LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2018

Loans and Leases Receivable Disclosure [Abstract]

Composition of the loan portfolio by type

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

	June 30,   2018		December 31,   2017
Commercial and agricultural:
Commercial and industrial	$	193,092	$	198,463
Agricultural	424		544
Commercial mortgages:
Construction	45,543		45,558
Commercial mortgages, other	621,150		598,772
Residential mortgages	193,423		194,440
Consumer loans:
Credit cards	1,367		1,517
Home equity lines and loans	99,052		100,591
Indirect consumer loans	162,813		153,060
Direct consumer loans	17,580		18,879
Total loans, net of deferred origination fees and costs	$	1,334,444	$	1,311,824
Interest receivable on loans	3,666		3,758
Total recorded investment in loans	$	1,338,110	$	1,315,582

Allowance for loan losses by portfolio segment

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six-month periods ended June 30, 2018 and 2017 (in thousands):

	Three Months Ended June 30, 2018
Allowance for loan losses	Commercial and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Beginning balance	$	7,003		$	8,640		$	1,407		$	4,340		$	21,390
Charge-offs	(3,624		)	(145		)	(71		)	(463		)	(4,303		)
Recoveries	11			1			—			184			196
Net recoveries (charge-offs)	(3,613		)	(144		)	(71		)	(279		)	(4,107		)
Provision	1,579			244			109			430			2,362
Ending balance	$	4,969		$	8,740		$	1,445		$	4,491		$	19,645

	Three Months Ended June 30, 2017
Allowance for loan losses	Commercial and Agricultural			Commercial Mortgages		Residential Mortgages			Consumer Loans			Total
Beginning balance	$	1,650		$	7,749	$	1,512		$	4,049		$	14,960
Charge-offs	(2		)	—		(48		)	(397		)	(447		)
Recoveries	36			2		13			119			170
Net recoveries (charge-offs)	34			2		(35		)	(278		)	(277		)
Provision	199			27		40			155			421
Ending balance	$	1,883		$	7,778	$	1,517		$	3,926		$	15,104

	Six Months Ended June 30, 2018
Allowance for loan losses	Commercial and Agricultural			Commercial Mortgages			Residential Mortgages			Consumer Loans			Total
Beginning balance:	$	6,976		$	8,514		$	1,316		$	4,355		$	21,161
Charge-offs:	(3,644		)	(145		)	(165		)	(921		)	(4,875		)
Recoveries:	21			2			5			260			288
Net recoveries (charge-offs)	(3,623		)	(143		)	(160		)	(661		)	(4,587		)
Provision	1,616			369			289			797			3,071
Ending balance	$	4,969		$	8,740		$	1,445		$	4,491		$	19,645

	Six Months Ended June 30, 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:	(7		)	—		(60		)	(825		)	(892		)
Recoveries:	61			3		30			188			282
Net recoveries (charge-offs)	54			3		(30		)	(637		)	(610		)
Provision	240			505		24			692			1,461
Ending balance	$	1,883		$	7,778	$	1,517		$	3,926		$	15,104

Allowance for loan losses and the 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 June 30, 2018 and December 31, 2017 (in thousands):

	June 30, 2018
Allowance for loan losses:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,285	$	453	$	—	$	—	$	1,738
Collectively evaluated for impairment	3,684		8,287		1,445		4,491		17,907
Total ending allowance balance	$	4,969	$	8,740	$	1,445	$	4,491	$	19,645

	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

	June 30, 2018
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,017	$	6,847	$	417	$	61	$	9,342
Loans collectively evaluated for  impairment	192,040		661,711		193,514		281,503		1,328,768
Total ending loans balance	$	194,057	$	668,558	$	193,931	$	281,564	$	1,338,110

	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

Summary of impaired financing receivables

The following table presents loans individually evaluated for impairment recognized by class of loans as of June 30, 2018 and December 31, 2017 (in thousands):

	June 30, 2018						December 31, 2017
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	643	$	647	$	—	$	861	$	867	$	—
Commercial mortgages:
Construction	336		338		—		364		365		—
Commercial mortgages, other	4,366		4,370		—		4,135		4,138		—
Residential mortgages	439		417		—		450		427		—
Consumer loans:
Home equity lines and loans	60		61		—		64		64		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,370		1,370		1,285		5,231		5,266		5,135
Commercial mortgages:
Commercial mortgages, other	2,173		2,139		453		2,989		2,799		802
Total	$	9,387	$	9,342	$	1,738	$	14,094	$	13,926	$	5,937

The following table presents the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans as of the three and six-month periods ended June 30, 2018 and 2017 (in thousands):

	Three Months Ended   June 30, 2018				Three Months Ended   June 30, 2017				Six Months Ended   June 30, 2018				Six Months Ended   June 30, 2017
With no related allowance recorded:	Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)
Commercial and agricultural:
Commercial and industrial	$	710	$	7	$	626	$	8	$	762	$	15	$	649	$	17
Commercial mortgages:
Construction	345		3		1,555		3		352		6		1,130		6
Commercial mortgages, other	4,290		5		5,879		32		4,240		10		6,538		90
Residential mortgages	421		2		417		2		423		4		410		4
Consumer loans:
Home equity lines & loans	61		1		71		1		62		2		79		1
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	3,196		—		84		1		3,886		—		56		1
Commercial mortgages:
Commercial mortgages, other	2,467		1		4,461		4		2,578		3		3,723		7
Consumer loans:
Home equity lines and loans	—		—		180		—		—		—		240		—
Total	$	11,490	$	19	$	13,273	$	51	$	12,303	$	40	$	12,825	$	126

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

The following table present the recorded investment in non-accrual and loans past due 90 days or more and still accruing by class of loans as of June 30, 2018 and December 31, 2017 (in thousands):

	Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	June 30, 2018		December 31, 2017		June 30, 2018		December 31, 2017
Commercial and agricultural:
Commercial and industrial	$	1,513	$	5,250	$	3	$	5
Commercial mortgages:
Construction	123		135		—		—
Commercial mortgages, other	6,101		6,520		—		—
Residential mortgages	2,981		3,160		—		—
Consumer loans:
Credit cards	—		—		14		24
Home equity lines and loans	1,359		1,310		—		—
Indirect consumer loans	673		935		—		—
Direct consumer loans	40		14		—		—
Total	$	12,790	$	17,324	$	17	$	29

Recorded investment in past due and non-accrual status by class of loans

The following tables present the aging of the recorded investment in loans as of June 30, 2018 and December 31, 2017 (in thousands):

	June 30, 2018
	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	$	392	$	—	$	17	$	409	$	—	$	193,223	$	193,632
Agricultural	—		—		—		—		—		425		425
Commercial mortgages:
Construction	—		—		—		—		—		45,671		45,671
Commercial mortgages, other	992		93		3,339		4,424		—		618,463		622,887
Residential mortgages	1,117		492		1,261		2,870		—		191,061		193,931
Consumer loans:
Credit cards	11		11		14		36		—		1,332		1,368
Home equity lines and loans	359		196		787		1,342		—		97,995		99,337
Indirect consumer loans	979		218		231		1,428		—		161,778		163,206
Direct consumer loans	56		24		22		102		—		17,551		17,653
Total	$	3,906	$	1,034	$	5,671	$	10,611	$	—	$	1,327,499	$	1,338,110

	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, other	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

Loans by class modified as troubled debt restructurings

The following table presents loans by class modified as TDRs that occurred during the three month period ended June 30, 2017 (dollars in thousands):

June 30, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	3	$	171	$	171
Residential mortgages	1	105		105
Total	4	$	276	$	276

The TDRs described above increased the allowance for loan losses by $0.1 million and resulted in no charge-offs during the three month period ended June 30, 2017.

The following tables presents loans by class modified as TDRs that occurred during the six months ended June 30, 2018 and 2017 (dollars in thousands):

June 30, 2018	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	1	$	100	$	100
Total	1	$	100	$	100

June 30, 2017	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	3	$	171	$	171
Commercial mortgages:
Commercial mortgages	1	$	166	$	166
Residential mortgages	1	105		105
Total	5	$	442	$	442

Risk category of the recorded investment of loans by class of loans

Based on the analyses performed as of June 30, 2018 and December 31, 2017, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):

	June 30, 2018
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loans acquired with deteriorated credit quality		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	179,814	$	9,843	$	2,619	$	1,356	$	—	$	193,632
Agricultural	—		425		—		—		—		—		425
Commercial mortgages:
Construction	—		45,548		—		123		—		—		45,671
Commercial mortgages	—		598,395		10,639		12,526		1,327		—		622,887
Residential mortgages	190,776		—		—		3,155		—		—		193,931
Consumer loans:
Credit cards	1,368		—		—		—		—		—		1,368
Home equity lines and loans	97,978		—		—		1,359		—		—		99,337
Indirect consumer loans	162,533		—		—		673		—		—		163,206
Direct consumer loans	17,613		—		—		40		—		—		17,653
Total	$	470,268	$	824,182	$	20,482	$	20,495	$	2,683	$	—	$	1,338,110

	December 31, 2017
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loans acquired with deteriorated credit quality		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		9,665		13,331		1,377		792		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	$	14,112	$	25,489	$	2,799	$	792	$	1,315,582

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 June 30, 2018 and December 31, 2017 (in thousands):

	June 30, 2018
			Consumer Loans
	Residential Mortgages		Credit Card		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	190,950	$	1,368	$	97,978	$	162,533	$	17,613
Non-Performing	2,981		—		1,359		673		40
	$	193,931	$	1,368	$	99,337	$	163,206	$	17,653

	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
	$	194,937	$	1,516	$	100,878	$	153,532	$	18,969