Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

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Changes in the Allowance for Loan Losses and Loan Balances Outstanding

The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three and six months ended June 30, 2016 and 2015.

Allowance for loan losses:

For the six months ended June 30, 2016

	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,478	$	(42	)	$	35	$	86		$	1,557
Commercial Real Estate:
Owner Occupied		2,467		(42	)		52		(84	)		2,393
Non-Owner Occupied		4,657		—			1,359		(1,047	)		4,969
Residential Real Estate		4,086		(225	)		361		(323	)		3,899
Real Estate Construction		371		—			2		(7	)		366
Farm Real Estate		538		—			—		(62	)		476
Consumer and Other		382		(47	)		33		(10	)		358
Unallocated		382		—			—		147			529
Total	$	14,361	$	(356	)	$	1,842	$	(1,300	)	$	14,547

Allowance for loan losses:

For the six months ended June 30, 2015

	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,819	$	—		$	31	$	(455	)	$	1,395
Commercial Real Estate:
Owner Occupied		2,221		(198	)		159		2,891			5,073
Non-Owner Occupied		4,334		(64	)		90		(1,207	)		3,153
Residential Real Estate		3,747		(541	)		165		99			3,470
Real Estate Construction		428		—			3		3			434
Farm Real Estate		822		—			51		(289	)		584
Consumer and Other		200		(87	)		30		47			190
Unallocated		697		—			—		(289	)		408
Total	$	14,268	$	(890	)	$	529	$	800		$	14,707

Allowance for loan losses:

For the three months ended June 30, 2016

	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,446	$	(20	)	$	30	$	101		$	1,557
Commercial Real Estate:
Owner Occupied		2,372		(42	)		3		60			2,393
Non-Owner Occupied		4,711		—			1,319		(1,061	)		4,969
Residential Real Estate		4,114		(129	)		272		(358	)		3,899
Real Estate Construction		408		—			1		(43	)		366
Farm Real Estate		496		—			—		(20	)		476
Consumer and Other		358		(39	)		19		20			358
Unallocated		528		—			—		1			529
Total	$	14,433	$	(230	)	$	1,644	$	(1,300	)	$	14,547

Allowance for loan losses:

For the three months ended June 30, 2015

	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,795	$	—		$	12	$	(412	)	$	1,395
Commercial Real Estate:
Owner Occupied		1,808		—			157		3,108			5,073
Non-Owner Occupied		4,926		(55	)		76		(1,794	)		3,153
Residential Real Estate		3,666		(213	)		34		(17	)		3,470
Real Estate Construction		498		—			2		(66	)		434
Farm Real Estate		799		—			—		(215	)		584
Consumer and Other		190		(37	)		16		21			190
Unallocated		633		—			—		(225	)		408
Total	$	14,315	$	(305	)	$	297	$	400		$	14,707

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of June 30, 2016 and December 31, 2015.

June 30, 2016	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	1,557	$	1,557
Commercial Real Estate:
Owner Occupied		—		4		2,389		2,393
Non-Owner Occupied		—		23		4,946		4,969
Residential Real Estate		105		162		3,632		3,899
Real Estate Construction		—		—		366		366
Farm Real Estate		—		—		476		476
Consumer and Other		—		—		358		358
Unallocated		—		—		529		529
Total	$	105	$	189	$	14,253	$	14,547
Outstanding loan balances:
Commercial & Agriculture	$	110	$	2,417	$	124,013	$	126,540
Commercial Real Estate:
Owner Occupied		—		1,609		166,285		167,894
Non-Owner Occupied		—		744		369,132		369,876
Residential Real Estate		190		1,891		243,860		245,941
Real Estate Construction		—		—		56,274		56,274
Farm Real Estate		—		1,398		41,891		43,289
Consumer and Other		—		2		19,106		19,108
Total	$	300	$	8,061	$	1,020,561	$	1,028,922

December 31, 2015	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	23	$	1,455	$	1,478
Commercial Real Estate:
Owner Occupied		—		103		2,364		2,467
Non-Owner Occupied		—		—		4,657		4,657
Residential Real Estate		123		137		3,826		4,086
Real Estate Construction		—		—		371		371
Farm Real Estate		—		—		538		538
Consumer and Other		—		—		382		382
Unallocated		—		—		382		382
Total	$	123	$	263	$	13,975	$	14,361
Outstanding loan balances:
Commercial & Agriculture	$	132	$	873	$	123,397	$	124,402
Commercial Real Estate:
Owner Occupied		—		2,141		165,756		167,897
Non-Owner Occupied		—		1,742		346,697		348,439
Residential Real Estate		131		1,642		234,565		236,338
Real Estate Construction		—		—		58,898		58,898
Farm Real Estate		—		953		46,040		46,993
Consumer and Other		—		3		18,557		18,560
Total	$	263	$	7,354	$	993,910	$	1,001,527

Credit Exposures by Internally Assigned Grades

June 30, 2016	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	119,406	$	3,332	$	3,802	$	—	$	126,540
Commercial Real Estate:
Owner Occupied		160,119		1,584		6,191		—		167,894
Non-Owner Occupied		363,558		4,305		2,013		—		369,876
Residential Real Estate		59,615		1,587		7,473		—		68,675
Real Estate Construction		50,656		340		27		—		51,023
Farm Real Estate		33,597		6,612		3,080		—		43,289
Consumer and Other		1,991		—		122		—		2,113
Total	$	788,942	$	17,760	$	22,708	$	—	$	829,410
December 31, 2015	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	117,739	$	3,090	$	3,573	$	—	$	124,402
Commercial Real Estate:
Owner Occupied		156,622		5,571		5,704		—		167,897
Non-Owner Occupied		339,734		6,100		2,605		—		348,439
Residential Real Estate		62,147		1,671		7,435		—		71,253
Real Estate Construction		52,399		216		29		—		52,644
Farm Real Estate		39,787		4,024		3,182		—		46,993
Consumer and Other		1,987		3		111		—		2,101
Total	$	770,415	$	20,675	$	22,639	$	—	$	813,729

Performing and Nonperforming Loans

Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
June 30, 2016
Performing	$	177,266	$	5,251	$	16,983	$	199,500
Nonperforming		—		—		12		12
Total	$	177,266	$	5,251	$	16,995	$	199,512
	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
December 31, 2015
Performing	$	165,048	$	6,254	$	16,458	$	187,760
Nonperforming		37		—		1		38
Total	$	165,085	$	6,254	$	16,459	$	187,798

Aging Analysis of Past Due Loans

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of June 30, 2016 and December 31, 2015.

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	111	$	905	$	233	$	1,249	$	125,181	$	110	$	126,540	$	—
Commercial Real Estate:
Owner Occupied		136		248		382		766		167,128		—		167,894		—
Non-Owner Occupied		218		—		339		557		369,319		—		369,876		—
Residential Real Estate		238		894		1,117		2,249		243,502		190		245,941		—
Real Estate Construction		—		—		—		—		56,274		—		56,274		—
Farm Real Estate		—		—		784		784		42,505		—		43,289		—
Consumer and Other		57		26		12		95		19,013		—		19,108		12
Total	$	760	$	2,073	$	2,867	$	5,700	$	1,022,922	$	300	$	1,028,922	$	12
December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Purchased Credit- Impaired Loans		Total Loans		Past Due 90 Days and Accruing
Commercial & Agriculture	$	9	$	32	$	37	$	78	$	124,192	$	132	$	124,402	$	—
Commercial Real Estate:
Owner Occupied		982		36		284		1,302		166,595		—		167,897		—
Non-Owner Occupied		269		330		123		722		347,717		—		348,439		—
Residential Real Estate		2,640		404		1,725		4,769		231,438		131		236,338		—
Real Estate Construction		8		—		—		8		58,890		—		58,898		—
Farm Real Estate		—		—		—		—		46,993		—		46,993		—
Consumer and Other		98		68		8		174		18,386		—		18,560		—
Total	$	4,006	$	870	$	2,177	$	7,053	$	994,211	$	263	$	1,001,527	$	—

Summary of Nonaccrual Loans

The following table presents loans on nonaccrual status as of June 30, 2016 and December 31, 2015.

	2016		2015
Commercial & Agriculture	$	1,975	$	1,185
Commercial Real Estate:
Owner Occupied		1,380		1,645
Non-Owner Occupied		705		1,428
Residential Real Estate		3,751		3,911
Real Estate Construction		27		29
Farm Real Estate		789		961
Consumer and Other		110		100
Total	$	8,737	$	9,259

Schedule of Troubled Debt Restructurings

Loan modifications that are considered TDRs completed during the periods ended June 30, 2016 and June 30, 2015 were as follows:

	For the Six-Month Period Ended June 30, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		4	$	529	$	529
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		2		308		308
Real Estate Construction		—		—		—
Farm Real Estate		2		614		614
Consumer and Other		—		—		—
Total Loan Modifications		8	$	1,451	$	1,451
	For the Six-Month Period Ended June 30, 2015
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		1	$	6	$	6
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		3		374		374
Real Estate Construction		1		41		41
Farm Real Estate		—		—		—
Consumer and Other		—		—		—
Total Loan Modifications		5	$	421	$	421

	For the Three-Month Period Ended June 30, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		1	$	47	$	47
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		1		76		76
Real Estate Construction		—		—		—
Farm Real Estate		—		—		—
Consumer and Other		—		—		—
Total Loan Modifications		2	$	123	$	123
	For the Three-Month Period Ended June 30, 2015
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate - Owner Occupied		—		—		—
Commercial Real Estate - Non-Owner Occupied		—		—		—
Residential Real Estate		—		—		—
Real Estate Construction		—		—		—
Farm Real Estate		—		—		—
Consumer and Other		—		—		—
Total Loan Modifications		—	$	—	$	—

Impaired Loans

The following tables include the recorded investment and unpaid principal balances for impaired loans with the related allowance amount, if applicable, as of June 30, 2016 and December 31, 2015.

	June 30, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial & Agriculture	$	2,417	$	2,966			$	851	$	1,034
Commercial Real Estate:
Owner Occupied		1,363		1,398				1,224		1,343
Non-Owner Occupied		683		687				1,742		1,826
Residential Real Estate		1,328		1,865				965		1,591
Farm Real Estate		1,398		1,398				953		1,026
Consumer and Other		2		2				3		3
Total		7,191		8,316				5,738		6,823
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		22		23	$	23
Commercial Real Estate:
Owner Occupied		246		246		4		917		999		103
Non-Owner Occupied		61		61		23		—		—		—
Residential Real Estate		563		582		162		808		683		260
Farm Real Estate		—		—		—		—		—		—
Total		870		889		189		1,747		1,705		386
Total:
Commercial & Agriculture		2,417		2,966		—		873		1,057		23
Commercial Real Estate:
Owner Occupied		1,609		1,644		4		2,141		2,342		103
Non-Owner Occupied		744		748		23		1,742		1,826		—
Residential Real Estate		1,891		2,447		162		1,773		2,274		260
Farm Real Estate		1,398		1,398		—		953		1,026		—
Consumer and Other		2		2		—		3		3		—
Total	$	8,061	$	9,205	$	189	$	7,485	$	8,528	$	386

The following table includes the average recorded investment and interest income recognized for impaired loans.

For the six months ended:	June 30, 2016				June 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	1,937	$	80	$	1,943	$	37
Commercial Real Estate - Owner Occupied		1,800		50		3,300		97
Commercial Real Estate - Non-Owner Occupied		1,489		26		2,053		19
Residential Real Estate		1,799		60		2,752		66
Real Estate Construction		—		—		27		—
Farm Real Estate		1,250		31		566		28
Consumer and Other		3		—		5		—
Total	$	8,278	$	247	$	10,646	$	247
For the three months ended:	June 30, 2016				June 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	2,469	$	41	$	1,762	$	11
Commercial Real Estate - Owner Occupied		1,630		24		3,277		50
Commercial Real Estate - Non-Owner Occupied		1,363		13		1,992		10
Residential Real Estate		1,878		29		2,471		39
Real Estate Construction		—		—		40		—
Farm Real Estate		1,398		15		848		14
Consumer and Other		2		—		5		—
Total	$	8,740	$	122	$	10,395	$	124

Schedule of Changes in Amortized Yield for Purchased Credit Impaired (PCI) Loans

Changes in the amortizable yield for purchased credit-impaired (PCI) loans were as follows, since acquisition:

	For the Six-Month Period Ended June 30, 2016			For the Six-Month Period Ended June 30, 2015
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	82		$	—
Acquisition of PCI loans		—			140
Accretion		(16	)		—
Balance at end of period	$	66		$	140
	For the Three-Month Period Ended June 30, 2016			For the Three-Month Period Ended June 30, 2015
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	74		$	140
Acquisition of PCI loans		—			—
Accretion		(8	)		—
Balance at end of period	$	66		$	140

Schedule of Loans Acquired and Accounted

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

	At June 30, 2016		At December 31, 2015
	Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence of Deterioration of Credit Quality (ASC 310-30)
	(In Thousands)
Outstanding balance	$	911	$	965
Carrying amount		300		263