Loans (Tables)

6 Months Ended

Jun. 30, 2014

Loan balances were as follows:

(In Thousands of Dollars)	June 30, 2014			December 31, 2013
Commercial real estate
Owner occupied	$	79,938		$	86,286
Non-owner occupied		117,127			107,625
Other		22,866			24,381
Commercial		110,539			105,023
Residential real estate
1-4 family residential		145,894			144,225
Home equity lines of credit		26,748			26,448
Consumer
Indirect		120,402			121,446
Direct		9,258			10,237
Other		3,034			3,031
Subtotal	$	635,806		$	628,702
Net deferred loan costs		1,968			1,982
Allowance for loan losses		(7,356	)		(7,568	)
Net loans	$	630,418		$	623,116

Activity in the Allowance for Loan Losses by Portfolio Segment

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six month periods ended June 30, 2014 and 2013:

Three Months Ended June 30, 2014

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	2,751		$	1,065		$	1,681		$	1,496		$	394		$	7,387
Provision for loan losses		(36	)		25			305			144			(138	)		300
Loans charged off		(33	)		(19	)		(210	)		(388	)		0			(650	)
Recoveries		40			5			8			266			0			319
Total ending allowance balance	$	2,722		$	1,076		$	1,784		$	1,518		$	256		$	7,356

Six Months Ended June 30, 2014

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	2,752		$	1,219		$	1,964		$	1,419		$	214	$	7,568
Provision for loan losses		(14	)		(137	)		77			662			42		630
Loans charged off		(90	)		(19	)		(280	)		(1,097	)		0		(1,486	)
Recoveries		74			13			23			534			0		644
Total ending allowance balance	$	2,722		$	1,076		$	1,784		$	1,518		$	256	$	7,356

Three Months Ended June 30, 2013

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,357		$	1,385		$	1,510		$	967		$	289		$	7,508
Provision for loan losses		(337	)		(74	)		302			390			(111	)		170
Loans charged off		0			0			(66	)		(390	)		0			(456	)
Recoveries		30			120			5			213			0			368
Total ending allowance balance	$	3,050		$	1,431		$	1,751		$	1,180		$	178		$	7,590

Six Months Ended June 30, 2013

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,392		$	1,453		$	1,569		$	951		$	264		$	7,629
Provision for loan losses		(393	)		(73	)		337			640			(86	)		425
Loans charged off		(81	)		(80	)		(168	)		(790	)		0			(1,119	)
Recoveries		132			131			13			379			0			655
Total ending allowance balance	$	3,050		$	1,431		$	1,751		$	1,180		$	178		$	7,590

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment and Based

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2014 and December 31, 2013. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees and costs, but excludes accrued interest receivable, which is not considered to be material:

June 30, 2014

(In Thousands of Dollars)	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	370	$	7	$	94	$	0	$	0	$	471
Collectively evaluated for impairment		2,352		1,069		1,690		1,518		256		6,885
Total ending allowance balance	$	2,722	$	1,076	$	1,784	$	1,518	$	256	$	7,356

Loans:
Loans individually evaluated for impairment	$	5,965	$	2,135	$	3,687	$	155	$	0	$	11,942
Loans collectively evaluated for impairment		213,331		108,028		168,460		136,013		0		625,832
Total ending loans balance	$	219,296	$	110,163	$	172,147	$	136,168	$	0	$	637,774

December 31, 2013

(In Thousands of Dollars)	Commercial Real Estate		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	166	$	110	$	202	$	82	$	0	$	560
Collectively evaluated for impairment		2,586		1,109		1,762		1,337		214		7,008
Total ending allowance balance	$	2,752	$	1,219	$	1,964	$	1,419	$	214	$	7,568

Loans:
Loans individually evaluated for impairment	$	6,623	$	2,430	$	2,554	$	363	$	0	$	11,970
Loans collectively evaluated for impairment		210,739		102,593		167,597		137,785		0		618,714
Total ending loans balance	$	217,362	$	105,023	$	170,151	$	138,148	$	0	$	630,684

Loans Individually Evaluated for Impairment by Class of Loans

The following tables present information related to impaired loans by class of loans as of June 30, 2014 and December 31, 2013:

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
June 30, 2014
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,728	$	1,596	$	0
Non-owner occupied		405		404		0
Commercial		2,083		2,045		0
Residential real estate
1-4 family residential		2,186		2,011		0
Home equity lines of credit		437		423		0
Consumer		218		155		0
Subtotal		7,057		6,634		0

With an allowance recorded:
Commercial real estate
Owner occupied		2,399		2,395		292
Non-owner occupied		1,574		1,570		78
Commercial		90		90		7
Residential real estate
1-4 family residential		1,205		1,162		91
Home equity lines of credit		91		91		3
Subtotal		5,359		5,308		471
Total	$	12,416	$	11,942	$	471

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2013
With no related allowance recorded:
Commercial real estate
Owner occupied	$	4,302	$	3,762	$	0
Non-owner occupied		491		389		0
Commercial		1,007		971		0
Residential real estate
1-4 family residential		1,026		961		0
Home equity lines of credit		107		99		0
Consumer		111		112		0
Subtotal		7,044		6,294		0

With an allowance recorded:
Commercial real estate
Owner occupied		886		884		91
Non-owner occupied		1,593		1,588		75
Commercial		1,462		1,459		110
Residential real estate
1-4 family residential		1,458		1,347		190
Home equity lines of credit		148		147		12
Consumer		247		251		82
Subtotal		5,794		5,676		560
Total	$	12,838	$	11,970	$	560

Average Recorded Investment By Class

The following table presents the average recorded investment in impaired loans by class and interest income recognized by loan class for the three and six month periods ended June 30, 2014 and 2013:

	Average Recorded Investment				Interest Income Recognized
	For Three Months Ended June 30,				For Three Months Ended June 30,
(In Thousands of Dollars)	2014		2013		2014
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,614	$	2,350	$	6
Non-owner occupied		405		489		9
Commercial		2,072		1,472		4
Residential real estate
1-4 family residential		1,659		982		14
Home equity lines of credit		329		186		2
Consumer		178		0		0
Subtotal		6,257		5,479		35

With an allowance recorded:
Commercial real estate
Owner occupied		2,225		2,876		25
Non-owner occupied		1,580		1,806		20
Commercial		91		135		1
Residential real estate
1-4 family residential		1,380		0		11
Home equity lines of credit		126		0		1
Subtotal		5,402		4,817		58
Total	$	11,659	$	10,296	$	93

	Average Recorded Investment				Interest Income Recognized
	For Six Months Ended June 30,				For Six Months Ended June 30,
(In Thousands of Dollars)	2014		2013		2014
With no related allowance recorded:
Commercial real estate
Owner occupied	$	2,095	$	2,521	$	11
Non-owner occupied		398		471		9
Commercial		1,502		1,428		9
Residential real estate
1-4 family residential		1,495		961		28
Home equity lines of credit		222		180		4
Consumer		209		0		0
Subtotal		5,921		5,561		61

With an allowance recorded:
Commercial real estate
Owner occupied		1,939		2,823		50
Non-owner occupied		1,583		1,918		40
Commercial		741		316		2
Residential real estate
1-4 family residential		1,385		0		22
Home equity lines of credit		136		0		2
Subtotal		5,784		5,057		116
Total	$	11,705	$	10,618	$	177

Schedule of Investment in Nonaccrual and Loans Past Due 90 Days or More Still on Accrual by Class of Loans

The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of June 30, 2014 and December 31, 2013:

	June 30, 2014				December 31, 2013
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Commercial real estate
Owner occupied	$	2,461	$	0	$	2,806	$	0
Non-owner occupied		46		0		405		0
Commercial		1,792		0		1,993		13
Residential real estate
1-4 family residential		2,917		101		2,584		526
Home equity lines of credit		386		89		280		0
Consumer
Indirect		153		135		308		94
Direct		45		0		55		3
Other		0		2		0		10
Total	$	7,800	$	327	$	8,431	$	646

Schedule of Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans as of June 30, 2014 and December 31, 2013 by class of loans:

(In Thousands of Dollars)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
June 30, 2014
Commercial real estate
Owner occupied	$	45	$	13	$	2,461	$	2,519	$	77,217	$	79,736
Non-owner occupied		0		0		46		46		116,739		116,785
Other		0		0		0		0		22,775		22,775
Commercial		52		0		1,792		1,844		108,319		110,163
Residential real estate
1-4 family residential		932		194		3,018		4,144		141,256		145,400
Home equity lines of credit		31		0		475		506		26,241		26,747
Consumer
Indirect		1,685		423		288		2,396		121,479		123,875
Direct		96		6		45		147		9,111		9,258
Other		24		3		2		29		3,006		3,035
Total	$	2,865	$	639	$	8,127	$	11,631	$	626,143	$	637,774

(In Thousands of Dollars)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
December 31, 2013
Commercial real estate
Owner occupied	$	48	$	0	$	2,806	$	2,854	$	83,065	$	85,919
Non-owner occupied		0		0		405		405		106,762		107,167
Other		0		0		0		0		24,276		24,276
Commercial		14		0		2,006		2,020		103,003		105,023
Residential real estate
1-4 family residential		573		141		3,110		3,824		139,879		143,703
Home equity lines of credit		35		0		280		315		26,133		26,448
Consumer
Indirect		2,004		539		402		2,945		121,935		124,880
Direct		204		31		58		293		9,944		10,237
Other		63		6		10		79		2,952		3,031
Total	$	2,941	$	717	$	9,077	$	12,735	$	617,949	$	630,684