Loans (Tables)

3 Months Ended

Mar. 31, 2018

Summary of 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, 2018 and December 31, 2017 (in thousands):

March 31, 2018	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	215,349	$	1,234	$	31	$	214,084
Commercial		320,381		13,949		1,422		305,010
Agricultural		248,710		3,818		689		244,203
Construction		22,239		-		-		22,239
Consumer		9,672		-		-		9,672
Other commercial loans		74,930		4,139		442		70,349
Other agricultural loans		40,396		1,380		-		39,016
State and political subdivision loans		100,061		-		-		100,061
Total		1,031,738		24,520		2,584		1,004,634
Allowance for loan losses		11,587		408		-		11,179
Net loans	$	1,020,151	$	24,112	$	2,584	$	993,455

December 31, 2017	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	214,479	$	1,065	$	33	$	213,381
Commercial		308,084		13,864		1,460		292,760
Agricultural		239,957		3,901		702		235,354
Construction		13,502		-		-		13,502
Consumer		9,944		8		-		9,936
Other commercial loans		72,013		4,197		443		67,373
Other agricultural loans		37,809		1,363		-		36,446
State and political subdivision loans		104,737		-		-		104,737
Total		1,000,525		24,398		2,638		973,489
Allowance for loan losses		11,190		410		-		10,780
Net loans	$	989,335	$	23,988	$	2,638	$	962,709

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, 2018 and 2017, respectively (in thousands):

	Three months ended
	March 31,
	2018			2017
Balance at beginning of period	$	106		$	389
Accretion		(24	)		(114	)
Balance at end of period	$	82		$	275

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, 2018		December 31, 2017
Outstanding balance	$	5,284	$	5,295
Carrying amount		2,584		2,638

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
March 31, 2018	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	1,227	$	268	$	870	$	1,138	$	22
Home Equity		112		39		57		96		16
Commercial		16,625		12,589		1,360		13,949		170
Agricultural		3,824		3,682		136		3,818		5
Construction		-		-		-		-		-
Consumer		-		-		-		-		-
Other commercial loans		4,655		3,721		418		4,139		184
Other agricultural loans		1,419		1,249		131		1,380		11
State and political subdivision loans		-		-		-		-		-
Total	$	27,862	$	21,548	$	2,972	$	24,520	$	408

December 31, 2017
Real estate loans:
Mortgages	$	1,055	$	273	$	700	$	973	$	47
Home Equity		92		40		52		92		9
Commercial		16,363		13,154		710		13,864		94
Agricultural		5,231		3,283		618		3,901		3
Construction		-		-		-		-		-
Consumer		10		2		6		8		-
Other commercial loans		4,739		3,766		431		4,197		231
Other agricultural loans		1,397		1,238		125		1,363		26
State and political subdivision loans		-		-		-		-		-
Total	$	28,887	$	21,756	$	2,642	$	24,398	$	410

The following tables includes the average balance of impaired financing receivables by class and the income recognized on these receivables for the three month periods ended March 31, 2018 and 2017(in thousands):

	For the Three Months Ended
	March 31, 2018						March 31, 2017
					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	$	1,023	$	4	$	-	$	894	$	3	$	-
Home Equity		107		1		-		56		1		-
Commercial		13,795		122		5		5,793		24		3
Agricultural		4,086		51		-		3,382		31		-
Construction		-		-		-		-		-		-
Consumer		4		-		-		1		-		-
Other commercial loans		4,156		26		-		5,597		40		10
Other agricultural loans		1,370		10		-		1,627		23		-
State and political subdivision loans		-		-		-		-		-		-
Total	$	24,541	$	214	$	5	$	17,350	$	122	$	13

Summary of financing receivable credit exposures by internally assigned grades

The following tables represent credit exposures by internally assigned grades as of March 31, 2018 and December 31, 2017 (in thousands):

March 31, 2018	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	294,894	$	15,387	$	9,981	$	119	$	-	$	320,381
Agricultural		231,711		11,766		5,233		-		-		248,710
Construction		22,108		-		131		-		-		22,239
Other commercial loans		70,850		862		3,095		123		-		74,930
Other agricultural loans		38,697		341		1,358		-		-		40,396
State and political
subdivision loans		89,480		-		10,581		-		-		100,061
Total	$	747,740	$	28,356	$	30,379	$	242	$	-	$	806,717

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	281,742	$	15,029	$	11,271	$	42	$	-	$	308,084
Agricultural		222,198		11,538		6,221		-		-		239,957
Construction		13,364		-		138		-		-		13,502
Other commercial loans		67,706		615		3,567		125		-		72,013
Other agricultural loans		34,914		1,325		1,570		-		-		37,809
State and political
subdivision loans		94,125		-		10,612		-		-		104,737
Total	$	714,049	$	28,507	$	33,379	$	167	$	-	$	776,102

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, 2018 and December 31, 2017 (in thousands):

March 31, 2018	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	154,274	$	1,501	$	31	$	155,806
Home Equity		59,444		99		-		59,543
Consumer		9,635		37		-		9,672
Total	$	223,353	$	1,637	$	31	$	225,021

December 31, 2017	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	152,820	$	1,492	$	33	$	154,345
Home Equity		60,022		112		-		60,134
Consumer		9,895		49		-		9,944
Total	$	222,737	$	1,653	$	33	$	224,423

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 March 31, 2018 and December 31, 2017 (in thousands):

															90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Total Financing		Greater and
March 31, 2018	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	425	$	281	$	911	$	1,617	$	154,158	$	31	$	155,806	$	44
Home Equity		186		54		74		314		59,229		-		59,543		-
Commercial		4,276		241		4,647		9,164		309,795		1,422		320,381		-
Agricultural		112		-		159		271		247,750		689		248,710		-
Construction		-		-		127		127		22,112		-		22,239		-
Consumer		104		44		25		173		9,499		-		9,672		7
Other commercial loans		584		47		2,597		3,228		71,260		442		74,930		378
Other agricultural loans		91		36		-		127		40,269		-		40,396		-
State and political
subdivision loans		-		-		-		-		100,061		-		100,061		-
Total	$	5,778	$	703	$	8,540	$	15,021	$	1,014,133	$	2,584	$	1,031,738	$	429

Loans considered non-accrual	$	375	$	446	$	8,111	$	8,932	$	2,501	$	-	$	11,433
Loans still accruing		5,403		257		429		6,089		1,011,632		2,584		1,020,305
Total	$	5,778	$	703	$	8,540	$	15,021	$	1,014,133	$	2,584	$	1,031,738

															90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Total Financing		Greater and
December 31, 2017	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	996	$	362	$	810	$	2,168	$	152,144	$	33	$	154,345	$	218
Home Equity		277		86		78		441		59,693		-		60,134		-
Commercial		1,353		1,010		3,865		6,228		300,396		1,460		308,084		162
Agricultural		242		-		205		447		238,808		702		239,957		30
Construction		-		-		133		133		13,369		-		13,502		-
Consumer		53		33		49		135		9,809		-		9,944		7
Other commercial loans		132		-		2,372		2,504		69,066		443		72,013		32
Other agricultural loans		-		42		106		148		37,661		-		37,809		106
State and political
subdivision loans		-		-		-		-		104,737		-		104,737		-

Total	$	3,053	$	1,533	$	7,618	$	12,204	$	985,683	$	2,638	$	1,000,525	$	555

Loans considered non-accrual	$	816	$	281	$	7,063	$	8,160	$	2,011	$	-	$	10,171
Loans still accruing		2,237		1,252		555		4,044		983,672		2,638		990,354
Total	$	3,053	$	1,533	$	7,618	$	12,204	$	985,683	$	2,638	$	1,000,525

Summary of financing receivables on nonaccrual status

The following table reflects the financing receivables, excluding PCI loans, on non-accrual status as of March 31, 2018 and December 31, 2017, respectively. The balances are presented by class of financing receivable (in thousands):

	March 31, 2018		December 31, 2017
Real estate loans:
Mortgages	$	1,458	$	1,274
Home Equity		98		112
Commercial		6,372		5,192
Agricultural		194		175
Construction		127		133
Consumer		30		42
Other commercial loans		2,494		2,637
Other agricultural loans		660		606
State and political subdivision		-		-
	$	11,433	$	10,171

Summary of troubled debt restructurings on financing receivables

Loan modifications that are considered TDRs completed during the three months ended March 31, 2018 and 2017 were as follows (dollars in thousands):

	For the Three Months Ended March 31, 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
Total		-		1	$	-	$	7	$	-	$	7

	For the Three Months Ended March 31, 2017
	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		-		2	$	-	$	703	$	-	$	703
Total		-		2	$	-	$	703	$	-	$	703

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, 2018 and December 31, 2017, respectively (in thousands):

	March 31, 2018						December 31, 2017
	Individually evaluated for impairment		Collectively evaluated for impairment		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Real estate loans:
Residential	$	38	$	1,039	$	1,077	$	56	$	993	$	1,049
Commercial		170		3,836		4,006		94		3,773		3,867
Agricultural		5		3,335		3,340		3		3,140		3,143
Construction		-		39		39		-		23		23
Consumer		-		123		123		-		124		124
Other commercial loans		184		1,089		1,273		231		1,041		1,272
Other agricultural loans		11		521		532		26		466		492
State and political
subdivision loans		-		789		789		-		816		816
Unallocated		-		408		408		-		404		404
Total	$	408	$	11,179	$	11,587	$	410	$	10,780	$	11,190

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 month periods ended March 31, 2018 and 2017, respectively (in thousands):

	For the three months ended March 31, 2018
	Balance at December 31, 2017		Charge-offs			Recoveries		Provision			Balance at March 31, 2018
Real estate loans:
Residential	$	1,049	$	(15	)	$	-	$	43		$	1,077
Commercial		3,867		-			-		139			4,006
Agricultural		3,143		-			-		197			3,340
Construction		23		-			-		16			39
Consumer		124		(13	)		10		2			123
Other commercial loans		1,272		(45	)		3		43			1,273
Other agricultural loans		492		(43	)		-		83			532
State and political subdivision loans		816		-			-		(27	)		789
Unallocated		404		-			-		4			408
Total	$	11,190	$	(116	)	$	13	$	500		$	11,587

	For the three months ended March 31, 2017
	Balance at December 31, 2016		Charge-offs			Recoveries		Provision			Balance at March 31, 2017
Real estate loans:
Residential	$	1,064	$	(45	)	$	-	$	23		$	1,042
Commercial		3,589		(41	)		4		113			3,665
Agricultural		1,494							458			1,952
Construction		47		-			-		(1	)		46
Consumer		122		(28	)		10		19			123
Other commercial loans		1,327		-			9		(121	)		1,215
Other agricultural loans		312		(5	)				(1	)		306
State and political subdivision loans		833		-			-		(9	)		824
Unallocated		98		-			-		134			232
Total	$	8,886	$	(119	)	$	23	$	615		$	9,405