Loans (Tables)

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Major Classifications of Loans

Major classifications of loans at June 30, 2017 and December 31, 2016 are as follows (in thousands):

	June 30, 2017		December 31, 2016
Commercial and industrial	$	38,651	$	41,878
Commercial, secured by real estate	495,255		477,275
Residential real estate	258,710		265,788
Consumer	17,475		19,173
Agricultural	16,014		14,802
Other loans, including deposit overdrafts	547		633
	826,652		819,549
Deferred origination costs (fees), net	281		254
	826,933		819,803
Less allowance for loan losses	3,382		3,575
Loans, net	$	823,551	$	816,228

Non-accrual, Past Due, and Accruing Restructured Loans

Non-accrual, past-due, and accruing restructured loans as of June 30, 2017 and December 31, 2016 are as follows (in thousands):

	June 30, 2017		December 31, 2016
Non-accrual loans:
Commercial and industrial	$	—	$	—
Commercial, secured by real estate	2,493		4,312
Residential real estate	1,076		1,079
Consumer	—		—
Agricultural	178		334
Total non-accrual loans	3,747		5,725
Past-due 90 days or more and still accruing	141		23
Total non-accrual and past-due 90 days or more and still accruing	3,888		5,748
Accruing restructured loans	11,287		11,731
Total	$	15,175	$	17,479

Allowance for Loan Losses and Recorded Investments in Loans

The allowance for loan losses for the three and six months ended June 30, 2017 and 2016 are as follows (in thousands):

	Commercial & Industrial			Commercial, Secured by Real Estate			Residential Real Estate			Consumer			Agricultural			Other			Total
Three Months Ended June 30, 2017
Balance, beginning of period	$	353		$	2,007		$	809		$	91		$	66		$	2		$	3,328
Provision charged to expenses	(90		)	206			109			(20		)	(5		)	22			222
Losses charged off	—			(82		)	(118		)	(9		)	—			(31		)	(240		)
Recoveries	10			5			22			24			—			11			72
Balance, end of period	$	273		$	2,136		$	822		$	86		$	61		$	4		$	3,382
Six Months Ended June 30, 2017
Allowance for loan losses:
Balance, beginning of year	$	350		$	2,179		$	885		$	96		$	60		$	5		$	3,575
Provision charged to expenses	(92		)	296			2			3			1			27			237
Losses charged off	—			(344		)	(135		)	(54		)	—			(61		)	(594		)
Recoveries	15			5			70			41			—			33			164
Balance, end of period	$	273		$	2,136		$	822		$	86		$	61		$	4		$	3,382
Three Months Ended June 30, 2016
Balance, beginning of period	$	247		$	1,868		$	896		$	81		$	56		$	2		$	3,150
Provision charged to expenses	74			320			(1		)	(12		)	6			9			396
Losses charged off	(49		)	(117		)	(14		)	(9		)	—			(19		)	(208		)
Recoveries	1			—			4			20			—			10			35
Balance, end of period	$	273		$	2,071		$	885		$	80		$	62		$	2		$	3,373
Six Months Ended June 30, 2016
Allowance for loan losses:
Balance, beginning of year	$	244		$	1,908		$	854		$	54		$	66		$	3		3,129
Provision charged to expenses	74			285			65			49			(4		)	17			486
Losses charged off	(49		)	(140		)	(42		)	(53		)	—			(42		)	(326		)
Recoveries	4			18			8			30			—			24			84
Balance, end of period	$	273		$	2,071		$	885		$	80		$	62		$	2		$	3,373

A breakdown of the allowance for loan losses and the loan portfolio by loan segment at June 30, 2017 and December 31, 2016 are as follows (in thousands):

	Commercial & Industrial		Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural		Other		Total
June 30, 2017
Allowance for loan losses:
Individually evaluated for impairment	$	7	$	129	$	51	$	8	$	—	$	—	$	195
Collectively evaluated for impairment	266		2,007		771		78		61		4		3,187
Acquired credit impaired loans	—		—		—		—		—		—		—
Balance, end of period	$	273	$	2,136	$	822	$	86	$	61	$	4	$	3,382
Loans:
Individually evaluated for impairment	$	320	$	12,005	$	1,428	$	61	$	177	$	—	$	13,991
Collectively evaluated for impairment	37,504		478,574		255,360		17,513		15,851		114		804,916
Acquired credit impaired loans	865		4,331		2,392		5		—		433		8,026
Balance, end of period	$	38,689	$	494,910	$	259,180	$	17,579	$	16,028	$	547	$	826,933
December 31, 2016
Allowance for loan losses:
Individually evaluated for impairment	$	9	$	55	$	100	$	13	$	—	$	—	$	177
Collectively evaluated for impairment	341		1,832		785		83		60		5		3,106
Acquired credit impaired loans	—		292		—		—		—		—		292
Balance, end of period	$	350	$	2,179	$	885	$	96	$	60	$	5	$	3,575
Loans:
Individually evaluated for impairment	$	337	$	12,580	$	1,518	$	52	$	334	$	—	$	14,821
Collectively evaluated for impairment	41,466		458,059		262,266		19,192		14,475		178		795,636
Acquired credit impaired loans	98		6,305		2,471		17		—		455		9,346
Balance, end of period	$	41,901	$	476,944	$	266,255	$	19,261	$	14,809	$	633	$	819,803

Analysis of the Company's Loan Portfolio by Credit Quality Indicators

A breakdown of the loan portfolio by credit quality indicators at June 30, 2017 and December 31, 2016 is as follows (in thousands):

	Pass		OAEM		Substandard		Doubtful		Total
June 30, 2017
Commercial & industrial	$	37,988	$	218	$	483	$	—	$	38,689
Commercial, secured by real estate	467,419		4,497		22,994		—		494,910
Residential real estate	255,321		120		3,739		—		259,180
Consumer	17,490		—		89		—		17,579
Agricultural	14,710		—		1,318		—		16,028
Other	547		—		—		—		547
Total	$	793,475	$	4,835	$	28,623	$	—	$	826,933
December 31, 2016
Commercial & industrial	$	41,178	$	304	$	419	$	—	$	41,901
Commercial, secured by real estate	443,781		5,479		27,684		—		476,944
Residential real estate	261,839		442		3,974		—		266,255
Consumer	19,182		—		79		—		19,261
Agricultural	13,311		—		1,498		—		14,809
Other	633		—		—		—		633
Total	$	779,924	$	6,225	$	33,654	$	—	$	819,803

Loan Portfolio Aging Analysis

A loan portfolio aging analysis at June 30, 2017 and December 31, 2016 is as follows (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans Greater Than 90 Days and Accruing
June 30, 2017
Commercial & industrial	$	—	$	—	$	—	$	—	$	38,689	$	38,689	$	—
Commercial, secured by real estate	742		—		541		1,283		493,627		494,910		—
Residential real estate	518		28		1,093		1,639		257,541		259,180		118
Consumer	33		27		23		83		17,496		17,579		23
Agricultural	—		—		177		177		15,851		16,028		—
Other	55		—		—		55		492		547		—
Total	$	1,348	$	55	$	1,834	$	3,237	$	823,696	$	826,933	$	141
December 31, 2016
Commercial & industrial	$	19	$	—	$	—	$	19	$	41,882	$	41,901	$	—
Commercial, secured by real estate	99		69		127		295		476,649		476,944		—
Residential real estate	686		80		727		1,493		264,762		266,255		20
Consumer	59		16		3		78		19,183		19,261		3
Agricultural	125		—		—		125		14,684		14,809		—
Other	115		—		—		115		518		633		—
Total	$	1,103	$	165	$	857	$	2,125	$	817,678	$	819,803	$	23

Impaired Loans

Impaired loans, including acquired credit impaired loans, at June 30, 2017 and December 31, 2016 are as follows (in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance
June 30, 2017
With no related allowance recorded:
Commercial & industrial	$	874	$	1,006	$	—
Commercial, secured by real estate	15,160		16,195		—
Residential real estate	3,223		4,329		—
Consumer	22		22		—
Agricultural	177		178		—
Other	433		592		—
Total	$	19,889	$	22,322	$	—
With an allowance recorded:
Commercial & industrial	$	311	$	315	$	7
Commercial, secured by real estate	1,176		1,176		129
Residential real estate	597		598		51
Consumer	44		44		8
Agricultural	—		—		—
Other	—		—		—
Total	$	2,128	$	2,133	$	195
Total:
Commercial & industrial	$	1,185	$	1,321	$	7
Commercial, secured by real estate	16,336		17,371		129
Residential real estate	3,820		4,927		51
Consumer	66		66		8
Agricultural	177		178		—
Other	433		592		—
Total	$	22,017	$	24,455	$	195
December 31, 2016
With no related allowance recorded:
Commercial & industrial	$	109	$	263	$	—
Commercial, secured by real estate	14,195		15,522		—
Residential real estate	3,238		4,286		—
Consumer	26		27		—
Agricultural	334		334		—
Other	455		629		—
Total	$	18,357	$	21,061	$	—
With an allowance recorded:
Commercial & industrial	$	326	$	326	$	9
Commercial, secured by real estate	4,690		4,946		347
Residential real estate	751		751		100
Consumer	43		43		13
Agricultural	—		—		—
Other	—		—		—
Total	$	5,810	$	6,066	$	469
Total:
Commercial & industrial	$	435	$	589	$	9
Commercial, secured by real estate	18,885		20,468		347
Residential real estate	3,989		5,037		100
Consumer	69		70		13
Agricultural	334		334		—
Other	455		629		—
Total	$	24,167	$	27,127	$	469

The following presents information related to the average recorded investment and interest income recognized on impaired loans, including acquired credit impaired loans, for the three and six months ended June 30, 2017 and 2016 (in thousands):

	2017				2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Three Months Ended June 30,
With no related allowance recorded:
Commercial & industrial	$	261	$	10	$	964	$	26
Commercial, secured by real estate	16,488		269		17,292		278
Residential real estate	3,351		47		3,855		123
Consumer	30		1		40		8
Agricultural	217		—		423		123
Other	463		14		495		20
Total	$	20,810	$	341	$	23,069	$	578
With an allowance recorded:
Commercial & industrial	$	314	$	4	$	358	$	5
Commercial, secured by real estate	1,087		25		2,651		20
Residential real estate	603		8		780		8
Consumer	44		1		34		1
Agricultural	—		—		—		—
Other	—		—		—		—
Total	$	2,048	$	38	$	3,823	$	34
Total:
Commercial & industrial	$	575	$	14	$	1,322	$	31
Commercial, secured by real estate	17,575		294		19,943		298
Residential real estate	3,954		55		4,635		131
Consumer	74		2		74		9
Agricultural	217		—		423		123
Other	463		14		495		20
Total	$	22,858	$	379	$	26,892	$	612
Six Months Ended June 30,
With no related allowance recorded:
Commercial & industrial	$	261	$	36	$	964	$	55
Commercial, secured by real estate	16,736		468		17,460		660
Residential real estate	3,332		136		3,823		194
Consumer	31		1		54		15
Agricultural	267		—		422		135
Other	463		32		495		40
Total	$	21,090	$	673	$	23,218	$	1,099
With an allowance recorded:
Commercial & industrial	$	318	$	9	$	362	$	10
Commercial, secured by real estate	970		33		2,671		42
Residential real estate	612		16		760		16
Consumer	43		2		34		2
Agricultural	—		—		—		—
Other	—		—		—		—
Total	$	1,943	$	60	$	3,827	$	70
Total:
Commercial & industrial	$	579	$	45	$	1,326	$	65
Commercial, secured by real estate	17,706		501		20,131		702
Residential real estate	3,944		152		4,583		210
Consumer	74		3		88		17
Agricultural	267		—		422		135
Other	463		32		495		40
Total	$	23,033	733		$	27,045	$	1,169

Troubled Debt Restructurings

Loan modifications that were classified as troubled debt restructurings during the three and six months ended June 30, 2017 and 2016 are as follows (dollars in thousands):

	2017					2016
	Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance
Three Months Ended June 30,
Commercial & industrial	—	$	—	$	—	—	$	—	$	—
Commercial, secured by real estate	—	—		—		—	—		—
Residential real estate	—	—		—		1	27		27
Consumer	—	—		—		1	10		10
Total	—	$	—	$	—	2	$	37	$	37
Six Months Ended June 30,
Commercial & industrial	—	$	—	$	—	—	$	—	$	—
Commercial, secured by real estate	—	—		—		1	299		372
Residential real estate	1	18		9		2	45		45
Consumer	1	14		14		2	27		27
Total	2	$	32	$	23	5	$	371	$	444

Schedule of Troubled Debt Restructurings by Modification Type

Post-modification balances of newly restructured troubled debt by type of modification for the three and six months ended June 30, 2017 and 2016 were as follows (dollars in thousands):

	Term Modification		Rate Modification		Interest Only		Principal Forgiveness		Combination		Total Modifications
Three Months Ended June 30, 2017
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		—		—
Residential real estate	—		—		—		—		—		—
Consumer	—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—
Six Months Ended June 30, 2017
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		—		—
Residential real estate	—		—		—		9		—		9
Consumer	14		—		—		—		—		14
Total	$	14	$	—	$	—	$	9	$	—	$	23
Three Months Ended June 30, 2016
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		—		—
Residential real estate	—		27		—		—		—		27
Consumer	—		10		—		—		—		10
Total	$	—	$	37	$	—	$	—	$	—	$	37
Six Months Ended June 30, 2016
Commercial & industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial, secured by real estate	—		—		—		—		372		372
Residential real estate	18		27		—		—		—		45
Consumer	—		27		—		—		—		27
Total	$	18	$	54	$	—	$	—	$	372	$	444