LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2017

Loans and Leases Receivable Disclosure [Abstract]

The composition of the loan portfolio, net of deferred loan fees is summarized as follows (in thousands):



	December 31, 2017		December 31, 2016
Commercial and agricultural:
Commercial and industrial	$	198,463	$	176,201
Agricultural	544		360
Commercial mortgages:
Construction	45,558		46,387
Commercial mortgages	598,772		522,269
Residential mortgages	194,440		198,493
Consumer loans:
Credit cards	1,517		1,476
Home equity lines and loans	100,591		98,590
Indirect consumer loans	153,060		139,572
Direct consumer loans	18,879		16,942
Total loans, net of deferred loan fees	1,311,824		1,200,290
Interest receivable on loans	3,758		3,192
Total recorded investment in loans	$	1,315,582	$	1,203,482

Allowance for Loan Losses by Portfolio Segment

The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2017, 2016 and 2015, respectively (in thousands):



	December 31, 2017
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Beginning balance:	$	1,589		$	7,270		$	1,523		$	3,871		$	14,253
Charge Offs:	(96		)	(419		)	(225		)	(1,831		)	(2,571		)
Recoveries:	109			5			30			313			457
Net (charge offs) recoveries	13			(414		)	(195		)	(1,518		)	(2,114		)
Provision	5,374			1,658			(12		)	2,002			9,022
Ending balance	$	6,976		$	8,514		$	1,316		$	4,355		$	21,161



	December 31, 2016
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Beginning balance:	$	1,831		$	7,112		$	1,464		$	3,853		$	14,260
Charge Offs:	(217		)	(911		)	(65		)	(1,637		)	(2,830		)
Recoveries:	92			10			—			284			386
Net recoveries (charge offs)	(125		)	(901		)	(65		)	(1,353		)	(2,444		)
Provision	(117		)	1,059			124			1,371			2,437
Ending balance	$	1,589		$	7,270		$	1,523		$	3,871		$	14,253



	December 31, 2015
Allowance for loan losses	Commercial, and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Beginning balance:	$	1,460		$	6,326		$	1,572		$	4,328		$	13,686
Charge Offs:	(186		)	(104		)	(47		)	(1,294		)	(1,631		)
Recoveries:	96			131			—			407			634
Net recoveries (charge offs)	(90		)	27			(47		)	(887		)	(997		)
Provision	461			759			(61		)	412			1,571
Ending balance	$	1,831		$	7,112		$	1,464		$	3,853		$	14,260

Allowance for Loan Losses and Recorded Investment in Loans Based on Impairment Method

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



	December 31, 2017
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	5,135	$	802	$	—	$	—	$	5,937
Collectively evaluated for impairment	1,841		7,683		1,316		4,355		15,195
Loans acquired with deteriorated credit quality	—		29		—		—		29
Total ending allowance balance	$	6,976	$	8,514	$	1,316	$	4,355	$	21,161



	December 31, 2016
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	735	$	—	$	141	$	876
Collectively evaluated for impairment	1,589		6,476		1,498		3,730		13,293
Loans acquired with deteriorated credit quality	—		59		25		—		84
Total ending allowance balance	$	1,589	$	7,270	$	1,523	$	3,871	$	14,253



	December 31, 2017
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	6,133	$	7,302	$	427	$	64	$	13,926
Loans collectively evaluated for impairment	193,443		638,080		194,510		274,831		1,300,864
Loans acquired with deteriorated credit quality	—		792		—		—		792
Total ending loans balance	$	199,576	$	646,174	$	194,937	$	274,895	$	1,315,582



	December 31, 2016
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	693	$	10,382	$	396	$	455	$	11,926
Loans collectively evaluated for impairment	176,334		558,451		198,474		256,879		1,190,138
Loans acquired with deteriorated credit quality	—		1,323		95		—		1,418
Total ending loans balance	$	177,027	$	570,156	$	198,965	$	257,334	$	1,203,482

Summary of Impaired Financing Receivables

The following tables present loans individually evaluated for impairment recognized by class of loans as of December 31, 2017 and December 31, 2016, the average recorded investment and interest income recognized by class of loans as of the years ended December 31, 2017, 2016 and 2015 (in thousands):



	December 31, 2017						December 31, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial and agricultural:
Commercial and industrial	$	861	$	867	$	—	$	690	$	693	$	—
Commercial mortgages:
Construction	364		365		—		277		278		—
Commercial mortgages	4,135		4,138		—		8,792		7,857		—
Residential mortgages	450		427		—		395		396		—
Consumer loans:
Home equity lines and loans	64		64		—		93		95		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	5,231		5,266		5,135		—		—		—
Commercial mortgages:
Commercial mortgages	2,989		2,799		802		2,245		2,247		735
Consumer loans:
Home equity lines and loans	—		—		—		360		360		141
Total	$	14,094	$	13,926	$	5,937	$	12,852	$	11,926	$	876



	December 31, 2017				December 31, 2016				December 31, 2015
	Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)
With no related allowance recorded:
Commercial and agricultural:
Commercial and industrial	$	706	$	35	$	1,010	$	42	$	1,358	$	64
Commercial mortgages:
Construction	830		12		320		14		992		36
Commercial mortgages	5,606		78		6,793		240		7,728		264
Residential mortgages	418		8		366		5		244		4
Consumer loans:
Home equity lines & loans	74		3		102		5		396		6
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,170		6		33		—		146		3
Commercial mortgages:
Commercial mortgages	3,751		12		4,749		6		4,503		49
Consumer loans:
Home equity lines and loans	144		—		362		—		84		18
Total	$	12,699	$	154	$	13,735	$	312	$	15,451	$	444

(1) Cash basis interest income approximates interest income recognized.

Recorded Investment in Past Due and Non-Accrual Status by Class of Loans

The following tables present the recorded investment in non-accrual and loans past due 90 days or more and still accruing by class of loans as of December 31, 2017 and December 31, 2016 (in thousands):



	Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	2017		2016		2017		2016
Commercial and agricultural:
Commercial and industrial	$	5,250	$	—	$	5	$	2
Commercial mortgages:
Construction	135		19		—		—
Commercial mortgages	6,520		5,454		—		—
Residential mortgages	3,160		4,201		—		—
Consumer loans:
Credit cards	—		—		24		11
Home equity lines and loans	1,310		1,670		—		—
Indirect consumer loans	935		654		—		—
Direct consumer loans	14		45		—		—
Total	$	17,324	$	12,043	$	29	$	13

The following tables present the aging of the recorded investment in loans as of December 31, 2017 and December 31, 2016 (in thousands):



	December 31, 2017
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Acquired with Deteriorated Credit Quality		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	1,689	$	999	$	20	$	2,708	$	—	$	196,322	$	199,030
Agricultural	—		—		—		—		—		546		546
Commercial mortgages:
Construction	—		—		—		—		—		45,688		45,688
Commercial mortgages	2,399		115		748		3,262		792		596,432		600,486
Residential mortgages	1,399		939		1,474		3,812		—		191,125		194,937
Consumer loans:
Credit cards	17		9		24		50		—		1,466		1,516
Home equity lines and loans	265		31		983		1,279		—		99,599		100,878
Indirect consumer loans	1,822		484		581		2,887		—		150,645		153,532
Direct consumer loans	48		28		2		78		—		18,891		18,969
Total	$	7,639	$	2,605	$	3,832	$	14,076	$	792	$	1,300,714	$	1,315,582



	December 31, 2016
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Acquired with Deteriorated Credit Quality		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	160	$	7	$	2	$	169	$	—	$	176,497	$	176,666
Agricultural	—		—		—		—		—		361		361
Commercial mortgages:
Construction	—		1,177		—		1,177		—		45,333		46,510
Commercial mortgages	652		4,460		2,412		7,524		1,323		514,799		523,646
Residential mortgages	2,100		436		2,383		4,919		95		193,951		198,965
Consumer loans:
Credit cards	3		9		11		23		—		1,453		1,476
Home equity lines and loans	227		—		1,149		1,376		—		97,477		98,853
Indirect consumer loans	1,773		287		542		2,602		—		137,391		139,993
Direct consumer loans	54		7		22		83		—		16,929		17,012
Total	$	4,969	$	6,383	$	6,521	$	17,873	$	1,418	$	1,184,191	$	1,203,482

Loans by Class Modified as Troubled Debt Restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2017, 2016 and 2015 (in thousands):



December 31, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	3	$	677	$	677
Commercial mortgages:
Commercial mortgages	1	166		166
Residential mortgages	1	105		105
Total	5	$	948	$	948

The TDRs described above increased the allowance for loan losses by $0.1 million and resulted in no charge offs during the year ended December 31, 2017.



December 31, 2016	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial mortgages:
Commercial mortgages	6	$	485	$	388
Residential mortgages	2	295		307
Consumer loans:
Home equity lines and loans	1	74		74
Total	9	$	854	$	769

The TDRs described above did not increase the allowance for loan losses and resulted in no charge offs during the year ended December 31, 2016.



December 31, 2015	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	1	$	477	$	477
Commercial mortgages:
Commercial mortgages	5	2,810		2,810
Total	6	$	3,287	$	3,287

The TDRs described above increased the allowance for loan losses by $1.1 million and resulted in no charge offs during the year ended December 31, 2015.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the year ended December 31, 2017:

There were no payment defaults on any loans previously modified as troubled debt restructurings during the year ended December 31, 2016, within twelve months following the modification.

The following table presents loans by class modified as TDRs for which there was a payment default within twelve months following the modification during the year ended December 31, 2015:

Risk Category of Recorded Investment of Loans by Class of Loans

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are included in groups of homogeneous loans. Based on the analyses performed as of December 31, 2017 and December 31, 2016, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):



	December 31, 2017
	Not Rated		Pass		Loans acquired with deteriorated credit quality		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	186,556	$	—	$	4,447	$	6,605	$	1,422	$	199,030
Agricultural	—		546		—		—		—		—		546
Commercial mortgages:
Construction	—		45,553		—		—		135		—		45,688
Commercial mortgages	—		575,321		792		9,665		13,331		1,377		600,486
Residential mortgages	191,777		—		—		—		3,160		—		194,937
Consumer loans
Credit cards	1,516		—		—		—		—		—		1,516
Home equity lines and loans	99,568		—		—		—		1,310		—		100,878
Indirect consumer loans	152,598		—		—		—		934		—		153,532
Direct consumer loans	18,955		—		—		—		14		—		18,969
Total	$	464,414	$	807,976	$	792	$	14,112	$	25,489	$	2,799	$	1,315,582



	December 31, 2016
	Not Rated		Pass		Loans acquired with deteriorated credit quality		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	172,873	$	—	$	2,277	$	1,516	$	—	$	176,666
Agricultural	—		361		—		—		—		—		361
Commercial mortgages:
Construction	—		45,055		—		259		1,196		—		46,510
Commercial mortgages	—		496,723		1,323		8,574		15,566		1,460		523,646
Residential mortgages	194,669		—		95		—		4,201		—		198,965
Consumer loans
Credit cards	1,476		—		—		—		—		—		1,476
Home equity lines and loans	97,183		—		—		—		1,670		—		98,853
Indirect consumer loans	139,339		—		—		—		654		—		139,993
Direct consumer loans	16,967		—		—		—		45		—		17,012
Total	$	449,634	$	715,012	$	1,418	$	11,110	$	24,848	$	1,460	$	1,203,482

Recorded Investment in Residential and Consumer Loans Based on Payment Activity

The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2017 and December 31, 2016 (in thousands):



	December 31, 2017
			Consumer Loans
	Residential Mortgages		Credit Card		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	191,777	$	1,516	$	99,568	$	152,598	$	18,955
Non-Performing	3,160		—		1,310		934		14
Total	$	194,937	$	1,516	$	100,878	$	153,532	$	18,969



	December 31, 2016
			Consumer Loans
	Residential Mortgages		Credit Card		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	194,764	$	1,476	$	97,183	$	139,339	$	16,967
Non-Performing	4,201		—		1,670		654		45
Total	$	198,965	$	1,476	$	98,853	$	139,993	$	17,012

Summary of Changes in Contractually Required Principal and Interest on Loans Acquired

The tables below summarize the changes in total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and carrying value of the PCI loans from January 1, 2015 to December 31, 2017 (in thousands):



	Balance at December 31, 2016			Income Accretion		All Other Adjustments			Balance at December 31, 2017
Contractually required principal and interest	$	1,940		$	—	$	(988	)	$	952
Contractual cash flows not expected to be collected (non accretable discount)	(352		)	—		286			(66		)
Cash flows expected to be collected	1,588			—		(702		)	886
Interest component of expected cash flows (accretable yield)	(170		)	61		15			(94		)
Recorded investment in loans acquired with deteriorating credit quality	$	1,418		$	61	$	(687	)	$	792



	Balance at December 31, 2015			Income Accretion		All Other Adjustments			Balance at December 31, 2016
Contractually required principal and interest	$	2,912		$	—	$	(972	)	$	1,940
Contractual cash flows not expected to be collected (non accretable discount)	(506		)	—		154			(352		)
Cash flows expected to be collected	2,406			—		(818		)	1,588
Interest component of expected cash flows (accretable yield)	(311		)	112		29			(170		)
Recorded investment in loans acquired with deteriorating credit quality	$	2,095		$	112	$	(789	)	$	1,418



	Balance at January 1, 2015			Income Accretion		All Other Adjustments			Balance at December 31, 2015
Contractually required principal and interest	$	3,621		$	—	$	(709	)	$	2,912
Contractual cash flows not expected to be collected (non accretable discount)	(570		)	—		64			(506		)
Cash flows expected to be collected	3,051			—		(645		)	2,406
Interest component of expected cash flows (accretable yield)	(420		)	174		(65		)	(311		)
Recorded investment in loans acquired with deteriorating credit quality	$	2,631		$	174	$	(710	)	$	2,095

December 31, 2017

Number of Loans

Recorded Investment

Commercial mortgages:

Commercial mortgages