LOANS (Tables)

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Major Classifications of Loans

Major classifications of loans at December 31 were as follows (in thousands):

	2017		2016
Commercial and industrial	$	36,057	41,878
Commercial, secured by real estate	527,947		477,275
Residential real estate	251,582		265,788
Consumer	17,450		19,173
Agricultural	15,194		14,802
Other loans, including deposit overdrafts	539		633
	848,769		819,549
Deferred origination costs, net	291		254
	849,060		819,803
Less allowance for loan losses	3,403		3,575
Loans-net	$	845,657	816,228

Schedule of Acquired Non Impaired Loans

Acquired Loans Accounted for in Accordance with FASB ASC 310-30

Non-accrual, Past Due, and Accruing Restructured Loans

Non-accrual, past-due, and accruing restructured loans at December 31 were as follows (dollars in thousands):

	2017			2016
Non-accrual loans:
Commercial and industrial	$	—		—
Commercial, secured by real estate	2,183			4,312
Agricultural	178			334
Residential real estate	604			1,079
Total non-accrual loans	2,965			5,725
Past-due 90 days or more and still accruing	—			23
Total non-accrual and past-due 90 days or more and still accruing	2,965			5,748
Accruing restructured loans	10,469			11,731
Total	$	13,434		17,479
Percentage of total non-accrual and past-due 90 days or more and still accruing to total loans	0.35		%	0.70	%
Percentage of total non-accrual, past-due 90 days or more and still accruing, and accruing restructured loans to total loans	1.58		%	2.13	%

Allowance for Loan Losses and Recorded Investments in Loans

The allowance for loan losses and recorded investment in loans for the years ended December 31 were as follows (in thousands):

	Commercial & Industrial			Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural		Other		Total
December 31, 2017
Allowance for loan losses:
Balance, beginning of year	$	350		2,179		885		96		60		5		3,575
Provision charged to expenses	(71		)	348		(83	)	(44	)	(7	)	72		215
Losses charged off	—			(462	)	(225	)	(90	)	—		(138	)	(915	)
Recoveries	99			113		140		114		—		62		528
Balance, end of year	$	378		2,178		717		76		53		1		3,403
Individually evaluated for impairment	$	8		146		29		8		—		—		191
Collectively evaluated for impairment	370			2,032		688		68		53		1		3,212
Acquired credit impaired loans	—			—		—		—		—		—		—
Balance, end of year	$	378		2,178		717		76		53		1		3,403
Loans:
Individually evaluated for impairment	$	303		11,289		1,351		47		177		—		13,167
Collectively evaluated for impairment	34,792			512,259		248,674		17,516		15,033		137		828,411
Acquired credit impaired loans	1,008			4,048		2,024		—		—		402		7,482
Balance, end of year	$	36,103		527,596		252,049		17,563		15,210		539		849,060
December 31, 2016
Allowance for loan losses:
Balance, beginning of year	$	244		1,908		854		54		66		3		3,129
Provision charged to expenses	314			358		106		74		(6	)	67		913
Losses charged off	(234		)	(185	)	(127	)	(85	)	—		(119	)	(750	)
Recoveries	26			98		52		53		—		54		283
Balance, end of year	$	350		2,179		885		96		60		5		3,575
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 year	$	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 year	$	41,901		476,944		266,255		19,261		14,809		633		819,803

	Commercial & Industrial			Commercial, Secured by Real Estate		Residential Real Estate		Consumer		Agricultural		Other		Total
December 31, 2015
Allowance for loan losses:
Balance, beginning of year	$	129		1,990		926		63		11		2		3,121
Provision charged to expenses	208			955		125		(17	)	55		40		1,366
Losses charged off	(100		)	(1,133	)	(304	)	(52	)	(67	)	(74	)	(1,730	)
Recoveries	7			96		107		60		67		35		372
Balance, end of year	$	244		1,908		854		54		66		3		3,129
Individually evaluated for impairment	$	9		306		48		—		—		—		363
Collectively evaluated for impairment	235			1,602		806		54		66		3		2,766
Acquired credit impaired loans	—			—		—		—		—		—		—
Balance, end of year	$	244		1,908		854		54		66		3		3,129

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

An analysis of the Company’s loan portfolio by credit quality indicators at December 31 is as follows (in thousands):

	Pass		OAEM	Substandard	Doubtful	Total
December 31, 2017
Commercial & industrial	$	35,683	176	244	—	36,103
Commercial, secured by real estate	506,833		2,180	18,583	—	527,596
Residential real estate	250,039		—	2,010	—	252,049
Consumer	17,522		—	41	—	17,563
Agricultural	14,233		—	977	—	15,210
Other	539		—	—	—	539
Total	$	824,849	2,356	21,855	—	849,060
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

The Company evaluates the loan risk grading system definitions and allowance

Impaired Loans

Impaired loans for the years ended December 31 were as follows (in thousands):

	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
December 31, 2017
With no related allowance recorded:
Commercial & industrial	$	1,015	1,100	—	685	88
Commercial, secured by real estate	12,677		13,608	—	14,113	1,068
Residential real estate	2,822		3,516	—	3,216	546
Consumer	6		6	—	20	2
Agricultural	177		177	—	269	12
Other	402		554	—	441	55
Total	$	17,099	18,961	—	18,744	1,771
With an allowance recorded:
Commercial & industrial	$	296	301	8	311	18
Commercial, secured by real estate	2,660		2,660	146	2,739	45
Residential real estate	553		572	29	596	19
Consumer	41		41	8	43	3
Agricultural	—		—	—	—	—
Other	—		—	—	—	—
Total	$	3,550	3,574	191	3,689	85
Total:
Commercial & industrial	$	1,311	1,401	8	996	106
Commercial, secured by real estate	15,337		16,268	146	16,852	1,113
Residential real estate	3,375		4,088	29	3,812	565
Consumer	47		47	8	63	5
Agricultural	177		177	—	269	12
Other	402		554	—	441	55
Total	$	20,649	22,535	191	22,433	1,856

	Recorded Investment		Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
December 31, 2016
With no related allowance recorded:
Commercial & industrial	$	109	263	—	998	151
Commercial, secured by real estate	14,195		15,522	—	15,274	1,140
Residential real estate	3,238		4,286	—	3,736	369
Consumer	26		27	—	37	29
Agricultural	334		334	—	392	136
Other	455		629	—	481	77
Total	$	18,357	21,061	—	20,918	1,902
With an allowance recorded:
Commercial & industrial	$	326	326	9	341	19
Commercial, secured by real estate	4,690		4,946	347	4,194	257
Residential real estate	751		751	100	651	36
Consumer	43		43	13	43	3
Agricultural	—		—	—	—	—
Other	—		—	—	—	—
Total	$	5,810	6,066	469	5,229	315
Total:
Commercial & industrial	$	435	589	9	1,339	170
Commercial, secured by real estate	18,885		20,468	347	19,468	1,397
Residential real estate	3,989		5,037	100	4,387	405
Consumer	69		70	13	80	32
Agricultural	334		334	—	392	136
Other	455		629	—	481	77
Total	$	24,167	27,127	469	26,147	2,217

	Average Recorded Investment		Interest Income Recognized
December 31, 2015
With no related allowance recorded:
Commercial & industrial	$	1,467	206
Commercial, secured by real estate	18,575		2,229
Residential real estate	4,092		453
Consumer	106		25
Agricultural	81		487
Other	510		82
Total	$	24,831	3,482
With an allowance recorded:
Commercial & industrial	$	370	21
Commercial, secured by real estate	4,007		114
Residential real estate	864		37
Consumer	—		—
Agricultural	—		—
Other	—		—
Total	$	5,241	172
Total:
Commercial & industrial	$	1,837	227
Commercial, secured by real estate	22,582		2,343
Residential real estate	4,956		490
Consumer	106		25
Agricultural	81		487
Other	510		82
Total	$	30,072	3,654

Loan Modification that were Classified as Troubled Debt Restructuring

Loan modifications that were classified as troubled debt restructurings during the years ended December 31 were as follows (dollars in thousands):

	2017					2016					2015
	Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance
Commercial and industrial	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Commercial, secured by real estate	—	—		—		4	2,142		2,215		1	75		74
Residential real estate	1	18		9		6	139		139		7	217		221
Consumer	1	14		14		3	39		39		2	9		9
	2	$	32	$	23	13	$	2,320	$	2,393	10	$	301	$	304

Troubled Debt Restructurings by Type of Modification

Post-modification balances of newly restructured troubled debt by type of modification for the years ended December 31 were as follows (in thousands):

	Term Modification		Rate Modification	Interest Only	Principal Forgiveness	Combination	Total Modifications
December 31, 2017
Commercial & industrial	$	—	—	—	—	—	—
Commercial, secured by real estate	—		—	—	—	—	—
Residential real estate	—		—	—	9	—	9
Consumer	14		—	—	—	—	14
Total	$	14	—	—	9	—	23
December 31, 2016
Commercial & industrial	$	—	—	—	—	—	—
Commercial, secured by real estate	1,539		—	304	—	372	2,215
Residential real estate	38		47	—	—	54	139
Consumer	—		28	—	—	11	39
Total	$	1,577	75	304	—	437	2,393
December 31, 2015
Commercial & industrial	$	—	—	—	—	—	—
Commercial, secured by real estate	74		—	—	—	—	74
Residential real estate	221		—	—	—	—	221
Consumer	9		—	—	—	—	9
Total	$	304	—	—	—	—	304

Schedule of Activity in the Mortgage Servicing Rights Portfolio

Activity in the mortgage servicing rights portfolio during the years ended December 31 was as follows (in thousands):

	2017			2016		2015
Balance, beginning of year	$	428		488		591
Amount capitalized to mortgage servicing rights	91			109		78
Amortization of mortgage servicing rights	(123		)	(169	)	(181	)
Balance, end of year	$	396		428		488