Loans

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Loans

Loans:

Loan balances were as follows:

(In Thousands of Dollars)	September 30, 2019			December 31, 2018
Originated loans:
Commercial real estate
Owner occupied	$	168,170		$	158,947
Non-owner occupied		284,210			256,124
Farmland		133,248			110,881
Other		92,206			94,527
Commercial
Commercial and industrial		238,260			227,031
Agricultural		42,856			37,623
Residential real estate
1-4 family residential		322,023			307,794
Home equity lines of credit		89,122			82,690
Consumer
Indirect		163,418			164,509
Direct		27,292			30,277
Other		9,762			11,894
Total originated loans	$	1,570,567		$	1,482,297
Acquired loans:
Commercial real estate
Owner occupied	$	39,344		$	44,872
Non-owner occupied		11,730			16,920
Farmland		37,152			40,983
Other		6,920			8,091
Commercial
Commercial and industrial		13,353			18,141
Agricultural		6,231			9,526
Residential real estate
1-4 family residential		68,398			78,786
Home equity lines of credit		20,453			23,617
Consumer
Direct		6,746			9,442
Other		101			162
Total acquired loans	$	210,428		$	250,540
Net Deferred loan costs		3,130			3,003
Allowance for loan losses		(14,261	)		(13,592	)
Net loans	$	1,769,864		$	1,722,248

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)	September 30, 2019		December 31, 2018
Commercial real estate
Non-owner occupied	$	242	$	292
Commercial
Commercial and industrial		769		899
Total outstanding balance	$	1,011	$	1,191
Carrying amount, net of allowance of $0 in 2019 and 2018	$	744	$	903

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

	Three Months Ended						Nine Months Ended
(In Thousands of Dollars)	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Beginning balance	$	79		$	132		$	93		$	170
New loans purchased	0			0			0			0
Accretion of income		(7	)		(19	)		(21	)		(57	)
Ending balance	$	72		$	113		$	72		$	113

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, 2019.

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, 2019 and 2018:

Three Months Ended September 30, 2019

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	5,571		$	2,199		$	2,910		$	2,755		$	787	$	14,222
Provision for loan losses		19			75			147			236			73		550
Loans charged off		(17	)		(32	)		(224	)		(401	)		0		(674	)
Recoveries		1			1			11			150			0		163
Total ending allowance balance	$	5,574		$	2,243		$	2,844		$	2,740		$	860	$	14,261

Nine Months Ended September 30, 2019

(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Unallocated		Total
Allowance for loan losses
Beginning balance	$	5,036		$	2,093		$	2,837		$	2,963		$	663	$	13,592
Provision for loan losses		552			228			330			543			197		1,850
Loans charged off		(17	)		(90	)		(371	)		(1,350	)		0		(1,828	)
Recoveries		3			12			48			584			0		647
Total ending allowance balance	$	5,574		$	2,243		$	2,844		$	2,740		$	860	$	14,261

Three Months Ended September 30, 2018

(In Thousands of Dollars)	Commercial Real Estate		Commercial			Residential Real Estate			Consumer			Unallocated			Total
Allowance for loan losses
Beginning balance	$	4,339	$	1,937		$	2,651		$	3,050		$	787		$	12,764
Provision for loan losses		380		96			177			309			(12	)		950
Loans charged off		0		(32	)		(48	)		(464	)		0			(544	)
Recoveries		21		6			40			140			0			207
Total ending allowance balance	$	4,740	$	2,007		$	2,820		$	3,035		$	775		$	13,377

Nine Months Ended September 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		426		182			345			1,422			100		2,475
Loans charged off		0		(194	)		(172	)		(1,737	)		0		(2,103	)
Recoveries		54		8			126			502			0		690
Total ending allowance balance	$	4,740	$	2,007		$	2,820		$	3,035		$	775	$	13,377

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, 2019 and December 31, 2018.  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, 2019

(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	$	2	$	61	$	0	$	0	$	63
Collectively evaluated for impairment		5,521		2,228		2,744		2,738		860		14,091
Acquired loans collectively evaluated for impairment		53		13		39		2		0		107
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	5,574	$	2,243	$	2,844	$	2,740	$	860	$	14,261
Loans:
Loans individually evaluated for impairment	$	1,040	$	221	$	3,200	$	253	$	0	$	4,714
Loans collectively evaluated for impairment		676,142		280,738		407,620		205,850		0		1,570,350
Acquired loans		94,129		18,947		88,447		6,794		0		208,317
Acquired with deteriorated credit quality		212		532		0		0		0		744
Total ending loans balance	$	771,523	$	300,438	$	499,267	$	212,897	$	0	$	1,784,125

December 31, 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	$	3	$	267	$	0	$	0	$	276
Collectively evaluated for impairment		4,981		2,075		2,534		2,960		663		13,213
Acquired loans collectively evaluated for impairment		49		15		36		3		0		103
Acquired with deteriorated credit quality		0		0		0		0		0		0
Total ending allowance balance	$	5,036	$	2,093	$	2,837	$	2,963	$	663	$	13,592
Loans:
Loans individually evaluated for impairment	$	790	$	223	$	4,627	$	83	$	0	$	5,723
Loans collectively evaluated for impairment		618,729		264,208		385,702		212,130		0		1,480,769
Acquired loans		110,143		26,916		101,804		9,582		0		248,445
Acquired with deteriorated credit quality		262		641		0		0		0		903
Total ending loans balance	$	729,924	$	291,988	$	492,133	$	221,795	$	0	$	1,735,840

The following tables present information related to impaired loans by class of loans as of September 30, 2019 and December 31, 2018:

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
September 30, 2019
With no related allowance recorded:
Commercial real estate
Owner occupied	$	286	$	242	$	0
Non-owner occupied		39		35		0
Farmland		783		763		0
Commercial
Commercial and industrial		190		155		0
Agricultural		11		11		0
Residential real estate
1-4 family residential		3,055		2,054		0
Home equity lines of credit		458		365		0
Consumer		458		253		0
Subtotal		5,280		3,878		0
With an allowance recorded:
Commercial real estate
Farmland		0		0		0
Commercial
Commercial and industrial		55		55		2
Residential real estate
1-4 family residential		751		686		52
Home equity lines of credit		95		95		9
Consumer		0		0		0
Subtotal		901		836		63
Total	$	6,181	$	4,714	$	63

(In Thousands of Dollars)	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
December 31, 2018
With no related allowance recorded:
Commercial real estate
Owner occupied	$	524	$	494	$	0
Non-owner occupied		40		38		0
Commercial
Commercial and industrial		191		162		0
Residential real estate
1-4 family residential		3,451		2,759		0
Home equity lines of credit		379		326		0
Consumer		174		83		0
Subtotal		4,759		3,862		0
With an allowance recorded:
Commercial real estate
Farmland		258		258		6
Commercial
Commercial and industrial		61		61		3
Residential real estate
1-4 family residential		1,354		1,343		188
Home equity lines of credit		224		199		79
Consumer		0		0		0
Subtotal		1,897		1,861		276
Total	$	6,656	$	5,723	$	276

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, 2019 and 2018:

	Average Recorded Investment				Interest Income Recognized
	For Three Months Ended September 30,				For Three Months Ended September 30,
(In Thousands of Dollars)	2019		2018		2019		2018
With no related allowance recorded:
Commercial real estate
Owner occupied	$	282	$	512	$	4	$	8
Non-owner occupied		36		40		1		1
Farmland		457		0		0		0
Commercial
Commercial and industrial		159		155		3		1
Agricultural		11		0		0		0
Residential real estate
1-4 family residential		2,194		2,941		38		40
Home equity lines of credit		375		294		5		4
Consumer		231		68		6		2
Subtotal		3,745		4,010		57		56
With an allowance recorded:
Commercial real estate
Owner occupied		0		0		0		0
Non-owner occupied		0		0		0		0
Farmland		171		257		0		0
Commercial
Commercial and industrial		56		78		1		1
Residential real estate
1-4 family residential		1,083		2,132		7		19
Home equity lines of credit		99		170		2		2
Consumer		7		11		0		0
Subtotal		1,416		2,648		10		22
Total	$	5,161	$	6,658	$	67	$	78

	Average Recorded Investment				Interest Income Recognized
	For Nine Months Ended September 30,				For Nine Months Ended September 30,
(In Thousands of Dollars)	2019		2018		2019		2018
With no related allowance recorded:
Commercial real estate
Owner occupied	$	310	$	487	$	13	$	23
Non-owner occupied		37		22		1		1
Farmland		162		0		0		0
Commercial
Commercial and industrial		154		411		8		3
Agricultural		5		0		0		0
Residential real estate
1-4 family residential		2,480		2,751		124		131
Home equity lines of credit		361		307		18		12
Consumer		155		69		15		8
Subtotal		3,664		4,047		179		178
With an allowance recorded:
Commercial real estate
Owner occupied		0		0		0		0
Non-owner occupied		0		0		0		0
Farmland		229		171		0		0
Commercial
Commercial and industrial		58		71		3		3
Agricultural		0		0		0		0
Residential real estate
1-4 family residential		1,229		1,837		23		38
Home equity lines of credit		145		161		5		5
Consumer		15		4		0		0
Subtotal		1,676		2,244		31		46
Total	$	5,340	$	6,291	$	210	$	224

Cash basis interest recognized during the three and nine month periods ended September 30, 2019 and 2018 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, 2019 and December 31, 2018:

	September 30, 2019				December 31, 2018
(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	$	242	$	0	$	340	$	0
Farmland		18		0		30		0
Commercial
Commercial and industrial		455		0		122		0
Agricultural		24		0		158		0
Residential real estate
1-4 family residential		1,294		114		2,318		185
Home equity lines of credit		687		37		644		31
Consumer
Indirect		557		130		346		369
Direct		111		73		54		200
Other		0		3		0		2
Total originated loans	$	3,388	$	357	$	4,012	$	787
Acquired loans:
Commercial real estate
Non-owner occupied	$	85	$	0	$	82	$	0
Farmland		763		0		257		0
Commercial
Commercial and industrial		713		0		824		0
Agricultural		10		0		291		0
Residential real estate
1-4 family residential		707		291		1,001		122
Home equity lines of credit		250		2		203		14
Consumer
Direct		162		21		95		43
Total acquired loans	$	2,690	$	314	$	2,753	$	179
Total loans	$	6,078	$	671	$	6,765	$	966

The following tables present the aging of the recorded investment in past due loans as of September 30, 2019 and December 31, 2018 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, 2019
Originated loans:
Commercial real estate
Owner occupied	$	0	$	0	$	242	$	242	$	167,548	$	167,790
Non-owner occupied		0		0		0		0		283,563		283,563
Farmland		0		0		18		18		133,059		133,077
Other		82		0		0		82		91,873		91,955
Commercial
Commercial and industrial		148		57		455		660		237,230		237,890
Agricultural		200		0		24		224		42,740		42,964
Residential real estate
1-4 family residential		2,371		1,136		1,408		4,915		316,362		321,277
Home equity lines of credit		265		38		724		1,027		88,112		89,139
Consumer
Indirect		1,521		402		687		2,610		166,218		168,828
Direct		636		298		184		1,118		26,344		27,462
Other		26		16		3		45		9,716		9,761
Total originated loans:	$	5,249	$	1,947	$	3,745	$	10,941	$	1,562,765	$	1,573,706
Acquired loans:
Commercial real estate
Owner occupied	$	23	$	42	$	0	$	65	$	39,340	$	39,405
Non-owner occupied		0		0		85		85		11,576		11,661
Farmland		0		69		763		832		36,320		37,152
Other		0		0		0		0		6,920		6,920
Commercial
Commercial and industrial		24		0		713		737		12,616		13,353
Agricultural		9		0		10		19		6,212		6,231
Residential real estate
1-4 family residential		1,014		277		998		2,289		66,109		68,398
Home equity lines of credit		145		0		252		397		20,056		20,453
Consumer
Direct		155		119		183		457		6,288		6,745
Other		3		0		0		3		98		101
Total acquired loans	$	1,373	$	507	$	3,004	$	4,884	$	205,535	$	210,419
Total loans	$	6,622	$	2,454	$	6,749	$	15,825	$	1,768,300	$	1,784,125

(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, 2018
Originated loans:
Commercial real estate
Owner occupied	$	82	$	0	$	340	$	422	$	158,161	$	158,583
Non-owner occupied		22		0		0		22		255,458		255,480
Farmland		184		0		30		214		110,547		110,761
Other		0		0		0		0		94,242		94,242
Commercial
Commercial and industrial		159		0		122		281		226,320		226,601
Agricultural		69		10		158		237		37,484		37,721
Residential real estate
1-4 family residential		1,964		424		2,503		4,891		302,131		307,022
Home equity lines of credit		64		14		675		753		81,957		82,710
Consumer
Indirect		1,714		755		715		3,184		166,622		169,806
Direct		714		340		254		1,308		29,183		30,491
Other		33		14		2		49		11,845		11,894
Total originated loans	$	5,005	$	1,557	$	4,799	$	11,361	$	1,473,950	$	1,485,311
Acquired loans:
Commercial real estate
Owner occupied	$	321	$	0	$	0	$	321	$	44,618	$	44,939
Non-owner occupied		0		0		82		82		16,764		16,846
Farmland		0		102		257		359		40,623		40,982
Other		0		0		0		0		8,091		8,091
Commercial
Commercial and industrial		94		0		824		918		17,223		18,141
Agricultural		31		5		291		327		9,198		9,525
Residential real estate
1-4 family residential		750		229		1,123		2,102		76,682		78,784
Home equity lines of credit		208		0		217		425		23,192		23,617
Consumer
Direct		318		257		138		713		8,729		9,442
Other		0		0		0		0		162		162
Total acquired loans	$	1,722	$	593	$	2,932	$	5,247	$	245,282	$	250,529
Total loans	$	6,727	$	2,150	$	7,731	$	16,608	$	1,719,232	$	1,735,840