10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 0-33203

LANDMARK BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	43-1930755
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

701 Poyntz Avenue, Manhattan, Kansas 66502

(Address of principal executive offices) (Zip code)

(785) 565-2000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X] Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: as of August 10, 2017, the issuer had outstanding 3,873,781 shares of its common stock, $.01 par value per share.

LANDMARK BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page Number
	PART I
Item 1.	Financial Statements	2 - 25
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26-33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34-35
Item 4.	Controls and Procedures	36
PART II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
	Signature Page	38

1

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)	June 30, 2017		December 31, 2016
	(Unaudited)
Assets
Cash and cash equivalents	$	10,594	$	19,996
Investment securities available-for-sale, at fair value		389,842		385,563
Bank Stocks, at cost		5,350		5,299
Loans, net of allowance for loans losses of $5,326 at June 30, 2017 and $5,344 at December 31, 2016		422,739		420,461
Loans held for sale, at fair value		9,758		5,517
Premises and equipment, net		19,938		20,407
Bank owned life insurance		18,550		18,314
Goodwill		17,532		17,532
Other intangible assets, net		3,802		3,986
Real estate owned, net		1,004		1,279
Accrued interest and other assets		11,690		13,028
Total assets	$	910,799	$	911,382
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing demand	$	158,824	$	152,012
Money market and checking		360,742		361,398
Savings		93,560		88,273
Time		131,896		139,838
Total deposits		745,022		741,521
Federal Home Loan Bank borrowings		31,000		39,100
Subordinated debentures		21,384		21,284
Other borrowings		11,447		12,483
Accrued interest, taxes, and other liabilities		10,911		12,043
Total liabilities		819,764		826,431
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued		-		-
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 3,871,045 and 3,868,077 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		39		38
Additional paid-in capital		52,067		51,968
Retained earnings		37,333		34,293
Accumulated other comprehensive income (loss)		1,596		(1,348	)
Total stockholders’ equity		91,035		84,951
Total liabilities and stockholders’ equity	$	910,799	$	911,382

See accompanying notes to consolidated financial statements.

2

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF EARNINGS

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30,				June 30,
	2017		2016		2017		2016
	(Unaudited)				(Unaudited)
Interest income:
Loans:
Taxable	$	5,246	$	5,285	$	10,265	$	10,420
Tax-exempt		34		60		69		127
Investment securities:
Taxable		1,202		1,171		2,394		2,335
Tax-exempt		974		856		1,916		1,664
Total interest income		7,456		7,372		14,644		14,546
Interest expense:
Deposits		394		287		732		564
Borrowings		486		523		968		1,016
Total interest expense		880		810		1,700		1,580
Net interest income		6,576		6,562		12,944		12,966
Provision for loan losses		100		300		150		350
Net interest income after provision for loan losses		6,476		6,262		12,794		12,616
Non-interest income:
Fees and service charges		1,917		1,847		3,632		3,576
Gains on sales of loans, net		1,692		1,405		3,081		3,199
Bank owned life insurance		119		145		236		265
Gains on sales of investment securities, net		177		285		324		297
Other		283		266		556		505
Total non-interest income		4,188		3,948		7,829		7,842
Non-interest expense:
Compensation and benefits		3,918		3,777		7,675		7,578
Occupancy and equipment		1,097		1,055		2,121		2,111
Amortization of intangibles		328		331		626		668
Data processing		337		346		667		657
Professional fees		476		282		766		501
Advertising		166		166		332		332
Federal deposit insurance premiums		73		110		145		220
Foreclosure and real estate owned expense		49		51		101		116
Other		1,095		1,093		2,167		2,190
Total non-interest expense		7,539		7,211		14,600		14,373
Earnings before income taxes		3,125		2,999		6,023		6,085
Income tax expense (1)		742		673		1,435		1,366
Net earnings (1)	$	2,383	$	2,326	$	4,588	$	4,719
Earnings per share:
Basic (1)(2)	$	0.62	$	0.61	$	1.19	$	1.25
Diluted (1)(2)	$	0.60	$	0.60	$	1.16	$	1.23
Dividends per share (2)	$	0.20	$	0.19	$	0.40	$	0.38

(1) Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

(2) Per share amounts for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

See accompanying notes to consolidated financial statements.

3

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three months ended						Six months ended
(Dollars in thousands)	June 30,						June 30,
	2017			2016			2017			2016
	(Unaudited)						(Unaudited)
Net earnings (1)	$	2,383		$	2,326		$	4,588		$	4,719
Net unrealized holding gains on available-for-sale securities		4,497			3,771			5,019			7,161
Reclassification adjustment for net gains included in earnings		(177	)		(285	)		(324	)		(297	)
Net unrealized gains		4,320			3,486			4,695			6,864
Income tax effect on net gains included in earnings		65			105			120			110
Income tax effect on net unrealized holding gains		(1,670	)		(1,396	)		(1,871	)		(2,654	)
Other comprehensive income		2,715			2,195			2,944			4,320
Total comprehensive income	$	5,098		$	4,521		$	7,532		$	9,039

(1) Net earnings for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

See accompanying notes to consolidated financial statements.

4

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands, except per share amounts)	Common stock		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total
	(Unaudited)
Balance at January 1, 2016	$	35	$	45,372	$	32,988		$	2,175		$	80,570
Net earnings (1)		-		-		4,719			-			4,719
Other comprehensive income		-		-		-			4,320			4,320
Dividends paid ($0.38 per share)		-		-		(1,437	)		-			(1,437	)
Exercise of stock options, 89,633 shares (1)		1		1,194		-			-			1,195
Balance at June 30, 2016	$	36	$	46,566	$	36,270		$	6,495		$	89,367
Balance at January 1, 2017	$	38	$	51,968	$	34,293		$	(1,348	)	$	84,951
Net earnings		-		-		4,588			-			4,588
Other comprehensive income		-		-		-			2,944			2,944
Dividends paid ($0.40 per share)		-		-		(1,548	)		-			(1,548	)
Stock-based compensation		-		77		-			-			77
Exercise of stock options, 2,968 shares,		1		22		-			-			23
Balance at June 30, 2017	$	39	$	52,067	$	37,333		$	1,596		$	91,035

(1) Net earnings and exercise of stock options for the period ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

See accompanying notes to consolidated financial statements.

5

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)	Six months ended June 30,
	2017			2016
	(Unaudited)
Cash flows from operating activities:
Net earnings (1)	$	4,588		$	4,719
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		150			350
Valuation allowance on real estate owned		67			-
Amortization of investment security premiums, net		944			818
Amortization of purchase accounting adjustment on loans		(91	)		(57	)
Amortization of purchase accounting adjustment on subordinated debentures		100			100
Amortization of intangibles		626			668
Depreciation		520			581
Increase in cash surrender value of bank owned life insurance		(236	)		(265	)
Stock-based compensation		77			-
Deferred income taxes		542			229
Net gains on sales of investment securities		(324	)		(297	)
Net (gain) loss on sales of premises, equipment and real estate owned		(10	)		72
Net gains on sales of loans		(3,081	)		(3,199	)
Proceeds from sales of loans		86,747			121,551
Origination of loans held for sale		(87,907	)		(113,944	)
Changes in assets and liabilities:
Accrued interest and other assets		(1,183	)		(1,536	)
Accrued expenses, taxes, and other liabilities		(1,201	)		(2,538	)
Net cash provided by operating activities		328			7,252
Cash flows from investing activities:
Net increase in loans		(2,662	)		(10,932	)
Maturities and prepayments of investment securities		28,501			23,429
Purchases of investment securities		(42,164	)		(43,815	)
Proceeds from sales of investment securities		13,459			13,617
Redemption of bank stocks		6,319			3,009
Purchase of bank stocks		(6,370	)		(3,134	)
Proceeds from sales of premises and equipment and foreclosed assets		398			749
Proceeds from bank owned life insurance		-			351
Purchases of premises and equipment, net		(51	)		(386	)
Net cash used in investing activities		(2,570	)		(17,112	)
Cash flows from financing activities:
Net increase in deposits		3,501			897
Federal Home Loan Bank advance borrowings		313,277			156,291
Federal Home Loan Bank advance repayments		(321,377	)		(145,891	)
Proceeds from other borrowings		100			-
Repayments on other borrowings		(1,136	)		(447	)
Proceeds from exercise of stock options (1)		23			1,195
Payment of dividends		(1,548	)		(1,437	)
Net cash (used in) provided by financing activities		(7,160	)		10,608
Net (decrease) increase in cash and cash equivalents		(9,402	)		748
Cash and cash equivalents at beginning of period		19,996			13,569
Cash and cash equivalents at end of period	$	10,594		$	14,317

(Continued)

6

LANDMARK BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

	Six months ended
(Dollars in thousands)	June 30,
	2017		2016
	(Unaudited)
Supplemental disclosure of cash flow information:
Cash payments for income taxes	$	800	$	500
Cash paid for interest		1,616		1,599
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		180		536
Investment securities purchases not yet settled		-		-

(1)  Net earnings and proceeds from the exercise of stock options for the period ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

See accompanying notes to consolidated financial statements.

7

LANDMARK BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiaries have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s most recent annual report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements, have been reflected herein. The results of the six months ended June 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017 or for any other future time period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

2. Investments

A summary of investment securities available-for-sale is as follows:

(Dollars in thousands)	As of June 30, 2017
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	4,993	$	24	$	(1	)	$	5,016
U. S. federal agency obligations		21,377		45		(40	)		21,382
Municipal obligations, tax exempt		177,419		2,485		(661	)		179,243
Municipal obligations, taxable		62,031		828		(81	)		62,778
Agency mortgage-backed securities		112,095		368		(623	)		111,840
Certificates of deposit		9,224		-		-			9,224
Common stocks		178		181		-			359
Total	$	387,317	$	3,931	$	(1,406	)	$	389,842

(Dollars in thousands)	As of December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	6,005	$	10	$	-		$	6,015
U. S. federal agency obligations		27,140		48		(49	)		27,139
Municipal obligations, tax exempt		163,632		696		(2,666	)		161,662
Municipal obligations, taxable		71,371		463		(271	)		71,563
Agency mortgage-backed securities		109,427		171		(1,222	)		108,376
Certificates of deposit		9,700		-		-			9,700
Common stocks		458		650		-			1,108
Total	$	387,733	$	2,038	$	(4,208	)	$	385,563

8

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of June 30, 2017 and December 31, 2016. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

(Dollars in thousands)			As of June 30, 2017
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. treasury securities		1	$	2,994	$	(1	)	$	-	$	-		$	2,994	$	(1	)
U.S. federal agency obligations		12		14,825		(36	)		995		(4	)		15,820		(40	)
Municipal obligations, tax exempt		113		41,363		(566	)		4,587		(95	)		45,950		(661	)
Municipal obligations, taxable		40		15,167		(81	)		-		-			15,167		(81	)
Agency mortgage-backed securities		38		54,970		(593	)		1,320		(30	)		56,290		(623	)
Total		204	$	129,319	$	(1,277	)	$	6,902	$	(129	)	$	136,221	$	(1,406	)

(Dollars in thousands)			As of December 31, 2016
			Less than 12 months					12 months or longer				Total
	No. of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	securities		value		losses			value		losses		value		losses
U. S. federal agency obligations		9		15,056		(49	)		-		-		15,056		(49	)
Municipal obligations, tax exempt		275		97,842		(2,666	)		-		-		97,842		(2,666	)
Municipal obligations, taxable		66		26,184		(271	)		-		-		26,184		(271	)
Agency mortgage-backed securities		58		83,011		(1,222	)		-		-		83,011		(1,222	)
Total		408	$	222,093	$	(4,208	)	$	-	$	-	$	222,093	$	(4,208	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the security and its belief that it was more likely than not that the Company will not be required to sell the security before recovery of their cost basis, the Company believed that the U.S. treasury security identified in the table above was temporarily impaired as of June 30, 2017.

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2017, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the Government National Mortgage Association (“GNMA”). The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

9

The table below sets forth amortized cost and fair value of investment securities at June 30, 2017. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. Securities with no maturity are listed separately.

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	30,111	$	30,139
Due after one year but within five years		182,277		182,573
Due after five years but within ten years		90,785		92,095
Due after ten years		83,966		84,676
Common stocks		178		359
Total	$	387,317	$	389,842

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017			2016
Sales proceeds	$	1,917	$	11,801		$	13,459		$	13,617
Realized gains	$	177	$	296		$	348		$	312
Realized losses		-		(11	)		(24	)		(15	)
Net realized losses	$	177	$	285		$	324		$	297

Securities with carrying values of $230.0 million and $224.3 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2017 and December 31, 2016, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

3. Loans and Allowance for Loan Losses

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2017			2016
One-to-four family residential real estate	$	138,932		$	136,846
Construction and land		16,557			13,738
Commercial real estate		116,600			118,200
Commercial		51,631			54,506
Agriculture		79,310			78,324
Municipal		3,593			3,884
Consumer		21,403			20,271
Total gross loans		428,026			425,769
Net deferred loan costs and loans in process		39			36
Allowance for loan losses		(5,326	)		(5,344	)
Loans, net	$	422,739		$	420,461

10

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

(Dollars in thousands)	Three and six months ended June 30, 2017
	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial			Agriculture		Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2017	$	493		$	71		$	1,740		$	1,101		$	1,731	$	11		$	180		$	5,327
Charge-offs		-			-			(61	)		-			-		-			(58	)		(119	)
Recoveries		7			-			-			1			-		-			10			18
Provision for loan losses		(1	)		(1	)		30			(21	)		41		(1	)		53			100
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326
Balance at January 1, 2017	$	504		$	53		$	1,777		$	1,119		$	1,684	$	12		$	195		$	5,344
Charge-offs		(19	)		-			(61	)		-			-		-			(165	)		(245	)
Recoveries		8			-			-			9			1		-			59			77
Provision for loan losses		6			17			(7	)		(47	)		87		(2	)		96			150
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326

(Dollars in thousands)	Three and six months ended June 30, 2016
	One-to-four family residential real estate			Construction and land		Commercial real estate			Commercial			Agriculture			Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2016	$	864		$	82	$	1,831		$	1,384		$	1,483		$	24		$	201		$	5,869
Charge-offs		-			-		-			(306	)		(83	)		-			(148	)		(537	)
Recoveries		3			-		-			1			-			6			10			20
Provision for loan losses		(283	)		7		(55	)		314			200			(7	)		124			300
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652
Balance at January 1, 2016	$	925		$	77	$	1,740		$	1,530		$	1,428		$	23		$	199		$	5,922
Charge-offs		-			-		-			(306	)		(83	)		-			(285	)		(674	)
Recoveries		5			-		-			20			-			6			23			54
Provision for loan losses		(346	)		12		36			149			255			(6	)		250			350
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652

11

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class and allowance methodology:

(Dollars in thousands)	As of June 30, 2017
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		50		76		149		-		-		275
Collectively evaluated for loss		499		70		1,659		1,005		1,623		10		185		5,051
Total		499		70		1,709		1,081		1,772		10		185		5,326
Loan balances:
Individually evaluated for loss		732		2,041		2,206		323		868		221		36		6,427
Collectively evaluated for loss		138,200		14,516		114,394		51,308		78,442		3,372		21,367		421,599
Total	$	138,932	$	16,557	$	116,600	$	51,631	$	79,310	$	3,593	$	21,403	$	428,026

(Dollars in thousands)	As of December 31, 2016
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		81		87		89		-		17		274
Collectively evaluated for loss		504		53		1,696		1,032		1,595		12		178		5,070
Total		504		53		1,777		1,119		1,684		12		195		5,344
Loan balances:
Individually evaluated for loss		780		1,937		2,445		355		881		258		72		6,728
Collectively evaluated for loss		136,066		11,801		115,755		54,151		77,443		3,626		20,199		419,041
Total	$	136,846	$	13,738	$	118,200	$	54,506	$	78,324	$	3,884	$	20,271	$	425,769

The Company’s impaired loans decreased from $6.7 million at December 31, 2016 to $6.4 million at June 30, 2017. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2017 and December 31, 2016, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. Interest income recognized on a cash basis was immaterial during the three and six month periods ended June 30, 2017 and 2016.

12

The following tables present information on impaired loans:

(Dollars in thousands)	As of June 30, 2017
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	732	$	732	$	732	$	-	$	-	$	739	$	4
Construction and land		3,776		2,041		2,041		-		-		2,010		33
Commercial real estate		2,206		2,206		2,156		50		50		2,217		246
Commercial		323		323		70		253		76		361		-
Agriculture		1,083		868		49		819		149		933		1
Municipal		221		221		221		-		-		236		3
Consumer		36		36		36		-		-		39		-
Total impaired loans	$	8,377	$	6,427	$	5,305	$	1,122	$	275	$	6,535	$	287

(Dollars in thousands)	As of December 31, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	780	$	780	$	780	$	-	$	-	$	798	$	7
Construction and land		3,672		1,937		1,937		-		-		2,068		72
Commercial real estate		2,445		2,445		2,145		300		81		2,587		505
Commercial		355		355		46		309		87		425		2
Agriculture		1,173		881		147		734		89		1,000		2
Municipal		258		258		258		-		-		418		-
Consumer		72		72		55		17		17		78		13
Total impaired loans	$	8,755	$	6,728	$	5,368	$	1,360	$	274	$	7,374	$	601

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans ninety days delinquent and accruing interest at June 30, 2017 or December 31, 2016.

13

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2017
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	300		$	316		$	-		$	616		$	557		$	1,173		$	137,759
Construction and land		-			-			-			-			692			692			15,865
Commercial real estate		1,971			42			-			2,013			69			2,082			114,518
Commercial		176			1,315			-			1,491			323			1,814			49,817
Agriculture		49			60			-			109			868			977			78,333
Municipal		-			-			-			-			-			-			3,593
Consumer		36			17			-			53			36			89			21,314
Total	$	2,532		$	1,750		$	-		$	4,282		$	2,545		$	6,827		$	421,199
Percent of gross loans		0.59	%		0.41	%		0.00	%		1.00	%		0.59	%		1.59	%		98.41	%

(Dollars in thousands)	As of December 31, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	215		$	388		$	-		$	603		$	595		$	1,198		$	135,648
Construction and land		-			-			-			-			599			599			13,139
Commercial real estate		-			-			-			-			300			300			117,900
Commercial		13			5			-			18			342			360			54,146
Agriculture		55			-			-			55			838			893			77,431
Municipal		-			-			-			-			-			-			3,884
Consumer		79			3			-			82			72			154			20,117
Total	$	362		$	396		$	-		$	758		$	2,746		$	3,504		$	422,265
Percent of gross loans		0.09	%		0.09	%		0.00	%		0.18	%		0.64	%		0.82	%		99.18	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2017 and 2016 would have increased interest income by $63,000 and $44,000, respectively. No interest income related to non-accrual loans was included in interest income for the six months ended June 30, 2017 and 2016.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Non-classified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

14

The following table provides information on the Company’s risk categories by loan class:

(Dollars in thousands)	As of June 30, 2017				As of December 31, 2016
	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	137,803	$	1,129	$	135,640	$	1,206
Construction and land		15,865		692		13,138		600
Commercial real estate		110,725		5,875		111,641		6,559
Commercial		48,115		3,516		51,080		3,426
Agriculture		74,727		4,583		73,564		4,760
Municipal		3,593		-		3,884		-
Consumer		21,356		47		20,181		90
Total	$	412,184	$	15,842	$	409,128	$	16,641

At June 30, 2017, the Company had 11 loan relationships consisting of 19 outstanding loans that were classified as TDRs. During the second quarter of 2017, the Company classified two agriculture loans totaling $87,000 as TDRs after renewing loans to an existing loan relationship that was classified as a TDR in 2016. During the first quarter of 2017, the Company classified an $11,000 commercial real estate loan as a TDR after extending the maturity of the loan and classified as a TDR a $15,000 agriculture loan extended to an existing loan relationship that was classified as a TDR in 2016. Since the commercial loan was adequately secured, no charge-offs or impairments were recorded against the principal as of June 30, 2017. The agriculture loan relationship had a $49,000 impairment recorded against the principal balance as of June 30, 2017 and a charge-off of $215,000 was recorded in the third quarter of 2016. During the second quarter of 2016, the Company classified two loans as TDRs including an $8,000 commercial loan after modifying the payments to interest only and a $188,000 one-to-four family residential real estate loan after agreeing to a loan modification which adjusted the payment schedule. No loans were classified as TDR in the first quarter of 2016.

The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans modified as TDRs for which there was a payment default within 12 months of modification as of June 30, 2017 and 2016. At June 30, 2017, there was a commitment of $63,000 to lend additional funds on one construction and land loan classified as a TDR. The Company did not record any charge-offs against loans classified as TDRs in the first six months either of 2017 or 2016. A credit provision for loan losses of $13,000 related to TDRs was recorded in the six months ended June 30, 2017 compared to no provision in the same period of 2016. The Company allocated $67,000 and $80,000 of the allowance for loan losses against loans classified as TDRs at June 30, 2017 and December 31, 2016, respectively.

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)	As of June 30, 2017						As of December 31, 2016
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	175		2	$	-	$	185
Construction and land		4		581		1,349		4		588		1,338
Commercial real estate		4		61		2,137		3		64		2,145
Commercial		-		-		-		2		-		13
Agriculture		7		409		-		4		268		44
Municipal		2		-		221		2		-		258
Total troubled debt restructurings		19	$	1,051	$	3,882		17	$	920	$	3,983

15

4. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual step one impairment test as of December 31, 2016 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2017 that required an interim goodwill impairment test.

Lease intangible assets are amortized over the life of the lease. Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. Mortgage servicing rights are amortized over the estimated life of the mortgage loan serviced for others. A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2017
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,262	)	$	805
Lease intangible asset		350		(166	)		184
Mortgage servicing rights		6,029		(3,216	)		2,813
Total other intangible assets	$	8,446	$	(4,644	)	$	3,802

(Dollars in thousands)	As of December 31, 2016
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,137	)	$	930
Lease intangible asset		350		(143	)		207
Mortgage servicing rights		5,788		(2,939	)		2,849
Total other intangible assets	$	8,205	$	(4,219	)	$	3,986

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2017 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2017	$	141
2018		252
2019		214
2020		177
2021		121
Thereafter		84
Total	$	989

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30, 2017		December 31, 2016
FHLMC	$	500,399	$	483,356
FHLB		10,444		11,393
Total	$	510,843	$	494,749

Custodial escrow balances maintained in connection with serviced loans were $5.0 million and $4.1 million at June 30, 2017 and December 31, 2016, respectively. Gross service fee income related to such loans was $320,000 and $304,000 for the three months ended June 30, 2017 and 2016, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $639,000 and $604,000 for the six months ended June 30, 2017 and 2016, respectively.

16

Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Mortgage servicing rights:
Balance at beginning of period	$	2,787		$	2,808		$	2,849		$	2,840
Additions		281			291			442			512
Amortization		(255	)		(248	)		(478	)		(501	)
Balance at end of period	$	2,813		$	2,851		$	2,813		$	2,851

The fair value of mortgage servicing rights was $5.3 million and $5.1 million at June 30, 2017 and December 31, 2016, respectively. Fair value at June 30, 2017 was determined using discount rates ranging from 9.50% to 9.51%; prepayment speeds ranging from 0% to 33.56%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.25%. Fair value at December 31, 2016 was determined using discount rates ranging from 9.50% to 9.51%; prepayment speeds ranging from 4.86% to 32.79%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.26%.

The Company had a mortgage repurchase reserve of $301,000 at both June 30, 2017 and December 31, 2016, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the first six months of 2017 and 2016. The Company did not have any recoveries against the mortgage repurchase reserve in the first six months of 2017. The Company recovered $3,000 of losses during the three months ended June 30, 2016 and recovered $10,000 of losses against the mortgage repurchase reserve during the six months ended June 30, 2016. As of June 30, 2017, the Company had one outstanding mortgage repurchase request and expects to incur a loss of approximately $70,000.

5. Earnings per Share

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2017		2016		2017		2016
Net earnings(1)	$	2,383	$	2,326	$	4,588	$	4,719
Weighted average common shares outstanding - basic (2)		3,870,564		3,794,355		3,870,183		3,764,497
Assumed exercise of stock options (1)(2)		80,087		91,322		79,086		89,751
Weighted average common shares outstanding - diluted (1)(2)		3,950,651		3,885,677		3,949,269		3,854,248
Net earnings per share (1)(2):
Basic	$	0.62	$	0.61	$	1.19	$	1.25
Diluted	$	0.60	$	0.60	$	1.16	$	1.22

(1)	Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.
(2)	Share and per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

The diluted earnings per share computations for the three and six months ended June 30, 2017 and 2016 include all unexercised stock options because no stock options were anti-dilutive during such periods.

17

6. Repurchase Agreements

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet. The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2017
	Overnight and		Up to 30				Greater
	Continuous		days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	3,890	$	-	$	-	$	-	$	3,890
Agency mortgage-backed securities		7,457		-		-		-		7,457
Total	$	11,347	$	-	$	-	$	-	$	11,347

	As of December 31, 2016
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,007	$	-	$	-	$	-	$	5,007
Agency mortgage-backed securities		7,476		-		-		-		7,476
Total	$	12,483	$	-	$	-	$	-	$	12,483

Repurchase agreements are comprised of non-insured customer funds, totaling $11.3 million at June 30, 2017, and $12.5 million at December 31, 2016, which were secured by $17.1 million and $15.7 million of the Company’s investment portfolio at the same dates, respectively.

The investment securities are held by a third-party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

7. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

18

Fair value estimates of the Company’s financial instruments as of June 30, 2017 and December 31, 2016, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2017
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	10,594		$	10,594		$	-		$	-	$	10,594
Investment securities available-for-sale		389,842			5,375			384,467			-		389,842
Bank stocks, at cost		5,350			n/a			n/a			n/a		n/a
Loans, net		422,739			-			-			420,935		420,935
Loans held for sale, net		9,758			-			9,758			-		9,758
Derivative financial instruments		711			-			711			-		711
Accrued interest receivable		4,089			2			2,219			1,868		4,089
Financial liabilities:
Non-maturity deposits	$	(613,126	)	$	(613,126	)	$	-		$	-		(613,126	)
Time deposits		(131,896	)		-			(130,377	)		-		(130,377	)
FHLB borrowings		(31,000	)		-			(31,358	)		-		(31,358	)
Subordinated debentures		(21,384	)		-			(19,215	)		-		(19,215	)
Other borrowings		(11,447	)		-			(11,447	)		-		(11,447	)
Derivative financial instruments		(28	)		-			(28	)		-		(28	)
Accrued interest payable		(253	)		-			(253	)		-		(253	)

	As of December 31, 2016
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	19,996		$	19,996		$	-		$	-	$	19,996
Investment securities available-for-sale		385,563			7,123			378,440			-		385,563
Bank stocks, at cost		5,299			n/a			n/a			n/a		n/a
Loans, net		420,461			-			-			417,957		417,957
Loans held for sale		5,517			-			5,517			-		5,517
Derivative financial instruments		662			-			662			-		662
Accrued interest receivable		4,240			21			2,104			2,115		4,240
Financial liabilities:
Non-maturity deposits	$	(601,683	)	$	(601,683	)	$	-		$	-	$	(601,683	)
Time deposits		(139,838	)		-			(138,623	)		-		(138,623	)
FHLB borrowings		(39,100	)		-			(35,695	)		-		(35,695	)
Subordinated debentures		(21,284	)		-			(18,608	)		-		(18,608	)
Other borrowings		(12,483	)		-			(12,483	)		-		(12,483	)
Accrued interest payable		(268	)		-			(268	)		-		(268	)

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency securities, municipal obligations, agency mortgage-backed securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s U.S treasury securities and common stock investments, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

19

It is not practical to determine the fair value of bank stocks due to restrictions placed on the transferability of FHLB and FRB stock.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there are no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820 and is classified as Level 3.

Mortgage loans originated and intended for sale in the secondary market are carried at the estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The carrying amounts of accrued interest receivable and payable are considered to approximate fair value.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and checking accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 2. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB, subordinated debentures, and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and forward commitments for the future delivery of these mortgage loans. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sale of loans, net in the consolidated statements of earnings.

Off-Balance-Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2017 or during the year ended December 31, 2016.

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Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)				As of June 30, 2017
				Fair value hierarchy
	Total			Level 1		Level 2			Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	5,016		$	5,016	$	-		$	-
U. S. federal agency obligations		21,382			-		21,382			-
Municipal obligations, tax exempt		179,243			-		179,243			-
Municipal obligations, taxable		62,778			-		62,778			-
Agency mortgage-backed securities		111,840			-		111,840			-
Certificates of deposit		9,224			-		9,224			-
Common stocks		359			359		-			-
Loans held for sale		9,758			-		9,758			-
Derivative financial instruments		711			-		711			-
Liabililty:
Derivative financial instruments		(28	)		-		(28	)		-

(Dollars in thousands)			As of December 31, 2016
			Fair value hierarchy
		Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	6,015	$	6,015	$	-	$	-
U. S. federal agency obligations		27,139		-		27,139		-
Municipal obligations, tax exempt		161,662		-		161,662		-
Municipal obligations, taxable		71,563		-		71,563		-
Agency mortgage-backed securities		108,376		-		108,376		-
Certificates of deposit		9,700		-		9,700		-
Common stocks		1,108		1,108		-		-
Loans held for sale		5,517		-		5,517		-
Derivative financial instruments		662		-		662		-

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
(Dollars in thousands)	June 30, 2017		December 31, 2016
Aggregate fair value	$	9,758	$	5,517
Contractual balance		9,553		5,480
Gain	$	205	$	37

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The total amount of gains from changes in fair value of loans held for sale included in earnings were as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2017		2016			2017		2016
Interest income	$	79	$	210		$	124	$	315
Change in fair value		60		(63	)		169		(67	)
Total change in fair value	$	139	$	147		$	293	$	248

Valuation Methods for Instruments Measured at Fair Value on a Non-recurring Basis

The Company does not value its loan portfolio at fair value. Collateral-dependent impaired loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Impaired loans are reviewed and evaluated at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s impaired loans was $6.4 million and $6.7 million, with an allocated allowance of $275,000 and $274,000, at June 30, 2017 and December 31, 2016, respectively.

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2017						Total
			Fair value hierarchy						gains
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
Commercial	$	177	$	-	$	-	$	177	$	11
Agriculture		670		-		-		670		(60	)
Real estate owned:
One-to-four family residential real estate		302		-		-		302		(67	)

			As of December 31, 2016						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
Commercial real estate	$	219	$	-	$	-	$	219	$	(81	)
Commercial		222		-		-		222		(87	)
Agriculture		645		-		-		645		(89	)
Real estate owned:
One-to-four family residential real estate		142		-		-		142		(34	)

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The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2017
Impaired loans:
Commercial		177	Sales comparison	Adjustment to comparable sales		0%-50%
Agriculture		670	Sales comparison	Adjustment to appraised value		10%-50%
Real estate owned:
One-to-four family residential real estate		302	Sales comparison	Adjustment to appraised value		10%
As of December 31, 2016
Impaired loans:
Commercial real estate	$	219	Sales comparison	Adjustment to appraised value		2%-15%
Commercial		222	Sales comparison	Adjustment to comparable sales		7%-80%
Agriculture		645	Sales comparison	Adjustment to appraised value		8%-80%
Real estate owned:
One-to-four family residential real estate		142	Sales comparison	Adjustment to appraised value		10%

8. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of June 30, 2017, the Company and its subsidiary, Landmark National Bank (“the Bank”) meet all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the capital rules (the “Basel III Rules”) that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules require a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a Tier 1 capital to risk-weighted assets minimum ratio of 6.0%, a Total Capital to risk-weighted assets minimum ratio of 8.0%, and a Tier 1 leverage minimum ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, was 1.25% effective on January 1, 2017, and will further increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, Tier 1 capital and total risk based capital ratios as of March 31 of each year.

As of June 30, 2017 and December 31, 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

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The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

(Dollars in thousands)	Actual					For capital adequacy purposes
	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2017
Leverage	$	91,954		10.17	%	$	36,178		4.0	%
Common Equity Tier 1 Capital		71,273		13.86	%		29,565		5.8	%
Tier 1 Capital		91,954		17.88	%		37,277		7.3	%
Total Risk Based Capital		97,502		18.96	%		47,561		9.3	%
As of December 31, 2016
Leverage	$	88,819		10.04	%	$	35,370		4.0	%
Common Equity Tier 1 Capital		68,263		13.32	%		26,265		5.1	%
Tier 1 Capital		88,819		17.33	%		33,952		6.6	%
Total Risk Based Capital		94,596		18.46	%		44,201		8.6	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

											To be well-capitalized under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
As of June 30, 2017
Leverage	$	91,007		10.08	%	$	36,116		4.0	%	$	45,145		5.0	%
Common Equity Tier 1 Capital		91,007		17.73	%		29,512		5.8	%		33,361		6.5	%
Tier 1 Capital		91,007		17.73	%		37,211		7.3	%		41,060		8.0	%
Total Risk Based Capital		96,473		18.80	%		47,476		9.3	%		51,325		10.0	%
As of December 31, 2016
Leverage	$	88,076		9.98	%	$	35,284		4.0	%	$	44,105		5.0	%
Common Equity Tier 1 Capital		88,076		17.23	%		26,194		5.1	%		33,222		6.5	%
Tier 1 Capital		88,076		17.23	%		33,861		6.6	%		40,888		8.0	%
Total Risk Based Capital		93,560		18.31	%		44,083		8.6	%		51,110		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625 for December 31,2016.

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9. Impact of Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The main provisions of the update require the identification of performance obligations within a contract and require the recognition of revenue based on a stand-alone allocation of contract revenue to each performance obligation. Performance obligations may be satisfied and revenue recognized over a period of time if: 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs, or 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date. For public entities the amendments of the update are effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. The Company’s revenue is primarily comprised of net interest income on financial asset and liabilities, which are excluded from the scope of ASU 2014-09. Management is still evaluating the impact of ASU 2014-09 on other non-interest income, but does not believe the adoption of ASU 2014-09 will have a material impact on the Company’s financial position, results of operations or cash flows. Management expects the most significant impact of ASU 2014-09 will likely be additional disclosures required for non-interest income. The Company will continue to evaluate the impact as additional guidance is issued and internal assessments progress.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities. The main provisions of the update are to eliminate the available for sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. The provisions of this update become effective for interim and annual periods beginning after December 15, 2017. Upon the effective date of the update, changes in the value of the Company’s common stock investments will be adjustments to the income statement. Additionally, the disclosure of fair value of the loan portfolio will be presented using an exit price method instead of the current discounted cash flow. Management has concluded that the remaining requirements of this update are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued an update (ASU No. 2016-02, Leases) creating FASB Topic 842, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. Management has concluded that based on the Company’s current operating leases, the adoption of ASU 2016-02 will not have a material impact on the Company’s consolidated financial statement and related disclosures.

In March 2016, the FASB issued an update, ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The guidance in this update affects any entity that issues share-based payment awards including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flow. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption was permitted. The Company elected to adopt ASU 2016-09 in 2016. As a result of this election, income tax expense decreased by $308,000 during 2016 as a result of recognized excess tax benefits from the exercise of stock options. The presentation of excess tax benefits from the exercise of stock options have been presented on a prospective basis and are included in changes in accrued interest and other assets in the operating activities section of the statement of cash flows. The Company’s excess tax benefits from the exercise of stock options totaled $24,000 in the first six months of 2017 and $197,000 in the first six months of 2016.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL.” The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the expected term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update, credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL oblige organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public entities, the amendments of the update are effective beginning January 1, 2020. Management has initiated an implementation committee to assist in assessing data and system needs for the new standard. Management anticipates the effect will be an increase to the allowance for loan losses upon adoption. However, the size of the overall increase is uncertain at this time.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Payments (a consensus of Emerging Issues Task Force). This ASU attempts to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The purpose of this update is to reduce existing diversity in practice in eight areas addressed by the update. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. Management has concluded that the adoption of ASU 2016-15 will not have a material impact on the Company’s consolidated financial statements and related disclosures.

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In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The provisions of this update become effective for interim and annual periods beginning after December 15, 2018. Management has concluded that based on the Company’s current portfolio of investment securities that the adoption of these amendments will result in shorter amortization period for investment security premiums, however, the impact will not be material to interest income on investment securities.

10. Subsequent Event

On August 8, 2017, the Company was made aware that checks deposited by our customer from a third party were being returned by another financial institution due to uncollected funds related to the third party. This resulted in a $10.3 million overdraft balance. An investigation of the situation and the potential recovery of losses are in their early stages, and accordingly, no conclusions have been reached concerning the responsibility for any potential losses, nor has there been a determination of whether or not existing insurance policies of any party will cover all or part of any possible losses. Since August 8, 2017, the entity whose checks to our customer were returned has provided $1.7 million in wire transfer deposits to our customer’s account, resulting in an $8.6 million overdraft as of the date of this filing. The Company intends to protect all of its rights pursuant to this matter and seek all available legal and equitable remedies. However, should there be no additional recoveries into the customer’s account, no insurance proceeds and the Company were to absorb all the losses known at this time to be associated with this event (excluding the costs of investigation), the Company would incur an after-tax loss of approximately $5.4 million in the third quarter of 2017.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview. Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank and in the insurance business through its wholly-owned subsidiary, Landmark Risk Management, Inc. References to the “Company,” “we,” “us,” and “our” refer collectively to Landmark Bancorp, Inc., Landmark National Bank and Landmark Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.”

The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes continuing a tradition of holding and acquiring quality assets while growing our commercial, commercial real estate and agriculture loan portfolios. We are committed to developing relationships with our borrowers and providing a comprehensive range of banking service. The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. Although not our primary business function, we do invest in certain investment and mortgage-related securities using deposits and other borrowings as funding sources.

Landmark Risk Management, Inc. was formed and began operations on May 31, 2017, which is a Nevada-based captive insurance company which will provide property and casualty insurance coverage to the Company and the Bank for which insurance may not be currently available or economically feasible in today’s insurance marketplace. Landmark Risk Management, Inc. pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. Landmark Risk Management, Inc. is subject to regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance.

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees and gains from the sale of newly originated loans and gains or losses on investments. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, federal deposit insurance costs, data processing expenses, amortization of intangibles, advertising expenses, foreclosure and real estate owned expense and provision for loan losses.

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

Currently, through our ownership of the bank, our business primarily consists of the operations of the Bank, with its main office in Manhattan, Kansas and twenty eight additional branch offices in central, eastern, southeast and southwest Kansas.

Critical Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial condition and results of operations and require our management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for loan losses, the valuation of investment securities, accounting for income taxes and the accounting for goodwill and other intangible assets, all of which involve significant judgment by our management. Information about our critical accounting policies is included under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2016.

Summary of Results. During the second quarter of 2017, we recorded net earnings of $2.4 million, which was an increase of $57,000, or 2.5%, from the $2.3 million of net earnings in the second quarter of 2016. During the first six months of 2017, we recorded net earnings of $4.6 million, which was a decrease of $131,000, or 2.8%, from the $4.7 million of net earnings in the first six months of 2016.

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The following table summarizes earnings and key performance measures for the periods presented.

(Dollars in thousands, except per share amounts)	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Net earnings:
Net earnings (1)	$	2,383		$	2,326		$	4,588		$	4,719
Basic earnings per share (1) (2)	$	0.62		$	0.61		$	1.19		$	1.25
Diluted earnings per share (1) (2)	$	0.60		$	0.60		$	1.16		$	1.23
Earnings ratios:
Return on average assets (1) (2) (3)		1.04	%		1.04	%		1.01	%		1.07	%
Return on average equity (1) (2) (3)		10.78	%		10.86	%		10.62	%		11.22	%
Equity to total assets		10.00	%		9.97	%		10.00	%		9.97	%
Net interest margin (3) (4)		3.41	%		3.46	%		3.41	%		3.47	%
Dividend payout ratio (1)		33.33	%		33.33	%		34.48	%		32.52	%

(1)	Net earnings, earnings per share, return on average assets, return on average equity and the dividend payout ratios for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.
(2)	Per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.
(3)	Ratios have been annualized and are not necessarily indicative of the results for the entire year.
(4)	Net interest margin is presented on a fully tax equivalent basis, using a 34% federal tax rate.

Interest Income. Interest income of $7.5 million for the quarter ended June 30, 2017 increased $84,000, or 1.1%, as compared to the same period of 2016. Interest income on loans decreased $65,000, or 1.2%, to $5.3 million for the quarter ended June 30, 2017, compared to the same period of 2016 due primarily to a decrease in our average loan balances, which decreased from $438.3 million in the second quarter of 2016 to $428.4 million in the second quarter of 2017. Partially offsetting the decrease in interest income were higher yields on loans, which increased from 4.93% in the second quarter of 2016 to 4.96% in the second quarter of 2017. Interest income on investment securities increased $149,000, or 7.4%, to $2.2 million for the second quarter of 2017, as compared to $2.0 million in the same period of 2016. The increase in interest income on investment securities was primarily the result of an increase in our average balance of investment securities from $376.0 million during the second quarter of 2016 to $398.3 million during the second quarter of 2017. Also contributing to the higher interest income on investment securities was an increase in our tax equivalent yield on investment securities, which increased from 2.62% in the second quarter of 2016 to 2.67% during the second quarter of 2017.

Interest income of $14.6 million for the six months ended June 30, 2017 increased $98,000, or 0.7%, as compared to the same period of 2016. Interest income on loans decreased $213,000, or 2.0%, to $10.3 million for the six months ended June 30, 2017, compared to the same period of 2016 due primarily to a decrease in our average loan balances, which decreased from $432.1 million during the first six months of 2016 to $424.5 million during the first six months of 2017. Also contributing to the decrease in interest income were lower yields on loans, which decreased from 4.94% in the first six months of 2016 to 4.93% in the first six months of 2017. Interest income on investment securities increased $311,000, or 7.8%, to $4.3 million for the first six months of 2017, as compared to $4.0 million in the same period of 2016. The increase in interest income on investment securities was primarily the result of an increase in our average balance of investment securities from $367.5 million during the first six months of 2016 to $395.9 million during the first six months of 2017. Also contributing to the higher interest income on investment securities was an increase in our tax equivalent yield on investment securities, which increased from 2.64% in the first six months of 2016 to 2.67% during the same period of 2017.

Interest Expense. Interest expense during the quarter ended June 30, 2017 increased $70,000, or 8.6%, to $880,000 as compared to the same period of 2016. Interest expense on interest-bearing deposits increased $107,000, or 37.3%, to $394,000 for the quarter ended June 30, 2017 as compared to the same period of 2016. The increase in interest expense on interest-bearing deposits was the result of deposits repricing higher and an increase in average interest-bearing deposit balances, which increased from $561.9 million in the second quarter of 2016 to $590.1 million in the second quarter of 2017. The average rate of interest-bearing deposits increased 0.06% for the second quarter of 2017 to 0.27% as compared to 0.21% in the same period of 2016. For the second quarter of 2017, interest expense on borrowings decreased $37,000, or 7.1%, to $486,000 as compared to the same period of 2016, due to a decrease in our average outstanding borrowings, which decreased from $88.6 million in the second quarter of 2016 to $68.5 million in the same period of 2017. Partially offsetting the lower average outstanding borrowings were higher average rates on our borrowings which increased to 2.84% for the second quarter of 2017 compared to 2.38% for the same period of 2016.

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Interest expense during the six months ended June 30, 2017 increased $120,000, or 7.6%, to $1.7 million as compared to the same period of 2016. Interest expense on interest-bearing deposits increased $168,000, or 29.8%, to $732,000 for the six months ended June 30, 2017 as compared to the same period of 2016. The increase in interest expense on interest-bearing deposits was the result of deposits repricing higher and an increase in average interest-bearing deposit balances, which increased from $561.7 million in the first six months of 2016 to $588.8 million in the same period of 2017. The average rate of interest-bearing deposits increased 0.05% for the first six months of 2017 to 0.25% as compared to 0.20% in the same period of 2016. For the first six months of 2017, interest expense on borrowings decreased $48,000, or 4.7%, to $968,000 as compared to the same period of 2016, due to a decrease in our average outstanding borrowings, which decreased from $80.5 million in the first six months of 2016 to $70.1 million in the first six months of 2017. Partially offsetting the lower average outstanding borrowings were higher average rates on our borrowings which increased to 2.78% for the first six months of 2017 compared to 2.54% for the same period of 2016.

Net Interest Income. Net interest income increased $14,000, or 0.2%, to $6.6 million for the second quarter of 2017 compared to the same period of 2016. The increase in net interest income was primarily a result of an increase of 2.0% in average interest-earning assets, from $815.1 million in the second quarter of 2016 to $831.3 million for the same period of 2017. Our net interest margin, on a tax-equivalent basis, decreased from 3.46% during the second quarter of 2016 to 3.41% in the same period of 2017. Lower average balances of loans and higher rates on our interest-bearing deposits were the primary driver of the decrease in our net interest margin.

Net interest income decreased $22,000, or 0.2%, to $12.9 million for the first six months of 2017 compared to the same period of 2016. The decrease in net interest income was primarily a result of lower yields on loans and higher rates on interest-bearing deposits and borrowings, which contributed to a decrease in our net interest margin, on a tax equivalent basis, from 3.47% in the first six months of 2016 to 3.41% in the same period of 2017. Partially offsetting the decline in net interest margin was an increase of 2.9% in average interest-earning assets, from $803.5 million in the first half of 2016 to $827.1 million for the same period of 2017. Our net interest income and net interest margin may continue to decline if short-term interest rates continue to increase and we are unable to reprice our loans higher or grow our average balances while our cost of interest-bearing deposits and borrowings increase.

See the Average Assets/Liabilities and Rate/Volume tables at the end of Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details on asset yields, liability rates and net interest margin.

Provision for Loan Losses. We maintain, and our Board of Directors monitors, an allowance for losses on loans. The allowance is established based upon management’s periodic evaluation of known and inherent risks in the loan portfolio, review of significant individual loans and collateral, review of delinquent loans, past loss experience, adverse situations that may affect the borrowers’ ability to repay, current and expected market conditions, and other factors management deems important. Determining the appropriate level of reserves involves a high degree of management judgment and is based upon historical and projected losses in the loan portfolio and the collateral value or discounted cash flows of specifically identified impaired loans. Additionally, allowance policies are subject to periodic review and revision in response to a number of factors, including current market conditions, actual loss experience and management’s expectations.

During the second quarter of 2017, we recorded a provision for loan losses of $100,000 compared to $300,000 in the second quarter of 2016. We recorded net loan charge-offs of $101,000 during the second quarter of 2017 compared to net loan charge-offs of $517,000 during the second quarter of 2016. The net loan charge-offs during the second quarter of 2016 were primarily related to the liquidation of the assets securing a previously identified and impaired commercial loan.

During the first six months of 2017, we recorded a provision for loan losses of $150,000 compared to $350,000 during the same period of 2016. We recorded net loan charge-offs of $168,000 during the six months ended June 30, 2017 compared to $620,000 during the same period of 2016.

For further discussion of the allowance for loan losses, refer to the “Asset Quality and Distribution” section below.

Non-interest Income. Total non-interest income was $4.2 million in the second quarter of 2017, an increase of $240,000, or 6.1%, compared to the second quarter of 2016. This change was primarily the result of a $287,000 increase in gains on sales of loans. Partially offsetting the increase in gains on sales of loans was a decrease of $108,000 in our gains on sales of investment securities. We recorded $177,000 in gains on sales of investment securities during the second quarter of 2017 compared to a gain of $285,000 in the second quarter of 2016.

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Total non-interest income was $7.8 million in the first six months of 2017, a decrease of $13,000, or 0.2%, compared to the same period of 2016. This change was primarily the result of a decline of $118,000 in gains on sales of loans, as the volume of one-to-four family residential real estate loans originated for sale in the first six months of 2017 was lower than in the same period of 2016. Partially offsetting the decline in gains on sales of loans was a $324,000 gain on sales of investment securities during the first six months of 2017, compared to a gain of $297,000 in the same period of 2016.

Non-interest Expense. Non-interest expense totaled $7.5 million for the second quarter of 2017, an increase of $328,000, or 4.6%, from $7.2 million for the second quarter of 2016. The increase was primarily due to increases of $194,000 in professional fees and $141,000 in compensation and benefits in the second quarter of 2017 as compared to the second quarter of 2016. The increase in professional fees was primarily related to costs associated with forming our captive insurance subsidiary and an audit over our internal control over financial reporting which will be required for 2017 as a result of exceeding the market capitalization threshold at June 30, 2017. The increase in compensation and benefits was related to increased salaries and stock-based compensation. Partially offsetting those increases was a decline of $37,000 in federal deposit insurance premiums due to lower rates that began in the third quarter of 2016.

Non-interest expense totaled $14.6 million for the first six months of 2017, an increase of $227,000, or 1.6%, from $14.4 million for the second quarter of 2016. The increase was primarily related to increased professional fees related to costs associated with forming our captive insurance subsidiary and audit over our internal control over financial reporting in the first half of 2017 as compared to the same period of 2016. Partially offsetting those increases was a decline of $75,000 in federal deposit insurance premiums due to lower rates that began in the third quarter of 2016.

Income Tax Expense. During the second quarter of 2017, we recorded income tax expense of $742,000, compared to $673,000 during the same period of 2016. Our effective tax rate increased from 22.4% in the second quarter of 2016 to 23.7% in the second quarter of 2017 primarily as a result of a decrease in excess tax benefits from the exercise of stock options from $81,000 in the second quarter of 2016 to $13,000 in the same period of 2017. Income tax expense was recast for the first quarter of 2016 to reflect the early adoption of ASU 2016-09.

We recorded income tax expense of $1.4 million the first six months of both 2017 and 2016. Our effective tax rate increased from 22.4% in the first half of 2016 to 23.8% in the second quarter of 2017 primarily as a result of a decrease in excess tax benefits from the exercise of stock options from $197,000 in the first half of 2016 to $24,000 in the same period of 2017. Income tax expense was recast for the first six months of 2016 to reflect the early adoption of ASU 2016-09.

Financial Condition. Despite measured improvement in certain metrics, general uncertainty with respect to economic conditions in the United States continues to affect our asset quality and performance. The geographic markets in which the Company operates have also been impacted by an economic downturn in the agriculture sector. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has generally improved over the past few years. Aside from these identified problem assets, management believes that the Company continues to have a high quality asset base and solid core earnings, and anticipates that its efforts to maintain these quality features will continue to provide a strong foundation for continued growth and profitability in the future.

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets decreased slightly to $910.8 million at June 30, 2017, compared to $911.4 million at December 31, 2016.

The allowance for loan losses is established through a provision for loan losses based on our evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of our loan activity. This evaluation, which includes a review of all loans with respect to which full collectability may not be reasonably assured, considers the fair value of the underlying collateral, economic conditions, historical loan loss experience, level of classified loans and other factors that warrant recognition in providing for an appropriate allowance for loan losses. At June 30, 2017 our allowance for loan losses totaled $5.3 million, or 1.24% of gross loans outstanding compared to $5.3 million, or 1.26% of gross loans outstanding at December 31, 2016.

As of June 30, 2017 and December 31, 2016, approximately $15.8 million and $16.6 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that these loans were identified as potential problem loans having more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Even though borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the allowance for loan losses was sufficient to cover the risks and probable incurred losses related to such loans at June 30, 2017 and December 31, 2016, respectively.

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Loans past due 30-89 days and still accruing interest totaled $4.3 million, or 1.00% of gross loans, at June 30, 2017 compared to $758,000, or 0.18% of gross loans, at December 31, 2016. The increase in loans past due 30-89 days was primarily related to a $3.1 million loan relationship consisting of a $1.3 million commercial loan and a $1.8 million commercial real estate loan. At June 30, 2017, $2.5 million in loans were on non-accrual status, or 0.59% of gross loans, compared to $2.7 million, or 0.64% of gross loans, at December 31, 2016. Non-accrual loans consist of loans 90 or more days past due and certain impaired loans. There were no loans 90 days delinquent and accruing interest at June 30, 2017 or December 31, 2016. Our impaired loans totaled $6.4 million at June 30, 2017 compared to $6.7 million at December 31, 2016. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2017 was related to TDRs that were accruing interest but still classified as impaired.

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial real estate and construction and land relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At June 30, 2017, we had $1.0 million of real estate owned compared to $1.3 million at December 31, 2016. As of June 30, 2017, real estate owned primarily consisted of residential real estate and commercial properties. The Company is currently marketing all of the remaining properties in real estate owned.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We experienced an increase of $3.5 million in total deposits during the six months of 2017, to $745.0 million at June 30, 2017, from $741.5 million at December 31, 2016. The increase in deposits was primarily due to increased balances in non-interest bearing and savings accounts. This increase was partially offset by lower balances of money market and checking and time deposit accounts.

Non-interest-bearing deposits at June 30, 2017, were $158.8 million, or 21.3% of deposits, compared to $152.0 million, or 20.5% of deposits, at December 31, 2016. Money market and checking deposit accounts were 48.4% of our deposit portfolio and totaled $360.7 million at June 30, 2017, compared to $361.4 million, or 48.7% of deposits, at December 31, 2016. Savings accounts increased to $93.6 million, or 12.6% of deposits, at June 30, 2017, from $88.3 million, or 11.9% of deposits, at December 31, 2016. Certificates of deposit totaled $131.9 million, or 17.7% of deposits, at June 30, 2017, compared to $139.8 million, or 18.9% of deposits, at December 31, 2016.

Certificates of deposit at June 30, 2017, scheduled to mature in one year or less, totaled $90.5 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.

Total borrowings decreased $9.0 million to $63.8 million at June 30, 2017, from $72.9 million at December 31, 2016. The decrease in total borrowings was primarily due to a decrease in our FHLB borrowings from $39.1 million at December 31, 2016 to $31.0 million at June 30, 2017, which was primarily the result of two $5.0 million FHLB advance maturing in the six months ended June 30, 2017.

Cash Flows. During the six months ended June 30, 2017, our cash and cash equivalents decreased by $9.4 million. Our operating activities provided cash of $328,000 during the first six months of 2017. Our investing activities used net cash of $2.6 million during the first six months of 2017, primarily as a result of the purchase of investment securities and an increase in our loan balances. Financing activities used net cash of $7.2 million during the first six months of 2017, primarily as a result of decreased borrowings.

Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available for sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $400.4 million at June 30, 2017 and $405.6 million at December 31, 2016. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments.

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Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At June 30, 2017, we had outstanding FHLB advances of $25.0 million and $6.0 million of borrowings against our line of credit with the FHLB. At June 30, 2017, we had collateral pledged to the FHLB that would allow us to borrow an additional $65.5 million, subject to FHLB credit requirements and policies. At June 30, 2017, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $14.7 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $30.0 million in available credit under which we had no outstanding borrowings at June 30, 2017. At June 30, 2017, we had subordinated debentures totaling $21.4 million and other borrowings of $11.4 million, which consisted of $11.3 million in repurchase agreements and $100,000 on a line of credit. The Company has a $7.5 million line of credit from an unrelated financial institution maturing on November 1, 2017, with an interest rate that adjusts daily based on the prime rate plus 0.25%, and a floor of 3.75%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at June 30, 2017.

Off Balance Sheet Arrangements. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $826,000 at June 30, 2017.

At June 30, 2017, we had outstanding loan commitments, excluding standby letters of credit, of $86.7 million. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

Capital. Current regulatory capital regulations require financial institutions (including banks and bank holding companies) to meet certain regulatory capital requirements. The Company and the Bank are subject to the Basel III Rules that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules require a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a Tier 1 capital to risk-weighted assets minimum ratio of 6.0%, a Total Capital to risk-weighted assets minimum ratio of 8.0%, and a Tier 1 leverage minimum ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, was 1.25% effective on January 1, 2017, and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. As of June 30, 2017 and December 31, 2016, the Bank was rated “well capitalized,” which is the highest rating available under the regulatory capital regulations framework for prompt corrective action. Management believes that as of June 30, 2017, the Company and the Bank met all capital adequacy requirements to which we are subject.

Dividends. During the quarter ended June 30, 2017, we paid a quarterly cash dividend of $0.20 per share to our stockholders.

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. In addition, under the Basel III Rules, financial institutions will have to maintain 2.5% in Common Equity Tier 1 attributable to the capital conservation buffer in order to pay dividends and do other capital distributions. This buffer is being phased in over three years beginning in 2016. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of June 30, 2017. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank’s current year’s net earnings plus the adjusted retained earnings for the two preceding years. As of June 30, 2017, approximately $18.6 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.

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Additionally, our ability to pay dividends is limited by the subordinated debentures that are held by three business trusts that we control. Interest payments on the debentures must be paid before we pay dividends on our capital stock, including our common stock. We have the right to defer interest payments on the debentures for up to 20 consecutive quarters. However, if we elect to defer interest payments, all deferred interest must be paid before we may pay dividends on our capital stock.

Average Assets/Liabilities. The following tables reflect the tax-equivalent yields earned on average interest-earning assets and costs of average interest-bearing liabilities for the periods indicated (derived by dividing income or expense by the monthly average balance of assets or liabilities, respectively) as well as “net interest margin” (which reflects the effect of the net earnings balance) for the periods shown:

	Three months ended							Three months ended
(Dollars in thousands)	June 30, 2017							June 30, 2016
	Average balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	4,566	$	9		0.79	%	$	817	$	1		0.49	%
Investment securities (1)		398,328		2,651		2.67	%		375,976		2,453		2.62	%
Loans receivable, net (2)		428,424		5,297		4.96	%		438,261		5,375		4.93	%
Total interest-earning assets		831,318		7,957		3.84	%		815,054		7,829		3.86	%
Non-interest-earning assets		91,856							85,276
Total	$	923,174						$	900,330
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Money market and checking	$	360,528	$	236		0.26	%	$	332,109	$	116		0.14	%
Savings accounts		94,047		7		0.03	%		86,863		7		0.03	%
Time deposit		135,512		151		0.45	%		142,948		164		0.46	%
Total deposits		590,087		394		0.27	%		561,920		287		0.21	%
FHLB advances and other borrowings		68,549		486		2.84	%		88,560		523		2.38	%
Total interest-bearing liabilities		658,636		880		0.54	%		650,480		810		0.50	%
Non-interest-bearing liabilities		175,859							163,718
Stockholders' equity		88,679							86,132
Total	$	923,174						$	900,330
Interest rate spread (3)						3.30	%						3.36	%
Net interest margin (4)			$	7,077		3.41	%			$	7,019		3.46	%
Tax-equivalent interest - imputed				501							457
Net interest income			$	6,576						$	6,562
Ratio of average interest-earning assets to average interest-bearing liabilities						126.2	%						125.3	%

(1)	Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 34% federal tax rate.
(2)	Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 34% federal tax rate.
(3)	Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(4)	Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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	Six months ended							Six months ended
(Dollars in thousands)	June 30, 2017							June 30, 2016
	Average balance		Interest		Average yield/rate			Average balance		Interest		Average yield/rate
Assets
Interest-earning assets:
Interest-bearing deposits at banks	$	6,676	$	27		0.82	%	$	3,875	$	10		0.52	%
Investment securities (1)		395,947		5,237		2.67	%		367,535		4,819		2.64	%
Loans receivable, net (2)		424,495		10,369		4.93	%		432,137		10,611		4.94	%
Total interest-earning assets		827,118		15,633		3.81	%		803,547		15,440		3.86	%
Non-interest-earning assets		91,448							85,168
Total	$	918,566						$	888,715
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Money market and checking	$	357,950	$	417		0.23	%	$	333,231	$	221		0.13	%
Savings accounts		92,670		14		0.03	%		85,143		13		0.03	%
Time deposit		138,228		301		0.44	%		143,304		330		0.46	%
Total deposits		588,848		732		0.25	%		561,678		564		0.20	%
FHLB advances and other borrowings		70,135		968		2.78	%		80,499		1,016		2.54	%
Total interest-bearing liabilities		658,983		1,700		0.52	%		642,177		1,580		0.49	%
Non-interest-bearing liabilities		172,486							161,982
Stockholders' equity		87,097							84,556
Total	$	918,566						$	888,715
Interest rate spread (3)						3.29	%						3.37	%
Net interest margin (4)			$	13,933		3.41	%			$	13,860		3.47	%
Tax-equivalent interest - imputed				989							894
Net interest income			$	12,944						$	12,966
Ratio of average interest-earning assets to average interest-bearing liabilities						125.5	%						125.1	%

(1)	Income on tax exempt securities is presented on a fully tax-equivalent basis, using a 34% federal tax rate.
(2)	Includes loans classified as non-accrual. Income on tax-exempt loans is presented on a fully tax-equivalent basis, using a 34% federal tax rate.
(3)	Interest rate spread represents the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
(4)	Net interest margin represents annualized, tax-equivalent net interest income divided by average interest-earning assets.

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Rate/Volume Table. The following table describes the extent to which changes in tax-equivalent interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities affected the Company’s interest income and expense for the periods indicated. The table distinguishes between (i) changes attributable to rate (changes in rate multiplied by prior volume), (ii) changes attributable to volume (changes in volume multiplied by prior rate), and (iii) net change (the sum of the previous columns). The net changes attributable to the combined effect of volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

(Dollars in thousands)	Three months ended June 30,									Six months ended June 30,
	2017 vs 2016									2017 vs 2016
	Increase/(decrease) attributable to									Increase/(decrease) attributable to
	Volume			Rate			Net			Volume			Rate			Net
Interest income:
Interest-bearing deposits at banks	$	7		$	1		$	8		$	9		$	8		$	17
Investment securities		150			48			198			365			53			418
Loans		(107	)		29			(78	)		(217	)		(25	)		(242	)
Total		50			78			128			157			36			193
Interest expense:
Deposits		16			91			107			27			141			168
Borrowings		(255	)		219			(37	)		(180	)		132			(48	)
Total		(239	)		310			70			(153	)		273			120
Net interest income	$	289		$	(232	)	$	58		$	310		$	(237	)	$	73

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our assets and liabilities are principally financial in nature, and the resulting net interest income thereon is subject to changes in market interest rates and the mix of various assets and liabilities. Interest rates in the financial markets affect our decisions relating to pricing our assets and liabilities, which impact net interest income, a significant cash flow source for us. As a result, a substantial portion of our risk management activities relates to managing interest rate risk.

Our Asset/Liability Management Committee monitors the interest rate sensitivity of our balance sheet using earnings simulation models. We have set policy limits of interest rate risk to be assumed in the normal course of business and monitor such limits through our simulation process.

We have been successful in meeting the interest rate sensitivity objectives set forth in our policy. Simulation models are prepared to determine the impact on net interest income for the coming twelve months, including one using rates at June 30, 2017, and forecasting volumes for the twelve-month projection. This position is then subjected to a shift in interest rates of 100 and 200 basis points with an impact to our net interest income on a one-year horizon as follows:

	Dollar change in net			Percent change in
Scenario	interest income ($000’s)			net interest income
200 basis point rising	$	(1,255	)		(4.5	)%
100 basis point rising	$	(643	)		(2.3	)%
100 basis point falling	$	(58	)		(0.2	)%
200 basis point falling		NM			NM

The 200 basis point falling scenario is considered to be not meaningful (“NM”) in the current low interest rate environment.

34

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Forward-Looking Statements

This document (including information incorporated by reference) contains, and future oral and written statements by us and our management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to our financial condition, results of operations, plans, objectives, future performance and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and we undertake no obligation to update any statement in light of new information or future events.

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on operations and future prospects by us and our subsidiaries include, but are not limited to, the following:

● The strength of the United States economy and international economy in general and the strength of the local economies in which we conduct our operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of our assets.

● The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, as well as rules adopted by the federal bank regulatory agencies to implement Basel III) and the effects of increases in Federal Deposit Insurance Corporation premiums.

● The effects of changes in interest rates (including the effects of changes in the rate of prepayments of our assets) and the policies of the Board of Governors of the Federal Reserve System.

● Our ability to compete with other financial institutions as effectively as we currently do due to increases in competitive pressures in the financial services sector.

● Our inability to obtain new customers and to retain existing customers.

● The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet.

● Technological changes implemented by us and by other parties, including third-party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to us and our customers.

● Our ability to develop and maintain secure and reliable electronic systems.

● Our ability to retain key executives and employees and the difficulty that we may experience in replacing key executives and employees in an effective manner.

● Consumer spending and saving habits which may change in a manner that affects our business adversely.

● Our ability to successfully integrate acquired businesses and future growth.

● The costs, effects and outcomes of existing or future litigation.

● Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board.

● The economic impact of past and any future terrorist attacks, acts of war or threats thereof, and the response of the United States to any such threats and attacks.

● Our ability to effectively manage our credit risk.

● Our ability to forecast probable loan losses and maintain an adequate allowance for loan losses.

● The effects of declines in the value of our investment portfolio.

● Our ability to raise additional capital if needed.

● The effects of cyber-attacks.

● The effects of declines in real estate markets.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Additional information concerning us and our business, including other factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission, including the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2016.

35

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of June 30, 2017. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2017.

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2017 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

36

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company or its subsidiaries is a party or which any of their property is subject, other than ordinary routine litigation incidental to their respective businesses.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors applicable to the Company from those disclosed in Part I, Item 1A. “Risk Factors,” in the Company’s 2016 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit 31.1	Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 31.2	Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016; (ii) Consolidated Statements of Earnings for the three and six months ended June 30, 2017 and June 30, 2016; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and June 30, 2016; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and June 30, 2016; (v) Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2017 and June 30, 2016; and (vi) Notes to Consolidated Financial Statements

37

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LANDMARK BANCORP, INC.
Date: August 21, 2017	/s/ Michael E. Scheopner
	Michael E. Scheopner
	President and Chief Executive Officer

Date: August 21, 2017	/s/ Mark A. Herpich
	Mark A. Herpich
	Vice President, Secretary, Treasurer
	and Chief Financial Officer

38

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Michael E. Scheopner, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 21, 2017	/s/ Michael E. Scheopner
	Michael E. Scheopner
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a)

I, Mark A. Herpich, certify that:

1	I have reviewed this quarterly report on Form 10-Q of Landmark Bancorp, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 21, 2017	/s/ Mark A. Herpich
	Mark A. Herpich
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael E. Scheopner, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael E. Scheopner

Michael E. Scheopner

Chief Executive Officer

August 21, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Landmark Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Herpich, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark A. Herpich

Mark A. Herpich

Chief Financial Officer

August 21, 2017

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 10, 2017
Document And Entity Information
Entity Registrant Name	LANDMARK BANCORP INC
Entity Central Index Key	0001141688
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,873,781
Trading Symbol	LARK
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2017

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and cash equivalents	$ 10,594	$ 19,996
Investment securities available-for-sale, at fair value	389,842	385,563
Bank Stocks, at cost	5,350	5,299
Loans, net of allowance for loans losses of $5,326 at June 30, 2017 and $5,344 at December 31, 2016	422,739	420,461
Loans held for sale, at fair value	9,758	5,517
Premises and equipment, net	19,938	20,407
Bank owned life insurance	18,550	18,314
Goodwill	17,532	17,532
Other intangible assets, net	3,802	3,986
Real estate owned, net	1,004	1,279
Accrued interest and other assets	11,690	13,028
Total assets	910,799	911,382
Deposits:
Non-interest-bearing demand	158,824	152,012
Money market and checking	360,742	361,398
Savings	93,560	88,273
Time	131,896	139,838
Total deposits	745,022	741,521
Federal Home Loan Bank borrowings	31,000	39,100
Subordinated debentures	21,384	21,284
Other borrowings	11,447	12,483
Accrued interest, taxes, and other liabilities	10,911	12,043
Total liabilities	819,764	826,431
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value per share, 200,000 shares authorized; none issued
Common stock, $0.01 par value per share, 7,500,000 shares authorized; 3,871,045 and 3,868,077 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	39	38
Additional paid-in capital	52,067	51,968
Retained earnings	37,333	34,293
Accumulated other comprehensive income (loss)	1,596	(1,348)
Total stockholders' equity	91,035	84,951
Total liabilities and stockholders' equity	$ 910,799	$ 911,382

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Net of allowance for loans losses	$ 5,326	$ 5,344
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	200,000	200,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	7,500,000	7,500,000
Common stock, shares issued	3,871,045	3,868,077
Common stock, shares, outstanding	3,871,045	3,868,077

XML

Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest income:
Taxable		$ 5,246	$ 5,285	$ 10,265	$ 10,420
Tax-exempt		34	60	69	127
Investment securities:
Taxable		1,202	1,171	2,394	2,335
Tax-exempt		974	856	1,916	1,664
Total interest income		7,456	7,372	14,644	14,546
Interest expense:
Deposits		394	287	732	564
Borrowings		486	523	968	1,016
Total interest expense		880	810	1,700	1,580
Net interest income		6,576	6,562	12,944	12,966
Provision for loan losses		100	300	150	350
Net interest income after provision for loan losses		6,476	6,262	12,794	12,616
Non-interest income:
Fees and service charges		1,917	1,847	3,632	3,576
Gains on sales of loans, net		1,692	1,405	3,081	3,199
Bank owned life insurance		119	145	236	265
Gains on sales of investment securities, net		177	285	324	297
Other		283	266	556	505
Total non-interest income		4,188	3,948	7,829	7,842
Non-interest expense:
Compensation and benefits		3,918	3,777	7,675	7,578
Occupancy and equipment		1,097	1,055	2,121	2,111
Amortization of intangibles		328	331	626	668
Data processing		337	346	667	657
Professional fees		476	282	766	501
Advertising		166	166	332	332
Federal deposit insurance premiums		73	110	145	220
Foreclosure and real estate owned expense		49	51	101	116
Other		1,095	1,093	2,167	2,190
Total non-interest expense		7,539	7,211	14,600	14,373
Earnings before income taxes		3,125	2,999	6,023	6,085
Income tax expense	[1]	742	673	1,435	1,366
Net earnings	[1],[2]	$ 2,383	$ 2,326	$ 4,588	$ 4,719
Earnings per share:
Basic	[1],[2],[3],[4]	$ 0.62	$ 0.61	$ 1.19	$ 1.25
Diluted	[1],[2],[3],[4]	0.60	0.60	1.16	1.23
Dividends per share	[3]	$ 0.20	$ 0.19	$ 0.40	$ 0.38

[1] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[2] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

[3] Per share amounts for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

[4] Share and per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net earnings	[1],[2]	$ 2,383	$ 2,326	$ 4,588	$ 4,719
Net unrealized holding gains on available-for-sale securities		4,497	3,771	5,019	7,161
Reclassification adjustment for net gains included in earnings		(177)	(285)	(324)	(297)
Net unrealized gains		4,320	3,486	4,695	6,864
Income tax effect on net gains included in earnings		65	105	120	110
Income tax effect on net unrealized holding gains		(1,670)	(1,396)	(1,871)	(2,654)
Other comprehensive income		2,715	2,195	2,944	4,320
Total comprehensive income		$ 5,098	$ 4,521	$ 7,532	$ 9,039

[1] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[2] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands		Common Stock [Member]		Additional Paid-In Capital [Member]		Retained Earnings [Member]		Accumulated Other Comprehensive Income (Loss) [Member]		Total
Balance at Dec. 31, 2015		$ 35		$ 45,372		$ 32,988		$ 2,175		$ 80,570
Net earnings			[1]		[1]	4,719	[1]		[1]	4,719	[2],[3]
Other comprehensive income								4,320		4,320
Dividends paid	[1]					(1,437)				(1,437)
Exercise of stock options	[1]	1		1,194						1,195
Balance at Jun. 30, 2016		36		46,566		36,270		6,495		89,367
Balance at Dec. 31, 2016		38		51,968		34,293		(1,348)		84,951
Net earnings						4,588				4,588	[2],[3]
Other comprehensive income								2,944		2,944
Dividends paid						(1,548)				(1,548)
Exercise of stock options		1		22						23
Stock-based compensation				77						77
Balance at Jun. 30, 2017		$ 39		$ 52,067		$ 37,333		$ 1,596		$ 91,035

[1] Net earnings and exercise of stock options for the period ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

[2] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[3] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Statement of Stockholders' Equity [Abstract]
Dividend, per share	$ 0.40	$ 0.38
Excise of stock option, shares	2,968	89,633

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net earnings	[1],[2]	$ 4,588	$ 4,719
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for loan losses		150	350
Valuation allowance on real estate owned		67
Amortization of investment security premiums, net		944	818
Amortization of purchase accounting adjustment on loans		(91)	(57)
Amortization of purchase accounting adjustment on subordinated debentures		100	100
Amortization of intangibles		626	668
Depreciation		520	581
Increase in cash surrender value of bank owned life insurance		(236)	(265)
Stock-based compensation		77
Deferred income taxes		542	229
Net gains on sales of investment securities		(324)	(297)
Net (gain) loss on sales of premises, equipment and real estate owned		(10)	72
Net gains on sales of loans		(3,081)	(3,199)
Proceeds from sales of loans		86,747	121,551
Origination of loans held for sale		(87,907)	(113,944)
Changes in assets and liabilities:
Accrued interest and other assets		(1,183)	(1,536)
Accrued expenses, taxes, and other liabilities		(1,201)	(2,538)
Net cash provided by operating activities		328	7,252
Cash flows from investing activities:
Net increase in loans		(2,662)	(10,932)
Maturities and prepayments of investment securities		28,501	23,429
Purchases of investment securities		(42,164)	(43,815)
Proceeds from sales of investment securities		13,459	13,617
Redemption of bank stocks		6,319	3,009
Purchase of bank stocks		(6,370)	(3,134)
Proceeds from sales of premises and equipment and foreclosed assets		398	749
Proceeds from bank owned life insurance			351
Purchases of premises and equipment, net		(51)	(386)
Net cash used in investing activities		(2,570)	(17,112)
Cash flows from financing activities:
Net increase in deposits		3,501	897
Federal Home Loan Bank advance borrowings		313,277	156,291
Federal Home Loan Bank advance repayments		(321,377)	(145,891)
Proceeds from other borrowings		100
Repayments on other borrowings		(1,136)	(447)
Proceeds from exercise of stock options	[3]	23	1,195
Payment of dividends		(1,548)	(1,437)
Net cash (used in) provided by financing activities		(7,160)	10,608
Net (decrease) increase in cash and cash equivalents		(9,402)	748
Cash and cash equivalents at beginning of period		19,996	13,569
Cash and cash equivalents at end of period		10,594	14,317
Supplemental disclosure of cash flow information:
Cash payments for income taxes		800	500
Cash paid for interest		1,616	1,599
Supplemental schedule of noncash investing and financing activities:
Transfer of loans to real estate owned		180	536
Investment securities purchases not yet settled

[1] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[2] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

[3] Net earnings and proceeds from the exercise of stock options for the period ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

XML

Interim Financial Statements

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Statements

1. Interim Financial Statements

The unaudited consolidated financial statements of Landmark Bancorp, Inc. (the “Company”) and subsidiaries have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements and should be read in conjunction with the Company’s most recent annual report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto. The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements, have been reflected herein. The results of the six months ended June 30, 2017 are not necessarily indicative of the results expected for the year ending December 31, 2017 or for any other future time period. The Company has evaluated subsequent events for recognition and disclosure up to the date the financial statements were issued.

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Investments

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investments

2. Investments

A summary of investment securities available-for-sale is as follows:

(Dollars in thousands)	As of June 30, 2017
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	4,993	$	24	$	(1	)	$	5,016
U. S. federal agency obligations		21,377		45		(40	)		21,382
Municipal obligations, tax exempt		177,419		2,485		(661	)		179,243
Municipal obligations, taxable		62,031		828		(81	)		62,778
Agency mortgage-backed securities		112,095		368		(623	)		111,840
Certificates of deposit		9,224		-		-			9,224
Common stocks		178		181		-			359
Total	$	387,317	$	3,931	$	(1,406	)	$	389,842

(Dollars in thousands)	As of December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	6,005	$	10	$	-		$	6,015
U. S. federal agency obligations		27,140		48		(49	)		27,139
Municipal obligations, tax exempt		163,632		696		(2,666	)		161,662
Municipal obligations, taxable		71,371		463		(271	)		71,563
Agency mortgage-backed securities		109,427		171		(1,222	)		108,376
Certificates of deposit		9,700		-		-			9,700
Common stocks		458		650		-			1,108
Total	$	387,733	$	2,038	$	(4,208	)	$	385,563

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of June 30, 2017 and December 31, 2016. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

(Dollars in thousands)			As of June 30, 2017
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. treasury securities		1	$	2,994	$	(1	)	$	-	$	-		$	2,994	$	(1	)
U.S. federal agency obligations		12		14,825		(36	)		995		(4	)		15,820		(40	)
Municipal obligations, tax exempt		113		41,363		(566	)		4,587		(95	)		45,950		(661	)
Municipal obligations, taxable		40		15,167		(81	)		-		-			15,167		(81	)
Agency mortgage-backed securities		38		54,970		(593	)		1,320		(30	)		56,290		(623	)
Total		204	$	129,319	$	(1,277	)	$	6,902	$	(129	)	$	136,221	$	(1,406	)

(Dollars in thousands)			As of December 31, 2016
			Less than 12 months					12 months or longer				Total
	No. of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	securities		value		losses			value		losses		value		losses
U. S. federal agency obligations		9		15,056		(49	)		-		-		15,056		(49	)
Municipal obligations, tax exempt		275		97,842		(2,666	)		-		-		97,842		(2,666	)
Municipal obligations, taxable		66		26,184		(271	)		-		-		26,184		(271	)
Agency mortgage-backed securities		58		83,011		(1,222	)		-		-		83,011		(1,222	)
Total		408	$	222,093	$	(4,208	)	$	-	$	-	$	222,093	$	(4,208	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the security and its belief that it was more likely than not that the Company will not be required to sell the security before recovery of their cost basis, the Company believed that the U.S. treasury security identified in the table above was temporarily impaired as of June 30, 2017.

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2017, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the Government National Mortgage Association (“GNMA”). The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The table below sets forth amortized cost and fair value of investment securities at June 30, 2017. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. Securities with no maturity are listed separately.

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	30,111	$	30,139
Due after one year but within five years		182,277		182,573
Due after five years but within ten years		90,785		92,095
Due after ten years		83,966		84,676
Common stocks		178		359
Total	$	387,317	$	389,842

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017			2016
Sales proceeds	$	1,917	$	11,801		$	13,459		$	13,617
Realized gains	$	177	$	296		$	348		$	312
Realized losses		-		(11	)		(24	)		(15	)
Net realized losses	$	177	$	285		$	324		$	297

Securities with carrying values of $230.0 million and $224.3 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2017 and December 31, 2016, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Loans and Allowance for Loan Losses

3. Loans and Allowance for Loan Losses

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2017			2016
One-to-four family residential real estate	$	138,932		$	136,846
Construction and land		16,557			13,738
Commercial real estate		116,600			118,200
Commercial		51,631			54,506
Agriculture		79,310			78,324
Municipal		3,593			3,884
Consumer		21,403			20,271
Total gross loans		428,026			425,769
Net deferred loan costs and loans in process		39			36
Allowance for loan losses		(5,326	)		(5,344	)
Loans, net	$	422,739		$	420,461

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

(Dollars in thousands)	Three and six months ended June 30, 2017
	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial			Agriculture		Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2017	$	493		$	71		$	1,740		$	1,101		$	1,731	$	11		$	180		$	5,327
Charge-offs		-			-			(61	)		-			-		-			(58	)		(119	)
Recoveries		7			-			-			1			-		-			10			18
Provision for loan losses		(1	)		(1	)		30			(21	)		41		(1	)		53			100
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326
Balance at January 1, 2017	$	504		$	53		$	1,777		$	1,119		$	1,684	$	12		$	195		$	5,344
Charge-offs		(19	)		-			(61	)		-			-		-			(165	)		(245	)
Recoveries		8			-			-			9			1		-			59			77
Provision for loan losses		6			17			(7	)		(47	)		87		(2	)		96			150
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326

(Dollars in thousands)	Three and six months ended June 30, 2016
	One-to-four family residential real estate			Construction and land		Commercial real estate			Commercial			Agriculture			Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2016	$	864		$	82	$	1,831		$	1,384		$	1,483		$	24		$	201		$	5,869
Charge-offs		-			-		-			(306	)		(83	)		-			(148	)		(537	)
Recoveries		3			-		-			1			-			6			10			20
Provision for loan losses		(283	)		7		(55	)		314			200			(7	)		124			300
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652
Balance at January 1, 2016	$	925		$	77	$	1,740		$	1,530		$	1,428		$	23		$	199		$	5,922
Charge-offs		-			-		-			(306	)		(83	)		-			(285	)		(674	)
Recoveries		5			-		-			20			-			6			23			54
Provision for loan losses		(346	)		12		36			149			255			(6	)		250			350
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class and allowance methodology:

(Dollars in thousands)	As of June 30, 2017
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		50		76		149		-		-		275
Collectively evaluated for loss		499		70		1,659		1,005		1,623		10		185		5,051
Total		499		70		1,709		1,081		1,772		10		185		5,326
Loan balances:
Individually evaluated for loss		732		2,041		2,206		323		868		221		36		6,427
Collectively evaluated for loss		138,200		14,516		114,394		51,308		78,442		3,372		21,367		421,599
Total	$	138,932	$	16,557	$	116,600	$	51,631	$	79,310	$	3,593	$	21,403	$	428,026

(Dollars in thousands)	As of December 31, 2016
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		81		87		89		-		17		274
Collectively evaluated for loss		504		53		1,696		1,032		1,595		12		178		5,070
Total		504		53		1,777		1,119		1,684		12		195		5,344
Loan balances:
Individually evaluated for loss		780		1,937		2,445		355		881		258		72		6,728
Collectively evaluated for loss		136,066		11,801		115,755		54,151		77,443		3,626		20,199		419,041
Total	$	136,846	$	13,738	$	118,200	$	54,506	$	78,324	$	3,884	$	20,271	$	425,769

The Company’s impaired loans decreased from $6.7 million at December 31, 2016 to $6.4 million at June 30, 2017. The difference between the unpaid contractual principal and the impaired loan balance is a result of charge-offs recorded against impaired loans. The difference in the Company’s non-accrual loan balances and impaired loan balances at June 30, 2017 and December 31, 2016, was related to troubled debt restructurings (“TDR”) that are current and accruing interest, but still classified as impaired. Interest income recognized on a cash basis was immaterial during the three and six month periods ended June 30, 2017 and 2016.

The following tables present information on impaired loans:

(Dollars in thousands)	As of June 30, 2017
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	732	$	732	$	732	$	-	$	-	$	739	$	4
Construction and land		3,776		2,041		2,041		-		-		2,010		33
Commercial real estate		2,206		2,206		2,156		50		50		2,217		246
Commercial		323		323		70		253		76		361		-
Agriculture		1,083		868		49		819		149		933		1
Municipal		221		221		221		-		-		236		3
Consumer		36		36		36		-		-		39		-
Total impaired loans	$	8,377	$	6,427	$	5,305	$	1,122	$	275	$	6,535	$	287

(Dollars in thousands)	As of December 31, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	780	$	780	$	780	$	-	$	-	$	798	$	7
Construction and land		3,672		1,937		1,937		-		-		2,068		72
Commercial real estate		2,445		2,445		2,145		300		81		2,587		505
Commercial		355		355		46		309		87		425		2
Agriculture		1,173		881		147		734		89		1,000		2
Municipal		258		258		258		-		-		418		-
Consumer		72		72		55		17		17		78		13
Total impaired loans	$	8,755	$	6,728	$	5,368	$	1,360	$	274	$	7,374	$	601

The Company’s key credit quality indicator is a loan’s performance status, defined as accruing or non-accruing. Performing loans are considered to have a lower risk of loss. Non-accrual loans are those which the Company believes have a higher risk of loss. The accrual of interest on non-performing loans is discontinued at the time the loan is ninety days delinquent, unless the credit is well secured and in process of collection. Loans are placed on non-accrual or are charged off at an earlier date if collection of principal or interest is considered doubtful. There were no loans ninety days delinquent and accruing interest at June 30, 2017 or December 31, 2016.

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2017
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	300		$	316		$	-		$	616		$	557		$	1,173		$	137,759
Construction and land		-			-			-			-			692			692			15,865
Commercial real estate		1,971			42			-			2,013			69			2,082			114,518
Commercial		176			1,315			-			1,491			323			1,814			49,817
Agriculture		49			60			-			109			868			977			78,333
Municipal		-			-			-			-			-			-			3,593
Consumer		36			17			-			53			36			89			21,314
Total	$	2,532		$	1,750		$	-		$	4,282		$	2,545		$	6,827		$	421,199
Percent of gross loans		0.59	%		0.41	%		0.00	%		1.00	%		0.59	%		1.59	%		98.41	%

(Dollars in thousands)	As of December 31, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	215		$	388		$	-		$	603		$	595		$	1,198		$	135,648
Construction and land		-			-			-			-			599			599			13,139
Commercial real estate		-			-			-			-			300			300			117,900
Commercial		13			5			-			18			342			360			54,146
Agriculture		55			-			-			55			838			893			77,431
Municipal		-			-			-			-			-			-			3,884
Consumer		79			3			-			82			72			154			20,117
Total	$	362		$	396		$	-		$	758		$	2,746		$	3,504		$	422,265
Percent of gross loans		0.09	%		0.09	%		0.00	%		0.18	%		0.64	%		0.82	%		99.18	%

Under the original terms of the Company’s non-accrual loans, interest earned on such loans for the six months ended June 30, 2017 and 2016 would have increased interest income by $63,000 and $44,000, respectively. No interest income related to non-accrual loans was included in interest income for the six months ended June 30, 2017 and 2016.

The Company also categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Non-classified loans generally include those loans that are expected to be repaid in accordance with contractual loan terms. Classified loans are those that are assigned a special mention, substandard or doubtful risk rating using the following definitions:

Special Mention: Loans are currently protected by the current net worth and paying capacity of the obligor or of the collateral pledged but such protection is potentially weak. These loans constitute an undue and unwarranted credit risk, but not to the point of justifying a classification of substandard. The credit risk may be relatively minor, yet constitutes an unwarranted risk in light of the circumstances surrounding a specific asset.

Substandard: Loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

The following table provides information on the Company’s risk categories by loan class:

(Dollars in thousands)	As of June 30, 2017				As of December 31, 2016
	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	137,803	$	1,129	$	135,640	$	1,206
Construction and land		15,865		692		13,138		600
Commercial real estate		110,725		5,875		111,641		6,559
Commercial		48,115		3,516		51,080		3,426
Agriculture		74,727		4,583		73,564		4,760
Municipal		3,593		-		3,884		-
Consumer		21,356		47		20,181		90
Total	$	412,184	$	15,842	$	409,128	$	16,641

At June 30, 2017, the Company had 11 loan relationships consisting of 19 outstanding loans that were classified as TDRs. During the second quarter of 2017, the Company classified two agriculture loans totaling $87,000 as TDRs after renewing loans to an existing loan relationship that was classified as a TDR in 2016. During the first quarter of 2017, the Company classified an $11,000 commercial real estate loan as a TDR after extending the maturity of the loan and classified as a TDR a $15,000 agriculture loan extended to an existing loan relationship that was classified as a TDR in 2016. Since the commercial loan was adequately secured, no charge-offs or impairments were recorded against the principal as of June 30, 2017. The agriculture loan relationship had a $49,000 impairment recorded against the principal balance as of June 30, 2017 and a charge-off of $215,000 was recorded in the third quarter of 2016. During the second quarter of 2016, the Company classified two loans as TDRs including an $8,000 commercial loan after modifying the payments to interest only and a $188,000 one-to-four family residential real estate loan after agreeing to a loan modification which adjusted the payment schedule. No loans were classified as TDR in the first quarter of 2016.

The Company evaluates each TDR individually and returns the loan to accrual status when a payment history is established after the restructuring and future payments are reasonably assured. There were no loans modified as TDRs for which there was a payment default within 12 months of modification as of June 30, 2017 and 2016. At June 30, 2017, there was a commitment of $63,000 to lend additional funds on one construction and land loan classified as a TDR. The Company did not record any charge-offs against loans classified as TDRs in the first six months either of 2017 or 2016. A credit provision for loan losses of $13,000 related to TDRs was recorded in the six months ended June 30, 2017 compared to no provision in the same period of 2016. The Company allocated $67,000 and $80,000 of the allowance for loan losses against loans classified as TDRs at June 30, 2017 and December 31, 2016, respectively.

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)	As of June 30, 2017						As of December 31, 2016
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	175		2	$	-	$	185
Construction and land		4		581		1,349		4		588		1,338
Commercial real estate		4		61		2,137		3		64		2,145
Commercial		-		-		-		2		-		13
Agriculture		7		409		-		4		268		44
Municipal		2		-		221		2		-		258
Total troubled debt restructurings		19	$	1,051	$	3,882		17	$	920	$	3,983

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

4. Goodwill and Other Intangible Assets

The Company tests goodwill for impairment annually or more frequently if circumstances warrant. The Company’s annual step one impairment test as of December 31, 2016 concluded that its goodwill was not impaired. The Company concluded there were no triggering events during the first six months of 2017 that required an interim goodwill impairment test.

Lease intangible assets are amortized over the life of the lease. Core deposit intangible assets are amortized over the estimated useful life of ten years on an accelerated basis. Mortgage servicing rights are amortized over the estimated life of the mortgage loan serviced for others. A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2017
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,262	)	$	805
Lease intangible asset		350		(166	)		184
Mortgage servicing rights		6,029		(3,216	)		2,813
Total other intangible assets	$	8,446	$	(4,644	)	$	3,802

(Dollars in thousands)	As of December 31, 2016
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,137	)	$	930
Lease intangible asset		350		(143	)		207
Mortgage servicing rights		5,788		(2,939	)		2,849
Total other intangible assets	$	8,205	$	(4,219	)	$	3,986

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2017 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2017	$	141
2018		252
2019		214
2020		177
2021		121
Thereafter		84
Total	$	989

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30, 2017		December 31, 2016
FHLMC	$	500,399	$	483,356
FHLB		10,444		11,393
Total	$	510,843	$	494,749

Custodial escrow balances maintained in connection with serviced loans were $5.0 million and $4.1 million at June 30, 2017 and December 31, 2016, respectively. Gross service fee income related to such loans was $320,000 and $304,000 for the three months ended June 30, 2017 and 2016, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $639,000 and $604,000 for the six months ended June 30, 2017 and 2016, respectively.

Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Mortgage servicing rights:
Balance at beginning of period	$	2,787		$	2,808		$	2,849		$	2,840
Additions		281			291			442			512
Amortization		(255	)		(248	)		(478	)		(501	)
Balance at end of period	$	2,813		$	2,851		$	2,813		$	2,851

The fair value of mortgage servicing rights was $5.3 million and $5.1 million at June 30, 2017 and December 31, 2016, respectively. Fair value at June 30, 2017 was determined using discount rates ranging from 9.50% to 9.51%; prepayment speeds ranging from 0% to 33.56%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.25%. Fair value at December 31, 2016 was determined using discount rates ranging from 9.50% to 9.51%; prepayment speeds ranging from 4.86% to 32.79%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 2.26%.

The Company had a mortgage repurchase reserve of $301,000 at both June 30, 2017 and December 31, 2016, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the first six months of 2017 and 2016. The Company did not have any recoveries against the mortgage repurchase reserve in the first six months of 2017. The Company recovered $3,000 of losses during the three months ended June 30, 2016 and recovered $10,000 of losses against the mortgage repurchase reserve during the six months ended June 30, 2016. As of June 30, 2017, the Company had one outstanding mortgage repurchase request and expects to incur a loss of approximately $70,000.

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings per share:

Earnings Per Share

5. Earnings per Share

Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during each period. Diluted earnings per share include the effect of all potential common shares outstanding during each period. The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2017		2016		2017		2016
Net earnings(1)	$	2,383	$	2,326	$	4,588	$	4,719
Weighted average common shares outstanding - basic (2)		3,870,564		3,794,355		3,870,183		3,764,497
Assumed exercise of stock options (1)(2)		80,087		91,322		79,086		89,751
Weighted average common shares outstanding - diluted (1)(2)		3,950,651		3,885,677		3,949,269		3,854,248
Net earnings per share (1)(2):
Basic	$	0.62	$	0.61	$	1.19	$	1.25
Diluted	$	0.60	$	0.60	$	1.16	$	1.22

(1)	Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.
(2)	Share and per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

The diluted earnings per share computations for the three and six months ended June 30, 2017 and 2016 include all unexercised stock options because no stock options were anti-dilutive during such periods.

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Repurchase Agreements

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

Repurchase Agreements

6. Repurchase Agreements

The Company has overnight repurchase agreements with certain deposit customers whereby the Company uses investment securities as collateral for non-insured funds. These balances are accounted for as collateralized financing and included in other borrowings on the balance sheet. The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2017
	Overnight and		Up to 30				Greater
	Continuous		days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	3,890	$	-	$	-	$	-	$	3,890
Agency mortgage-backed securities		7,457		-		-		-		7,457
Total	$	11,347	$	-	$	-	$	-	$	11,347

	As of December 31, 2016
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,007	$	-	$	-	$	-	$	5,007
Agency mortgage-backed securities		7,476		-		-		-		7,476
Total	$	12,483	$	-	$	-	$	-	$	12,483

Repurchase agreements are comprised of non-insured customer funds, totaling $11.3 million at June 30, 2017, and $12.5 million at December 31, 2016, which were secured by $17.1 million and $15.7 million of the Company’s investment portfolio at the same dates, respectively.

The investment securities are held by a third-party financial institution in the customer’s custodial account. The Company is required to maintain adequate collateral for each repurchase agreement. Changes in the fair value of the investment securities impact the amount of collateral required. If the Company were to default, the investment securities would be used to settle the repurchase agreement with the deposit customer.

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Fair Value of Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments and Fair Value Measurements

7. Fair Value of Financial Instruments and Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value estimates of the Company’s financial instruments as of June 30, 2017 and December 31, 2016, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2017
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	10,594		$	10,594		$	-		$	-	$	10,594
Investment securities available-for-sale		389,842			5,375			384,467			-		389,842
Bank stocks, at cost		5,350			n/a			n/a			n/a		n/a
Loans, net		422,739			-			-			420,935		420,935
Loans held for sale, net		9,758			-			9,758			-		9,758
Derivative financial instruments		711			-			711			-		711
Accrued interest receivable		4,089			2			2,219			1,868		4,089
Financial liabilities:
Non-maturity deposits	$	(613,126	)	$	(613,126	)	$	-		$	-		(613,126	)
Time deposits		(131,896	)		-			(130,377	)		-		(130,377	)
FHLB borrowings		(31,000	)		-			(31,358	)		-		(31,358	)
Subordinated debentures		(21,384	)		-			(19,215	)		-		(19,215	)
Other borrowings		(11,447	)		-			(11,447	)		-		(11,447	)
Derivative financial instruments		(28	)		-			(28	)		-		(28	)
Accrued interest payable		(253	)		-			(253	)		-		(253	)

	As of December 31, 2016
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	19,996		$	19,996		$	-		$	-	$	19,996
Investment securities available-for-sale		385,563			7,123			378,440			-		385,563
Bank stocks, at cost		5,299			n/a			n/a			n/a		n/a
Loans, net		420,461			-			-			417,957		417,957
Loans held for sale		5,517			-			5,517			-		5,517
Derivative financial instruments		662			-			662			-		662
Accrued interest receivable		4,240			21			2,104			2,115		4,240
Financial liabilities:
Non-maturity deposits	$	(601,683	)	$	(601,683	)	$	-		$	-	$	(601,683	)
Time deposits		(139,838	)		-			(138,623	)		-		(138,623	)
FHLB borrowings		(39,100	)		-			(35,695	)		-		(35,695	)
Subordinated debentures		(21,284	)		-			(18,608	)		-		(18,608	)
Other borrowings		(12,483	)		-			(12,483	)		-		(12,483	)
Accrued interest payable		(268	)		-			(268	)		-		(268	)

Methods and Assumptions Utilized

The carrying amount of cash and cash equivalents is considered to approximate fair value.

The Company’s investment securities classified as available-for-sale include U.S. treasury securities, U.S. federal agency securities, municipal obligations, agency mortgage-backed securities, certificates of deposits and common stocks. Quoted exchange prices are available for the Company’s U.S treasury securities and common stock investments, which are classified as Level 1. U.S. federal agency securities and agency mortgage-backed obligations are priced utilizing industry-standard models that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. These measurements are classified as Level 2. Municipal securities are valued using a type of matrix, or grid, pricing in which securities are benchmarked against U.S. treasury rates based on credit rating. These model and matrix measurements are classified as Level 2 in the fair value hierarchy.

It is not practical to determine the fair value of bank stocks due to restrictions placed on the transferability of FHLB and FRB stock.

The estimated fair value of the Company’s loan portfolio is based on the segregation of loans by collateral type, interest terms, and maturities. The fair value is estimated based on discounting scheduled and estimated cash flows through maturity using an appropriate risk-adjusted yield curve to approximate current interest rates for each category. No adjustment was made to the interest rates for changes in credit risk of performing loans where there are no known credit concerns. Management segregates loans in appropriate risk categories. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses applicable to the performing loan portfolio results in a fair valuation of such loans. The fair values of impaired loans are generally based on market prices for similar assets determined through independent appraisals or discounted values of independent appraisals and brokers’ opinions of value. This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC Topic 820 and is classified as Level 3.

Mortgage loans originated and intended for sale in the secondary market are carried at the estimated fair value, determined on an aggregate basis. The mortgage loan valuations are based on quoted secondary market prices for similar loans and are classified as Level 2.

The carrying amounts of accrued interest receivable and payable are considered to approximate fair value.

The estimated fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, money market accounts, and checking accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits. The discount rate is tied to the FHLB yield curve plus an appropriate servicing spread. Fair value measurements based on discounted cash flows are classified as Level 2. These fair values do not incorporate the value of core deposit intangibles which may be associated with the deposit base.

The fair value of advances from the FHLB, subordinated debentures, and other borrowings is estimated using current yield curves for similar borrowings adjusted for the Company’s current credit spread and classified as Level 2.

The Company’s derivative financial instruments consist of interest rate lock commitments and forward commitments for the future delivery of these mortgage loans. The fair values of these derivatives are based on quoted prices for similar loans in the secondary market. The market prices are adjusted by a factor, based on the Company’s historical data and its judgment about future economic trends, which considers the likelihood that a commitment will ultimately result in a closed loan. These instruments are classified as Level 2. The amounts are included in other assets or other liabilities on the consolidated balance sheets and gains on sale of loans, net in the consolidated statements of earnings.

Off-Balance-Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material.

Transfers

The Company did not transfer any assets or liabilities among levels during the six months ended June 30, 2017 or during the year ended December 31, 2016.

Valuation Methods for Instruments Measured at Fair Value on a Recurring Basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)				As of June 30, 2017
				Fair value hierarchy
	Total			Level 1		Level 2			Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	5,016		$	5,016	$	-		$	-
U. S. federal agency obligations		21,382			-		21,382			-
Municipal obligations, tax exempt		179,243			-		179,243			-
Municipal obligations, taxable		62,778			-		62,778			-
Agency mortgage-backed securities		111,840			-		111,840			-
Certificates of deposit		9,224			-		9,224			-
Common stocks		359			359		-			-
Loans held for sale		9,758			-		9,758			-
Derivative financial instruments		711			-		711			-
Liabililty:
Derivative financial instruments		(28	)		-		(28	)		-

(Dollars in thousands)			As of December 31, 2016
			Fair value hierarchy
		Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	6,015	$	6,015	$	-	$	-
U. S. federal agency obligations		27,139		-		27,139		-
Municipal obligations, tax exempt		161,662		-		161,662		-
Municipal obligations, taxable		71,563		-		71,563		-
Agency mortgage-backed securities		108,376		-		108,376		-
Certificates of deposit		9,700		-		9,700		-
Common stocks		1,108		1,108		-		-
Loans held for sale		5,517		-		5,517		-
Derivative financial instruments		662		-		662		-

Changes in the fair value of available-for-sale securities are included in other comprehensive income to the extent the changes are not considered other-than-temporary impairments. Other-than-temporary impairment tests are performed on a quarterly basis and any decline in the fair value of an individual security below its cost that is deemed to be other-than-temporary results in a write-down of that security’s cost basis.

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
(Dollars in thousands)	June 30, 2017		December 31, 2016
Aggregate fair value	$	9,758	$	5,517
Contractual balance		9,553		5,480
Gain	$	205	$	37

The total amount of gains from changes in fair value of loans held for sale included in earnings were as follows:

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2017		2016			2017		2016
Interest income	$	79	$	210		$	124	$	315
Change in fair value		60		(63	)		169		(67	)
Total change in fair value	$	139	$	147		$	293	$	248

Valuation Methods for Instruments Measured at Fair Value on a Non-recurring Basis

The Company does not value its loan portfolio at fair value. Collateral-dependent impaired loans are generally carried at the lower of cost or fair value of the collateral, less estimated selling costs. Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company and then further adjusted if warranted based on relevant facts and circumstances. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Impaired loans are reviewed and evaluated at least quarterly for additional impairment and adjusted accordingly, based on the same factors identified above. The carrying value of the Company’s impaired loans was $6.4 million and $6.7 million, with an allocated allowance of $275,000 and $274,000, at June 30, 2017 and December 31, 2016, respectively.

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2017						Total
			Fair value hierarchy						gains
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
Commercial	$	177	$	-	$	-	$	177	$	11
Agriculture		670		-		-		670		(60	)
Real estate owned:
One-to-four family residential real estate		302		-		-		302		(67	)

			As of December 31, 2016						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
Commercial real estate	$	219	$	-	$	-	$	219	$	(81	)
Commercial		222		-		-		222		(87	)
Agriculture		645		-		-		645		(89	)
Real estate owned:
One-to-four family residential real estate		142		-		-		142		(34	)

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2017
Impaired loans:
Commercial		177	Sales comparison	Adjustment to comparable sales		0%-50%
Agriculture		670	Sales comparison	Adjustment to appraised value		10%-50%
Real estate owned:
One-to-four family residential real estate		302	Sales comparison	Adjustment to appraised value		10%
As of December 31, 2016
Impaired loans:
Commercial real estate	$	219	Sales comparison	Adjustment to appraised value		2%-15%
Commercial		222	Sales comparison	Adjustment to comparable sales		7%-80%
Agriculture		645	Sales comparison	Adjustment to appraised value		8%-80%
Real estate owned:
One-to-four family residential real estate		142	Sales comparison	Adjustment to appraised value		10%

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Regulatory Capital Requirements

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

Regulatory Capital Requirements

8. Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of June 30, 2017, the Company and its subsidiary, Landmark National Bank (“the Bank”) meet all capital adequacy requirements to which they were subject at that time.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the capital rules (the “Basel III Rules”) that implemented the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel III Rules are applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $1.0 billion).

The Basel III Rules require a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a Tier 1 capital to risk-weighted assets minimum ratio of 6.0%, a Total Capital to risk-weighted assets minimum ratio of 8.0%, and a Tier 1 leverage minimum ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer began on January 1, 2016 at 0.625% of risk-weighted assets, was 1.25% effective on January 1, 2017, and will further increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, Tier 1 capital and total risk based capital ratios as of March 31 of each year.

As of June 30, 2017 and December 31, 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

(Dollars in thousands)	Actual					For capital adequacy purposes
	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2017
Leverage	$	91,954		10.17	%	$	36,178		4.0	%
Common Equity Tier 1 Capital		71,273		13.86	%		29,565		5.8	%
Tier 1 Capital		91,954		17.88	%		37,277		7.3	%
Total Risk Based Capital		97,502		18.96	%		47,561		9.3	%
As of December 31, 2016
Leverage	$	88,819		10.04	%	$	35,370		4.0	%
Common Equity Tier 1 Capital		68,263		13.32	%		26,265		5.1	%
Tier 1 Capital		88,819		17.33	%		33,952		6.6	%
Total Risk Based Capital		94,596		18.46	%		44,201		8.6	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

											To be well-capitalized under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
As of June 30, 2017
Leverage	$	91,007		10.08	%	$	36,116		4.0	%	$	45,145		5.0	%
Common Equity Tier 1 Capital		91,007		17.73	%		29,512		5.8	%		33,361		6.5	%
Tier 1 Capital		91,007		17.73	%		37,211		7.3	%		41,060		8.0	%
Total Risk Based Capital		96,473		18.80	%		47,476		9.3	%		51,325		10.0	%
As of December 31, 2016
Leverage	$	88,076		9.98	%	$	35,284		4.0	%	$	44,105		5.0	%
Common Equity Tier 1 Capital		88,076		17.23	%		26,194		5.1	%		33,222		6.5	%
Tier 1 Capital		88,076		17.23	%		33,861		6.6	%		40,888		8.0	%
Total Risk Based Capital		93,560		18.31	%		44,083		8.6	%		51,110		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625 for December 31,2016.

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Impact of Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

Accounting Changes and Error Corrections [Abstract]

Impact of Recent Accounting Pronouncements

9. Impact of Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The main provisions of the update require the identification of performance obligations within a contract and require the recognition of revenue based on a stand-alone allocation of contract revenue to each performance obligation. Performance obligations may be satisfied and revenue recognized over a period of time if: 1) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs, or 2) the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or 3) the entity’s performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date. For public entities the amendments of the update are effective for annual reporting periods beginning after December 15, 2017 including interim periods within that reporting period. The Company’s revenue is primarily comprised of net interest income on financial asset and liabilities, which are excluded from the scope of ASU 2014-09. Management is still evaluating the impact of ASU 2014-09 on other non-interest income, but does not believe the adoption of ASU 2014-09 will have a material impact on the Company’s financial position, results of operations or cash flows. Management expects the most significant impact of ASU 2014-09 will likely be additional disclosures required for non-interest income. The Company will continue to evaluate the impact as additional guidance is issued and internal assessments progress.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities. The main provisions of the update are to eliminate the available for sale classification of accounting for equity securities and to adjust the fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The provisions of this update will require that equity securities be carried at fair market value on the balance sheet and any periodic changes in value will be adjustments to the income statement. A practical expedient is provided for equity securities without a readily determinable fair value, such that these securities can be carried at cost less any impairment. The provisions of this update become effective for interim and annual periods beginning after December 15, 2017. Upon the effective date of the update, changes in the value of the Company’s common stock investments will be adjustments to the income statement. Additionally, the disclosure of fair value of the loan portfolio will be presented using an exit price method instead of the current discounted cash flow. Management has concluded that the remaining requirements of this update are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued an update (ASU No. 2016-02, Leases) creating FASB Topic 842, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requiring more disclosures related to leasing transactions. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. Management has concluded that based on the Company’s current operating leases, the adoption of ASU 2016-02 will not have a material impact on the Company’s consolidated financial statement and related disclosures.

In March 2016, the FASB issued an update, ASU No. 2016-09, Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The guidance in this update affects any entity that issues share-based payment awards including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flow. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption was permitted. The Company elected to adopt ASU 2016-09 in 2016. As a result of this election, income tax expense decreased by $308,000 during 2016 as a result of recognized excess tax benefits from the exercise of stock options. The presentation of excess tax benefits from the exercise of stock options have been presented on a prospective basis and are included in changes in accrued interest and other assets in the operating activities section of the statement of cash flows. The Company’s excess tax benefits from the exercise of stock options totaled $24,000 in the first six months of 2017 and $197,000 in the first six months of 2016.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL.” The provisions of the update eliminate the probable initial recognition threshold under current GAAP which requires reserves to be based on an incurred loss methodology. Under CECL, reserves required for financial assets measured at amortized cost will reflect an organization’s estimate of all expected credit losses over the expected term of the financial asset and thereby require the use of reasonable and supportable forecasts to estimate future credit losses. Because CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. Under the provisions of the update, credit losses recognized on available for sale debt securities will be presented as an allowance as opposed to a write-down. In addition, CECL will modify the accounting for purchased loans, with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Under current GAAP a purchased loan’s contractual balance is adjusted to fair value through a credit discount and no reserve is recorded on the purchased loan upon acquisition. Since under CECL reserves will be established for purchased loans at the time of acquisition, the accounting for purchased loans is made more comparable to the accounting for originated loans. Finally, increased disclosure requirements under CECL oblige organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. FASB expects that the evaluation of underwriting standards and credit quality trends by financial statement users will be enhanced with the additional vintage disclosures. For public entities, the amendments of the update are effective beginning January 1, 2020. Management has initiated an implementation committee to assist in assessing data and system needs for the new standard. Management anticipates the effect will be an increase to the allowance for loan losses upon adoption. However, the size of the overall increase is uncertain at this time.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Payments (a consensus of Emerging Issues Task Force). This ASU attempts to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The purpose of this update is to reduce existing diversity in practice in eight areas addressed by the update. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. Management has concluded that the adoption of ASU 2016-15 will not have a material impact on the Company’s consolidated financial statements and related disclosures.

In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in this Update shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The provisions of this update become effective for interim and annual periods beginning after December 15, 2018. Management has concluded that based on the Company’s current portfolio of investment securities that the adoption of these amendments will result in shorter amortization period for investment security premiums, however, the impact will not be material to interest income on investment securities.

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Subsequent Event

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Event

10. Subsequent Event

On August 8, 2017, the Company was made aware that checks deposited by our customer from a third party were being returned by another financial institution due to uncollected funds related to the third party. This resulted in a $10.3 million overdraft balance. An investigation of the situation and the potential recovery of losses are in their early stages, and accordingly, no conclusions have been reached concerning the responsibility for any potential losses, nor has there been a determination of whether or not existing insurance policies of any party will cover all or part of any possible losses. Since August 8, 2017, the entity whose checks to our customer were returned has provided $1.7 million in wire transfer deposits to our customer’s account, resulting in an $8.6 million overdraft as of the date of this filing. The Company intends to protect all of its rights pursuant to this matter and seek all available legal and equitable remedies. However, should there be no additional recoveries into the customer’s account, no insurance proceeds and the Company were to absorb all the losses known at this time to be associated with this event (excluding the costs of investigation), the Company would incur an after-tax loss of approximately $5.4 million in the third quarter of 2017.

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Investments (Tables)

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities

A summary of investment securities available-for-sale is as follows:

(Dollars in thousands)	As of June 30, 2017
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	4,993	$	24	$	(1	)	$	5,016
U. S. federal agency obligations		21,377		45		(40	)		21,382
Municipal obligations, tax exempt		177,419		2,485		(661	)		179,243
Municipal obligations, taxable		62,031		828		(81	)		62,778
Agency mortgage-backed securities		112,095		368		(623	)		111,840
Certificates of deposit		9,224		-		-			9,224
Common stocks		178		181		-			359
Total	$	387,317	$	3,931	$	(1,406	)	$	389,842

(Dollars in thousands)	As of December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
U. S. treasury securities	$	6,005	$	10	$	-		$	6,015
U. S. federal agency obligations		27,140		48		(49	)		27,139
Municipal obligations, tax exempt		163,632		696		(2,666	)		161,662
Municipal obligations, taxable		71,371		463		(271	)		71,563
Agency mortgage-backed securities		109,427		171		(1,222	)		108,376
Certificates of deposit		9,700		-		-			9,700
Common stocks		458		650		-			1,108
Total	$	387,733	$	2,038	$	(4,208	)	$	385,563

Schedule of Available for Sale Securities Continuous Unrealized Loss Position Fair Value

(Dollars in thousands)			As of June 30, 2017
			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	securities		value		losses			value		losses			value		losses
U.S. treasury securities		1	$	2,994	$	(1	)	$	-	$	-		$	2,994	$	(1	)
U.S. federal agency obligations		12		14,825		(36	)		995		(4	)		15,820		(40	)
Municipal obligations, tax exempt		113		41,363		(566	)		4,587		(95	)		45,950		(661	)
Municipal obligations, taxable		40		15,167		(81	)		-		-			15,167		(81	)
Agency mortgage-backed securities		38		54,970		(593	)		1,320		(30	)		56,290		(623	)
Total		204	$	129,319	$	(1,277	)	$	6,902	$	(129	)	$	136,221	$	(1,406	)

(Dollars in thousands)			As of December 31, 2016
			Less than 12 months					12 months or longer				Total
	No. of		Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	securities		value		losses			value		losses		value		losses
U. S. federal agency obligations		9		15,056		(49	)		-		-		15,056		(49	)
Municipal obligations, tax exempt		275		97,842		(2,666	)		-		-		97,842		(2,666	)
Municipal obligations, taxable		66		26,184		(271	)		-		-		26,184		(271	)
Agency mortgage-backed securities		58		83,011		(1,222	)		-		-		83,011		(1,222	)
Total		408	$	222,093	$	(4,208	)	$	-	$	-	$	222,093	$	(4,208	)

Schedule of Investments Classified by Contractual Maturity Date

(Dollars in thousands)	Amortized		Estimated
	cost		fair value
Due in less than one year	$	30,111	$	30,139
Due after one year but within five years		182,277		182,573
Due after five years but within ten years		90,785		92,095
Due after ten years		83,966		84,676
Common stocks		178		359
Total	$	387,317	$	389,842

Schedule of Realized Gain (Loss)

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)	Three months ended June 30,					Six months ended June 30,
	2017		2016			2017			2016
Sales proceeds	$	1,917	$	11,801		$	13,459		$	13,617
Realized gains	$	177	$	296		$	348		$	312
Realized losses		-		(11	)		(24	)		(15	)
Net realized losses	$	177	$	285		$	324		$	297

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2017

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

Loans consisted of the following as of the dates indicated below:

	June 30,			December 31,
(Dollars in thousands)	2017			2016
One-to-four family residential real estate	$	138,932		$	136,846
Construction and land		16,557			13,738
Commercial real estate		116,600			118,200
Commercial		51,631			54,506
Agriculture		79,310			78,324
Municipal		3,593			3,884
Consumer		21,403			20,271
Total gross loans		428,026			425,769
Net deferred loan costs and loans in process		39			36
Allowance for loan losses		(5,326	)		(5,344	)
Loans, net	$	422,739		$	420,461

Schedule of Allowance for Credit Losses On Financing Receivables

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class:

(Dollars in thousands)	Three and six months ended June 30, 2017
	One-to-four family residential real estate			Construction and land			Commercial real estate			Commercial			Agriculture		Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2017	$	493		$	71		$	1,740		$	1,101		$	1,731	$	11		$	180		$	5,327
Charge-offs		-			-			(61	)		-			-		-			(58	)		(119	)
Recoveries		7			-			-			1			-		-			10			18
Provision for loan losses		(1	)		(1	)		30			(21	)		41		(1	)		53			100
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326
Balance at January 1, 2017	$	504		$	53		$	1,777		$	1,119		$	1,684	$	12		$	195		$	5,344
Charge-offs		(19	)		-			(61	)		-			-		-			(165	)		(245	)
Recoveries		8			-			-			9			1		-			59			77
Provision for loan losses		6			17			(7	)		(47	)		87		(2	)		96			150
Balance at June 30, 2017		499			70			1,709			1,081			1,772		10			185			5,326

(Dollars in thousands)	Three and six months ended June 30, 2016
	One-to-four family residential real estate			Construction and land		Commercial real estate			Commercial			Agriculture			Municipal			Consumer			Total
Allowance for loan losses:
Balance at April 1, 2016	$	864		$	82	$	1,831		$	1,384		$	1,483		$	24		$	201		$	5,869
Charge-offs		-			-		-			(306	)		(83	)		-			(148	)		(537	)
Recoveries		3			-		-			1			-			6			10			20
Provision for loan losses		(283	)		7		(55	)		314			200			(7	)		124			300
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652
Balance at January 1, 2016	$	925		$	77	$	1,740		$	1,530		$	1,428		$	23		$	199		$	5,922
Charge-offs		-			-		-			(306	)		(83	)		-			(285	)		(674	)
Recoveries		5			-		-			20			-			6			23			54
Provision for loan losses		(346	)		12		36			149			255			(6	)		250			350
Balance at June 30, 2016		584			89		1,776			1,393			1,600			23			187			5,652

The following tables provide information on the Company’s activity in the allowance for loan losses by loan class and allowance methodology:

(Dollars in thousands)	As of June 30, 2017
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		50		76		149		-		-		275
Collectively evaluated for loss		499		70		1,659		1,005		1,623		10		185		5,051
Total		499		70		1,709		1,081		1,772		10		185		5,326
Loan balances:
Individually evaluated for loss		732		2,041		2,206		323		868		221		36		6,427
Collectively evaluated for loss		138,200		14,516		114,394		51,308		78,442		3,372		21,367		421,599
Total	$	138,932	$	16,557	$	116,600	$	51,631	$	79,310	$	3,593	$	21,403	$	428,026

(Dollars in thousands)	As of December 31, 2016
	One-to-four family residential real estate		Construction and land		Commercial real estate		Commercial		Agriculture		Municipal		Consumer		Total
Allowance for loan losses:
Individually evaluated for loss		-		-		81		87		89		-		17		274
Collectively evaluated for loss		504		53		1,696		1,032		1,595		12		178		5,070
Total		504		53		1,777		1,119		1,684		12		195		5,344
Loan balances:
Individually evaluated for loss		780		1,937		2,445		355		881		258		72		6,728
Collectively evaluated for loss		136,066		11,801		115,755		54,151		77,443		3,626		20,199		419,041
Total	$	136,846	$	13,738	$	118,200	$	54,506	$	78,324	$	3,884	$	20,271	$	425,769

Schedule of Impaired Financing Receivables

The following tables present information on impaired loans:

(Dollars in thousands)	As of June 30, 2017
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	732	$	732	$	732	$	-	$	-	$	739	$	4
Construction and land		3,776		2,041		2,041		-		-		2,010		33
Commercial real estate		2,206		2,206		2,156		50		50		2,217		246
Commercial		323		323		70		253		76		361		-
Agriculture		1,083		868		49		819		149		933		1
Municipal		221		221		221		-		-		236		3
Consumer		36		36		36		-		-		39		-
Total impaired loans	$	8,377	$	6,427	$	5,305	$	1,122	$	275	$	6,535	$	287

(Dollars in thousands)	As of December 31, 2016
	Unpaid contractual principal		Impaired loan balance		Impaired loans without an allowance		Impaired loans with an allowance		Related allowance recorded		Year-to-date average loan balance		Year-to-date interest income recognized
One-to-four family residential real estate	$	780	$	780	$	780	$	-	$	-	$	798	$	7
Construction and land		3,672		1,937		1,937		-		-		2,068		72
Commercial real estate		2,445		2,445		2,145		300		81		2,587		505
Commercial		355		355		46		309		87		425		2
Agriculture		1,173		881		147		734		89		1,000		2
Municipal		258		258		258		-		-		418		-
Consumer		72		72		55		17		17		78		13
Total impaired loans	$	8,755	$	6,728	$	5,368	$	1,360	$	274	$	7,374	$	601

Schedule of Past Due Financing Receivables

The following tables present information on the Company’s past due and non-accrual loans by loan class:

(Dollars in thousands)	As of June 30, 2017
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	300		$	316		$	-		$	616		$	557		$	1,173		$	137,759
Construction and land		-			-			-			-			692			692			15,865
Commercial real estate		1,971			42			-			2,013			69			2,082			114,518
Commercial		176			1,315			-			1,491			323			1,814			49,817
Agriculture		49			60			-			109			868			977			78,333
Municipal		-			-			-			-			-			-			3,593
Consumer		36			17			-			53			36			89			21,314
Total	$	2,532		$	1,750		$	-		$	4,282		$	2,545		$	6,827		$	421,199
Percent of gross loans		0.59	%		0.41	%		0.00	%		1.00	%		0.59	%		1.59	%		98.41	%

(Dollars in thousands)	As of December 31, 2016
	30-59 days delinquent and accruing			60-89 days delinquent and accruing			90 days or more delinquent and accruing			Total past due loans accruing			Non-accrual loans			Total past due and non-accrual loans			Total loans not past due
One-to-four family residential real estate	$	215		$	388		$	-		$	603		$	595		$	1,198		$	135,648
Construction and land		-			-			-			-			599			599			13,139
Commercial real estate		-			-			-			-			300			300			117,900
Commercial		13			5			-			18			342			360			54,146
Agriculture		55			-			-			55			838			893			77,431
Municipal		-			-			-			-			-			-			3,884
Consumer		79			3			-			82			72			154			20,117
Total	$	362		$	396		$	-		$	758		$	2,746		$	3,504		$	422,265
Percent of gross loans		0.09	%		0.09	%		0.00	%		0.18	%		0.64	%		0.82	%		99.18	%

Schedule of Risk Categories by Loan Class

The following table provides information on the Company’s risk categories by loan class:

(Dollars in thousands)	As of June 30, 2017				As of December 31, 2016
	Nonclassified		Classified		Nonclassified		Classified
One-to-four family residential real estate	$	137,803	$	1,129	$	135,640	$	1,206
Construction and land		15,865		692		13,138		600
Commercial real estate		110,725		5,875		111,641		6,559
Commercial		48,115		3,516		51,080		3,426
Agriculture		74,727		4,583		73,564		4,760
Municipal		3,593		-		3,884		-
Consumer		21,356		47		20,181		90
Total	$	412,184	$	15,842	$	409,128	$	16,641

Schedule of Troubled Debt Restructurings On Financing Receivables

The following table presents information on loans that are classified as TDRs:

(Dollars in thousands)	As of June 30, 2017						As of December 31, 2016
	Number of loans		Non-accrual balance		Accruing balance		Number of loans		Non-accrual balance		Accruing balance
One-to-four family residential real estate		2	$	-	$	175		2	$	-	$	185
Construction and land		4		581		1,349		4		588		1,338
Commercial real estate		4		61		2,137		3		64		2,145
Commercial		-		-		-		2		-		13
Agriculture		7		409		-		4		268		44
Municipal		2		-		221		2		-		258
Total troubled debt restructurings		19	$	1,051	$	3,882		17	$	920	$	3,983

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Goodwill

A summary of the other intangible assets that continue to be subject to amortization is as follows:

(Dollars in thousands)	As of June 30, 2017
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,262	)	$	805
Lease intangible asset		350		(166	)		184
Mortgage servicing rights		6,029		(3,216	)		2,813
Total other intangible assets	$	8,446	$	(4,644	)	$	3,802

(Dollars in thousands)	As of December 31, 2016
	Gross carrying amount		Accumulated amortization			Net carrying amount
Core deposit intangible assets	$	2,067	$	(1,137	)	$	930
Lease intangible asset		350		(143	)		207
Mortgage servicing rights		5,788		(2,939	)		2,849
Total other intangible assets	$	8,205	$	(4,219	)	$	3,986

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following sets forth estimated amortization expense for core deposit and lease intangible assets for the remainder of 2017 and in successive years ending December 31:

(Dollars in thousands)	Amortization
	expense
Remainder of 2017	$	141
2018		252
2019		214
2020		177
2021		121
Thereafter		84
Total	$	989

Schedule of Participating Mortgage Loans

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

(Dollars in thousands)	June 30, 2017		December 31, 2016
FHLMC	$	500,399	$	483,356
FHLB		10,444		11,393
Total	$	510,843	$	494,749

Schedule of Servicing Asset at Amortized Cost

Activity for mortgage servicing rights and the related valuation allowance follows:

(Dollars in thousands)	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Mortgage servicing rights:
Balance at beginning of period	$	2,787		$	2,808		$	2,849		$	2,840
Additions		281			291			442			512
Amortization		(255	)		(248	)		(478	)		(501	)
Balance at end of period	$	2,813		$	2,851		$	2,813		$	2,851

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings per share:

Schedule of Earnings Per Share, Basic and Diluted

The shares used in the calculation of basic and diluted earnings per share are shown below:

	Three months ended				Six months ended
(Dollars in thousands, except per share amounts)	June 30				June 30
	2017		2016		2017		2016
Net earnings(1)	$	2,383	$	2,326	$	4,588	$	4,719
Weighted average common shares outstanding - basic (2)		3,870,564		3,794,355		3,870,183		3,764,497
Assumed exercise of stock options (1)(2)		80,087		91,322		79,086		89,751
Weighted average common shares outstanding - diluted (1)(2)		3,950,651		3,885,677		3,949,269		3,854,248
Net earnings per share (1)(2):
Basic	$	0.62	$	0.61	$	1.19	$	1.25
Diluted	$	0.60	$	0.60	$	1.16	$	1.22

(1)	Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.
(2)	Share and per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

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Repurchase Agreements (Tables)

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

Schedule of Repurchase Agreements

The following is a summary of the balances of and collateral for the Company’s repurchase agreements:

	As of June 30, 2017
	Overnight and		Up to 30				Greater
	Continuous		days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	3,890	$	-	$	-	$	-	$	3,890
Agency mortgage-backed securities		7,457		-		-		-		7,457
Total	$	11,347	$	-	$	-	$	-	$	11,347

	As of December 31, 2016
	Overnight and		Up to				Greater
	Continuous		30 days		30-90 days		than 90 days		Total
Repurchase agreements:
U.S. federal agency obligations	$	5,007	$	-	$	-	$	-	$	5,007
Agency mortgage-backed securities		7,476		-		-		-		7,476
Total	$	12,483	$	-	$	-	$	-	$	12,483

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Fair Value of Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Fair Value, by Balance Sheet Grouping

Fair value estimates of the Company’s financial instruments as of June 30, 2017 and December 31, 2016, including methods and assumptions utilized, are set forth below:

(Dollars in thousands)	As of June 30, 2017
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	10,594		$	10,594		$	-		$	-	$	10,594
Investment securities available-for-sale		389,842			5,375			384,467			-		389,842
Bank stocks, at cost		5,350			n/a			n/a			n/a		n/a
Loans, net		422,739			-			-			420,935		420,935
Loans held for sale, net		9,758			-			9,758			-		9,758
Derivative financial instruments		711			-			711			-		711
Accrued interest receivable		4,089			2			2,219			1,868		4,089
Financial liabilities:
Non-maturity deposits	$	(613,126	)	$	(613,126	)	$	-		$	-		(613,126	)
Time deposits		(131,896	)		-			(130,377	)		-		(130,377	)
FHLB borrowings		(31,000	)		-			(31,358	)		-		(31,358	)
Subordinated debentures		(21,384	)		-			(19,215	)		-		(19,215	)
Other borrowings		(11,447	)		-			(11,447	)		-		(11,447	)
Derivative financial instruments		(28	)		-			(28	)		-		(28	)
Accrued interest payable		(253	)		-			(253	)		-		(253	)

	As of December 31, 2016
	Carrying
	amount			Level 1			Level 2			Level 3		Total
Financial assets:
Cash and cash equivalents	$	19,996		$	19,996		$	-		$	-	$	19,996
Investment securities available-for-sale		385,563			7,123			378,440			-		385,563
Bank stocks, at cost		5,299			n/a			n/a			n/a		n/a
Loans, net		420,461			-			-			417,957		417,957
Loans held for sale		5,517			-			5,517			-		5,517
Derivative financial instruments		662			-			662			-		662
Accrued interest receivable		4,240			21			2,104			2,115		4,240
Financial liabilities:
Non-maturity deposits	$	(601,683	)	$	(601,683	)	$	-		$	-	$	(601,683	)
Time deposits		(139,838	)		-			(138,623	)		-		(138,623	)
FHLB borrowings		(39,100	)		-			(35,695	)		-		(35,695	)
Subordinated debentures		(21,284	)		-			(18,608	)		-		(18,608	)
Other borrowings		(12,483	)		-			(12,483	)		-		(12,483	)
Accrued interest payable		(268	)		-			(268	)		-		(268	)

Schedule of Fair Value, Assets Measured On Recurring Basis

The following table represents the Company’s financial instruments that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016, allocated to the appropriate fair value hierarchy:

(Dollars in thousands)				As of June 30, 2017
				Fair value hierarchy
	Total			Level 1		Level 2			Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	5,016		$	5,016	$	-		$	-
U. S. federal agency obligations		21,382			-		21,382			-
Municipal obligations, tax exempt		179,243			-		179,243			-
Municipal obligations, taxable		62,778			-		62,778			-
Agency mortgage-backed securities		111,840			-		111,840			-
Certificates of deposit		9,224			-		9,224			-
Common stocks		359			359		-			-
Loans held for sale		9,758			-		9,758			-
Derivative financial instruments		711			-		711			-
Liabililty:
Derivative financial instruments		(28	)		-		(28	)		-

(Dollars in thousands)			As of December 31, 2016
			Fair value hierarchy
		Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale investment securities:
U. S. treasury securities	$	6,015	$	6,015	$	-	$	-
U. S. federal agency obligations		27,139		-		27,139		-
Municipal obligations, tax exempt		161,662		-		161,662		-
Municipal obligations, taxable		71,563		-		71,563		-
Agency mortgage-backed securities		108,376		-		108,376		-
Certificates of deposit		9,700		-		9,700		-
Common stocks		1,108		1,108		-		-
Loans held for sale		5,517		-		5,517		-
Derivative financial instruments		662		-		662		-

Schedule of Fair Value Contractual Balance and Gain Loss On Loans Held for Sale

The aggregate fair value, contractual balance (including accrued interest), and gain on loans held for sale were as follows:

	As of		As of
(Dollars in thousands)	June 30, 2017		December 31, 2016
Aggregate fair value	$	9,758	$	5,517
Contractual balance		9,553		5,480
Gain	$	205	$	37

Schedule of Gains and Losses from Changes in Fair Value of Loans Held for Sale

	Three months ended					Six months ended
	June 30,					June 30,
(Dollars in thousands)	2017		2016			2017		2016
Interest income	$	79	$	210		$	124	$	315
Change in fair value		60		(63	)		169		(67	)
Total change in fair value	$	139	$	147		$	293	$	248

Schedule of Fair Value, Assets and Liabilities Measured On Nonrecurring Basis, Valuation Techniques

The following table represents the Company’s financial instruments that are measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016 allocated to the appropriate fair value hierarchy:

(Dollars in thousands)
			As of June 30, 2017						Total
			Fair value hierarchy						gains
	Total		Level 1		Level 2		Level 3		(losses)
Assets:
Impaired loans:
Commercial	$	177	$	-	$	-	$	177	$	11
Agriculture		670		-		-		670		(60	)
Real estate owned:
One-to-four family residential real estate		302		-		-		302		(67	)

			As of December 31, 2016						Total
			Fair value hierarchy						(losses)/
	Total		Level 1		Level 2		Level 3		gains
Assets:
Impaired loans:
Commercial real estate	$	219	$	-	$	-	$	219	$	(81	)
Commercial		222		-		-		222		(87	)
Agriculture		645		-		-		645		(89	)
Real estate owned:
One-to-four family residential real estate		142		-		-		142		(34	)

Schedule of Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table presents quantitative information about Level 3 fair value measurements for impaired loans measured at fair value on a non-recurring basis as of June 30, 2017 and December 31, 2016.

(Dollars in thousands)
	Fair value		Valuation technique	Unobservable inputs	Range
As of June 30, 2017
Impaired loans:
Commercial		177	Sales comparison	Adjustment to comparable sales		0%-50%
Agriculture		670	Sales comparison	Adjustment to appraised value		10%-50%
Real estate owned:
One-to-four family residential real estate		302	Sales comparison	Adjustment to appraised value		10%
As of December 31, 2016
Impaired loans:
Commercial real estate	$	219	Sales comparison	Adjustment to appraised value		2%-15%
Commercial		222	Sales comparison	Adjustment to comparable sales		7%-80%
Agriculture		645	Sales comparison	Adjustment to appraised value		8%-80%
Real estate owned:
One-to-four family residential real estate		142	Sales comparison	Adjustment to appraised value		10%

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Regulatory Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2017

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements for Bank Holding Companies

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

(Dollars in thousands)	Actual					For capital adequacy purposes
	Amount		Ratio			Amount		Ratio (1)
As of June 30, 2017
Leverage	$	91,954		10.17	%	$	36,178		4.0	%
Common Equity Tier 1 Capital		71,273		13.86	%		29,565		5.8	%
Tier 1 Capital		91,954		17.88	%		37,277		7.3	%
Total Risk Based Capital		97,502		18.96	%		47,561		9.3	%
As of December 31, 2016
Leverage	$	88,819		10.04	%	$	35,370		4.0	%
Common Equity Tier 1 Capital		68,263		13.32	%		26,265		5.1	%
Tier 1 Capital		88,819		17.33	%		33,952		6.6	%
Total Risk Based Capital		94,596		18.46	%		44,201		8.6	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2017 and December 31, 2016:

											To be well-capitalized under prompt
(Dollars in thousands)						For capital					corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio(1)			Amount		Ratio
As of June 30, 2017
Leverage	$	91,007		10.08	%	$	36,116		4.0	%	$	45,145		5.0	%
Common Equity Tier 1 Capital		91,007		17.73	%		29,512		5.8	%		33,361		6.5	%
Tier 1 Capital		91,007		17.73	%		37,211		7.3	%		41,060		8.0	%
Total Risk Based Capital		96,473		18.80	%		47,476		9.3	%		51,325		10.0	%
As of December 31, 2016
Leverage	$	88,076		9.98	%	$	35,284		4.0	%	$	44,105		5.0	%
Common Equity Tier 1 Capital		88,076		17.23	%		26,194		5.1	%		33,222		6.5	%
Tier 1 Capital		88,076		17.23	%		33,861		6.6	%		40,888		8.0	%
Total Risk Based Capital		93,560		18.31	%		44,083		8.6	%		51,110		10.0	%

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625 for December 31,2016.

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Investments (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Security Owned and Pledged as Collateral, Fair Value, Total	$ 230,000	$ 224,300
Equity Method Investment, Ownership Percentage	10.00%

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Investments - Schedule of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 387,317	$ 387,733
Gross unrealized gains	3,931	2,038
Gross unrealized losses	(1,406)	(4,208)
Estimated fair value	389,842	385,563
Common Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	178	458
Gross unrealized gains	181	650
Gross unrealized losses
Estimated fair value	359	1,108
US Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	4,993	6,005
Gross unrealized gains	24	10
Gross unrealized losses	(1)
Estimated fair value	5,016	6,015
US Federal Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	21,377	27,140
Gross unrealized gains	45	48
Gross unrealized losses	(40)	(49)
Estimated fair value	21,382	27,139
Municipal Obligations Tax Exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	177,419	163,632
Gross unrealized gains	2,485	696
Gross unrealized losses	(661)	(2,666)
Estimated fair value	179,243	161,662
Municipal Obligations Taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	62,031	71,371
Gross unrealized gains	828	463
Gross unrealized losses	(81)	(271)
Estimated fair value	62,778	71,563
Agency Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	112,095	109,427
Gross unrealized gains	368	171
Gross unrealized losses	(623)	(1,222)
Estimated fair value	111,840	108,376
Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	9,224	9,700
Gross unrealized gains
Gross unrealized losses
Estimated fair value	$ 9,224	$ 9,700

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Investments - Schedule of Available For Sale Securities Continuous Unrealized Loss Position Fair Value (Details) $ in Thousands	Jun. 30, 2017 USD ($) Number	Dec. 31, 2016 USD ($) Number
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	204	408
Fair value, Less than 12 months	$ 129,319	$ 222,093
Unrealized losses, Less than 12 months	(1,277)	(4,208)
Fair value, 12 months or longer	6,902	0
Unrealized losses, 12 months or longer	(129)	0
Total, Fair value	136,221	222,093
Total, Unrealized losses	$ (1,406)	$ (4,208)
US Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	1
Fair value, Less than 12 months	$ 2,994
Unrealized losses, Less than 12 months	(1)
Fair value, 12 months or longer
Unrealized losses, 12 months or longer
Total, Fair value	2,994
Total, Unrealized losses	$ (1)
US Federal Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	12	9
Fair value, Less than 12 months	$ 14,825	$ 15,056
Unrealized losses, Less than 12 months	(36)	(49)
Fair value, 12 months or longer	995
Unrealized losses, 12 months or longer	(4)
Total, Fair value	15,820	15,056
Total, Unrealized losses	$ (40)	$ (49)
Municipal Obligations Tax Exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	113	275
Fair value, Less than 12 months	$ 41,363	$ 97,842
Unrealized losses, Less than 12 months	(566)	(2,666)
Fair value, 12 months or longer	4,587
Unrealized losses, 12 months or longer	(95)
Total, Fair value	45,950	97,842
Total, Unrealized losses	$ (661)	$ (2,666)
Municipal Obligations Taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	40	66
Fair value, Less than 12 months	$ 15,167	$ 26,184
Unrealized losses, Less than 12 months	(81)	(271)
Fair value, 12 months or longer
Unrealized losses, 12 months or longer
Total, Fair value	15,167	26,184
Total, Unrealized losses	$ (81)	$ (271)
Agency Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
No. of securities | Number	38	58
Fair value, Less than 12 months	$ 54,970	$ 83,011
Unrealized losses, Less than 12 months	(593)	(1,222)
Fair value, 12 months or longer	1,320
Unrealized losses, 12 months or longer	(30)
Total, Fair value	56,290	83,011
Total, Unrealized losses	$ (623)	$ (1,222)

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Investments - Schedule of Investments Classified by Contractual Maturity Date (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Amortized cost, Due in less than one year	$ 30,111
Amortized cost, Due after one year but within five years	182,277
Amortized cost, Due after five years but within ten years	90,785
Amortized cost, Due after ten years	83,966
Amortized cost, Common stocks	178
Amortized cost, Total	387,317	$ 387,733
Estimated fair value, Due in less than one year	30,139
Estimated fair value, Due after one year but within five years	182,573
Estimated fair value, Due after five years but within ten years	92,095
Estimated fair value, Due after ten years	84,676
Estimated fair value, Common stocks	359
Estimated fair value, Total	$ 389,842	$ 385,563

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Investments - Schedule of Realized Gain (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Sales proceeds	$ 1,917	$ 11,801	$ 13,459	$ 13,617
Realized gains	177	296	348	312
Realized losses		(11)	(24)	(15)
Net realized losses	$ 177	$ 285	$ 324	$ 297

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Loans and Allowance for Loan Losses (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 30, 2016	Jun. 30, 2017	Dec. 31, 2016	Mar. 31, 2017	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Loan Balance Charged Off	$ 215
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans		63	$ 44
Impaired Financing Receivable, Recorded Investment, Total		6,427	6,728
Loans and Leases Receivable, Impaired, Commitment to Lend		63
Provision For Loan Losses Reversal		13
Loans and Leases Receivable, Allowance		5,326	5,344	$ 5,327	$ 5,652	$ 5,869	$ 5,922
Trouble Debt Restructurings [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Agricultural		15
Loans and Leases Receivable, Allowance		67	80
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate, Total				11
Loans and Leases Receivable, Allowance		1,709	1,777	$ 1,740	1,776	$ 1,831	$ 1,740
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate, Total					188
Agriculture Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Agricultural		87
Impaired Financing Receivable, Recorded Investment, Total		49
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate, Total					$ 8
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Loan Balance Charged Off			$ 6,700
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable Loan Balance Charged Off		$ 6,400

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Loans and Allowance for Loan Losses - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	$ 428,026		$ 425,769
Net deferred loan costs and loans in process	39		36
Allowance for loan losses	(5,326)	$ (5,327)	(5,344)	$ (5,652)	$ (5,869)	$ (5,922)
Loans, net, carrying amount	422,739		420,461
One-To-Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	138,932		136,846
Allowance for loan losses	(499)	(493)	(504)	(584)	(864)	(925)
Loans, net, carrying amount	138,932		136,846
Construction and Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	16,557		13,738
Allowance for loan losses	(70)		(53)
Loans, net, carrying amount	16,557		13,738
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	116,600		118,200
Allowance for loan losses	(1,709)		(1,777)
Loans, net, carrying amount	116,600		118,200
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	51,631		54,506
Allowance for loan losses	(1,081)	(1,101)	(1,119)	(1,393)	(1,384)	(1,530)
Loans, net, carrying amount	51,631		54,506
Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	79,310		78,324
Allowance for loan losses	(1,772)	(1,731)	(1,684)	(1,600)	(1,483)	(1,428)
Loans, net, carrying amount	79,310		78,324
Municipal [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	3,593		3,884
Allowance for loan losses	(10)		(195)
Loans, net, carrying amount	3,593		3,884
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	21,403		20,271
Allowance for loan losses	(185)	$ (180)	(195)	$ (23)	$ (24)	$ (23)
Loans, net, carrying amount	$ 21,403		$ 20,271

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Loans and Allowance for Loan Losses - Schedule of Allowance for Credit Losses on Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	$ 5,327	$ 5,869	$ 5,344	$ 5,922
Charge-offs	(119)	(537)	(245)	(674)
Recoveries	18	20	77	54
Provision for loan losses	100	300	150	350
Balance	5,326	5,652	5,326	5,652
Individually evaluated for loss					$ 275	$ 274
Collectively evaluated for loss					5,051	5,070
Total	5,326	5,869	5,326	5,652	5,326	5,344
Individually evaluated for loss					6,427	6,728
Collectively evaluated for loss					421,599	419,041
Total					422,739	420,461
One-To-Four Family Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	493	864	504	925
Charge-offs			(19)
Recoveries	7	3	8	5
Provision for loan losses	(1)	(283)	6	(346)
Balance	499	584	499	584
Individually evaluated for loss
Collectively evaluated for loss					499	504
Total	499	864	499	584	499	504
Individually evaluated for loss					732	780
Collectively evaluated for loss					138,200	136,066
Total					138,932	136,846
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,101	1,384	1,119	1,530
Charge-offs		(306)		(306)
Recoveries	1	1	9	20
Provision for loan losses	(21)	314	(47)	149
Balance	1,081	1,393	1,081	1,393
Individually evaluated for loss					76	87
Collectively evaluated for loss					1,005	1,032
Total	1,081	1,384	1,081	1,393	1,081	1,119
Individually evaluated for loss					323	355
Collectively evaluated for loss					51,308	54,151
Total					51,631	54,506
Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,731	1,483	1,684	1,428
Charge-offs		(83)		(83)
Recoveries			1
Provision for loan losses	41	200	87	255
Balance	1,772	1,600	1,772	1,600
Individually evaluated for loss					149	89
Collectively evaluated for loss					1,623	1,595
Total	1,772	1,483	1,772	1,600	1,772	1,684
Individually evaluated for loss					868	881
Collectively evaluated for loss					78,442	77,443
Total					79,310	78,324
Municipal Bonds [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	11	201		199
Charge-offs		(148)		(285)
Recoveries		10		23
Provision for loan losses	(1)	124		250
Balance	10	187	10	187
Total	11	201	10	187	10
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	180	24	195	23
Charge-offs	(58)
Recoveries	10	6		6
Provision for loan losses	53	(7)	(2)	(6)
Balance	185	23	185	23
Individually evaluated for loss						17
Collectively evaluated for loss					185	178
Total	185	24	185	23	185	195
Individually evaluated for loss					36	72
Collectively evaluated for loss					21,367	20,199
Total					21,403	20,271
Municipal [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance			195
Charge-offs			(165)
Recoveries			59
Provision for loan losses			96
Balance	10		10
Individually evaluated for loss
Collectively evaluated for loss					10	12
Total	10		10		10	195
Individually evaluated for loss					221	258
Collectively evaluated for loss					3,372	3,626
Total					3,593	3,884
Construction and Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance			53
Balance	70		70
Individually evaluated for loss
Collectively evaluated for loss					70	53
Total	70		70		70	53
Individually evaluated for loss					2,041	1,937
Collectively evaluated for loss					14,516	11,801
Total					16,557	13,738
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance			1,777
Balance	1,709		1,709
Individually evaluated for loss					50	81
Collectively evaluated for loss					1,659	1,696
Total	1,709		1,709		1,709	1,777
Individually evaluated for loss					2,206	2,445
Collectively evaluated for loss					114,394	115,755
Total					116,600	118,200
Construction and Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	71	82	53	77
Charge-offs
Recoveries
Provision for loan losses	(1)	7	17	12
Balance	70	89	70	89
Total	71	82	70	89	70	53
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance	1,740	1,831	1,777	1,740
Charge-offs	(61)		(61)
Recoveries
Provision for loan losses	30	(55)	(7)	36
Balance	1,709	1,776	1,709	1,776
Total	$ 1,740	$ 1,831	$ 1,709	$ 1,776	$ 1,709	$ 1,777

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Loans and Allowance for Loan Losses - Schedule of Impaired Financing Receivables (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	$ 8,377	$ 8,755
Impaired loan balance	6,427	6,728
Impaired loans without an allowance	5,305	5,368
Impaired loans with an allowance	1,122	1,360
Related allowance recorded	275	274
Year-to-date average loan balance	6,535	7,374
Year-to-date interest income recognized	287	601
One-To-Four Family Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	732	780
Impaired loan balance	732	780
Impaired loans without an allowance	732	780
Impaired loans with an allowance
Related allowance recorded
Year-to-date average loan balance	739	798
Year-to-date interest income recognized	4	7
Construction and Land [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	3,776	3,672
Impaired loan balance	2,041	1,937
Impaired loans without an allowance	2,041	1,937
Impaired loans with an allowance
Related allowance recorded
Year-to-date interest income recognized	33	72
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	2,206	2,445
Impaired loan balance	2,206	2,445
Impaired loans without an allowance	2,156	2,145
Impaired loans with an allowance	50	300
Related allowance recorded	50	81
Year-to-date interest income recognized	246	505
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	323	355
Impaired loan balance	323	355
Impaired loans without an allowance	70	46
Impaired loans with an allowance	253	309
Related allowance recorded	76	87
Year-to-date average loan balance	361	425
Year-to-date interest income recognized		2
Agriculture [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	1,083	1,173
Impaired loan balance	868	881
Impaired loans without an allowance	49	147
Impaired loans with an allowance	819	734
Related allowance recorded	149	89
Year-to-date average loan balance	933	1,000
Year-to-date interest income recognized	1	2
Municipal [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	221	258
Impaired loan balance	221	258
Impaired loans without an allowance	221	258
Impaired loans with an allowance
Related allowance recorded
Year-to-date average loan balance	236	418
Year-to-date interest income recognized	3
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Unpaid contractual principal	36	72
Impaired loan balance	36	72
Impaired loans without an allowance	36	55
Impaired loans with an allowance		17
Related allowance recorded		17
Year-to-date average loan balance	39	78
Year-to-date interest income recognized		13
Construction and Land [Member]
Financing Receivable, Impaired [Line Items]
Year-to-date average loan balance	2,010	2,068
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Year-to-date average loan balance	$ 2,217	$ 2,587

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Loans and Allowance for Loan Losses - Schedule of Past Due Financing Receivables (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	4,282	758
Loans, Non-accrual loans	2,545	2,746
Loan, Total past due and non-accrual loans	6,827	3,504
Loan, Total loans not past due	$ 421,199	$ 422,265
Percent of gross loans, 30-59 days delinquent and accruing	0.59%	0.09%
Percent of gross loans, 60-89 days delinquent and accruing	0.41%	0.09%
Percent of gross loans, 90 days or more delinquent and accruing	0.00%	0.00%
Percentage of gross loans, Total past due loans accruing	1.00%	0.18%
Percent of gross loans, Non-accrual loans	0.59%	0.64%
Percentage of Total past due and non-accrual loans	1.59%	0.82%
Percentage of Total loans not past due	98.41%	99.18%
30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 2,532	$ 362
60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,750	396
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	1,491	18
Loans, Non-accrual loans	323	342
Loan, Total past due and non-accrual loans	1,814	360
Loan, Total loans not past due	49,817	54,146
Commercial [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	176	13
Commercial [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,315	5
Agriculture [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	109	55
Loans, Non-accrual loans	868	838
Loan, Total past due and non-accrual loans	977	893
Loan, Total loans not past due	78,333	77,431
Agriculture [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	49	55
Agriculture [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	60
Municipal [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing
Loans, Non-accrual loans
Loan, Total past due and non-accrual loans
Loan, Total loans not past due	3,593	3,884
Municipal [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due
Municipal [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due
Consumer Loan [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	36	79
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	53	82
Loans, Non-accrual loans	36	72
Loan, Total past due and non-accrual loans	89	154
Loan, Total loans not past due	21,314	20,117
Consumer [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	17	3
One-To-Four Family Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	616	603
Loans, Non-accrual loans	557	595
Loan, Total past due and non-accrual loans	1,173	1,198
Loan, Total loans not past due	137,759	135,648
One-To-Four Family Residential Real Estate [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	300	215
One-To-Four Family Residential Real Estate [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	316	388
Construction and Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing
Loans, Non-accrual loans	692	599
Loan, Total past due and non-accrual loans	692	599
Loan, Total loans not past due	15,865	13,139
Construction and Land [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due
Construction and Land [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 90 days or more delinquent and accruing
Loans, Total past due loans accruing	2,013
Loans, Non-accrual loans	69	300
Loan, Total past due and non-accrual loans	2,082	300
Loan, Total loans not past due	114,518	117,900
Commercial Real Estate [Member] | 30-59Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,971
Commercial Real Estate [Member] | 60-89 Days Delinquent and Accruing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 42

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Loans and Allowance for Loan Losses - Schedule of Risk Categories by Loan Class (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	$ 428,026	$ 425,769
One-To-Four Family Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	138,932	136,846
Construction and Land [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	16,557	13,738
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	116,600	118,200
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	51,631	54,506
Agriculture [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	79,310	78,324
Municipal [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	3,593	3,884
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	21,403	20,271
Loans Receivables Non Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	412,184	409,128
Loans Receivables Non Classified [Member] | One-To-Four Family Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	137,803	135,640
Loans Receivables Non Classified [Member] | Construction and Land [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	15,865	13,138
Loans Receivables Non Classified [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	110,725	111,641
Loans Receivables Non Classified [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	48,115	51,080
Loans Receivables Non Classified [Member] | Agriculture [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	74,727	73,564
Loans Receivables Non Classified [Member] | Municipal [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	3,593	3,884
Loans Receivables Non Classified [Member] | Consumer [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	21,356	20,181
Loans Receivables Classified [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	15,842	16,641
Loans Receivables Classified [Member] | One-To-Four Family Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	1,129	1,206
Loans Receivables Classified [Member] | Construction and Land [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	692	600
Loans Receivables Classified [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	5,875	6,559
Loans Receivables Classified [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	3,516	3,426
Loans Receivables Classified [Member] | Agriculture [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	4,583	4,760
Loans Receivables Classified [Member] | Municipal [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total
Loans Receivables Classified [Member] | Consumer [Member]
Financing Receivable, Modifications [Line Items]
Loans and Leases Receivable, Gross, Total	$ 47	$ 90

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Loans and Allowance for Loan Losses - Schedule of Troubled Debt Restructurings On Financing Receivables (Details) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($) Number	Dec. 31, 2016 USD ($) Number
Troubled debt restructurings, Number of loans | Number	19	17
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 2,545	$ 2,746
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 3,882	$ 3,983
One-To-Four Family Residential Real Estate [Member]
Troubled debt restructurings, Number of loans | Number	2	2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 175	$ 185
Commercial [Member]
Troubled debt restructurings, Number of loans | Number		2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 323	$ 342
Financing Receivable, Modifications, Recorded Investment, Accruing Balance		$ 13
Agriculture [Member]
Troubled debt restructurings, Number of loans | Number	7	4
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 868	$ 838
Financing Receivable, Modifications, Recorded Investment, Accruing Balance		$ 44
Municipal [Member]
Troubled debt restructurings, Number of loans | Number	2	2
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	221	258
Construction and Land [Member]
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	581	588
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	1,349	1,338
Commercial Real Estate [Member]
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	61	64
Financing Receivable, Modifications, Recorded Investment, Accruing Balance	$ 2,137	$ 2,145
Construction and Land [Member]
Troubled debt restructurings, Number of loans | Number	4	4
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 692	$ 599
Commercial Real Estate [Member]
Troubled debt restructurings, Number of loans | Number	4	3
Financing Receivable, Modifications, Recorded Investment, Non Accrual Balance	$ 69	$ 300

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Goodwill and Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Weighted Average [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption For Fair Value Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities Weighted Average Default Rate			2.25%		2.26%
Mortgage Loans Serviced [Member]
Finite-Lived Intangible Assets [Line Items]
Escrow Deposit	$ 5,000		$ 5,000		$ 4,100
Interest and Fee Income, Other Loans	320	$ 304	639	$ 604
Servicing Asset at Fair Value, Amount	5,300		$ 5,300		$ 5,100
Mortgage Loans on Real Estate, Other Deductions				$ 70
Mortgage Loans Serviced [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Discount Rate			9.50%		9.51%
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Prepayment Speed			0.00%		32.79%
Mortgage Loans Serviced [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Discount Rate			9.51%		9.50%
Assumption for Fair Value of Assets or Liabilities that relate to Transferor's Continuing Involvement, Prepayment Speed			33.56%		4.86%
Mortgage Repurchase Reserve [Member]
Finite-Lived Intangible Assets [Line Items]
Mortgage Loans on Real Estate, Write-down or Reserve, Amount	301		$ 301		$ 301
Financing Receivable, Allowance for Credit Losses, Recovery	$ 3		$ 10

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Goodwill and Other Intangible Assets - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	$ 8,446	$ 8,205
Intangible assets, Accumulated amortization	2,813	(4,219)
Intangible assets, Net carrying amount	3,802	3,986
Core Deposits [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	2,067	2,067
Intangible assets, Accumulated amortization	(1,262)	(1,137)
Intangible assets, Net carrying amount	850	930
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	350	350
Intangible assets, Accumulated amortization	(166)	(143)
Intangible assets, Net carrying amount	184	207
Mortgage Servicing Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	6,029	5,788
Intangible assets, Accumulated amortization	(3,216)	(2,939)
Intangible assets, Net carrying amount	$ 2,813	$ 2,849

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Goodwill and Other Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2017	$ 141
2018	252
2019	214
2020	177
2021	121
Thereafter	84
Total	$ 989

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Goodwill and Other Intangible Assets - Schedule of Participating Mortgage Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Mortgage Loans on Real Estate [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 510,843	$ 494,749
Federal Home Loan Bank Certificates and Obligations (FHLB) [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages	500,399	11,393
Federal Home Loan Mortgage Corporation Certificates and Obligations (FHLMC) [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage Loans on Real Estate, Face Amount of Mortgages	$ 10,444	$ 483,356

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Goodwill and Other Intangible Assets - Schedule of Servicing Asset at Amortized Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Balance at beginning of period	$ 2,787	$ 2,808	$ 2,849	$ 2,840
Additions	281	291	442	512
Amortization	(255)	(248)	(478)	(501)
Balance at end of period	$ 2,813	$ 2,851	$ 2,813	$ 2,851

XML

Earnings per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings per share:
Net earnings	[1],[2]	$ 2,383	$ 2,326	$ 4,588	$ 4,719
Weighted average common shares outstanding - basic	[3]	3,870,564	3,794,355	3,870,183	3,764,497
Assumed exercise of stock options	[2],[3]	80,087	91,322	79,086	89,751
Weighted average common shares outstanding - diluted		3,950,651	3,885,677	3,949,269	3,854,248
Basic	[1],[2],[3],[4]	$ 0.62	$ 0.61	$ 1.19	$ 1.25
Diluted	[1],[2],[3],[4]	$ 0.60	$ 0.60	$ 1.16	$ 1.23

[1] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[2] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.

[3] Share and per share values for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

[4] Per share amounts for the periods ended June 30, 2016 have been adjusted to give effect to the 5% stock dividend paid during December 2016.

XML

Earnings per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) (Parenthetical)	12 Months Ended
	Dec. 31, 2016
Earnings per share:
Percentage Of Stocks Dividend	5.00%

XML

Repurchase Agreements (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets Sold under Agreements to Repurchase [Line Items]
Customer Funds	$ 11,300	$ 12,500
Repurchase Agreements [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Debt Instrument, Collateral Amount	$ 17,100	$ 15,700

XML

Repurchase Agreements - Schedule of Repurchase Agreements (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	$ 11,347	$ 12,483
Overnight And Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	11,347	12,483
Upto 30 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
30 - 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
Greater Than 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
US Federal Agency Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	3,890	5,007
US Federal Agency Obligations [Member] | Overnight And Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	3,890	5,007
US Federal Agency Obligations [Member] | Upto 30 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
US Federal Agency Obligations [Member] | 30 - 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
US Federal Agency Obligations [Member] | Greater Than 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
Agency Mortgage-Backed Securities [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	7,457	7,476
Agency Mortgage-Backed Securities [Member] | Overnight And Continuous [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount	7,457	7,476
Agency Mortgage-Backed Securities [Member] | Upto 30 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
Agency Mortgage-Backed Securities [Member] | 30 - 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount
Agency Mortgage-Backed Securities [Member] | Greater Than 90 Days [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Assets Sold under Agreements to Repurchase, Carrying Amount

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Impaired Financing Receivable, Related Allowance	$ 275	$ 274
Impaired Financing Receivable, Recorded Investment, Total	$ 6,427	$ 6,728

XML

Fair Value of Financial Instruments and Fair Value Measurements - Schedule of Fair Value, by Balance Sheet Grouping (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, carrying amount	$ 10,594	$ 19,996	$ 14,317	$ 13,569
Cash and cash equivalents		19,996
Investment securities available for sale	389,842	385,563
Bank stocks, at cost, carrying amount	5,350	5,299
Loans held for sale	9,758	5,517
Loans, net, carrying amount	422,739	420,461
Loans held for sale, net, carrying amount	9,758	5,517
Derivative financial instruments	711	662
Accrued interest receivable, carrying amount	4,089	4,240
Non-maturity deposits, carrying amount	(613,126)	(601,683)
Time deposits, carrying amount	(131,896)	(139,838)
FHLB borrowings, carrying amount	(31,000)	(39,100)
Subordinated debentures, carrying amount	(21,384)	(21,284)
Other borrowings, carrying amount	(11,447)	(12,483)
Accrued interest payable, carrying amount	(253)	(268)
Derivative financial instruments	(28)
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, carrying amount	10,594	19,996
Investment securities available for sale	389,842	385,563
Bank stocks, at cost, carrying amount
Loans, net, carrying amount	420,935	417,957
Loans held for sale, net, carrying amount	9,758	5,517
Derivative financial instruments	711	662
Accrued interest receivable, carrying amount	4,089	4,240
Non-maturity deposits, carrying amount	(613,126)	(601,683)
Time deposits, carrying amount	(130,377)	(138,623)
FHLB borrowings, carrying amount	(31,358)	(35,695)
Subordinated debentures, carrying amount	(19,215)	(18,608)
Other borrowings, carrying amount	(11,447)	(12,483)
Accrued interest payable, carrying amount	(253)	(268)
Derivative financial instruments	(28)
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	10,594	19,996
Investment securities available for sale	5,375	7,123
Bank stocks, at cost, carrying amount
Loans, net
Loans held for sale
Derivative financial instruments
Accrued interest receivable	2	21
Non-maturity deposits	(613,126)	(601,683)
Time deposits
FHLB borrowings
Subordinated debentures
Other borrowings
Derivative financial instruments
Accrued interest payable
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents
Investment securities available for sale	384,467	378,440
Bank stocks, at cost, carrying amount
Loans, net
Loans held for sale	9,758	5,517
Derivative financial instruments	711	662
Accrued interest receivable	2,219	2,104
Non-maturity deposits
Time deposits	(130,377)	(138,623)
FHLB borrowings	(31,358)	(35,695)
Subordinated debentures	(19,215)	(18,608)
Other borrowings	(11,447)	(12,483)
Derivative financial instruments	(28)
Accrued interest payable	(253)	(268)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents
Investment securities available for sale
Bank stocks, at cost, carrying amount
Loans, net	420,935	417,957
Loans held for sale
Derivative financial instruments
Accrued interest receivable	1,868	2,115
Non-maturity deposits
Time deposits
FHLB borrowings
Subordinated debentures
Other borrowings
Derivative financial instruments
Accrued interest payable

XML

Fair Value of Financial Instruments and Fair Value Measurements - Schedule of Fair Value, Assets Measured On Recurring Basis - Schedule of Fair Value, Assets Measured On Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	$ 389,842	$ 385,563
Loans held for Sale	9,758	5,517
Derivative financial instruments	711	662
Derivative financial instruments, carrying amount	(28)
Municipal Obligations Tax Exempt [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	179,243	161,662
Municipal Obligations Taxable [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	62,778	71,563
Agency mortgage-backed securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	111,840	108,376
Certificates of deposit [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	9,224	9,700
US Treasury Securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	5,016	6,015
Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans held for Sale	9,758	5,517
Derivative financial instruments	711	662
Derivative financial instruments, carrying amount	(28)
Fair Value, Inputs, Level 1 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	5,375	7,123
Loans held for Sale
Derivative financial instruments
Derivative financial instruments, carrying amount
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans held for Sale
Derivative financial instruments
Derivative financial instruments, carrying amount
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | US Federal Agency Obligations [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Tax Exempt [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Taxable [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Agency mortgage-backed securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	359	1,108
Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	384,467	378,440
Loans held for Sale	9,758	5,517
Derivative financial instruments	711	662
Derivative financial instruments, carrying amount	(28)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans held for Sale	9,758	5,517
Derivative financial instruments	711	662
Derivative financial instruments, carrying amount	(28)
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | US Federal Agency Obligations [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	21,382	27,139
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Tax Exempt [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	179,243	161,662
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Taxable [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	62,778	71,563
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Agency mortgage-backed securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	111,840	108,376
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	9,224	9,700
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Loans held for Sale
Derivative financial instruments
Derivative financial instruments, carrying amount
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Loans held for Sale
Derivative financial instruments
Derivative financial instruments, carrying amount
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | US Federal Agency Obligations [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Tax Exempt [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Municipal Obligations Taxable [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Agency mortgage-backed securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Common stocks [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	5,016	6,015
US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value
US Federal Agency Obligations [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	21,382	27,139
Municipal Obligations Tax Exempt [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	179,243	161,662
Municipal Obligations Taxable [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	62,778	71,563
Agency mortgage-backed securities [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	111,840	108,376
Certificates of deposit [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	9,224	9,700
Common stocks [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Investment securities available-for-sale, at fair value	$ 359	$ 1,108

XML

Fair Value of Financial Instruments and Fair Value Measurements - Schedule of Fair Value Contractual Balance and Gain Loss on Loans Held for Sale (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Aggregate fair value	$ 9,758	$ 5,517
Contractual balance	9,553	5,480
Gain	$ 205	$ 37

XML

Fair Value of Financial Instruments and Fair Value Measurements - Schedule of Gains and Losses from Changes in Fair Value of Loans Held for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Interest income	$ 79	$ 210	$ 124	$ 315
Change in fair value	60	(63)	169	(67)
Total change in fair value	$ 139	$ 147	$ 293	$ 248

XML

Fair Value of Financial Instruments and Fair Value Measurements - Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Commercial Loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	$ 177	$ 222
Total gains/(losses) on impaired loans fair value disclosure	11	(87)
Agriculture loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	670	645
Total gains/(losses) on impaired loans fair value disclosure	(60)	(89)
Fair Value, Inputs, Level 1 [Member] | Commercial Loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Fair Value, Inputs, Level 1 [Member] | Agriculture loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Fair Value, Inputs, Level 2 [Member] | Commercial Loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Fair Value, Inputs, Level 2 [Member] | Agriculture loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Fair Value, Inputs, Level 3 [Member] | Commercial Loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	177	222
Fair Value, Inputs, Level 3 [Member] | Agriculture loan [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	670	645
Residential Real Estate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	302	142
Total gains/(losses) on impaired loans fair value disclosure	(67)	(34)
Residential Real Estate [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Residential Real Estate [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Residential Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans	$ 302	142
Commercial Real Estate [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		219
Total gains/(losses) on impaired loans fair value disclosure		(81)
Commercial Real Estate [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Commercial Real Estate [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans
Commercial Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans		$ 219

XML

Fair Value of Financial Instruments and Fair Value Measurements - Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Commercial Real Estate [Member]
Impaired Loans Fair Value Disclosure		$ 219
Fair Value Measurements, Valuation Techniques		Sales comparison
Fair Value Measurements, Changes in Valuation Techniques		Adjustment to appraised value
Minimum [Member] | Commercial Real Estate [Member]
Fair Value Measurements Sales Comparison Range		2.00%
Maximum [Member] | Commercial Real Estate [Member]
Fair Value Measurements Sales Comparison Range		15.00%
Commercial Loan [Member]
Impaired Loans Fair Value Disclosure	$ 177
Fair Value Measurements, Valuation Techniques	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to comparable sales
Commercial Loan [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range	0.00%
Commercial Loan [Member] | Maximum [Member]
Fair Value Measurements Sales Comparison Range	50.00%
Agriculture Loans [Member]
Impaired Loans Fair Value Disclosure	$ 670	$ 645
Fair Value Measurements, Valuation Techniques	Sales comparison	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value	Adjustment to comparable sales
Agriculture Loans [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range	10.00%	8.00%
Agriculture Loans [Member] | Maximum [Member]
Fair Value Measurements Sales Comparison Range	50.00%	80.00%
One-to-four family residential real estate [Member]
Impaired Loans Fair Value Disclosure		$ 142
Real Estate Owned Fair Value Disclosure	$ 302
Fair Value Measurements, Valuation Techniques	Sales comparison	Sales comparison
Fair Value Measurements, Changes in Valuation Techniques	Adjustment to appraised value	Adjustment to appraised value
Fair Value Measurements Sales Comparison Range	10.00%	10.00%
Consumer Loan [Member]
Impaired Loans Fair Value Disclosure		$ 222
Fair Value Measurements, Valuation Techniques		Sales comparison
Fair Value Measurements, Changes in Valuation Techniques		Adjustment to comparable sales
Consumer Loan [Member] | Minimum [Member]
Fair Value Measurements Sales Comparison Range		7.00%
Consumer Loan [Member] | Maximum [Member]
Fair Value Measurements Sales Comparison Range		80.00%

XML

Regulatory Capital Requirements (Details Narrative) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2017	Dec. 31, 2016
Regulatory Capital Requirements [Line Items]
Common equity tier one risk based capital required for capital adequacy to risk weighted assets		4.50%
Tier one risk based capital required for capital adequacy to risk weighted assets		6.00%
Capital required for capital adequacy to risk weighted assets		8.00%
Tier one leverage capital required for capital adequacy to average assets		4.00%
Assets, total		$ 910,799	$ 911,382
Companys Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Common equity tier one risk based capital required for capital adequacy to risk weighted assets	[1]	5.80%	5.10%
Tier one risk based capital required for capital adequacy to risk weighted assets	[1]	7.30%	6.60%
Capital required for capital adequacy to risk weighted assets	[1]	9.30%	8.60%
Tier one leverage capital required for capital adequacy to average assets	[1]	4.00%	4.00%
Tier one capital conversation buffer		1.25%	0.625%
Banks Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Common equity tier one risk based capital required for capital adequacy to risk weighted assets	[1]	5.80%	5.10%
Tier one risk based capital required for capital adequacy to risk weighted assets	[1]	7.30%	6.60%
Capital required for capital adequacy to risk weighted assets	[1]	9.30%	8.60%
Tier one leverage capital required for capital adequacy to average assets	[1]	4.00%	4.00%
Tier one capital conversation buffer		1.25%	0.625%
Small Bank Holding Companies [Member]
Regulatory Capital Requirements [Line Items]
Assets, total		$ 1,000,000
Capital Conservation Buffer [Member]
Regulatory Capital Requirements [Line Items]
Tier one capital conversation buffer		1.25%	0.625%
Tier one capital conversation buffer increase		0.00%
Capital Conservation Buffer [Member] | January 1, 2019 [Member]
Regulatory Capital Requirements [Line Items]
Tier one capital conversation buffer		2.50%

[1] The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

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Regulatory Capital Requirements - Schedule of Compliance with Regulatory Capital Requirements for Mortgage Companies (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Dec. 31, 2016
Regulatory Capital Requirements [Line Items]
Leverage - For capital adequacy purposes Ratio		4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio		4.50%
Tier 1 Capital - For capital adequacy purposes Ratio		6.00%
Total Risk Based Capital - For capital adequacy purposes Ratio		8.00%
Companys Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Leverage - Actual Amount		$ 91,954	$ 88,819
Common Equity Tier 1 Capital - Actual Amount		71,273	68,263
Tier 1 Capital - Actual Amount		91,954	88,819
Total Risk Based Capital - Actual Amount		$ 97,502	$ 94,596
Leverage - Actual Ratio		10.17%	10.04%
Common Equity Tier 1 Capital - Actual Ratio		13.86%	13.32%
Tier 1 Capital - Actual Ratio		17.88%	17.33%
Total Risk Based Capital - Actual Ratio		18.96%	18.46%
Leverage - For capital adequacy purposes Amount		$ 36,178	$ 35,370
Common Equity Tier 1 Capital - For capital adequacy purposes Amount		29,565	26,265
Tier 1 Capital - For capital adequacy purposes Amount		37,277	33,952
Total Risk Based Capital - For capital adequacy purposes Amount		$ 47,561	$ 44,201
Leverage - For capital adequacy purposes Ratio	[1]	4.00%	4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio	[1]	5.80%	5.10%
Tier 1 Capital - For capital adequacy purposes Ratio	[1]	7.30%	6.60%
Total Risk Based Capital - For capital adequacy purposes Ratio	[1]	9.30%	8.60%

[1] The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

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Regulatory Capital Requirements - Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations (Details) - USD ($) $ in Thousands		Jun. 30, 2017	Dec. 31, 2016
Regulatory Capital Requirements [Line Items]
Leverage - For capital adequacy purposes Ratio		4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio		4.50%
Tier 1 Capital - For capital adequacy purposes Ratio		6.00%
Total Risk Based Capital - For capital adequacy purposes Ratio		8.00%
Banks Regulatory Capital Requirements [Member]
Regulatory Capital Requirements [Line Items]
Leverage - Actual Amount		$ 91,007	$ 88,076
Common Equity Tier 1 Capital - Actual Amount		91,007	88,076
Tier 1 Capital - Actual Amount		91,007	88,076
Total Risk Based Capital - Actual Amount		$ 96,473	$ 93,560
Leverage - Actual Ratio		10.08%	9.98%
Common Equity Tier 1 Capital - Actual Ratio		17.73%	17.23%
Tier 1 Capital - Actual Ratio		17.73%	17.23%
Total Risk Based Capital - Actual Ratio		18.80%	18.31%
Leverage - For capital adequacy purposes Amount		$ 36,116	$ 35,284
Common Equity Tier 1 Capital - For capital adequacy purposes Amount		29,512	26,194
Tier 1 Capital - For capital adequacy purposes Amount		37,211	33,861
Total Risk Based Capital - For capital adequacy purposes Amount		$ 47,476	$ 44,083
Leverage - For capital adequacy purposes Ratio	[1]	4.00%	4.00%
Common Equity Tier 1 Capital - For capital adequacy purposes Ratio	[1]	5.80%	5.10%
Tier 1 Capital - For capital adequacy purposes Ratio	[1]	7.30%	6.60%
Total Risk Based Capital - For capital adequacy purposes Ratio	[1]	9.30%	8.60%
Leverage - To be well-capitalized under prompt corrective action provisions Amount		$ 45,145	$ 44,105
Common Equity Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Amount		33,361	33,222
Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Amount		41,060	40,888
Total Risk Based Capital - To be well-capitalized under prompt corrective action provisions Amount		$ 51,325	$ 51,110
Leverage - To be well-capitalized under prompt corrective action provisions Ratio		5.00%	5.00%
Common Equity Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Ratio		6.50%	6.50%
Tier 1 Capital - To be well-capitalized under prompt corrective action provisions Ratio		8.00%	8.00%
Total Risk Based Capital - To be well-capitalized under prompt corrective action provisions Ratio		10.00%	10.00%

[1] The required ratios for capital adequacy purposes include a capital conservation buffer of 1.25% for June 30, 2017 and 0.625% for December 31, 2016.

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Impact of Recent Accounting Pronouncements (Details Narrative) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Accounting Standards Update 2016-09 [Member]
Employee service share-based compensation, tax benefit realized from exercise of stock options	$ 24	$ 197	$ 308

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Subsequent Event (Details Narrative) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
		Aug. 08, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
After-tax loss	[1],[2]		$ 2,383	$ 2,326	$ 4,588	$ 4,719
Subsequent Event [Member]
Overdraft balance amount		$ 8,600
Subsequent Event [Member] | Third Quarter of 2017 [Member]
Deposits returned to customer's account		1,700
After-tax loss		5,400
Subsequent Event [Member] | Third Party [Member]
Overdraft balance amount		$ 10,300

[1] Income tax expense, net earnings and earnings per share for the periods ended June 30, 2016 have been recast to reflect the early adoption of Accounting Standards Update ("ASU") 2016-09

[2] Net earnings, earnings per share and assumed exercise of stock options for the periods ended June 30, 2016 have been recast to reflect the early adoption of ASU 2016-09.