LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2014

LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract]

The composition of the loan portfolio, net of deferred loan fees is summarized as follows (amounts in thousands):

	December 31, 2014		December 31, 2013
Commercial and agricultural:
Commercial and industrial	$	165,385	$	144,787
Agricultural		1,021		576
Commercial mortgages:
Construction		54,831		27,440
Commercial mortgages		397,762		345,707
Residential mortgages		196,809		195,997
Consumer loans:
Credit cards		1,654		1,756
Home equity lines and loans		99,354		95,905
Indirect consumer loans		184,763		164,846
Direct consumer loans		19,995		18,852
Total loans, net of deferred loan fees	$	1,121,574	$	995,866
Interest receivable on loans		2,780		2,597
Total recorded investment in loans	$	1,124,354	$	998,463

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, 2014, 2013 and 2012, respectively (amounts in thousands):

	December 31, 2014
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Unallocated		Total
Beginning balance:	$	1,979		$	6,243		$	1,517		$	3,037		$	-	$	12,776
Charge Offs:		(444	)		(2,229	)		(97	)		(1,508	)		-		(4,278	)
Recoveries:		385			156			32			634			-		1,207
Net (charge offs) recoveries		(59	)		(2,073	)		(65	)		(874	)		-		(3,071	)
Provision		(460	)		2,156			120			2,165			-		3,981
Ending balance	$	1,460		$	6,326		$	1,572		$	4,328		$	-	$	13,686

	December 31, 2013
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Unallocated			Total
Beginning balance:	$	1,708		$	4,428		$	1,565		$	2,706		$	26		$	10,433
Charge Offs:		(186	)		(44	)		(124	)		(1,139	)		-			(1,493	)
Recoveries:		537			98			65			381			-			1,081
Net recoveries (charge offs)		351			54			(59	)		(758	)		-			(412	)
Provision		(80	)		1,761			11			1,089			(26	)		2,755
Ending balance	$	1,979		$	6,243		$	1,517		$	3,037		$	-		$	12,776

	December 31, 2012
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Unallocated			Total
Beginning balance:	$	3,143		$	2,570		$	1,310		$	2,193		$	443		$	9,659
Reclassification of acquired loan discount		74			50			-			-			-			124
Charge Offs:		(181	)		(335	)		(83	)		(674	)		-			(1,273	)
Recoveries:		802			55			-			238			-			1,095
Net recoveries (charge offs)		621			(280	)		(83	)		(436	)		-			(178	)
Provision		(2,130	)		2,088			338			949			(417	)		828
Ending balance	$	1,708		$	4,428		$	1,565		$	2,706		$	26		$	10,433

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, 2014 and December 31, 2013 (amounts in thousands):

	December 31, 2014
Allowance for loan losses	Commercial and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	89		$	1,145		$	-		$	1		$	1,235
Collectively evaluated for impairment			1,335			5,145			1,550			4,327			12,357
Loans acquired with deteriorated credit quality			36			36			22			-			94
Total ending allowance balance		$	1,460		$	6,326		$	1,572		$	4,328		$	13,686

	December 31, 2013
Allowance for loan losses	Commercial and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	576		$	466		$	-		$	4		$	1,046
Collectively evaluated for impairment			1,403			4,407			1,497			3,033			10,340
Loans acquired with deteriorated credit quality			-			1,370			20			-			1,390
Total ending allowance balance		$	1,979		$	6,243		$	1,517		$	3,037		$	12,776

	December 31, 2014
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	1,452	$	13,712	$	254	$	486	$	15,904
Loans collectively evaluated for impairment		164,748		438,246		196,783		306,042		1,105,819
Loans acquired with deteriorated credit quality		620		1,761		250		-		2,631
Total ending loans balance	$	166,820	$	453,719	$	197,287	$	306,528	$	1,124,354

	December 31, 2013
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,946	$	10,703	$	117	$	131	$	13,897
Loans collectively evaluated for impairment		142,108		354,636		196,147		281,979		974,870
Loans acquired with deteriorated credit quality		678		8,757		261		-		9,696
Total ending loans balance	$	145,732	$	374,096	$	196,525	$	282,110	$	998,463

Summary of Impaired Financing Receivables

The following tables present loans individually evaluated for impairment recognized by class of loans as of December 31, 2014 and December 31, 2013, the average recorded investment and interest income recognized by class of loans as of the years ended December 31, 2014, 2013 and 2012 (amounts in thousands):

	December 31, 2014						December 31, 2013
	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	$	1,359	$	1,364	$	-	$	1,906	$	1,909	$	-
Commercial mortgages:
Construction		1,927		1,910		-		2,329		2,319		-
Commercial mortgages		7,803		7,708		-		7,406		7,439		-
Residential mortgages		253		253		-		117		117		-
Consumer loans:
Home equity lines and loans		429		432		-		71		73		-
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial		89		89		89		1,037		1,037
Commercial mortgages:												576
Commercial mortgages		4,210		4,094		1,145		951		945
Consumer loans:												466
Home equity lines and loans		54		54		1		58		58		4
Total	$	16,124	$	15,904	$	1,235	$	13,875	$	13,897	$	1,046

	December 31, 2014				December 31, 2013				December 31, 2012
	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	$	1,463	$	40	$	1,605	$	71	$	481	$	1
Commercial mortgages:
Construction		2,104		102		3,364		95		73		1
Commercial mortgages		7,492		259		5,991		249		1,990		10
Residential mortgages		141		1		125		-		106		-
Consumer loans:
Home equity lines & loans		143		6		47		2		30		-
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial		502		-		719		-		1,831		-
Commercial mortgages:
Construction		-		-		-		-		4		-
Commercial mortgages		1,611		41		867		-		872		-
Residential mortgages		-		-		-		-		64		-
Consumer loans:
Home equity lines and loans		56		4		47		3		-		-
Direct consumer loans		-		-		3		-		-		-
Total	$	13,512	$	453	$	12,768	$	421	$	5,451	$	12

Recorded Investment in Past Due and Non-Accrual Status by Class of Loans

The following tables present the recorded investment in past due and non-accrual status by class of loans as of December 31, 2014 and December 31, 2013 (amounts in thousands):

December 31, 2014

	Current		30-89 Days Past Due		90 Days or more Past Due and accruing		Loans acquired with deteriorated credit quality		Non-Accrual (1)		Total
Commercial and agricultural:
Commercial and industrial	$	164,109	$	756	$	-	$	620	$	312	$	165,797
Agricultural		1,023		-		-		-		-		1,023
Commercial mortgages:
Construction		53,371		-		1,446		-		150		54,967
Commercial mortgages		391,096		3,064		-		1,761		2,831		398,752
Residential mortgages		191,089		2,333		-		250		3,615		197,287
Consumer loans:
Credit cards		1,641		5		8		-		-		1,654
Home equity lines and loans		98,340		736		-		-		515		99,591
Indirect consumer loans		183,103		1,789		-		-		325		185,217
Direct consumer loans		19,988		48		-		-		30		20,066
Total	$	1,103,760	$	8,731	$	1,454	$	2,631	$	7,778	$	1,124,354

(1) Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of December 31, 2014.

December 31, 2013

	Current		30-89 Days Past Due		90 Days or more Past Due and accruing		Loans acquired with deteriorated credit quality		Non-Accrual (1)		Total
Commercial and agricultural:
Commercial and industrial	$	143,100	$	29	$	-	$	678	$	1,348	$	145,155
Agricultural		577		-		-		-		-		577
Commercial mortgages:
Construction		24,742		-		1,454		774		540		27,510
Commercial mortgages		335,123		1,138		-		7,983		2,342		346,586
Residential mortgages		187,448		5,458		-		261		3,358		196,525
Consumer loans:
Credit cards		1,729		9		19		-		-		1,757
Home equity lines and loans		95,349		150		-		-		635		96,134
Indirect consumer loans		163,810		1,235		-		-		249		165,294
Direct consumer loans		18,830		50		-		-		45		18,925
Total	$	970,708	$	8,069	$	1,473	$	9,696	$	8,517	$	998,463

(1) Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of December 31, 2013.

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, 2014, 2013 and 2012 (amounts in thousands):

December 31, 2014	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial		4	$	1,028	$	1,028
Commercial mortgages:
Commercial mortgages		4		2,666		2,623
Residential mortgages		1		149		150
Consumer loans:
Home equity lines and loans		1		366		366
Total		10	$	4,209	$	4,167

December 31, 2013	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial		5	$	1,343	$	1,343
Commercial mortgages:
Construction		1		326		326
Commercial mortgages		1		133		133
Consumer loans:
Home equity lines and loans		3		134		134
Total		10	$	1,936	$	1,936

December 31, 2012	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial		4	$	1,307	$	1,307
Commercial mortgages:
Construction		1		251		251
Commercial mortgages		3		3,872		3,872
Total		8	$	5,430	$	5,430

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, 2014 and December 31, 2013, the risk category of the recorded investment of loans by class of loans is as follows (amounts in thousands):

	December 31, 2014
	Not Rated		Pass		Loans acquired with deteriorated credit quality		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	-	$	158,140	$	620	$	3,695	$	3,306	$	36	$	165,797
Agricultural		-		1,023		-		-		-		-		1,023
Commercial mortgages:
Construction		-		51,525		-		3,292		150		-		54,967
Commercial mortgages		-		365,448		1,761		20,871		10,266		406		398,752
Residential mortgages		193,422		-		250		-		3,615		-		197,287
Consumer loans
Credit cards		1,654		-		-		-		-		-		1,654
Home equity lines and loans		99,076		-		-		-		515		-		99,591
Indirect consumer loans		184,940		-		-		-		277		-		185,217
Direct consumer loans		20,045		-		-		-		21		-		20,066
Total	$	499,137	$	576,136	$	2,631	$	27,858	$	18,150	$	442	$	1,124,354

	December 31, 2013
	Not Rated		Pass		Loans acquired with deteriorated credit quality		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	-	$	133,615	$	678	$	5,117	$	4,724	$	1,021	$	145,155
Agricultural		-		577		-		-		-		-		577
Commercial mortgages:
Construction		-		23,087		774		2,783		866		-		27,510
Commercial mortgages		-		313,956		7,983		13,611		11,036		-		346,586
Residential mortgages		192,995		-		261		-		3,269		-		196,525
Consumer loans
Credit cards		1,757		-		-		-		-		-		1,757
Home equity lines and loans		95,422		-		-		-		712		-		96,134
Indirect consumer loans		165,045		-		-		-		249		-		165,294
Direct consumer loans		18,880		-		-		-		45		-		18,925
Total	$	474,099	$	471,235	$	9,696	$	21,511	$	20,901	$	1,021	$	998,463

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, 2014 and December 31, 2013 (amounts in thousands):

	December 31, 2014
				Consumer Loans
	Residential Mortgages			Credit Card			Home Equity Lines and Loans			Indirect Consumer Loans			Other Direct Consumer Loans
Performing		$	193,672		$	1,654		$	99,076		$	184,892		$	20,036
Non-Performing			3,615			-			515			325			30
		$	197,287		$	1,654		$	99,591		$	185,217		$	20,066

	December 31, 2013
				Consumer Loans
	Residential Mortgages			Credit Card			Home Equity Lines and Loans			Indirect Consumer Loans			Other Direct Consumer Loans
Performing		$	193,167		$	1,757		$	95,499		$	165,045		$	18,880
Non-Performing			3,358			-			635			249			45
Total		$	196,525		$	1,757		$	96,134		$	165,294		$	18,925

Summary of Changes in Contractually Required Principal and Interest on Loans Acquired

The table below summarizes the changes in total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of the PCI loans from January 1, 2014 to December 31, 2014 (amounts in thousands):

	Balance at December 31, 2013			Income Accretion		All Other Adjustments			Balance at December 31, 2014
Contractually required principal and interest	$	11,230		$	-	$	(7,609	)	$	3,621
Contractual cash flows not expected to be collected (non accretable discount)		(543	)		-		(27	)		(570	)
Cash flows expected to be collected		10,687			-		(7,636	)		3,051
Interest component of expected cash flows (accretable yield)		(991	)		515		56			(420	)
Fair value of loans acquired with deteriorating credit quality	$	9,696		$	515	$	(7,580	)	$	2,631