LOANS (Tables)

6 Months Ended

Jun. 30, 2013

Loan balances as of June 30, 2013 and December 31, 2012:


	(In Thousands)
Loans:	June 30, 2013			December 31, 2012
Commercial real estate	$	215,246		$	199,999
Agricultural real estate		35,746			40,143
Consumer real estate		77,948			80,287
Commercial and industrial		93,978			101,624
Agricultural		55,331			57,770
Consumer		19,881			20,413
Industrial Development Bonds		3,102			1,299

		501,232			501,535

Less: Net deferred loan fees and costs		(158	)		(133	)

		501,074			501,402
Less: Allowance for loan losses		(5,297	)		(5,224	)


Loans - Net	$	495,777		$	496,178

Maturity Schedule by Major Category of Loans

The following is a maturity schedule by major category of loans as of June 30, 2013:


	Maturities (In Thousands)
	Within One Year		After One Year Within Five Years		After Five Years
Commercial Real Estate	$	36,770	$	103,283	$	75,193
Agricultural Real Estate		2,609		9,126		24,011
Consumer Real Estate		11,501		13,082		53,365
Commercial/Industrial		61,597		27,005		5,376
Agricultural		32,792		19,349		3,190
Consumer		5,210		12,573		1,940
Industrial Development Bonds		2,220		490		392

Distribution of Fixed Rate Loans and Variable Rate Loans by Major Loan Category

The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of June 30, 2013. Variable rate loans whose current rates are equal to their floor or ceiling are classified as fixed in this table.


	(In Thousands)
	Fixed Rate		Variable Rate
Commercial Real Estate	$	127,488	$	87,758
Agricultural Real Estate	$	25,836	$	9,910
Consumer Real Estate	$	64,041	$	13,907
Commercial/Industrial	$	73,134	$	20,844
Agricultural	$	50,697	$	4,634
Consumer	$	16,415	$	3,308
Industrial Development Bonds	$	3,102	$	—

Contractual Aging of Recorded Investment in Past Due Loans by Portfolio Segment of Loans

The following table represents the contractual aging of the recorded investment in past due loans by portfolio segment of loans as of June 30, 2013 and December 31, 2012, net of deferred fees:


June 30, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing

Residential	$	453	$	249	$	319	$	1,021	$	76,927	$	77,948	$	—
Ag Real Estate		104		—		88		192		35,554		35,746		—
Ag		—		—		—		—		55,331		55,331		—
Commercial Real Estate		501		—		1,035		1,536		213,710		215,246		—
Commercial and Industrial		65		—		2,552		2,617		94,463		97,080		—
Consumer		13		7		—		20		19,703		19,723		—

Total	$	1,136	$	256	$	3,994	$	5,386	$	495,688	$	501,074	$	—


December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing

Residential	$	575	$	—	$	648	$	1,223	$	79,064	$	80,287	$	—
Ag Real Estate		—		—		—		—		40,143		40,143		—
Ag		11		—		—		11		57,759		57,770		—
Commercial Real Estate		—		—		877		877		199,122		199,999		—
Commercial and Industrial		78		—		2,567		2,645		100,278		102,923		—
Consumer		65		7		—		72		20,208		20,280		1

Total	$	729	$	7	$	4,092	$	4,828	$	496,574	$	501,402	$	1

Recorded Investment in Nonaccrual Loans by Portfolio Segment of Loans

The following table presents the recorded investment in nonaccrual loans by class of loans as of June 30, 2013 and December 31, 2012:


	(In Thousands)
	June 30 2013		December 31 2012

Consumer Real Estate	$	551	$	964
Agricultural Real Estate		88		—
Agriculture		—		—
Commercial Real Estate		1,035		877
Commercial and Industrial		2,935		2,987
Consumer		—		—

Total	$	4,609	$	4,828

Risk Category of Loans by Portfolio Segment

The following table represents the risk category of loans by class based on the most recent analysis performed as of June 30, 2013 and December 31, 2012:


(in Thousands)	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
June 30, 2013
1-2	$	3,258	$	5,014	$	2,573	$	605	$	—
3		12,953		21,695		53,936		23,894		2,758
4		18,625		28,588		147,286		63,047		344
5		786		34		5,283		2,245		—
6		36		—		6,168		1,517		—
7		88		—		—		2,670		—
8		—		—		—		—		—

Total	$	35,746	$	55,331	$	215,246	$	93,978	$	3,102


	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
December 31, 2012
1-2	$	2,719	$	5,022	$	4,046	$	750	$	97
3		15,111		23,525		42,467		21,750		859
4		21,481		29,188		137,537		71,228		343
5		794		35		8,984		3,385		—
6		38		—		6,295		2,202		—
7		—		—		670		2,309		—
8		—		—		—		—		—

Total	$	40,143	$	57,770	$	199,999	$	101,624	$	1,299

Recorded Investment in Those Classes Based on Payment Activity and Assigned Risk Grading

The following tables present the recorded investment in those classes based on payment activity and assigned risk grading as of June 30, 2013 and December 31, 2012.


	(In Thousands)
	Consumer Real Estate		Consumer Real Estate
	June 30 2013		December 31 2012
Grade
Pass	$	77,531	$	79,766
Special Mention (5)		—		—
Substandard (6)		393		110
Doubtful (7)		24		411

Total	$	77,948	$	80,287


	(In Thousands)
	Consumer - Credit				Consumer - Other
	June 30 2013		December 31 2012		June 30 2013		December 31 2012
Performing	$	3,498	$	3,470	$	16,225	$	16,775
Nonperforming		—		3		—		32

Total	$	3,498	$	3,473	$	16,225	$	16,807

Schedule of Impaired Loans

Information about impaired loans as of June 30, 2013, December 31, 2012 and June 30, 2012 are as follows:


			(In Thousands)
	June 30, 2013		December 31, 2012		June 30, 2012

Impaired loans without a valuation allowance	$	1,703	$	730	$	806

Impaired loans with a valuation allowance		2,818		3,861		3,548

Total impaired loans	$	4,521	$	4,591	$	4,354


Valuation allowance related to impaired loans	$	771	$	865	$	557
Total non-accrual loans	$	4,609	$	4,828	$	4,893
Total loans past-due ninety days or more and still accruing	$	—	$	1	$	—

Three months ended average investment in impaired loans	$	4,363	$	4,468	$	2,772

Six months ended average investment in impaired loans	$	4,342	$	4,508	$	2,363

Impaired Loans Classified as Troubled Debt Restructured

The following table represents three months and six months ended June 30, 2013.


Three Months June 30, 2013 Troubled Debt Restructurings	Number of Contracts Modified in the Last 3 Months		Modification Outstanding Recorded Investment		Modification Outstanding Recorded Investment		Six Months June 30, 2013 Troubled Debt Restructurings	Number of Contracts Modified in the Last 3 Months		Modification Outstanding Recorded Investment		Modification Outstanding Recorded Investment
Commercial Real Estate			$	—	$	—	Commercial Real Estate			$	—	$	—
Ag Real Estate			$	—	$	—	Ag Real Estate			$	—	$	—
Commercial and Industrial		3	$	2,251	$	2,251	Commercial and Industrial		4	$	2,294	$	2,332

Troubled Debt Restructurings

That Subsequently Defaulted

Number of
Contracts
Modified in the
Last 3 Months

Recorded
Investment

Troubled Debt Restructurings

That Subsequently Defaulted

Number of
Contracts
Modified in the
Last 3 Months

Recorded
Investment

Commercial Real Estate

—

Commercial Real Estate

—

Ag Real Estate

—

Ag Real Estate

—

Commercial and Industrial

—

Commercial and Industrial

—

The following table represents three months and six months ended June 30, 2012.


Three Months June 30, 2012 Troubled Debt Restructurings	Number of Contracts Modified in the Last 6 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Six Months June 30, 2012 Troubled Debt Restructurings	Number of Contracts Modified in the Last 6 Months		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate		1	$	1,937	$	1,937	Commercial Real Estate		1	$	1,937	$	1,937
Ag Real Estate			$	—	$	—	Ag Real Estate			$	—	$	—
Commercial and Industrial			$	—	$	—	Commercial and Industrial			$	—	$	—

Troubled Debt Restructurings

That Subsequently Defaulted

Number of
Contracts
Modified in the
Last 6 Months

Recorded
Investment

Troubled Debt Restructurings

That Subsequently Defaulted

Number of
Contracts
Modified in the
Last 6 Months

Recorded
Investment

Commercial Real Estate

—

Commercial Real Estate

—

Ag Real Estate

—

Ag Real Estate

—

Commercial and Industrial

—

Commercial and Industrial

—

Loans Individually Evaluated for Impairment by Portfolio Segment of Loans

The following table presents loans individually evaluated for impairment by class of loans for three months ended June 30, 2013.


Three Months Ended June 30, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(in thousands)
With no related allowance recorded:
Consumer real estate	$	359	$	431	$	—	$	202	$	—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		1,035		1,459		—		1,038		—
Commercial and industrial		309		309		—		309		—
Consumer		—		3		—		—		—
With a specific allowance recorded:
Consumer real estate		111		111		38		111		—
Agriculture real estate		88		88		15		111		—
Agriculture		—		—		—		—		—
Commercial real estate		—		—		—		15		—
Commercial and industrial		2,619		2,619		718		2,659		—
Consumer		—		—		—		—		—

Totals:
Consumer real estate	$	470	$	542	$	38	$	313	$	—

Agriculture real estate	$	88	$	88	$	15	$	111	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial real estate	$	1,035	$	1,459	$	—	$	1,053	$	—

Commercial and industrial	$	2,928	$	2,928	$	718	$	2,968	$	—

Consumer	$	—	$	3	$	—	$	—	$	—


Three Months Ended June 30, 2012 (in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer real estate	$	340	$	355	$	—	$	213	$	—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		207		384		—		207		—
Commercial and industrial		364		364		—		122		—
Consumer		—		10		—		—		—
With a specific allowance recorded:								—
Consumer real estate		398		425		139		400		—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		600		847		—		664		—
Commercial and industrial		2,441		2,441		417		1,162		1
Consumer		4		4		1		4		—

Totals:
Consumer real estate	$	738	$	780	$	139	$	613	$	—

Agriculture real estate	$	—	$	—	$	—	$	—	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial real estate	$	807	$	1,231	$	—	$	871	$	—

Commercial and industrial	$	2,805	$	2,805	$	417	$	1,284	$	1

Consumer	$	4	$	14	$	1	$	4	$	—

The following table presents loans individually evaluated for impairment by class of loans for six months ended June 30, 2013.


Six Months Ended June 30, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(in thousands)
With no related allowance recorded:
Consumer Real Estate	$	359	$	431	$	—	$	131	$	—
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		1,035		1,459		—		622		—
Commercial and Industrial		309		309		—		297		—
Consumer		—		3		—		—		—
With a specific allowance recorded:
Consumer Real Estate		111		111		38		121		—
Agriculture Real Estate		88		88		15		55		—
Agriculture		—		—		—		—		—
Commercial Real Estate		—		—		—		332		—
Commercial and Industrial		2,619		2,619		718		2,701		—
Consumer		—		—		—		—		—

Totals:
Consumer Real Estate	$	470	$	542	$	38	$	252	$	—

Agriculture Real Estate	$	88	$	88	$	15	$	55	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	1,035	$	1,459	$	—	$	954	$	—

Commercial and Industrial	$	2,928	$	2,928	$	718	$	2,998	$	—

Consumer	$	—	$	3	$	—	$	—	$	—


Six Months Ended June 30, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(in thousands)
With no related allowance recorded:
Consumer Real Estate	$	340	$	355	$	—	$	185	$	—
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		207		384		—		207		—
Commercial and Industrial		364		364		—		61		—
Consumer		—		10		—		—		—
With a specific allowance recorded:
Consumer Real Estate		398		425		139		395		5
Agriculture Real Estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial Real Estate		600		847		—		683		—
Commercial and Industrial		2,441		2,441		417		827		2
Consumer		4		4		1		4		—

Totals:
Consumer Real Estate	$	738	$	780	$	139	$	580	$	5

Agriculture Real Estate	$	—	$	—	$	—	$	—	$	—

Agriculture	$	—	$	—	$	—	$	—	$	—

Commercial Real Estate	$	807	$	1,231	$	—	$	890	$	—

Commercial and Industrial	$	2,805	$	2,805	$	417	$	888	$	2

Consumer	$	4	$	14	$	1	$	4	$	—

Summary of Activities in Allowance for Credit Losses

The following tables summarize the activities in the allowance for credit losses.


	(In Thousands)
	Six Months Ended June 30, 2013			Twelve Months Ended December 31, 2012
Allowance for Loan Losses
Balance at beginning of year	$	5,224		$	5,091
Provision for loan loss		279			738
Loans charged off		(362	)		(891	)
Recoveries		156			286

Allowance for Loan & Leases Losses	$	5,297		$	5,224

Allowance for Unfunded Loan Commitments & Letters of Credit	$	187		$	162

Total Allowance for Credit Losses	$	5,484		$	5,386

Analysis of Allowance for Credit Losses

Additional analysis related to the allowance for credit losses for three months ended June 30, 2013 is as follows:


	Consumer Real Estate			Agriculture Real Estate		Agriculture		Commercial Real Estate			Commercial and Industrial		Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated			Total
(in thousands)
Three Months Ended June 30, 2013
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	463		$	105	$	260	$	1,566		$	1,972	$	256		$	172	$	722		$	5,516
Charge Offs		(89	)		—		—		(44	)		—		(112	)		—		—		$	(245	)
Recoveries		4			—		3		—			41		38			—		—		$	86
Provision		(17	)		10		14		(62	)		125		84			—		(42	)	$	112
Other Non-interest expense related to unfunded		—			—		—		—			—		—			15		—		$	15

Ending Balance	$	361		$	115	$	277	$	1,460		$	2,138	$	266		$	187	$	680		$	5,484

Ending balance: individually evaluated for impairment	$	38		$	15	$	—	$	—		$	718	$	—		$	—	$	—		$	771

Ending balance: collectively evaluated for impairment	$	323		$	100	$	277	$	1,460		$	1,420	$	266		$	187	$	680		$	4,713

Ending balance: loans acquired with deteriorated credit quality	$	2		$	—	$	—	$	—		$	—	$	—		$	—	$	—		$	2
FINANCING RECEIVABLES:																					$	—
Ending balance	$	77,948		$	35,746	$	55,331	$	215,246		$	97,080	$	19,723		$	—	$	—		$	501,074

Ending balance: individually evaluated for impairment	$	470		$	88	$	—	$	1,035		$	2,928	$	—		$	—	$	—		$	4,521

Ending balance: collectively evaluated for impairment	$	77,478		$	35,658	$	55,331	$	214,211		$	94,152	$	19,723		$	—	$	—		$	496,553

Ending balance: loans acquired with deteriorated credit quality	$	549		$	—	$	—	$	—		$	—	$	—		$	—	$	—		$	549


	Consumer Real Estate			Agriculture Real Estate		Agriculture		Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated			Total
(in thousands)
Three Months Ended June 30, 2012
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	433		$	90	$	272	$	1,569		$	1,859		$	293		$	140	$	636		$	5,292
Charge Offs		(53	)		—		—		(97	)		—			(121	)		—		—			(271	)
Recoveries		25			—		3		1			4			45			—		—			78
Provision		55			2		—		249			(7	)		66			—		(288	)		77
Other Non-interest expense related to unfunded		—			—		—		—			—			—			1		—			1

Ending Balance	$	460		$	92	$	275	$	1,722		$	1,856		$	283		$	141	$	348		$	5,177

Ending balance: individually evaluated for impairment	$	139		$	—	$	—	$	—		$	417		$	1		$	—	$	—		$	557

Ending balance: collectively evaluated for impairment	$	321		$	92	$	275	$	1,722		$	1,439		$	282		$	141	$	348		$	4,620

Ending balance: loans acquired with deteriorated credit quality	$	1		$	—	$	—	$	—		$	—		$	—		$	—	$	—		$	1
FINANCING RECEIVABLES:
Ending balance	$	81,252		$	32,408	$	54,808	$	202,900		$	105,423		$	21,577		$	—	$	—		$	498,368

Ending balance: individually evaluated for impairment	$	738		$	—	$	—	$	807		$	2,805		$	4		$	—	$	—		$	4,354

Ending balance: collectively evaluated for impairment	$	80,514		$	32,408	$	54,808	$	202,093		$	102,618		$	21,573		$	—	$	—		$	494,014

Ending balance: loans acquired with deteriorated credit quality	$	547		$	—	$	—	$	—		$	—		$	—		$	—	$	—		$	547

Additional analysis related to the allowance for credit losses for six months ended June 30, 2013 is as follows:


	Consumer Real Estate			Agriculture Real Estate		Agriculture			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total
(in thousands)
Six Months Ended June 30, 2013
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	368		$	113	$	290		$	1,749		$	2,183		$	268		$	162	$	253	$	5,386
Charge Offs		(100	)		—		—			(64	)		—			(198	)					$	(362	)
Recoveries		9			—		4			—			56			87						$	156
Provision		84			2		(17	)		(225	)		(101	)		109			—		427	$	279
Other Non-interest expense related to unfunded		—			—		—			—			—			—			25		—	$	25

Ending Balance	$	361		$	115	$	277		$	1,460		$	2,138		$	266		$	187	$	680	$	5,484

Ending balance: individually evaluated for impairment	$	38		$	15	$	—		$	—		$	718		$	—		$	—	$	—	$	771

Ending balance: collectively evaluated for impairment	$	323		$	100	$	277		$	1,460		$	1,420		$	266		$	187	$	680	$	4,713

Ending balance: loans acquired with deteriorated credit quality	$	2		$	—	$	—		$	—		$	—		$	—		$	—	$	—	$	2
FINANCING RECEIVABLES:																						$	—
Ending balance	$	77,948		$	35,746	$	55,331		$	215,246		$	97,080		$	19,723		$	—	$	—	$	501,074

Ending balance: individually evaluated for impairment	$	470		$	88	$	—		$	1,035		$	2,928		$	—		$	—	$	—	$	4,521

Ending balance: collectively evaluated for impairment	$	77,478		$	35,658	$	55,331		$	214,211		$	94,152		$	19,723		$	—	$	—	$	496,553

Ending balance: loans acquired with deteriorated credit quality	$	549		$	—	$	—		$	—		$	—		$	—		$	—	$	—	$	549


	Consumer Real Estate		Agriculture Real Estate			Agriculture			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total
(in thousands)
Six Months Ended June 30, 2012
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	261	$	140		$	266		$	2,088		$	1,947		$	315		$	130	$	74	$	5,221
Charge Offs		93		—			—			(97	)		—			(208	)		—		—		(398	)
Recoveries		30		—			10			2			19			76			—		—		137
Provision		262		(48	)		(1	)		(271	)		(110	)		100			—		274		206
Other Non-interest expense related to unfunded		—		—			—			—			—			—			11		—		11

Ending Balance	$	460	$	92		$	275		$	1,722		$	1,856		$	283		$	141	$	348	$	5,177

Ending balance: individually evaluated for impairment	$	139	$	—		$	—		$	—		$	417		$	1		$	—	$	—	$	557

Ending balance: collectively evaluated for impairment	$	321	$	92		$	275		$	1,722		$	1,439		$	282		$	141	$	348	$	4,620

Ending balance: loans acquired with deteriorated credit quality	$	1	$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	1
FINANCING RECEIVABLES:
Ending balance	$	81,252	$	32,408		$	54,808		$	202,900		$	105,423		$	21,577		$	—	$	—	$	498,368

Ending balance: individually evaluated for impairment	$	738	$	—		$	—		$	807		$	2,805		$	4		$	—	$	—	$	4,354

Ending balance: collectively evaluated for impairment	$	80,514	$	32,408		$	54,808		$	202,093		$	102,618		$	21,573		$	—	$	—	$	494,014

Ending balance: loans acquired with deteriorated credit quality	$	547	$	—		$	—		$	—		$	—		$	—		$	—	$	—	$	547