Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2018

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 months ended March 31, 2018 and 2017.

Allowance for loan losses:

March 31, 2018	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	1,562	$	(125	)	$	19	$	(97	)	$	1,359
Commercial Real Estate:
Owner Occupied		2,043		(193	)		9		171			2,030
Non-Owner Occupied		5,307		(44	)		14		393			5,670
Residential Real Estate		1,910		(22	)		58		(196	)		1,750
Real Estate Construction		834		—			—		(14	)		820
Farm Real Estate		430		—			1		(20	)		411
Consumer and Other		290		(41	)		4		(6	)		247
Unallocated		758		—			—		(231	)		527
Total	$	13,134	$	(425	)	$	105	$	—		$	12,814

Allowance for loan losses:

March 31, 2017	Beginning balance		Charge-offs			Recoveries		Provision			Ending Balance
Commercial & Agriculture	$	2,018	$	(1	)	$	56	$	(504	)	$	1,569
Commercial Real Estate:
Owner Occupied		2,171		—			2		86			2,259
Non-Owner Occupied		4,606		—			5		(68	)		4,543
Residential Real Estate		3,089		(89	)		55		(33	)		3,022
Real Estate Construction		420		—			5		(12	)		413
Farm Real Estate		442		—			—		(35	)		407
Consumer and Other		314		(41	)		3		78			354
Unallocated		245		—			—		488			733
Total	$	13,305	$	(131	)	$	126	$	—		$	13,300

The following tables present, by portfolio segment, the allocation of the allowance for loan losses and related loan balances as of March 31, 2018 and December 31, 2017.

March 31, 2018	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	60	$	1,299	$	1,359
Commercial Real Estate:
Owner Occupied		—		8		2,022		2,030
Non-Owner Occupied		—		—		5,670		5,670
Residential Real Estate		37		105		1,608		1,750
Real Estate Construction		—		—		820		820
Farm Real Estate		—		6		405		411
Consumer and Other		—		—		247		247
Unallocated		—		—		527		527
Total	$	37	$	179	$	12,598	$	12,814
Outstanding loan balances:
Commercial & Agriculture	$	80	$	1,025	$	135,971	$	137,076
Commercial Real Estate:
Owner Occupied		—		532		162,453		162,985
Non-Owner Occupied		—		43		436,117		436,160
Residential Real Estate		119		1,335		265,976		267,430
Real Estate Construction		—		—		95,856		95,856
Farm Real Estate		—		793		37,135		37,928
Consumer and Other		—		—		16,323		16,323
Total	$	199	$	3,728	$	1,149,831	$	1,153,758

December 31, 2017	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	82	$	4	$	1,476	$	1,562
Commercial Real Estate:
Owner Occupied		—		6		2,037		2,043
Non-Owner Occupied		—		—		5,307		5,307
Residential Real Estate		44		109		1,757		1,910
Real Estate Construction		—		—		834		834
Farm Real Estate		—		6		424		430
Consumer and Other		—		—		290		290
Unallocated		—		—		758		758
Total	$	126	$	125	$	12,883	$	13,134
Outstanding loan balances:
Commercial & Agriculture	$	87	$	438	$	151,948	$	152,473
Commercial Real Estate:
Owner Occupied		—		1,010		163,089		164,099
Non-Owner Occupied		—		44		425,579		425,623
Residential Real Estate		128		1,360		267,247		268,735
Real Estate Construction		—		—		97,531		97,531
Farm Real Estate		—		608		38,853		39,461
Consumer and Other		—		—		16,739		16,739
Total	$	215	$	3,460	$	1,160,986	$	1,164,661

Credit Exposures by Internally Assigned Grades

March 31, 2018	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	131,082	$	2,820	$	3,174	$	—	$	137,076
Commercial Real Estate:
Owner Occupied		155,400		1,273		6,312		—		162,985
Non-Owner Occupied		433,379		2,334		447		—		436,160
Residential Real Estate		61,428		1,884		5,628		—		68,940
Real Estate Construction		89,195		1,276		27		—		90,498
Farm Real Estate		29,034		6,094		2,800		—		37,928
Consumer and Other		1,434		—		67		—		1,501
Total	$	900,952	$	15,681	$	18,455	$	—	$	935,088

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	140,842	$	8,412	$	3,219	$	—	$	152,473
Commercial Real Estate:
Owner Occupied		155,756		1,166		7,177		—		164,099
Non-Owner Occupied		422,363		2,321		939		—		425,623
Residential Real Estate		62,628		1,997		5,873		—		70,498
Real Estate Construction		91,545		15		27		—		91,587
Farm Real Estate		25,228		11,236		2,997		—		39,461
Consumer and Other		1,312		—		70		—		1,382
Total	$	899,674	$	25,147	$	20,302	$	—	$	945,123

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.

March 31, 2018	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	198,490	$	5,358	$	14,802	$	218,650
Nonperforming		—		—		20		20
Total	$	198,490	$	5,358	$	14,822	$	218,670

December 31, 2017	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	198,237	$	5,944	$	15,341	$	219,522
Nonperforming		—		—		16		16
Total	$	198,237	$	5,944	$	15,357	$	219,538

Aging Analysis of Past Due Loans

The following tables include an aging analysis of the recorded investment of past due loans outstanding as of March 31, 2018 and December 31, 2017.

March 31, 2018	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	$	188	$	41	$	808	$	1,037	$	135,959	$	80	$	137,076	$	—
Commercial Real Estate:
Owner Occupied		320		44		390		754		162,231		—		162,985		—
Non-Owner Occupied		—		49		167		216		435,944		—		436,160		—
Residential Real Estate		1,643		64		554		2,261		265,050		119		267,430		—
Real Estate Construction		—		—		27		27		95,829		—		95,856		—
Farm Real Estate		152		—		186		338		37,590		—		37,928		—
Consumer and Other		64		76		20		160		16,163		—		16,323		20
Total	$	2,367	$	274	$	2,152	$	4,793	$	1,148,766	$	199	$	1,153,758	$	20

December 31, 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	$	575	$	2	$	685	$	1,262	$	151,124	$	87	$	152,473	$	—
Commercial Real Estate:
Owner Occupied		897		104		484		1,485		162,614		—		164,099		—
Non-Owner Occupied		133		—		470		603		425,020		—		425,623		—
Residential Real Estate		1,613		229		785		2,627		265,980		128		268,735		—
Real Estate Construction		—		—		27		27		97,504		—		97,531		—
Farm Real Estate		27		—		186		213		39,248		—		39,461		—
Consumer and Other		92		96		16		204		16,535		—		16,739		16
Total	$	3,337	$	431	$	2,653	$	6,421	$	1,158,025	$	215	$	1,164,661	$	16

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 March 31, 2018 and December 31, 2017.

	March 31, 2018		December 31, 2017
Commercial & Agriculture	$	1,004	$	887
Commercial Real Estate:
Owner Occupied		806		1,476
Non-Owner Occupied		268		711
Residential Real Estate		2,589		2,778
Real Estate Construction		27		27
Farm Real Estate		186		186
Consumer and Other		64		67
Total	$	4,944	$	6,132

Schedule of Troubled Debt Restructurings

Loan modifications that are considered TDRs completed during the three-month period ended March 31, 2018 were as follows. There were no loans modified in trouble debt restructuring during the three-month period ended March 31, 2017:

	For the Three-Month Period Ended
	March 31, 2018
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		3	$	591	$	591
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		3	$	591	$	591

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 March 31, 2018 and December 31, 2017.

	March 31, 2018						December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial & Agriculture	$	760	$	760			$	—	$	—
Commercial Real Estate:
Owner Occupied		218		218				693		913
Non-Owner Occupied		43		47				44		48
Residential Real Estate		957		1,030				977		1,049
Farm Real Estate		333		333				148		148
Consumer and Other		—		—				—		—
Total		2,311		2,388				1,862		2,158
With an allowance recorded:
Commercial & Agriculture		265		365	$	60		438		438	$	4
Commercial Real Estate:
Owner Occupied		314		314		8		317		317		6
Non-Owner Occupied		—		—		—		—		—		—
Residential Real Estate		378		381		105		383		387		109
Farm Real Estate		460		460		6		460		460		6
Total		1,417		1,520		179		1,598		1,602		125
Total:
Commercial & Agriculture		1,025		1,125		60		438		438		4
Commercial Real Estate:
Owner Occupied		532		532		8		1,010		1,230		6
Non-Owner Occupied		43		47		—		44		48		—
Residential Real Estate		1,335		1,411		105		1,360		1,436		109
Farm Real Estate		793		793		6		608		608		6
Consumer and Other		—		—		—		—		—		—
Total	$	3,728	$	3,908	$	179	$	3,460	$	3,760	$	125

The following table includes the average recorded investment and interest income recognized for impaired financing receivables for the three-month periods ended March 31, 2018 and 2017.

	March 31, 2018				March 31, 2017
For the three months ended:	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	732	$	7	$	1,852	$	6
Commercial Real Estate—Owner Occupied		771		9		1,886		22
Commercial Real Estate—Non-Owner Occupied		43		1		358		—
Residential Real Estate		1,348		17		1,671		16
Real Estate Construction		—		—		—		—
Farm Real Estate		701		7		614		6
Consumer and Other		—		—		1		—
Total	$	3,595	$	41	$	6,382	$	50

Schedule of Changes in Amortized Yield for PCI Loans

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

	For the Three-Month Period Ended March 31, 2018			For the Three-Month Period Ended March 31, 2017
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	15		$	49
Acquisition of PCI loans		—			—
Accretion		(7	)		(9	)
Balance at end of period	$	8		$	40

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 March 31, 2018		At December 31, 2017
	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	$	752	$	775
Carrying amount		199		215