Loans

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Loans

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	September 30, 2017			December 31, 2016
Originated loans:
Commercial real estate
Owner occupied	$	137,557		$	109,750
Non-owner occupied		191,592			165,861
Farmland		58,342			34,155
Other		80,767			70,823
Commercial
Commercial and industrial		187,576			171,145
Agricultural		32,006			24,598
Residential real estate
1-4 family residential		259,568			224,222
Home equity lines of credit		68,513			59,642
Consumer
Indirect		160,804			156,633
Direct		28,314			26,663
Other		8,461			7,611
Total originated loans	$	1,213,500		$	1,051,103
Acquired loans:
Commercial real estate
Owner occupied	$	54,073		$	60,928
Non-owner occupied		23,152			24,949
Farmland		51,231			54,204
Other		13,285			14,665
Commercial
Commercial and industrial		31,370			33,626
Agricultural		13,757			16,024
Residential real estate
1-4 family residential		101,284			112,015
Home equity lines of credit		30,338			34,795
Consumer
Direct		16,226			21,681
Other		113			247
Total acquired loans	$	334,829		$	373,134
Net Deferred loan costs		3,108			3,398
Allowance for loan losses		(12,104	)		(10,852	)
Net loans	$	1,539,333		$	1,416,783

Purchased credit impaired loans

As part of the NBOH acquisition the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected.  The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables:

(In Thousands of Dollars)	September 30, 2017		December 31, 2016
Commercial real estate
Owner occupied	$	745	$	689
Non-owner occupied		394		436
Commercial
Commercial and industrial		1,087		1,213
Total outstanding balance	$	2,226	$	2,338
Carrying amount, net of allowance of $0 in 2017 and 2016	$	1,811	$	1,864

There were no purchased credit impaired loans identified as part of the Monitor or Tri-State acquisitions.

Accretable yield, or income expected to be collected, is shown in the table below:

(In Thousands of Dollars)	Nine Months Ended September 30, 2017
Beginning balance	$	247
New loans purchased	0
Accretion of income		(57	)
Ending balance	$	190

The key assumptions considered include probability of default and the amount of actual prepayments after the acquisition date.  Prepayments affect the estimated life of the loans and could change the amount of interest income and principal expected to be collected.  In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary.  There were no adjustments to forecasted cash flows that impacted the allowance for loan losses for the three and nine month periods ended September 30, 2017.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine month periods ended September 30, 2017 and 2016:

Three Months Ended September 30, 2017

(In Thousands of Dollars)	Commercial Real Estate		Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	3,954	$	1,936		$	2,310		$	2,927		$	619	$	11,746
Provision for loan losses		264		87			36			552			11		950
Loans charged off		0		(10	)		(74	)		(725	)		0		(809	)
Recoveries		1		2			61			153			0		217
Total ending allowance balance	$	4,219	$	2,015		$	2,333		$	2,907		$	630	$	12,104

Nine Months Ended September 30, 2017

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	3,577		$	1,874		$	2,205		$	2,766		$	430	$	10,852
Provision for loan losses		706			302			150			1,592			200		2,950
Loans charged off		(207	)		(225	)		(116	)		(1,929	)		0		(2,477	)
Recoveries		143			64			94			478			0		779
Total ending allowance balance	$	4,219		$	2,015		$	2,333		$	2,907		$	630	$	12,104

Three Months Ended September 30, 2016

(In Thousands of Dollars)	Commercial Real Estate			Commercial		Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	3,210		$	1,634	$	2,081		$	2,444		$	351	$	9,720
Provision for loan losses		138			188		105			423			256		1,110
Loans charged off		(8	)		0		(87	)		(467	)		0		(562	)
Recoveries		1			0		48			201			0		250
Total ending allowance balance	$	3,341		$	1,822	$	2,147		$	2,601		$	607	$	10,518

Nine Months Ended September 30, 2016

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	3,127		$	1,373		$	1,845		$	2,160		$	473	$	8,978
Provision for loan losses		516			464			376			1,390			134		2,880
Loans charged off		(315	)		(37	)		(165	)		(1,442	)		0		(1,959	)
Recoveries		13			22			91			493			0		619
Total ending allowance balance	$	3,341		$	1,822		$	2,147		$	2,601		$	607	$	10,518

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, based on impairment method as of September 30, 2017 and December 31, 2016.  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:

September 30, 2017

(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	$	3	$	4	$	70	$	0	$	0	$	77
Collectively evaluated for impairment		4,179		1,999		2,230		2,904		630		11,942
Acquired loans collectively evaluated for impairment		37		12		33		3		0		85
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	4,219	$	2,015	$	2,333	$	2,907	$	630	$	12,104
Loans:
Loans individually evaluated for impairment	$	853	$	250	$	3,591	$	98	$	0	$	4,792
Loans collectively evaluated for impairment		466,325		218,907		324,201		202,780		0		1,212,213
Acquired loans		140,558		44,337		131,385		16,341		0		332,621
Acquired with deteriorated credit quality		1,019		792		0		0		0		1,811
Total ending loans balance	$	608,755	$	264,286	$	459,177	$	219,219	$	0	$	1,551,437

December 31, 2016

(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	$	86	$	111	$	52	$	0	$	0	$	249
Collectively evaluated for impairment		3,491		1,763		2,153		2,766		430		10,603
Acquired loans collectively evaluated for impairment		0		0		0		0		0		0
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	3,577	$	1,874	$	2,205	$	2,766	$	430	$	10,852
Loans:
Loans individually evaluated for impairment	$	3,457	$	477	$	3,308	$	96	$	0	$	7,338
Loans collectively evaluated for impairment		376,632		195,146		280,215		196,081		0		1,048,074
Acquired loans		153,228		48,536		146,672		21,923		0		370,359
Acquired with deteriorated credit quality		968		896		0		0		0		1,864
Total ending loans balance	$	534,285	$	245,055	$	430,195	$	218,100	$	0	$	1,427,635

The following tables present information related to impaired loans by class of loans as of September 30, 2017 and December 31, 2016:

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
September 30, 2017
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,196	$	680	$	0
Non-owner occupied		15		15		0
Commercial
Commercial and industrial		202		181		0
Residential real estate
1-4 family residential		2,603		2,369		0
Home equity lines of credit		330		323		0
Consumer		261		98		0
Subtotal		4,607		3,666		0
With an allowance recorded:
Commercial real estate
Owner occupied		158		158		3
Commercial
Commercial and industrial		70		70		4
Residential real estate
1-4 family residential		838		803		56
Home equity lines of credit		99		96		14
Subtotal		1,165		1,127		77
Total	$	5,772	$	4,793	$	77

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2016
With no related allowance recorded:
Commercial real estate
Owner occupied	$	1,974	$	1,456	$	0
Non-owner occupied		332		331		0
Commercial
Commercial and industrial		205		184		0
Residential real estate
1-4 family residential		2,650		2,403		0
Home equity lines of credit		195		179		0
Consumer		205		96		0
Subtotal		5,561		4,649		0
With an allowance recorded:
Commercial real estate
Owner occupied		173		173		14
Non-owner occupied		1,118		1,118		30
Farmland		380		379		42
Commercial
Commercial and industrial		75		75		4
Agricultural		219		218		107
Residential real estate
1-4 family residential		661		642		51
Home equity lines of credit		84		84		1
Subtotal		2,710		2,689		249
Total	$	8,271	$	7,338	$	249

The following tables present the average recorded investment in impaired loans by class and interest income recognized by loan class for the three and nine month periods ended September 30, 2017 and 2016:

	Average Recorded Investment				Interest Income Recognized
	For Three Months Ended September 30,				For Three Months Ended September 30,
(In Thousands of Dollars)	2017		2016		2017		2016
With no related allowance recorded:
Commercial real estate
Owner occupied	$	680	$	1,266	$	2	$	28
Non-owner occupied		16		334		1		0
Commercial
Commercial and industrial		181		331		1		5
Residential real estate
1-4 family residential		2,208		2,249		32		33
Home equity lines of credit		326		227		4		3
Consumer		91		86		2		3
Subtotal		3,502		4,493		42		72
With an allowance recorded:
Commercial real estate
Owner occupied		159		908		2		9
Non-owner occupied		362		1,401		0		19
Commercial
Commercial and industrial		70		78		1		1
Residential real estate
1-4 family residential		785		845		10		11
Home equity lines of credit		97		86		1		1
Consumer		9		0		0		0
Subtotal		1,482		3,318		14		41
Total	$	4,984	$	7,811	$	56	$	113

	Average Recorded Investment				Interest Income Recognized
	For Nine Months Ended September 30,				For Nine Months Ended September 30,
(In Thousands of Dollars)	2017		2016		2017		2016
With no related allowance recorded:
Commercial real estate
Owner occupied	$	794	$	1,786	$	7	$	38
Non-owner occupied		87		335		2		4
Farmland		16		0		0		0
Commercial
Commercial and industrial		182		472		3		10
Agricultural		14		0		0		0
Residential real estate
1-4 family residential		2,279		2,270		104		71
Home equity lines of credit		293		234		11		6
Consumer		90		101		8		6
Subtotal		3,755		5,198		135		135
With an allowance recorded:
Commercial real estate
Owner occupied		164		1,248		6		18
Non-owner occupied		854		1,435		28		38
Farmland		84		0		0		0
Commercial
Commercial and industrial		72		79		3		2
Agricultural		66		0		0		0
Residential real estate
1-4 family residential		784		797		27		20
Home equity lines of credit		88		86		3		2
Consumer		3		0		0		0
Subtotal		2,115		3,645		67		80
Total	$	5,870	$	8,843	$	202	$	215

Cash basis interest recognized during the three and nine month periods ended September 30, 2017 and 2016 was materially equal to interest income recognized.

Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired 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 September 30, 2017 and December 31, 2016:

	September 30, 2017				December 31, 2016
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Originated loans:
Commercial real estate
Owner occupied	$	536	$	0	$	958	$	0
Non-owner occupied		15		0		343		0
Farmland		47		0		58		0
Commercial
Commercial and industrial		290		0		400		0
Agricultural		2		0		12		0
Residential real estate
1-4 family residential		1,800		593		1,929		295
Home equity lines of credit		550		70		202		118
Consumer
Indirect		397		160		298		438
Direct		60		42		9		65
Other		0		16		0		16
Total originated loans	$	3,697	$	881	$	4,209	$	932
Acquired loans:
Commercial real estate
Owner occupied	$	8	$	0	$	85	$	0
Non-owner occupied		174		42		0		0
Other		0		0		24		0
Farmland		47		0		380		0
Commercial
Commercial and industrial		1,004		65		961		0
Agricultural		10		0		236		0
Residential real estate
1-4 family residential		469		157		386		545
Home equity lines of credit		212		0		119		109
Consumer
Direct		134		0		89		95
Total acquired loans	$	2,058	$	264	$	2,280	$	749
Total loans	$	5,755	$	1,145	$	6,489	$	1,681

The following tables present the aging of the recorded investment in past due loans as of September 30, 2017 and December 31, 2016 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
September 30, 2017
Originated loans:
Commercial real estate
Owner occupied	$	5	$	0	$	536	$	541	$	136,633	$	137,174
Non-owner occupied		0		0		15		15		191,075		191,090
Farmland		0		0		47		47		58,223		58,270
Other		0		0		0		0		80,478		80,478
Commercial
Commercial and industrial		136		0		290		426		186,633		187,059
Agricultural		95		0		2		97		32,001		32,098
Residential real estate
1-4 family residential		1,799		835		2,393		5,027		253,982		259,009
Home equity lines of credit		3		18		620		641		67,904		68,545
Consumer
Indirect		1,995		625		557		3,177		162,739		165,916
Direct		567		318		102		987		27,516		28,503
Other		11		21		16		48		8,413		8,461
Total originated loans:	$	4,611	$	1,817	$	4,578	$	11,006	$	1,205,597	$	1,216,603
Acquired loans:
Commercial real estate
Owner occupied	$	0	$	0	$	8	$	8	$	54,066	$	54,074
Non-owner occupied		105		0		216		321		22,805		23,126
Farmland		0		150		47		197		51,034		51,231
Other		0		0		0		0		13,312		13,312
Commercial
Commercial and industrial		479		74		1,069		1,622		29,749		31,371
Agricultural		49		5		10		64		13,693		13,757
Residential real estate
1-4 family residential		753		112		626		1,491		99,795		101,286
Home equity lines of credit		0		0		212		212		30,126		30,338
Consumer
Direct		371		153		134		658		15,568		16,226
Other		1		0		0		1		112		113
Total acquired loans	$	1,758	$	494	$	2,322	$	4,574	$	330,260	$	334,834
Total loans	$	6,369	$	2,311	$	6,900	$	15,580	$	1,535,857	$	1,551,437

(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, 2016
Originated loans:
Commercial real estate
Owner occupied	$	0	$	0	$	958	$	958	$	108,475	$	109,433
Non-owner occupied		0		0		343		343		165,105		165,448
Farmland		0		0		58		58		34,057		34,115
Other		0		0		0		0		70,542		70,542
Commercial
Commercial and industrial		90		0		400		490		170,242		170,732
Agricultural		0		29		12		41		24,632		24,673
Residential real estate
1-4 family residential		3,368		356		2,224		5,948		217,752		223,700
Home equity lines of credit		77		37		320		434		59,248		59,682
Consumer
Indirect		2,844		696		736		4,276		157,437		161,713
Direct		744		213		74		1,031		25,815		26,846
Other		92		28		16		136		7,476		7,612
Total originated loans	$	7,215	$	1,359	$	5,141	$	13,715	$	1,040,781	$	1,054,496
Acquired loans:
Commercial real estate
Owner occupied	$	8	$	205	$	85	$	298	$	60,630	$	60,928
Non-owner occupied		134		0		0		134		24,815		24,949
Farmland		83		0		380		463		53,741		54,204
Other		0		0		24		24		14,642		14,666
Commercial
Commercial and industrial		278		0		961		1,239		32,387		33,626
Agricultural		21		0		236		257		15,767		16,024
Residential real estate
1-4 family residential		1,556		504		931		2,991		109,027		112,018
Home equity lines of credit		152		9		228		389		34,406		34,795
Consumer
Direct		938		184		184		1,306		20,376		21,682
Other		100		0		0		100		147		247
Total acquired loans	$	3,270	$	902	$	3,029	$	7,201	$	365,938	$	373,139
Total loans	$	10,485	$	2,261	$	8,170	$	20,916	$	1,406,719	$	1,427,635