December 31, 2017 (in thousands):
 
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
With no related allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
$
355

 
$
553

 
$
—

Real estate:
 
 

 
 

 
 

Real estate construction and other land loans
 
3,023

 
3,085

 
—

Commercial real estate
 
1,772

 
2,040

 
—

Total real estate
 
4,795

 
5,125

 
—

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
146

 
206

 
—

Total with no related allowance recorded
 
5,296

 
5,884

 
—

 
 
 
 
 
 
 
With an allowance recorded:
 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

Commercial and industrial
 
22

 
22

 
1

Real estate:
 
 

 
 

 
 

Agricultural real estate
 
51

 
51

 
1

Consumer:
 
 

 
 

 
 

Equity loans and lines of credit
 
997

 
997

 
34

Total with an allowance recorded
 
1,070

 
1,070

 
36

Total
 
$
6,366

 
$
6,954

 
$
36

 
The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
The following presents by class, information related to the average recorded investment and interest income recognized on impaired loans for the years ended December 31, 2018, 2017, and 2016 (in thousands):
 
 
Year Ended
December 31, 2018
 
Year Ended
December 31, 2017
 
Year Ended
December 31, 2016
 
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With no related allowance recorded:
 
 

 
 

 
 

 
 

 
 

 
 

Commercial:
 
 

 
 

 
 

 
 

 
 

 
 

Commercial and industrial
 
$
311

 
$
—

 
$
404

 
$
—

 
$
115

 
$
—

Agricultural production
 
—

 
—

 
—

 
—

 
42

 
—

Total commercial
 
311

 
—

 
404

 
—

 
157

 
—

Real estate:
 
 

 
 

 
 

 
 

 
 

 
 

Owner occupied
 
17

 
—

 
24

 
—

 
162

 
—

Real estate construction and other land loans
 
2,857

 
85

 
1,228

 
114

 
2,393

 
196

Commercial real estate
 
1,542

 
51

 
1,370

 
53

 
903

 
55

Agricultural real estate
 
1,173

 
159

 
—

 
—

 
173

 
—

Other real estate
 
702

 
—

 
—

 
—

 
—

 
—

Total real estate
 
6,291

 
295

 
2,622

 
167

 
3,631

 
251

Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
217

 
—

 
132

 
—

 
598

 
—

Consumer and installment
 
—

 
—

 
6

 
—

 
41

 
—

Total consumer
 
217

 
—

 
138

 
—

 
639

 
—

Total with no related allowance recorded
 
6,819

 
295

 
3,164

 
167

 
4,427

 
251

 
 
—

 
 

 
 

 
 

 
 

 
 

With an allowance recorded:
 
—

 
 

 
 

 
 

 
 

 
 

Commercial:
 
 
 
 
 
 
 
 
 
 
 
—

Commercial and industrial
 
55

 
4

 
38

 
1

 
441

 
3

Agricultural production
 
—

 
—

 
—

 
—

 
104

 
—

Total commercial
 
55

 
4

 
38

 
1

 
545

 
3

Real estate:
 
 

 
—

 
 
 
—

 
 
 
—

Owner occupied
 
—

 
—

 
—

 
—

 
120

 
—

Real estate construction and other land loans
 
—

 
—

 
1,827

 
—

 
171

 
—

Commercial real estate
 
200

 
12

 
470

 
—

 
548

 
—

Agricultural real estate
 
49

 
3

 
43

 
3

 
—

 
—

Other real estate
 
86

 
—

 
—

 
—

 
—

 
—

Total real estate
 
335

 
15

 
2,340

 
3

 
839

 
—

Consumer:
 
 

 
 

 
 

 
 

 
 

 
 

Equity loans and lines of credit
 
1,054

 
57

 
239

 
32

 
203

 
—

Consumer and installment
 
3

 
—

 
1

 
—

 
19

 
—

Total consumer
 
1,057

 
57

 
240

 
32

 
222

 
—

Total with an allowance recorded
 
1,447

 
76

 
2,618

 
36

 
1,606

 
3

Total
 
$
8,266

 
$
371

 
$
5,782

 
$
203

 
$
6,033

 
$
254
Troubled Debt Restructurings
The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2018 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
1

 
$
38

 
$
—

 
$
38

 
$
30

Real Estate:
 
 
 
 
 
 
 
 
 
 
Real Estate - Commercial
 
1

 
$
166

 
$
—

 
$
166

 
$
161

Total

2

 
$
204

 
$
—

 
$
204

 
$
191

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2017 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Real Estate:
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
 
1

 
59

 
—

 
59

 
51

Consumer
 
 
 
 
 
 
 
 
 
 
Equity loans and line of credit
 
2

 
490

 
—

 
1,066

 
1,059

Total
 
3

 
$
549

 
$
—

 
$
1,125

 
$
1,110

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.

The following table presents loans by class modified as troubled debt restructurings that occurred during the year ended December 31, 2016 (dollars in thousands):
Troubled Debt Restructurings:
 
Number of Loans
 
Pre-Modification Outstanding Recorded Investment (1)
 
Principal Modification
 
Post Modification Outstanding Recorded Investment (2)
 
Outstanding Recorded Investment
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and Industrial
 
2

 
$
45

 
$
—

 
$
45

 
$
40

(1)
Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)
Balance outstanding after principal modification, if any borrower reduction to recorded investment.