10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

For the quarterly period ended March 31, 2018

Farmers Capital Bank Corporation

(Exact name of registrant as specified in its charter)

Kentucky	000-14412	61-1017851
(State or other jurisdiction of incorporation or organization)	(Commission  File Number)	(IRS Employer  Identification No.)

P.O. Box 309 202 West Main St. Frankfort, KY	40601
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code – (502) 227-1668

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

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   ☒     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 (Section 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   ☒     No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.

Large accelerated filer  ☐	Accelerated filer  ☒
Non-accelerated filer  ☐ (Do not check if a smaller reporting company)	Smaller reporting company  ☐
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  ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common stock, par value $0.125 per share

7,519,814 shares outstanding at May 1, 2018

1

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Unaudited Condensed Consolidated Balance Sheets	3
Unaudited Condensed Consolidated Statements of Income	4
Unaudited Condensed Consolidated Statements of Comprehensive Income	5
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	6
Unaudited Condensed Consolidated Statements of Cash Flows	7
Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	46
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6. Exhibits	47
SIGNATURES	50

2

PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Unaudited Condensed Consolidated Balance Sheets

	March 31,			December 31,
(In thousands, except share and per share data)	2018			2017
Assets
Cash and cash equivalents:
Cash and due from banks	$	22,143		$	25,581
Interest bearing deposits in other banks		96,099			58,154
Money market mutual funds		34,979			36,673
Total cash and cash equivalents		153,221			120,408
Investment securities:
Available for sale, amortized cost of $411,995 (2018) and $427,831 (2017)		402,288			423,318
Equity investments, amortized cost of $1,560 (2018) and $864 (2017)		1,575			935
Held to maturity, fair value of $3,424 (2018) and $3,478 (2017)		3,350			3,364
Total investment securities		407,213			427,617
Loans, net of unearned income		1,035,469			1,035,263
Allowance for loan losses		(9,748	)		(9,783	)
Loans, net		1,025,721			1,025,480
Premises and equipment, net		30,909			30,928
Company-owned life insurance		30,731			30,817
Other real estate owned		5,087			5,489
Other assets		33,105			33,133
Total assets	$	1,685,987		$	1,673,872
Liabilities
Deposits:
Noninterest bearing	$	375,645		$	361,855
Interest bearing		1,018,446			1,018,048
Total deposits		1,394,091			1,379,903
Securities sold under agreements to repurchase		33,343			34,252
Federal Home Loan Bank advances		3,436			3,479
Subordinated notes payable to unconsolidated trusts		33,506			33,506
Dividends payable, common stock		940			939
Other liabilities		26,643			28,440
Total liabilities		1,491,959			1,480,519
Shareholders’ Equity
Common stock, par value $.125 per share; 14,608,000 shares authorized; 7,519,445 and 7,517,446 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively		940			940
Capital surplus		52,278			52,201
Retained earnings		148,535			143,778
Accumulated other comprehensive loss		(7,725	)		(3,566	)
Total shareholders’ equity		194,028			193,353
Total liabilities and shareholders’ equity	$	1,685,987		$	1,673,872

See accompanying notes to unaudited condensed consolidated financial statements.

3

Unaudited Condensed Consolidated Statements of Income

	Three Months Ended
	March 31,
(In thousands, except per share data)	2018			2017
Interest Income
Interest and fees on loans	$	12,469		$	11,722
Interest on investment securities:
Taxable		2,025			1,900
Nontaxable		475			591
Interest on deposits in other banks		269			142
Interest on federal funds sold and money market mutual funds		106			24
Total interest income		15,344			14,379
Interest Expense
Interest on deposits		586			533
Interest on securities sold under agreements to repurchase		19			25
Interest on Federal Home Loan Bank advances		28			160
Interest on subordinated notes payable to unconsolidated trusts		254			198
Total interest expense		887			916
Net interest income		14,457			13,463
Provision for loan losses		(261	)		580
Net interest income after provision for loan losses		14,718			12,883
Noninterest Income
Service charges and fees on deposits		1,912			1,958
Allotment processing fees		720			715
Other service charges, commissions, and fees		1,372			1,372
Trust income		789			704
Net loss on sales of available for sale investment securities		-			(9	)
Gains on sale of mortgage loans, net		95			154
Income from company-owned life insurance		293			235
Other		20			122
Total noninterest income		5,201			5,251
Noninterest Expense
Salaries and employee benefits		7,490			7,860
Occupancy expenses, net		1,254			1,214
Equipment expenses		601			553
Data processing and communication expenses		1,083			1,293
Bank franchise tax		500			557
Deposit insurance expense		126			137
Other real estate expenses, net		117			74
Other		1,947			1,841
Total noninterest expense		13,118			13,529
Income before income taxes		6,801			4,605
Income tax expense		1,160			1,276
Net income	$	5,641		$	3,329
Per Common Share
Net income – basic and diluted	$	.75		$	.44
Cash dividends declared		.125			.10
Weighted Average Common Shares Outstanding
Basic and diluted		7,518			7,510

See accompanying notes to unaudited condensed consolidated financial statements.

4

Unaudited Condensed Consolidated Statements of Comprehensive Income

	Three Months Ended
	March 31,
(In thousands)	2018			2017
Net Income	$	5,641		$	3,329
Other comprehensive (loss) income:
Unrealized holding (loss) gain on available for sale securities arising during the period, net of tax of $(1,093) and $510, respectively		(4,102	)		948
Reclassification adjustment for net realized loss included in net income, net of tax of $- and $(3), respectively		-			6
Change in unfunded portion of postretirement benefit obligation, net of tax of $- and $32, respectively		(1	)		59
Other comprehensive (loss) income		(4,103	)		1,013
Comprehensive income	$	1,538		$	4,342

See accompanying notes to unaudited condensed consolidated financial statements.

5

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except per share data)										Accumulated
										Other			Total
Three months ended	Common Stock				Capital		Retained			Comprehensive			Shareholders’
March 31, 2018 and 2017	Shares		Amount		Surplus		Earnings			(Loss) Income			Equity
Balance at January 1, 2018		7,517	$	940	$	52,201	$	143,778		$	(3,566	)	$	193,353
Net income		-		-		-		5,641			-			5,641
Other comprehensive loss		-		-		-		-			(4,103	)		(4,103	)
Adoption of Accounting Standards Update 2016-01		-		-		-		56			(56	)		-
Cash dividends declared – common, $.125 per share		-		-		-		(940	)		-			(940	)
Shares issued under director compensation plan		-		-		18		-			-			18
Shares issued pursuant to employee stock purchase plan		2		-		51		-			-			51
Expense related to employee stock purchase plan		-		-		8		-			-			8
Balance at March 31, 2018		7,519	$	940	$	52,278	$	148,535		$	(7,725	)	$	194,028
Balance at January 1, 2017		7,509	$	939	$	51,885	$	134,650		$	(3,408	)	$	184,066
Net income		-		-		-		3,329			-			3,329
Other comprehensive income		-		-		-		-			1,013			1,013
Cash dividends declared – common, $.10 per share		-		-		-		(751	)		-			(751	)
Shares issued under director compensation plan		1		-		28		-			-			28
Shares issued pursuant to employee stock purchase plan		2		-		46		-			-			46
Expense related to employee stock purchase plan		-		-		9		-			-			9
Balance at March 31, 2017		7,512	$	939	$	51,968	$	137,228		$	(2,395	)	$	187,740

See accompanying notes to unaudited condensed consolidated financial statements.

6

Unaudited Condensed Consolidated Statements of Cash Flows

Three months ended March 31, (In thousands)	2018			2017
Cash Flows from Operating Activities
Net income	$	5,641		$	3,329
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		800			862
Net premium amortization of investment securities:
Available for sale		616			897
Held to maturity		14			13
Provision for loan losses		(261	)		580
Deferred income tax (benefit) expense		(10	)		18
Noncash employee stock purchase plan expense		8			9
Noncash director fee compensation		18			28
Mortgage loans originated for sale		(2,557	)		(5,324	)
Proceeds from sale of mortgage loans		2,537			6,624
Gain on sale of mortgage loans, net		(95	)		(154	)
Loss on disposal of premises and equipment, net		-			37
Net loss (gain) on sale and write downs of other real estate		76			(5	)
Net loss on sale of available for sale investment securities		-			9
Unrealized loss on equity investment securities		55			-
Curtailment gain on postretirement benefits plan liability		-			(351	)
Increase in cash surrender value of company-owned life insurance		(213	)		(216	)
Death benefits in excess of cash surrender value on company-owned life insurance		(67	)		-
Decrease in accrued interest receivable		363			434
Decrease in other assets		517			1,787
Increase (decrease) in accrued interest payable		4			(32	)
Decrease in other liabilities		(1,802	)		(2,603	)
Net cash provided by operating activities		5,644			5,942
Cash Flows from Investing Activities
Proceeds from maturities and calls of available for sale investment securities		16,715			19,474
Purchase of available for sale investment securities		(1,536	)		(31,058	)
Purchase of equity investment securities		(695	)		(3	)
Proceeds from cancelation of cost method investment securities		239			666
Purchase of cost method investment securities		-			(4,236	)
Loans originated for investment greater than principal collected, net		(493	)		(18,347	)
Purchase of loans held for investment		(709	)		(732	)
Principal collected on purchased loans		1,317			643
Proceeds from death benefits of company-owned life insurance		366			-
Purchase of premises and equipment		(729	)		(1,145	)
Proceeds from sale of other real estate		346			699
Net cash provided by (used in) investing activities		14,821			(34,039	)
Cash Flows from Financing Activities
Net increase in deposits		14,188			18,170
Net decrease in short-term securities sold under agreements to repurchase		(910	)		(2,299	)
Proceeds from long-term securities sold under agreements to repurchase		1			2
Repayments of long-term securities sold under agreements to repurchase		-			(5,041	)
Repayments of Federal Home Loan Bank advances		(43	)		-
Dividends paid, common stock		(939	)		(751	)
Shares issued under employee stock purchase plan		51			46
Net cash provided by financing activities		12,348			10,127
Net increase (decrease) in cash and cash equivalents		32,813			(17,970	)
Cash and cash equivalents at beginning of year		120,408			113,534
Cash and cash equivalents at end of period	$	153,221		$	95,564
Supplemental Disclosures
Cash paid during the period for interest	$	883		$	948
Transfers from loans to other real estate		104			187
Sale and financing of other real estate		84			2,172
Cash dividends payable, common		940			751

See accompanying notes to unaudited condensed consolidated financial statements.

7

Notes to Unaudited Condensed Consolidated Financial Statements

1. Basis of Presentation and Nature of Operations

The condensed consolidated financial statements include the accounts of Farmers Capital Bank Corporation (the “Company” or “Parent Company”), a financial holding company, and its wholly owned subsidiaries. The Company has one bank subsidiary, United Bank & Capital Trust Company (“United Bank”), and one nonbank subsidiary, FFKT Insurance Services, Inc. (“FFKT Insurance”).

FFKT Insurance is a captive insurance company that provides property and casualty coverage to the Parent Company and its subsidiaries for risk management purposes or where insurance may not be available or economically feasible. The Company has two subsidiaries organized as Delaware statutory trusts that are not consolidated into its financial statements. These trusts were formed for the purpose of issuing trust preferred securities.

United Bank’s significant subsidiaries include EG Properties, Inc. and Farmers Capital Insurance Corporation (“Farmers Insurance”). EG Properties, Inc. is involved in real estate management and liquidation for certain repossessed properties of United Bank. Farmers Insurance is an insurance agency in Frankfort, KY.

The Company provides financial services at its 34 locations in 21 communities throughout Central and Northern Kentucky to individual, business, agricultural, governmental, and educational customers. Its primary deposit products are checking, savings, and term certificate accounts. Its primary lending products are residential mortgage, commercial lending, and consumer installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Other services include, but are not limited to, cash management services, issuing letters of credit, safe deposit box rental, and providing funds transfer services. Other financial instruments, which could potentially represent concentrations of credit risk, include deposit accounts in other financial institutions and federal funds sold.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates used in the preparation of the condensed financial statements are based on various factors including the current interest rate environment and the general strength of the local and state economy. Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities. Actual results could differ from those estimates used in the preparation of the condensed financial statements. The allowance for loan losses, carrying value of other real estate owned, actuarial assumptions used to calculate postretirement benefits, and the fair values of financial instruments are estimates that are particularly subject to change.

The consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements of the Company as of that date. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2017 included in the Company’s annual report on Form 10-K. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and the footnotes required by U.S. GAAP for complete statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such condensed financial statements, have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. All significant intercompany transactions and balances are eliminated in consolidation.

2. Reclassifications

Certain reclassifications have been made to the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications do not affect net income or total shareholders’ equity as previously reported.

8

3. Accumulated Other Comprehensive (Loss) Income

The following table presents changes in accumulated other comprehensive (loss) income (“AOCI”) by component, net of tax, for the periods indicated. The table also includes $56 thousand cumulative-effect adjustment from AOCI to retained earnings related to the adoption of Accounting Standards Update (“ASU”) 2016-01 effective January 1, 2018. ASU 2016-01 requires changes in the fair value of the Company’s equity investments to be recognized through net income. Prior to 2018, changes in the fair value of equity securities were recognized through AOCI. Additional information related to the adoption of ASU 2016-01 can be found in Note 4 and Note 7.

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017
(In thousands)	Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total			Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total
Beginning balance	$	(3,510	)	$	(56	)	$	(3,566	)	$	(3,363	)	$	(45	)	$	(3,408	)
Other comprehensive (loss) income before reclassifications		(4,102	)		-			(4,102	)		948			10			958
Amounts reclassified from accumulated other comprehensive income		-			(1	)		(1	)		6			49			55
Net current-period other comprehensive (loss) income		(4,102	)		(1	)		(4,103	)		954			59			1,013
Adoption of Accounting Standards Update 2016-01		(56	)		-			(56	)		-			-			-
Ending balance	$	(7,668	)	$	(57	)	$	(7,725	)	$	(2,409	)	$	14		$	(2,395	)

The following table presents amounts reclassified out of accumulated other comprehensive income by component for the periods indicated. Line items in the statement of income affected by the reclassification are also presented.

	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
(In thousands)	Three Months Ended March 31, 2018		Three Months Ended March 31, 2017
Unrealized gains (losses) on available for sale investment securities	$	-	$	(9	)	Net loss on sales of available for sale investment securities
		-		3		Income tax expense
	$	-	$	(6	)	Net of tax
Amortization related to postretirement benefits
Prior service costs	$	-	$	(75	)	Salaries and employee benefits
Actuarial gains (losses)		1		(1	)	Other noninterest expense
		1		(76	)	Total before tax
		-		27		Income tax expense
	$	1	$	(49	)	Net of tax
Total reclassifications for the period	$	1	$	(55	)	Net of tax

9

4. Accounting Policy

Loans and Interest Income

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their unpaid principal amount outstanding adjusted for any charge-offs, deferred fees or costs on originated loans, and unamortized premiums and discounts on purchased loans. Interest income on loans is recognized using the interest method based on loan principal amounts outstanding during the period. Interest income also includes amortization and accretion of any premiums or discounts over the expected life of acquired loans at the time of purchase or business acquisition. Loan origination fees, net of certain direct origination costs, are deferred and amortized as yield adjustments over the contractual term of the loans.

The Company disaggregates certain disclosure information related to loans, the related allowance for loan losses, and credit quality measures by either portfolio segment or by loan class. The Company segregates its loan portfolio segments based on similar risk characteristics as follows: real estate loans, commercial loans, and consumer loans. Portfolio segments are further disaggregated into classes for certain required disclosures as follows:

Portfolio Segment	Class
Real estate loans	Real estate mortgage – construction and land development Real estate mortgage – residential Real estate mortgage – farmland and other commercial enterprises
Commercial loans	Commercial and industrial Depository institutions Agriculture production and other loans to farmers States and political subdivisions Other
Consumer loans	Secured Unsecured

The Company has a loan policy in place that is amended and approved from time to time as needed to reflect current economic conditions and product offerings in its markets. The policy establishes written procedures concerning areas such as the lending authorities of loan officers, committee review and approval of certain credit requests, underwriting criteria, policy exceptions, appraisal requirements, and loan review. Credit is extended to borrowers based primarily on their ability to repay as demonstrated by income and cash flow analysis.

Loans secured by real estate make up the largest segment of the Company’s loan portfolio. If a borrower fails to repay a loan secured by real estate, the Company may liquidate the collateral in order to satisfy the amount owed. Determining the value of real estate is a key component to the lending process for real estate backed loans. If the fair value of real estate (less estimated cost to sell) securing a collateral dependent loan declines below the outstanding loan amount, the Company will write down the carrying value of the loan and thereby incur a loss. The Company uses independent third party state certified or licensed appraisers in accordance with its loan policy to mitigate risk when underwriting real estate loans. Cash flow analysis of the borrower, loan to value limits as adopted by loan policy, and other customary underwriting standards are also in place which are designed to maximize credit quality and mitigate risks associated with real estate lending.

Commercial loans are made to businesses and are secured mainly by assets such as inventory, accounts receivable, machinery, fixtures and equipment, or other business assets. Commercial lending involves significant risk, as loan repayments are more dependent on the successful operation or management of the business and its cash flows. Consumer lending includes loans to individuals mainly for personal autos, boats, or a variety of other personal uses and may be secured or unsecured. Loan repayment associated with consumer loans is highly dependent upon the borrower’s continuing financial stability, which is heavily influenced by local unemployment rates. The Company mitigates its risk exposure to each of its loan segments by analyzing the borrower’s repayment capacity, imposing restrictions on the amount it will loan compared to estimated collateral values, limiting the payback periods, and following other customary underwriting practices as adopted in its loan policy.

10

The accrual of interest on loans is discontinued when it is determined that the collection of interest or principal is doubtful, or when a default of interest or principal has existed for 90 days or more, unless such loan is well secured and in the process of collection. Past due status is based on the contractual terms of the loan. Interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Cash payments received on nonaccrual loans generally are applied to principal until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company’s policy for placing a loan on nonaccrual status or subsequently returning a loan to accrual status does not differ based on its portfolio class or segment.

Commercial and real estate loans delinquent in excess of 120 days and consumer loans delinquent in excess of 180 days are charged off, unless the collateral securing the debt is of such value that any loss appears to be unlikely. In all cases, loans are charged off at an earlier date if classified as loss under the Company’s loan grading process or as a result of regulatory examination. The Company’s charge-off policy for impaired loans does not differ from the charge-off policy for loans outside the definition of impaired.

Provision and Allowance for Loan Losses

The provision for loan losses represents charges or credits made to earnings to maintain an allowance for loan losses at a level considered adequate to provide for probable incurred credit losses at the balance sheet date. The allowance for loan losses is a valuation allowance increased by the provision for loan losses and decreased by net charge-offs. Loan losses are charged against the allowance when management believes the uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company estimates the adequacy of the allowance using a risk-rated methodology which is based on the Company’s past loan loss experience, known and inherent risks in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral securing loans, composition of the loan portfolio, current economic conditions, and other relevant factors. This evaluation is inherently subjective as it requires significant judgment and the use of estimates that may be susceptible to change.

The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current risk factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. Actual loan losses could differ significantly from the amounts estimated by management.

The general portion of the Company’s loan portfolio is segregated into portfolio segments having similar risk characteristics identified as follows: real estate loans, commercial loans, and consumer loans. Each of these portfolio segments is assigned a loss percentage based on their respective twelve quarter rolling historical loss rates, adjusted for the qualitative risk factors summarized below.

The qualitative risk factors used in the methodology are consistent with the guidance in the most recent Interagency Policy Statement on the Allowance for Loan Losses issued. Each factor is supported by a detailed analysis and is both measurable and supportable. Some factors include a minimum allocation in instances where loss levels are extremely low and it is determined to be prudent from a safety and soundness perspective. Qualitative risk factors that are used in the methodology include the following for each loan portfolio segment:

● Delinquency trends

● Trends in net charge-offs

● Trends in loan volume

● Lending philosophy risk

● Management experience risk

● Concentration of credit risk

● Economic conditions risk

11

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company accounts for impaired loans in accordance with Accounting Standards Codification (“ASC”) Topic 310, “Receivables.” ASC Topic 310 requires that impaired loans be measured at the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or at the fair value of the collateral if the loan is collateral dependent. Impaired loans may also be classified as nonaccrual. In many circumstances, however, the Company continues to accrue interest on an impaired loan. Cash receipts on accruing impaired loans are applied to the recorded investment in the loan, including any accrued interest receivable. Cash payments received on nonaccrual impaired loans generally are applied to principal until qualifying for return to accrual status. Loans that are part of a large group of smaller-balance homogeneous loans, such as residential mortgage, consumer, and smaller-balance commercial loans, are collectively evaluated for impairment. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception, or at the fair value of collateral. The Company determines the amount of reserve for troubled debt restructurings that subsequently default in accordance with its accounting policy for the allowance for loan losses.

Adoption of New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and subsequently issued several amendments to the standard during 2015, 2016, and 2017. The primary principle of ASU No. 2014-09 is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The majority of the Company’s revenues earned are excluded from the scope of the new standard. Revenue streams within the scope of this ASU include services charges and fees on deposits, allotment processing fees, trust income, and certain components of other service charges, commission, and fees. The Company has analyzed each revenue stream under Topic 606 and determined that there were no material changes to existing recognition practices. The Company adopted ASU No. 2014-09 effective January 1, 2018 using a modified retrospective approach and no cumulative-effect adjustment was recorded. Additional disclosures required by the new standard are included in Note 5.

In  January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and, in February 2018, issued an amendment for technical corrections and improvements related to this ASU. The amendments in this ASU require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). In addition, this ASU eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. Public business entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company adopted ASU No. 2016-01 effective January 1, 2018, recorded a cumulative-effect adjustment of $56 thousand, and began using the exit price notion rather than entrance price to determine the fair value for disclosure purposes. For equity securities without a readily determinable fair value, the Company elected the practical expedient and recorded them at cost adjusted for impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions. Additional information related to the cumulative-effect adjustment can be found in Note 3 and Note 7. Fair value disclosures can be found in Note 13.

12

In March 2017, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that employers offering benefit plans accounted for under Topic 715 report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company retrospectively adopted ASU 2017-07 effective January 1, 2018, which did not have a material impact on its consolidated financial position, results of operations, or cash flows upon adoption. For prior periods, the interest cost, recognized actuarial loss, and recognized curtailment gain have been reclassified from salaries and employee benefits to other noninterest expense.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows entities to reclassify the stranded tax effects caused by the Tax Cuts and Jobs Act (“Tax Act”), which was enacted in December 2017, from accumulated other comprehensive income (“AOCI”) to retained earnings. This ASU is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. The Company early adopted this standard, resulting in the reclassification of $633 thousand from AOCI to retained earnings for the year ended December 31, 2017. There was no impact on total equity.

Recently Issued Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

For public companies, ASU No. 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company has identified a project team and is in the process of reviewing its leases and assessing the impact of ASU No. 2016-02 on its consolidated financial position, results of operations, and cash flows.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures, including qualitative and quantitative requirements, which provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU No. 2016-13 is effective for the Company in annual and interim reporting periods beginning after December 15, 2019. Although early adoption is permitted for fiscal years beginning after December 15, 2018, the Company does not plan to early adopt. The Company has been preserving certain historical loan information from its core processing system in anticipation of adopting the standard. The Company has identified a project team to assess the impact of this ASU on its consolidated financial position, results of operations, and cash flows. The project team has developed a timeline for implementing the standard, has begun working with a third party software solution provider, and has identified an independent third party for validation of the impending changes to our credit loss methodologies and processes. The team continues to assess the impact of the standard; however, the Company expects adopting this ASU will result in an increase in its allowance for loan losses. The amount of the increase in the allowance for loan losses upon adoption will be dependent upon the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date. A cumulative effect adjustment will be made to retained earnings for the impact of the standard at the beginning of the period the standard is adopted.

13

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

5. Revenue From Contracts With Customers

The Company records revenue from contracts with customers in accordance with ASC Topic 606, “Revenue from Contracts with Customers.” ASC Topic 606 requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized when, or as, the Company satisfies a performance obligation. Primarily all of the Company’s revenue from contracts with customers in the scope of ASC Topic 606 is recognized within noninterest income. Net gains or losses on the sale of other real estate owned (“OREO”) are included in net other real estate expenses. The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2018 and 2017. Amounts in the table are within the scope of ASC Topic 606 unless otherwise noted.

Three Months Ended March 31, (In thousands)	2018		2017
Service charges and fees on deposits
Overdraft fees	$	956	$	927
Dormant account fees		593		665
Service charges on checking and savings accounts		314		310
Other		49		56
Allotment processing fees		720		715
Other service charges, commissions, and fees
Interchange fees		827		781
Other1		545		591
Trust income		789		704
Investment securities (losses) gains, net2		-		(9	)
Gain on sale of mortgage loans, net2		95		154
Income from company-owned life insurance2		293		235
Other		20		122
Total noninterest income	$	5,201	$	5,251

¹Includes broker, ATM, and other fees totaling $402 thousand and $457 thousand for the three months ended March 31, 2018 and 2017, respectively, which is within the scope of ASC Topic 606.

²Not within the scope of ASC Topic 606.

Net other real estate expenses include a net loss on the sale of OREO of $43 thousand and a net gain of $115 thousand for the three months ended March 31, 2018 and 2017, respectively.

A description of the Company’s revenue-generating activities accounted for under Topic 606 follows.

Service charges and fees on deposits consist primarily of overdraft fees, dormant account fees, and service charges on checking and savings accounts. Overdraft fees are recognized at the time an account is overdrawn. Dormant account fees are recognized when an account is inactive for 365 days. The majority of service charges on checking and savings accounts are for account maintenance services performed and recognized in the same calendar month. Other fees are primarily for transaction-based services completed at the request of the customer and recognized at the time the transaction is executed. These transaction-based services include foreign ATM usage and stop payments services. All service charges and fees on deposits are withdrawn from the customer’s account balance.

Allotment processing fees relate to the Company’s bill payment and electronic funds transfer (“EFT”) services provided under the name of FirstNet. The Company processes payments by individual customers to unaffiliated third party lenders on bi-weekly and monthly schedules. Other EFT services are available to customers upon request. The Company does not provide credit to individuals under the program. Fees are primarily withdrawn from the customer’s account and recognized at the time the transaction is executed.

Other service charges, commissions, and fees include interchange fees earned primarily from debit card holder transactions conducted through the VISA payment network and other networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are received and recognized daily, concurrent with the transaction processing services provided to the cardholder.

14

Trust income is earned from living trusts and investment management agency accounts, estate planning and estate settlement, custody accounts, individual retirement accounts, and other related services. These fees are primarily earned and accrued over the period of time the Company provides the contracted services and are generally assessed based on tiered scale of the market value of the assets of the accounts. Fees for other services, including the preparation of fiduciary income tax returns, are recognized when the services are rendered. Fees are generally paid out of the assets held in the customer’s account.

6. Net Income Per Common Share

Basic net income per common share is determined by dividing net income by the weighted average total number of common shares issued and outstanding. There were no dilutive instruments at March 31, 2018 and 2017.

Net income per common share computations were as follows for the periods indicated:

	Three Months Ended March 31,
(In thousands, except per share data)	2018		2017
Net income, basic and diluted	$	5,641	$	3,329
Average common shares issued and outstanding, basic and diluted		7,518		7,510
Net income per common share, basic and diluted	$	.75	$	.44

7. Investment Securities

Equity Securities

Equity securities consist of money market mutual funds classified as cash and cash equivalents on the balance sheet and mutual funds and equity securities in the investment portfolio of the Company’s captive insurance subsidiary. Money market mutual funds were $35.0 million and $36.7 million at March 31, 2018 and December 31, 2017, respectively. The Company held $1.6 million and $935 thousand in mutual funds and equity securities recorded at fair value at March 31, 2018 and December 31, 2017, respectively.

Effective January 1, 2018, the Company adopted ASU 2016-01, which requires the Company to recognize changes in the fair value of its equity securities through net income. Prior to 2018, changes in the fair value of equity securities were recognized through AOCI. At December 31, 2017, unrealized gains, net of tax, of $56 thousand had been recognized in AOCI. At the beginning of 2018, the Company made a cumulative-effect adjustment to reclassify those gains out of AOCI and into retained earnings. During the three months ended March 31, 2018, the Company recognized an unrealized loss of $55 thousand on the equity securities held at March 31, 2018, which was recorded in other noninterest income. There were no sales of equity securities during the three months ended March 31, 2018.

15

Debt Securities

The Company’s debt securities are classified as available for sale or held to maturity. The following tables summarize the amortized costs and estimated fair value of the Company’s debt securities at March 31, 2018 and December 31, 2017.

March 31, 2018 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	42,633	$	14	$	691	$	41,956
Obligations of states and political subdivisions		109,652		281		2,365		107,568
Mortgage-backed securities – residential		186,441		318		5,158		181,601
Mortgage-backed securities – commercial		49,990		-		2,116		47,874
Asset-backed securities		15,538		8		29		15,517
Corporate debt securities		7,741		49		18		7,772
Total securities – available for sale	$	411,995	$	670	$	10,377	$	402,288
Held To Maturity
Obligations of states and political subdivisions	$	3,350	$	74	$	-	$	3,424

December 31, 2017 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	43,601	$	44	$	437	$	43,208
Obligations of states and political subdivisions		114,960		562		1,273		114,249
Mortgage-backed securities – residential		195,605		523		2,735		193,393
Mortgage-backed securities – commercial		50,518		42		1,208		49,352
Asset-backed securities		15,569		9		4		15,574
Corporate debt securities		7,578		1		37		7,542
Total securities – available for sale	$	427,831	$	1,181	$	5,694	$	423,318
Held To Maturity
Obligations of states and political subdivisions	$	3,364	$	114	$	-	$	3,478

Debt securities with a carrying value of $208 million and $214 million at March 31, 2018 and December 31, 2017, respectively, were pledged to secure public and trust deposits, repurchase agreements, and for other purposes.

The amortized cost and estimated fair value of the debt securities portfolio at March 31, 2018, by contractual maturity, are detailed below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are stated separately due to the nature of payment and prepayment characteristics of these securities, as principal is not due at a single date.

	Available For Sale				Held To Maturity
	Amortized		Estimated		Amortized		Estimated
March 31, 2018 (In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	28,921	$	28,872	$	-	$	-
Due after one year through five years		52,222		51,572		-		-
Due after five years through ten years		55,496		53,726		1,232		1,289
Due after ten years		38,925		38,643		2,118		2,135
Mortgage-backed securities		236,431		229,475		-		-
Total	$	411,995	$	402,288	$	3,350	$	3,424

16

Gross realized gains and losses on the sale of available for sale debt securities are presented in the table below for the periods indicated.

	Three Months Ended
	March 31,
(In thousands)	2018		2017
Gross realized gains	$	-	$	-
Gross realized losses		-		9
Net realized loss	$	-	$	(9	)

Debt securities with unrealized losses at March 31, 2018 and December 31, 2017 not recognized in income are presented in the tables below. The tables segregate debt securities that have been in a continuous unrealized loss position for less than twelve months from those that have been in a continuous unrealized loss position for twelve months or more. The tables also include the fair value of the related securities.

	Less than 12 Months				12 Months or More				Total
March 31, 2018 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	13,336	$	182	$	27,010	$	509	$	40,346	$	691
Obligations of states and political subdivisions		52,756		956		33,058		1,409		85,814		2,365
Mortgage-backed securities – residential		74,591		1,642		93,924		3,516		168,515		5,158
Mortgage-backed securities – commercial		14,798		378		33,076		1,738		47,874		2,116
Asset-backed securities		11,721		29		-		-		11,721		29
Corporate debt securities		2,721		15		498		3		3,219		18
Total	$	169,923	$	3,202	$	187,566	$	7,175	$	357,489	$	10,377

	Less than 12 Months				12 Months or More				Total
December 31, 2017 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	11,544	$	43	$	25,298	$	394	$	36,842	$	437
Obligations of states and political subdivisions		40,402		413		33,965		860		74,367		1,273
Mortgage-backed securities – residential		77,312		481		99,986		2,254		177,298		2,735
Mortgage-backed securities – commercial		7,758		62		34,139		1,146		41,897		1,208
Asset-backed securities		1,166		4		-		-		1,166		4
Corporate debt securities		7,251		36		200		1		7,451		37
Total	$	145,433	$	1,039	$	193,588	$	4,655	$	339,021	$	5,694

Unrealized losses included in the tables above have not been recognized in income since they have been identified as temporary. The Company evaluates debt securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant. Many factors are considered, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was effected by macroeconomic conditions, and (4) whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. The assessment of whether an OTTI charge exists involves a high degree of subjectivity and judgment and is based on the information available to the Company at a point in time.

17

The Company attributes the unrealized losses in its debt securities portfolio to changes in market interest rates and volatility. Debt securities with unrealized losses at March 31, 2018 and December 31, 2017 are performing according to their contractual terms, and the Company does not expect to incur a loss on these securities unless they are sold prior to maturity. The Company does not have the intent to sell these securities nor does it believe it is likely that it will be required to sell these securities prior to their anticipated recovery. The Company does not consider any of the securities to be impaired due to reasons of credit quality or other factors.

8. Loans and Allowance for Loan Losses

Major classifications of loans outstanding are summarized as follows:

(In thousands)	March 31, 2018		December 31, 2017
Real Estate
Real estate mortgage – construction and land development	$	131,376	$	129,181
Real estate mortgage – residential		351,838		355,304
Real estate mortgage – farmland and other commercial enterprises		440,680		432,321
Commercial
Commercial and industrial		68,472		63,417
States and political subdivisions		18,883		27,209
Other		16,663		19,916
Consumer
Secured		3,980		4,853
Unsecured		3,577		3,062
Total loans		1,035,469		1,035,263
Less unearned income		-		-
Total loans, net of unearned income	$	1,035,469	$	1,035,263

Activity in the allowance for loan losses by portfolio segment was as follows for the periods indicated:

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended March 31, 2018
Balance, beginning of period	$	8,509		$	951		$	323		$	9,783
Provision for loan losses		(191	)		(47	)		(23	)		(261	)
Recoveries		341			20			27			388
Loans charged off		(58	)		(88	)		(16	)		(162	)
Balance, end of period	$	8,601		$	836		$	311		$	9,748

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended March 31, 2017
Balance, beginning of period	$	8,205		$	854		$	285		$	9,344
Provision for loan losses		396			(7	)		191			580
Recoveries		17			49			11			77
Loans charged off		(434	)		(32	)		(28	)		(494	)
Balance, end of period	$	8,184		$	864		$	459		$	9,507

18

The following tables present individually impaired loans by class of loans for the dates indicated.

March 31, 2018 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	3,473	$	1,501	$	1,597	$	3,098	$	325
Real estate mortgage – residential		10,177		3,056		7,120		10,176		2,115
Real estate mortgage – farmland and other commercial enterprises		8,675		2,169		6,338		8,507		307
Commercial
Commercial and industrial		391		-		391		391		214
Consumer
Unsecured		305		-		305		305		212
Total	$	23,021	$	6,726	$	15,751	$	22,477	$	3,173

December 31, 2017 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	4,076	$	1,746	$	1,955	$	3,701	$	402
Real estate mortgage – residential		10,112		3,233		6,877		10,110		1,973
Real estate mortgage – farmland and other commercial enterprises		8,737		2,203		6,367		8,570		319
Commercial
Commercial and industrial		448		-		448		448		270
Consumer
Unsecured		312		-		312		312		218
Total	$	23,685	$	7,182	$	15,959	$	23,141	$	3,182

Three Months Ended March 31,	2018						2017
(In thousands)	Average		Interest Income Recognized		Cash Basis Interest Recognized		Average		Interest Income Recognized		Cash Basis Interest Recognized
Real Estate
Real estate mortgage – construction and land development	$	3,616	$	46	$	26	$	6,247	$	76	$	52
Real estate mortgage – residential		10,343		136		133		9,702		118		117
Real estate mortgage – farmland and other commercial enterprises		8,887		100		96		24,089		302		291
Commercial
Commercial and industrial		393		5		4		499		7		6
Consumer
Unsecured		320		4		4		335		5		2
Total	$	23,559	$	291	$	263	$	40,872	$	508	$	468

19

The following tables present the balance of the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of March 31, 2018 and December 31, 2017.

March 31, 2018 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,747	$	214	$	212	$	3,173
Collectively evaluated for impairment		5,854		622		99		6,575
Total ending allowance balance	$	8,601	$	836	$	311	$	9,748
Loans
Loans individually evaluated for impairment	$	21,781	$	391	$	305	$	22,477
Loans collectively evaluated for impairment		902,113		103,627		7,252		1,012,992
Total ending loan balance, net of unearned income	$	923,894	$	104,018	$	7,557	$	1,035,469

December 31, 2017 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,694	$	270	$	218	$	3,182
Collectively evaluated for impairment		5,815		681		105		6,601
Total ending allowance balance	$	8,509	$	951	$	323	$	9,783
Loans
Loans individually evaluated for impairment	$	22,381	$	448	$	312	$	23,141
Loans collectively evaluated for impairment		894,425		110,094		7,603		1,012,122
Total ending loan balance, net of unearned income	$	916,806	$	110,542	$	7,915	$	1,035,263

The following tables present the recorded investment in nonperforming loans by class of loans as of March 31, 2018 and December 31, 2017.

March 31, 2018 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	150	$	1,597	$	-
Real estate mortgage – residential		1,636		5,648		-
Real estate mortgage – farmland and other commercial enterprises		1,738		3,682		-
Commercial
Commercial and industrial		30		369		-
Consumer
Unsecured		165		126		-
Total	$	3,719	$	11,422	$	-

20

December 31, 2017 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	151	$	1,955	$	-
Real estate mortgage – residential		1,763		5,326		-
Real estate mortgage – farmland and other commercial enterprises		1,752		3,703		-
Commercial
Commercial and industrial		53		370		-
Consumer
Unsecured		168		128		-
Total	$	3,887	$	11,482	$	-

The Company has allocated $1.7 million and $1.8 million of specific reserves as of March 31, 2018 and December 31, 2017, respectively, to customers whose loan terms have been modified in troubled debt restructurings and that are in compliance with those terms. The Company had no commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings at March 31, 2018 and December 31, 2017. The Company had no credits during the first three months of 2018 or 2017 that were modified as troubled debt restructurings.

The tables below present an age analysis of past due loans 30 days or more by class of loans as of the dates indicated. Past due loans that are also classified as nonaccrual are included in their respective past due category.

March 31, 2018 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	-	$	87	$	87	$	131,289	$	131,376
Real estate mortgage – residential		2,145		250		2,395		349,443		351,838
Real estate mortgage – farmland and other commercial enterprises		712		989		1,701		438,979		440,680
Commercial
Commercial and industrial		47		-		47		68,425		68,472
States and political subdivisions		-		-		-		18,883		18,883
Other		-		-		-		16,663		16,663
Consumer
Secured		-		-		-		3,980		3,980
Unsecured		1		-		1		3,576		3,577
Total	$	2,905	$	1,326	$	4,231	$	1,031,238	$	1,035,469

21

December 31, 2017 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	15	$	87	$	102	$	129,079	$	129,181
Real estate mortgage – residential		1,160		538		1,698		353,606		355,304
Real estate mortgage – farmland and other commercial enterprises		966		948		1,914		430,407		432,321
Commercial
Commercial and industrial		62		-		62		63,355		63,417
States and political subdivisions		-		-		-		27,209		27,209
Other		21		-		21		19,895		19,916
Consumer
Secured		-		-		-		4,853		4,853
Unsecured		9		-		9		3,053		3,062
Total	$	2,233	$	1,573	$	3,806	$	1,031,457	$	1,035,263

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends and conditions. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes large-balance loans and non-homogeneous loans, such as commercial real estate and certain residential real estate loans. Loan rating grades, as described further below, are assigned based on a continuous process. The amount and adequacy of the allowance for loan loss is determined on a quarterly basis. The Company uses the following definitions for its risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the borrower’s repayment ability, weaken the collateral or inadequately protect the Company’s credit position at some future date. These credits pose elevated risk, but their weaknesses do not yet justify a substandard classification.

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

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

22

Loans not meeting the criteria above which are analyzed individually as part of the above described process are considered to be pass rated loans and are considered to have a low risk of loss. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows for the dates indicated.

	Real Estate						Commercial
March 31, 2018 (In thousands)	Real Estate Mortgage – Construction and Land Development		Real Estate Mortgage – Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	127,443	$	326,807	$	423,824	$	67,586	$	18,883	$	16,647
Special Mention		681		9,355		6,174		461		-		16
Substandard		3,252		15,676		10,682		425		-		-
Doubtful		-		-		-		-		-		-
Total	$	131,376	$	351,838	$	440,680	$	68,472	$	18,883	$	16,663

	Real Estate						Commercial
December 31, 2017 (In thousands)	Real Estate Mortgage –Construction and Land Development		Real Estate Mortgage –Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	124,926	$	330,401	$	414,663	$	62,490	$	27,209	$	19,898
Special Mention		396		9,196		7,556		474		-		18
Substandard		3,859		15,707		10,102		453		-		-
Doubtful		-		-		-		-		-		-
Total	$	129,181	$	355,304	$	432,321	$	63,417	$	27,209	$	19,916

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the consumer loans outstanding based on payment activity as of March 31, 2018 and December 31, 2017.

	March 31, 2018				December 31, 2017
	Consumer				Consumer
(In thousands)	Secured		Unsecured		Secured		Unsecured
Credit risk profile based on payment activity
Performing	$	3,980	$	3,286	$	4,853	$	2,766
Nonperforming		-		291		-		296
Total	$	3,980	$	3,577	$	4,853	$	3,062

23

9. Other Real Estate Owned

Other real estate owned (“OREO”) was as follows for the dates indicated:

(In thousands)	March 31, 2018		December 31, 2017
Construction and land development	$	4,089	$	4,433
Residential real estate		35		157
Farmland and other commercial enterprises		963		899
Total	$	5,087	$	5,489

OREO activity for the three months ended March 31, 2018 and 2017 was as follows:

Three months ended March 31, (In thousands)	2018			2017
Beginning balance	$	5,489		$	10,673
Transfers from loans and other increases		104			193
Proceeds from sales		(430	)		(2,871	)
(Loss) gain on sales, net		(43	)		115
Write downs and other decreases, net		(33	)		(110	)
Ending balance	$	5,087		$	8,000

At March 31, 2018, the Company had a total of $136 thousand of loans secured by residential real estate mortgages that were in the process of foreclosure.

10. Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase represent transactions where the Company sells certain of its investment securities and agrees to repurchase them at a specific date in the future. Securities sold under agreements to repurchase are accounted for as secured borrowings and reflect the amount of cash received in connection with the transaction.

Securities sold under agreements to repurchase are collateralized by U.S. government agency securities, primarily mortgage-backed securities. The Company may be required to provide additional collateral securing the borrowings in the event of principal pay downs or a decrease in the market value of the pledged securities. The Company mitigates this risk by monitoring the market value and liquidity of the collateral and ensuring that it holds a sufficient level of eligible securities to cover potential increases in collateral requirements.

The following tables represent the remaining maturity of repurchase agreements disaggregated by the class of securities pledged as of the dates indicated.

	Remaining Contractual Maturity of the Agreements
March 31, 2018 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343
Total	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343

	Remaining Contractual Maturity of the Agreements
December 31, 2017 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252
Total	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252

24

11. Postretirement Medical Benefits

The Company provides lifetime medical and dental benefits upon retirement for certain employees meeting the eligibility requirements as of December 31, 1989 (“Plan 1”). Additional participants are not eligible to be included in Plan 1 unless they met the requirements on this date. During 2003, the Company implemented an additional postretirement health insurance program (“Plan 2”). Under Plan 2, any employee meeting the service requirement of 20 years of full time service to the Company and is at least age 55 upon retirement is eligible to continue their health insurance coverage. Under both plans, retirees not yet eligible for Medicare have coverage identical to the coverage offered to active employees. Under both plans, Medicare-eligible retirees are provided with a Medicare Advantage plan. The Company pays 100% of the cost of Plan 1. The Company and the retirees each pay 50% of the cost under Plan 2. Both plans are unfunded. Employees hired on or after January 1, 2016 are not eligible for benefits under Plan 2.

The following disclosures of the net periodic benefit cost components of Plan 1 and Plan 2 were measured at January 1, 2018 and 2017.

Three months ended March 31, (In thousands)	2018		2017
Service cost	$	140	$	146
Interest cost		153		167
Curtailment gain recognized		-		(417	)
Recognized prior service cost		-		75
Net periodic benefit cost	$	293	$	(29	)

Service costs and recognized prior service costs are recorded as a component of salaries and employee benefits with the remaining portion of net periodic benefit cost recorded in other noninterest expense on the Company’s unaudited condensed consolidated statements of income. In connection with the merger of certain of its subsidiaries in February 2017, the Company recognized a curtailment gain of $417 thousand and prior service costs of $66 thousand, for a net gain of $351 thousand at the time of curtailment. This gain is a result of revaluing its postretirement medical benefits plan liability due to a reduction in workforce during the first quarter of 2017.

The Company expects benefit payments of $459 thousand for 2018, of which $96 thousand have been made during the first three months of 2018.

12. Regulatory Matters

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements will initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, banks must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and its subsidiary bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The regulatory ratios of the consolidated Company and its subsidiary bank were as follows for the dates indicated:

	March 31, 2018												December 31, 2017
	Common Equity Tier 1 Risk-based Capital1			Tier 1 Risk-based Capital1			Total Risk-based Capital1			Tier 1 Leverage2			Common Equity Tier 1 Risk-based Capital1			Tier 1 Risk-based Capital1			Total Risk-based Capital1			Tier 1 Leverage2
Consolidated		17.07	%		19.82	%		20.65	%		13.99	%		16.56	%		19.30	%		20.12	%		13.75	%
United Bank		14.63			14.63			15.47			10.47			14.05			14.05			14.88			10.13
Regulatory minimum		4.50			6.00			8.00			4.00			4.50			6.00			8.00			4.00
Well-capitalized status		6.50			8.00			10.00			5.00			6.50			8.00			10.00			5.00

¹Common Equity Tier 1 Risked-based, Tier 1 Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank’s Common Equity Tier 1, Tier 1 or Total Capital, as defined by regulation, by a risk-weighted sum of the bank’s assets, with the risk weighting determined by general standards established by regulation.

²Tier 1 Leverage ratio is computed by dividing a bank’s Tier 1 Capital by its total quarterly average assets, as defined by regulation.

25

13. Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value, and sets forth disclosures about fair value measurements. ASC Topic 825, “Financial Instruments,” allows entities to choose to measure certain financial assets and liabilities at fair value. The Company has not elected the fair value option for any of its financial assets or liabilities.

ASC Topic 820 defines fair value as the price that would be received to sell 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 at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This Topic describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access at 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 for substantially the full term of the assets or liabilities.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions supported by little or no market activity about the assumptions that market participants would use in pricing the asset or liability.

Following is a description of the valuation method used for financial instruments measured at fair value on a recurring basis. For this disclosure, the Company only has available for sale debt securities, equity securities, and money market mutual funds classified as cash equivalents that meet the requirement. The carrying value of the $35.0 million and $36.7 million in money market mutual funds at March 31, 2018 and December 31, 2017, respectively, is equivalent to its fair value and based on Level 1 inputs.

Available for sale debt securities and equity securities

Valued primarily by independent third party pricing services under the market valuation approach that include, but are not limited to, the following inputs:

● Mutual funds and equity securities are priced utilizing real-time data feeds from active market exchanges for identical securities and are considered Level 1 inputs.

● Government-sponsored agency debt securities, obligations of states and political subdivisions, mortgage-backed securities, corporate bonds, and other similar investment securities are priced with available market information through processes using benchmark yields, matrix pricing, prepayment speeds, cash flows, live trading data, and market spreads sourced from new issues, dealer quotes, and trade prices, among others sources and are considered Level 2 inputs.

26

Fair value disclosure for available for sale debt securities and equity securities classified as investments on the balance sheet as of March 31, 2018 and December 31, 2017 are as follows:

			Fair Value Measurements Using
(In thousands) March 31, 2018	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	41,956	$	-	$	41,956	$	-
Obligations of states and political subdivisions		107,568		-		107,568		-
Mortgage-backed securities – residential		181,601		-		181,601		-
Mortgage-backed securities – commercial		47,874		-		47,874		-
Asset-backed securities		15,517		-		15,517		-
Corporate debt securities		7,772		-		7,772		-
Total available for sale securities	$	402,288	$	-	$	402,288	$	-
Equity Securities
Mutual funds and equity securities	$	1,575	$	1,575	$	-	$	-
December 31, 2017
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	43,208	$	-	$	43,208	$	-
Obligations of states and political subdivisions		114,249		-		114,249		-
Mortgage-backed securities – residential		193,393		-		193,393		-
Mortgage-backed securities – commercial		49,352		-		49,352		-
Asset-backed securities		15,574		-		15,574		-
Corporate debt securities		7,542		-		7,542		-
Total available for sale securities	$	423,318	$	-	$	423,318	$	-
Equity Securities
Mutual funds and equity securities	$	935	$	935	$	-	$	-

The Company is required to measure and disclose certain other assets and liabilities at fair value on a nonrecurring basis in periods following their initial recognition. The Company’s disclosure about assets and liabilities measured at fair value on a nonrecurring basis consists of collateral-dependent impaired loans and OREO.

Adjustments to the fair value of collateral-dependent loans are recorded by either direct loan charge-offs through the allowance for loan losses or an adjustment to the specific reserve through an increase or decrease to the provision for loan losses. The fair value of collateral-dependent impaired loans with specific allocations of the allowance for loan losses is measured based on recent appraisals of the underlying collateral. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraisers take absorption rates into consideration and adjustments are routinely made in the appraisal process to identify differences between the comparable sales and income data available. Such adjustments consist mainly of estimated costs to sell that are not included in certain appraisals or to update appraised collateral values as a result of market declines of similar properties for which a newer appraisal is available. These adjustments can be significant and typically result in a Level 3 classification of the inputs for determining fair value.

27

OREO includes properties acquired by the Company through, or in lieu of, actual loan foreclosures and is carried at fair value less estimated costs to sell. Fair value of OREO at acquisition is generally based on third party appraisals of the property that includes comparable sales data and is considered as Level 3 inputs. The carrying value of each OREO property is updated at least annually and more frequently when market conditions significantly impact the value of the property. If the carrying amount of the OREO exceeds fair value less estimated costs to sell, an impairment loss is recorded through noninterest expense.

The following table represents the carrying amount of assets measured at fair value on a nonrecurring basis and still held by the Company as of the dates indicated. The amounts in the table only represent assets whose carrying amount has been adjusted during the period in a manner as described above; therefore, these amounts will differ from the total amounts outstanding. With the exception of those calculated using the collateral valuation method, collateral-dependent impaired loan amounts in the tables below exclude restructured loans that are measured based on present value techniques, which are outside the scope of the fair value reporting framework.

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2018
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,271	$	-	$	-	$	1,271
Real estate mortgage – residential		4,176		-		-		4,176
Total	$	5,447	$	-	$	-	$	5,447
OREO
Construction and land development	$	125	$	-	$	-	$	125
Residential real estate		35		-		-		35
Total	$	160	$	-	$	-	$	160

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2017
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,553	$	-	$	-	$	1,553
Real estate mortgage – residential		4,687		-		-		4,687
Real estate mortgage – farmland and other commercial enterprises		2,645		-		-		2,645
Total	$	8,885	$	-	$	-	$	8,885
OREO
Construction and land development	$	3,468	$	-	$	-	$	3,468
Residential real estate		157		-		-		157
Farmland and other commercial enterprises		821		-		-		821
Total	$	4,446	$	-	$	-	$	4,446

28

The following table represents fair value adjustments recorded in earnings for the periods indicated on assets measured at fair value on a nonrecurring basis.

(In thousands)
Three months ended March 31,	2018		2017
Net decrease in fair value:
Collateral-dependent impaired loans	$	115	$	65
OREO		33		110
Total	$	148	$	175

The following table presents quantitative information about unobservable inputs for assets measured on a nonrecurring basis using Level 3 measurements. As described above, the fair value of real estate securing collateral-dependent impaired loans and OREO are based on current third party appraisals. It is sometimes necessary, however, for the Company to discount the appraisal amounts supporting its impaired loans and OREO. These discounts relate primarily to marketing and other holding costs that are not included in certain appraisals or to update values as a result of market declines of similar properties for which newer appraisals are available. Discounts may also result from contracts to sell properties entered into during the period. The range of discounts is presented in the table below for 2018 and 2017.

(In thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range				Weighted Average
March 31, 2018
Collateral-dependent impaired loans	$	5,447	Discounted appraisals	Marketability discount	0%	-	73.6	%		1.3	%
OREO	$	160	Discounted appraisals	Marketability discount	0%	-	35.9	%		10.8	%
December 31, 2017
Collateral-dependent impaired loans	$	8,885	Discounted appraisals	Marketability discount	0%	-	22.8	%		3.1	%
OREO	$	4,446	Discounted appraisals	Marketability discount	0%	-	71.7	%		4.0	%

29

Fair Value of Financial Instruments

The table that follows represents the estimated fair values of the Company’s financial instruments made in accordance with the requirements of ASC Topic 825, “Financial Instruments.” ASC Topic 825 requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet for which it is practicable to estimate that value. The estimated fair value amounts have been determined by the Company using available market information and present value or other valuation techniques. These derived fair values are subjective in nature, involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from the disclosure requirements. Accordingly, the aggregate fair value amounts presented are not intended to represent the underlying value of the Company.

The following table presents the estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2018 and December 31, 2017. Information for available for sale investment securities is presented within this footnote in greater detail above. In accordance with the prospective adoption of ASU 2016-01, the fair values as of March 31, 2018 were measured using an exit price notion.

					Fair Value Measurements Using
(In thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2018
Assets
Cash and cash equivalents	$	153,221	$	153,221	$	153,221	$	-	$	-
Held to maturity investment securities		3,350		3,424		-		3,424		-
Loans, net		1,025,721		1,007,469		-		-		1,007,469
Accrued interest receivable		4,572		4,572		-		4,572		-
Federal Home Loan Bank and Federal Reserve Bank Stock		12,996		12,996		-		-		12,996
Liabilities
Deposits		1,394,091		1,393,901		1,181,392		-		212,509
Securities sold under agreements to repurchase		33,343		33,349		-		33,349		-
Federal Home Loan Bank advances		3,436		3,488		-		3,488		-
Subordinated notes payable to unconsolidated trusts		33,506		23,918		-		-		23,918
Accrued interest payable		265		265		-		265		-
December 31, 2017
Assets
Cash and cash equivalents	$	120,408	$	120,408	$	120,408	$	-	$	-
Held to maturity investment securities		3,364		3,478		-		3,478		-
Loans, net		1,025,480		1,012,959		-		-		1,012,959
Accrued interest receivable		4,935		4,935		-		4,935		-
Federal Home Loan Bank and Federal Reserve Bank Stock		13,235		13,235		-		-		13,235
Liabilities
Deposits		1,379,903		1,380,122		1,157,045		-		223,077
Securities sold under agreements to repurchase		34,252		34,257		-		34,257		-
Federal Home Loan Bank advances		3,479		3,546		-		3,546		-
Subordinated notes payable to unconsolidated trusts		33,506		22,709		-		-		22,709
Accrued interest payable		261		261		-		261		-

30

14. Subsequent Event

On April 19, 2018, the Company and Wesbanco, Inc. (“WesBanco”), a multi-state bank holding company with $10.2 billion in assets at March 31, 2018, entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of the Company with and into WesBanco (the “Merger”) subject to the terms and conditions set forth in the Merger Agreement. As a result of the Merger, the separate corporate existence of the Company will cease and WesBanco will continue as the surviving corporation in the Merger. The Merger Agreement also provides that, immediately following the completion of the Merger, the Company’s subsidiary bank, United Bank, will merge with and into Wesbanco Bank, Inc., a West Virginia banking corporation and a wholly-owned subsidiary of WesBanco (the “Bank Merger”), with Wesbanco Bank, Inc. continuing as the surviving bank in the Bank Merger. The Merger Agreement was unanimously approved by the Board of Directors of both WesBanco and the Company.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, the Company’s shareholders will have the right to receive (i) 1.053 shares of WesBanco common stock and (ii) $5.00 in cash, without interest, for each share of the Company’s common stock. As of the date of the announcement, the transaction was valued at approximately $378.2 million. The Merger Agreement contains certain termination rights for both WesBanco and the Company and further provides that, upon termination of the Merger Agreement under certain circumstances, the Company may be obligated to pay WesBanco a termination fee of $12,000,000.

Consummation of the Merger is subject to a number of customary conditions, including, but not limited to, the approval of the Merger Agreement by the shareholders of the Company and the receipt of all required regulatory approvals. The transaction is expected to close in the third or fourth quarter of 2018.

31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements with the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Statements in this report that are not statements of historical fact are forward-looking statements. In general, forward-looking statements relate to a discussion of future financial results or projections, future economic performance, future operational plans and objectives, and statements regarding the underlying assumptions of such statements. Although management of Farmers Capital Bank Corporation (the “Company” or “Parent Company”) believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate.

Various risks and uncertainties may cause actual results to differ materially from those indicated by the Company’s forward-looking statements. In addition to the risks described under Part 1, Item 1A “Risk Factors” in the Company’s most recent annual report on Form 10-K, factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which the Company and its subsidiaries operate) and lower interest margins; competition for the Company’s customers from other providers of financial services; deposit outflows or reduced demand for financial services and loan products; government legislation, regulation, and changes in monetary and fiscal policies (which changes from time to time and over which the Company has no control); changes in interest rates; changes in prepayment speeds of loans or investment securities; inflation; material unforeseen changes in the liquidity, results of operations, or financial condition of the Company’s customers; changes in the level of non-performing assets and charge-offs; changes in the number of common shares outstanding; the capability of the Company to successfully enter into a definitive agreement for, close, and realize the benefits of anticipated transactions; unexpected claims or litigation against the Company; expected insurance or other recoveries; technological or operational difficulties; the impact of new accounting pronouncements and changes in policies and practices that may be adopted by regulatory agencies; acts of war or terrorism; the ability of the Parent Company to receive dividends from its subsidiaries; the impact of larger or similar financial institutions encountering difficulties, which may adversely affect the banking industry or the Company; the Company or its subsidiary bank’s ability to maintain required capital levels and adequate funding sources and liquidity; and other risks or uncertainties detailed in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company.

The Company’s forward-looking statements are based on information available at the time such statements are made. The Company expressly disclaims any intent or obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events, or other changes.

32

RESULTS OF OPERATIONS

Net income was $5.6 million, or $.75 per common share, and $3.3 million, or $.44 per common share, for the quarters ended March 31, 2018 and 2017, respectively. This represents an increase of $2.3 million, or 69.5%, and $.31, or 70.5%, on a per common share basis. The first quarter of 2017 includes pre-tax expenses of $472 thousand ($307 thousand after tax), or $.04 per common share, related to the Company’s consolidation of its four bank subsidiaries and data processing subsidiary into one bank, which was completed in February 2017.

Selected income statement amounts and related data are summarized in the table below.

(In thousands except per share data)
Three Months Ended March 31,	2018			2017			Increase (Decrease)
Interest income	$	15,344		$	14,379		$	965
Interest expense		887			916			(29	)
Net interest income		14,457			13,463			994
Provision for loan losses		(261	)		580			(841	)
Net interest income after provision for loan losses		14,718			12,883			1,835
Noninterest income		5,201			5,251			(50	)
Noninterest expenses		13,118			13,529			(411	)
Income before income taxes		6,801			4,605			2,196
Income tax expense		1,160			1,276			(116	)
Net income	$	5,641		$	3,329		$	2,312
Basic and diluted net income per common share	$	.75		$	.44		$	.31
Cash dividends declared per common share		.125			.10			.025
Weighted average common shares outstanding – basic and diluted		7,518			7,510			8
Return on average assets		1.37	%		.81	%	56 bp
Return on average equity		11.86	%		7.27	%	459 bp
bp – basis points.

The increase in net income in the comparison is attributed primarily to higher net interest income of $994 thousand, or 7.4%, and a lower provision for loan losses of $841 thousand. Noninterest expenses declined $411 thousand, or 3.0%, which was partially offset by a decrease in noninterest income of $50 thousand, or 1.0%. Further information related to the more significant components making up the changes in net income follows.

Net Interest Income

The overall interest rate environment at March 31, 2018 (as measured by the Treasury yield curve) increased during the quarter, but remained at very low levels when compared with historical trends. During the quarter, the shape of the yield curve flattened as a result of yields on short-term maturities increasing more than yields on longer-term maturities. Yields for the two and three-year maturity periods were up 38 and 41 basis points, respectively, while yields on the ten and thirty-year maturities increased 33 and 23 basis points, respectively.

The Federal Reserve Board increased the short-term federal funds target interest rate 25 basis points during March 2018 to a range between 1.50% and 1.75% and has indicated that it will continue to assess realized and expected economic conditions relative to its objectives of maximum employment and two percent inflation when determining the timing and size of future adjustments to the target rate. At March 31, 2018, the national and Kentucky unemployment rates were 4.1% and 4.0%, respectively. The national inflation rate at March 31, 2018 was 2.4% based on the Consumer Price Index published by the Bureau of Labor Statistics, up from 2.1% at year-end 2017.

Net interest income increased $994 thousand, or 7.4%, for the first quarter of 2018 compared to the first quarter of 2017. The increase was driven by overall loan growth and higher average rates earned on loans and investment securities, partially offset by declines in investment securities balances. Net interest margin increased 16 basis points in the comparison, reflecting the Company’s efforts to improve net interest income and net interest margin through loan growth combined with continued refinement of the Company’s investment securities portfolio.

33

Interest income on loans was up $747 thousand, or 6.4%, driven by a higher average loan balance outstanding of $61.5 million, or 6.3%, in the comparison. Interest income on loans in the current quarter includes the collection of $74 thousand in prepayment fees, which aided the average rate earned on loans by three basis points.

Interest income on investment securities is up $9 thousand, or 0.4%, for the comparison. An increase in the average rate earned on investment securities was mostly offset by lower volume. The average rate earned was up 14 basis points compared to the year-ago quarter. Average investment securities decreased $54.9 million, or 11.1%, mainly as the result of loan demand. As loan demand increases, the Company uses proceeds from maturities, calls, and sales of investment securities to fund higher-earning loans.

Interest expense on deposits was up $53 thousand, or 9.9%, compared to the first quarter of 2017. The average rate paid on deposits increased two basis points due to a higher average rate on interest bearing demand deposits of 15 basis points which correlates to the increase in market rates and local market competition. Rates on time deposits decreased 8 basis points. Average total deposits were down $8.9 million driven by a decline in average time deposits of $45.8 million, partially offset by higher volume of interest bearing demand deposits of $32.1 million. The Company has continued to aggressively reprice higher-rate maturing time deposits downward with lower rate offerings or to allow them to mature without renewal.

Interest expense on borrowed funds was down $82 thousand, or 21.4%, in the comparison primarily due to a lower average balance of FHLB advances. The Company had FHLB advances of $10.0 million and $5.0 million mature during September and February 2017, respectively. The average rate paid on subordinated notes payable to the Company’s unconsolidated trusts, which is tied to the 3-month LIBOR, increased 67 basis points. The 3-month LIBOR was 2.31% as of the end of the quarter, up from 1.15% at March 31, 2017.

The average rate earned from interest income on loans and average interest rate paid on deposits continue to be near historical lows as a result of the low interest rate environment, competitive pressures, and the Company’s ongoing strategy of being more selective in pricing its loans and deposits. The goal of this strategy is to improve credit quality, net interest income, overall profitability, and capital position.

The Company has improved its mix of earning assets and interest bearing liabilities mainly through growth in the loan portfolio over the past year combined with a significant decrease in lower-yielding investment securities and a decline in higher-rate borrowings. On an average basis, loans represented 65.7% of earning assets for the first quarter of 2018, an increase of 325 basis points compared to 62.5% for the first quarter of 2017. Loans typically involve an increase in credit risk and higher yields when compared to investment securities.

For the current quarter, net interest margin on a taxable equivalent basis was 3.76%, an increase of 16 basis points compared with 3.60% a year earlier. Net interest spread increased 16 basis points to 3.66%, up from 3.50% in the year-ago quarter. Net interest margin and spread for the current quarter were negatively impacted four basis points by lower tax-equivalent adjustments related to tax-exempt loans and investment securities due to a reduction in Federal income tax rates that went to effect at the beginning of 2018. Net interest margin and spread for the current quarter were positively impacted two basis points from the collection of $74 thousand in prepayment fees during the quarter.

The Company expects its net interest margin to stay relatively flat or trend slightly upward in the near term according to internal modeling using expectations about future market interest rates, loan volume, the maturity structure of the Company’s earning assets and liabilities, and other factors. Future results could be significantly different than current expectations.

34

The following tables present an analysis of net interest income for periods indicated.

Distribution of Assets, Liabilities and Shareholders’ Equity: Interest Rates and Interest Differential

Three Months Ended March 31,	2018									2017
(In thousands)	Average Balance			Interest			Average Rate			Average Balance			Interest			Average Rate
Earning Assets
Investment securities1
Taxable	$	342,307		$	2,025			2.40	%	$	369,635		$	1,900			2.08	%
Nontaxable2		95,647			598			2.54			123,174			887			2.92
Interest bearing deposits in banks, federal funds sold, and money market mutual funds		102,484			375			1.48			92,593			166			.73
Loans2,3,4		1,036,527			12,518			4.90			974,987			11,796			4.91
Total earning assets		1,576,965		$	15,516			3.99	%		1,560,389		$	14,749			3.83	%
Allowance for loan losses		(9,815	)								(9,448	)
Total earning assets, net of allowance for loan losses		1,567,150									1,550,941
Nonearning Assets
Cash and due from banks		22,299									25,462
Premises and equipment, net		30,806									31,852
Other assets		48,452									58,660
Total assets	$	1,668,707								$	1,666,915
Interest Bearing Liabilities
Deposits
Interest bearing demand	$	381,339		$	248			.26	%	$	349,212		$	91			.11	%
Savings		426,007			115			.11			421,230			124			.12
Time		218,799			223			.41			264,585			318			.49
Federal funds purchased		-			-			-			39			-			-
Short-term securities sold under agreements to repurchase		34,215			18			.21			33,723			23			.28
Long-term securities sold under agreements to repurchase		512			1			.79			1,287			2			.63
Federal Home Loan Bank advances		3,450			28			3.29			16,000			160			4.06
Subordinated notes payable to unconsolidated trusts		33,506			254			3.07			33,506			198			2.40
Total interest bearing liabilities		1,097,828		$	887			.33	%		1,119,582		$	916			.33	%
Noninterest Bearing Liabilities
Demand deposits		350,183									337,016
Other liabilities		27,732									24,541
Total liabilities		1,475,743									1,481,139
Shareholders’ equity		192,964									185,776
Total liabilities and shareholders’ equity	$	1,668,707								$	1,666,915
Net interest income					14,629									13,833
TE basis adjustment					(172	)								(370	)
Net interest income				$	14,457								$	13,463
Net interest spread								3.66	%								3.50	%
Impact of noninterest bearing sources of funds								.10									.10
Net interest margin								3.76	%								3.60	%

¹Average yields on securities available for sale have been calculated based on amortized cost.

²Income and yield stated at a fully tax equivalent basis using the marginal corporate Federal tax rate of 21% for 2018 and 35% for 2017.

³Loan balances include principal balances on nonaccrual loans.

⁴Loan fees included in interest income amounted to $298 thousand and $326 thousand in 2018 and 2017, respectively.

35

Analysis of Changes in Net Interest Income (tax equivalent basis)

(In thousands)	Variance			Variance Attributed to
Three Months Ended March 31,	2018/20171			Volume			Rate
Interest Income
Taxable investment securities	$	125		$	(727	)	$	852
Nontaxable investment securities2		(289	)		(183	)		(106	)
Interest bearing deposits in banks, federal funds sold, and money market mutual funds		209			20			189
Loans2		722			888			(166	)
Total interest income		767			(2	)		769
Interest Expense
Interest bearing demand deposits		157			10			147
Savings deposits		(9	)		9			(18	)
Time deposits		(95	)		(49	)		(46	)
Federal funds purchased		-			-			-
Short-term securities sold under agreements to repurchase		(5	)		2			(7	)
Long-term securities sold under agreements to repurchase		(1	)		(4	)		3
Federal Home Loan Bank advances		(132	)		(106	)		(26	)
Subordinated notes payable to unconsolidated trusts		56			-			56
Total interest expense		(29	)		(138	)		109
Net interest income	$	796		$	136		$	660
Percentage change		100.0	%		17.1	%		82.9	%

¹The changes that are not solely due to rate or volume are allocated on a percentage basis using the absolute values of rate and volume variances as a basis for allocation.

²Income stated at fully tax equivalent basis using the marginal corporate Federal tax rate of 21% for 2018 and 35% for 2017.

Provision for Loan Losses

The provision for loan losses represents charges or credits to earnings that are necessary to maintain an allowance for loan losses at an adequate level to cover credit losses specifically identified in the loan portfolio, as well as management’s best estimate of incurred probable loan losses in the remainder of the portfolio at the balance sheet date. The credit quality of the Company’s loan portfolio continued recent trends of improvement during the current quarter, as certain credit quality metrics further improved upon recent quarterly bests.

The Company recorded a credit to the provision for loan losses in the amount of $261 thousand for the current quarter and a provision of $580 thousand for the year-ago quarter. The allowance for loan losses as a percentage of outstanding loans was 0.94% at March 31, 2018 compared to 0.94% and 0.96% at year-end 2017 and March 31, 2017, respectively. The credit to the provision for the current quarter was driven by net recoveries of $226 thousand and improvement in the overall credit quality of the loan portfolio. Net recoveries in the current quarter include $219 thousand from a real estate development project. The Company recorded a total of $2.4 million in principal charge-offs primarily between 2010 and 2012 related to this project. Recoveries in the current quarter bring the total recoveries related to this project to $2.1 million and the Company anticipates it could receive an additional $332 thousand in recoveries related to this credit. The timing and amount of these possible recoveries are subject to change and are dependent on the price and volume of lots sold by the developer; however, the Company expects to receive the recoveries in the second quarter of 2018. The provision in the first quarter of 2017 was driven by net charge-offs of $417 thousand primarily due to a $405 thousand charge-off on one larger-balance credit.

Overall credit quality metrics of the loan portfolio have continued to improve. Nonperforming loans, impaired loans, loans graded as substandard or below, and watch list loans have each declined when compared with a year earlier even though total loans outstanding have increased $45.6 million, or 4.6%, over that period of time. For further information about improvements in the Company’s overall credit quality, please refer to the discussion under the captions “Allowance for Loan Losses” and “Nonperforming Loans” that follows.

36

Noninterest Income

The components of noninterest income are as follows for the periods indicated:

Three Months Ended March 31, (In thousands)	2018		2017			Increase (Decrease)			%
Service charges and fees on deposits	$	1,912	$	1,958		$	(46	)		(2.3	)%
Allotment processing fees		720		715			5			0.7
Other service charges, commissions, and fees		1,372		1,372			-			-
Trust income		789		704			85			12.1
Net loss on sale of available for sale investment securities		-		(9	)		9			(100.0	)
Gain on sale of mortgage loans, net		95		154			(59	)		(38.3	)
Income from company-owned life insurance		293		235			58			24.7
Other		20		122			(102	)		(83.6	)
Total noninterest income	$	5,201	$	5,251		$	(50	)		(1.0	)%

The more significant items impacting noninterest income in the comparison are included below.

Service charges and fees on deposits were down due to lower dormant account fees of $73 thousand, or 10.9%, partially offset by higher overdraft fees of $29 thousand, or 3.2%. Dormant fees were down primarily due to a decline in certain savings account balances. The increase in overdraft fees was driven by higher volume and customer activity.

Allotment processing fees include $54 thousand related to an extra processing period during the current quarter due to the timing of scheduled transactions, which more than offset the overall reduction in processing volume. Volume declines in the comparison were primarily due to a customer that was acquired by a company that has the ability to do its own payment processing at the end of the first quarter of 2017. Allotment processing fees continued to be affected by lower processing volume stemming from the U.S. Department of Defense policy that became effective January 1, 2015, restricting the types of purchases active service members are able to make using the military allotment system for payment. The rate of decline in allotment processing fees began to subside during 2017, as existing contracts for the types of purchases affected by the new policy have steadily decreased and the Company continues its efforts to diversify its customer base and expand its payment processing options.

The increase in trust income was driven by a revision of fee schedules and an increase in the market value of accounts. The Company standardized the fee schedules for its trust services following the consolidation of its subsidiaries in 2017. The new fee schedule became effective for new customer accounts during the second quarter of 2017 and effective for existing accounts as of January 1, 2018, resulting in higher overall fee rates. Tax preparation fees related to annual fiduciary returns were up $22 thousand.

Net gains on the sale of mortgage loans were down in the comparisons mainly due to lower sales volume, partially offset by an increase in fees earned per loan sold beginning in 2018. Sales of mortgage loans decreased $4.0 million, or 62.3%, compared to the first quarter of 2017. The decrease in sales activity is mainly the result of the Company retaining a limited amount of certain mortgage loans that meet specific criteria in order to grow its loan portfolio. The increase in income from company-owned life insurance in the comparison is primarily due to a tax-free death benefit received in excess of the cash surrender value during the quarter of $67 thousand.

Other noninterest income during the current quarter includes a net unrealized loss on equity securities of $55 thousand related to the adoption of Accounting Standards Update (“ASU”) 2016-01 at the beginning of 2018 which requires equity investments to be measured at fair value with changes in the fair value recognized through net income. Prior to 2018, changes in the fair value of equity securities were recognized through accumulated other comprehensive income.

37

Noninterest Expense

The components of noninterest expense are as follows for the periods indicated:

Three Months Ended March 31, (In thousands)	2018		2017		Increase (Decrease)			%
Salaries and employee benefits	$	7,490	$	7,860	$	(370	)		(4.7	)%
Occupancy expenses, net		1,254		1,214		40			3.3
Equipment expenses		601		553		48			8.7
Data processing and communication expenses		1,083		1,293		(210	)		(16.2	)
Bank franchise tax		500		557		(57	)		(10.2	)
Deposit insurance expenses		126		137		(11	)		(8.0	)
Other real estate expenses, net		117		74		43			58.1
Other		1,947		1,841		106			5.8
Total noninterest expense	$	13,118	$	13,529	$	(411	)		(3.0	)%

Noninterest expense for the first quarter of the prior year includes $472 thousand related to the consolidation of the Company’s subsidiaries that was completed during the first quarter of 2017. The more significant items impacting noninterest expense in the comparison are included below.

The decrease in salaries and employee benefits was led by a decline in salaries and related payroll taxes of $302 thousand, or 4.8%, which reflects a reduction in workforce related to the subsidiary consolidation plan completed during the first quarter of 2017. The Company had 424 full time equivalent employees at March 31, 2018, down from 443 a year ago. Salaries and employee benefits for the first quarter of 2017 include severance pay expense of $301 thousand. There were no similar expenses during the first quarter of 2018. Benefit expenses were up $131 thousand, or 12.9%, primarily due to higher claims activity of the Company’s self-funded health insurance plan of $111 thousand, or 10.1%. Accruals related to the Company’s incentive payment plans increased $100 thousand, or 46.8% in the comparison.

In connection with the merger of certain of its subsidiaries in February 2017, the Company revalued its postretirement medical benefits plan liability due to the reduction in workforce. This resulted in a curtailment gain of $417 thousand, which is recorded in other noninterest expense, and prior service costs of $66 thousand, which is recorded in salaries and employee benefits, for a net gain of $351 thousand at the time of curtailment during the first quarter of 2017.

The decline in data processing and communication expenses was primarily due to $127 thousand related to the consolidation of subsidiaries in the first quarter of 2017. The reduction in deposit insurance expense in the comparison is primarily due to a refinement of the accrual in the current quarter. Other noninterest expenses also includes a reduction in supplies expense of $95 thousand, or 52.6%, due to $21 thousand in the year-ago quarter related to the consolidation and the timing of the replenishment of operational supplies and a decline in legal expenses of $47 thousand or 55.3%.

Income Taxes

Income tax expense was $1.2 million for the current quarter, a decrease of $116 thousand, or 9.1%, compared to $1.3 million for the first quarter of 2017. The effective income tax rates were 17.1% and 27.7% for the current and year-ago quarters, respectively. Tax expense and the effective tax rate declined as a result of the decrease in the top Federal income tax rate from 35% to 21% that went into effect in 2018.

38

FINANCIAL CONDITION

Total assets were $1.7 billion at March 31, 2018, an increase of $12.1 million, or 0.7%, from year-end 2017, led by an increase in cash and cash equivalents of $32.8 million, partially offset by a decline in investment securities of $20.4 million. Liabilities were up $11.4 million, or 0.8%, and equity increased $675 thousand, or 0.3%, in the comparison. Selected balance sheet amounts and related data are presented in the table below and discussion that follows.

(Dollars in thousands, except per share data)	March 31, 2018			December 31, 2017			Increase (Decrease)			%
Cash and cash equivalents	$	153,221		$	120,408		$	32,813			27.3	%
Investment securities		407,213			427,617			(20,404	)		(4.8	)
Loans, net of allowance of $9,748 and $9,783		1,025,721			1,025,480			241			0.0
Other real estate owned		5,087			5,489			(402	)		(7.3	)
Other assets		94,745			94,878			(133	)		(0.1	)
Total assets	$	1,685,987		$	1,673,872		$	12,115			0.7	%
Deposits	$	1,394,091		$	1,379,903		$	14,188			1.0	%
Securities sold under agreements to repurchase		33,343			34,252			(909	)		(2.7	)
Other borrowings		36,942			36,985			(43	)		(0.1	)
Other liabilities		27,583			29,379			(1,796	)		(6.1	)
Total liabilities		1,491,959			1,480,519			11,440			0.8
Common stock		940			940			-			-
Capital surplus		52,278			52,201			77			0.1
Retained earnings		148,535			143,778			4,757			3.3
Accumulated other comprehensive loss		(7,725	)		(3,566	)		(4,159	)		116.6
Total shareholders’ equity		194,028			193,353			675			0.3
Total liabilities and shareholders’ equity	$	1,685,987		$	1,673,872		$	12,115			0.7	%
End of period tangible book value per common share1	$	25.80		$	25.72		$	.08			0.3	%
End of period per common share closing price		39.95			38.50			1.45			3.8

¹Represents total common equity less intangible assets divided by the number of common shares outstanding at the end of the period.

Cash and cash equivalents increased as the result of net proceeds from sales, maturities, and calls of investment securities and an increase in deposits. Deposits were up primarily from higher noninterest bearing demand deposits and savings deposits. Noninterest bearing demand deposits includes $12.3 million received at the end of the quarter related to a single business customer. These funds were temporary and transferred out of the account following quarter-end.

Shareholders’ equity was up primarily due to net income of $5.6 million, partially offset by other comprehensive loss of $4.1 million and dividends declared on common stock of $940 thousand. Other comprehensive loss was driven by an increase in the after-tax unrealized loss of $4.1 million related to the available for sale investment securities portfolio.

Temporary Investments

Temporary investments consist of interest bearing deposits in other banks, federal funds sold, and money market mutual funds. The Company uses these funds in the management of liquidity and interest rate sensitivity, as a short-term holding prior to subsequent movement into other investments with higher yields, or for other purposes. At March 31, 2018, temporary investments were $131 million, an increase of $36.3 million, or 38.2%, from year-end 2017.

Investment Securities

The investment securities portfolio is comprised primarily of residential mortgage-backed securities, tax-exempt securities of states and political subdivisions, and debt securities issued by U.S. government-sponsored agencies. Substantially all of the Company’s investment securities are designated as available for sale debt securities. Proceeds received from maturing or called investment securities not needed to fund higher-earning loans are either reinvested in similar investments or used to manage liquidity, such as for deposit outflows or other payment obligations. Total investment securities had a carrying amount of $407 million at March 31, 2018, a decrease of $20.4 million, or 4.8%, compared to $428 million at year-end 2017.

39

The decline in investment securities was driven by net maturities, calls, and sales totaling $14.5 million, lower pre-tax market values related to the available for sale portfolio of $5.2 million, and net premium amortization of $630 thousand. The decrease in the market value of the available for sale portfolio correlates with an overall increase in market interest rates during the quarter. As market interest rates rise, the value of fixed rate investments generally declines.

Loans

Loans were $1.0 billion at March 31, 2018, relatively unchanged compared to year-end 2017 despite early payoffs of several larger-balance loans totaling $11.8 million in the aggregate. The loan portfolio has grown in nine of the last twelve quarter and is at the highest level since the second quarter of 2012.

From time to time the Company may purchase a limited amount of loans originated by otherwise nonaffiliated third parties. The Company performs its own risk assessment and makes the credit decision on each loan prior to purchase. The Company purchased smaller balance commercial loans totaling $709 thousand and $732 thousand in the aggregate during the first quarter of 2018 and 2017, respectively. The average amount of the purchased loans was $118 thousand for 2018 and $122 thousand for 2017.

The composition of the loan portfolio is summarized in the table below.

	March 31, 2018					December 31, 2017
(Dollars in thousands)	Amount		%			Amount		%
Real estate mortgage – construction and land development	$	131,376		12.7	%	$	129,181		12.5	%
Real estate mortgage – residential		351,838		34.0			355,304		34.3
Real estate mortgage – farmland and other commercial enterprises		440,680		42.6			432,321		41.8
Commercial, financial, and agriculture		104,018		10.0			110,542		10.7
Installment		7,557		.7			7,915		.7
Total	$	1,035,469		100.0	%	$	1,035,263		100.0	%

On an average basis, loans represented 65.7% of earning assets for the first three months of 2018, an increase of 244 basis points compared to 63.3% for the full year of 2017. The increase in the level of loans as a percentage of earning assets reflects the overall growth in the loan portfolio over the past year combined with a decrease in investment securities. The increase in loans in recent periods has been funded primarily by cash flows from the investment portfolio. Loans typically involve an increase in credit risk and higher yields when compared to investment securities and temporary investment alternatives.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level management believes is adequate to cover probable losses in the loan portfolio. The determination of the appropriate level of allowance for loan losses requires significant judgment in order to reflect credit losses specifically identified in the Company’s loan portfolio as well as management's best estimate of probable incurred credit losses in the loan portfolio at the balance sheet date. The allowance for loan losses is a valuation allowance increased by the provision for loan losses and decreased by net charge-offs. Loan losses are charged against the allowance when management believes the uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses and the related provision for loan losses generally fluctuate as the relative level of nonperforming and impaired loans vary. However, other factors impact the amount of the allowance such as the Company’s historical loss experience, the financial condition of its borrowers, general economic conditions, and other qualitative risk factors as described in greater detail in the Company’s most recent annual report on Form 10-K.

40

The allowance for loan losses was $9.7 million, or 0.94% of outstanding loans, at March 31, 2018, a decline of $35 thousand compared to $9.8 million, or 0.94% of loans outstanding, at year-end 2017. The allowance as a percentage of loans outstanding was unchanged from the prior year-end as the result of net recoveries of $226 thousand, which nearly offsets the credit to the provision for loan losses of $261 thousand for the quarter and a relatively unchanged loan balance. As a percentage of nonperforming loans, the allowance for loan losses was 64.4% at March 31, 2018 compared to 63.7% at year-end 2017. The relatively low amount of the allowance for loan losses as a percentage of nonperforming loans is due mainly to the makeup of nonperforming loans as discussed further below.

Nonperforming loans include $11.4 million of accruing restructured loans, which represents 75.4% of total nonperforming loans at March 31, 2018. At year-end 2017, this amount was $11.5 million, or 74.7%. The allowance attributed to credits that are restructured with lower interest rates generally represents the difference in the present value of future cash flows calculated at the loan’s original effective interest rate and the new lower rate resulting from the restructuring. This typically results in a reserve for loan losses that is less severe than for other loans that are collateral dependent. The allowance specifically allocated to impaired loans, which includes restructured loans, was $3.2 million, or 14.1%, and $3.2 million, or 13.8% of such loans, at March 31, 2018 and year-end 2017, respectively. As a percentage of nonaccrual loans and loans past due 90 days or more and still accruing, the allowance for loan losses was 262% and 252% for the current quarter-end and year-end 2017, respectively.

The overall improvement in the credit quality of the loan portfolio experienced during 2017 continued during the first three months of 2018. Certain credit quality measures are summarized in the table that follows for the periods indicated. Several of these measures are at or near the best level in the last three years.

(In thousands)	March 31, 2018		December 31, 2017		March 31, 2017		Three-year High1		Three-year Low1
Nonperforming loans	$	15,141	$	15,369	$	27,736	$	34,193	$	15,141
Nonaccrual loans		3,719		3,887		5,182		9,921		3,719
Loans past due 30-89 days and still accruing		2,598		2,099		1,453		2,719		588
Loans graded substandard or below		30,035		30,121		35,855		48,985		30,035
Impaired loans		22,477		23,141		39,732		43,395		22,477
Loans, net of unearned income		1,035,469		1,035,263		989,833		1,035,469		933,305

¹Based on quarter-end balances over the previous three years.

Nonperforming Loans

Nonperforming loans consist of nonaccrual loans, accruing restructured loans, and loans 90 days or more past due and still accruing interest. The accrual of interest on loans is discontinued when it is determined that the collection of interest or principal is doubtful, or when a default of interest or principal has existed for 90 days or more, unless such loan is well secured and in the process of collection.

Restructured loans occur when a lender, because of economic or legal reasons related to a borrower’s financial difficulty, grants a concession to the borrower that it would not otherwise consider. Restructured loans typically include a reduction of the stated interest rate or an extension of the maturity date, among other possible concessions. The Company gives careful consideration to identifying which of its challenged credits merit a restructuring of terms that it believes will result in maximum loan repayments and mitigation of possible losses. Cash flow projections are carefully scrutinized prior to restructuring any credits; past due credits are typically not granted concessions.

Nonperforming loans were $15.1 million at March 31, 2018, a decrease of $228 thousand or, 1.5%, compared to $15.4 million at year-end 2017. Nonaccrual loans and accruing restructured loans decreased $168 thousand, or 4.3%, and $60 thousand, or 0.5%, respectively. Loan payments include $348 thousand related to nonaccrual loans during the first three months of 2018.

Accruing restructured loans make up $11.4 million, or 75.4%, of the Company’s nonperforming loans at March 31, 2018 compared with $3.7 million, or 24.6%, related to nonaccrual loans. Additionally, two larger balance credits account for $10.3 million, or 89.8%, of total restructured loans. Nonaccrual loans have decreased to the lowest level since the second quarter of 2007 and are down $60.0 million, or 94.2%, from their peak of $63.7 million in the second quarter of 2011.

41

Nonperforming loans, presented by class, were as follows for the periods indicated:

Nonperforming Loans

(In thousands)	March 31, 2018			December 31, 2017
Nonaccrual Loans
Real Estate
Real estate mortgage – construction and land development	$	150		$	151
Real estate mortgage – residential		1,636			1,763
Real estate mortgage – farmland and other commercial enterprises		1,738			1,752
Commercial
Commercial and industrial		30			53
Consumer
Unsecured		165			168
Total nonaccrual loans	$	3,719		$	3,887
Restructured Loans
Real Estate
Real estate mortgage – construction and land development	$	1,597		$	1,955
Real estate mortgage – residential		5,648			5,326
Real estate mortgage – farmland and other commercial enterprises		3,682			3,703
Commercial
Commercial and industrial		369			370
Consumer
Unsecured		126			128
Total restructured loans	$	11,422		$	11,482
Past Due 90 Days or More and Still Accruing	$	-		$	-
Total nonperforming loans	$	15,141		$	15,369
Ratio of total nonperforming loans to total loans		1.5	%		1.5	%

The most significant components of nonperforming loans include nonaccrual and restructured loans. Activity during 2018 related to these two components was as follows:

(In thousands)	Nonaccrual Loans			Restructured Loans
Balance at December 31, 2017	$	3,887		$	11,482
Additions		291			-
Principal paydowns		(348	)		(60	)
Charge-offs		(111	)		-
Balance at March 31, 2018	$	3,719		$	11,422

The Company’s comprehensive risk-grading and loan review program includes a review of loans to assess risk and assign a grade to those loans, a review of delinquencies, and an assessment of loans for needed charge-offs or placement on nonaccrual status. The Company had loans in the amount of $31.9 million and $32.7 million at March 31, 2018 and year-end 2017, respectively, which were performing but considered potential problem loans and are not included in the nonperforming loan totals in the table above. These loans, however, are considered in establishing an appropriate allowance for loan losses. Potential problem loans include a variety of borrowers and are secured primarily by various types of real estate including commercial, construction properties, and residential real estate developments. At March 31, 2018, the five largest potential problem credits were $7.8 million in the aggregate compared to $9.3 million at year-end 2017.

42

Potential problem loans are identified on the Company’s watch list and consist of loans that require close monitoring by management. Credits may be considered as a potential problem loan for reasons that are temporary or correctable, such as for a deficiency in loan documentation or absence of current financial statements of the borrower. Potential problem loans may also include credits where adverse circumstances are identified that may affect the borrower’s ability to comply with the contractual terms of the loan. Other factors which might indicate the existence of a potential problem loan include the delinquency of a scheduled loan payment, deterioration in a borrower’s financial condition identified in a review of periodic financial statements, a decrease in the value of the collateral securing the loan, or a change in the economic environment in which the borrower operates. Certain loans on the Company’s watch list are also considered impaired and specific allowances related to these loans are established in accordance with the appropriate accounting guidance.

Other Real Estate

OREO includes real estate properties acquired by the Company through, or in lieu of, actual foreclosure. At March 31, 2018, OREO was $5.1 million, a decrease of $402 thousand, or 7.3%, compared to $5.5 million at year-end 2017. The decrease was driven by sales activity, including the sale of two related real estate development properties that sold for $223 thousand with a related loss of $4 thousand. OREO has declined $47.5 million or 90.3% from its peak of $52.6 million, which occurred at year-end 2012. A summary of OREO activity for 2018 follows.

(In thousands)	Amount
Balance at December 31, 2017	$	5,489
Transfers from loans and other increases		104
Proceeds from sales		(430	)
Loss on sales, net		(43	)
Write-downs		(33	)
Balance at March 31, 2018	$	5,087

Deposits

A summary of the Company’s deposits are as follows for the periods indicated:

	End of Period							Average
(In thousands)	March 31, 2018		December 31, 2017		Increase (Decrease)			Three Months March 31, 2018		Twelve Months December 31, 2017		Increase (Decrease)
Noninterest Bearing	$	375,645	$	361,855	$	13,790		$	350,183	$	347,355	$	2,828
Interest Bearing
Demand		381,253		379,027		2,226			381,339		356,023		25,316
Savings		424,494		416,163		8,331			426,007		418,507		7,500
Time		212,699		222,858		(10,159	)		218,799		245,215		(26,416	)
Total interest bearing		1,018,446		1,018,048		398			1,026,145		1,019,745		6,400
Total Deposits	$	1,394,091	$	1,379,903	$	14,188		$	1,376,328	$	1,367,100	$	9,228

The increase in total end of period deposits was driven by higher noninterest bearing demand, savings, and interest bearing demand deposits of $13.8 million, or 3.8%, $8.3 million, or 2.0%, and $2.2 million, or 0.6%, respectively. Noninterest bearing demand deposits includes $12.3 million received at the end of the quarter related to a single business customer. These funds were temporary and transferred out of the account following quarter-end. Time deposits decreased $10.2 million, or 4.6%. The decrease in time deposits is a result of the Company’s overall high liquidity position and a strategy to minimize overall funding costs, mainly by allowing higher-rate certificates of deposit to roll off or reprice at lower interest rates. Many of those balances have been moved into noninterest bearing demand or lower-rate interest bearing demand or savings accounts by the customer. The Company has not sought out or accepted brokered deposits in the past nor does it have plans to do so in the future.

43

Borrowed Funds

Total borrowed funds were $70.3 million at March 31, 2018, down $952 thousand, or 1.3%, from year-end 2017. The decrease in borrowed funds was driven by securities sold under agreements to repurchase, which were $33.3 million at quarter-end, down $909 thousand, or 2.7%, from year-end 2017. Securities sold under agreements to repurchase represent funds that have been swept out of the deposit accounts into repurchase agreements to facilitate the needs of certain qualifying customers, primarily commercial. Such transactions are accounted for as secured borrowings.

LIQUIDITY

The primary source of funds for the Parent Company is the receipt of dividends from its subsidiary bank, United Bank & Capital Trust Company (“United Bank” or the “Bank”), balances of cash and cash equivalents maintained, and borrowings from nonaffiliated sources. Primary uses of cash include the payment of dividends to its shareholders, paying interest expense on borrowings, and payments to fund general operating expenses.

Payments of dividends to the Parent Company by the Bank are subject to certain regulatory restrictions as set forth in national and state banking laws and regulations. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it is already undercapitalized. Capital ratios at the Bank exceed regulatory established “well-capitalized” status at March 31, 2018 under the prompt corrective action regulatory framework. The federal banking agencies may prevent the payment of a dividend if they determine that the payment would be an unsafe and unsound banking practice. Moreover, the federal agencies have issued policy statements which provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

The Parent Company had cash and cash equivalents of $60.3 million and $61.6 million at March 31, 2018 and year-end 2017, respectively. Significant cash transactions include $939 thousand and $242 thousand for the payment of dividends on common stock and interest on subordinated notes payable, respectively.

The Company's objective as it relates to liquidity is to ensure that the Bank has funds available to meet deposit withdrawals and credit demands without unduly penalizing profitability. In order to maintain a proper level of liquidity, the Bank has several sources of funds available on a daily basis. For assets, those sources of funds include liquid assets that are readily marketable or that can be pledged, or which mature in the near future. These assets primarily include cash and due from banks, federal funds sold, investment securities, and cash flow generated by the repayment of principal and interest on loans and investment securities. For liabilities, sources of funds primarily include the Bank’s core deposits, FHLB and other borrowings, and federal funds purchased and securities sold under agreements to repurchase. While maturities and scheduled amortization of loans and investment securities are generally a predictable source of funds, deposit outflows and mortgage prepayments are influenced significantly by general interest rates, economic conditions, and competition in our local markets.

As of March 31, 2018, the Company had $419 million of additional borrowing capacity under various FHLB, federal funds, and other borrowing agreements. However, there is no guarantee that these sources of funds will continue to be available to the Company, or that current borrowings can be refinanced upon maturity, although the Company is not aware of any events or uncertainties that are likely to cause a decrease in the Company’s liquidity from these sources. The Company’s borrowing capacity was $406 million at year-end 2017.

For the longer term, the liquidity position is managed by balancing the maturity structure of the balance sheet. This process allows for an orderly flow of funds over an extended period of time. The Company’s Asset and Liability Management Committee meets regularly and monitors the composition of the balance sheet to ensure comprehensive management of interest rate risk and liquidity.

Liquid assets consist of cash and cash equivalents, available for sale debt securities, and equity investment securities. At March 31, 2018, consolidated liquid assets were $557 million, up $12.4 million, or 2.3%, compared to $545 million at year-end 2017. The Company’s liquidity position remains elevated mainly as a result of the Company’s overall net funding position. The overall funding position of the Company changes as loan demand, deposit levels, and other sources and uses of funds fluctuate.

44

Net cash provided by operating activities was $5.6 million and $5.9 million for the first three months of 2018 and 2017, respectively. This represents a decrease of $298 thousand, or 5.0%. Net cash provided by investing activities was $14.8 million for the first three months of 2018 compared to net cash used in investing activities of $34.0 million for the first quarter of 2017. The change was primarily driven by investment securities activity and loan activity. The Company had net cash proceeds of $14.5 million related to investment securities for 2018, up $26.1 million compared with the year-ago period. Net cash inflows represent proceeds from the sale, maturity, and call of investment securities in excess of purchases. For loans, the Company had cash inflows representing overall net principal collections of $115 thousand for 2018 compared to net principal advances of $18.4 million a year earlier.

Net cash provided by financing activities was $12.3 million and $10.1 million for the first three months of 2018 and 2017, respectively. This represents an increase of $2.2 million, or 21.9%, driven primarily by long and short-term securities sold under agreements to repurchase activity. For 2018, the Company had net proceeds from long-term securities sold under agreements to repurchase of $1 thousand, compared to net repayments of $5.0 million in 2017. Short-term securities sold under agreements to repurchase declined $910 thousand during the first three months of 2018, down $1.4 million compared to a decrease of $2.3 million in the year-ago period. Deposits were up $14.2 million during 2018 compared to an $18.2 million increase for the first three months of 2017.

Commitments to extend credit are entered into with customers in the ordinary course of providing traditional banking services and are considered in addressing the Company’s liquidity management. The Company does not expect these commitments to significantly affect the liquidity position in future periods. The Company has not entered into any contracts for financial derivative instruments such as futures, swaps, options, or similar instruments.

CAPITAL RESOURCES

Shareholders’ equity was $194 million at March 31, 2018, an increase of $675 thousand, or 0.3%, compared to $193 million at year-end 2017. The increase in shareholders’ equity was driven by net income of $5.6 million, partially offset by higher accumulated other comprehensive loss of $4.2 million, and dividends declared on common stock of $940 thousand. The increase in accumulated other comprehensive loss is primarily due to a $4.1 million after-tax decline in the market value of the available for sale investment securities portfolio, which correlates with an overall increase in market interest rates during the quarter. As market interest rates rise, the value of fixed rate investments generally declines.

At March 31, 2018, the Company’s tangible common equity ratio was 11.51%, a decrease of 4 basis points compared to 11.55% at year-end 2017. The tangible common equity ratio represents tangible common equity as a percentage of tangible assets, which excludes intangible assets.

In July 2013, U.S. banking regulators adopted final rules related to standards on bank capital adequacy and liquidity (commonly referred to as “Basel III”). The rules were effective for the Company beginning on January 1, 2015, subject to a phase-in period for certain provisions extending through January 1, 2019. The rules include a new common equity Tier 1 capital ratio, an increase to the minimum Tier 1 capital ratio, an increase to risk-weightings of certain assets, implementation of a new capital conservation buffer in excess of the required minimum (which began being phased in during 2016), and changes to how regulatory capital is defined. At March 31, 2018, the Company and the Bank met the minimum capital ratios and a fully phased-in capital conservation buffer under the rules.

45

Consistent with the objective of operating a sound financial organization, the Company’s goal is to maintain capital ratios well above the regulatory minimum requirements. The capital ratios of the Company and its subsidiary bank are presented in the following table for the dates indicated.

	March 31, 2018												December 31, 2017
	Common Equity Tier 1 Risk- based Capital1			Tier 1 Risk- based Capital1			Total Risk- based Capital1			Tier 1 Leverage2			Common Equity Tier 1 Risk- based Capital1			Tier 1 Risk- based Capital1			Total Risk- based Capital1			Tier 1 Leverage2
Consolidated		17.07	%		19.82	%		20.65	%		13.99	%		16.56	%		19.30	%		20.12	%		13.75	%
United Bank & Capital Trust Company		14.63			14.63			15.47			10.47			14.05			14.05			14.88			10.13
Regulatory minimum		4.50			6.00			8.00			4.00			4.50			6.00			8.00			4.00
Well-capitalized status		6.50			8.00			10.00			5.00			6.50			8.00			10.00			5.00

¹Common Equity Tier 1 Risked-based, Tier 1 Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank’s Common Equity Tier 1, Tier 1 or Total Capital, as defined by regulation, by a risk-weighted sum of the bank’s assets, with the risk weighting determined by general standards established by regulation.

²Tier 1 Leverage ratio is computed by dividing a bank’s Tier 1 Capital by its total quarterly average assets, as defined by regulation.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company uses a simulation model as a tool to monitor and evaluate interest rate risk exposure. The model is designed to measure the sensitivity of net interest income and net income to changing interest rates over future time periods. Forecasting net interest income and its sensitivity to changes in interest rates requires the Company to make assumptions about the volume and characteristics of many attributes, including assumptions relating to the replacement of maturing earning assets and liabilities. Other assumptions include, but are not limited to, projected prepayments, projected new volume, and the predicted relationship between changes in market interest rates and changes in customer account balances. These effects are combined with the Company’s estimate of the most likely rate environment to produce a forecast of net interest income and net income. The forecasted results are then adjusted for the effect of a gradual increase and decrease in market interest rates on the Company’s net interest income and net income. Because assumptions are inherently uncertain, the model cannot precisely estimate net interest income and net income or the effect of interest rate changes on net interest income and net income. Actual results could differ significantly from simulated results.

At March 31, 2018, the model indicated that if rates were to gradually increase by 150 basis points during the remainder of the calendar year, then net interest income and net income would decrease 0.16% and 0.37%, respectively, for the year ending December 31, 2018 when compared to the forecasted results for the most likely rate environment. The model indicated that if rates were to gradually decrease by 150 basis points over the same period, then net interest income and net income would decrease 0.02% and 0.06%, respectively.

In the current low interest rate environment, it is not practical or possible to reduce certain deposit rates by the same magnitude as rates on earning assets. The average rate paid on the Company’s deposits is presently below 1.5%. This situation magnifies the model’s predicted results when modeling a decrease in interest rates, as earning assets with higher yields have more of an opportunity to reprice at lower rates than lower-rate deposits.

Item 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report, and have concluded that the Company’s disclosure controls and procedures were adequate and effective to ensure that all material information required to be disclosed in this report has been made known to them in a timely fashion.

The Company’s Chief Executive Officer and Chief Financial Officer have also concluded that there were no significant changes during the quarter ended March 31, 2018 in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

46

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

As of March 31, 2018, there were various pending legal actions and proceedings against the Company arising from the normal course of business and in which claims for damages are asserted. It is the opinion of management, after discussion with legal counsel, that the disposition or ultimate resolution of such claims and legal actions will not have a material effect upon the consolidated financial statements of the Company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During 2014, the Company changed the form of payment to its directors for board meeting and quarterly fees from 100% cash to 50% in cash and 50% in Company common stock. The shares are issued as part of a plan adopted by the Board of Directors. Each director has elected to participate by entering into an agreement with the Company to accept common stock in lieu of cash for 50% of the director’s board meeting and quarterly fees. As the shares are only issued to directors as part of a plan approved by the Board, the shares are exempt from the registration requirements of the Securities Act of 1933, as amended (the “1933 Act”), as a sale not involving any public offering under Section 4(2) of the 1933 Act. Attendance for committee meetings continues to be paid completely in cash. As employee directors are not paid director’s fees, only non-employee directors receive stock under this plan.

In the three months ended March 31, 2018, the Company issued a total of 447 shares of common stock to its non-employee directors under this plan as compensation for $18 thousand of director fees. The cash retained by the Company by issuing common stock in lieu of paying cash is used for general corporate purposes. There are no brokers involved in the issuance of stock to directors and no commissions or other broker fees are paid.

At various times, the Company’s Board of Directors has authorized the purchase of shares of the Company’s outstanding common stock. No stated expiration dates have been established under any of the previous authorizations. There were no shares of common stock repurchased by the Company during the quarter ended March 31, 2018. There are 84,971 shares that may still be purchased under the various authorizations, although no shares have been purchased since 2008.

Item 6. Exhibits

List of Exhibits

2.1	Agreement and Plan of Merger dated April 19, 2018 by and between WesBanco, Inc., WesBanco Bank, Inc., Farmers Capital Bank Corporation, and United Bank & Capital Trust Company (incorporated by reference to the Current Report on Form 8-K filed April 20, 2018 (File No. 000-14412)).
3.1	Second Amended and Restated Articles of Incorporation of Farmers Capital Bank Corporation (incorporated by reference to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2006 (File No. 000-14412)).
3.2	Articles of Amendment to Second Amended and Restated Articles of Incorporation of Farmers Capital Bank Corporation dated January 6, 2009 (incorporated by reference to the Current Report on Form 8-K dated January 13, 2009 (File No. 000-14412)).
3.3	Articles of Amendment to Second Amended and Restated Articles of Incorporation of Farmers Capital Bank Corporation dated November 16, 2009 (incorporated by reference to the Current Report on Form 8-K dated November 17, 2009 (File No. 000-14412)).
3.4	Amended and Restated Bylaws of Farmers Capital Bank Corporation (incorporated by reference to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 000-14412)).
4.1*	Junior Subordinated Indenture, dated as of July 21, 2005, between Farmers Capital Bank Corporation and Wilmington Trust Company, as Trustee, relating to unsecured junior subordinated deferrable interest notes that mature in 2035.
4.2*	Amended and Restated Trust Agreement, dated as of July 21, 2005, among Farmers Capital Bank Corporation, as Depositor, Wilmington Trust Company, as Property and Delaware Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).

47

4.3*	Guarantee Agreement, dated as of July 21, 2005, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.
4.4*	Junior Subordinated Indenture, dated as of July 26, 2005, between Farmers Capital Bank Corporation and Wilmington Trust Company, as Trustee, relating to unsecured junior subordinated deferrable interest notes that mature in 2035.
4.5*	Amended and Restated Trust Agreement, dated as of July 26, 2005, among Farmers Capital Bank Corporation, as Depositor, Wilmington Trust Company, as Property and Delaware Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).
4.6*	Guarantee Agreement, dated as of July 26, 2005, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.
4.7*	Indenture, dated as of August 14, 2007 between Farmers Capital Bank Corporation, as Issuer, and Wilmington Trust Company, as Trustee, relating to fixed/floating rate junior subordinated debt due 2037.
4.8*	Amended and Restated Declaration of Trust, dated as of August 14, 2007, by Farmers Capital Bank Corporation, as Sponsor, Wilmington Trust Company, as Delaware and Institutional Trustee, the Administrative Trustees (as named therein), and the Holders (as defined therein).
4.9*	Guarantee Agreement, dated as of August 14, 2007, between Farmers Capital Bank Corporation, as Guarantor, and Wilmington Trust Company, as Guarantee Trustee.
10.1	Employee Stock Purchase Plan of Farmers Capital Bank Corporation (incorporated by reference to Form S-8 effective June 24, 2004 (File No. 333-116801)).
10.2	Nonqualified Stock Option Plan of Farmers Capital Bank Corporation (incorporated by reference to Form S-8 effective September 8, 1998 (File No. 333-63037)).
10.3	Employment agreement dated December 17, 2013 between Farmers Capital Bank Corporation and Rickey D. Harp (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 30, 2013 (File No. 000-14412)).
10.4	Employment agreement dated November 18, 2015 between Farmers Capital Bank Corporation and J. David Smith, Jr. (incorporated by reference to Exhibit 10.1 to Form 8-K filed November 19, 2015 (File No. 000-14412)).
10.5	Executive Short-Term Incentive Plan January 1, 2017 (incorporated by reference to Exhibit 10.1 to Form 8-K filed January 24, 2017).
10.6	Executive Short-Term Incentive Plan January 1, 2018 (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 6, 2017).
10.7	Employment agreement dated December 4, 2017 between Farmers Capital Bank Corporation and Lloyd C. Hillard, Jr. (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 8, 2017).
10.8	Employment agreement dated December 4, 2017 between Farmers Capital Bank Corporation and Mark A. Hampton (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 8, 2017).
31.1**	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

48

31.2**	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**	CEO & CFO Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	Interactive Data Files

* Exhibit not included pursuant to Item 601(b)(4)(iii) and (v) of Regulation S-K. The Company will provide a copy of such exhibit to the Securities and Exchange Commission upon request.

** Filed with this Quarterly Report on Form 10-Q.

49

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.

Date:	May 7, 2018	/s/ Lloyd C. Hillard, Jr.
		Lloyd C. Hillard, Jr.
		President and CEO
		(Principal Executive Officer)
Date:	May 7, 2018	/s/ Mark A. Hampton
		Mark A. Hampton
		Executive Vice President, CFO, and Secretary
		(Principal Financial and Accounting Officer)

50

EX-31.1

Exhibit 31.1

CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lloyd C. Hillard, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Farmers Capital Bank Corporation;

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:	May 7, 2018	/s/ Lloyd C. Hillard, Jr.
		Lloyd C. Hillard, Jr.
		President and CEO

EX-31.2

Exhibit 31.2

CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark A. Hampton, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Farmers Capital Bank Corporation;
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:	May 7, 2018	/s/ Mark A. Hampton
		Mark A. Hampton
		Executive Vice President, Secretary, and CFO

EX-32

Exhibit 32

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 accompanying Quarterly Report of Farmers Capital Bank Corporation on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies in his capacity as officer of Farmers Capital Bank Corporation, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

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

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

Date:	May 7, 2018	/s/ Lloyd C. Hillard, Jr.
		Lloyd C. Hillard, Jr.
		President and CEO
Date:	May 7, 2018	/s/ Mark A. Hampton
		Mark A. Hampton
		Executive Vice President, CFO, and Secretary

A signed original of this written statement required by Section 906 has been provided to Farmers Capital Bank Corporation and will be retained by Farmers Capital Bank Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 01, 2018
Document Information [Line Items]
Entity Registrant Name	FARMERS CAPITAL BANK CORP
Entity Central Index Key	0000713095
Trading Symbol	ffkt
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,519,814
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Cash and cash equivalents:
Cash and due from banks	$ 22,143	$ 25,581
Interest bearing deposits in other banks	96,099	58,154
Money market mutual funds	34,979	36,673
Total cash and cash equivalents	153,221	120,408
Investment securities:
Available for sale, amortized cost of $411,995 (2018) and $427,831 (2017)	402,288	423,318
Equity investments, amortized cost of $1,560 (2018) and $864 (2017)	1,575	935
Held to maturity, fair value of $3,424 (2018) and $3,478 (2017)	3,350	3,364
Total investment securities	407,213	427,617
Loans, net of unearned income	1,035,469	1,035,263
Allowance for loan losses	(9,748)	(9,783)
Loans, net	1,025,721	1,025,480
Premises and equipment, net	30,909	30,928
Company-owned life insurance	30,731	30,817
Other real estate owned	5,087	5,489
Other assets	33,105	33,133
Total assets	1,685,987	1,673,872
Deposits:
Noninterest bearing	375,645	361,855
Interest bearing	1,018,446	1,018,048
Total deposits	1,394,091	1,379,903
Securities sold under agreements to repurchase	33,343	34,252
Federal Home Loan Bank advances	3,436	3,479
Subordinated notes payable to unconsolidated trusts	33,506	33,506
Cash dividends payable, common	940	939
Other liabilities	26,643	28,440
Total liabilities	1,491,959	1,480,519
Shareholders’ Equity
Common stock, par value $.125 per share; 14,608,000 shares authorized; 7,519,445 and 7,517,446 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	940	940
Capital surplus	52,278	52,201
Retained earnings	148,535	143,778
Accumulated other comprehensive loss	(7,725)	(3,566)
Total shareholders’ equity	194,028	193,353
Total liabilities and shareholders’ equity	$ 1,685,987	$ 1,673,872

XML

Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Available for sale, amortized cost	$ 411,995	$ 427,831
Equity investments, amortized cost	1,560	864
Held to maturity, fair value	$ 3,424	$ 3,478
Common stock, par value (in dollars per share)	$ 0.125	$ 0.125
Common stock, shares authorized (in shares)	14,608,000	14,608,000
Common stock, shares issued (in shares)	7,519,445	7,517,446
Common stock, shares outstanding (in shares)	7,519,445	7,517,446

XML

Unaudited Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Interest Income
Interest and fees on loans		$ 12,469	$ 11,722
Interest on investment securities:
Taxable		2,025	1,900
Nontaxable		475	591
Interest on deposits in other banks		269	142
Interest on federal funds sold and money market mutual funds		106	24
Total interest income		15,344	14,379
Interest Expense
Interest on deposits		586	533
Interest on securities sold under agreements to repurchase		19	25
Interest on Federal Home Loan Bank advances		28	160
Interest on subordinated notes payable to unconsolidated trusts		254	198
Total interest expense		887	916
Net interest income		14,457	13,463
Provision for loan losses		(261)	580
Net interest income after provision for loan losses		14,718	12,883
Noninterest Income
Net loss on sales of available for sale investment securities	[1]	0	(9)
Gain on sale of mortgage loans, net	[1]	95	154
Income from company-owned life insurance	[1]	293	235
Other		20	122
Total noninterest income		5,201	5,251
Noninterest Expense
Salaries and employee benefits		7,490	7,860
Occupancy expenses, net		1,254	1,214
Equipment expenses		601	553
Data processing and communication expenses		1,083	1,293
Bank franchise tax		500	557
Deposit insurance expense		126	137
Other real estate expenses, net		117	74
Other		1,947	1,841
Total noninterest expense		13,118	13,529
Income before income taxes		6,801	4,605
Income tax expense		1,160	1,276
Net income		$ 5,641	$ 3,329
Per Common Share
Net income – basic and diluted (in dollars per share)		$ 0.75	$ 0.44
Cash dividends declared (in dollars per share)		$ 0.125	$ 0.10
Weighted Average Common Shares Outstanding
Basic and diluted (in shares)		7,518	7,510
Deposit Account [Member]
Noninterest Income
Service charges, commissions, fees, and trust income		$ 1,912	$ 1,958
Allotment Processing Fees [Member]
Noninterest Income
Service charges, commissions, fees, and trust income		720	715
Financial Service, Other [Member]
Noninterest Income
Service charges, commissions, fees, and trust income		1,372	1,372
Fiduciary and Trust [Member]
Noninterest Income
Service charges, commissions, fees, and trust income		$ 789	$ 704

[1] Not within the scope of ASC Topic 606.

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income	$ 5,641	$ 3,329
Other comprehensive (loss) income:
Unrealized holding (loss) gain on available for sale securities arising during the period, net of tax of $(1,093) and $510, respectively	(4,102)	948
Reclassification adjustment for net realized loss included in net income, net of tax of $- and $(3), respectively		6
Change in unfunded portion of postretirement benefit obligation, net of tax of $- and $32, respectively	(1)	59
Net current-period other comprehensive (loss) income	(4,103)	1,013
Comprehensive income	$ 1,538	$ 4,342

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Unrealized holding (loss) gain on available for sale securities arising during the period, tax	$ (1,093)	$ 510
Reclassification adjustment for net realized loss included in net income, tax		(3)
Change in unfunded portion of postretirement benefit obligation, tax		$ 32

XML

Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Beginning balance (in shares) at Dec. 31, 2016	7,509
Beginning balance at Dec. 31, 2016	$ 939	$ 51,885	$ 134,650	$ (3,408)	$ 184,066
Net income			3,329		3,329
Other comprehensive loss				1,013	1,013
Cash dividends declared – common			(751)		(751)
Shares issued under director compensation plan		28			28
Shares issued pursuant to employee stock purchase plan (in shares)	2
Shares issued pursuant to employee stock purchase plan		46			46
Expense related to employee stock purchase plan		9			9
Shares issued under director compensation plan (in shares)	1
Ending balance (in shares) at Mar. 31, 2017	7,512
Ending balance at Mar. 31, 2017	$ 939	51,968	137,228	(2,395)	187,740
Adoption of Accounting Standards Update 2016-01
Beginning balance (in shares) at Dec. 31, 2017	7,517
Beginning balance at Dec. 31, 2017	$ 940	52,201	143,778	(3,566)	193,353
Net income			5,641		5,641
Other comprehensive loss				(4,103)	(4,103)
Cash dividends declared – common			(940)		(940)
Shares issued under director compensation plan		18			18
Shares issued pursuant to employee stock purchase plan (in shares)	2
Shares issued pursuant to employee stock purchase plan		51			51
Expense related to employee stock purchase plan		8			8
Ending balance (in shares) at Mar. 31, 2018	7,519
Ending balance at Mar. 31, 2018	$ 940	52,278	148,535	(7,725)	194,028
Adoption of Accounting Standards Update 2016-01			$ 56	$ (56)

XML

Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Retained Earnings [Member]
Cash dividends declared – common (in dollars per share)	$ 0.125	$ 0.10
Cash dividends declared – common (in dollars per share)	$ 0.125	$ 0.10

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Cash Flows from Operating Activities
Net income		$ 5,641	$ 3,329
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		800	862
Net premium amortization of investment securities:
Provision for loan losses		(261)	580
Deferred income tax (benefit) expense		(10)	18
Mortgage loans originated for sale		(2,557)	(5,324)
Proceeds from sale of mortgage loans		2,537	6,624
Gain on sale of mortgage loans, net	[1]	(95)	(154)
Loss on disposal of premises and equipment, net		0	37
Net loss (gain) on sale and write downs of other real estate		76	(5)
Net loss on sale of available for sale investment securities	[1]	0	9
Unrealized loss on equity investment securities		55	0
Curtailment gain on postretirement benefits plan liability		0	(351)
Increase in cash surrender value of company-owned life insurance		(213)	(216)
Death benefits in excess of cash surrender value on company-owned life insurance		(67)	0
Decrease in accrued interest receivable		363	434
Decrease in other assets		517	1,787
Increase (decrease) in accrued interest payable		4	(32)
Decrease in other liabilities		(1,802)	(2,603)
Net cash provided by operating activities		5,644	5,942
Cash Flows from Investing Activities
Proceeds from maturities and calls of available for sale investment securities		16,715	19,474
Purchase of available for sale investment securities		(1,536)	(31,058)
Purchase of equity investment securities		(695)	(3)
Proceeds from cancelation of cost method investment securities		239	666
Purchase of cost method investment securities		0	(4,236)
Loans originated for investment greater than principal collected, net		(493)	(18,347)
Purchase of loans held for investment		(709)	(732)
Principal collected on purchased loans		1,317	643
Proceeds from death benefits of company-owned life insurance		366	0
Purchase of premises and equipment		(729)	(1,145)
Proceeds from sale of other real estate		346	699
Net cash provided by (used in) investing activities		14,821	(34,039)
Cash Flows from Financing Activities
Net increase in deposits		14,188	18,170
Net decrease in short-term securities sold under agreements to repurchase		(910)	(2,299)
Proceeds from long-term securities sold under agreements to repurchase		1	2
Repayments of long-term securities sold under agreements to repurchase		0	(5,041)
Repayments of Federal Home Loan Bank advances		(43)	0
Dividends paid, common stock		(939)	(751)
Shares issued under employee stock purchase plan		51	46
Net cash provided by financing activities		12,348	10,127
Net increase (decrease) in cash and cash equivalents		32,813	(17,970)
Cash and cash equivalents at beginning of year		120,408	113,534
Cash and cash equivalents at end of period		153,221	95,564
Supplemental Disclosures
Cash paid during the period for interest		883	948
Transfers from loans to other real estate		104	187
Sale and financing of other real estate		84	2,172
Cash dividends payable, common		940	751
Employee Stock Purchase Plan Expense [Member]
Net premium amortization of investment securities:
Noncash compensation expense		8	9
Director Fee Compensation [Member]
Net premium amortization of investment securities:
Noncash compensation expense		18	28
Available-for-sale Securities [Member]
Net premium amortization of investment securities:
Net premium amortization of investment securities		616	897
Held-to-maturity Securities [Member]
Net premium amortization of investment securities:
Net premium amortization of investment securities		$ 14	$ 13

[1] Not within the scope of ASC Topic 606.

XML

Note 1 - Basis of Presentation and Nature of Operations

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.

Basis of Presentation and Nature of Operations

The condensed consolidated financial statements include the accounts of Farmers Capital Bank Corporation (the “Company” or “Parent Company”), a financial holding company, and its wholly owned subsidiaries. The Company has

one

bank subsidiary, United Bank & Capital Trust Company (“United Bank”), and

one

nonbank subsidiary, FFKT Insurance Services, Inc. (“FFKT Insurance”).

FFKT Insurance is a captive insurance company that provides property and casualty coverage to the Parent Company and its subsidiaries for risk management purposes or where insurance

may

not

be available or economically feasible. The Company has

two

subsidiaries organized as Delaware statutory trusts that are

not

consolidated into its financial statements. These trusts were formed for the purpose of issuing trust preferred securities.

United Bank’s significant subsidiaries include EG Properties, Inc. and Farmers Capital Insurance Corporation (“Farmers Insurance”). EG Properties, Inc. is involved in real estate management and liquidation for certain repossessed properties of United Bank. Farmers Insurance is an insurance agency in Frankfort, KY.

The Company provides financial services at its

34

locations in

21

communities throughout Central and Northern Kentucky to individual, business, agricultural, governmental, and educational customers. Its primary deposit products are checking, savings, and term certificate accounts. Its primary lending products are residential mortgage, commercial lending, and consumer installment loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flow from operations of businesses. Other services include, but are

not

limited to, cash management services, issuing letters of credit, safe deposit box rental, and providing funds transfer services. Other financial instruments, which could potentially represent concentrations of credit risk, include deposit accounts in other financial institutions and federal funds sold.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates used in the preparation of the condensed financial statements are based on various factors including the current interest rate environment and the general strength of the local and state economy. Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities. Actual results could differ from those estimates used in the preparation of the condensed financial statements. The allowance for loan losses, carrying value of other real estate owned, actuarial assumptions used to calculate postretirement benefits, and the fair values of financial instruments are estimates that are particularly subject to change.

The consolidated balance sheet as of

December 31, 2017

has been derived from the audited financial statements of the Company as of that date. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended

December 31, 2017

included in the Company’s annual report on Form

10

-K. The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form

10

-Q and Rule

10

-

01

of Regulation S-

X

and do

not

include all of the information and the footnotes required by U.S. GAAP for complete statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such condensed financial statements, have been included. The results of operations for the interim periods are

not

necessarily indicative of the results to be expected for the full year. All significant intercompany transactions and balances are eliminated in consolidation.

XML

Note 2 - Reclassifications

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Reclassifications [Text Block]

2

.

Reclassifications

Certain reclassifications have been made to the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications do

not

affect net income or total shareholders’ equity as previously reported.

XML

Note 3 - Accumulated Other Comprehensive (Loss) Income

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

3

.

Accumulated Other Comprehensive

(Loss)

Income

The following table presents changes in accumulated other comprehensive (loss) income (“AOCI”) by component, net of tax, for the periods indicated. The table also includes

$56

thousand cumulative-effect adjustment from AOCI to retained earnings related to the adoption of Accounting Standards Update (“ASU”)

2016

-

01

effective

January 1, 2018.

ASU

2016

-

01

requires changes in the fair value of the Company’s equity investments to be recognized through net income. Prior to

2018,

changes in the fair value of equity securities were recognized through AOCI. Additional information related to the adoption of ASU

2016

-

01

can be found in Note

4

and Note

7.

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017
(In thousands)	Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total			Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total
Beginning balance	$	(3,510	)	$	(56	)	$	(3,566	)	$	(3,363	)	$	(45	)	$	(3,408	)
Other comprehensive (loss) income before reclassifications		(4,102	)		-			(4,102	)		948			10			958
Amounts reclassified from accumulated other comprehensive income		-			(1	)		(1	)		6			49			55
Net current-period other comprehensive (loss) income		(4,102	)		(1	)		(4,103	)		954			59			1,013
Adoption of Accounting Standards Update 2016-01		(56	)		-			(56	)		-			-			-
Ending balance	$	(7,668	)	$	(57	)	$	(7,725	)	$	(2,409	)	$	14		$	(2,395	)

The following table presents amounts reclassified out of accumulated other comprehensive income by component for the periods indicated. Line items in the statement of income affected by the reclassification are also presented.

	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
(In thousands)	Three Months Ended March 31, 2018		Three Months Ended March 31, 2017
Unrealized gains (losses) on available for sale investment securities	$	-	$	(9	)	Net loss on sales of available for sale investment securities
		-		3		Income tax expense
	$	-	$	(6	)	Net of tax
Amortization related to postretirement benefits
Prior service costs	$	-	$	(75	)	Salaries and employee benefits
Actuarial gains (losses)		1		(1	)	Other noninterest expense
		1		(76	)	Total before tax
		-		27		Income tax expense
	$	1	$	(49	)	Net of tax
Total reclassifications for the period	$	1	$	(55	)	Net of tax

XML

Note 4 - Accounting Policy

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

4

.

Accounting Policy

Loans and Interest Income

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their unpaid principal amount outstanding adjusted for any charge-offs, deferred fees or costs on originated loans, and unamortized premiums and discounts on purchased loans. Interest income on loans is recognized using the interest method based on loan principal amounts outstanding during the period. Interest income also includes amortization and accretion of any premiums or discounts over the expected life of acquired loans at the time of purchase or business acquisition. Loan origination fees, net of certain direct origination costs, are deferred and amortized as yield adjustments over the contractual term of the loans.

The Company disaggregates certain disclosure information related to loans, the related allowance for loan losses, and credit quality measures by either portfolio segment or by loan class. The Company segregates its loan portfolio segments based on similar risk characteristics as follows: real estate loans, commercial loans, and consumer loans. Portfolio segments are further disaggregated into classes for certain required disclosures as follows:

Portfolio Segment	Class
Real estate loans	Real estate mortgage – construction and land development Real estate mortgage – residential Real estate mortgage – farmland and other commercial enterprises
Commercial loans	Commercial and industrial Depository institutions Agriculture production and other loans to farmers States and political subdivisions Other
Consumer loans	Secured Unsecured

The Company has a loan policy in place that is amended and approved from time to time as needed to reflect current economic conditions and product offerings in its markets. The policy establishes written procedures concerning areas such as the lending authorities of loan officers, committee review and approval of certain credit requests, underwriting criteria, policy exceptions, appraisal requirements, and loan review. Credit is extended to borrowers based primarily on their ability to repay as demonstrated by income and cash flow analysis.

Loans secured by real estate make up the largest segment of the Company’s loan portfolio. If a borrower fails to repay a loan secured by real estate, the Company

may

liquidate the collateral in order to satisfy the amount owed. Determining the value of real estate is a key component to the lending process for real estate backed loans. If the fair value of real estate (less estimated cost to sell) securing a collateral dependent loan declines below the outstanding loan amount, the Company will write down the carrying value of the loan and thereby incur a loss. The Company uses independent

third

party state certified or licensed appraisers in accordance with its loan policy to mitigate risk when underwriting real estate loans. Cash flow analysis of the borrower, loan to value limits as adopted by loan policy, and other customary underwriting standards are also in place which are designed to maximize credit quality and mitigate risks associated with real estate lending.

Commercial loans are made to businesses and are secured mainly by assets such as inventory, accounts receivable, machinery, fixtures and equipment, or other business assets. Commercial lending involves significant risk, as loan repayments are more dependent on the successful operation or management of the business and its cash flows. Consumer lending includes loans to individuals mainly for personal autos, boats, or a variety of other personal uses and

may

be secured or unsecured. Loan repayment associated with consumer loans is highly dependent upon the borrower’s continuing financial stability, which is heavily influenced by local unemployment rates. The Company mitigates its risk exposure to each of its loan segments by analyzing the borrower’s repayment capacity, imposing restrictions on the amount it will loan compared to estimated collateral values, limiting the payback periods, and following other customary underwriting practices as adopted in its loan policy.

The accrual of interest on loans is discontinued when it is determined that the collection of interest or principal is doubtful, or when a default of interest or principal has existed for

90

days or more, unless such loan is well secured and in the process of collection. Past due status is based on the contractual terms of the loan. Interest accrued but

not

received for a loan placed on nonaccrual status is reversed against interest income. Cash payments received on nonaccrual loans generally are applied to principal until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company’s policy for placing a loan on nonaccrual status or subsequently returning a loan to accrual status does

not

differ based on its portfolio class or segment.

Commercial and real estate loans delinquent in excess of

120

days and consumer loans delinquent in excess of

180

days are charged off, unless the collateral securing the debt is of such value that any loss appears to be unlikely. In all cases, loans are charged off at an earlier date if classified as loss under the Company’s loan grading process or as a result of regulatory examination. The Company’s charge-off policy for impaired loans does

not

differ from the charge-off policy for loans outside the definition of impaired.

Provision and Allowance for Loan Losses

The provision for loan losses represents charges or credits made to earnings to maintain an allowance for loan losses at a level considered adequate to provide for probable incurred credit losses at the balance sheet date. The allowance for loan losses is a valuation allowance increased by the provision for loan losses and decreased by net charge-offs. Loan losses are charged against the allowance when management believes the uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company estimates the adequacy of the allowance using a risk-rated methodology which is based on the Company’s past loan loss experience, known and inherent risks in the loan portfolio, adverse situations that

may

affect the borrower’s ability to repay, the estimated value of any underlying collateral securing loans, composition of the loan portfolio, current economic conditions, and other relevant factors. This evaluation is inherently subjective as it requires significant judgment and the use of estimates that

may

be susceptible to change.

The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current risk factors. Allocations of the allowance

may

be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. Actual loan losses could differ significantly from the amounts estimated by management.

The general portion of the Company’s loan portfolio is segregated into portfolio segments having similar risk characteristics identified as follows: real estate loans, commercial loans, and consumer loans. Each of these portfolio segments is assigned a loss percentage based on their respective

twelve

quarter rolling historical loss rates, adjusted for the qualitative risk factors summarized below.

The qualitative risk factors used in the methodology are consistent with the guidance in the most recent Interagency Policy Statement on the Allowance for Loan Losses issued. Each factor is supported by a detailed analysis and is both measurable and supportable. Some factors include a minimum allocation in instances where loss levels are extremely low and it is determined to be prudent from a safety and soundness perspective. Qualitative risk factors that are used in the methodology include the following for each loan portfolio segment:

● Delinquency trends

● Trends in net charge-offs

● Trends in loan volume

● Lending philosophy risk

● Management experience risk

● Concentration of credit risk

● Economic conditions risk

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are

not

classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company accounts for impaired loans in accordance with Accounting Standards Codification (“ASC”) Topic

310,

“Receivables

.

”

ASC Topic

310

requires that impaired loans be measured at the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or at the fair value of the collateral if the loan is collateral dependent. Impaired loans

may

also be classified as nonaccrual. In many circumstances, however, the Company continues to accrue interest on an impaired loan. Cash receipts on accruing impaired loans are applied to the recorded investment in the loan, including any accrued interest receivable. Cash payments received on nonaccrual impaired loans generally are applied to principal until qualifying for return to accrual status. Loans that are part of a large group of smaller-balance homogeneous loans, such as residential mortgage, consumer, and smaller-balance commercial loans, are collectively evaluated for impairment. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception, or at the fair value of collateral. The Company determines the amount of reserve for troubled debt restructurings that subsequently default in accordance with its accounting policy for the allowance for loan losses.

Adoption of New

Accounting

Standards

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

, and subsequently issued several amendments to the standard during

2015,

2016,

and

2017.

The primary principle of ASU

No.

2014

-

09

is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The majority of the Company’s revenues earned are excluded from the scope of the new standard. Revenue streams within the scope of this ASU include services charges and fees on deposits, allotment processing fees, trust income, and certain components of other service charges, commission, and fees. The Company has analyzed each revenue stream under Topic

606

and determined that there were

no

material changes to existing recognition practices. The Company adopted ASU

No.

2014

-

09

effective

January 1, 2018

using a modified retrospective approach and

no

cumulative-effect adjustment was recorded. Additional disclosures required by the new standard are included in Note

5.

In 

January 2016,

the FASB issued ASU

No.

2016

-

01,

 

Financial Instruments – Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

 and, in

February 2018,

issued an amendment for technical corrections and improvements related to this ASU. The amendments in this ASU require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). In addition, this ASU eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. Public business entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. For public business entities, the amendments in this ASU are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company adopted ASU

No.

2016

-

01

effective

January 1, 2018,

recorded a cumulative-effect adjustment of

$56

thousand, and began using the exit price notion rather than entrance price to determine the fair value for disclosure purposes. For equity securities without a readily determinable fair value, the Company elected the practical expedient and recorded them at cost adjusted for impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions. Additional information related to the cumulative-effect adjustment can be found in Note

3

and Note

7.

Fair value disclosures can be found in Note

13.

In

March 2017,

the FASB issued ASU

No.

2017

-

07,

“

Compensation—Retirement Benefits (Topic

715

): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,

” which requires that employers offering benefit plans accounted for under Topic

715

report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component. If a separate line item or items are

not

used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company retrospectively adopted ASU

2017

-

07

effective

January 1, 2018,

which did

not

have a material impact on its consolidated financial position, results of operations, or cash flows upon adoption. For prior periods, the interest cost, recognized actuarial loss, and recognized curtailment gain have been reclassified from salaries and employee benefits to other noninterest expense.

In

February 2018, 

the FASB issued ASU

No.

2018

-

02,

“

Income Statement—Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,”

 which allows entities to reclassify the stranded tax effects caused by the Tax Cuts and Jobs Act (“Tax Act”), which was enacted in

December 2017,

from accumulated other comprehensive income (“AOCI”) to retained earnings. This ASU is effective for annual and interim periods beginning after

December 15, 2018,

with early adoption permitted. The Company early adopted this standard, resulting in the reclassification of

$633

thousand from AOCI to retained earnings for the year ended

December 31, 2017.

There was

no

impact on total equity.

Recently Issued

Accounting

Standards

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

),”

to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than

twelve

months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic

606,

Revenue from Contracts with Customers

.

For public companies, ASU

No.

2016

-

02

is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would

not

require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors

may

not

apply a full retrospective transition approach. The Company has identified a project team and is in the process of reviewing its leases and assessing the impact of ASU

No.

2016

-

02

on its consolidated financial position, results of operations, and cash flows.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

,

”

to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures, including qualitative and quantitative requirements, which provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU

No.

2016

-

13

is effective for the Company in annual and interim reporting periods beginning after

December 15, 2019.

Although early adoption is permitted for fiscal years beginning after

December 15, 2018,

the Company does

not

plan to early adopt. The Company has been preserving certain historical loan information from its core processing system in anticipation of adopting the standard. The Company has identified a project team to assess the impact of this ASU on its consolidated financial position, results of operations, and cash flows. The project team has developed a timeline for implementing the standard, has begun working with a

third

party software solution provider, and has identified an independent

third

party for validation of the impending changes to our credit loss methodologies and processes. The team continues to assess the impact of the standard; however, the Company expects adopting this ASU will result in an increase in its allowance for loan losses. The amount of the increase in the allowance for loan losses upon adoption will be dependent upon the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date. A cumulative effect adjustment will be made to retained earnings for the impact of the standard at the beginning of the period the standard is adopted.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are

not

expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

Note 5 - Revenue From Contracts With Customers

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

5

.

Revenue From Contracts With Customers

The Company records revenue from contracts with customers in accordance with ASC Topic

606,

“

Revenue from Contracts with Customers

.

” ASC Topic

606

requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized when, or as, the Company satisfies a performance obligation. Primarily all of the Company’s revenue from contracts with customers in the scope of ASC Topic

606

is recognized within noninterest income. Net gains or losses on the sale of other real estate owned (“OREO”) are included in net other real estate expenses. The following table presents the Company’s sources of noninterest income for the

three

months ended

March 31, 2018

and

2017.

Amounts in the table are within the scope of ASC Topic

606

unless otherwise noted.

Three Months Ended March 31, (In thousands)	2018		2017
Service charges and fees on deposits
Overdraft fees	$	956	$	927
Dormant account fees		593		665
Service charges on checking and savings accounts		314		310
Other		49		56
Allotment processing fees		720		715
Other service charges, commissions, and fees
Interchange fees		827		781
Other 1		545		591
Trust income		789		704
Investment securities (losses) gains, net 2		-		(9	)
Gain on sale of mortgage loans, net 2		95		154
Income from company-owned life insurance 2		293		235
Other		20		122
Total noninterest income	$	5,201	$	5,251

1

Includes broker, ATM, and other fees totaling

$402

thousand and

$457

thousand for the

three

months ended

March 31, 2018

and

2017,

respectively, which is within the scope of ASC Topic

606.

2

Not

within the scope of ASC Topic

606.

Net other real estate expenses include a net loss on the sale of OREO of

$43

thousand and a net gain of

$115

thousand for the

three

months ended

March 31, 2018

and

2017,

respectively.

A description of the Company’s revenue-generating activities accounted for under Topic

606

follows.

Service charges and fees on deposits consist primarily of overdraft fees, dormant account fees, and service charges on checking and savings accounts. Overdraft fees are recognized at the time an account is overdrawn. Dormant account fees are recognized when an account is inactive for

365

days. The majority of service charges on checking and savings accounts are for account maintenance services performed and recognized in the same calendar month. Other fees are primarily for transaction-based services completed at the request of the customer and recognized at the time the transaction is executed. These transaction-based services include foreign ATM usage and stop payments services. All service charges and fees on deposits are withdrawn from the customer’s account balance.

Allotment processing fees relate to the Company’s bill payment and electronic funds transfer (“EFT”) services provided under the name of FirstNet. The Company processes payments by individual customers to unaffiliated

third

party lenders on bi-weekly and monthly schedules. Other EFT services are available to customers upon request. The Company does

not

provide credit to individuals under the program. Fees are primarily withdrawn from the customer’s account and recognized at the time the transaction is executed.

Other service charges, commissions, and fees include interchange fees earned primarily from debit card holder transactions conducted through the VISA payment network and other networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are received and recognized daily, concurrent with the transaction processing services provided to the cardholder.

Trust income is earned from living trusts and investment management agency accounts, estate planning and estate settlement, custody accounts, individual retirement accounts, and other related services. These fees are primarily earned and accrued over the period of time the Company provides the contracted services and are generally assessed based on tiered scale of the market value of the assets of the accounts. Fees for other services, including the preparation of fiduciary income tax returns, are recognized when the services are rendered. Fees are generally paid out of the assets held in the customer’s account.

XML

Note 6 - Net Income Per Common Share

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

6

.

Net

Income Per Common Share

Basic net income per common share is determined by dividing net income by the weighted average total number of common shares issued and outstanding. There were

no

dilutive instruments at

March 31, 2018

and

2017.

Net income per common share computations were as follows for the periods indicated:

	Three Months Ended March 31,
(In thousands, except per share data)	2018		2017
Net income, basic and diluted	$	5,641	$	3,329
Average common shares issued and outstanding, basic and diluted		7,518		7,510
Net income per common share, basic and diluted	$	.75	$	.44

XML

Note 7 - Investment Securities

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

7

.

Investment Securities

Equity Securities

Equity securities consist of money market mutual funds classified as cash and cash equivalents on the balance sheet and mutual funds and equity securities in the investment portfolio of the Company’s captive insurance subsidiary. Money market mutual funds were

$35.0

million and

$36.7

million at

March 31, 2018

and

December 31, 2017,

respectively. The Company held

$1.6

million and

$935

thousand in mutual funds and equity securities recorded at fair value at

March 31, 2018

and

December 31, 2017,

respectively.

Effective

January 1, 2018,

the Company adopted ASU

2016

-

01,

which requires the Company to recognize changes in the fair value of its equity securities through net income. Prior to

2018,

changes in the fair value of equity securities were recognized through AOCI. At

December 31, 2017,

unrealized gains, net of tax, of

$56

thousand had been recognized in AOCI. At the beginning of

2018,

the Company made a cumulative-effect adjustment to reclassify those gains out of AOCI and into retained earnings. During the

three

months ended

March 31, 2018,

the Company recognized an unrealized loss of

$55

thousand on the equity securities held at

March 31, 2018,

which was recorded in other noninterest income. There were

no

sales of equity securities during the

three

months ended

March 31, 2018.

Debt Securities

The Company’s debt securities are classified as available for sale or held to maturity. The following tables summarize the amortized costs and estimated fair value of the Company’s debt securities at

March 31, 2018

and

December 31, 2017.

March 31, 2018 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	42,633	$	14	$	691	$	41,956
Obligations of states and political subdivisions		109,652		281		2,365		107,568
Mortgage-backed securities – residential		186,441		318		5,158		181,601
Mortgage-backed securities – commercial		49,990		-		2,116		47,874
Asset-backed securities		15,538		8		29		15,517
Corporate debt securities		7,741		49		18		7,772
Total securities – available for sale	$	411,995	$	670	$	10,377	$	402,288
Held To Maturity
Obligations of states and political subdivisions	$	3,350	$	74	$	-	$	3,424

December 31, 2017 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	43,601	$	44	$	437	$	43,208
Obligations of states and political subdivisions		114,960		562		1,273		114,249
Mortgage-backed securities – residential		195,605		523		2,735		193,393
Mortgage-backed securities – commercial		50,518		42		1,208		49,352
Asset-backed securities		15,569		9		4		15,574
Corporate debt securities		7,578		1		37		7,542
Total securities – available for sale	$	427,831	$	1,181	$	5,694	$	423,318
Held To Maturity
Obligations of states and political subdivisions	$	3,364	$	114	$	-	$	3,478

Debt securities with a carrying value of

$208

million and

$214

million at

March 31, 2018

and

December 31, 2017,

respectively, were pledged to secure public and trust deposits, repurchase agreements, and for other purposes.

The amortized cost and estimated fair value of the debt securities portfolio at

March 31, 2018,

by contractual maturity, are detailed below. Expected maturities

may

differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are stated separately due to the nature of payment and prepayment characteristics of these securities, as principal is

not

due at a single date.

	Available For Sale				Held To Maturity
	Amortized		Estimated		Amortized		Estimated
March 31, 2018 (In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	28,921	$	28,872	$	-	$	-
Due after one year through five years		52,222		51,572		-		-
Due after five years through ten years		55,496		53,726		1,232		1,289
Due after ten years		38,925		38,643		2,118		2,135
Mortgage-backed securities		236,431		229,475		-		-
Total	$	411,995	$	402,288	$	3,350	$	3,424

Gross realized gains and losses on the sale of available for sale debt securities are presented in the table below for the periods indicated.

	Three Months Ended
	March 31,
(In thousands)	2018		2017
Gross realized gains	$	-	$	-
Gross realized losses		-		9
Net realized loss	$	-	$	(9	)

Debt securities with unrealized losses at

March 31, 2018

and

December 31, 2017

not

recognized in income are presented in the tables below. The tables segregate debt securities that have been in a continuous unrealized loss position for less than

twelve

months from those that have been in a continuous unrealized loss position for

twelve

months or more. The tables also include the fair value of the related securities.

	Less than 12 Months				12 Months or More				Total
March 31, 2018 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	13,336	$	182	$	27,010	$	509	$	40,346	$	691
Obligations of states and political subdivisions		52,756		956		33,058		1,409		85,814		2,365
Mortgage-backed securities – residential		74,591		1,642		93,924		3,516		168,515		5,158
Mortgage-backed securities – commercial		14,798		378		33,076		1,738		47,874		2,116
Asset-backed securities		11,721		29		-		-		11,721		29
Corporate debt securities		2,721		15		498		3		3,219		18
Total	$	169,923	$	3,202	$	187,566	$	7,175	$	357,489	$	10,377

	Less than 12 Months				12 Months or More				Total
December 31, 2017 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	11,544	$	43	$	25,298	$	394	$	36,842	$	437
Obligations of states and political subdivisions		40,402		413		33,965		860		74,367		1,273
Mortgage-backed securities – residential		77,312		481		99,986		2,254		177,298		2,735
Mortgage-backed securities – commercial		7,758		62		34,139		1,146		41,897		1,208
Asset-backed securities		1,166		4		-		-		1,166		4
Corporate debt securities		7,251		36		200		1		7,451		37
Total	$	145,433	$	1,039	$	193,588	$	4,655	$	339,021	$	5,694

Unrealized losses included in the tables above have

not

been recognized in income since they have been identified as temporary. The Company evaluates debt securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant. Many factors are considered, including: (

1

) the length of time and the extent to which the fair value has been less than cost, (

2

) the financial condition and near-term prospects of the issuer, (

3

) whether the market decline was effected by macroeconomic conditions, and (

4

) whether the Company has the intent to sell the security or more likely than

not

will be required to sell the security before its anticipated recovery. The assessment of whether an OTTI charge exists involves a high degree of subjectivity and judgment and is based on the information available to the Company at a point in time.

The Company attributes the unrealized losses in its debt securities portfolio to changes in market interest rates and volatility. Debt securities with unrealized losses at

March 31, 2018 and December 31, 2017

are performing according to their contractual terms, and the Company does

not

expect to incur a loss on these securities unless they are sold prior to maturity. The Company does

not

have the intent to sell these securities nor does it believe it is likely that it will be required to sell these securities prior to their anticipated recovery. The Company does

not

consider any of the securities to be impaired due to reasons of credit quality or other factors.

XML

Note 8 - Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Financing Receivables [Text Block]

8

. Loans and Allowance for Loan Losses

Major classifications of loans outstanding are summarized as follows:

(In thousands)	March 31, 2018		December 31, 2017
Real Estate
Real estate mortgage – construction and land development	$	131,376	$	129,181
Real estate mortgage – residential		351,838		355,304
Real estate mortgage – farmland and other commercial enterprises		440,680		432,321
Commercial
Commercial and industrial		68,472		63,417
States and political subdivisions		18,883		27,209
Other		16,663		19,916
Consumer
Secured		3,980		4,853
Unsecured		3,577		3,062
Total loans		1,035,469		1,035,263
Less unearned income		-		-
Total loans, net of unearned income	$	1,035,469	$	1,035,263

Activity in the allowance for loan losses by portfolio segment was as follows for the periods indicated:

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended Ma r ch 3 1 , 201 8
Balance, beginning of period	$	8,509		$	951		$	323		$	9,783
Provision for loan losses		(191	)		(47	)		(23	)		(261	)
Recoveries		341			20			27			388
Loans charged off		(58	)		(88	)		(16	)		(162	)
Balance, end of period	$	8,601		$	836		$	311		$	9,748

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended Ma r ch 3 1 , 201 7
Balance, beginning of period	$	8,205		$	854		$	285		$	9,344
Provision for loan losses		396			(7	)		191			580
Recoveries		17			49			11			77
Loans charged off		(434	)		(32	)		(28	)		(494	)
Balance, end of period	$	8,184		$	864		$	459		$	9,507

The following tables present individually impaired loans by class of loans for the dates indicated.

March 31, 2018 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	3,473	$	1,501	$	1,597	$	3,098	$	325
Real estate mortgage – residential		10,177		3,056		7,120		10,176		2,115
Real estate mortgage – farmland and other commercial enterprises		8,675		2,169		6,338		8,507		307
Commercial
Commercial and industrial		391		-		391		391		214
Consumer
Unsecured		305		-		305		305		212
Total	$	23,021	$	6,726	$	15,751	$	22,477	$	3,173

December 31, 2017 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	4,076	$	1,746	$	1,955	$	3,701	$	402
Real estate mortgage – residential		10,112		3,233		6,877		10,110		1,973
Real estate mortgage – farmland and other commercial enterprises		8,737		2,203		6,367		8,570		319
Commercial
Commercial and industrial		448		-		448		448		270
Consumer
Unsecured		312		-		312		312		218
Total	$	23,685	$	7,182	$	15,959	$	23,141	$	3,182

Three Months Ended March 31,	2018						2017
(In thousands)	Average		Interest Income Recognized		Cash Basis Interest Recognized		Average		Interest Income Recognized		Cash Basis Interest Recognized
Real Estate
Real estate mortgage – construction and land development	$	3,616	$	46	$	26	$	6,247	$	76	$	52
Real estate mortgage – residential		10,343		136		133		9,702		118		117
Real estate mortgage – farmland and other commercial enterprises		8,887		100		96		24,089		302		291
Commercial
Commercial and industrial		393		5		4		499		7		6
Consumer
Unsecured		320		4		4		335		5		2
Total	$	23,559	$	291	$	263	$	40,872	$	508	$	468

The following tables present the balance of the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of

March 31, 2018

and

December 31, 2017.

March 31, 2018 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,747	$	214	$	212	$	3,173
Collectively evaluated for impairment		5,854		622		99		6,575
Total ending allowance balance	$	8,601	$	836	$	311	$	9,748
Loans
Loans individually evaluated for impairment	$	21,781	$	391	$	305	$	22,477
Loans collectively evaluated for impairment		902,113		103,627		7,252		1,012,992
Total ending loan balance, net of unearned income	$	923,894	$	104,018	$	7,557	$	1,035,469

December 31, 2017 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,694	$	270	$	218	$	3,182
Collectively evaluated for impairment		5,815		681		105		6,601
Total ending allowance balance	$	8,509	$	951	$	323	$	9,783
Loans
Loans individually evaluated for impairment	$	22,381	$	448	$	312	$	23,141
Loans collectively evaluated for impairment		894,425		110,094		7,603		1,012,122
Total ending loan balance, net of unearned income	$	916,806	$	110,542	$	7,915	$	1,035,263

The following tables present the recorded investment in nonperforming loans by class of loans as of

March 31, 2018

and

December 31, 2017.

March 31, 2018 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	150	$	1,597	$	-
Real estate mortgage – residential		1,636		5,648		-
Real estate mortgage – farmland and other commercial enterprises		1,738		3,682		-
Commercial
Commercial and industrial		30		369		-
Consumer
Unsecured		165		126		-
Total	$	3,719	$	11,422	$	-

December 31, 2017 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	151	$	1,955	$	-
Real estate mortgage – residential		1,763		5,326		-
Real estate mortgage – farmland and other commercial enterprises		1,752		3,703		-
Commercial
Commercial and industrial		53		370		-
Consumer
Unsecured		168		128		-
Total	$	3,887	$	11,482	$	-

The Company has allocated

$1.7

million and

$1.8

million of specific reserves as of

March 31, 2018

and

December 31, 2017,

respectively, to customers whose loan terms have been modified in troubled debt restructurings and that are in compliance with those terms. The Company had

no

commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings at

March 31, 2018

and

December 31, 2017.

The Company had

no

credits during the

first

three

months of

2018

or

2017

that were modified as troubled debt restructurings.

The tables below present an age analysis of past due loans

30

days or more by class of loans as of the dates indicated. Past due loans that are also classified as nonaccrual are included in their respective past due category.

March 31, 2018 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	-	$	87	$	87	$	131,289	$	131,376
Real estate mortgage – residential		2,145		250		2,395		349,443		351,838
Real estate mortgage – farmland and other commercial enterprises		712		989		1,701		438,979		440,680
Commercial
Commercial and industrial		47		-		47		68,425		68,472
States and political subdivisions		-		-		-		18,883		18,883
Other		-		-		-		16,663		16,663
Consumer
Secured		-		-		-		3,980		3,980
Unsecured		1		-		1		3,576		3,577
Total	$	2,905	$	1,326	$	4,231	$	1,031,238	$	1,035,469

December 31, 2017 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	15	$	87	$	102	$	129,079	$	129,181
Real estate mortgage – residential		1,160		538		1,698		353,606		355,304
Real estate mortgage – farmland and other commercial enterprises		966		948		1,914		430,407		432,321
Commercial
Commercial and industrial		62		-		62		63,355		63,417
States and political subdivisions		-		-		-		27,209		27,209
Other		21		-		21		19,895		19,916
Consumer
Secured		-		-		-		4,853		4,853
Unsecured		9		-		9		3,053		3,062
Total	$	2,233	$	1,573	$	3,806	$	1,031,457	$	1,035,263

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends and conditions. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes large-balance loans and non-homogeneous loans, such as commercial real estate and certain residential real estate loans. Loan rating grades, as described further below, are assigned based on a continuous process. The amount and adequacy of the allowance for loan loss is determined on a quarterly basis. The Company uses the following definitions for its risk ratings:

Special Mention.

Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses

may

result in deterioration of the borrower’s repayment ability, weaken the collateral or inadequately protect the Company’s credit position at some future date. These credits pose elevated risk, but their weaknesses do

not

yet justify a substandard classification.

Substandard.

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are

not

corrected.

Doubtful.

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

Loans

not

meeting the criteria above which are analyzed individually as part of the above described process are considered to be pass rated loans and are considered to have a low risk of loss. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows for the dates indicated.

	Real Estate						Commercial
March 31, 2018 (In thousands)	Real Estate Mortgage – Construction and Land Development		Real Estate Mortgage – Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	127,443	$	326,807	$	423,824	$	67,586	$	18,883	$	16,647
Special Mention		681		9,355		6,174		461		-		16
Substandard		3,252		15,676		10,682		425		-		-
Doubtful		-		-		-		-		-		-
Total	$	131,376	$	351,838	$	440,680	$	68,472	$	18,883	$	16,663

	Real Estate						Commercial
December 31, 2017 (In thousands)	Real Estate Mortgage –Construction and Land Development		Real Estate Mortgage –Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	124,926	$	330,401	$	414,663	$	62,490	$	27,209	$	19,898
Special Mention		396		9,196		7,556		474		-		18
Substandard		3,859		15,707		10,102		453		-		-
Doubtful		-		-		-		-		-		-
Total	$	129,181	$	355,304	$	432,321	$	63,417	$	27,209	$	19,916

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the consumer loans outstanding based on payment activity as of

March 31, 2018

and

December 31, 2017.

	March 31, 2018				December 31, 2017
	Consumer				Consumer
(In thousands)	Secured		Unsecured		Secured		Unsecured
Credit risk profile based on payment activity
Performing	$	3,980	$	3,286	$	4,853	$	2,766
Nonperforming		-		291		-		296
Total	$	3,980	$	3,577	$	4,853	$	3,062

XML

Note 9 - Other Real Estate Owned

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Real Estate Owned [Text Block]

9

.

Other Real Estate Owned

Other real estate owned (“OREO”) was as follows for the dates indicated:

(In thousands)	March 31, 2018		December 31, 2017
Construction and land development	$	4,089	$	4,433
Residential real estate		35		157
Farmland and other commercial enterprises		963		899
Total	$	5,087	$	5,489

OREO activity for the

three

months ended

March 31, 2018

and

2017

was as follows:

Three months ended March 31, (In thousands)	2018			2017
Beginning balance	$	5,489		$	10,673
Transfers from loans and other increases		104			193
Proceeds from sales		(430	)		(2,871	)
(Loss) gain on sales, net		(43	)		115
Write downs and other decreases, net		(33	)		(110	)
Ending balance	$	5,087		$	8,000

At

March 31, 2018,

the Company had a total of

$136

thousand of loans secured by residential real estate mortgages that were in the process of foreclosure.

XML

Note 10 - Securities Sold Under Agreements to Repurchase

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Long-term Debt [Text Block]

10

.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase represent transactions where the Company sells certain of its investment securities and agrees to repurchase them at a specific date in the future. Securities sold under agreements to repurchase are accounted for as secured borrowings and reflect the amount of cash received in connection with the transaction.

Securities sold under agreements to repurchase are collateralized by U.S. government agency securities, primarily mortgage-backed securities. The Company

may

be required to provide additional collateral securing the borrowings in the event of principal pay downs or a decrease in the market value of the pledged securities. The Company mitigates this risk by monitoring the market value and liquidity of the collateral and ensuring that it holds a sufficient level of eligible securities to cover potential increases in collateral requirements.

The following tables represent the remaining maturity of repurchase agreements disaggregated by the class of securities pledged as of the dates indicated.

	Remaining Contractual Maturity of the Agreements
March 31, 2018 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343
Total	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343

	Remaining Contractual Maturity of the Agreements
December 31, 2017 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252
Total	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252

XML

Note 11 - Postretirement Medical Benefits

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

1

1

.

Postretirement Medical Benefits

The Company provides lifetime medical and dental benefits upon retirement for certain employees meeting the eligibility requirements as of

December 31, 1989 (

“Plan

1”

). Additional participants are

not

eligible to be included in Plan

1

unless they met the requirements on this date. During

2003,

the Company implemented an additional postretirement health insurance program (“Plan

2”

). Under Plan

2,

any employee meeting the service requirement of

20

years of full time service to the Company and is at least age

55

upon retirement is eligible to continue their health insurance coverage. Under both plans, retirees

not

yet eligible for Medicare have coverage identical to the coverage offered to active employees. Under both plans, Medicare-eligible retirees are provided with a Medicare Advantage plan. The Company pays

100%

of the cost of Plan

1.

The Company and the retirees each pay

50%

of the cost under Plan

2.

Both plans are unfunded. Employees hired on or after

January 1, 2016

are

not

eligible for benefits under Plan

2.

The following disclosures of the net periodic benefit cost components of Plan

1

and Plan

2

were measured at

January 1, 2018

and

2017.

Three months ended March 31, (In thousands)	2018		2017
Service cost	$	140	$	146
Interest cost		153		167
Curtailment gain recognized		-		(417	)
Recognized prior service cost		-		75
Net periodic benefit cost	$	293	$	(29	)

Service costs and recognized prior service costs are recorded as a component of salaries and employee benefits with the remaining portion of net periodic benefit cost recorded in other noninterest expense on the Company’s unaudited condensed consolidated statements of income. In connection with the merger of certain of its subsidiaries in

February 2017,

the Company recognized a curtailment gain of

$417

thousand and prior service costs of

$66

thousand, for a net gain of

$351

thousand at the time of curtailment. This gain is a result of revaluing its postretirement medical benefits plan liability due to a reduction in workforce during the

first

quarter of

2017.

The Company expects benefit payments of

$459

thousand for

2018,

of which

$96

thousand have been made during the

first

three

months of

2018.

XML

Note 12 - Regulatory Matters

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

1

2

. Regulatory Matters

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements will initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, banks must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and its subsidiary bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The regulatory ratios of the consolidated Company and its subsidiary bank were as follows for the dates indicated:

	March 31, 2018												December 31, 2017
	Common Equity Tier 1 Risk-based Capital 1			Tier 1 Risk-based Capital 1			Total Risk-based Capital 1			Tier 1 Leverage 2			Common Equity Tier 1 Risk-based Capital 1			Tier 1 Risk-based Capital 1			Total Risk-based Capital 1			Tier 1 Leverage 2
Consolidated		17.07	%		19.82	%		20.65	%		13.99	%		16.56	%		19.30	%		20.12	%		13.75	%
United Bank		14.63			14.63			15.47			10.47			14.05			14.05			14.88			10.13
Regulatory minimum		4.50			6.00			8.00			4.00			4.50			6.00			8.00			4.00
Well-capitalized status		6.50			8.00			10.00			5.00			6.50			8.00			10.00			5.00

1

Common Equity Tier

1

Risked-based, Tier

1

Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank’s Common Equity Tier

1,

Tier

1

or Total Capital, as defined by regulation, by a risk-weighted sum of the bank’s assets, with the risk weighting determined by general standards established by regulation.

2

Tier

1

Leverage ratio is computed by dividing a bank’s Tier

1

Capital by its total quarterly average assets, as defined by regulation.

XML

Note 13 - Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Fair Value Disclosures [Text Block]

1

3

.

Fair Value Measurements

ASC Topic

820,

“Fair Value Measurements and Disclosures

,

”

defines fair value, establishes a framework for measuring fair value, and sets forth disclosures about fair value measurements. ASC Topic

825,

“Financial Instruments

,

”

allows entities to choose to measure certain financial assets and liabilities at fair value. The Company has

not

elected the fair value option for any of its financial assets or liabilities.

ASC Topic

820

defines fair value as the price that would be received to sell 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 at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This Topic describes

three

levels of inputs that

may

be used to measure fair value:

Level 1: Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access at 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 for substantially the full term of the assets or liabilities.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions supported by little or no market activity about the assumptions that market participants would use in pricing the asset or liability.

Following is a description of the valuation method used for financial instruments measured at fair value on a recurring basis. For this disclosure, the Company only has available for sale debt securities, equity securities, and money market mutual funds classified as cash equivalents that meet the requirement. The carrying value of the

$35.0

million and

$36.7

million in money market mutual funds at

March 31, 2018

and

December 31, 2017,

respectively, is equivalent to its fair value and based on Level

1

inputs.

Available for sale

debt

securities

and equity securities

Valued primarily by independent

third

party pricing services under the market valuation approach that include, but are

not

limited to, the following inputs:

● Mutual funds and equity securities are priced utilizing real-time data feeds from active market exchanges for identical securities and are considered Level 1 inputs.

● Government-sponsored agency debt securities, obligations of states and political subdivisions, mortgage-backed securities, corporate bonds, and other similar investment securities are priced with available market information through processes using benchmark yields, matrix pricing, prepayment speeds, cash flows, live trading data, and market spreads sourced from new issues, dealer quotes, and trade prices, among others sources and are considered Level 2 inputs.

Fair value disclosure for available for sale debt securities and equity securities classified as investments on the balance sheet as of

March 31, 2018

and

December 31, 2017

are as follows:

			Fair Value Measurements Using
(In thousands) March 31, 2018	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	41,956	$	-	$	41,956	$	-
Obligations of states and political subdivisions		107,568		-		107,568		-
Mortgage-backed securities – residential		181,601		-		181,601		-
Mortgage-backed securities – commercial		47,874		-		47,874		-
Asset-backed securities		15,517		-		15,517		-
Corporate debt securities		7,772		-		7,772		-
Total available for sale securities	$	402,288	$	-	$	402,288	$	-
Equity Securities
Mutual funds and equity securities	$	1,575	$	1,575	$	-	$	-
December 31, 2017
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	43,208	$	-	$	43,208	$	-
Obligations of states and political subdivisions		114,249		-		114,249		-
Mortgage-backed securities – residential		193,393		-		193,393		-
Mortgage-backed securities – commercial		49,352		-		49,352		-
Asset-backed securities		15,574		-		15,574		-
Corporate debt securities		7,542		-		7,542		-
Total available for sale securities	$	423,318	$	-	$	423,318	$	-
Equity Securities
Mutual funds and equity securities	$	935	$	935	$	-	$	-

The Company is required to measure and disclose certain other assets and liabilities at fair value on a nonrecurring basis in periods following their initial recognition. The Company’s disclosure about assets and liabilities measured at fair value on a nonrecurring basis consists of collateral-dependent impaired loans and OREO.

Adjustments to the fair value of collateral-dependent loans are recorded by either direct loan charge-offs through the allowance for loan losses or an adjustment to the specific reserve through an increase or decrease to the provision for loan losses. The fair value of collateral-dependent impaired loans with specific allocations of the allowance for loan losses is measured based on recent appraisals of the underlying collateral. These appraisals

may

utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Appraisers take absorption rates into consideration and adjustments are routinely made in the appraisal process to identify differences between the comparable sales and income data available. Such adjustments consist mainly of estimated costs to sell that are

not

included in certain appraisals or to update appraised collateral values as a result of market declines of similar properties for which a newer appraisal is available. These adjustments can be significant and typically result in a Level

3

classification of the inputs for determining fair value.

OREO includes properties acquired by the Company through, or in lieu of, actual loan foreclosures and is carried at fair value less estimated costs to sell. Fair value of OREO at acquisition is generally based on

third

party appraisals of the property that includes comparable sales data and is considered as Level

3

inputs. The carrying value of each OREO property is updated at least annually and more frequently when market conditions significantly impact the value of the property. If the carrying amount of the OREO exceeds fair value less estimated costs to sell, an impairment loss is recorded through noninterest expense.

The following table represents the carrying amount of assets measured at fair value on a nonrecurring basis and still held by the Company as of the dates indicated. The amounts in the table only represent assets whose carrying amount has been adjusted during the period in a manner as described above; therefore, these amounts will differ from the total amounts outstanding. With the exception of those calculated using the collateral valuation method, collateral-dependent impaired loan amounts in the tables below exclude restructured loans that are measured based on present value techniques, which are outside the scope of the fair value reporting framework.

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 3 1 , 201 8
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,271	$	-	$	-	$	1,271
Real estate mortgage – residential		4,176		-		-		4,176
Total	$	5,447	$	-	$	-	$	5,447
OREO
Construction and land development	$	125	$	-	$	-	$	125
Residential real estate		35		-		-		35
Total	$	160	$	-	$	-	$	160

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 201 7
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,553	$	-	$	-	$	1,553
Real estate mortgage – residential		4,687		-		-		4,687
Real estate mortgage – farmland and other commercial enterprises		2,645		-		-		2,645
Total	$	8,885	$	-	$	-	$	8,885
OREO
Construction and land development	$	3,468	$	-	$	-	$	3,468
Residential real estate		157		-		-		157
Farmland and other commercial enterprises		821		-		-		821
Total	$	4,446	$	-	$	-	$	4,446

The following table represents fair value adjustments recorded in earnings for the periods indicated on assets measured at fair value on a nonrecurring basis.

(In thousands)
Three months ended March 31,	2018		2017
Net decrease in fair value:
Collateral-dependent impaired loans	$	115	$	65
OREO		33		110
Total	$	148	$	175

The following table presents quantitative information about unobservable inputs for assets measured on a nonrecurring basis using Level

3

measurements. As described above, the fair value of real estate securing collateral-dependent impaired loans and OREO are based on current

third

party appraisals. It is sometimes necessary, however, for the Company to discount the appraisal amounts supporting its impaired loans and OREO. These discounts relate primarily to marketing and other holding costs that are

not

included in certain appraisals or to update values as a result of market declines of similar properties for which newer appraisals are available. Discounts

may

also result from contracts to sell properties entered into during the period. The range of discounts is presented in the table below for

2018

and

2017.

(In thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range				Weighted Average
Ma r ch 3 1 , 201 8
Collateral-dependent impaired loans	$	5,447	Discounted appraisals	Marketability discount	0%	-	73.6	%		1.3	%
OREO	$	160	Discounted appraisals	Marketability discount	0%	-	35.9	%		10.8	%
December 31, 201 7
Collateral-dependent impaired loans	$	8,885	Discounted appraisals	Marketability discount	0%	-	22.8	%		3.1	%
OREO	$	4,446	Discounted appraisals	Marketability discount	0%	-	71.7	%		4.0	%

Fair Value of Financial Instruments

The table that follows represents the estimated fair values of the Company’s financial instruments made in accordance with the requirements of ASC Topic

825,

“Financial Instruments

.

”

ASC Topic

825

requires disclosure of fair value information about financial instruments, whether or

not

recognized in the balance sheet for which it is practicable to estimate that value. The estimated fair value amounts have been determined by the Company using available market information and present value or other valuation techniques. These derived fair values are subjective in nature, involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. ASC Topic

825

excludes certain financial instruments and all nonfinancial instruments from the disclosure requirements. Accordingly, the aggregate fair value amounts presented are

not

intended to represent the underlying value of the Company.

The following table presents the estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at

March 31, 2018

and

December 31, 2017.

Information for available for sale investment securities is presented within this footnote in greater detail above. In accordance with the prospective adoption of ASU

2016

-

01,

the fair values as of

March 31, 2018

were measured using an exit price notion.

					Fair Value Measurements Using
(In thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 3 1 , 201 8
Assets
Cash and cash equivalents	$	153,221	$	153,221	$	153,221	$	-	$	-
Held to maturity investment securities		3,350		3,424		-		3,424		-
Loans, net		1,025,721		1,007,469		-		-		1,007,469
Accrued interest receivable		4,572		4,572		-		4,572		-
Federal Home Loan Bank and Federal Reserve Bank Stock		12,996		12,996		-		-		12,996
Liabilities
Deposits		1,394,091		1,393,901		1,181,392		-		212,509
Securities sold under agreements to repurchase		33,343		33,349		-		33,349		-
Federal Home Loan Bank advances		3,436		3,488		-		3,488		-
Subordinated notes payable to unconsolidated trusts		33,506		23,918		-		-		23,918
Accrued interest payable		265		265		-		265		-
December 31, 201 7
Assets
Cash and cash equivalents	$	120,408	$	120,408	$	120,408	$	-	$	-
Held to maturity investment securities		3,364		3,478		-		3,478		-
Loans, net		1,025,480		1,012,959		-		-		1,012,959
Accrued interest receivable		4,935		4,935		-		4,935		-
Federal Home Loan Bank and Federal Reserve Bank Stock		13,235		13,235		-		-		13,235
Liabilities
Deposits		1,379,903		1,380,122		1,157,045		-		223,077
Securities sold under agreements to repurchase		34,252		34,257		-		34,257		-
Federal Home Loan Bank advances		3,479		3,546		-		3,546		-
Subordinated notes payable to unconsolidated trusts		33,506		22,709		-		-		22,709
Accrued interest payable		261		261		-		261		-

XML

Note 14 - Subsequent Event

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

14

.

Subsequent Event

On

April 19, 2018,

the Company and Wesbanco, Inc. (“WesBanco”), a multi-state bank holding company with

$10.2

billion in assets at

March 31, 2018,

entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of the Company with and into WesBanco (the “Merger”) subject to the terms and conditions set forth in the Merger Agreement. As a result of the Merger, the separate corporate existence of the Company will cease and WesBanco will continue as the surviving corporation in the Merger. The Merger Agreement also provides that, immediately following the completion of the Merger, the Company’s subsidiary bank, United Bank, will merge with and into Wesbanco Bank, Inc., a West Virginia banking corporation and a wholly-owned subsidiary of WesBanco (the “Bank Merger”), with Wesbanco Bank, Inc. continuing as the surviving bank in the Bank Merger. The Merger Agreement was unanimously approved by the Board of Directors of both WesBanco and the Company.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, the Company’s shareholders will have the right to receive (i)

1.053

shares of WesBanco common stock and (ii)

$5.00

in cash, without interest, for each share of the Company’s common stock. As of the date of the announcement, the transaction was valued at approximately

$378.2

million. The Merger Agreement contains certain termination rights for both WesBanco and the Company and further provides that, upon termination of the Merger Agreement under certain circumstances, the Company

may

be obligated to pay WesBanco a termination fee of

$12,000,000.

Consummation of the Merger is subject to a number of customary conditions, including, but

not

limited to, the approval of the Merger Agreement by the shareholders of the Company and the receipt of all required regulatory approvals. The transaction is expected to close in the

third

or

fourth

quarter of

2018.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Reclassification, Policy [Policy Text Block]

Certain reclassifications have been made to the condensed consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications do

not

affect net income or total shareholders’ equity as previously reported.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Loans and Interest Income

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their unpaid principal amount outstanding adjusted for any charge-offs, deferred fees or costs on originated loans, and unamortized premiums and discounts on purchased loans. Interest income on loans is recognized using the interest method based on loan principal amounts outstanding during the period. Interest income also includes amortization and accretion of any premiums or discounts over the expected life of acquired loans at the time of purchase or business acquisition. Loan origination fees, net of certain direct origination costs, are deferred and amortized as yield adjustments over the contractual term of the loans.

The Company disaggregates certain disclosure information related to loans, the related allowance for loan losses, and credit quality measures by either portfolio segment or by loan class. The Company segregates its loan portfolio segments based on similar risk characteristics as follows: real estate loans, commercial loans, and consumer loans. Portfolio segments are further disaggregated into classes for certain required disclosures as follows:

Portfolio Segment	Class
Real estate loans	Real estate mortgage – construction and land development Real estate mortgage – residential Real estate mortgage – farmland and other commercial enterprises
Commercial loans	Commercial and industrial Depository institutions Agriculture production and other loans to farmers States and political subdivisions Other
Consumer loans	Secured Unsecured

The Company has a loan policy in place that is amended and approved from time to time as needed to reflect current economic conditions and product offerings in its markets. The policy establishes written procedures concerning areas such as the lending authorities of loan officers, committee review and approval of certain credit requests, underwriting criteria, policy exceptions, appraisal requirements, and loan review. Credit is extended to borrowers based primarily on their ability to repay as demonstrated by income and cash flow analysis.

Loans secured by real estate make up the largest segment of the Company’s loan portfolio. If a borrower fails to repay a loan secured by real estate, the Company

may

liquidate the collateral in order to satisfy the amount owed. Determining the value of real estate is a key component to the lending process for real estate backed loans. If the fair value of real estate (less estimated cost to sell) securing a collateral dependent loan declines below the outstanding loan amount, the Company will write down the carrying value of the loan and thereby incur a loss. The Company uses independent

third

party state certified or licensed appraisers in accordance with its loan policy to mitigate risk when underwriting real estate loans. Cash flow analysis of the borrower, loan to value limits as adopted by loan policy, and other customary underwriting standards are also in place which are designed to maximize credit quality and mitigate risks associated with real estate lending.

Commercial loans are made to businesses and are secured mainly by assets such as inventory, accounts receivable, machinery, fixtures and equipment, or other business assets. Commercial lending involves significant risk, as loan repayments are more dependent on the successful operation or management of the business and its cash flows. Consumer lending includes loans to individuals mainly for personal autos, boats, or a variety of other personal uses and

may

be secured or unsecured. Loan repayment associated with consumer loans is highly dependent upon the borrower’s continuing financial stability, which is heavily influenced by local unemployment rates. The Company mitigates its risk exposure to each of its loan segments by analyzing the borrower’s repayment capacity, imposing restrictions on the amount it will loan compared to estimated collateral values, limiting the payback periods, and following other customary underwriting practices as adopted in its loan policy.

The accrual of interest on loans is discontinued when it is determined that the collection of interest or principal is doubtful, or when a default of interest or principal has existed for

90

days or more, unless such loan is well secured and in the process of collection. Past due status is based on the contractual terms of the loan. Interest accrued but

not

received for a loan placed on nonaccrual status is reversed against interest income. Cash payments received on nonaccrual loans generally are applied to principal until qualifying for return to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company’s policy for placing a loan on nonaccrual status or subsequently returning a loan to accrual status does

not

differ based on its portfolio class or segment.

Commercial and real estate loans delinquent in excess of

120

days and consumer loans delinquent in excess of

180

days are charged off, unless the collateral securing the debt is of such value that any loss appears to be unlikely. In all cases, loans are charged off at an earlier date if classified as loss under the Company’s loan grading process or as a result of regulatory examination. The Company’s charge-off policy for impaired loans does

not

differ from the charge-off policy for loans outside the definition of impaired.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Provision and Allowance for Loan Losses

The provision for loan losses represents charges or credits made to earnings to maintain an allowance for loan losses at a level considered adequate to provide for probable incurred credit losses at the balance sheet date. The allowance for loan losses is a valuation allowance increased by the provision for loan losses and decreased by net charge-offs. Loan losses are charged against the allowance when management believes the uncollectibility of a loan is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The Company estimates the adequacy of the allowance using a risk-rated methodology which is based on the Company’s past loan loss experience, known and inherent risks in the loan portfolio, adverse situations that

may

affect the borrower’s ability to repay, the estimated value of any underlying collateral securing loans, composition of the loan portfolio, current economic conditions, and other relevant factors. This evaluation is inherently subjective as it requires significant judgment and the use of estimates that

may

be susceptible to change.

The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current risk factors. Allocations of the allowance

may

be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off. Actual loan losses could differ significantly from the amounts estimated by management.

The general portion of the Company’s loan portfolio is segregated into portfolio segments having similar risk characteristics identified as follows: real estate loans, commercial loans, and consumer loans. Each of these portfolio segments is assigned a loss percentage based on their respective

twelve

quarter rolling historical loss rates, adjusted for the qualitative risk factors summarized below.

The qualitative risk factors used in the methodology are consistent with the guidance in the most recent Interagency Policy Statement on the Allowance for Loan Losses issued. Each factor is supported by a detailed analysis and is both measurable and supportable. Some factors include a minimum allocation in instances where loss levels are extremely low and it is determined to be prudent from a safety and soundness perspective. Qualitative risk factors that are used in the methodology include the following for each loan portfolio segment:

● Delinquency trends

● Trends in net charge-offs

● Trends in loan volume

● Lending philosophy risk

● Management experience risk

● Concentration of credit risk

● Economic conditions risk

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are

not

classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company accounts for impaired loans in accordance with Accounting Standards Codification (“ASC”) Topic

310,

“Receivables

.

”

ASC Topic

310

requires that impaired loans be measured at the present value of expected future cash flows, discounted at the loan’s effective interest rate, at the loan’s observable market price, or at the fair value of the collateral if the loan is collateral dependent. Impaired loans

may

also be classified as nonaccrual. In many circumstances, however, the Company continues to accrue interest on an impaired loan. Cash receipts on accruing impaired loans are applied to the recorded investment in the loan, including any accrued interest receivable. Cash payments received on nonaccrual impaired loans generally are applied to principal until qualifying for return to accrual status. Loans that are part of a large group of smaller-balance homogeneous loans, such as residential mortgage, consumer, and smaller-balance commercial loans, are collectively evaluated for impairment. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception, or at the fair value of collateral. The Company determines the amount of reserve for troubled debt restructurings that subsequently default in accordance with its accounting policy for the allowance for loan losses.

New Accounting Pronouncements, Policy [Policy Text Block]

Adoption of New

Accounting

Standards

In

May 2014,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

, and subsequently issued several amendments to the standard during

2015,

2016,

and

2017.

The primary principle of ASU

No.

2014

-

09

is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The majority of the Company’s revenues earned are excluded from the scope of the new standard. Revenue streams within the scope of this ASU include services charges and fees on deposits, allotment processing fees, trust income, and certain components of other service charges, commission, and fees. The Company has analyzed each revenue stream under Topic

606

and determined that there were

no

material changes to existing recognition practices. The Company adopted ASU

No.

2014

-

09

effective

January 1, 2018

using a modified retrospective approach and

no

cumulative-effect adjustment was recorded. Additional disclosures required by the new standard are included in Note

5.

In 

January 2016,

the FASB issued ASU

No.

2016

-

01,

 

Financial Instruments – Overall (Subtopic

825

-

10

): Recognition and Measurement of Financial Assets and Financial Liabilities

 and, in

February 2018,

issued an amendment for technical corrections and improvements related to this ASU. The amendments in this ASU require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). In addition, this ASU eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. Public business entities are required to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. For public business entities, the amendments in this ASU are effective for fiscal years beginning after

December 15, 2017,

including interim periods within those fiscal years. The amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company adopted ASU

No.

2016

-

01

effective

January 1, 2018,

recorded a cumulative-effect adjustment of

$56

thousand, and began using the exit price notion rather than entrance price to determine the fair value for disclosure purposes. Additional information related to the cumulative-effect adjustment can be found in Note

3

and Note

7.

Fair value disclosures can be found in Note

13.

In

March 2017,

the FASB issued ASU

No.

2017

-

07,

“

Compensation—Retirement Benefits (Topic

715

): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,

” which requires that employers offering benefit plans accounted for under Topic

715

report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component. If a separate line item or items are

not

used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The Company retrospectively adopted ASU

2017

-

07

effective

January 1, 2018,

which did

not

have a material impact on its consolidated financial position, results of operations, or cash flows upon adoption. For prior periods, the interest cost, recognized actuarial loss, and recognized curtailment gain have been reclassified from salaries and employee benefits to other noninterest expense.

In

February 2018, 

the FASB issued ASU

No.

2018

-

02,

“

Income Statement—Reporting Comprehensive Income (Topic

220

): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,”

 which allows entities to reclassify the stranded tax effects caused by the Tax Cuts and Jobs Act (“Tax Act”), which was enacted in

December 2017,

from accumulated other comprehensive income (“AOCI”) to retained earnings. This ASU is effective for annual and interim periods beginning after

December 15, 2018,

with early adoption permitted. The Company early adopted this standard, resulting in the reclassification of

$633

thousand from AOCI to retained earnings for the year ended

December 31, 2017.

There was

no

impact on total equity.

Recently Issued

Accounting

Standards

In

February 2016,

the FASB issued ASU

No.

2016

-

02,

“Leases (Topic

842

),”

to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than

twelve

months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic

606,

Revenue from Contracts with Customers

.

For public companies, ASU

No.

2016

-

02

is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would

not

require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors

may

not

apply a full retrospective transition approach. The Company has identified a project team and is in the process of reviewing its leases and assessing the impact of ASU

No.

2016

-

02

on its consolidated financial position, results of operations, and cash flows.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

“

Financial Instruments—Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

,

”

to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU requires enhanced disclosures, including qualitative and quantitative requirements, which provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU

No.

2016

-

13

is effective for the Company in annual and interim reporting periods beginning after

December 15, 2019.

Although early adoption is permitted for fiscal years beginning after

December 15, 2018,

the Company does

not

plan to early adopt. The Company has been preserving certain historical loan information from its core processing system in anticipation of adopting the standard. The Company has identified a project team to assess the impact of this ASU on its consolidated financial position, results of operations, and cash flows. The project team has developed a timeline for implementing the standard, has begun working with a

third

party software solution provider, and has identified an independent

third

party for validation of the impending changes to our credit loss methodologies and processes. The team continues to assess the impact of the standard; however, the Company expects adopting this ASU will result in an increase in its allowance for loan losses. The amount of the increase in the allowance for loan losses upon adoption will be dependent upon the characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that date. A cumulative effect adjustment will be made to retained earnings for the impact of the standard at the beginning of the period the standard is adopted.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are

not

expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

Note 3 - Accumulated Other Comprehensive (Loss) Income (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended March 31, 2018									Three Months Ended March 31, 2017
(In thousands)	Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total			Unrealized Gains (Losses) on Available for Sale Investment Securities			Postretirement Benefit Obligation			Total
Beginning balance	$	(3,510	)	$	(56	)	$	(3,566	)	$	(3,363	)	$	(45	)	$	(3,408	)
Other comprehensive (loss) income before reclassifications		(4,102	)		-			(4,102	)		948			10			958
Amounts reclassified from accumulated other comprehensive income		-			(1	)		(1	)		6			49			55
Net current-period other comprehensive (loss) income		(4,102	)		(1	)		(4,103	)		954			59			1,013
Adoption of Accounting Standards Update 2016-01		(56	)		-			(56	)		-			-			-
Ending balance	$	(7,668	)	$	(57	)	$	(7,725	)	$	(2,409	)	$	14		$	(2,395	)

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Statement Where Net Income is Presented
(In thousands)	Three Months Ended March 31, 2018		Three Months Ended March 31, 2017
Unrealized gains (losses) on available for sale investment securities	$	-	$	(9	)	Net loss on sales of available for sale investment securities
		-		3		Income tax expense
	$	-	$	(6	)	Net of tax
Amortization related to postretirement benefits
Prior service costs	$	-	$	(75	)	Salaries and employee benefits
Actuarial gains (losses)		1		(1	)	Other noninterest expense
		1		(76	)	Total before tax
		-		27		Income tax expense
	$	1	$	(49	)	Net of tax
Total reclassifications for the period	$	1	$	(55	)	Net of tax

XML

Note 5 - Revenue From Contracts With Customers (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

Three Months Ended March 31, (In thousands)	2018		2017
Service charges and fees on deposits
Overdraft fees	$	956	$	927
Dormant account fees		593		665
Service charges on checking and savings accounts		314		310
Other		49		56
Allotment processing fees		720		715
Other service charges, commissions, and fees
Interchange fees		827		781
Other 1		545		591
Trust income		789		704
Investment securities (losses) gains, net 2		-		(9	)
Gain on sale of mortgage loans, net 2		95		154
Income from company-owned life insurance 2		293		235
Other		20		122
Total noninterest income	$	5,201	$	5,251

XML

Note 6 - Net Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31,
(In thousands, except per share data)	2018		2017
Net income, basic and diluted	$	5,641	$	3,329
Average common shares issued and outstanding, basic and diluted		7,518		7,510
Net income per common share, basic and diluted	$	.75	$	.44

XML

Note 7 - Investment Securities (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Marketable Securities [Table Text Block]

March 31, 2018 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	42,633	$	14	$	691	$	41,956
Obligations of states and political subdivisions		109,652		281		2,365		107,568
Mortgage-backed securities – residential		186,441		318		5,158		181,601
Mortgage-backed securities – commercial		49,990		-		2,116		47,874
Asset-backed securities		15,538		8		29		15,517
Corporate debt securities		7,741		49		18		7,772
Total securities – available for sale	$	411,995	$	670	$	10,377	$	402,288
Held To Maturity
Obligations of states and political subdivisions	$	3,350	$	74	$	-	$	3,424

December 31, 2017 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	43,601	$	44	$	437	$	43,208
Obligations of states and political subdivisions		114,960		562		1,273		114,249
Mortgage-backed securities – residential		195,605		523		2,735		193,393
Mortgage-backed securities – commercial		50,518		42		1,208		49,352
Asset-backed securities		15,569		9		4		15,574
Corporate debt securities		7,578		1		37		7,542
Total securities – available for sale	$	427,831	$	1,181	$	5,694	$	423,318
Held To Maturity
Obligations of states and political subdivisions	$	3,364	$	114	$	-	$	3,478

Investments Classified by Contractual Maturity Date [Table Text Block]

	Available For Sale				Held To Maturity
	Amortized		Estimated		Amortized		Estimated
March 31, 2018 (In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	28,921	$	28,872	$	-	$	-
Due after one year through five years		52,222		51,572		-		-
Due after five years through ten years		55,496		53,726		1,232		1,289
Due after ten years		38,925		38,643		2,118		2,135
Mortgage-backed securities		236,431		229,475		-		-
Total	$	411,995	$	402,288	$	3,350	$	3,424

Realized Gain (Loss) on Investments [Table Text Block]

	Three Months Ended
	March 31,
(In thousands)	2018		2017
Gross realized gains	$	-	$	-
Gross realized losses		-		9
Net realized loss	$	-	$	(9	)

Schedule of Unrealized Loss on Investments [Table Text Block]

	Less than 12 Months				12 Months or More				Total
March 31, 2018 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	13,336	$	182	$	27,010	$	509	$	40,346	$	691
Obligations of states and political subdivisions		52,756		956		33,058		1,409		85,814		2,365
Mortgage-backed securities – residential		74,591		1,642		93,924		3,516		168,515		5,158
Mortgage-backed securities – commercial		14,798		378		33,076		1,738		47,874		2,116
Asset-backed securities		11,721		29		-		-		11,721		29
Corporate debt securities		2,721		15		498		3		3,219		18
Total	$	169,923	$	3,202	$	187,566	$	7,175	$	357,489	$	10,377

	Less than 12 Months				12 Months or More				Total
December 31, 2017 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	11,544	$	43	$	25,298	$	394	$	36,842	$	437
Obligations of states and political subdivisions		40,402		413		33,965		860		74,367		1,273
Mortgage-backed securities – residential		77,312		481		99,986		2,254		177,298		2,735
Mortgage-backed securities – commercial		7,758		62		34,139		1,146		41,897		1,208
Asset-backed securities		1,166		4		-		-		1,166		4
Corporate debt securities		7,251		36		200		1		7,451		37
Total	$	145,433	$	1,039	$	193,588	$	4,655	$	339,021	$	5,694

XML

Note 8 - Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

(In thousands)	March 31, 2018		December 31, 2017
Real Estate
Real estate mortgage – construction and land development	$	131,376	$	129,181
Real estate mortgage – residential		351,838		355,304
Real estate mortgage – farmland and other commercial enterprises		440,680		432,321
Commercial
Commercial and industrial		68,472		63,417
States and political subdivisions		18,883		27,209
Other		16,663		19,916
Consumer
Secured		3,980		4,853
Unsecured		3,577		3,062
Total loans		1,035,469		1,035,263
Less unearned income		-		-
Total loans, net of unearned income	$	1,035,469	$	1,035,263

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended Ma r ch 3 1 , 201 8
Balance, beginning of period	$	8,509		$	951		$	323		$	9,783
Provision for loan losses		(191	)		(47	)		(23	)		(261	)
Recoveries		341			20			27			388
Loans charged off		(58	)		(88	)		(16	)		(162	)
Balance, end of period	$	8,601		$	836		$	311		$	9,748

(In thousands)	Real Estate			Commercial			Consumer			Total
Three months ended Ma r ch 3 1 , 201 7
Balance, beginning of period	$	8,205		$	854		$	285		$	9,344
Provision for loan losses		396			(7	)		191			580
Recoveries		17			49			11			77
Loans charged off		(434	)		(32	)		(28	)		(494	)
Balance, end of period	$	8,184		$	864		$	459		$	9,507

Impaired Financing Receivables [Table Text Block]

March 31, 2018 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	3,473	$	1,501	$	1,597	$	3,098	$	325
Real estate mortgage – residential		10,177		3,056		7,120		10,176		2,115
Real estate mortgage – farmland and other commercial enterprises		8,675		2,169		6,338		8,507		307
Commercial
Commercial and industrial		391		-		391		391		214
Consumer
Unsecured		305		-		305		305		212
Total	$	23,021	$	6,726	$	15,751	$	22,477	$	3,173

December 31, 2017 (In thousands)	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Allowance for Loan Losses Allocated
Real Estate
Real estate mortgage – construction and land development	$	4,076	$	1,746	$	1,955	$	3,701	$	402
Real estate mortgage – residential		10,112		3,233		6,877		10,110		1,973
Real estate mortgage – farmland and other commercial enterprises		8,737		2,203		6,367		8,570		319
Commercial
Commercial and industrial		448		-		448		448		270
Consumer
Unsecured		312		-		312		312		218
Total	$	23,685	$	7,182	$	15,959	$	23,141	$	3,182

Three Months Ended March 31,	2018						2017
(In thousands)	Average		Interest Income Recognized		Cash Basis Interest Recognized		Average		Interest Income Recognized		Cash Basis Interest Recognized
Real Estate
Real estate mortgage – construction and land development	$	3,616	$	46	$	26	$	6,247	$	76	$	52
Real estate mortgage – residential		10,343		136		133		9,702		118		117
Real estate mortgage – farmland and other commercial enterprises		8,887		100		96		24,089		302		291
Commercial
Commercial and industrial		393		5		4		499		7		6
Consumer
Unsecured		320		4		4		335		5		2
Total	$	23,559	$	291	$	263	$	40,872	$	508	$	468

Loans and ALL Disaggregated Impairment Method [Table Text Block]

March 31, 2018 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,747	$	214	$	212	$	3,173
Collectively evaluated for impairment		5,854		622		99		6,575
Total ending allowance balance	$	8,601	$	836	$	311	$	9,748
Loans
Loans individually evaluated for impairment	$	21,781	$	391	$	305	$	22,477
Loans collectively evaluated for impairment		902,113		103,627		7,252		1,012,992
Total ending loan balance, net of unearned income	$	923,894	$	104,018	$	7,557	$	1,035,469

December 31, 2017 (In thousands)	Real Estate		Commercial		Consumer		Total
Allowance for Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,694	$	270	$	218	$	3,182
Collectively evaluated for impairment		5,815		681		105		6,601
Total ending allowance balance	$	8,509	$	951	$	323	$	9,783
Loans
Loans individually evaluated for impairment	$	22,381	$	448	$	312	$	23,141
Loans collectively evaluated for impairment		894,425		110,094		7,603		1,012,122
Total ending loan balance, net of unearned income	$	916,806	$	110,542	$	7,915	$	1,035,263

Non-performing Loans Including TDR's [Table Text Block]

March 31, 2018 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	150	$	1,597	$	-
Real estate mortgage – residential		1,636		5,648		-
Real estate mortgage – farmland and other commercial enterprises		1,738		3,682		-
Commercial
Commercial and industrial		30		369		-
Consumer
Unsecured		165		126		-
Total	$	3,719	$	11,422	$	-

December 31, 2017 (In thousands)	Nonaccrual		Restructured Loans		Loans Past Due 90 Days or More and Still Accruing
Real Estate
Real estate mortgage – construction and land development	$	151	$	1,955	$	-
Real estate mortgage – residential		1,763		5,326		-
Real estate mortgage – farmland and other commercial enterprises		1,752		3,703		-
Commercial
Commercial and industrial		53		370		-
Consumer
Unsecured		168		128		-
Total	$	3,887	$	11,482	$	-

Past Due Financing Receivables [Table Text Block]

March 31, 2018 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	-	$	87	$	87	$	131,289	$	131,376
Real estate mortgage – residential		2,145		250		2,395		349,443		351,838
Real estate mortgage – farmland and other commercial enterprises		712		989		1,701		438,979		440,680
Commercial
Commercial and industrial		47		-		47		68,425		68,472
States and political subdivisions		-		-		-		18,883		18,883
Other		-		-		-		16,663		16,663
Consumer
Secured		-		-		-		3,980		3,980
Unsecured		1		-		1		3,576		3,577
Total	$	2,905	$	1,326	$	4,231	$	1,031,238	$	1,035,469

December 31, 2017 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total		Current		Total Loans
Real Estate
Real estate mortgage – construction and land development	$	15	$	87	$	102	$	129,079	$	129,181
Real estate mortgage – residential		1,160		538		1,698		353,606		355,304
Real estate mortgage – farmland and other commercial enterprises		966		948		1,914		430,407		432,321
Commercial
Commercial and industrial		62		-		62		63,355		63,417
States and political subdivisions		-		-		-		27,209		27,209
Other		21		-		21		19,895		19,916
Consumer
Secured		-		-		-		4,853		4,853
Unsecured		9		-		9		3,053		3,062
Total	$	2,233	$	1,573	$	3,806	$	1,031,457	$	1,035,263

Financing Receivable Credit Quality Indicators [Table Text Block]

	Real Estate						Commercial
March 31, 2018 (In thousands)	Real Estate Mortgage – Construction and Land Development		Real Estate Mortgage – Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	127,443	$	326,807	$	423,824	$	67,586	$	18,883	$	16,647
Special Mention		681		9,355		6,174		461		-		16
Substandard		3,252		15,676		10,682		425		-		-
Doubtful		-		-		-		-		-		-
Total	$	131,376	$	351,838	$	440,680	$	68,472	$	18,883	$	16,663

	Real Estate						Commercial
December 31, 2017 (In thousands)	Real Estate Mortgage –Construction and Land Development		Real Estate Mortgage –Residential		Real Estate Mortgage – Farmland and Other Commercial Enterprises		Commercial and Industrial		States and Political Subdivisions		Other
Credit risk profile by internally assigned rating grades
Pass	$	124,926	$	330,401	$	414,663	$	62,490	$	27,209	$	19,898
Special Mention		396		9,196		7,556		474		-		18
Substandard		3,859		15,707		10,102		453		-		-
Doubtful		-		-		-		-		-		-
Total	$	129,181	$	355,304	$	432,321	$	63,417	$	27,209	$	19,916

Risk Category of Loans by Class-Consumer [Table Text Block]

	March 31, 2018				December 31, 2017
	Consumer				Consumer
(In thousands)	Secured		Unsecured		Secured		Unsecured
Credit risk profile based on payment activity
Performing	$	3,980	$	3,286	$	4,853	$	2,766
Nonperforming		-		291		-		296
Total	$	3,980	$	3,577	$	4,853	$	3,062

XML

Note 9 - Other Real Estate Owned (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

OREO Detail [Table Text Block]

(In thousands)	March 31, 2018		December 31, 2017
Construction and land development	$	4,089	$	4,433
Residential real estate		35		157
Farmland and other commercial enterprises		963		899
Total	$	5,087	$	5,489

OREO Activity [Table Text Block]

Three months ended March 31, (In thousands)	2018			2017
Beginning balance	$	5,489		$	10,673
Transfers from loans and other increases		104			193
Proceeds from sales		(430	)		(2,871	)
(Loss) gain on sales, net		(43	)		115
Write downs and other decreases, net		(33	)		(110	)
Ending balance	$	5,087		$	8,000

XML

Note 10 - Securities Sold Under Agreements to Repurchase (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Repurchase Agreements [Table Text Block]

	Remaining Contractual Maturity of the Agreements
March 31, 2018 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343
Total	$	31,431	$	254	$	-	$	1,400	$	258	$	33,343

	Remaining Contractual Maturity of the Agreements
December 31, 2017 (In thousands)	Overnight/ Continuous		Less Than 30 Days		30-89 Days		90 Days to One Year		Over One Year to Three Years		Total
Mortgage-backed securities – residential	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252
Total	$	32,341	$	1,200	$	-	$	454	$	257	$	34,252

XML

Note 11 - Postretirement Medical Benefits (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Net Benefit Costs [Table Text Block]

Three months ended March 31, (In thousands)	2018		2017
Service cost	$	140	$	146
Interest cost		153		167
Curtailment gain recognized		-		(417	)
Recognized prior service cost		-		75
Net periodic benefit cost	$	293	$	(29	)

XML

Note 12 - Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

	March 31, 2018												December 31, 2017
	Common Equity Tier 1 Risk-based Capital 1			Tier 1 Risk-based Capital 1			Total Risk-based Capital 1			Tier 1 Leverage 2			Common Equity Tier 1 Risk-based Capital 1			Tier 1 Risk-based Capital 1			Total Risk-based Capital 1			Tier 1 Leverage 2
Consolidated		17.07	%		19.82	%		20.65	%		13.99	%		16.56	%		19.30	%		20.12	%		13.75	%
United Bank		14.63			14.63			15.47			10.47			14.05			14.05			14.88			10.13
Regulatory minimum		4.50			6.00			8.00			4.00			4.50			6.00			8.00			4.00
Well-capitalized status		6.50			8.00			10.00			5.00			6.50			8.00			10.00			5.00

XML

Note 13 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

			Fair Value Measurements Using
(In thousands) March 31, 2018	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	41,956	$	-	$	41,956	$	-
Obligations of states and political subdivisions		107,568		-		107,568		-
Mortgage-backed securities – residential		181,601		-		181,601		-
Mortgage-backed securities – commercial		47,874		-		47,874		-
Asset-backed securities		15,517		-		15,517		-
Corporate debt securities		7,772		-		7,772		-
Total available for sale securities	$	402,288	$	-	$	402,288	$	-
Equity Securities
Mutual funds and equity securities	$	1,575	$	1,575	$	-	$	-
December 31, 2017
Available For Sale Securities
Obligations of U.S. government-sponsored entities	$	43,208	$	-	$	43,208	$	-
Obligations of states and political subdivisions		114,249		-		114,249		-
Mortgage-backed securities – residential		193,393		-		193,393		-
Mortgage-backed securities – commercial		49,352		-		49,352		-
Asset-backed securities		15,574		-		15,574		-
Corporate debt securities		7,542		-		7,542		-
Total available for sale securities	$	423,318	$	-	$	423,318	$	-
Equity Securities
Mutual funds and equity securities	$	935	$	935	$	-	$	-

Fair Value Measurements, Nonrecurring [Table Text Block]

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 3 1 , 201 8
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,271	$	-	$	-	$	1,271
Real estate mortgage – residential		4,176		-		-		4,176
Total	$	5,447	$	-	$	-	$	5,447
OREO
Construction and land development	$	125	$	-	$	-	$	125
Residential real estate		35		-		-		35
Total	$	160	$	-	$	-	$	160

			Fair Value Measurements Using
(In thousands) Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 201 7
Collateral-dependent Impaired Loans
Real estate mortgage – construction and land development	$	1,553	$	-	$	-	$	1,553
Real estate mortgage – residential		4,687		-		-		4,687
Real estate mortgage – farmland and other commercial enterprises		2,645		-		-		2,645
Total	$	8,885	$	-	$	-	$	8,885
OREO
Construction and land development	$	3,468	$	-	$	-	$	3,468
Residential real estate		157		-		-		157
Farmland and other commercial enterprises		821		-		-		821
Total	$	4,446	$	-	$	-	$	4,446

Asset Impairment Charges on Assets Nonrecurring [Table Text Block]

(In thousands)
Three months ended March 31,	2018		2017
Net decrease in fair value:
Collateral-dependent impaired loans	$	115	$	65
OREO		33		110
Total	$	148	$	175

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

(In thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range				Weighted Average
Ma r ch 3 1 , 201 8
Collateral-dependent impaired loans	$	5,447	Discounted appraisals	Marketability discount	0%	-	73.6	%		1.3	%
OREO	$	160	Discounted appraisals	Marketability discount	0%	-	35.9	%		10.8	%
December 31, 201 7
Collateral-dependent impaired loans	$	8,885	Discounted appraisals	Marketability discount	0%	-	22.8	%		3.1	%
OREO	$	4,446	Discounted appraisals	Marketability discount	0%	-	71.7	%		4.0	%

Fair Value, by Balance Sheet Grouping [Table Text Block]

					Fair Value Measurements Using
(In thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 3 1 , 201 8
Assets
Cash and cash equivalents	$	153,221	$	153,221	$	153,221	$	-	$	-
Held to maturity investment securities		3,350		3,424		-		3,424		-
Loans, net		1,025,721		1,007,469		-		-		1,007,469
Accrued interest receivable		4,572		4,572		-		4,572		-
Federal Home Loan Bank and Federal Reserve Bank Stock		12,996		12,996		-		-		12,996
Liabilities
Deposits		1,394,091		1,393,901		1,181,392		-		212,509
Securities sold under agreements to repurchase		33,343		33,349		-		33,349		-
Federal Home Loan Bank advances		3,436		3,488		-		3,488		-
Subordinated notes payable to unconsolidated trusts		33,506		23,918		-		-		23,918
Accrued interest payable		265		265		-		265		-
December 31, 201 7
Assets
Cash and cash equivalents	$	120,408	$	120,408	$	120,408	$	-	$	-
Held to maturity investment securities		3,364		3,478		-		3,478		-
Loans, net		1,025,480		1,012,959		-		-		1,012,959
Accrued interest receivable		4,935		4,935		-		4,935		-
Federal Home Loan Bank and Federal Reserve Bank Stock		13,235		13,235		-		-		13,235
Liabilities
Deposits		1,379,903		1,380,122		1,157,045		-		223,077
Securities sold under agreements to repurchase		34,252		34,257		-		34,257		-
Federal Home Loan Bank advances		3,479		3,546		-		3,546		-
Subordinated notes payable to unconsolidated trusts		33,506		22,709		-		-		22,709
Accrued interest payable		261		261		-		261		-

XML

Note 3 - Accumulated Other Comprehensive (Loss) Income (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2018	Jan. 01, 2018
Cumulative Effect of New Accounting Principle in Period of Adoption
Accounting Standards Update 2016-01 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ 56	$ 56

XML

Note 3 - Accumulated Other Comprehensive (Loss) Income - Changes in Accumulated Other Comprehensive (Loss) Income by Component (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Beginning balance	$ 193,353	$ 184,066
Net current-period other comprehensive (loss) income	(4,103)	1,013
Adoption of Accounting Standards Update 2016-01
Ending balance	194,028	187,740
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Beginning balance	(3,510)	(3,363)
Other comprehensive (loss) income before reclassifications	(4,102)	948
Amounts reclassified from accumulated other comprehensive income		6
Net current-period other comprehensive (loss) income	(4,102)	954
Adoption of Accounting Standards Update 2016-01	(56)
Ending balance	(7,668)	(2,409)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Beginning balance	(56)	(45)
Other comprehensive (loss) income before reclassifications		10
Amounts reclassified from accumulated other comprehensive income	(1)	49
Net current-period other comprehensive (loss) income	(1)	59
Adoption of Accounting Standards Update 2016-01
Ending balance	(57)	14
AOCI Attributable to Parent [Member]
Beginning balance	(3,566)	(3,408)
Other comprehensive (loss) income before reclassifications	(4,102)	958
Amounts reclassified from accumulated other comprehensive income	(1)	55
Net current-period other comprehensive (loss) income	(4,103)	1,013
Adoption of Accounting Standards Update 2016-01	(56)
Ending balance	$ (7,725)	$ (2,395)

XML

Note 3 - Accumulated Other Comprehensive (Loss) Income - Amounts Reclassified Out of Accumulated Other Comprehensive (Loss) Income by Component (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income tax expense	$ (1,160)	$ (1,276)
Net income	5,641	3,329
Salaries and employee benefits	(7,490)	(7,860)
Total before tax	6,801	4,605
Reclassification out of Accumulated Other Comprehensive Income [Member]
Net income	1	(55)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Unrealized gains (losses) on available for sale investment securities		(9)
Income tax expense		3
Net income		(6)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment, Net Prior Service Attributable to Parent [Member]
Salaries and employee benefits		(75)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent [Member]
Salaries and employee benefits	1	(1)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Income tax expense		27
Net income	1	(49)
Total before tax	$ 1	$ (76)

XML

Note 4 - Accounting Policy (Details Textual) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)	Jan. 01, 2018 USD ($)	Dec. 31, 2017 USD ($)
Allowance for Loan Losses, Look-back Period	12
Cumulative Effect of New Accounting Principle in Period of Adoption
Accounting Standards Update 2016-01 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ 56	$ 56
Accounting Standards Update 2018-02 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption			$ 633

XML

Note 5 - Revenue From Contracts With Customers (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Gains (Losses) on Sales of Other Real Estate	$ (76)	$ 5
Other Real Estate Expenses, Net [Member]
Gains (Losses) on Sales of Other Real Estate	(43)	115
Broker, ATM, and Other Fees [Member]
Revenue from Contract with Customer, Excluding Assessed Tax, Total	$ 402	$ 457

XML

Note 5 - Revenue From Contracts With Customers - Sources of Noninterest Income (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Investment securities (losses) gains, net	[1]	$ 0	$ (9)
Gain on sale of mortgage loans, net	[1]	95	154
Income from company-owned life insurance	[1]	293	235
Other		20	122
Total noninterest income		5,201	5,251
Overdraft Fees [Member]
Service charges, commissions, fees, and trust income		956	927
Dormant Account Fees [Member]
Service charges, commissions, fees, and trust income		593	665
Service Charges on Checking and Savings Accounts [Member]
Service charges, commissions, fees, and trust income		314	310
Other Service Charges and Fees on Deposits [Member]
Service charges, commissions, fees, and trust income		49	56
Allotment Processing Fees [Member]
Service charges, commissions, fees, and trust income		720	715
Interchange Fees [Member]
Service charges, commissions, fees, and trust income		827	781
Other Service Charges, Commissions, and Fees, Other [Member]
Service charges, commissions, fees, and trust income	[2]	545	591
Fiduciary and Trust [Member]
Service charges, commissions, fees, and trust income		$ 789	$ 704

[1] Not within the scope of ASC Topic 606.

[2] Includes broker, ATM, and other fees totaling $402 thousand and $457 thousand for the three months ended March 31, 2018 and 2017, respectively, which is within the scope of ASC Topic 606.

XML

Note 6 - Net Income Per Common Share (Details Textual) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Weighted Average Number Diluted Shares Outstanding Adjustment, Total	0	0

XML

Note 6 - Net Income Per Common Share - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income, basic and diluted	$ 5,641	$ 3,329
Average common shares issued and outstanding, basic and diluted (in shares)	7,518	7,510
Net income per common share, basic and diluted (in dollars per share)	$ 0.75	$ 0.44

XML

Note 7 - Investment Securities (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Jan. 01, 2018	Dec. 31, 2017
Money Market Funds, at Carrying Value	$ 34,979			$ 36,673
Equity Securities, FV-NI	1,575			935
Cumulative Effect of New Accounting Principle in Period of Adoption
Equity Securities, FV-NI, Unrealized Gain (Loss), Total	(55)	$ 0
Proceeds from Sale of Equity Securities, FV-NI	0
Collateral Pledged [Member]
Debt Securities, Available-for-sale, Restricted	208,000			$ 214,000
Other Noninterest Income [Member]
Equity Securities, FV-NI, Unrealized Gain (Loss), Total	(55)
Accounting Standards Update 2016-01 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	$ 56		$ 56

XML

Note 7 - Investment Securities - Amortized Costs and Estimated Fair Value of the Securities Portfolio (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Available for Sale Securities - Amortized Cost	$ 411,995	$ 427,831
Available for Sale Securities - Gross Unrealized Gains	670	1,181
Available for Sale Securities - Gross Unrealized Losses	10,377	5,694
Available for Sale Securities - Estimated Fair Value	402,288	423,318
Held to Maturity Securities - Amortized Cost	3,350	3,364
Held to Maturity Securities - Estimated Fair Value	3,424	3,478
US Government-sponsored Enterprises Debt Securities [Member]
Available for Sale Securities - Amortized Cost	42,633	43,601
Available for Sale Securities - Gross Unrealized Gains	14	44
Available for Sale Securities - Gross Unrealized Losses	691	437
Available for Sale Securities - Estimated Fair Value	41,956	43,208
US States and Political Subdivisions Debt Securities [Member]
Available for Sale Securities - Amortized Cost	109,652	114,960
Available for Sale Securities - Gross Unrealized Gains	281	562
Available for Sale Securities - Gross Unrealized Losses	2,365	1,273
Available for Sale Securities - Estimated Fair Value	107,568	114,249
Held to Maturity Securities - Amortized Cost	3,350	3,364
Held to Maturity Securities - Gross Unrealized Gains	74	114
Held to Maturity Securities - Gross Unrealized Losses	0	0
Held to Maturity Securities - Estimated Fair Value	3,424	3,478
Residential Mortgage Backed Securities [Member]
Available for Sale Securities - Amortized Cost	186,441	195,605
Available for Sale Securities - Gross Unrealized Gains	318	523
Available for Sale Securities - Gross Unrealized Losses	5,158	2,735
Available for Sale Securities - Estimated Fair Value	181,601	193,393
Commercial Mortgage Backed Securities [Member]
Available for Sale Securities - Amortized Cost	49,990	50,518
Available for Sale Securities - Gross Unrealized Gains		42
Available for Sale Securities - Gross Unrealized Losses	2,116	1,208
Available for Sale Securities - Estimated Fair Value	47,874	49,352
Asset-backed Securities [Member]
Available for Sale Securities - Amortized Cost	15,538	15,569
Available for Sale Securities - Gross Unrealized Gains	8	9
Available for Sale Securities - Gross Unrealized Losses	29	4
Available for Sale Securities - Estimated Fair Value	15,517	15,574
Corporate Debt Securities [Member]
Available for Sale Securities - Amortized Cost	7,741	7,578
Available for Sale Securities - Gross Unrealized Gains	49	1
Available for Sale Securities - Gross Unrealized Losses	18	37
Available for Sale Securities - Estimated Fair Value	$ 7,772	$ 7,542

XML

Note 7 - Investment Securities - Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Available-for-sale, amortized cost, due in one year or less	$ 28,921
Available-for-sale, estimated fair value, due in one year or less	28,872
Held-to-maturity, amortized cost, due in one year or less	0
Held-to-maturity, estimated fair value, due in one year or less	0
Available-for-sale, amortized cost, due after one year through five years	52,222
Available-for-sale, estimated fair value, due after one year through five years	51,572
Held-to-maturity, amortized cost, due after one year through five years	0
Held-to-maturity, estimated fair value, due after one year through five years	0
Available-for-sale, amortized cost, due after five years through ten years	55,496
Available-for-sale, estimated fair value, due after five years through ten years	53,726
Held-to-maturity, amortized cost, due after five years through ten years	1,232
Held-to-maturity, estimated fair value, due after five years through ten years	1,289
Available-for-sale, amortized cost, due after ten years	38,925
Available-for-sale, estimated fair value, due after ten years	38,643
Held-to-maturity, amortized cost, due after ten years	2,118
Held-to-maturity, estimated fair value, due after ten years	2,135
Available-for-sale, amortized cost, mortgage-backed securities	236,431
Available-for-sale, estimated fair value, mortgage-backed securities	229,475
Held-to-maturity, amortized cost, mortgage-backed securities	0
Held-to-maturity, estimated fair value, mortgage-backed securities	0
Available-for-sale, amortized cost	411,995	$ 427,831
Available-for-sale, estimated fair value	402,288	423,318
Held-to-maturity, amortized cost	3,350	3,364
Held-to-maturity, estimated fair value	$ 3,424	$ 3,478

XML

Note 7 - Investment Securities - Gross Realized Gains and Losses on the Sale of Available for Sale Investment Securities (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2018	Mar. 31, 2017
Gross realized gains		$ 0	$ 0
Gross realized losses		0	9
Net realized loss	[1]	$ 0	$ (9)

[1] Not within the scope of ASC Topic 606.

XML

Note 7 - Investment Securities - Investment Securities With Unrealized Losses Not Recognized In Income (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Less than 12 Months Fair Value	$ 169,923	$ 145,433
Less than 12 Months Unrealized Losses	3,202	1,039
12 Months or More Fair Value	187,566	193,588
12 Months or More Unrealized Losses	7,175	4,655
Total Fair Value	357,489	339,021
Total Unrealized Losses	10,377	5,694
US Government-sponsored Enterprises Debt Securities [Member]
Less than 12 Months Fair Value	13,336	11,544
Less than 12 Months Unrealized Losses	182	43
12 Months or More Fair Value	27,010	25,298
12 Months or More Unrealized Losses	509	394
Total Fair Value	40,346	36,842
Total Unrealized Losses	691	437
US States and Political Subdivisions Debt Securities [Member]
Less than 12 Months Fair Value	52,756	40,402
Less than 12 Months Unrealized Losses	956	413
12 Months or More Fair Value	33,058	33,965
12 Months or More Unrealized Losses	1,409	860
Total Fair Value	85,814	74,367
Total Unrealized Losses	2,365	1,273
Residential Mortgage Backed Securities [Member]
Less than 12 Months Fair Value	74,591	77,312
Less than 12 Months Unrealized Losses	1,642	481
12 Months or More Fair Value	93,924	99,986
12 Months or More Unrealized Losses	3,516	2,254
Total Fair Value	168,515	177,298
Total Unrealized Losses	5,158	2,735
Commercial Mortgage Backed Securities [Member]
Less than 12 Months Fair Value	14,798	7,758
Less than 12 Months Unrealized Losses	378	62
12 Months or More Fair Value	33,076	34,139
12 Months or More Unrealized Losses	1,738	1,146
Total Fair Value	47,874	41,897
Total Unrealized Losses	2,116	1,208
Asset-backed Securities [Member]
Less than 12 Months Fair Value	11,721	1,166
Less than 12 Months Unrealized Losses	29	4
12 Months or More Fair Value
12 Months or More Unrealized Losses
Total Fair Value	11,721	1,166
Total Unrealized Losses	29	4
Corporate Debt Securities [Member]
Less than 12 Months Fair Value	2,721	7,251
Less than 12 Months Unrealized Losses	15	36
12 Months or More Fair Value	498	200
12 Months or More Unrealized Losses	3	1
Total Fair Value	3,219	7,451
Total Unrealized Losses	$ 18	$ 37

XML

Note 8 - Loans and Allowance for Loan Losses (Details Textual) xbrli-pure in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017	Dec. 31, 2017 USD ($)
Allowance for Credit Losses, Change in Method of Calculating Impairment	$ 1,700		$ 1,800
Loans and Leases Receivable, Impaired, Commitment to Lend	$ 0
Financing Receivable, Modifications, Number of Contracts	0	0

XML

Note 8 - Loans and Allowance for Loan Losses - Major Classifications of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Loan receivable	$ 1,035,469	$ 1,035,263
Less unearned income	0	0
Loans, net of unearned income	1,035,469	1,035,263
Real Estate Portfolio Segment [Member]
Loans, net of unearned income	923,894	916,806
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loan receivable	131,376	129,181
Loans, net of unearned income	131,376	129,181
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loan receivable	351,838	355,304
Loans, net of unearned income	351,838	355,304
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loan receivable	440,680	432,321
Loans, net of unearned income	440,680	432,321
Commercial Portfolio Segment [Member]
Loans, net of unearned income	104,018	110,542
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loan receivable	68,472	63,417
Loans, net of unearned income	68,472	63,417
Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loan receivable	18,883	27,209
Loans, net of unearned income	18,883	27,209
Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loan receivable	16,663	19,916
Loans, net of unearned income	16,663	19,916
Consumer Portfolio Segment [Member]
Loans, net of unearned income	7,557	7,915
Consumer Portfolio Segment [Member] | Consumer Secured [Member]
Loan receivable	3,980	4,853
Loans, net of unearned income	3,980	4,853
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Loan receivable	3,577	3,062
Loans, net of unearned income	$ 3,577	$ 3,062

XML

Note 8 - Loans and Allowance for Loan Losses - Activity In the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Balance, beginning of period	$ 9,783	$ 9,344
Provision for loan losses	(261)	580
Recoveries	388	77
Loans charged off	(162)	(494)
Balance, end of period	9,748	9,507
Real Estate Portfolio Segment [Member]
Balance, beginning of period	8,509	8,205
Provision for loan losses	(191)	396
Recoveries	341	17
Loans charged off	(58)	(434)
Balance, end of period	8,601	8,184
Commercial Portfolio Segment [Member]
Balance, beginning of period	951	854
Provision for loan losses	(47)	(7)
Recoveries	20	49
Loans charged off	(88)	(32)
Balance, end of period	836	864
Consumer Portfolio Segment [Member]
Balance, beginning of period	323	285
Provision for loan losses	(23)	191
Recoveries	27	11
Loans charged off	(16)	(28)
Balance, end of period	$ 311	$ 459

XML

Note 8 - Loans and Allowance for Loan Losses - Individually Impaired Loans by Class of Loans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Unpaid principal balance	$ 23,021		$ 23,685
Recorded investment with no allowance	6,726		7,182
Recorded investment with allowance	15,751		15,959
Total recorded investment	22,477		23,141
Allowance for loan losses allocated	3,173		3,182
Average	23,559	$ 40,872
Interest income recognized	291	508
Cash basis interest recognized	263	468
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Unpaid principal balance	3,473		4,076
Recorded investment with no allowance	1,501		1,746
Recorded investment with allowance	1,597		1,955
Total recorded investment	3,098		3,701
Allowance for loan losses allocated	325		402
Average	3,616	6,247
Interest income recognized	46	76
Cash basis interest recognized	26	52
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Unpaid principal balance	10,177		10,112
Recorded investment with no allowance	3,056		3,233
Recorded investment with allowance	7,120		6,877
Total recorded investment	10,176		10,110
Allowance for loan losses allocated	2,115		1,973
Average	10,343	9,702
Interest income recognized	136	118
Cash basis interest recognized	133	117
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Unpaid principal balance	8,675		8,737
Recorded investment with no allowance	2,169		2,203
Recorded investment with allowance	6,338		6,367
Total recorded investment	8,507		8,570
Allowance for loan losses allocated	307		319
Average	8,887	24,089
Interest income recognized	100	302
Cash basis interest recognized	96	291
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Unpaid principal balance	391		448
Recorded investment with no allowance	0		0
Recorded investment with allowance	391		448
Total recorded investment	391		448
Allowance for loan losses allocated	214		270
Average	393	499
Interest income recognized	5	7
Cash basis interest recognized	4	6
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Unpaid principal balance	305		312
Recorded investment with no allowance	0		0
Recorded investment with allowance	305		312
Total recorded investment	305		312
Allowance for loan losses allocated	212		$ 218
Average	320	335
Interest income recognized	4	5
Cash basis interest recognized	$ 4	$ 2

XML

Note 8 - Loans and Allowance for Loan Losses - Allowance for Loan Losses and the Recorded Investment In Loans by Impairment Method (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Individually evaluated for impairment	$ 3,173	$ 3,182
Collectively evaluated for impairment	6,575	6,601
Total ending allowance balance	9,748	9,783	$ 9,507	$ 9,344
Loans individually evaluated for impairment	22,477	23,141
Loans collectively evaluated for impairment	1,012,992	1,012,122
Loans, net of unearned income	1,035,469	1,035,263
Real Estate Portfolio Segment [Member]
Individually evaluated for impairment	2,747	2,694
Collectively evaluated for impairment	5,854	5,815
Total ending allowance balance	8,601	8,509	8,184	8,205
Loans individually evaluated for impairment	21,781	22,381
Loans collectively evaluated for impairment	902,113	894,425
Loans, net of unearned income	923,894	916,806
Commercial Portfolio Segment [Member]
Individually evaluated for impairment	214	270
Collectively evaluated for impairment	622	681
Total ending allowance balance	836	951	864	854
Loans individually evaluated for impairment	391	448
Loans collectively evaluated for impairment	103,627	110,094
Loans, net of unearned income	104,018	110,542
Consumer Portfolio Segment [Member]
Individually evaluated for impairment	212	218
Collectively evaluated for impairment	99	105
Total ending allowance balance	311	323	$ 459	$ 285
Loans individually evaluated for impairment	305	312
Loans collectively evaluated for impairment	7,252	7,603
Loans, net of unearned income	$ 7,557	$ 7,915

XML

Note 8 - Loans and Allowance for Loan Losses - Recorded Investment In Nonperforming Loans by Class of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Nonaccrual	$ 3,719	$ 3,887
Restructured Loans	11,422	11,482
Loans Past Due 90 Days or More and Still Accruing	0	0
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Nonaccrual	150	151
Restructured Loans	1,597	1,955
Loans Past Due 90 Days or More and Still Accruing	0	0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Nonaccrual	1,636	1,763
Restructured Loans	5,648	5,326
Loans Past Due 90 Days or More and Still Accruing	0	0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Nonaccrual	1,738	1,752
Restructured Loans	3,682	3,703
Loans Past Due 90 Days or More and Still Accruing	0	0
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Nonaccrual	30	53
Restructured Loans	369	370
Loans Past Due 90 Days or More and Still Accruing	0	0
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Nonaccrual	165	168
Restructured Loans	126	128
Loans Past Due 90 Days or More and Still Accruing	$ 0	$ 0

XML

Note 8 - Loans and Allowance for Loan Losses - Aging Analysis of Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Loans, past due	$ 4,231	$ 3,806
Loans, current	1,031,238	1,031,457
Loans, net of unearned income	1,035,469	1,035,263
Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	2,905	2,233
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	1,326	1,573
Real Estate Portfolio Segment [Member]
Loans, net of unearned income	923,894	916,806
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, past due	87	102
Loans, current	131,289	129,079
Loans, net of unearned income	131,376	129,181
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	0	15
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	87	87
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, past due	2,395	1,698
Loans, current	349,443	353,606
Loans, net of unearned income	351,838	355,304
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	2,145	1,160
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	250	538
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, past due	1,701	1,914
Loans, current	438,979	430,407
Loans, net of unearned income	440,680	432,321
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	712	966
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	989	948
Commercial Portfolio Segment [Member]
Loans, net of unearned income	104,018	110,542
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, past due	47	62
Loans, current	68,425	63,355
Loans, net of unearned income	68,472	63,417
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	47	62
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	0	0
Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, past due	0	0
Loans, current	18,883	27,209
Loans, net of unearned income	18,883	27,209
Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	0	0
Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	0	0
Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, past due	0	21
Loans, current	16,663	19,895
Loans, net of unearned income	16,663	19,916
Commercial Portfolio Segment [Member] | Commercial Other [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	0	21
Commercial Portfolio Segment [Member] | Commercial Other [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	0	0
Consumer Portfolio Segment [Member]
Loans, net of unearned income	7,557	7,915
Consumer Portfolio Segment [Member] | Consumer Secured [Member]
Loans, past due	0	0
Loans, current	3,980	4,853
Loans, net of unearned income	3,980	4,853
Consumer Portfolio Segment [Member] | Consumer Secured [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	0	0
Consumer Portfolio Segment [Member] | Consumer Secured [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	0	0
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Loans, past due	1	9
Loans, current	3,576	3,053
Loans, net of unearned income	3,577	3,062
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member] | Financing Receivables 30 to 89 Days Past Due [Member]
Loans, past due	1	9
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Loans, past due	$ 0	$ 0

XML

Note 8 - Loans and Allowance for Loan Losses - Risk Category of Non Consumer Loans by Class (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Loans, net of unearned income	$ 1,035,469	$ 1,035,263
Real Estate Portfolio Segment [Member]
Loans, net of unearned income	923,894	916,806
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, net of unearned income	131,376	129,181
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, net of unearned income	351,838	355,304
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, net of unearned income	440,680	432,321
Commercial Portfolio Segment [Member]
Loans, net of unearned income	104,018	110,542
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, net of unearned income	68,472	63,417
Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, net of unearned income	18,883	27,209
Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, net of unearned income	16,663	19,916
Pass [Member] | Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, net of unearned income	127,443	124,926
Pass [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, net of unearned income	326,807	330,401
Pass [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, net of unearned income	423,824	414,663
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, net of unearned income	67,586	62,490
Pass [Member] | Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, net of unearned income	18,883	27,209
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, net of unearned income	16,647	19,898
Special Mention [Member] | Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, net of unearned income	681	396
Special Mention [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, net of unearned income	9,355	9,196
Special Mention [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, net of unearned income	6,174	7,556
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, net of unearned income	461	474
Special Mention [Member] | Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, net of unearned income	0	0
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, net of unearned income	16	18
Substandard [Member] | Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, net of unearned income	3,252	3,859
Substandard [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, net of unearned income	15,676	15,707
Substandard [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, net of unearned income	10,682	10,102
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, net of unearned income	425	453
Substandard [Member] | Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, net of unearned income	0	0
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | States and Political Subdivisions [Member]
Loans, net of unearned income	0	0
Doubtful [Member] | Commercial Portfolio Segment [Member] | Commercial Other [Member]
Loans, net of unearned income	$ 0	$ 0

XML

Note 8 - Loans and Allowance for Loan Losses - Risk Category of Consumer Loans by Class (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Loans, net of unearned income	$ 1,035,469	$ 1,035,263
Consumer Portfolio Segment [Member]
Loans, net of unearned income	7,557	7,915
Consumer Portfolio Segment [Member] | Consumer Secured [Member]
Loans, net of unearned income	3,980	4,853
Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Loans, net of unearned income	3,577	3,062
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Consumer Secured [Member]
Loans, net of unearned income	3,980	4,853
Performing Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Loans, net of unearned income	3,286	2,766
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Consumer Secured [Member]
Loans, net of unearned income	0
Nonperforming Financial Instruments [Member] | Consumer Portfolio Segment [Member] | Consumer Unsecured [Member]
Loans, net of unearned income	$ 291	$ 296

XML

Note 9 - Other Real Estate Owned (Details Textual) $ in Thousands	Mar. 31, 2018 USD ($)
Mortgage Loans in Process of Foreclosure, Amount	$ 136

XML

Note 9 - Other Real Estate Owned - Other Real Estate Owned (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Other Real Estate Owned	$ 5,087	$ 5,489	$ 8,000	$ 10,673
Construction and Land Development OREO [Member]
Other Real Estate Owned	4,089	4,433
Residential Real Estate OREO [Member]
Other Real Estate Owned	35	157
Farmland and Other Commercial Enterprises OREO [Member]
Other Real Estate Owned	963	899
OREO [Member]
Other Real Estate Owned	$ 5,087	$ 5,489

XML

Note 9 - Other Real Estate Owned - OREO Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Beginning balance	$ 5,489	$ 10,673
Transfers from loans and other increases	104	193
Proceeds from sales	(430)	(2,871)
(Loss) gain on sales, net	(43)	115
Write downs and other decreases, net	(33)	(110)
Ending balance	$ 5,087	$ 8,000

XML

Note 10 - Securities Sold Under Agreements to Repurchase - Maturity of Short and Long-term Repurchase Agreements (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Short and long-term purchase agreements	$ 33,343	$ 34,252
Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	33,343	34,252
Maturity Overnight [Member]
Short and long-term purchase agreements	31,431	32,341
Maturity Overnight [Member] | Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	31,431	32,341
Maturity Less than 30 Days [Member]
Short and long-term purchase agreements	254	1,200
Maturity Less than 30 Days [Member] | Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	254	1,200
Maturity 30 to 90 Days [Member]
Short and long-term purchase agreements	0	0
Maturity 30 to 90 Days [Member] | Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	0	0
Maturity 90 Days to One Year [Member]
Short and long-term purchase agreements	1,400	454
Maturity 90 Days to One Year [Member] | Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	1,400	454
Maturity Over One Year to Four Years [Member]
Short and long-term purchase agreements	258	257
Maturity Over One Year to Four Years [Member] | Residential Mortgage Backed Securities [Member]
Short and long-term purchase agreements	$ 258	$ 257

XML

Note 11 - Postretirement Medical Benefits (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Curtailment		$ 417
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Prior Service Costs Recognized Due to Curtailment		66
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Curtailment, Net of Prior Service Costs Recognized	$ 0	$ 351
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	459
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 96
Plan 2 [Member]
Employee Service Requirement	20 years
Employee Age Requirement	55 years
Contributions Plan 2	50.00%
Plan 1 [Member]
Company Contributions Plan 1	100.00%

XML

Note 11 - Postretirement Medical Benefits - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Curtailment gain recognized		$ (417)
Postretirement Health Coverage [Member]
Service cost	$ 140	146
Interest cost	153	167
Curtailment gain recognized	0	(417)
Recognized prior service cost	0	75
Net periodic benefit cost	$ 293	$ (29)

XML

Note 12 - Regulatory Matters - Regulatory Ratios of the Consolidated Company and Its Subsidiary Banks (Details)		Mar. 31, 2018	Dec. 31, 2017
Common Equity Tier 1 Risk-based Capital	[1]	17.07%	16.56%
Tier 1 Risk-based Capital	[1]	19.82%	19.30%
Total Risk-based Capital	[1]	20.65%	20.12%
Tier 1 Leverage	[2]	13.99%	13.75%
Common Equity Tier 1 Risk-based Capital, regulatory minimum	[1]	4.50%	4.50%
Tier 1 Risk-based Capital, regulatory minimum	[1]	6.00%	6.00%
Total Risk-based Capital , regulatory minimum	[1]	8.00%	8.00%
Tier 1 Leverage, regulatory minimum	[2]	4.00%	4.00%
Common Equity Tier 1 Risk-based Capital, well-capitalized status	[1]	6.50%	6.50%
Tier 1 Risk-based Capital, well-capitalized status	[1]	8.00%	8.00%
Total Risk-based Capital , well-capitalized status	[1]	10.00%	10.00%
Tier 1 Leverage, well-capitalized status	[2]	5.00%	5.00%
United Bank and Capital Trust Company [Member]
Common Equity Tier 1 Risk-based Capital	[1]	14.63%	14.05%
Tier 1 Risk-based Capital	[1]	14.63%	14.05%
Total Risk-based Capital	[1]	15.47%	14.88%
Tier 1 Leverage	[2]	10.47%	10.13%

[1] Common Equity Tier 1 Risked-based, Tier 1 Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank's Common Equity Tier 1, Tier 1 or Total Capital, as defined by regulation, by a risk-weighted sum of the bank's assets, with the risk weighting determined by general standards established by regulation.

[2] Tier 1 Leverage ratio is computed by dividing a bank's Tier 1 Capital by its total quarterly average assets, as defined by regulation.

XML

Note 13 - Fair Value Measurements (Details Textual) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure	$ 35.0	$ 36.7

XML

Note 13 - Fair Value Measurements - Available for Sale Investment Securities Measured At Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Available for Sale Debt Securities - Estimated Fair Value	$ 402,288	$ 423,318
Equity Securities - Fair Value	1,575	935
Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	402,288	423,318
Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
US Government-sponsored Enterprises Debt Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	41,956	43,208
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	41,956	43,208
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
US States and Political Subdivisions Debt Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	107,568	114,249
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	107,568	114,249
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Residential Mortgage Backed Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	181,601	193,393
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	181,601	193,393
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Commercial Mortgage Backed Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	47,874	49,352
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	47,874	49,352
Commercial Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Asset-backed Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	15,517	15,574
Asset-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	15,517	15,574
Asset-backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Corporate Debt Securities [Member]
Available for Sale Debt Securities - Estimated Fair Value	7,772	7,542
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Available for Sale Debt Securities - Estimated Fair Value	7,772	7,542
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Available for Sale Debt Securities - Estimated Fair Value	0	0
Mutual Funds and Equity Securities [Member]
Equity Securities - Fair Value	1,575	935
Mutual Funds and Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Equity Securities - Fair Value	1,575	935
Mutual Funds and Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Equity Securities - Fair Value	0	0
Mutual Funds and Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Equity Securities - Fair Value	$ 0	$ 0

XML

Note 13 - Fair Value Measurements - Assets Measured At Fair Value On a Nonrecurring Basis (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Collateral-dependent impaired loans, fair value	$ 5,447	$ 8,885
OREO, fair value	160	4,446
Fair Value, Inputs, Level 1 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Fair Value, Inputs, Level 2 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Fair Value, Inputs, Level 3 [Member]
Collateral-dependent impaired loans, fair value	5,447	8,885
OREO, fair value	160	4,446
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member]
Collateral-dependent impaired loans, fair value	1,271	1,553
OREO, fair value	125	3,468
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member] | Fair Value, Inputs, Level 1 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member] | Fair Value, Inputs, Level 2 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Real Estate Portfolio Segment [Member] | Real Estate Construction and Land Development [Member] | Fair Value, Inputs, Level 3 [Member]
Collateral-dependent impaired loans, fair value	1,271	1,553
OREO, fair value	125	3,468
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member]
Collateral-dependent impaired loans, fair value	4,176	4,687
OREO, fair value	35	157
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member] | Fair Value, Inputs, Level 1 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member] | Fair Value, Inputs, Level 2 [Member]
Collateral-dependent impaired loans, fair value	0	0
OREO, fair value	0	0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Residential [Member] | Fair Value, Inputs, Level 3 [Member]
Collateral-dependent impaired loans, fair value	4,176	4,687
OREO, fair value	$ 35	157
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member]
Collateral-dependent impaired loans, fair value		2,645
OREO, fair value		821
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member] | Fair Value, Inputs, Level 1 [Member]
Collateral-dependent impaired loans, fair value		0
OREO, fair value		0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Collateral-dependent impaired loans, fair value		0
OREO, fair value		0
Real Estate Portfolio Segment [Member] | Real Estate Mortgage Farmland and Other Commercial Enterprises [Member] | Fair Value, Inputs, Level 3 [Member]
Collateral-dependent impaired loans, fair value		2,645
OREO, fair value		$ 821

XML

Note 13 - Fair Value Measurements - Fair Value Adjustments for Assets Measured On a Nonrecurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net decrease in fair value:
Fair value adjustments	$ 148	$ 175
Impaired Loans [Member]
Net decrease in fair value:
Fair value adjustments	115	65
OREO [Member]
Net decrease in fair value:
Fair value adjustments	$ 33	$ 110

XML

Note 13 - Fair Value Measurements - Quantitative Information About Unobservable Inputs for Assets Measured on a Nonrecurring Basis Using Level 3 Measurements (Details) - Fair Value, Inputs, Level 3 [Member] - Valuation, Market Approach [Member] $ in Thousands	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Collateral-dependent impaired loans, fair value	$ 5,447	$ 8,885
OREO, fair value	$ 160	$ 4,446
Minimum [Member] | Measurement Input, Discount for Lack of Marketability [Member]
Collateral-dependent impaired loans, measurement input	0	0
OREO, measurement input	0	0
Maximum [Member] | Measurement Input, Discount for Lack of Marketability [Member]
Collateral-dependent impaired loans, measurement input	73.6	22.8
OREO, measurement input	35.9	71.7
Weighted Average [Member] | Measurement Input, Discount for Lack of Marketability [Member]
Collateral-dependent impaired loans, measurement input	1.3	3.1
OREO, measurement input	10.8	4

XML

Note 13 - Fair Value Measurements - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Assets
Held to maturity investment securities	$ 3,424	$ 3,478
Reported Value Measurement [Member]
Assets
Cash and cash equivalents	153,221	120,408
Held to maturity investment securities	3,350	3,364
Loans, net	1,025,721	1,025,480
Accrued interest receivable	4,572	4,935
Federal Home Loan Bank and Federal Reserve Bank Stock	12,996	13,235
Liabilities
Deposits	1,394,091	1,379,903
Securities sold under agreements to repurchase	33,343	34,252
Federal Home Loan Bank advances	3,436	3,479
Subordinated notes payable to unconsolidated trusts	33,506	33,506
Accrued interest payable	265	261
Estimate of Fair Value Measurement [Member]
Assets
Cash and cash equivalents	153,221	120,408
Held to maturity investment securities	3,424	3,478
Loans, net	1,007,469	1,012,959
Accrued interest receivable	4,572	4,935
Federal Home Loan Bank and Federal Reserve Bank Stock	12,996	13,235
Liabilities
Deposits	1,393,901	1,380,122
Securities sold under agreements to repurchase	33,349	34,257
Federal Home Loan Bank advances	3,488	3,546
Subordinated notes payable to unconsolidated trusts	23,918	22,709
Accrued interest payable	265	261
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Assets
Cash and cash equivalents	153,221	120,408
Held to maturity investment securities	0	0
Loans, net		0
Accrued interest receivable	0	0
Federal Home Loan Bank and Federal Reserve Bank Stock	0	0
Liabilities
Deposits	1,181,392	1,157,045
Securities sold under agreements to repurchase	0	0
Federal Home Loan Bank advances	0	0
Subordinated notes payable to unconsolidated trusts	0	0
Accrued interest payable	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Cash and cash equivalents	0	0
Held to maturity investment securities	3,424	3,478
Loans, net		0
Accrued interest receivable	4,572	4,935
Federal Home Loan Bank and Federal Reserve Bank Stock	0	0
Liabilities
Deposits	0	0
Securities sold under agreements to repurchase	33,349	34,257
Federal Home Loan Bank advances	3,488	3,546
Subordinated notes payable to unconsolidated trusts	0	0
Accrued interest payable	265	261
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Cash and cash equivalents	0	0
Held to maturity investment securities	0	0
Loans, net	1,007,469	1,012,959
Accrued interest receivable	0	0
Federal Home Loan Bank and Federal Reserve Bank Stock	12,996	13,235
Liabilities
Deposits	212,509	223,077
Securities sold under agreements to repurchase	0	0
Federal Home Loan Bank advances	0	0
Subordinated notes payable to unconsolidated trusts	23,918	22,709
Accrued interest payable	$ 0	$ 0

XML

Note 14 - Subsequent Event (Details Textual) - USD ($)	Apr. 19, 2018	Mar. 31, 2018	Dec. 31, 2017
Assets, Total		$ 1,685,987,000	$ 1,673,872,000
Subsequent Event [Member] | WesBanco [Member]
Business Combination, Rights to Stockholders Upon Merger	1.053
Business Combination, Rights to Stockholders, Cash Received per Share	$ 5
Business Combination, Consideration Transferred, Total	$ 378,200,000
Business Combination, Contingent Consideration, Merger Agreement Termination Fee	12,000,000
WesBanco [Member] | Subsequent Event [Member]
Assets, Total	$ 10,200,000,000