Loans

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Loans

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	June 30, 2018			December 31, 2017
Originated loans:
Commercial real estate
Owner occupied	$	145,923		$	140,321
Non-owner occupied		225,569			199,080
Farmland		94,500			70,534
Other		72,361			89,025
Commercial
Commercial and industrial		209,361			193,347
Agricultural		32,849			32,587
Residential real estate
1-4 family residential		290,430			272,421
Home equity lines of credit		74,951			71,507
Consumer
Indirect		167,938			155,950
Direct		29,566			28,519
Other		9,902			8,876
Total originated loans	$	1,353,350		$	1,262,167
Acquired loans:
Commercial real estate
Owner occupied	$	49,776		$	53,031
Non-owner occupied		18,388			20,286
Farmland		42,985			47,754
Other		11,400			11,964
Commercial
Commercial and industrial		23,311			27,094
Agricultural		10,839			12,206
Residential real estate
1-4 family residential		87,569			96,759
Home equity lines of credit		26,536			28,755
Consumer
Direct		11,587			14,378
Other		145			128
Total acquired loans	$	282,536		$	312,355
Net Deferred loan costs		3,305			2,859
Allowance for loan losses		(12,764	)		(12,315	)
Net loans	$	1,626,427		$	1,565,066

Purchased credit impaired loans

As part of past acquisitions 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)	June 30, 2018		December 31, 2017
Commercial real estate
Owner occupied	$	693	$	670
Non-owner occupied		370		387
Commercial
Commercial and industrial		972		1,072
Total outstanding balance	$	2,035	$	2,129
Carrying amount, net of allowance of $0 in 2018 and 2017	$	1,677	$	1,733

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

	Three Months Ended						Six Months Ended
(In Thousands of Dollars)	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Beginning balance	$	151		$	228		$	170		$	247
New loans purchased	0			0			0			0
Accretion of income		(19	)		(19	)		(38	)		(38	)
Ending balance	$	132		$	209		$	132		$	209

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 six month periods ended June 30, 2018.

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, 2018 and 2017:

Three Months Ended June 30, 2018

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	4,404		$	2,062		$	2,601		$	2,924		$	559	$	12,550
Provision for loan losses		(96	)		(61	)		93			586			228		750
Loans charged off		0			(65	)		(68	)		(644	)		0		(777	)
Recoveries		31			1			25			184			0		241
Total ending allowance balance	$	4,339		$	1,937		$	2,651		$	3,050		$	787	$	12,764

Six Months Ended June 30, 2018

(In Thousands of Dollars)	Commercial Real Estate		Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	4,260	$	2,011		$	2,521		$	2,848		$	675	$	12,315
Provision for loan losses		46		86			168			1,113			112		1,525
Loans charged off		0		(162	)		(124	)		(1,273	)		0		(1,559	)
Recoveries		33		2			86			362			0		483
Total ending allowance balance	$	4,339	$	1,937		$	2,651		$	3,050		$	787	$	12,764

Three Months Ended June 30, 2017

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	3,638		$	1,846		$	2,321		$	2,813		$	701		$	11,319
Provision for loan losses		365			198			5			464			(82	)		950
Loans charged off		(67	)		(113	)		(36	)		(509	)		0			(725	)
Recoveries		18			5			20			159			0			202
Total ending allowance balance	$	3,954		$	1,936		$	2,310		$	2,927		$	619		$	11,746

Six Months Ended June 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		442			215			114			1,040			189		2,000
Loans charged off		(207	)		(215	)		(42	)		(1,204	)		0		(1,668	)
Recoveries		142			62			33			325			0		562
Total ending allowance balance	$	3,954		$	1,936		$	2,310		$	2,927		$	619	$	11,746

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 June 30, 2018 and December 31, 2017.  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, 2018

(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	$	6	$	5	$	239	$	0	$	0	$	250
Collectively evaluated for impairment		4,285		1,918		2,375		3,047		787		12,412
Acquired loans collectively evaluated for impairment		48		14		37		3		0		102
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	4,339	$	1,937	$	2,651	$	3,050	$	787	$	12,764
Loans:
Loans individually evaluated for impairment	$	819	$	282	$	5,492	$	87	$	0	$	6,680
Loans collectively evaluated for impairment		536,661		241,648		359,716		212,947		0		1,350,972
Acquired loans		121,101		33,410		113,619		11,732		0		279,862
Acquired with deteriorated credit quality		978		699		0		0		0		1,677
Total ending loans balance	$	659,559	$	276,039	$	478,827	$	224,766	$	0	$	1,639,191

December 31, 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	$	0	$	4	$	158	$	0	$	0	$	162
Collectively evaluated for impairment		4,214		1,993		2,322		2,844		675		12,048
Acquired loans collectively evaluated for impairment		46		14		41		4		0		105
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	4,260	$	2,011	$	2,521	$	2,848	$	675	$	12,315
Loans:
Loans individually evaluated for impairment	$	658	$	260	$	4,559	$	59	$	0	$	5,536
Loans collectively evaluated for impairment		497,168		225,312		339,143		198,370		0		1,259,993
Acquired loans		131,926		38,503		125,182		14,507		0		310,118
Acquired with deteriorated credit quality		948		786		0		0		0		1,734
Total ending loans balance	$	630,700	$	264,861	$	468,884	$	212,936	$	0	$	1,577,381

The following tables present information related to impaired loans by class of loans as of June 30, 2018 and December 31, 2017:

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
June 30, 2018
With no related allowance recorded:
Commercial real estate
Owner occupied	$	541	$	522	$	0
Non-owner occupied		41		40		0
Commercial
Commercial and industrial		279		207		0
Residential real estate
1-4 family residential		3,483		2,901		0
Home equity lines of credit		342		294		0
Consumer		221		87		0
Subtotal		4,907		4,051		0
With an allowance recorded:
Commercial real estate
Owner occupied		0		0		0
Non-owner occupied		0		0		0
Farmland		258		257		6
Commercial
Commercial and industrial		75		75		5
Residential real estate
1-4 family residential		2,151		2,141		165
Home equity lines of credit		169		156		74
Subtotal		2,653		2,629		250
Total	$	7,560	$	6,680	$	250

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2017
With no related allowance recorded:
Commercial real estate
Owner occupied	$	659	$	658	$	0
Non-owner occupied		0		0		0
Farmland		0		0		0
Commercial
Commercial and industrial		214		192		0
Agricultural		0		0		0
Residential real estate
1-4 family residential		2,923		2,697		0
Home equity lines of credit		341		319		0
Consumer		145		59		0
Subtotal		4,282		3,925		0
With an allowance recorded:
Commercial real estate
Owner occupied		0		0		0
Non-owner occupied		0		0		0
Farmland		0		0		0
Commercial
Commercial and industrial		68		68		4
Agricultural		0		0		0
Residential real estate
1-4 family residential		1,409		1,387		84
Home equity lines of credit		159		156		74
Subtotal		1,636		1,611		162
Total	$	5,918	$	5,536	$	162

The following tables present 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, 2018 and 2017:

	Average Recorded Investment				Interest Income Recognized
	For Three Months Ended June 30,				For Three Months Ended June 30,
(In Thousands of Dollars)	2018		2017		2018		2017
With no related allowance recorded:
Commercial real estate
Owner occupied	$	527	$	682	$	8	$	2
Non-owner occupied		27		18		0		0
Farmland		0		17		0		0
Commercial
Commercial and industrial		204		182		1		1
Agricultural		0		15		0		0
Residential real estate
1-4 family residential		2,677		2,251		42		35
Home equity lines of credit		302		326		4		3
Consumer		77		105		3		4
Subtotal		3,814		3,596		58		45
With an allowance recorded:
Commercial real estate
Owner occupied		0		164		0		2
Non-owner occupied		0		1,092		0		14
Farmland		257		0		0		0
Commercial
Commercial and industrial		68		72		1		1
Residential real estate
1-4 family residential		1,949		794		9		9
Home equity lines of credit		157		84		1		1
Consumer		0		0		0		0
Subtotal		2,431		2,206		11		27
Total	$	6,245	$	5,802	$	69	$	72

	Average Recorded Investment				Interest Income Recognized
	For Six Months Ended June 30,				For Six Months Ended June 30,
(In Thousands of Dollars)	2018		2017		2018		2017
With no related allowance recorded:
Commercial real estate
Owner occupied	$	474	$	851	$	15	$	5
Non-owner occupied		14		122		0		1
Farmland		0		24		0		0
Commercial
Commercial and industrial		538		183		2		2
Agricultural		0		21		0		0
Residential real estate
1-4 family residential		2,657		2,315		91		72
Home equity lines of credit		314		276		8		7
Consumer		70		90		6		6
Subtotal		4,067		3,882		122		93
With an allowance recorded:
Commercial real estate
Owner occupied		0		166		0		4
Non-owner occupied		0		1,099		0		28
Farmland		129		126		0		0
Commercial
Commercial and industrial		68		73		2		2
Agricultural		0		100		0		0
Residential real estate
1-4 family residential		1,689		784		19		17
Home equity lines of credit		156		84		3		2
Consumer		0		0		0		0
Subtotal		2,042		2,432		24		53
Total	$	6,109	$	6,314	$	146	$	146

Cash basis interest recognized during the three and six month periods ended June 30, 2018 and 2017 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 June 30, 2018 and December 31, 2017:

	June 30, 2018				December 31, 2017
(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	$	373	$	0	$	501	$	0
Non-owner occupied		0		0		0		0
Farmland		37		0		45		0
Commercial
Commercial and industrial		254		0		249		0
Agricultural		0		8		2		0
Residential real estate
1-4 family residential		3,332		83		2,653		393
Home equity lines of credit		627		170		602		8
Consumer
Indirect		332		109		457		361
Direct		36		147		63		153
Other		0		14		0		14
Total originated loans	$	4,991	$	531	$	4,572	$	929
Acquired loans:
Commercial real estate
Owner occupied	$	0	$	0	$	0	$	0
Non-owner occupied		88		0		216		0
Farmland		257		251		0		0
Commercial
Commercial and industrial		865		0		943		19
Agricultural		0		0		9		0
Residential real estate
1-4 family residential		933		60		613		69
Home equity lines of credit		181		83		170		0
Consumer
Direct		142		24		140		15
Total acquired loans	$	2,466	$	418	$	2,091	$	103
Total loans	$	7,457	$	949	$	6,663	$	1,032

The following tables present the aging of the recorded investment in past due loans as of June 30, 2018 and December 31, 2017 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, 2018
Originated loans:
Commercial real estate
Owner occupied	$	37	$	0	$	373	$	410	$	145,135	$	145,545
Non-owner occupied		0		0		0		0		225,000		225,000
Farmland		388		0		37		425		93,965		94,390
Other		0		0		0		0		72,086		72,086
Commercial
Commercial and industrial		919		27		254		1,200		207,742		208,942
Agricultural		0		0		8		8		32,940		32,948
Residential real estate
1-4 family residential		2,114		279		3,415		5,808		283,940		289,748
Home equity lines of credit		256		0		797		1,053		73,924		74,977
Consumer
Indirect		1,901		784		441		3,126		170,233		173,359
Direct		603		311		183		1,097		28,676		29,773
Other		32		22		14		68		9,833		9,901
Total originated loans:	$	6,250	$	1,423	$	5,522	$	13,195	$	1,343,474	$	1,356,669
Acquired loans:
Commercial real estate
Owner occupied	$	308	$	0	$	0	$	308	$	49,530	$	49,838
Non-owner occupied		0		0		88		88		18,229		18,317
Farmland		407		0		508		915		42,069		42,984
Other		0		0		0		0		11,399		11,399
Commercial
Commercial and industrial		56		83		865		1,004		22,306		23,310
Agricultural		3		0		0		3		10,836		10,839
Residential real estate
1-4 family residential		1,260		148		993		2,401		85,166		87,567
Home equity lines of credit		40		0		264		304		26,231		26,535
Consumer
Direct		462		195		166		823		10,765		11,588
Other		0		1		0		1		144		145
Total acquired loans	$	2,536	$	427	$	2,884	$	5,847	$	276,675	$	282,522
Total loans	$	8,786	$	1,850	$	8,406	$	19,042	$	1,620,149	$	1,639,191

(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, 2017
Originated loans:
Commercial real estate
Owner occupied	$	4	$	340	$	501	$	845	$	139,081	$	139,926
Non-owner occupied		0		0		0		0		198,588		198,588
Farmland		0		0		45		45		70,398		70,443
Other		0		0		0		0		88,703		88,703
Commercial
Commercial and industrial		292		3		249		544		192,335		192,879
Agricultural		74		0		2		76		32,605		32,681
Residential real estate
1-4 family residential		2,044		403		3,046		5,493		266,338		271,831
Home equity lines of credit		155		18		610		783		70,754		71,537
Consumer
Indirect		2,429		829		818		4,076		156,772		160,848
Direct		632		250		216		1,098		27,608		28,706
Other		115		11		14		140		8,736		8,876
Total originated loans	$	5,745	$	1,854	$	5,501	$	13,100	$	1,251,918	$	1,265,018
Acquired loans:
Commercial real estate
Owner occupied	$	0	$	0	$	0	$	0	$	53,051	$	53,051
Non-owner occupied		0		0		216		216		20,042		20,258
Farmland		454		0		0		454		47,301		47,755
Other		0		0		0		0		11,976		11,976
Commercial
Commercial and industrial		327		96		962		1,385		25,709		27,094
Agricultural		87		0		9		96		12,111		12,207
Residential real estate
1-4 family residential		858		77		682		1,617		95,144		96,761
Home equity lines of credit		161		0		170		331		28,424		28,755
Consumer
Direct		380		151		155		686		13,692		14,378
Other		0		1		0		1		127		128
Total acquired loans	$	2,267	$	325	$	2,194	$	4,786	$	307,577	$	312,363
Total loans	$	8,012	$	2,179	$	7,695	$	17,886	$	1,559,495	$	1,577,381