LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2019

Loan Portfolio and Allowance for Loan Losses

The following table summarizes the primary segments of the loan portfolio, as well as how those segments are analyzed within the allowance for loan losses as of December 31, 2019 and 2018 (in thousands):

2019	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
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
Allowance for loan losses		13,845		735		-		13,110
Net loans	$	1,101,724	$	18,937	$	1,282	$	1,081,505

2018	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Collectively evaluated for impairment
Real estate loans:
Residential	$	215,305	$	890	$	28	$	214,387
Commercial		319,265		13,327		1,321		304,617
Agricultural		284,520		5,592		-		278,928
Construction		33,913		-		-		33,913
Consumer		9,858		-		-		9,858
Other commercial loans		74,118		2,206		510		71,402
Other agricultural loans		42,186		1,435		-		40,751
State and political subdivision loans		102,718		-		-		102,718
Total		1,081,883		23,450		1,859		1,056,574
Allowance for loan losses		12,884		676		-		12,208
Net loans	$	1,068,999	$	22,774	$	1,859	$	1,044,366

Accretable Yield for Purchased Credit Impaired Loans

Changes in the accretable discount for PCI loans were as follows for the years ended December 31, 2019 and 2018 (in thousands):

	December 31, 2019			December 31, 2018
Balance at beginning of period	$	104		$	106
Accretion		(15	)		(95	)
Reclassification of non-accretable discount		-			93
Balance at end of period	$	89		$	104

Loans Acquired with Specific Evidence of Deterioration in Credit Quality

The following table presents additional information regarding PCI loans (in thousands):

	December 31, 2019		December 31, 2018
Outstanding balance	$	4,072	$	4,529
Carrying amount		1,282		1,859

Impaired Financing Receivables with Associated Allowance Amount

The following table includes the recorded investment and unpaid principal balances for impaired loans by class, with the associated allowance amount as of December 31, 2019 and 2018, if applicable (in thousands):

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
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

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
2018	Principal		With No		With		Recorded		Related
Real estate loans:	Balance		Allowance		Allowance		Investment		Allowance
Mortgages	$	932	$	515	$	288	$	803	$	10
Home Equity		106		12		75		87		14
Commercial		16,326		11,933		1,394		13,327		216
Agricultural		5,598		2,386		3,206		5,592		84
Other commercial loans		2,711		1,836		370		2,206		193
Other agricultural loans		1,487		120		1,315		1,435		159
Total	$	27,160	$	16,802	$	6,648	$	23,450	$	676

The following table includes the average investment in impaired loans and the income recognized on impaired loans for 2019, 2018 and 2017 (in thousands):

					Interest
	Average		Interest		Income
	Recorded		Income		Recognized
2019	Investment		Recognized		Cash Basis
Real estate loans:
Mortgages	$	1,062	$	16	$	-
Home Equity		119		6		-
Commercial		11,756		453		24
Agricultural		4,899		78		-
Consumer		2		-		-
Other commercial loans		2,056		1		-
Other agricultural loans		1,400		4		-
Total	$	21,294	$	558	$	24

					Interest
	Average		Interest		Income
	Recorded		Income		Recognized
2018	Investment		Recognized		Cash Basis
Real estate loans:
Mortgages	$	944	$	13	$	-
Home Equity		95		4		-
Commercial		13,907		506		20
Agricultural		4,736		151		-
Consumer		1		-		-
Other commercial loans		3,659		89		-
Other agricultural loans		1,401		23		-
Total	$	24,743	$	786	$	20

Financing Receivable Credit Exposures by Internally Assigned Grades

The following tables represent credit exposures by internally assigned grades as of December 31, 2019 and 2018 (in thousands):

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

2018	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	297,690	$	10,792	$	10,743	$	40	$	-	$	319,265
Agricultural		264,732		10,017		9,771		-		-		284,520
Construction		33,913		-		-		-		-		33,913
Other commercial loans		70,425		777		2,800		116		-		74,118
Other agricultural loans		38,628		1,724		1,834		-		-		42,186
State and political
subdivision loans		92,666		9,481		571		-		-		102,718
Total	$	798,054	$	32,791	$	25,719	$	156	$	-	$	856,720

For residential real estate mortgages, home equities 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. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2019 and 2018 (in thousands):

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

2018	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	155,360	$	1,099	$	28	$	156,487
Home Equity		58,736		82		-		58,818
Consumer		9,832		26		-		9,858
Total	$	223,928	$	1,207	$	28	$	225,163

Aging Analysis of Past Due Financing Receivables

The following table includes an aging analysis of the recorded investment of past due loans as of December 31, 2019 and 2018

															90 Days
	30-59 Days		60-89 Days		90 Days		Total Past						Total Financing		Past due
2019	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		and 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

	30-59 Days		60-89 Days		90 Days		Total Past						Total Financing		90 Days Past Due
2018	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		And Accruing
Real estate loans:
Mortgages	$	483	$	789	$	686	$	1,958	$	154,501	$	28	$	156,487	$	20
Home Equity		257		108		63		428		58,390		-		58,818		-
Commercial		999		631		4,706		6,336		311,608		1,321		319,265		36
Agricultural		121		-		3,184		3,305		281,215		-		284,520		-
Construction		-		-		-		-		33,913		-		33,913		-
Consumer		37		14		12		63		9,795		-		9,858		12
Other commercial loans		141		53		2,061		2,255		71,353		510		74,118		-
Other agricultural loans		-		-		1,201		1,201		40,985		-		42,186		-
State and political
subdivision loans		-		-		-		-		102,718		-		102,718		-
Total	$	2,038	$	1,595	$	11,913	$	15,546	$	1,064,478	$	1,859	$	1,081,883	$	68

Loans considered non-accrual	$	72	$	253	$	11,845	$	12,170	$	1,554	$	-	$	13,724
Loans still accruing		1,966		1,342		68		3,376		1,062,924		1,859		1,068,159
Total	$	2,038	$	1,595	$	11,913	$	15,546	$	1,064,478	$	1,859	$	1,081,883

Financing Receivables on Nonaccrual Status

The following table reflects the loans on nonaccrual status as of December 31, 2019 and 2018, respectively. The balances are presented by class of loan (in thousands):

	2019		2018
Real estate loans:
Mortgages	$	903	$	1,079
Home Equity		59		82
Commercial		5,080		5,957
Agricultural		2,578		3,206
Consumer		6		14
Other commercial loans		1,837		2,185
Other agricultural loans		1,073		1,201
	$	11,536	$	13,724

Troubled Debt Restructurings on Financing Receivables

Loan modifications that are considered TDRs completed during the years ended December 31, 2019, 2018 and 2017 were as follows (dollars in thousands):

	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
2019	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Mortgages		-		1	$	-	$	4	$	-	$	4
Home Equity		-		1		-		40		-		40
Commercial		-		6		-		918		-		918
Agricultural		-		5		-		1,731		-		1,731
Consumer		-		1		-		3				3
Other commercial loans		-		1		-		55				55
Other agricultural loans		-		5		-		1,054		-		1,054
Total		-		20	$	-	$	3,805	$	-	$	3,805

	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
2018	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Mortgages		-		1	$	-	$	7	$	-	$	7
Home Equity		-		1		-		1		-		1
Commercial		-		2		-		683		-		683
Agricultural		-		5		-		3,209		-		3,209
Other agricultural loans		-		4		-		176		-		176
Total		-		13	$	-	$	4,076	$	-	$	4,076

2017
Real estate loans:
Home Equity		-		1	$	-	$	25	$	-	$	25
Commercial		-		5		-		7,021		-		7,021
Agricultural		-		4		-		1,475		-		1,475
Other commercial loans		-		1		-		9		-		9
Other agricultural loans		-		1		-		161		-		161
Total		-		12	$	-	$	8,691	$	-	$	8,691

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 begin January 1, 2019, 2018 and 2017, respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

	December 31, 2019				December 31, 2018				December 31, 2017
	Number of contracts		Recorded investment		Number of contracts		Recorded investment		Number of contracts		Recorded investment
Real estate loans:
Commercial		-	$	-		2	$	683		-	$	-
Agricultural		1		1,439		2		1,325		-		-
Other agricultural loans		3		137		1		161		2		632
Total recidivism		4	$	1,576		5	$	2,169		2	$	632

Roll forward of Allowance for Loan Losses by Portfolio Segment

The following tables roll forward the balance of the allowance for loan and lease losses for the years ended December 31, 2019, 2018 and 2017 and is segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2019, 2018 and 2017 (in thousands):

	Balance at December 31, 2018		Charge-offs			Recoveries		Provision			Balance at December 31, 2019		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	1,105	$	(32	)	$	-	$	41		$	1,114	$	32	$	1,082
Commercial		4,115		(578	)		-		1,012			4,549		251		4,298
Agricultural		4,264		-			-		758			5,022		151		4,871
Construction		58		-			-		(15	)		43		-		43
Consumer		120		(49	)		33		8			112		-		112
Other commercial loans		1,354		(38	)		10		(71	)		1,255		147		1,108
Other agricultural loans		752		(60	)		-		269			961		154		807
State and political
subdivision loans		762		-			-		(226	)		536		-		536
Unallocated		354		-			-		(101	)		253		-		253
Total	$	12,884	$	(757	)	$	43	$	1,675		$	13,845	$	735	$	13,110

	Balance at December 31, 2017		Charge-offs			Recoveries		Provision			Balance at December 31, 2018		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	1,049	$	(118	)	$	69	$	105		$	1,105	$	24	$	1,081
Commercial		3,867		(66	)		3		311			4,115		216		3,899
Agricultural		3,143		-			-		1,121			4,264		84		4,180
Construction		23		-			-		35			58		-		58
Consumer		124		(40	)		31		5			120		-		120
Other commercial loans		1,272		(91	)		30		143			1,354		193		1,161
Other agricultural loans		492		(50	)		1		309			752		159		593
State and political
subdivision loans		816		-			-		(54	)		762		-		762
Unallocated		404		-			-		(50	)		354		-		354
Total	$	11,190	$	(365	)	$	134	$	1,925		$	12,884	$	676	$	12,208

	Balance at December 31, 2016		Charge-offs			Recoveries		Provision			Balance at December 31, 2017		Individually evaluated for impairment		Collectively evaluated for impairment
Real estate loans:
Residential	$	1,064	$	(107	)	$	-	$	92		$	1,049	$	56	$	993
Commercial		3,589		(41	)		11		308			3,867		94		3,773
Agricultural		1,494		(30	)		-		1,679			3,143		3		3,140
Construction		47		-			-		(24	)		23		-		23
Consumer		122		(130	)		49		83			124		-		124
Other commercial loans		1,327		-			16		(71	)		1,272		231		1,041
Other agricultural loans		312		(5	)		1		184			492		26		466
State and political
subdivision loans		833		-			-		(17	)		816		-		816
Unallocated		98		-			-		306			404		-		404
Total	$	8,886	$	(313	)	$	77	$	2,540		$	11,190	$	410	$	10,780