Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2017

Changes in the Allowance for Loan Losses

The following tables present, by portfolio segment, the changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016.

Allowance for loan losses:

For the nine months ended September 30, 2017

September 30, 2017	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,018	$	(11	)	$	134	$	(530	)	$	1,611
Commercial Real Estate:
Owner Occupied		2,171		(301	)		26		177			2,073
Non-Owner Occupied		4,606		(38	)		42		663			5,273
Residential Real Estate		3,089		(312	)		164		(462	)		2,479
Real Estate Construction		420		—			32		215			667
Farm Real Estate		442		—			2		(20	)		424
Consumer and Other		314		(135	)		38		108			325
Unallocated		245		—			—		(151	)		94
Total	$	13,305	$	(797	)	$	438	$	—		$	12,946

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		0			337
Unallocated		382		—			—		(140	)		242
Total	$	14,361	$	(1,539	)	$	1,929	$	(1,300	)	$	13,451

Allowance for loan losses:

For the three months ended September 30, 2017

	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,608	$	(10	)	$	51	$	(38	)	$	1,611
Commercial Real Estate:
Owner Occupied		2,010		(91	)		8		146			2,073
Non-Owner Occupied		4,739		(38	)		33		539			5,273
Residential Real Estate		2,676		(116	)		77		(158	)		2,479
Real Estate Construction		482		—			13		172			667
Farm Real Estate		425		—			2		(3	)		424
Consumer and Other		324		(54	)		24		31			325
Unallocated		783		—			—		(689	)		94
Total	$	13,047	$	(309	)	$	208	$	—		$	12,946

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

September 30, 2017	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	81	$	122	$	1,408	$	1,611
Commercial Real Estate:
Owner Occupied		—		4		2,069		2,073
Non-Owner Occupied		—		—		5,273		5,273
Residential Real Estate		52		114		2,313		2,479
Real Estate Construction		—		—		667		667
Farm Real Estate		—		6		418		424
Consumer and Other		—		—		325		325
Unallocated		—		—		94		94
Total	$	133	$	246	$	12,567	$	12,946
Outstanding loan balances:
Commercial & Agriculture	$	89	$	1,170	$	146,278	$	147,537
Commercial Real Estate:
Owner Occupied		—		1,039		166,639		167,678
Non-Owner Occupied		—		50		424,380		424,430
Residential Real Estate		139		1,386		266,314		267,839
Real Estate Construction		—		—		77,978		77,978
Farm Real Estate		—		613		38,353		38,966
Consumer and Other		—		—		17,564		17,564
Total	$	228	$	4,258	$	1,137,506	$	1,141,992

December 31, 2016	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	86	$	82	$	1,850	$	2,018
Commercial Real Estate:
Owner Occupied		—		4		2,167		2,171
Non-Owner Occupied		—		—		4,606		4,606
Residential Real Estate		89		102		2,898		3,089
Real Estate Construction		—		—		420		420
Farm Real Estate		—		—		442		442
Consumer and Other		—		—		314		314
Unallocated		—		—		245		245
Total	$	175	$	188	$	12,942	$	13,305
Outstanding loan balances:
Commercial & Agriculture	$	88	$	1,983	$	133,391	$	135,462
Commercial Real Estate:
Owner Occupied		—		1,896		159,468		161,364
Non-Owner Occupied		—		359		395,572		395,931
Residential Real Estate		168		1,686		245,454		247,308
Real Estate Construction		—		—		56,293		56,293
Farm Real Estate		—		614		40,556		41,170
Consumer and Other		—		1		17,977		17,978
Total	$	256	$	6,539	$	1,048,711	$	1,055,506

Credit Exposures by Internally Assigned Grades

September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	140,866	$	4,697	$	1,974	$	—	$	147,537
Commercial Real Estate:
Owner Occupied		156,583		7,119		3,976		—		167,678
Non-Owner Occupied		421,452		2,174		804		—		424,430
Residential Real Estate		63,081		2,054		5,998		—		71,133
Real Estate Construction		73,581		15		27		—		73,623
Farm Real Estate		30,604		6,513		1,849		—		38,966
Consumer and Other		1,598		—		75		—		1,673
Total	$	887,765	$	22,572	$	14,703	$	—	$	925,040

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	127,867	$	4,300	$	3,295	$	—	$	135,462
Commercial Real Estate:
Owner Occupied		151,659		4,016		5,689		—		161,364
Non-Owner Occupied		393,592		1,676		663		—		395,931
Residential Real Estate		59,015		1,661		6,911		—		67,587
Real Estate Construction		50,678		16		27		—		50,721
Farm Real Estate		31,814		5,673		3,683		—		41,170
Consumer and Other		2,135		—		109		—		2,244
Total	$	816,760	$	17,342	$	20,377	$	—	$	854,479

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.

September 30, 2017	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	196,706	$	4,355	$	15,847	$	216,908
Nonperforming		—		—		44		44
Total	$	196,706	$	4,355	$	15,891	$	216,952

December 31, 2016	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	179,721	$	5,572	$	15,725	$	201,018
Nonperforming		—		—		9		9
Total	$	179,721	$	5,572	$	15,734	$	201,027

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, 2017 and December 31, 2016.

September 30, 2017	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	$	389	$	—	$	664	$	1,053	$	146,395	$	89	$	147,537	$	—
Commercial Real Estate:
Owner Occupied		—		174		516		690		166,988		—		167,678		—
Non-Owner Occupied		164		108		420		692		423,738		—		424,430		—
Residential Real Estate		218		242		878		1,338		266,362		139		267,839		—
Real Estate Construction		—		68		27		95		77,883		—		77,978		—
Farm Real Estate		—		—		193		193		38,773		—		38,966		—
Consumer and Other		86		10		48		144		17,420		—		17,564		44
Total	$	857	$	602	$	2,746	$	4,205	$	1,137,559	$	228	$	1,141,992	$	44

December 31, 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	$	156	$	20	$	152	$	328	$	135,046	$	88	$	135,462	$	—
Commercial Real Estate:
Owner Occupied		722		553		280		1,555		159,809		—		161,364		—
Non-Owner Occupied		147		—		316		463		395,468		—		395,931		—
Residential Real Estate		1,812		507		1,049		3,368		243,772		168		247,308		—
Real Estate Construction		—		—		27		27		56,266		—		56,293		—
Farm Real Estate		93		—		—		93		41,077		—		41,170		—
Consumer and Other		215		31		31		277		17,701		—		17,978		9
Total	$	3,145	$	1,111	$	1,855	$	6,111	$	1,049,139	$	256	$	1,055,506	$	9

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, 2017 and December 31, 2016.

	September 30, 2017		December 31, 2016
Commercial & Agriculture	$	1,889	$	1,622
Commercial Real Estate:
Owner Occupied		1,989		1,461
Non-Owner Occupied		566		464
Residential Real Estate		2,798		3,266
Real Estate Construction		27		27
Farm Real Estate		193		2
Consumer and Other		70		101
Total	$	7,532	$	6,943

Schedule of Troubled Debt Restructurings

Loan modifications that are considered TDRs completed during the periods ended September 30, 2017 and September 30, 2016 were as follows:

	For the Nine-Month Period Ended September 30, 2017
	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		1		13		13
Real Estate Construction		—		—		—
Farm Real Estate		—		—		—
Consumer and Other		—		—		—
Total Loan Modifications		1	$	13	$	13

	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 Three-Month Period Ended

September 30, 2017

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

—

	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

Impaired Financing Receivables Excluding PCI Loans

The following table includes the recorded investment and unpaid principal balances for impaired financing receivables, excluding PCI loans, with the associated allowance amount, if applicable, as of September 30, 2017 and December 31, 2016.

	September 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial & Agriculture	$	—	$	—			$	1,230	$	1,751
Commercial Real Estate:
Owner Occupied		814		1,069				1,658		1,803
Non-Owner Occupied		50		53				359		386
Residential Real Estate		996		1,068				1,259		1,590
Farm Real Estate		149		149				614		614
Consumer and Other		—		—				1		1
Total		2,009		2,339				5,121		6,145
With an allowance recorded:
Commercial & Agriculture		1,170		1,720	$	122		753		1,303	$	82
Commercial Real Estate:
Owner Occupied		225		225		4		238		238		4
Non-Owner Occupied		—		—		—		—		—		—
Residential Real Estate		390		394		114		427		431		102
Farm Real Estate		464		464		6		—		—		—
Total		2,249		2,803		246		1,418		1,972		188
Total:
Commercial & Agriculture		1,170		1,720		122		1,983		3,054		82
Commercial Real Estate:
Owner Occupied		1,039		1,294		4		1,896		2,041		4
Non-Owner Occupied		50		53		—		359		386		—
Residential Real Estate		1,386		1,462		114		1,686		2,021		102
Farm Real Estate		613		613		6		614		614		—
Consumer and Other		—		—		—		1		1		—
Total	$	4,258	$	5,142	$	246	$	6,539	$	8,117	$	188

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the three- and nine-month periods ended September 30, 2017 and 2016.

	September 30, 2017				September 30, 2016
For the nine months ended:	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	1,609	$	27	$	1,453	$	19
Commercial Real Estate—Owner Occupied		1,632		66		1,954		66
Commercial Real Estate—Non-Owner Occupied		280		5		1,519		858
Residential Real Estate		1,554		56		1,699		60
Real Estate Construction		—		—		473		—
Farm Real Estate		614		21		1,123		17
Consumer and Other		—		—		2		—
Total	$	5,689	$	175	$	8,223	$	1,020

	September 30, 2017				September 30, 2016
For the three months ended:	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	1,366	$	7	$	2,401	$	8
Commercial Real Estate—Owner Occupied		1,377		18		1,774		21
Commercial Real Estate—Non-Owner Occupied		202		2		556		1
Residential Real Estate		1,437		17		1,873		21
Real Estate Construction		—		—		—		—
Farm Real Estate		614		8		1,032		7
Consumer and Other		—		—		2		—
Total	$	4,996	$	52	$	7,638	$	58

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 Period Ended September 30, 2017			For the Nine-Month Period Ended September 30, 2016
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	49		$	82
Acquisition of PCI loans		—			—
Accretion		(27	)		(24	)
Balance at end of period	$	22		$	58

	For the Three-Month Period Ended September 30, 2017			For the Three-Month Period Ended September 30, 2016
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	31		$	66
Acquisition of PCI loans		—			—
Accretion		(9	)		(8	)
Balance at end of period	$	22		$	58

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, 2017		At December 31, 2016
	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	$	795	$	850
Carrying amount		228		256