Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2016

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 nine months ended September 30, 2016 and 2015.

Allowance for loan losses:

For the nine months ended September 30, 2016


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,478	$	(870	)	$	79	$	1,023		$	1,710
Commercial Real Estate:
Owner Occupied		2,467		(166	)		53		(44	)		2,310
Non-Owner Occupied		4,657		(23	)		1,365		(1,456	)		4,543
Residential Real Estate		4,086		(280	)		384		(735	)		3,455
Real Estate Construction		371		(115	)		8		160			424
Farm Real Estate		538		—			—		(108	)		430
Consumer and Other		382		(85	)		40		—			337
Unallocated		382		—			—		(140	)		242

Total	$	14,361	$	(1,539	)	$	1,929	$	(1,300	)	$	13,451

Allowance for loan losses:

For the nine months ended September 30, 2015


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,819	$	(187	)	$	158	$	(412	)	$	1,378
Commercial Real Estate:
Owner Occupied		2,221		(362	)		162		661			2,682
Non-Owner Occupied		4,334		(81	)		105		581			4,939
Residential Real Estate		3,747		(779	)		289		965			4,222
Real Estate Construction		428		—			4		(4	)		428
Farm Real Estate		822		—			60		(224	)		658
Consumer and Other		200		(115	)		38		251			374
Unallocated		697		—			—		(618	)		79

Total	$	14,268	$	(1,524	)	$	816	$	1,200		$	14,760

Allowance for loan losses:

For the three months ended September 30, 2016


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,557	$	(828	)	$	44	$	937		$	1,710
Commercial Real Estate:
Owner Occupied		2,393		(124	)		1		40			2,310
Non-Owner Occupied		4,969		(23	)		6		(409	)		4,543
Residential Real Estate		3,899		(55	)		23		(412	)		3,455
Real Estate Construction		366		(115	)		6		167			424
Farm Real Estate		476		—			—		(46	)		430
Consumer and Other		358		(38	)		7		10			337
Unallocated		529		—			—		(287	)		242

Total	$	14,547	$	(1,183	)	$	87	$	—		$	13,451

Allowance for loan losses:

For the three months ended September 30, 2015


	Beginning balance		Charge- offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,395	$	(187	)	$	127	$	43		$	1,378
Commercial Real Estate:
Owner Occupied		5,073		(164	)		3		(2,230	)		2,682
Non-Owner Occupied		3,153		(17	)		15		1,788			4,939
Residential Real Estate		3,470		(238	)		124		866			4,222
Real Estate Construction		434		—			1		(7	)		428
Farm Real Estate		584		—			9		65			658
Consumer and Other		190		(28	)		8		204			374
Unallocated		408		—			—		(329	)		79

Total	$	14,707	$	(634	)	$	287	$	400		$	14,760

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


September 30, 2016	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:

Commercial & Agriculture	$	—	$	—	$	1,710	$	1,710
Commercial Real Estate:
Owner Occupied		—		4		2,306		2,310
Non-Owner Occupied		—		—		4,543		4,543
Residential Real Estate		97		113		3,245		3,455
Real Estate Construction		—		—		424		424
Farm Real Estate		—		—		430		430
Consumer and Other		—		—		337		337
Unallocated		—		—		242		242

Total	$	97	$	117	$	13,237	$	13,451


Outstanding loan balances:

Commercial & Agriculture	$	89	$	2,386	$	127,225	$	129,700
Commercial Real Estate:
Owner Occupied		—		1,939		165,625		167,564
Non-Owner Occupied		—		369		385,494		385,863
Residential Real Estate		177		1,854		245,143		247,174
Real Estate Construction		—		—		56,919		56,919
Farm Real Estate		—		665		41,197		41,862
Consumer and Other		—		1		17,884		17,885

Total	$	266	$	7,214	$	1,039,487	$	1,046,967


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


September 30, 2016	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	121,273	$	4,569	$	3,858	$	—	$	129,700
Commercial Real Estate:
Owner Occupied		159,392		1,849		6,323		—		167,564
Non-Owner Occupied		380,064		4,054		1,745		—		385,863
Residential Real Estate		58,290		1,698		7,539		—		67,527
Real Estate Construction		50,391		17		27		—		50,435
Farm Real Estate		32,430		7,088		2,344		—		41,862
Consumer and Other		1,586		—		95		—		1,681

Total	$	803,426	$	19,275	$	21,931	$	—	$	844,632


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
September 30, 2016
Performing	$	179,647	$	6,484	$	16,171	$	202,302
Nonperforming		—		—		33		33

Total	$	179,647	$	6,484	$	16,204	$	202,335


	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 September 30, 2016 and December 31, 2015.


September 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	$	57	$	169	$	213	$	439	$	129,172	$	89	$	129,700	$	—
Commercial Real Estate:
Owner Occupied		642		59		303		1,004		166,560		—		167,564		—
Non-Owner Occupied		—		14		316		330		385,533		—		385,863		—
Residential Real Estate		230		384		1,299		1,913		245,084		177		247,174		—
Real Estate Construction		—		—		27		27		56,892		—		56,919		—
Farm Real Estate		21		—		—		21		41,841		—		41,862		—
Consumer and Other		157		37		33		227		17,658		—		17,885		33

Total	$	1,107	$	663	$	2,191	$	3,961	$	1,042,740	$	266	$	1,046,967	$	33


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 Excluding Purchased Credit-Impaired (PCI) Loans

The following table presents loans on nonaccrual status, excluding purchased credit-impaired (PCI) loans, as of September 30, 2016 and December 31, 2015.


	2016		2015
Commercial & Agriculture	$	2,008	$	1,185
Commercial Real Estate:
Owner Occupied		1,618		1,645
Non-Owner Occupied		459		1,428
Residential Real Estate		3,887		3,911
Real Estate Construction		27		29
Farm Real Estate		54		961
Consumer and Other		84		100

Total	$	8,137	$	9,259

Schedule of Troubled Debt Restructurings

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


	For the Nine-Month Period Ended September 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		3		700		700
Consumer and Other		—		—		—

Total Loan Modifications		9	$	1,537	$	1,537


	For the Nine-Month Period Ended September 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		1		41		41
Farm Real Estate		—		—		—
Consumer and Other		—		—		—

Total Loan Modifications		1	$	41	$	41


	For the Three-Month Period Ended September 30, 2016
	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		1		86		86
Consumer and Other		—		—		—

Total Loan Modifications		1	$	86	$	86


	For the Three-Month Period Ended September 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 Excluding PCI Loans

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


	September 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	$	2,386	$	3,457			$	851	$	1,034
Commercial Real Estate:
Owner Occupied		1,697		1,842				1,224		1,343
Non-Owner Occupied		369		396				1,742		1,826
Residential Real Estate		1,376		1,912				965		1,591
Farm Real Estate		665		665				953		1,026
Consumer and Other		1		1				3		3

Total		6,494		8,273				5,738		6,823

With an allowance recorded:
Commercial & Agriculture		—		—	$	—		22		23	$	23
Commercial Real Estate:
Owner Occupied		242		242		4		917		999		103
Non-Owner Occupied		—		—		—		—		—		—
Residential Real Estate		478		497		113		808		683		260
Farm Real Estate		—		—		—		—		—		—

Total		720		739		117		1,747		1,705		386

Total:
Commercial & Agriculture		2,386		3,457		—		873		1,057		23
Commercial Real Estate:
Owner Occupied		1,939		2,084		4		2,141		2,342		103
Non-Owner Occupied		369		396		—		1,742		1,826		—
Residential Real Estate		1,854		2,409		113		1,773		2,274		260
Farm Real Estate		665		665		—		953		1,026		—
Consumer and Other		1		1		—		3		3		—

Total	$	7,214	$	9,012	$	117	$	7,485	$	8,528	$	386

The following tables include the average recorded investment and interest income recognized for impaired loans.


For the nine months ended:	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Commercial & Agriculture	$	1,453	$	147	$	1,680	$	41
Commercial Real Estate - Owner Occupied		1,954		101		2,887		120
Commercial Real Estate - Non-Owner Occupied		1,519		62		1,997		31
Residential Real Estate		1,699		89		2,640		78
Real Estate Construction		473		6		20		—
Farm Real Estate		1,123		33		620		42
Consumer and Other		2		—		5		—

Total	$	8,223	$	438	$	9,849	$	312


For the three months ended:	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized

Commercial & Agriculture	$	2,401	$	67	$	1,058	$	4
Commercial Real Estate - Owner Occupied		1,774		51		2,447		23
Commercial Real Estate - Non-Owner Occupied		556		36		1,870		12
Residential Real Estate		1,873		29		2,450		12
Real Estate Construction		—		6		20		—
Farm Real Estate		1,032		2		816		14
Consumer and Other		2		—		4		—

Total	$	7,638	$	191	$	8,665	$	65

Schedule of Changes in Amortized Yield for PCI Loans

Changes in the amortizable yield for PCI loans were as follows, since acquisition:


	For the Nine-Month			For the Nine-Month
	Period Ended			Period Ended
	September 30, 2016			September 30, 2015
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	82		$	—
Acquisition of PCI loans		—			140
Accretion		(24	)		—

Balance at end of period	$	58		$	140


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

Balance at end of period	$	58		$	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 September 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	$	868	$	965
Carrying amount		266		263