Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2018

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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, the ending allocation of the allowance for loan losses and the loan balances outstanding for the years ended December 31, 2018, 2017 and 2016. The changes can be impacted by overall loan volume, adversely graded loans, historical charge-offs and economic factors

Allowance for loan losses:

December 31, 2018	Beginning balance		Charge-offs			Recoveries		Provision (Credit)			Ending Balance
Commercial & Agriculture	$	1,562	$	(249	)	$	169	$	265		$	1,747
Commercial Real Estate:
Owner Occupied		2,043		(193	)		158		(46	)		1,962
Non-Owner Occupied		5,307		(153	)		28		621			5,803
Residential Real Estate		1,910		(105	)		208		(482	)		1,531
Real Estate Construction		834		—			—		212			1,046
Farm Real Estate		430		—			5		(38	)		397
Consumer and Other		290		(203	)		100		97			284
Unallocated		758		—			—		151			909
Total	$	13,134	$	(903	)	$	668	$	780		$	13,679

Allowance for loan losses:

December 31, 2017	Beginning balance		Charge-offs			Recoveries		Provision (Credit)			Ending Balance
Commercial & Agriculture	$	2,018	$	(11	)	$	372	$	(817	)	$	1,562
Commercial Real Estate:
Owner Occupied		2,171		(328	)		69		131			2,043
Non-Owner Occupied		4,606		(38	)		46		693			5,307
Residential Real Estate		3,089		(400	)		194		(973	)		1,910
Real Estate Construction		420		—			44		370			834
Farm Real Estate		442		—			3		(15	)		430
Consumer and Other		314		(165	)		43		98			290
Unallocated		245		—			—		513			758
Total	$	13,305	$	(942	)	$	771	$	—		$	13,134

Allowance for loan losses:

December 31, 2016	Beginning balance		Charge-offs			Recoveries		Provision (Credit)			Ending Balance
Commercial & Agriculture	$	1,478	$	(880	)	$	105	$	1,315		$	2,018
Commercial Real Estate:
Owner Occupied		2,467		(228	)		56		(124	)		2,171
Non-Owner Occupied		4,657		(23	)		1,372		(1,400	)		4,606
Residential Real Estate		4,086		(455	)		479		(1,021	)		3,089
Real Estate Construction		371		(115	)		12		152			420
Farm Real Estate		538		—			—		(96	)		442
Consumer and Other		382		(125	)		46		11			314
Unallocated		382		—			—		(137	)		245
Total	$	14,361	$	(1,826	)	$	2,070	$	(1,300	)	$	13,305

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

December 31, 2018	Loans acquired with credit deterioration		Loans individually evaluated for impairment		Loans collectively evaluated for impairment		Total
Allowance for loan losses:
Commercial & Agriculture	$	—	$	—	$	1,747	$	1,747
Commercial Real Estate:
Owner Occupied		—		12		1,950		1,962
Non-Owner Occupied		—		—		5,803		5,803
Residential Real Estate		8		122		1,401		1,531
Real Estate Construction		—		—		1,046		1,046
Farm Real Estate		—		7		390		397
Consumer and Other		—		—		284		284
Unallocated		—		—		909		909
Total	$	8	$	141	$	13,530	$	13,679
Outstanding loan balances:
Commercial & Agriculture	$	41	$	367	$	176,693	$	177,101
Commercial Real Estate:
Owner Occupied		—		484		209,637		210,121
Non-Owner Occupied		—		31		523,567		523,598
Residential Real Estate		883		1,279		455,688		457,850
Real Estate Construction		—		—		135,195		135,195
Farm Real Estate		—		696		37,817		38,513
Consumer and Other		—		—		19,563		19,563
Total	$	924	$	2,857	$	1,558,160	$	1,561,941

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

December 31, 2018	Pass		Special Mention		Substandard		Doubtful		Ending Balance
Commercial & Agriculture	$	173,783	$	1,509	$	1,809	$	—	$	177,101
Commercial Real Estate:
Owner Occupied		201,228		3,512		5,381		—		210,121
Non-Owner Occupied		520,487		2,023		1,088		—		523,598
Residential Real Estate		70,908		580		7,363		—		78,851
Real Estate Construction		124,769		13		41		—		124,823
Farm Real Estate		32,908		3,096		2,509		—		38,513
Consumer and Other		1,713		—		20		—		1,733
Total	$	1,125,796	$	10,733	$	18,211	$	—	$	1,154,740

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.

December 31, 2018	Residential Real Estate		Real Estate Construction		Consumer and Other		Total
Performing	$	378,999	$	10,372	$	17,830	$	407,201
Nonperforming		—		—		—		—
Total	$	378,999	$	10,372	$	17,830	$	407,201

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 December 31, 2018 and 2017.

December 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	$	225	$	—	$	92	$	317	$	176,743	$	41	$	177,101	$	—
Commercial Real Estate:
Owner Occupied		547		413		564		1,524		208,597		—		210,121		—
Non-Owner Occupied		288		290		372		950		522,648		—		523,598		—
Residential Real Estate		7,118		677		806		8,601		448,366		883		457,850		—
Real Estate Construction		—		12		27		39		135,156		—		135,195		—
Farm Real Estate		33		—		158		191		38,322		—		38,513		—
Consumer and Other		117		57		9		183		19,380		—		19,563		—
Total	$	8,328	$	1,449	$	2,028	$	11,805	$	1,549,212	$	924	$	1,561,941	$	—

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 December 31, 2018 and 2017.

	2018		2017
Commercial & Agriculture	$	270	$	887
Commercial Real Estate:
Owner Occupied		942		1,476
Non-Owner Occupied		374		711
Residential Real Estate		3,886		2,778
Real Estate Construction		41		27
Farm Real Estate		338		186
Consumer and Other		18		67
Total	$	5,869	$	6,132

Schedule of Troubled Debt Restructurings

Loan modifications that are considered TDRs completed during the twelve month periods ended December 31, 2018, 2017 and 2016 were as follows:

	For the Twelve Month Period Ended December 31, 2018
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—
Non-Owner Occupied		—		—		—
Residential Real Estate		1		23		23
Real Estate Construction		—		—		—
Farm Real Estate		1		110		110
Consumer and Other		—		—		—
Total Loan Modifications		2	$	133	$	133

	For the Twelve Month Period Ended December 31, 2017
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		—	$	—	$	—
Commercial Real Estate:
Owner Occupied		—		—		—
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 Twelve Month Period Ended December 31, 2016
	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial & Agriculture		4	$	529	$	529
Commercial Real Estate:
Owner Occupied		—		—		—
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

Impaired Financing Receivables Excluding PCI Loans

The following tables include the recorded investment and unpaid principal balances for impaired financing receivables, excluding PCI loans, with the associated allowance amount, if applicable, as of December 31, 2018 and 2017.

	December 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	$	367	$	367			$	—	$	—
Commercial Real Estate:
Owner Occupied		193		193				693		913
Non-Owner Occupied		31		34				44		48
Residential Real Estate		1,017		1,089				977		1,049
Farm Real Estate		256		256				148		148
Consumer and Other		—		—				—		—
Total		1,864		1,939				1,862		2,158
With an allowance recorded:
Commercial & Agriculture		—		—	$	—		438		438	$	4
Commercial Real Estate:
Owner Occupied		291		291		12		317		317		6
Non-Owner Occupied		—		—		—		—		—		—
Residential Real Estate		262		265		122		383		387		109
Farm Real Estate		440		440		7		460		460		6
Total		993		996		141		1,598		1,602		125
Total:
Commercial & Agriculture		367		367		—		438		438		4
Commercial Real Estate:
Owner Occupied		484		484		12		1,010		1,230		6
Non-Owner Occupied		31		34		—		44		48		—
Residential Real Estate		1,279		1,354		122		1,360		1,436		109
Farm Real Estate		696		696		7		608		608		6
Consumer and Other		—		—		—		—		—		—
Total	$	2,857	$	2,935	$	141	$	3,460	$	3,760	$	125

The following tables include the average recorded investment and interest income recognized for impaired financing receivables as of, and for the years ended, December 31, 2018, 2017 and 2016.

For the year ended:	December 31, 2018				December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	636	$	25	$	1,375	$	34
Commercial Real Estate:
Owner Occupied		610		33		1,507		75
Non-Owner Occupied		39		5		233		6
Residential Real Estate		1,519		75		1,515		73
Real Estate Construction		—		—		—		—
Farm Real Estate		716		29		613		28
Consumer and Other		—		—		—		—
Total	$	3,520	$	167	$	5,243	$	216

For the year ended:	December 31, 2016
	Average Recorded Investment		Interest Income Recognized
Commercial & Agriculture	$	2,036	$	40
Commercial Real Estate:
Owner Occupied		1,847		862
Non-Owner Occupied		1,039		83
Residential Real Estate		1,787		175
Real Estate Construction		—		1
Farm Real Estate		1,006		95
Consumer and Other		2		—
Total	$	7,717	$	1,256

Schedule of Changes in Amortized Yield for PCI Loans

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

	At December 31, 2018			At December 31, 2017
	(In Thousands)			(In Thousands)
Balance at beginning of period	$	15		$	49
Acquisition of PCI loans		334			—
Accretion		(13	)		(34	)
Balance at end of period	$	336		$	15

Schedule of Loans Components of Purchase Accounting Adjustments

The table below presents the components of the purchase accounting adjustments.

	September 14, 2018
	(In Thousands)
Contractually required payments	$	2,353
Non-accretable discount		(1,141	)
Expected cash flows		1,212
Accretable discount		(334	)
Estimated fair value	$	878

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

	At December 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	$	1,805	$	775
Carrying amount		924		215