Kentucky Bancshares (KTYB) 10-Q 13 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 31, 2017
Document and Entity Information
Entity Registrant Name	KENTUCKY BANCSHARES INC /KY/
Entity Central Index Key	1,000,232
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		2,971,611
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS (un

CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash and due from banks	$ 18,426	$ 42,052
Federal funds sold	186	1,198
Cash and cash equivalents	18,612	43,250
Interest bearing time deposits	1,830	5,029
Securities available for sale	289,956	273,770
Trading Assets	5,714	5,592
Loans held for sale	1,316	724
Loans	648,965	656,007
Allowance for loan losses	(7,755)	(7,541)
Net loans	641,210	648,466
Federal Home Loan Bank stock	7,034	7,034
Real estate owned, net	2,669	1,824
Assets held for sale		969
Bank premises and equipment, net	16,265	14,781
Interest receivable	3,785	3,715
Mortgage servicing rights	1,485	1,321
Goodwill	14,001	14,001
Other intangible assets	405	529
Other assets	6,476	7,442
Total assets	1,010,758	1,028,447
Deposits
Non-interest bearing	220,518	219,556
Time deposits, $250,000 and over	68,528	74,302
Other interest bearing	459,333	509,123
Total deposits	748,379	802,981
Repurchase agreements	24,070	20,873
Federal funds purchased	17,302
Short-term Federal Home Loan Bank advances	8,530
Long-term Federal Home Loan Bank advances	93,665	92,500
Note payable	3,762	4,090
Subordinated debentures	7,217	7,217
Interest payable	796	692
Other liabilities	6,768	7,122
Total liabilities	910,489	935,475
Stockholders' equity
Preferred stock, 300,000 shares authorized and unissued
Common stock, no par value; 10,000,000 shares authorized; 2,971,611 and 2,973,232 shares issued and outstanding at September 30, 2017 and December 31, 2016	20,889	20,767
Retained earnings	78,515	73,161
Accumulated other comprehensive income (loss)	865	(956)
Total stockholders' equity	100,269	92,972
Total liabilities and stockholders’ equity	$ 1,010,758	$ 1,028,447

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (unaudited) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
CONSOLIDATED BALANCE SHEETS
Preferred stock, shares authorized	300,000	300,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	2,971,611	2,973,232
Common stock, shares outstanding	2,971,611	2,973,232

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INTEREST INCOME:
Loans, including fees	$ 7,779	$ 7,630	$ 22,985	$ 22,432
Securities
Taxable	1,156	782	3,353	2,555
Tax exempt	625	649	1,801	1,967
Trading Assets	27	44	86	117
Other	132	101	454	319
Total interest income	9,719	9,206	28,679	27,390
INTEREST EXPENSE:
Deposits	668	555	1,997	1,667
Repurchase agreements and federal funds purchased	38	30	89	83
Federal Home Loan Bank advances	466	428	1,251	1,205
Note payable	48	57	147	177
Subordinated debentures	75	70	232	198
Total interest expense	1,295	1,140	3,716	3,330
Net interest income	8,424	8,066	24,963	24,060
Provision for loan losses	100	175	650	775
Net interest income after provision	8,324	7,891	24,313	23,285
NON-INTEREST INCOME:
Service charges	1,281	1,401	3,806	3,782
Loan service fee income, net	60	(26)	234	23
Trust department income	304	272	879	796
Gain on sale of available for sale securities, net	60	40	103	317
Gain (loss) on trading assets	(15)	(52)	36	48
Gain on sale of loans	415	533	1,456	1,289
Brokerage income	215	168	589	602
Debit card interchange income	763	699	2,274	2,053
Gain on bank premises			1,200	4
Other	88	201	239	218
Total other income	3,171	3,236	10,816	9,132
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,592	4,540	13,545	13,472
Occupancy expenses	935	974	2,884	2,831
Repossession expenses, net	104	79	289	222
FDIC Insurance	86	106	274	444
Legal and professional fees	285	423	762	1,314
Data processing	409	396	1,309	1,249
Debit card expenses	486	391	1,304	1,078
Amortization expense of intangible assets, excluding mortgage servicing right	38	45	124	201
Advertising and marketing	212	225	636	675
Taxes other than payroll, property and income	304	282	904	836
Telephone	83	77	342	262
Postage	92	88	270	278
Loan fees	40	64	151	155
Other	669	1,064	2,276	2,536
Total other expenses	8,335	8,754	25,070	25,553
Income before taxes	3,160	2,373	10,059	6,864
Income taxes	568	8	1,920	580
Net income	2,592	2,365	8,139	6,284
Other comprehensive income, net of tax:
Change in unrealized gains on securities, net of tax	(348)	(800)	1,821	3,243
Comprehensive Income	$ 2,244	$ 1,565	$ 9,960	$ 9,527
Earnings per share:
Basic (in dollars per share)	$ 0.87	$ 0.79	$ 2.74	$ 2.10
Diluted (in dollars per share)	0.87	0.79	2.74	2.10
Dividends per share (in dollars per share)	$ 0.29	$ 0.27	$ 0.87	$ 0.81

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income/(Loss)	Total
Beginning Balance at Dec. 31, 2015			$ 359
Increase (Decrease) in Stockholders' Equity
Net income				$ 6,284
Ending Balance at Sep. 30, 2016			3,602
Beginning Balance at Jun. 30, 2016			4,402
Increase (Decrease) in Stockholders' Equity
Net income				$ 2,365
Ending Balance at Sep. 30, 2016			3,602
Increase (Decrease) in Stockholders' Equity
Common stock, par value (in dollars per share)				$ 0
Beginning Balance at Dec. 31, 2016	$ 20,767	$ 73,161	(956)	$ 92,972
Balances (in shares) at Dec. 31, 2016	2,973,232
Increase (Decrease) in Stockholders' Equity
Common stock issued	$ 64			64
Common stock issued (in shares)	7,409
Stock compensation expense	$ 121			121
Common stock purchased and retired	$ (63)	(200)		(263)
Common stock purchased and retired (in shares)	(9,030)
Other comprehensive income			1,821	1,821
Net income		8,139		8,139
Dividends declared		(2,585)		(2,585)
Ending Balance at Sep. 30, 2017	$ 20,889	78,515	865	100,269
Balances (in shares) at Sep. 30, 2017	2,971,611
Beginning Balance at Jun. 30, 2017			1,213
Increase (Decrease) in Stockholders' Equity
Net income				2,592
Ending Balance at Sep. 30, 2017	$ 20,889	$ 78,515	$ 865	$ 100,269
Balances (in shares) at Sep. 30, 2017	2,971,611
Increase (Decrease) in Stockholders' Equity
Common stock, par value (in dollars per share)				$ 0

CONSOLIDATED STATEMENTS OF CHA6

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (unaudited)	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Common stock issued - employee stock grants (in shares)	5,423
Common stock, forfeited (in shares)	1,152
Common stock issued - director stock awards (in shares)	1,386
Common stock issued - director stock options exercised (in shares) | $	$ 600
Dividends per share (in dollars per share) | $ / shares	$ 0.87

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows From Operating Activities
Net Income	$ 8,139	$ 6,284
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	514	985
Securities amortization (accretion), net	794	854
Stock based compensation expense	121	117
Provision for loan losses	650	775
Securities available for sale gains, net	(103)	(317)
Net change in trading assets	(122)	(165)
Originations of loans held for sale	(46,559)	(43,331)
Proceeds from sale of loans	47,423	42,345
Losses (gains) on sale of bank premises and equipment	(1,200)	(4)
Losses (gains) on other real estate	(11)	(163)
Gain on sale of loans	(1,456)	(1,289)
Write-downs of other real estate, net	141	131
Changes in:
Interest receivable	(70)	(6)
Other assets	4	461
Interest payable	104	81
Deferred taxes	12	1,663
Other liabilities	(354)	(2,425)
Net cash from operating activities	8,027	5,996
Cash Flows From Investing Activities
Net change in interest bearing time deposits	3,199	(155)
Purchases of securities available for sale	(59,235)	(61,876)
Proceeds from sales of securities available for sale	14,559	23,888
Proceeds from principal payments, maturities and calls securities available for sale	30,570	50,987
Net change in loans	5,048	(35,688)
Purchases of bank premises and equipment	(2,270)	(667)
Proceeds from the sale of bank premises and equipment	2,062	4
Proceeds from the sale of other real estate	922	734
Net cash used in investing activities	(5,145)	(22,773)
Cash Flows From Financing Activities:
Net change in deposits	(54,602)	(24,783)
Net change in repurchase agreements	3,197	5,037
Net change in federal funds purchased	17,302	10,517
Net change in short-term Federal Home Loan Bank advances	8,530	10,000
Proceeds from long-term Federal Home Loan Bank advances	13,000	15,000
Repayment of long-term Federal Home Loan Bank advances	(11,835)	(6,660)
Repayment of note payable	(328)	(600)
Proceeds from issuance of common stock	64	49
Purchase of common stock	(263)	(296)
Dividends paid	(2,585)	(2,426)
Net cash (used in) from financing activities	(27,520)	5,838
Net change in cash and cash equivalents	(24,638)	(10,939)
Cash and cash equivalents at beginning of period	43,250	28,048
Cash and cash equivalents at end of period	18,612	17,109
Supplemental disclosures of cash flow information Cash paid during the year for:
Interest expense	3,612	3,249
Income taxes	1,600	800
Supplemental disclosures of non-cash investing activities
Real estate acquired through foreclosure	$ 1,897	$ 235

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial information presented as of any date other than December 31 has been prepared from the Company’s books and records without audit. The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain financial information that is normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but is not required for interim reporting purposes, has been condensed or omitted. There have been no significant changes to the Company’s accounting and reporting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of such financial statements, have been included. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (“Kentucky Bancshares”, the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation. Nature of Operations : As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance. Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements. Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income. Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity. Adoption of New Accounting Standards ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Issued in August 2016, ASU 2016-15 provides guidance to reduce the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of ASU 2016-15 provide guidance on eight specific cash flow: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon bonds; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. The amendments of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Management has evaluated the amendments of ASU 2016-15 and does not believe that adoption of this ASU will impact Kentucky Bancshares existing presentation of the applicable cash receipts and cash payments on its consolidated statement of cash flows. ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 will add Financial Accounting Standards Board “FASB” ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a writedown. The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-13 during the first quarter of 2020. Kentucky Bancshares has established a steering committee which includes the appropriate members of management to evaluate the impact this ASU will have on the Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments. ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions. The amendments of ASU 2016-09 include: (i) requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement; (ii) requiring excess tax benefits to be classified along with other income tax cash flows as an operating activity on the statement of cash flow; (iii) allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that expect to vest or account for forfeitures when they occur; (iv) change the threshold to qualify for equity classification to permit withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) requiring that cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The amendments of ASU 2016-09 became effective for Kentucky Bancshares on January 1, 2017 and did not have a material impact on Kentucky Bancshares consolidated financial statements. The Company has made an entity-wide accounting policy election to account for forfeitures of stock awards as they occur. Changes to Kentucky Bancshares consolidated statement of cash flows required by the amendments of ASU 2016-09 are incorporated into the presentation in the Quarterly Report on Form 10-Q for the three month and nine month periods ending September 30, 2017. ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 was issued by the FASB to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The amendments of ASU 2016-02 are effective for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-02 beginning in the first quarter of 2019. At adoption, Kentucky Bancshares will recognize a lease asset and a corresponding lease liability on its consolidated balance sheet for its total lease obligation measured on a discounted basis. As of September 30, 2017, all leases in which Kentucky Bancshares was the lessee were classified as operating leases. Kentucky Bancshares does not anticipate any material impact to its consolidated statements of income, balance sheet or regulatory capital as a result of the adoption of this ASU as the Company has an immaterial amount of leases in which it is the lessee. ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the FASB Accounting Standards Codification).” Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) eliminating the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) requiring the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requiring an entity that has elected the fair value option to measure the fair value of a liability to present separately in other comprehensive income the portion of the change in the fair value resulting from a change in the instrument-specific credit risk; (vi) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017. Kentucky Bancshares plans to adopt the amendments of ASU 2016-01 during the first quarter of 2018. Management has evaluated the impact this ASU will have on the Company’s consolidated financial statements and does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financials statements. ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 will add FASB ASC Topic 606, “Revenue from Contracts with Customers,” and will supersede revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” as well as certain cost guidance in FASB ASC Topic 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts.” ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services are transferred to the customer. ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application of (1) the amount by which each financial statement line item is affected in the current reporting period, as compared to the guidance that was in effect before the change, and (2) an explanation of the reasons for significant changes. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year. ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017. All subsequently issued ASUs which provide additional guidance and clarifications to various aspects of FASB ASC Topic 606 will become effective when the amendments of ASU 2014-09 become effective. Kentucky Bancshares plans to adopt these amendments during the first quarter of 2018. Management is continuing to evaluate the impact ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements as well as the most appropriate transition method of application. Based on this evaluation to date, Management has determined that the majority of the revenues earned by Kentucky Bancshares are not within the scope of ASU 2014-09. Management also believes that for most revenue streams within the scope of ASU 2014-09, the amendments will not change the timing of when the revenue is recognized. Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements, focusing on noninterest income sources within the scope of ASU 2014-09 as well as new disclosures required by these amendments; however, the adoption of ASU 2014‑09 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2019, which for Kentucky Bancshares will be effective for the fiscal year beginning January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements. ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities : In March 2017, the FASB issued ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This ASU amends the amortization period for certain purchased callable debt securities held at a premium. It shortens the amortization period for the premium to the earliest call date. Under current U.S. GAAP, premiums on callable debt securities generally are amortized to the maturity date. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, which for Kentucky Bancshares will be the fiscal year beginning January 1, 2019. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a cons ensus of the FASB Emerging Issues Task Force): Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Update 2017-01 - Busi ness Combinations (Topic 805): Clarifying the Definition of a Business: The amendments in this ASU are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, which for Kentucky Bancshares will be the fiscal year beginning January 1, 2018, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting: In May 2017, the FASB issued ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU amends the guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." Issued in August 2017, ASU 2017-12 aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The amendments in ASU 2017-12 aim to better align an entity's risk management activities and financial reporting for hedging relationships by expanding and refining hedge accounting for both non-financial and financial risk components and aligning the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in ASU 2017-12 (i) permit hedge accounting for risk components in hedging relationships involving nonfinancial risk and interest rate risk; (ii) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (iii) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (iv) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-country basis spread from the assessment of hedge effectiveness. The amendments of ASU 2017-12 also include targeted improvements intended to simplify the application of hedge accounting. The amendments of ASU 2017-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, which for Kentucky Bancshares is January 1, 2019. All transition requirements and elections must be applied to all hedging relationships existing at the date of adoption. Kentucky Bancshares plans to adopt ASU 2017-12 during the first quarter of 2019 using the required modified retrospective transition method. Kentucky Bancshares is currently not impacted by ASU 2017-12. However, if the Company does become involved with derivatives or hedge accounting, the Company will recognize the cumulative effect of the change, if any, in the beginning balance of each affected component of equity as of January 1, 2019. The adoption of ASU 2017-12 is not expected to have a material impact on the Company’s consolidated financial statements.

SECURITIES

SECURITIES	9 Months Ended
	Sep. 30, 2017
SECURITIES
SECURITIES	2. SECURITIES AVAILABLE FOR SALE Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale September 30, 2017 U. S. government agencies $ 30,391 $ 448 $ (179) $ 30,660 States and political subdivisions 100,195 2,254 (158) 102,291 Mortgage-backed - residential 157,739 330 (1,406) 156,663 Equity securities 320 22 — 342 Total $ 288,645 $ 3,054 $ (1,743) $ 289,956 December 31, 2016 U. S. government agencies $ 36,454 $ 373 $ (299) $ 36,528 States and political subdivisions 90,117 1,731 (716) 91,132 Mortgage-backed - residential 148,327 120 (2,677) 145,770 Equity securities 320 20 — 340 Total $ 275,218 $ 2,244 $ (3,692) $ 273,770 The amortized cost and fair value of securities September 30, 2017 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately. Further discussion concerning Fair Value Measurements can be found in Note 9. Amortized Fair Cost Value Due in one year or less $ 384 $ 384 Due after one year through five years 25,963 26,669 Due after five years through ten years 40,893 41,554 Due after ten years 63,346 64,344 130,586 132,951 Mortgage-backed - residential 157,739 156,663 Equity 320 342 Total $ 288,645 $ 289,956 Proceeds from sales of securities during the first nine months of 2017 and 2016 were $14.6 and $23.9 million. Gross gains of $105 thousand and $317 thousand and gross losses of $2 thousand and $0 were realized on those sales, respectively. The tax provision related to these realized net gains was $35 thousand and $108 thousand, respectively. Proceeds from sales of securities during the three months ended September 30, 2017 and September 30, 2016 were $10.5 million and $2.5 million. Gross gains of $60 thousand and $40 thousand and gross losses of $2 thousand and $0 were realized on those sales, respectively. The tax provision related to these realized net gains was $20 thousand and $14 thousand, respectively. Securities with unrealized losses at September 30, 2017 and at December 31, 2016 not recognized in income are as follows: September 30, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ $ 6,056 $ (100) $ 21,673 $ (179) States and municipals 2,271 (48) 18,720 (158) Mortgage-backed - residential 54,303 (385) 44,469 (1,021) 98,772 (1,406) Total temporarily impaired $ 86,369 $ (574) $ 52,796 $ (1,169) $ 139,165 $ (1,743) December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 28,202 $ (299) $ — $ — $ 28,202 $ (299) States and municipals 27,834 (716) — — 27,834 (716) Mortgage-backed - residential 119,802 (1,938) 13,652 (739) 133,454 (2,677) Total temporarily impaired $ 175,838 $ (2,953) $ 13,652 $ (739) $ 189,490 $ (3,692) The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. In analyzing an issuer’s financial condition, we may consider many factors including, (1) whether the securities are issued by the federal government or its agencies, (2) whether downgrades by bond rating agencies have occurred, (3) the results of reviews of the issuer’s financial condition and near-term prospects, (4) the length of time and the extent to which the fair value has been less than cost, and (5) whether we intend to sell the investment security or more likely than not will be required to sell the investment security before its anticipated recovery. Unrealized losses on securities included in the tables above have not been recognized into income because (1) all rated securities are investment grade and are of high credit quality, (2) management does not intend to sell and it is more likely than not that management would not be required to sell the securities prior to their anticipated recovery, (3) management believes the decline in fair value is largely due to changes in interest rates and (4) management believes the declines in fair value are temporary. The Company believes the fair value will recover as the securities approach maturity. TRADING ASSETS The trading assets, which totaled $5.7 million at September 30, 2017 and $5.6 million at December 31, 2016, are primarily comprised of cash and cash equivalents and municipal securities which are generally held for 60 days or less.

LOANS

LOANS	9 Months Ended
	Sep. 30, 2017
LOANS
LOANS	3. Loans at period-end are as follows: (in thousands) 9/30/2017 12/31/2016 Commercial $ 75,061 $ 77,436 Real estate construction 34,289 29,169 Real estate mortgage: 1-4 family residential 242,152 244,638 Multi-family residential 41,498 47,199 Non-farm & non-residential 179,399 176,024 Agricultural 58,930 62,491 Consumer 17,520 18,867 Other 116 183 Total $ 648,965 $ 656,007 Activity in the allowance for loan losses for the nine month and three month periods indicated was as follows: Nine Months Ended September 30, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 789 $ (35) $ 17 $ 161 $ 932 Real estate Construction 564 — 1 120 685 Real estate mortgage: 1-4 family residential 2,301 (203) 8 248 2,354 Multi-family residential 581 — 10 39 630 Non-farm & non-residential 1,203 (78) — 304 1,429 Agricultural 856 — 47 (420) 483 Consumer 547 (128) 34 80 533 Other 60 (682) 573 91 42 Unallocated 640 — — 27 667 $ 7,541 $ (1,126) $ 690 $ 650 $ 7,755 Three Months Ended September 30, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 1,006 $ (20) $ 2 $ (56) $ 932 Real estate construction 584 — — 101 685 Real estate mortgage: 1-4 family residential 2,575 (170) 3 (54) 2,354 Multi-family residential 645 — 3 (18) 630 Non-farm & non-residential 1,322 (78) — 185 1,429 Agricultural 504 — 19 (40) 483 Consumer 561 (26) 6 (8) 533 Other 76 (214) 172 8 42 Unallocated 685 — — (18) 667 $ 7,958 $ (508) $ 205 $ 100 $ 7,755 Nine Months Ended September 30, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 486 $ — $ 37 $ 164 $ 687 Real estate Construction 411 — 153 Real estate mortgage: 1-4 family residential 2,081 (90) 8 252 2,251 Multi-family residential 458 — 7 576 Non-farm & non-residential 1,213 — 355 (355) 1,213 Agricultural 678 (3) 35 118 828 Consumer 525 (210) 77 163 555 Other 60 (705) 583 62 Unallocated 609 — — 654 $ 6,521 $ (1,008) $ 1,117 $ 775 $ 7,405 Three Months Ended September 30, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 666 $ — $ 3 $ 18 $ 687 Real estate Construction 552 — 2 25 579 Real estate mortgage: 1-4 family residential 2,304 (26) 1 (28) 2,251 Multi-family residential 507 — 3 66 576 Non-farm & non-residential 1,158 — 82 (27) 1,213 Agricultural 801 (3) 12 18 828 Consumer 550 (47) 7 45 555 Other 50 (206) 143 75 62 Unallocated 671 — — (17) 654 $ 7,259 $ (282) $ 253 $ 175 $ 7,405 The following tables present the balance in the allowance for loan losses and the recorded investment (excluding accrued interest receivable amounting to $2.4 million as of September 30, 2017 and $2.4 million at December 31, 2016) in loans by portfolio segment and based on impairment method as of September 30, 2017 and December 31, 2016: Individually Collectively Purchased As of September 30, 2017 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 932 $ — $ 932 Real estate construction — 685 — 685 Real estate mortgage: — 1-4 family residential 68 2,286 — 2,354 Multi-family residential — 630 — 630 Non-farm & non-residential — 1,429 — 1,429 Agricultural — 483 — 483 Consumer — 533 — 533 Other — 42 — 42 Unallocated — 667 — 667 $ 68 $ 7,687 $ — $ 7,755 Loans: Commercial $ — $ 75,061 $ — $ 75,061 Real estate construction — 34,289 — 34,289 Real estate mortgage: 1-4 family residential 420 240,836 896 242,152 Multi-family residential — 40,924 574 41,498 Non-farm & non-residential 1,133 178,263 3 179,399 Agricultural 286 58,460 184 58,930 Consumer — 17,520 — 17,520 Other — 116 — 116 $ 1,839 $ 645,469 $ 1,657 $ 648,965 Individually Collectively Purchased As of December 31, 2016 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 789 $ — $ 789 Real estate construction — 564 — 564 Real estate mortgage: 1-4 family residential 99 2,202 — 2,301 Multi-family residential — 581 — 581 Non-farm & non-residential 15 1,188 — 1,203 Agricultural 427 429 — 856 Consumer — 547 — 547 Other — 60 — 60 Unallocated — 640 — 640 $ 541 $ 7,000 $ — $ 7,541 Loans: Commercial $ 97 $ 77,339 $ — 77,436 Real estate construction 153 29,016 — 29,169 Real estate mortgage: 1-4 family residential 2,704 240,906 1,028 244,638 Multi-family residential — 46,637 562 47,199 Non-farm & non-residential 1,725 174,154 145 176,024 Agricultural 3,315 58,998 178 62,491 Consumer — 18,867 — 18,867 Other — 183 — 183 Total $ 7,994 $ 646,100 $ 1,913 $ 656,007 The following table presents loans individually evaluated for impairment by class of loans as of and for the nine months ended September 30, 2017 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Non-farm & non-residential $ 1,133 $ 1,133 $ — $ 1,243 $ $ 42 Agricultural 286 286 — 410 9 9 With an allowance recorded: Real estate mortgage: 1-4 family residential 420 420 68 1,045 8 8 Total $ 1,839 $ 1,839 $ 68 $ 2,699 $ 59 $ 59 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the nine months ended September 30, 2016: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Construction $ 171 $ 37 $ 37 Agricultural 436 21 21 With an allowance recorded: Real estate mortgage: 1-4 family residential 989 47 47 Non-farm & non-residential 1,983 70 70 Agricultural 3,868 — — Total $ 7,447 $ 175 $ 175 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commercial $ $ $ — $ $ $ Real-estate construction Real-estate mortgage: 1-4 family residential Non-farm & non-residential 606 606 — 488 — — Agricultural 654 654 — 561 — — With an allowance recorded: Real estate mortgage 1-4 family residential 2,098 2,098 99 1,590 56 56 Non-farm & non-residential 1,725 1,725 15 2,303 71 71 Agricultural 2,661 2,661 427 3,309 25 25 Total $ 7,994 $ 7,994 $ 541 $ 8,793 $ 191 $ 191 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present loans individually evaluated for impairment by class of loans for the three months ended September 30, 2017 and September 30, 2016: Three Months Ending September 30, 2017 Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Non-farm & non-residential $ 2,431 $ $ 17 Agricultural 491 2 With an allowance recorded: Real estate mortgage: 1-4 family residential 455 1 1 $ 3,377 $ 20 $ 20 Three Months Ending September 30, 2016 Average Interest Cash Basis Recorded Income Interest Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Construction $ 167 $ 10 $ 10 Agricultural 654 — — With an allowance recorded: Real estate mortgage: 1-4 family residential 949 17 17 Non-farm & non-residential 2,094 21 21 Agricultural 3,824 — — Total $ 7,688 $ 48 $ 48 The following tables present the recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans as of September 30, 2017 and December 31, 2016: Loans Past Due Over 90 Days As of September 30, 2017 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ — $ 32 $ — Real estate construction — 67 — Real estate mortgage: 1-4 family residential 1,213 47 — Non-farm & non-residential — — — Agricultural 150 — — Consumer 30 5 — Total $ 1,393 $ 151 $ — Loans Past Due Over 90 Days As of December 31, 2016 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 3 $ 11 $ — Real estate construction — 153 — Real estate mortgage: 1-4 family residential 2,725 31 338 Multi-family residential 25 — — Non-farm & non-residential 272 — 1,725 Agricultural 1,541 724 — Consumer — 8 — Total $ 4,566 $ 927 $ 2,063 Nonaccrual loans secured by real estate make up 97.0% of the total nonaccrual loan balances at September 30, 2017. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected as scheduled in the loan agreement. Nonaccrual loans are loans for which payments in full of principal or interest is not expected or which principal or interest has been in default for a period of 90 days or more unless the asset is both well secured and in the process of collection. Other impaired loans may be loans showing signs of weakness or interruptions in cash flow, but ultimately are current or less than 90 days past due with respect to principal and interest and for which we anticipate full payment of principal and interest but not in accordance with contractual terms. Additional factors considered by management in determining impairment and non-accrual status include payment status, collateral value, availability of current financial information, and the probability of collecting all contractual principal and interest payments. The following tables present the aging of the recorded investment in past due and non-accrual loans as of September 30, 2017 and December 31, 2016 by class of loans: 30–59 60–89 Greater than Total As of September 30, 2017 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 95 $ — $ 32 $ — $ 127 $ 74,934 Real estate construction — — 67 — 67 34,222 Real estate mortgage: 1-4 family residential 1,512 706 47 1,213 3,478 238,674 Multi-family residential — — — — — 41,498 Non-farm & non-residential 192 — — — 192 179,207 Agricultural 151 — — 150 301 58,629 Consumer 95 10 5 30 140 17,380 Other — — — — — 116 Total $ 2,045 $ 716 $ 151 $ 1,393 $ 4,305 $ 644,660 30–59 60–89 Greater than Total As of December 31, 2016 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 54 $ 45 $ 11 $ 3 $ 113 $ 77,323 Real estate construction — — 153 — 153 29,016 Real estate mortgage: 1-4 family residential 2,310 228 31 2,725 5,294 239,344 Multi-family residential 391 3 — 25 419 46,780 Non-farm & non-residential 159 61 — 272 492 175,532 Agricultural 647 61 724 1,541 2,973 59,518 Consumer 97 37 8 — 142 18,725 Other — — — — — 183 Total $ 3,658 $ 435 $ 927 $ 4,566 $ 9,586 $ 646,421 Troubled Debt Restructurings: Management periodically reviews renewals and modifications of previously identified TDRs, for which there was no principal forgiveness, to consider if it is appropriate to remove the TDR classification. If the borrower is no longer experiencing financial difficulty and the renewal/modification did not contain a concessionary interest rate or other concessionary terms, management considers the potential removal of the TDR classification. If deemed appropriate based upon current underwriting, the TDR classification is removed as the borrower has complied with the terms of the loan at the date of renewal/modification and there was a reasonable expectation that the borrower will continue to comply with the terms of the loan after the date of the renewal/modification. Additionally, TDR classification can be removed in circumstances in which the Company performs a non-concessionary re-modification of the loan at terms considered to be at market for loans with comparable risk and management expects the borrower will continue to perform under the re-modified terms based on the borrower's past history of performance. In July 2017, the TDR classification was removed from one loan that met the requirements as discussed above. This loans totaled $1.7 million at December 31, 2016. This loan is no longer evaluated individually for impairment. The Company had no loans classified as troubled debt restructurings as of September 30, 2017. The Company allocated $40 thousand for specific reserves to customers whose loan terms had been modified in troubled debt restructuring as of December 31, 2016. The Company has not committed to lend additional amounts as of September 30, 2017 and December 31, 2016 to customers with outstanding loans that are classified as troubled debt restructurings. No loans were modified as troubled debt restructurings during the first nine months ended of 2017 or 2016. Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: Special Mention. Loans classified as special mention have one or more potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined and documented weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: As of September 30, 2017 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 73,482 $ 1,537 $ 42 $ — Real estate construction 34,289 — — — Real estate mortgage: 1-4 family residential 233,723 3,806 4,577 46 Multi-family residential 38,195 3,303 — — Non-farm & non-residential 171,052 7,275 1,072 — Agricultural 55,865 2,258 807 — Total $ 606,606 $ 18,179 $ 6,498 $ 46 As of December 31, 2016 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 76,346 $ 1,078 $ 12 $ — Real estate construction 28,577 — 592 — Real estate mortgage: 1-4 family residential 232,969 4,031 7,627 11 Multi-family residential 43,681 2,617 901 — Non-farm & non-residential 167,451 8,185 388 — Agricultural 58,155 1,367 2,969 — Total $ 607,179 $ 17,278 $ 12,489 $ 11 For consumer loans, the Company evaluates the credit quality based on the aging of the recorded investment in loans, which was previously presented. Non-performing consumer loans are loans which are greater than 90 days past due or on non-accrual status, and total $35 thousand at September 30, 2017 and $8 thousand at December 31, 2016.

REAL ESTATE OWNED

REAL ESTATE OWNED	9 Months Ended
	Sep. 30, 2017
REAL ESTATE OWNED
REAL ESTATE OWNED	4. Activity in real estate owned, net was as follows: Nine Months Ended September 30, 2017 2016 Beginning of year $ 1,824 $ 2,347 Additions 1,897 193 Sales (911) (571) Fair value adjustments (141) (131) End of period $ 2,669 $ 1,838 Activity in the valuation allowance was as follows: 2017 2016 Beginning of year $ 803 $ 616 Fair value adjustments 141 131 Reductions from sale (46) — End of Period $ 898 $ 747 Expenses related to foreclosed assets include: Nine Months Ended September 30, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ (11) $ (163) Fair value adjustments 141 131 Operating expenses, net of rental income 148 91 Repossession expense, net 289 222 Net expense, net of gain or loss on sales, for the period $ 278 $ 59 Three Months Ended September 30, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ 6 $ (163) Fair value adjustments 103 46 Operating expenses, net of rental income 1 33 Repossession expense, net 104 79 Net expense, net of gain or loss on sales, for the period $ 110 $ (84)

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2017
EARNINGS PER SHARE
EARNINGS PER SHARE	5. Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock based compensation agreements. The factors used in the earnings per share computation follow: Nine Months Ended September 30, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 8,139 $ 6,284 Weighted average common shares outstanding 2,955 2,975 Basic earnings per share $ 2.74 $ 2.10 Diluted Earnings Per Share Net Income $ 8,139 $ 6,284 Weighted average common shares outstanding 2,955 2,975 Weighted average common and dilutive potential common shares outstanding 2,956 2,975 Diluted earnings per share $ 2.74 $ 2.10 Three Months Ended September 30, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 2,592 $ 2,365 Weighted average common shares outstanding 2,955 2,976 Basic earnings per share $ 0.87 $ 0.79 Diluted Earnings Per Share Net Income $ 2,592 $ 2,365 Weighted average common shares outstanding 2,955 2,976 Weighted average common and dilutive potential common shares outstanding 2,956 2,976 Diluted earnings per share $ 0.87 $ 0.79 Stock options for 0 shares of common stock for the nine and three months ended September 30, 2017 and 1,200 shares of common stock for the nine and three months ended September 30, 2016 were excluded from diluted earnings per share because their impact was antidilutive.

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2017
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION	6. We have four stock based compensation plans as described below. Two Stock Option Plans Under its expired 1999 Employee Stock Option Plan, the Company has granted certain officers and key employees stock option awards which vest and become fully exercisable at the end of five years and provided for issuance of up to 100,000 options. Under the expired 1993 Non-Employee Directors Stock Ownership Incentive Plan, the Company also granted certain directors stock option awards which vest and become fully exercisable immediately and provided for issuance of up to 20,000 options. For each Stock Option Plan, the exercise price of each option which has a ten year life, was equal to the market price of the Company’s stock on the date of grant. Summary of activity in the stock option plan for the first nine months of 2017 follows: Weighted Weighted Average Aggregate Average Remaining Intrinsic Exercise Contractual Value Shares Price Term (in thousands) Outstanding, beginning of year 1,200 $ 31.00 Granted — — — Forfeited or expired — — — Exercised (600) 31.00 Outstanding, end of period 600 $ 31.00 5 months $ 6 Vested and expected to vest 600 $ 31.00 5 months $ 6 Exercisable, end of period 600 $ 31.00 5 months $ 6 (1) Aggregate intrinsic value in thousands As of September 30, 2017, there was $0 of total unrecognized compensation cost related to nonvested stock options granted under the Plan. Since both stock option plans have expired, neither plan allows for additional options to be issued. 2005 Restricted Stock Grant Plan On May 10, 2005, the Company’s stockholders approved a restricted stock grant plan. Total shares issuable under the plan were 50,000. There were no shares issued during the first nine months of 2017 or 2016. The plan is now expired and no additional shares will be issued from the 2005 plan. There were 117 shares forfeited during the first nine months of 2017 and 639 shares were forfeited during the first nine months 2016. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 10,636 $ 253,518 $ 23.84 Granted — — — Vested (4,348) (97,747) 22.48 Forfeited (117) (3,004) — Nonvested at September 30, 2017 6,171 $ 152,767 $ 24.76 (1) Grant date fair value in thousands As of September 30, 2017, there was $99 thousand of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 1.8 years. As of September 30, 2017, no additional shares are available for issuance under the restricted stock grant plan. 2009 Stock Award Plan On May 13, 2009, the Company’s stockholders approved a stock award plan that provides for the granting of both incentive and nonqualified stock options and other share based awards. Total shares issuable under the plan are 150,000. There were 6,575 shares issued during the first nine months of 2017 and 6,170 shares were issued during the first nine months of 2016. There were 951 shares forfeited during the first nine months of 2017 and 360 shares were forfeited during the first nine months of 2016. A summary of changes in the Company’s nonvested shares for the year follows: Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 7,297 $ 213,853 $ 29.31 Granted 6,575 213,688 32.50 Vested (1,648) (47,988) 29.12 Forfeited (951) (30,463) 32.03 Nonvested at September 30, 2017 11,273 $ 349,090 $ 30.97 (1) Grant date fair value in thousands As of September 30, 2017, there was $292 thousand of total unrecognized compensation cost related to nonvested shares granted under the restricted stock grant plan. The cost is expected to be recognized over a weighted-average period of 3.7 years. As of September 30, 2017, 133,368, shares are still available for issuance.

REPURCHASE AGREEMENTS

REPURCHASE AGREEMENTS	9 Months Ended
	Sep. 30, 2017
REPURCHASE AGREEMENTS.
REPURCHASE AGREEMENTS	7. Repurchase agreements totaled $24.1 million at September 30, 2017. Of this, $18.1 million were overnight obligations and $6.0 million had terms extending through May 2021 and a weighted remaining average life of 1.6 years. The Company pledged agencies and mortgage-backed securities with a carrying amount of $30.5 million to secure repurchase agreements as of September 30, 2017.

OTHER BORROWINGS

OTHER BORROWINGS	9 Months Ended
	Sep. 30, 2017
OTHER BORROWINGS
OTHER BORROWINGS	8. On July 20, 2015, the Company borrowed $5 million which had an outstanding balance of $3.8 million at September 30, 2017. The term loan has a fixed interest rate of 5.02%, requires quarterly principal and interest payments, matures July 20, 2025 and is collateralized by Kentucky Bank stock. The maturity schedule for the term loan as of September 30, 2017 is as follows (in thousands): 2017 $ 81 2018 399 2019 419 2020 441 2021 463 Thereafter 1,959 $ 3,762 In addition, the Company also had $17.3 million in federal funds purchased at September 30, 2017.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2017
FAIR VALUE MEASUREMENTS.
FAIR VALUE MEASUREMENTS	9. ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value, establishes a framework for measuring fair value, and sets forth disclosures about fair value measurements. ASC Topic 825, “Financial Instruments”, allows entities to choose to measure certain financial assets and liabilities at fair value. The Company has not elected the fair value option for any financial assets or liabilities. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This Topic describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate the fair value: Investment Securities and Trading Assets : The fair values for available for sale investment securities and trading assets are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Impaired Loans : The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent third party real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Adjustments totaled $68 thousand the first nine months of 2017 and $0 for the first nine months of 2016 and resulted in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy. Other Real Estate Owned : Assets acquired through or instead of loan foreclosure and classified as other real estate owned (OREO) are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach with data from comparable properties. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments were $141 thousand for the nine months ended September 30, 2017 and $131 thousand for the nine months ended September 30, 2016, and $103 thousand for the three months ended September 30, 2017 and $46 thousand for the three months ended September 30, 2016, and resulted in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. Mortgage Servicing Rights : Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Assets and Liabilities Measured on a Recurring Basis : Available for sale investment securities and trading assets are the Company’s only balance sheet items that meet the disclosure requirements for instruments measured at fair value on a recurring basis. Disclosures are as follows in the tables below. Fair Value Measurements at September 30, 2017 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 30,660 $ — $ 30,660 $ — States and municipals 102,291 — 102,291 — Mortgage-backed - residential 156,663 — 156,663 — Equity securities 342 342 — — Trading Assets 5,714 1,959 3,755 — Total $ 295,670 $ 2,301 $ 293,369 $ — Fair Value Measurements at December 31, 2016 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 36,528 $ — $ 36,528 $ — States and municipals 91,132 — 91,132 — Mortgage-backed - residential 145,770 — 145,770 — Equity securities 340 340 — — Trading Assets 5,592 1,608 3,984 — Total $ 279,362 $ 1,948 $ 277,414 $ — There were no transfers between level 1 and level 2 during 2017 or 2016. Assets measured at fair value on a non-recurring basis are summarized below (in thousands): Fair Value Measurements at September 30, 2017 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family Residential $ 353 $ — $ — $ 353 Other real estate owned, net: Residential 611 — — 611 Commercial 57 — — 57 Mortgage servicing rights 1,310 — — 1,310 Fair Value Measurements at December 31, 2016 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family residential $ 1,685 $ — $ — $ 1,685 Agricultural 2,234 — — 2,234 Other real estate owned, net: Residential 956 — — 956 Commercial 272 — 272 Mortgage servicing rights 1,083 — — 1,083 Impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had a carrying amount of $353 thousand, which includes a valuation allowance of $68 thousand at September 30, 2017. Impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans had a net carrying amount of $3.9 million, with a valuation allowance of $502 thousand at December 31, 2016. One new loan became impaired during the nine month and three month period ended September 30, 2017 which resulted in $68 thousand in additional provision for loan losses for impaired loans. For the nine months and three months ended September 30, 2016, no loans which became impaired during 2016, resulted in additional loan loss provision expense. Other real estate owned measured at fair value less costs to sell had a net carrying amount of $668 thousand, which is made up of the outstanding balance of $1.6 million, net of a valuation allowance of $898 thousand at September 30, 2017. Other real estate owned which was measured at fair value less costs to sell, had a net carrying amount of $1.6 million, which was made up of the outstanding balance of $2.4 million, net of a valuation allowance of $803 thousand at December 31, 2016. The Company recorded $141 thousand in write-downs of other real estate owned properties for the nine months ended September 30, 2017 and $103 thousand for the three months ended September 30, 2017. The Company recorded $131 thousand and $46 thousand in net write-downs of other real estate owned properties during the nine months and the three months ended September 30, 2016. Impaired mortgage servicing rights, which are carried at the lower of cost or fair value, were carried at their fair value of $1.3 million, which is made up of the outstanding balance of $1.4 million, net of a valuation allowance of $86 thousand at September 30, 2017. At December 31, 2016, impaired loan servicing rights were carried at their fair value of $1.1 million, which is made up of the outstanding balance of $1.2 million, net of a valuation allowance of $125 thousand. For the first nine months of 2017, the Company recorded a net recovery of prior write-downs of $40 thousand and net write-downs of $106 thousand for the nine months ended September 30, 2016. For the three months ended September 30, 2017, the Company recorded a net recovery of prior write-downs of $6 thousand compared to net write-downs of $64 thousand for the three months ended September 30, 2016. The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2017 and December 31, 2016: Range September 30, 2017 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales 0%-12% (6)% Other real estate owned: Residential sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial income approach capitalization rate 10%-10% (10)% Mortgage Servicing Rights discounted cash flow constant prepayment rates 8%-50% (11)% Range December 31, 2016 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential 1,685 sales comparison adjustment for differences between the comparable sales 0%-21% (10)% Agricultural 2,234 sales comparison adjustment for differences between the comparable sales 2%-75% (9)% Other real estate owned: Residential 956 sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial 272 income approach capitalization rate 10%-10% (10)% Mortgage Servicing Rights discounted cash flow constant prepayment rates 8%-45% (13)% Fair Value of Financial Instruments The carrying amounts and estimated fair values of financial instruments, at September 30, 2017 and December 31, 2016 are as follows: September 30, 2017: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 18,612 $ 18,612 $ — $ — $ 18,612 Interest bearing time deposits 1,830 1,830 — — 1,830 Securities available for sale 289,956 342 289,614 — 289,956 Trading assets 5,714 1,959 3,755 — 5,714 Loans held for sale 1,316 — 1,350 — 1,350 Net Loans 641,210 — — 640,915 640,915 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 3,785 — 1,338 2,447 3,785 Financial liabilities Total deposits $ 748,379 $ 559,820 $ 189,475 $ — $ 749,295 Federal funds purchased 17,302 17,302 — — 17,302 Repurchase agreements 24,070 — 24,125 — 24,125 Short-term Federal Home Loan Bank advances 8,530 — 8,532 — 8,532 Long-term Federal Home Loan Bank advances 93,665 — 88,557 — 88,557 Note payable 3,762 4,208 4,208 Subordinated debentures 7,217 — — 7,213 7,213 Interest payable 796 — 736 60 796 December 31, 2016: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 43,250 $ 43,250 $ — $ — $ 43,250 Interest bearing time deposits 5,029 5,029 — — 5,029 Securities available for sale 273,770 340 273,430 — 273,770 Trading assets 5,592 1,608 3,984 — 5,592 Loans held for sale 724 — 750 — 750 Net Loans 648,466 — — 648,234 648,234 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 3,715 — 1,334 2,381 3,715 Financial liabilities Total deposits $ 802,981 $ 607,617 $ 195,528 $ — $ 803,145 Repurchase agreements 20,873 — 21,006 — 21,006 Long-term Federal Home Loan Bank advances 92,500 — 91,015 — 91,015 Note payable 4,090 — 4,564 — 4,564 Subordinated debentures 7,217 — — 7,210 7,210 Interest payable 692 — 639 53 692 The methods and assumptions, not previously presented, used to estimate fair values are described as follows: Cash and Cash Equivalents - The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1. Interest Bearing Deposits - The carrying amounts of interest bearing deposits approximate fair values and are classified as Level 1. FHLB Stock - It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability. Loans - Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods used to estimate the fair value of loans do not necessarily represent an exit price. The fair value of mortgage loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification. Deposits - The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. Securities Sold Under Agreements to Repurchase and Other Borrowings - The carrying amounts of borrowings under repurchase agreements approximate their fair values resulting in a Level 2 classification. The carrying amount of the Company’s variable rate borrowings approximate their fair values resulting in a Level 2 classification. Federal Funds Purchased - The carrying amounts of federal funds purchased approximate fair values and are classified as Level 1. FHLB Advances, Borrowings and Subordinated Debentures - The fair values of the Company’s FHLB advances and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification. The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. Accrued Interest Receivable/Payable - The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the related asset/liability. Off-balance Sheet Instruments - Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of off-balance sheet instruments is not material.

CHANGES IN ACCUMULATED OTHER CO

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (LOSS)	9 Months Ended
	Sep. 30, 2017
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT	10. Changes in Accumulated Other Comprehensive Income by Component (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Nine Months Ended September 30, 2017 2016 Beginning Balance $ (956) $ 359 Unrealized holding gains (losses) for the period, net of tax 1,889 3,452 Reclassification adjustment for: Securities gains realized in income 103 317 Income taxes (35) (108) 68 209 Net current period other comprehensive income 1,821 3,243 Ending balance $ 865 $ 3,602 Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ended September 30, 2017 2016 Beginning Balance $ 1,213 $ 4,402 Unrealized holding gains (losses) for the period, net of tax (308) (774) Reclassification adjustment for: Securities gains realized in income, net 60 40 Income taxes (20) (14) 40 26 Net current period other comprehensive income (loss) (348) (800) Ending balance $ 865 $ 3,602 The following is significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 and September 30, 2016: September 30, 2017 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 103 Gain on sale of available for sale securities, net 35 Income taxes 68 Net income September 30, 2016 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 317 Gain on sale of available for sale securities, net 108 Income taxes 209 Net income

SUMMARY OF SIGNIFICANT ACCOUN18

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2017
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation : The consolidated financial statements include the accounts of Kentucky Bancshares, Inc. (“Kentucky Bancshares”, the “Company”, “we”, “our” or “us”), its wholly-owned subsidiaries, Kentucky Bank (the “Bank”) and KBI Insurance Company, Inc., and the Bank’s wholly-owned subsidiary, KB Special Assets Unit, LLC. Intercompany transactions and balances have been eliminated in consolidation.
Nature of Operations	Nature of Operations : As a state bank, the Bank is subject to regulation by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The Company, a bank holding company, is regulated by the Federal Reserve. KBI Insurance Company, Inc. is a subsidiary of Kentucky Bancshares, Inc. and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which provides various liability and property damage insurance policies for Kentucky Bancshares, Inc. and its related subsidiaries. KBI Insurance Company, Inc. is regulated by the State of Nevada Division of Insurance.
Estimates in the Financial Statements	Estimates in the Financial Statements : The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the financial statements.
Trading Assets	Trading Assets : The Company engages in trading activities for its own account. Securities that are held principally for resale in the near term are recorded at fair value with changes in fair value included in earnings. Interest and dividends are included in net interest income.
Loss Contingencies	Loss Contingencies : Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Reclassifications	Reclassifications : Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or stockholders’ equity.
Adoption of New Accounting Standards	Adoption of New Accounting Standards ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” Issued in August 2016, ASU 2016-15 provides guidance to reduce the diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments of ASU 2016-15 provide guidance on eight specific cash flow: (i) debt prepayment or debt extinguishment costs; (ii) settlement of zero-coupon bonds; (iii) contingent consideration payments made after a business combination; (iv) proceeds from the settlement of insurance claims; (v) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (vi) distributions received from equity method investees; (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. The amendments of ASU 2016-15 are effective for interim and annual periods beginning after December 15, 2017. Management has evaluated the amendments of ASU 2016-15 and does not believe that adoption of this ASU will impact Kentucky Bancshares existing presentation of the applicable cash receipts and cash payments on its consolidated statement of cash flows. ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Issued in June 2016, ASU 2016-13 will add Financial Accounting Standards Board “FASB” ASC Topic 326, “Financial Instruments-Credit Losses” and finalizes amendments to FASB ASC Subtopic 825-15, “Financial Instruments-Credit Losses.” The amendments of ASU 2016-13 are intended to provide financial statement users with more decision-useful information related to expected credit losses on financial instruments and other commitments to extend credit by replacing the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and, in turn, reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 does not specify the method for measuring expected credit losses, and an entity is allowed to apply methods that reasonably reflect its expectations of the credit loss estimate. Additionally, the amendments of ASU 2016-13 require that credit losses on available for sale debt securities be presented as an allowance rather than as a writedown. The amendments of ASU 2016-13 are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-13 during the first quarter of 2020. Kentucky Bancshares has established a steering committee which includes the appropriate members of management to evaluate the impact this ASU will have on the Company’s financial position, results of operations and financial statement disclosures and determine the most appropriate method of implementing the amendments in this ASU as well as any resources needed to implement the amendments. ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Issued in March 2016, ASU 2016-09 seeks to reduce complexity in accounting standards by simplifying several aspects of the accounting for share-based payment transactions. The amendments of ASU 2016-09 include: (i) requiring all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement; (ii) requiring excess tax benefits to be classified along with other income tax cash flows as an operating activity on the statement of cash flow; (iii) allowing an entity to make an entity-wide accounting policy election to either estimate the number of awards that expect to vest or account for forfeitures when they occur; (iv) change the threshold to qualify for equity classification to permit withholding up to the maximum statutory tax rates in the applicable jurisdictions; and (v) requiring that cash paid by an employer when directly withholding shares for tax-withholding purposes to be classified as a financing activity on the statement of cash flows. The amendments of ASU 2016-09 became effective for Kentucky Bancshares on January 1, 2017 and did not have a material impact on Kentucky Bancshares consolidated financial statements. The Company has made an entity-wide accounting policy election to account for forfeitures of stock awards as they occur. Changes to Kentucky Bancshares consolidated statement of cash flows required by the amendments of ASU 2016-09 are incorporated into the presentation in the Quarterly Report on Form 10-Q for the three month and nine month periods ending September 30, 2017. ASU 2016-02, “Leases (Topic 842).” Issued in February 2016, ASU 2016-02 was issued by the FASB to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and by disclosing key information about leasing arrangements. ASU 2016-02 will, among other things, require lessees to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The amendments of ASU 2016-02 are effective for interim and annual periods beginning after December 15, 2018. Kentucky Bancshares plans to adopt the amendments of ASU 2016-02 beginning in the first quarter of 2019. At adoption, Kentucky Bancshares will recognize a lease asset and a corresponding lease liability on its consolidated balance sheet for its total lease obligation measured on a discounted basis. As of September 30, 2017, all leases in which Kentucky Bancshares was the lessee were classified as operating leases. Kentucky Bancshares does not anticipate any material impact to its consolidated statements of income, balance sheet or regulatory capital as a result of the adoption of this ASU as the Company has an immaterial amount of leases in which it is the lessee. ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (An Amendment of the FASB Accounting Standards Codification).” Issued in January 2016, ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with improved decision-making information. The amendments of ASU 2016-01 include: (i) requiring equity investments, except those accounted for under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value with changes in fair value recognized in net income; (ii) requiring a qualitative assessment to identify impairment of equity investments without readily determinable fair values; (iii) eliminating the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet; (iv) requiring the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (v) requiring an entity that has elected the fair value option to measure the fair value of a liability to present separately in other comprehensive income the portion of the change in the fair value resulting from a change in the instrument-specific credit risk; (vi) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The amendments of ASU 2016-01 are effective for interim and annual periods beginning after December 15, 2017. Kentucky Bancshares plans to adopt the amendments of ASU 2016-01 during the first quarter of 2018. Management has evaluated the impact this ASU will have on the Company’s consolidated financial statements and does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financials statements. ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” Issued in May 2014, ASU 2014-09 will add FASB ASC Topic 606, “Revenue from Contracts with Customers,” and will supersede revenue recognition requirements in FASB ASC Topic 605, “Revenue Recognition,” as well as certain cost guidance in FASB ASC Topic 605-35, “Revenue Recognition – Construction-Type and Production-Type Contracts.” ASU 2014-09 provides a framework for revenue recognition that replaces the existing industry and transaction specific requirements under the existing standards. ASU 2014-09 requires an entity to apply a five-step model to determine when to recognize revenue and at what amount. The model specifies that revenue should be recognized when (or as) an entity transfers control of goods or services to a customer at the amount in which the entity expects to be entitled. Depending on whether certain criteria are met, revenue should be recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control of the goods or services are transferred to the customer. ASU 2014-09 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement in ASU 2014-09. The amendments of ASU 2014-09 may be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If the transition method of application is elected, the entity should also provide the additional disclosures in reporting periods that include the date of initial application of (1) the amount by which each financial statement line item is affected in the current reporting period, as compared to the guidance that was in effect before the change, and (2) an explanation of the reasons for significant changes. ASU 2015-14, “Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date,” issued in August 2015, defers the effective date of ASU 2014-09 by one year. ASU 2015-14 provides that the amendments of ASU 2014-09 become effective for interim and annual periods beginning after December 15, 2017. All subsequently issued ASUs which provide additional guidance and clarifications to various aspects of FASB ASC Topic 606 will become effective when the amendments of ASU 2014-09 become effective. Kentucky Bancshares plans to adopt these amendments during the first quarter of 2018. Management is continuing to evaluate the impact ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements as well as the most appropriate transition method of application. Based on this evaluation to date, Management has determined that the majority of the revenues earned by Kentucky Bancshares are not within the scope of ASU 2014-09. Management also believes that for most revenue streams within the scope of ASU 2014-09, the amendments will not change the timing of when the revenue is recognized. Management will continue to evaluate the impact the adoption of ASU 2014-09 will have on Kentucky Bancshares consolidated financial statements, focusing on noninterest income sources within the scope of ASU 2014-09 as well as new disclosures required by these amendments; however, the adoption of ASU 2014‑09 is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-04 - Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 from the goodwill impairment test. Instead, under the new guidance, an entity is to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2019, which for Kentucky Bancshares will be effective for the fiscal year beginning January 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements. ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities : In March 2017, the FASB issued ASU 2017-08 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This ASU amends the amortization period for certain purchased callable debt securities held at a premium. It shortens the amortization period for the premium to the earliest call date. Under current U.S. GAAP, premiums on callable debt securities generally are amortized to the maturity date. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2018, which for Kentucky Bancshares will be the fiscal year beginning January 1, 2019. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. ASU 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash (a cons ensus of the FASB Emerging Issues Task Force): Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Update 2017-01 - Busi ness Combinations (Topic 805): Clarifying the Definition of a Business: The amendments in this ASU are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, which for Kentucky Bancshares will be the fiscal year beginning January 1, 2018, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting: In May 2017, the FASB issued ASU 2017-09 - Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU amends the guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for interim or annual periods. The adoption of this guidance is not expected to have a material impact on Kentucky Bancshares consolidated financial statements. ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." Issued in August 2017, ASU 2017-12 aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The amendments in ASU 2017-12 aim to better align an entity's risk management activities and financial reporting for hedging relationships by expanding and refining hedge accounting for both non-financial and financial risk components and aligning the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in ASU 2017-12 (i) permit hedge accounting for risk components in hedging relationships involving nonfinancial risk and interest rate risk; (ii) change the guidance for designating fair value hedges of interest rate risk and for measuring the change in fair value of the hedged item in fair value hedges of interest rate risk; (iii) continue to allow an entity to exclude option premiums and forward points from the assessment of hedge effectiveness; and (iv) permit an entity to exclude the portion of the change in fair value of a currency swap that is attributable to a cross-country basis spread from the assessment of hedge effectiveness. The amendments of ASU 2017-12 also include targeted improvements intended to simplify the application of hedge accounting. The amendments of ASU 2017-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, which for Kentucky Bancshares is January 1, 2019. All transition requirements and elections must be applied to all hedging relationships existing at the date of adoption. Kentucky Bancshares plans to adopt ASU 2017-12 during the first quarter of 2019 using the required modified retrospective transition method. Kentucky Bancshares is currently not impacted by ASU 2017-12. However, if the Company does become involved with derivatives or hedge accounting, the Company will recognize the cumulative effect of the change, if any, in the beginning balance of each affected component of equity as of January 1, 2019. The adoption of ASU 2017-12 is not expected to have a material impact on the Company’s consolidated financial statements.

SECURITIES (Tables)

SECURITIES (Tables)	9 Months Ended
	Sep. 30, 2017
SECURITIES
Schedule of securities available for sale	Period-end securities are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Available for Sale September 30, 2017 U. S. government agencies $ 30,391 $ 448 $ (179) $ 30,660 States and political subdivisions 100,195 2,254 (158) 102,291 Mortgage-backed - residential 157,739 330 (1,406) 156,663 Equity securities 320 22 — 342 Total $ 288,645 $ 3,054 $ (1,743) $ 289,956 December 31, 2016 U. S. government agencies $ 36,454 $ 373 $ (299) $ 36,528 States and political subdivisions 90,117 1,731 (716) 91,132 Mortgage-backed - residential 148,327 120 (2,677) 145,770 Equity securities 320 20 — 340 Total $ 275,218 $ 2,244 $ (3,692) $ 273,770
Schedule of amortized cost and fair value of securities by contractual maturity	Amortized Fair Cost Value Due in one year or less $ 384 $ 384 Due after one year through five years 25,963 26,669 Due after five years through ten years 40,893 41,554 Due after ten years 63,346 64,344 130,586 132,951 Mortgage-backed - residential 157,739 156,663 Equity 320 342 Total $ 288,645 $ 289,956
Schedule of securities with unrealized losses not recognized in income	September 30, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ $ $ 6,056 $ (100) $ 21,673 $ (179) States and municipals 2,271 (48) 18,720 (158) Mortgage-backed - residential 54,303 (385) 44,469 (1,021) 98,772 (1,406) Total temporarily impaired $ 86,369 $ (574) $ 52,796 $ (1,169) $ 139,165 $ (1,743) December 31, 2016 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Description of Securities Value Loss Value Loss Value Loss U.S. Government agencies $ 28,202 $ (299) $ — $ — $ 28,202 $ (299) States and municipals 27,834 (716) — — 27,834 (716) Mortgage-backed - residential 119,802 (1,938) 13,652 (739) 133,454 (2,677) Total temporarily impaired $ 175,838 $ (2,953) $ 13,652 $ (739) $ 189,490 $ (3,692)

LOANS (Tables)

LOANS (Tables)	9 Months Ended
	Sep. 30, 2017
LOANS
Schedule of loans	(in thousands) 9/30/2017 12/31/2016 Commercial $ 75,061 $ 77,436 Real estate construction 34,289 29,169 Real estate mortgage: 1-4 family residential 242,152 244,638 Multi-family residential 41,498 47,199 Non-farm & non-residential 179,399 176,024 Agricultural 58,930 62,491 Consumer 17,520 18,867 Other 116 183 Total $ 648,965 $ 656,007
Schedule of activity in the allowance for loan losses	Nine Months Ended September 30, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 789 $ (35) $ 17 $ 161 $ 932 Real estate Construction 564 — 1 120 685 Real estate mortgage: 1-4 family residential 2,301 (203) 8 248 2,354 Multi-family residential 581 — 10 39 630 Non-farm & non-residential 1,203 (78) — 304 1,429 Agricultural 856 — 47 (420) 483 Consumer 547 (128) 34 80 533 Other 60 (682) 573 91 42 Unallocated 640 — — 27 667 $ 7,541 $ (1,126) $ 690 $ 650 $ 7,755 Three Months Ended September 30, 2017 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 1,006 $ (20) $ 2 $ (56) $ 932 Real estate construction 584 — — 101 685 Real estate mortgage: 1-4 family residential 2,575 (170) 3 (54) 2,354 Multi-family residential 645 — 3 (18) 630 Non-farm & non-residential 1,322 (78) — 185 1,429 Agricultural 504 — 19 (40) 483 Consumer 561 (26) 6 (8) 533 Other 76 (214) 172 8 42 Unallocated 685 — — (18) 667 $ 7,958 $ (508) $ 205 $ 100 $ 7,755 Nine Months Ended September 30, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 486 $ — $ 37 $ 164 $ 687 Real estate Construction 411 — 153 Real estate mortgage: 1-4 family residential 2,081 (90) 8 252 2,251 Multi-family residential 458 — 7 576 Non-farm & non-residential 1,213 — 355 (355) 1,213 Agricultural 678 (3) 35 118 828 Consumer 525 (210) 77 163 555 Other 60 (705) 583 62 Unallocated 609 — — 654 $ 6,521 $ (1,008) $ 1,117 $ 775 $ 7,405 Three Months Ended September 30, 2016 (in thousands) Beginning Ending Balance Charge-offs Recoveries Provision Balance Commercial $ 666 $ — $ 3 $ 18 $ 687 Real estate Construction 552 — 2 25 579 Real estate mortgage: 1-4 family residential 2,304 (26) 1 (28) 2,251 Multi-family residential 507 — 3 66 576 Non-farm & non-residential 1,158 — 82 (27) 1,213 Agricultural 801 (3) 12 18 828 Consumer 550 (47) 7 45 555 Other 50 (206) 143 75 62 Unallocated 671 — — (17) 654 $ 7,259 $ (282) $ 253 $ 175 $ 7,405
Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method	Individually Collectively Purchased As of September 30, 2017 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 932 $ — $ 932 Real estate construction — 685 — 685 Real estate mortgage: — 1-4 family residential 68 2,286 — 2,354 Multi-family residential — 630 — 630 Non-farm & non-residential — 1,429 — 1,429 Agricultural — 483 — 483 Consumer — 533 — 533 Other — 42 — 42 Unallocated — 667 — 667 $ 68 $ 7,687 $ — $ 7,755 Loans: Commercial $ — $ 75,061 $ — $ 75,061 Real estate construction — 34,289 — 34,289 Real estate mortgage: 1-4 family residential 420 240,836 896 242,152 Multi-family residential — 40,924 574 41,498 Non-farm & non-residential 1,133 178,263 3 179,399 Agricultural 286 58,460 184 58,930 Consumer — 17,520 — 17,520 Other — 116 — 116 $ 1,839 $ 645,469 $ 1,657 $ 648,965 Individually Collectively Purchased As of December 31, 2016 Evaluated for Evaluated for Credit (in thousands) Impairment Impairment Impaired Total Allowance for Loan Losses: Commercial $ — $ 789 $ — $ 789 Real estate construction — 564 — 564 Real estate mortgage: 1-4 family residential 99 2,202 — 2,301 Multi-family residential — 581 — 581 Non-farm & non-residential 15 1,188 — 1,203 Agricultural 427 429 — 856 Consumer — 547 — 547 Other — 60 — 60 Unallocated — 640 — 640 $ 541 $ 7,000 $ — $ 7,541 Loans: Commercial $ 97 $ 77,339 $ — 77,436 Real estate construction 153 29,016 — 29,169 Real estate mortgage: 1-4 family residential 2,704 240,906 1,028 244,638 Multi-family residential — 46,637 562 47,199 Non-farm & non-residential 1,725 174,154 145 176,024 Agricultural 3,315 58,998 178 62,491 Consumer — 18,867 — 18,867 Other — 183 — 183 Total $ 7,994 $ 646,100 $ 1,913 $ 656,007
Schedule of loans individually evaluated for impairment by class of loans	The following table presents loans individually evaluated for impairment by class of loans as of and for the nine months ended September 30, 2017 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Non-farm & non-residential $ 1,133 $ 1,133 $ — $ 1,243 $ $ 42 Agricultural 286 286 — 410 9 9 With an allowance recorded: Real estate mortgage: 1-4 family residential 420 420 68 1,045 8 8 Total $ 1,839 $ 1,839 $ 68 $ 2,699 $ 59 $ 59 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans for the nine months ended September 30, 2016: Year to Date Year to Date Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Construction $ 171 $ 37 $ 37 Agricultural 436 21 21 With an allowance recorded: Real estate mortgage: 1-4 family residential 989 47 47 Non-farm & non-residential 1,983 70 70 Agricultural 3,868 — — Total $ 7,447 $ 175 $ 175 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following table presents loans individually evaluated for impairment by class of loans as of and for the year ended December 31, 2016 (in thousands): Unpaid Allowance for Average Interest Cash Basis Principal Recorded Loan Losses Recorded Income Interest Balance Investment Allocated Investment Recognized Recognized With no related allowance recorded: Commercial $ $ $ — $ $ $ Real-estate construction Real-estate mortgage: 1-4 family residential Non-farm & non-residential 606 606 — 488 — — Agricultural 654 654 — 561 — — With an allowance recorded: Real estate mortgage 1-4 family residential 2,098 2,098 99 1,590 56 56 Non-farm & non-residential 1,725 1,725 15 2,303 71 71 Agricultural 2,661 2,661 427 3,309 25 25 Total $ 7,994 $ 7,994 $ 541 $ 8,793 $ 191 $ 191 The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. The following tables present loans individually evaluated for impairment by class of loans for the three months ended September 30, 2017 and September 30, 2016: Three Months Ending September 30, 2017 Average Interest Cash Basis Recorded Income Interest (in thousands): Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Non-farm & non-residential $ 2,431 $ $ 17 Agricultural 491 2 With an allowance recorded: Real estate mortgage: 1-4 family residential 455 1 1 $ 3,377 $ 20 $ 20 Three Months Ending September 30, 2016 Average Interest Cash Basis Recorded Income Interest Investment Recognized Recognized With no related allowance recorded: Real estate mortgage: Construction $ 167 $ 10 $ 10 Agricultural 654 — — With an allowance recorded: Real estate mortgage: 1-4 family residential 949 17 17 Non-farm & non-residential 2,094 21 21 Agricultural 3,824 — — Total $ 7,688 $ 48 $ 48
Schedule of recorded investment in nonaccrual, loans past due over 90 days still on accrual and accruing troubled debt restructurings by class of loans	Loans Past Due Over 90 Days As of September 30, 2017 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ — $ 32 $ — Real estate construction — 67 — Real estate mortgage: 1-4 family residential 1,213 47 — Non-farm & non-residential — — — Agricultural 150 — — Consumer 30 5 — Total $ 1,393 $ 151 $ — Loans Past Due Over 90 Days As of December 31, 2016 Still Troubled Debt (in thousands) Nonaccrual Accruing Restructurings Commercial $ 3 $ 11 $ — Real estate construction — 153 — Real estate mortgage: 1-4 family residential 2,725 31 338 Multi-family residential 25 — — Non-farm & non-residential 272 — 1,725 Agricultural 1,541 724 — Consumer — 8 — Total $ 4,566 $ 927 $ 2,063
Schedule of aging of the recorded investment in past due and non-accrual loans	30–59 60–89 Greater than Total As of September 30, 2017 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 95 $ — $ 32 $ — $ 127 $ 74,934 Real estate construction — — 67 — 67 34,222 Real estate mortgage: 1-4 family residential 1,512 706 47 1,213 3,478 238,674 Multi-family residential — — — — — 41,498 Non-farm & non-residential 192 — — — 192 179,207 Agricultural 151 — — 150 301 58,629 Consumer 95 10 5 30 140 17,380 Other — — — — — 116 Total $ 2,045 $ 716 $ 151 $ 1,393 $ 4,305 $ 644,660 30–59 60–89 Greater than Total As of December 31, 2016 Days Days 90 Days Past Due & Loans Not (in thousands) Past Due Past Due Past Due Non-accrual Non-accrual Past Due Commercial $ 54 $ 45 $ 11 $ 3 $ 113 $ 77,323 Real estate construction — — 153 — 153 29,016 Real estate mortgage: 1-4 family residential 2,310 228 31 2,725 5,294 239,344 Multi-family residential 391 3 — 25 419 46,780 Non-farm & non-residential 159 61 — 272 492 175,532 Agricultural 647 61 724 1,541 2,973 59,518 Consumer 97 37 8 — 142 18,725 Other — — — — — 183 Total $ 3,658 $ 435 $ 927 $ 4,566 $ 9,586 $ 646,421
Schedule of risk category of loans by class of loans	As of September 30, 2017 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 73,482 $ 1,537 $ 42 $ — Real estate construction 34,289 — — — Real estate mortgage: 1-4 family residential 233,723 3,806 4,577 46 Multi-family residential 38,195 3,303 — — Non-farm & non-residential 171,052 7,275 1,072 — Agricultural 55,865 2,258 807 — Total $ 606,606 $ 18,179 $ 6,498 $ 46 As of December 31, 2016 Special (in thousands) Pass Mention Substandard Doubtful Commercial $ 76,346 $ 1,078 $ 12 $ — Real estate construction 28,577 — 592 — Real estate mortgage: 1-4 family residential 232,969 4,031 7,627 11 Multi-family residential 43,681 2,617 901 — Non-farm & non-residential 167,451 8,185 388 — Agricultural 58,155 1,367 2,969 — Total $ 607,179 $ 17,278 $ 12,489 $ 11

REAL ESTATE OWNED (Tables)

REAL ESTATE OWNED (Tables)	9 Months Ended
	Sep. 30, 2017
REAL ESTATE OWNED
Schedule of activity in real estate owned	Nine Months Ended September 30, 2017 2016 Beginning of year $ 1,824 $ 2,347 Additions 1,897 193 Sales (911) (571) Fair value adjustments (141) (131) End of period $ 2,669 $ 1,838
Schedule of activity in the valuation allowance	2017 2016 Beginning of year $ 803 $ 616 Fair value adjustments 141 131 Reductions from sale (46) — End of Period $ 898 $ 747
Schedule of expenses related to foreclosed assets	Nine Months Ended September 30, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ (11) $ (163) Fair value adjustments 141 131 Operating expenses, net of rental income 148 91 Repossession expense, net 289 222 Net expense, net of gain or loss on sales, for the period $ 278 $ 59 Three Months Ended September 30, 2017 2016 (in thousands) Net (gain) loss on sales, included in other income on income statement $ 6 $ (163) Fair value adjustments 103 46 Operating expenses, net of rental income 1 33 Repossession expense, net 104 79 Net expense, net of gain or loss on sales, for the period $ 110 $ (84)

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2017
EARNINGS PER SHARE
Schedule of factors used in the earnings per share computation	Nine Months Ended September 30, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 8,139 $ 6,284 Weighted average common shares outstanding 2,955 2,975 Basic earnings per share $ 2.74 $ 2.10 Diluted Earnings Per Share Net Income $ 8,139 $ 6,284 Weighted average common shares outstanding 2,955 2,975 Weighted average common and dilutive potential common shares outstanding 2,956 2,975 Diluted earnings per share $ 2.74 $ 2.10 Three Months Ended September 30, 2017 2016 (in thousands) Basic Earnings Per Share Net Income $ 2,592 $ 2,365 Weighted average common shares outstanding 2,955 2,976 Basic earnings per share $ 0.87 $ 0.79 Diluted Earnings Per Share Net Income $ 2,592 $ 2,365 Weighted average common shares outstanding 2,955 2,976 Weighted average common and dilutive potential common shares outstanding 2,956 2,976 Diluted earnings per share $ 0.87 $ 0.79

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2017
Stock Based Compensation
Summary of activity for the Stock Option Plans	Weighted Weighted Average Aggregate Average Remaining Intrinsic Exercise Contractual Value Shares Price Term (in thousands) Outstanding, beginning of year 1,200 $ 31.00 Granted — — — Forfeited or expired — — — Exercised (600) 31.00 Outstanding, end of period 600 $ 31.00 5 months $ 6 Vested and expected to vest 600 $ 31.00 5 months $ 6 Exercisable, end of period 600 $ 31.00 5 months $ 6 (1) Aggregate intrinsic value in thousands
2005 Restricted Stock Grant Plan
Stock Based Compensation
Summary of changes in nonvested shares of restricted stock	Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 10,636 $ 253,518 $ 23.84 Granted — — — Vested (4,348) (97,747) 22.48 Forfeited (117) (3,004) — Nonvested at September 30, 2017 6,171 $ 152,767 $ 24.76 (1) Grant date fair value in thousands
2009 Stock Award Plan
Stock Based Compensation
Summary of changes in nonvested shares of restricted stock	Weighted-Average Fair Grant-Date Value Nonvested Shares Shares Fair Value Per Share Nonvested at January 1, 2017 7,297 $ 213,853 $ 29.31 Granted 6,575 213,688 32.50 Vested (1,648) (47,988) 29.12 Forfeited (951) (30,463) 32.03 Nonvested at September 30, 2017 11,273 $ 349,090 $ 30.97 (1) Grant date fair value in thousands

OTHER BORROWINGS (Tables)

OTHER BORROWINGS (Tables)	9 Months Ended
	Sep. 30, 2017
OTHER BORROWINGS
Maturity schedule for the term loan	2017 $ 81 2018 399 2019 419 2020 441 2021 463 Thereafter 1,959 $ 3,762

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2017
FAIR VALUE MEASUREMENTS.
Schedule of assets measured at fair value on a recurring basis	Fair Value Measurements at September 30, 2017 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 30,660 $ — $ 30,660 $ — States and municipals 102,291 — 102,291 — Mortgage-backed - residential 156,663 — 156,663 — Equity securities 342 342 — — Trading Assets 5,714 1,959 3,755 — Total $ 295,670 $ 2,301 $ 293,369 $ — Fair Value Measurements at December 31, 2016 (in thousands): Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs Description Value (Level 1) (Level 2) (Level 3) U. S. government agencies $ 36,528 $ — $ 36,528 $ — States and municipals 91,132 — 91,132 — Mortgage-backed - residential 145,770 — 145,770 — Equity securities 340 340 — — Trading Assets 5,592 1,608 3,984 — Total $ 279,362 $ 1,948 $ 277,414 $ —
Schedule of assets measured at fair value on a non-recurring basis	Fair Value Measurements at September 30, 2017 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family Residential $ 353 $ — $ — $ 353 Other real estate owned, net: Residential 611 — — 611 Commercial 57 — — 57 Mortgage servicing rights 1,310 — — 1,310 Fair Value Measurements at December 31, 2016 Using : Quoted Prices In Active Markets for Significant Other Significant Identical Observable Unobservable Carrying Assets Inputs Inputs (In thousands) Value (Level 1) (Level 2) (Level 3) Description Impaired loans: Real Estate Mortgage: 1-4 family residential $ 1,685 $ — $ — $ 1,685 Agricultural 2,234 — — 2,234 Other real estate owned, net: Residential 956 — — 956 Commercial 272 — 272 Mortgage servicing rights 1,083 — — 1,083
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis	Range September 30, 2017 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential sales comparison adjustment for differences between the comparable sales 0%-12% (6)% Other real estate owned: Residential sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial income approach capitalization rate 10%-10% (10)% Mortgage Servicing Rights discounted cash flow constant prepayment rates 8%-50% (11)% Range December 31, 2016 Fair Valuation Unobservable (Weighted (In thousands) Value Technique(s) Input(s) Average) Impaired loans Real estate mortgage: 1-4 family residential 1,685 sales comparison adjustment for differences between the comparable sales 0%-21% (10)% Agricultural 2,234 sales comparison adjustment for differences between the comparable sales 2%-75% (9)% Other real estate owned: Residential 956 sales comparison adjustment for differences between the comparable sales 1%-16% (9)% Commercial 272 income approach capitalization rate 10%-10% (10)% Mortgage Servicing Rights discounted cash flow constant prepayment rates 8%-45% (13)%
Schedule of carrying amounts and estimated fair values of financial instruments	September 30, 2017: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 18,612 $ 18,612 $ — $ — $ 18,612 Interest bearing time deposits 1,830 1,830 — — 1,830 Securities available for sale 289,956 342 289,614 — 289,956 Trading assets 5,714 1,959 3,755 — 5,714 Loans held for sale 1,316 — 1,350 — 1,350 Net Loans 641,210 — — 640,915 640,915 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 3,785 — 1,338 2,447 3,785 Financial liabilities Total deposits $ 748,379 $ 559,820 $ 189,475 $ — $ 749,295 Federal funds purchased 17,302 17,302 — — 17,302 Repurchase agreements 24,070 — 24,125 — 24,125 Short-term Federal Home Loan Bank advances 8,530 — 8,532 — 8,532 Long-term Federal Home Loan Bank advances 93,665 — 88,557 — 88,557 Note payable 3,762 4,208 4,208 Subordinated debentures 7,217 — — 7,213 7,213 Interest payable 796 — 736 60 796 December 31, 2016: Carrying (in thousands) Value Level 1 Level 2 Level 3 Total Financial assets Cash and cash equivalents $ 43,250 $ 43,250 $ — $ — $ 43,250 Interest bearing time deposits 5,029 5,029 — — 5,029 Securities available for sale 273,770 340 273,430 — 273,770 Trading assets 5,592 1,608 3,984 — 5,592 Loans held for sale 724 — 750 — 750 Net Loans 648,466 — — 648,234 648,234 Federal Home Loan Bank stock 7,034 — — — N/A Interest receivable 3,715 — 1,334 2,381 3,715 Financial liabilities Total deposits $ 802,981 $ 607,617 $ 195,528 $ — $ 803,145 Repurchase agreements 20,873 — 21,006 — 21,006 Long-term Federal Home Loan Bank advances 92,500 — 91,015 — 91,015 Note payable 4,090 — 4,564 — 4,564 Subordinated debentures 7,217 — — 7,210 7,210 Interest payable 692 — 639 53 692

CHANGES IN ACCUMULATED OTHER 26

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Tables)	9 Months Ended
	Sep. 30, 2017
CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT
Schedule of changes in Accumulated Other Comprehensive Income (Loss) by Component	Changes in Accumulated Other Comprehensive Income by Component (unaudited) (in thousands) Unrealized Gains and Losses on Available for Sale Securities For the Nine Months Ended September 30, 2017 2016 Beginning Balance $ (956) $ 359 Unrealized holding gains (losses) for the period, net of tax 1,889 3,452 Reclassification adjustment for: Securities gains realized in income 103 317 Income taxes (35) (108) 68 209 Net current period other comprehensive income 1,821 3,243 Ending balance $ 865 $ 3,602 Unrealized Gains and Losses on Available for Sale Securities For the Three Months Ended September 30, 2017 2016 Beginning Balance $ 1,213 $ 4,402 Unrealized holding gains (losses) for the period, net of tax (308) (774) Reclassification adjustment for: Securities gains realized in income, net 60 40 Income taxes (20) (14) 40 26 Net current period other comprehensive income (loss) (348) (800) Ending balance $ 865 $ 3,602
Significant amounts reclassified out of each component of AOCI	September 30, 2017 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 103 Gain on sale of available for sale securities, net 35 Income taxes 68 Net income September 30, 2016 Details about Amount Affected Line Item Accumulated Other Reclassified From in the Statement Comprehensive Accumulated Other Where Net Income Components Comprehensive Income Income is Presented Unrealized gains and losses on available-for-sale securities $ 317 Gain on sale of available for sale securities, net 108 Income taxes 209 Net income

SECURITIES (Details)

SECURITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities Available for Sale
Amortized Cost	$ 288,645	$ 275,218
Gross Unrealized Gains	3,054	2,244
Gross Unrealized Losses	(1,743)	(3,692)
Fair Value	289,956	273,770
U.S. government agencies
Securities Available for Sale
Amortized Cost	30,391	36,454
Gross Unrealized Gains	448	373
Gross Unrealized Losses	(179)	(299)
Fair Value	30,660	36,528
States and political subdivisions
Securities Available for Sale
Amortized Cost	100,195	90,117
Gross Unrealized Gains	2,254	1,731
Gross Unrealized Losses	(158)	(716)
Fair Value	102,291	91,132
Mortgage-backed - residential
Securities Available for Sale
Amortized Cost	157,739	148,327
Gross Unrealized Gains	330	120
Gross Unrealized Losses	(1,406)	(2,677)
Fair Value	156,663	145,770
Equity
Securities Available for Sale
Amortized Cost	320	320
Gross Unrealized Gains	22	20
Fair Value	$ 342	$ 340

SECURITIES - AMORTIZED COST AND

SECURITIES - AMORTIZED COST AND FAIR VALUE BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Amortized Cost
Due in one year or less	$ 384		$ 384
Due after one year through five years	25,963		25,963
Due after five years through ten years	40,893		40,893
Due after ten years	63,346		63,346
Securities due at a single maturity date	130,586		130,586
Amortized Cost	288,645		288,645		$ 275,218
Fair Value
Due in one year or less	384		384
Due after one year through five years	26,669		26,669
Due after five years through ten years	41,554		41,554
Due after ten years	64,344		64,344
Securities due at a single maturity date	132,951		132,951
Fair Value	289,956		289,956		273,770
Sales of securities
Proceeds from sales of securities available for sale	10,500	$ 2,500	14,559	$ 23,888
Gross gains realized on sales of securities	60	40	105	317
Gross losses realized on sales of securities	2	0	2	0
Tax provision related to realized gains	20	$ 14	35	$ 108
Mortgage-backed - residential
Amortized Cost
Amortized Cost	157,739		157,739		148,327
Fair Value
Fair Value	156,663		156,663		145,770
Equity
Amortized Cost
Amortized Cost	320		320		320
Fair Value
Fair Value	$ 342		$ 342		$ 340

SECURITIES - UNREALIZED LOSSES

SECURITIES - UNREALIZED LOSSES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities with unrealized losses
Less than 12 Months, Fair Value	$ 86,369	$ 175,838
Less than 12 Months, Unrealized Loss	(574)	(2,953)
12 Months or More, Fair Value	52,796	13,652
12 Months or More, Unrealized Loss	(1,169)	(739)
Total, Fair Value	139,165	189,490
Total, Unrealized Loss	(1,743)	(3,692)
Trading Assets
Trading Assets	5,714	5,592
U.S. government agencies
Securities with unrealized losses
Less than 12 Months, Fair Value	15,617	28,202
Less than 12 Months, Unrealized Loss	(79)	(299)
12 Months or More, Fair Value	6,056
12 Months or More, Unrealized Loss	(100)
Total, Fair Value	21,673	28,202
Total, Unrealized Loss	(179)	(299)
States and political subdivisions
Securities with unrealized losses
Less than 12 Months, Fair Value	16,449	27,834
Less than 12 Months, Unrealized Loss	(110)	(716)
12 Months or More, Fair Value	2,271
12 Months or More, Unrealized Loss	(48)
Total, Fair Value	18,720	27,834
Total, Unrealized Loss	(158)	(716)
Mortgage-backed - residential
Securities with unrealized losses
Less than 12 Months, Fair Value	54,303	119,802
Less than 12 Months, Unrealized Loss	(385)	(1,938)
12 Months or More, Fair Value	44,469	13,652
12 Months or More, Unrealized Loss	(1,021)	(739)
Total, Fair Value	98,772	133,454
Total, Unrealized Loss	$ (1,406)	$ (2,677)

LOANS (Details)

LOANS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loans
Loans	$ 648,965	$ 656,007
Commercial
Loans
Loans	75,061	77,436
Real estate construction
Loans
Loans	34,289	29,169
1-4 family residential
Loans
Loans	242,152	244,638
Multi-family residential
Loans
Loans	41,498	47,199
Non-farm & non-residential
Loans
Loans	179,399	176,024
Agricultural
Loans
Loans	58,930	62,491
Consumer
Loans
Loans	17,520	18,867
Other
Loans
Loans	$ 116	$ 183

LOANS - ACTIVITY IN ALLOWANCE (

LOANS - ACTIVITY IN ALLOWANCE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Activity in allowance for loan losses
Beginning Balance	$ 7,958	$ 7,259	$ 7,541	$ 6,521
Charge-offs	(508)	(282)	(1,126)	(1,008)
Recoveries	205	253	690	1,117
Provision	100	175	650	775
Ending Balance	7,755	7,405	7,755	7,405
Commercial
Activity in allowance for loan losses
Beginning Balance	1,006	666	789	486
Charge-offs	(20)		(35)
Recoveries	2	3	17	37
Provision	(56)	18	161	164
Ending Balance	932	687	932	687
Real estate construction
Activity in allowance for loan losses
Beginning Balance	584	552	564	411
Recoveries		2	1	15
Provision	101	25	120	153
Ending Balance	685	579	685	579
1-4 family residential
Activity in allowance for loan losses
Beginning Balance	2,575	2,304	2,301	2,081
Charge-offs	(170)	(26)	(203)	(90)
Recoveries	3	1	8	8
Provision	(54)	(28)	248	252
Ending Balance	2,354	2,251	2,354	2,251
Multi-family residential
Activity in allowance for loan losses
Beginning Balance	645	507	581	458
Recoveries	3	3	10	7
Provision	(18)	66	39	111
Ending Balance	630	576	630	576
Non-farm & non-residential
Activity in allowance for loan losses
Beginning Balance	1,322	1,158	1,203	1,213
Charge-offs	(78)		(78)
Recoveries		82		355
Provision	185	(27)	304	(355)
Ending Balance	1,429	1,213	1,429	1,213
Agricultural
Activity in allowance for loan losses
Beginning Balance	504	801	856	678
Charge-offs		(3)		(3)
Recoveries	19	12	47	35
Provision	(40)	18	(420)	118
Ending Balance	483	828	483	828
Consumer
Activity in allowance for loan losses
Beginning Balance	561	550	547	525
Charge-offs	(26)	(47)	(128)	(210)
Recoveries	6	7	34	77
Provision	(8)	45	80	163
Ending Balance	533	555	533	555
Other
Activity in allowance for loan losses
Beginning Balance	76	50	60	60
Charge-offs	(214)	(206)	(682)	(705)
Recoveries	172	143	573	583
Provision	8	75	91	124
Ending Balance	42	62	42	62
Unallocated
Activity in allowance for loan losses
Beginning Balance	685	671	640	609
Provision	(18)	(17)	27	45
Ending Balance	$ 667	$ 654	$ 667	$ 654

LOANS - ALLOWANCE FOR LOAN LOSS

LOANS - ALLOWANCE FOR LOAN LOSSES AND RECORDED INVESTMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Loans
Accrued interest receivable	$ 2,400		$ 2,400
Allowance for Loan Losses:
Individually Evaluated for Impairment	68		541
Collectively Evaluated for Impairment	7,687		7,000
Total	7,755	$ 7,958	7,541	$ 7,405	$ 7,259	$ 6,521
Loans:
Individually Evaluated for Impairment	1,839		7,994
Collectively Evaluated for Impairment	645,469		646,100
Purchased Credit Impairment	1,657		1,913
Total	648,965		656,007
Commercial
Allowance for Loan Losses:
Collectively Evaluated for Impairment	932		789
Total	932	1,006	789	687	666	486
Loans:
Individually Evaluated for Impairment			97
Collectively Evaluated for Impairment	75,061		77,339
Total	75,061		77,436
Real estate construction
Allowance for Loan Losses:
Collectively Evaluated for Impairment	685		564
Total	685	584	564	579	552	411
Loans:
Individually Evaluated for Impairment			153
Collectively Evaluated for Impairment	34,289		29,016
Total	34,289		29,169
1-4 family residential
Allowance for Loan Losses:
Individually Evaluated for Impairment	68		99
Collectively Evaluated for Impairment	2,286		2,202
Total	2,354	2,575	2,301	2,251	2,304	2,081
Loans:
Individually Evaluated for Impairment	420		2,704
Collectively Evaluated for Impairment	240,836		240,906
Purchased Credit Impairment	896		1,028
Total	242,152		244,638
Multi-family residential
Allowance for Loan Losses:
Collectively Evaluated for Impairment	630		581
Total	630	645	581	576	507	458
Loans:
Collectively Evaluated for Impairment	40,924		46,637
Purchased Credit Impairment	574		562
Total	41,498		47,199
Non-farm & non-residential
Allowance for Loan Losses:
Individually Evaluated for Impairment			15
Collectively Evaluated for Impairment	1,429		1,188
Total	1,429	1,322	1,203	1,213	1,158	1,213
Loans:
Individually Evaluated for Impairment	1,133		1,725
Collectively Evaluated for Impairment	178,263		174,154
Purchased Credit Impairment	3		145
Total	179,399		176,024
Agricultural
Allowance for Loan Losses:
Individually Evaluated for Impairment			427
Collectively Evaluated for Impairment	483		429
Total	483	504	856	828	801	678
Loans:
Individually Evaluated for Impairment	286		3,315
Collectively Evaluated for Impairment	58,460		58,998
Purchased Credit Impairment	184		178
Total	58,930		62,491
Consumer
Allowance for Loan Losses:
Collectively Evaluated for Impairment	533		547
Total	533	561	547	555	550	525
Loans:
Collectively Evaluated for Impairment	17,520		18,867
Total	17,520		18,867
Other
Allowance for Loan Losses:
Collectively Evaluated for Impairment	42		60
Total	42	76	60	62	50	60
Loans:
Collectively Evaluated for Impairment	116		183
Total	116		183
Unallocated
Allowance for Loan Losses:
Collectively Evaluated for Impairment	667		640
Total	$ 667	$ 685	$ 640	$ 654	$ 671	$ 609

LOANS - INDIVIDUALLY EVALUATED

LOANS - INDIVIDUALLY EVALUATED FOR IMPAIRMENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Unpaid Principal Balance
Total	$ 1,839		$ 1,839		$ 7,994
Recorded Investment
Total	1,839		1,839		7,994
Allowance for Loan Losses Allocated.	68		68		541
Average Recorded Investment
With an allowance recorded		$ 7,688
Total	3,377		2,699	$ 7,447	8,793
Interest Income Recognized
With an allowance recorded		48
Total	20		59	175	191
Cash Basis Interest Recognized
With an allowance recorded		48
Total	20		59	175	191
Commercial
Unpaid Principal Balance
With no related allowance recorded					97
Recorded Investment
With no related allowance recorded					97
Average Recorded Investment
With no related allowance recorded					48
Interest Income Recognized
With no related allowance recorded					30
Cash Basis Interest Recognized
With no related allowance recorded					30
Real estate construction
Unpaid Principal Balance
With no related allowance recorded					153
Recorded Investment
With no related allowance recorded					153
Average Recorded Investment
With no related allowance recorded					494
Interest Income Recognized
With no related allowance recorded					9
Cash Basis Interest Recognized
With no related allowance recorded					9
1-4 family residential
Unpaid Principal Balance
With an allowance recorded	420		420		2,098
Recorded Investment
With an allowance recorded	420		420		2,098
Allowance for Loan Losses Allocated.	68		68		99
Average Recorded Investment
With an allowance recorded	455	949	1,045	989	1,590
Interest Income Recognized
With an allowance recorded	1	17	8	47	56
Cash Basis Interest Recognized
With an allowance recorded	1	17	8	47	56
Non-farm & non-residential
Unpaid Principal Balance
With no related allowance recorded	1,133		1,133		606
With an allowance recorded					1,725
Recorded Investment
With no related allowance recorded	1,133		1,133		606
With an allowance recorded					1,725
Allowance for Loan Losses Allocated.					15
Average Recorded Investment
With no related allowance recorded	2,431		1,243		488
With an allowance recorded		2,094		1,983	2,303
Interest Income Recognized
With no related allowance recorded	17		42
With an allowance recorded		21		70	71
Cash Basis Interest Recognized
With no related allowance recorded	17		42
With an allowance recorded		21		70	71
Construction
Average Recorded Investment
With no related allowance recorded		167		171
Interest Income Recognized
With no related allowance recorded		10		37
Cash Basis Interest Recognized
With no related allowance recorded		10		37
Agricultural
Unpaid Principal Balance
With no related allowance recorded	286		286		654
With an allowance recorded					2,661
Recorded Investment
With no related allowance recorded	286		286		654
With an allowance recorded					2,661
Allowance for Loan Losses Allocated.					427
Average Recorded Investment
With no related allowance recorded	491	654	410	436	561
With an allowance recorded		$ 3,824		3,868	3,309
Interest Income Recognized
With no related allowance recorded	2		9	21
With an allowance recorded					25
Cash Basis Interest Recognized
With no related allowance recorded	$ 2		$ 9	$ 21
With an allowance recorded					$ 25

LOANS - NONACCRUAL, LOANS PAST

LOANS - NONACCRUAL, LOANS PAST DUE OVER 90 DAYS STILL ACCRUING AND TDR (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Loans
Nonaccrual	$ 1,393	$ 4,566
Loans Past Due Over 90 Days Still Accruing	$ 151	927
Troubled Debt Restructurings		2,063
Percentage of nonaccrual loans secured by real estate	97.00%
Minimum period for which principal or interest is in default for loans to be considered as nonaccrual	90 days
Maximum period past due for loans to be considered as impaired	90 days
Commercial
Loans
Nonaccrual		3
Loans Past Due Over 90 Days Still Accruing	$ 32	11
Real estate construction
Loans
Loans Past Due Over 90 Days Still Accruing	67	153
1-4 family residential
Loans
Nonaccrual	1,213	2,725
Loans Past Due Over 90 Days Still Accruing	47	31
Troubled Debt Restructurings		338
Multi-family residential
Loans
Nonaccrual		25
Non-farm & non-residential
Loans
Nonaccrual		272
Troubled Debt Restructurings		1,725
Agricultural
Loans
Nonaccrual	150	1,541
Loans Past Due Over 90 Days Still Accruing		724
Consumer
Loans
Nonaccrual	30
Loans Past Due Over 90 Days Still Accruing	$ 5	$ 8

LOANS - AGING OF RECORDED INVES

LOANS - AGING OF RECORDED INVESTMENT IN PAST DUE AND NON-ACCRUAL LOANS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due	$ 151	$ 927
Non-accrual	1,393	4,566
Total Past Due and Non-accrual	4,305	9,586
Loans Not Past Due	644,660	646,421
30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	2,045	3,658
60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	716	435
Commercial
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due	32	11
Non-accrual		3
Total Past Due and Non-accrual	127	113
Loans Not Past Due	74,934	77,323
Commercial | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	95	54
Commercial | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due		45
Real estate construction
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due	67	153
Total Past Due and Non-accrual	67	153
Loans Not Past Due	34,222	29,016
1-4 family residential
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due	47	31
Non-accrual	1,213	2,725
Total Past Due and Non-accrual	3,478	5,294
Loans Not Past Due	238,674	239,344
1-4 family residential | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	1,512	2,310
1-4 family residential | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	706	228
Multi-family residential
Aging of recorded investment in past due and non-accrual loans
Non-accrual		25
Total Past Due and Non-accrual		419
Loans Not Past Due	41,498	46,780
Multi-family residential | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due		391
Multi-family residential | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due		3
Non-farm & non-residential
Aging of recorded investment in past due and non-accrual loans
Non-accrual		272
Total Past Due and Non-accrual	192	492
Loans Not Past Due	179,207	175,532
Non-farm & non-residential | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	192	159
Non-farm & non-residential | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due		61
Agricultural
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due		724
Non-accrual	150	1,541
Total Past Due and Non-accrual	301	2,973
Loans Not Past Due	58,629	59,518
Agricultural | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	151	647
Agricultural | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due		61
Consumer
Aging of recorded investment in past due and non-accrual loans
Greater than 90 Days Past Due	5	8
Non-accrual	30
Total Past Due and Non-accrual	140	142
Loans Not Past Due	17,380	18,725
Consumer | 30 to 59 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	95	97
Consumer | 60 to 89 Days Past Due
Aging of recorded investment in past due and non-accrual loans
Recorded Investment Past Due	10	37
Other
Aging of recorded investment in past due and non-accrual loans
Loans Not Past Due	$ 116	$ 183

LOANS - TROUBLED DEBT RESTRUCTU

LOANS - TROUBLED DEBT RESTRUCTURINGS (Details) $ in Thousands	1 Months Ended	9 Months Ended
	Jul. 31, 2017loan	Sep. 30, 2017loan	Sep. 30, 2016loan	Dec. 31, 2016USD ($)
LOANS
Number of loans that met the definition of troubled debt restructurings | loan		0	0
Number of loans removed from troubled debt restructuring | loan	1
Amount of the outstanding recorded investment related to financing receivables that was modified by TDR but subsequently removed from the modifications | $				$ 1,700
Reserves to customers whose loan terms have been modified in troubled debt restructurings | $				$ 40

LOANS - RISK CATEGORY OF LOANS

LOANS - RISK CATEGORY OF LOANS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Credit Quality Indicators
Loans	$ 648,965	$ 656,007
Pass
Credit Quality Indicators
Loans	606,606	607,179
Special Mention
Credit Quality Indicators
Loans	18,179	17,278
Substandard
Credit Quality Indicators
Loans	6,498	12,489
Doubtful
Credit Quality Indicators
Loans	46	11
Commercial
Credit Quality Indicators
Loans	75,061	77,436
Commercial | Pass
Credit Quality Indicators
Loans	73,482	76,346
Commercial | Special Mention
Credit Quality Indicators
Loans	1,537	1,078
Commercial | Substandard
Credit Quality Indicators
Loans	42	12
Real estate construction
Credit Quality Indicators
Loans	34,289	29,169
Real estate construction | Pass
Credit Quality Indicators
Loans	34,289	28,577
Real estate construction | Substandard
Credit Quality Indicators
Loans		592
1-4 family residential
Credit Quality Indicators
Loans	242,152	244,638
1-4 family residential | Pass
Credit Quality Indicators
Loans	233,723	232,969
1-4 family residential | Special Mention
Credit Quality Indicators
Loans	3,806	4,031
1-4 family residential | Substandard
Credit Quality Indicators
Loans	4,577	7,627
1-4 family residential | Doubtful
Credit Quality Indicators
Loans	46	11
Multi-family residential
Credit Quality Indicators
Loans	41,498	47,199
Multi-family residential | Pass
Credit Quality Indicators
Loans	38,195	43,681
Multi-family residential | Special Mention
Credit Quality Indicators
Loans	3,303	2,617
Multi-family residential | Substandard
Credit Quality Indicators
Loans		901
Non-farm & non-residential
Credit Quality Indicators
Loans	179,399	176,024
Non-farm & non-residential | Pass
Credit Quality Indicators
Loans	171,052	167,451
Non-farm & non-residential | Special Mention
Credit Quality Indicators
Loans	7,275	8,185
Non-farm & non-residential | Substandard
Credit Quality Indicators
Loans	1,072	388
Agricultural
Credit Quality Indicators
Loans	58,930	62,491
Agricultural | Pass
Credit Quality Indicators
Loans	55,865	58,155
Agricultural | Special Mention
Credit Quality Indicators
Loans	2,258	1,367
Agricultural | Substandard
Credit Quality Indicators
Loans	807	2,969
Consumer
Credit Quality Indicators
Loans	17,520	18,867
Consumer | Non-performing
Credit Quality Indicators
Loans	$ 35	$ 8
Minimum period past due for loans to be considered as non-performing	90 days

REAL ESTATE OWNED (Details)

REAL ESTATE OWNED (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Activity in real estate owned
Beginning of year, net			$ 1,824	$ 2,347	$ 2,347
Additions			1,897	193
Sales			(911)	(571)
Fair value adjustments			(141)	(131)	(141)	$ (131)
End of period, net	$ 2,669	$ 1,838	2,669	1,838	1,824	2,347
Activity in the valuation allowance
Beginning of year			803	616	616
Fair value adjustments			141	131	141	131
Reductions from sale			(46)
End of period	898	747	898	747	$ 803	$ 616
Expenses related to foreclosed assets
Net (gain) loss on sales, included in other income on income statement	6	(163)	(11)	(163)
Fair value adjustments	103	46	141	131
Operating expenses, net of rental income	1	33	148	91
Repossession expenses, net	104	79	289	222
Net expense, net of gain or loss on sales, for the period	$ 110	$ (84)	$ 278	$ 59

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Basic Earnings Per Share
Net income	$ 2,592	$ 2,365	$ 8,139	$ 6,284
Weighted average common shares outstanding	2,955	2,976	2,955	2,975
Basic earnings per share (in dollars per share)	$ 0.87	$ 0.79	$ 2.74	$ 2.10
Diluted Earnings Per Share
Net Income	$ 2,592	$ 2,365	$ 8,139	$ 6,284
Weighted average common shares outstanding	2,955	2,976	2,955	2,975
Weighted average common and dilutive potential common shares outstanding	2,956	2,976	2,956	2,975
Diluted earnings per share (in dollars per share)	$ 0.87	$ 0.79	$ 2.74	$ 2.10

EARNINGS PER SHARE - ANTIDILUTI

EARNINGS PER SHARE - ANTIDILUTIVE SECURITIES (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Stock options
Antidilutive securities
Antidilutive shares excluded from computation of diluted earnings per share	0	1,200	0	1,200

STOCK BASED COMPENSATION - VEST

STOCK BASED COMPENSATION - VESTING PERIOD (Details)	9 Months Ended
	Sep. 30, 2017planshares
Stock Based Compensation
Number of stock based compensation plans | plan	4
Stock options
Stock Based Compensation
Number of stock based compensation plans | plan	2
Stock Option Plans | Stock options
Stock Based Compensation
Life of awards	10 years
1999 Plan | Stock options
Stock Based Compensation
Vesting period	5 years
Number of shares authorized for issuance | shares	100,000
1993 Non-Employee Directors Stock Ownership Incentive Plan | Stock options
Stock Based Compensation
Number of shares authorized for issuance | shares	20,000

STOCK BASED COMPENSATION - ACTI

STOCK BASED COMPENSATION - ACTIVITY (Details) - Stock Option Plans $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017USD ($)$ / sharesshares
Shares
Outstanding, beginning of year (in shares) | shares	1,200
Exercised (in shares) | shares	(600)
Outstanding, end of year (in shares) | shares	600
Vested and expected to vest (in shares) | shares	600
Exercisable, end of period (in shares) | shares	600
Weighted Average Exercise Price
Outstanding, beginning of year (in dollars per share) | $ / shares	$ 31
Exercised (in dollars per share) | $ / shares	31
Outstanding, end of year (in dollars per share) | $ / shares	31
Vested and expected to vest (in dollars per share) | $ / shares	31
Exercisable, end of period (in dollars per share) | $ / shares	$ 31
Weighted Average Remaining Contractual Term
Outstanding, end of period	5 months
Vested and expected to vest	5 months
Exercisable, end of period	5 months
Additional disclosures
Total unrecognized compensation cost related to nonvested stock options granted | $	$ 0
Aggregate Intrinsic Value
Outstanding, end of period | $	6
Vested and expected to vest | $	6
Exercisable, end of period | $	$ 6

STOCK BASED COMPENSATION - NONV

STOCK BASED COMPENSATION - NONVESTED SHARES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
2005 Restricted Stock Grant Plan | Restricted stock
Stock Based Compensation
Number of shares authorized for issuance	50,000
Shares available for issuance	0
Shares
Nonvested at the beginning of the period (in shares)	10,636
Vested (in shares)	(4,348)
Forfeited (in shares)	(117)	(639)
Nonvested at the end of the period (in shares)	6,171
Weighted-Average Grant-Date Fair Value
Nonvested shares, balance at the beginning of the period (in dollars)	$ 253,518
Vested (in dollars)	(97,747)
Forfeited (in dollars)	(3,004)
Nonvested shares, balance at the end of the period (in dollars)	$ 152,767
Fair Value Per Share
Nonvested shares, balance at the beginning of the period (in dollars per share)	$ 23.84
Vested (in dollars per share)	22.48
Nonvested shares, balance at the end of the period (in dollars per share)	$ 24.76
Additional disclosures
Total unrecognized compensation cost related to nonvested shares granted	$ 99,000
Period over which cost is expected to be recognized	1 year 9 months 18 days
2009 Stock Award Plan
Stock Based Compensation
Number of shares authorized for issuance	150,000
Shares available for issuance	133,368
Shares
Nonvested at the beginning of the period (in shares)	7,297
Granted (in shares)	6,575	6,170
Vested (in shares)	(1,648)
Forfeited (in shares)	(951)	(360)
Nonvested at the end of the period (in shares)	11,273
Weighted-Average Grant-Date Fair Value
Nonvested shares, balance at the beginning of the period (in dollars)	$ 213,853
Granted (in dollars)	213,688
Vested (in dollars)	(47,988)
Forfeited (in dollars)	(30,463)
Nonvested shares, balance at the end of the period (in dollars)	$ 349,090
Fair Value Per Share
Nonvested shares, balance at the beginning of the period (in dollars per share)	$ 29.31
Granted (in dollars per share)	32.50
Vested (in dollars per share)	29.12
Forfeited (in dollars per share)	(32.03)
Nonvested shares, balance at the end of the period (in dollars per share)	$ 30.97
Additional disclosures
Total unrecognized compensation cost related to nonvested shares granted	$ 292,000
2009 Stock Award Plan | Restricted stock
Additional disclosures
Period over which cost is expected to be recognized	3 years 8 months 12 days

REPURCHASE AGREEMENTS (Details)

REPURCHASE AGREEMENTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
REPURCHASE AGREEMENTS
Repurchase agreements	$ 24,070	$ 20,873
Carrying amount of agency-backed securities pledged to secure repurchase agreements	30,500
Overnight obligations
REPURCHASE AGREEMENTS
Repurchase agreements	18,100
Maturity terms extending
REPURCHASE AGREEMENTS
Repurchase agreements	$ 6,000
Average weighted remaining life	1 year 7 months 6 days

OTHER BORROWINGS (Details)

OTHER BORROWINGS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Jul. 20, 2015
OTHER BORROWINGS
Amount outstanding	$ 3,762	$ 4,090
Federal funds purchased	17,302
Term loan
OTHER BORROWINGS
Debt instrument, face amount			$ 5,000
Amount outstanding	3,800
Fixed interest rate			5.02%
Maturity schedule of term loan
2,017	81
2,018	399
2,019	419
2,020	441
2,021	463
Thereafter	1,959
Total term loan maturities	$ 3,762

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Fair value on instruments on recurring basis
Securities available for sale	$ 289,956		$ 289,956		$ 273,770
Transfers from Level 1 to Level 2	0		0		0
Transfers from Level 2 to Level 1	0		0		0
Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	289,956		289,956		273,770
Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	295,670		295,670		279,362
Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	2,301		2,301		1,948
Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	293,369		293,369		277,414
Impaired Loans
Fair value on instruments on recurring basis
Adjustments for differences between the comparable sales and income data available			68	$ 0
Other Real Estate Owned | Significant Unobservable Inputs (Level 3)
Fair value on instruments on recurring basis
Adjustments for differences between the comparable sales and income data available	103	$ 46	141	$ 131
U.S. government agencies
Fair value on instruments on recurring basis
Securities available for sale	30,660		30,660		36,528
U.S. government agencies | Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	30,660		30,660		36,528
U.S. government agencies | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	30,660		30,660		36,528
States and political subdivisions
Fair value on instruments on recurring basis
Securities available for sale	102,291		102,291		91,132
States and political subdivisions | Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	102,291		102,291		91,132
States and political subdivisions | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	102,291		102,291		91,132
Mortgage-backed - residential
Fair value on instruments on recurring basis
Securities available for sale	156,663		156,663		145,770
Mortgage-backed - residential | Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	156,663		156,663		145,770
Mortgage-backed - residential | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	156,663		156,663		145,770
Equity
Fair value on instruments on recurring basis
Securities available for sale	342		342		340
Equity | Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	342		342		340
Equity | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	342		342		340
Trading Assets | Recurring | Carrying Value
Fair value on instruments on recurring basis
Securities available for sale	5,714		5,714		5,592
Trading Assets | Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1)
Fair value on instruments on recurring basis
Securities available for sale	1,959		1,959		1,608
Trading Assets | Recurring | Significant Other Observable Inputs (Level 2)
Fair value on instruments on recurring basis
Securities available for sale	$ 3,755		$ 3,755		$ 3,984

FAIR VALUE MEASUREMENTS - FAIR

FAIR VALUE MEASUREMENTS - FAIR VALUE ON NON-RECURRING (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017USD ($)loan	Sep. 30, 2016USD ($)loan	Sep. 30, 2017USD ($)loan	Sep. 30, 2016USD ($)loan	Dec. 31, 2016USD ($)	Dec. 31, 2015USD ($)
Impaired Loans
Valuation allowance of impaired loans	$ 68		$ 68		$ 541
Loan loss provision expense for impaired loans	68		68
Other real estate owned, net:
Outstanding balance of other real estate owned	2,669	$ 1,838	2,669	$ 1,838	1,824	$ 2,347
Valuation allowance of other real estate owned	898	$ 747	898	$ 747	803	$ 616
Loan servicing rights
Mortgage servicing rights	1,485		1,485		1,321
Non-recurring
Impaired Loans
Impaired loans, at fair value	353		353		3,900
Valuation allowance of impaired loans	$ 68		$ 68		502
Number of impaired loans. | loan	1	0	1	0
Other real estate owned, net:
Other real estate owned	$ 668		$ 668		1,600
Outstanding balance of other real estate owned	1,600		1,600		2,400
Valuation allowance of other real estate owned	898		898		803
Write downs of other real estate owned	141	$ 131	141	$ 46
Loan servicing rights
Mortgage servicing rights	1,300		1,300		1,100
Balance of loan servicing rights	1,400		1,400		1,200
Valuation allowance of loan servicing rights	86		86		125
Write-downs of loan servicing rights	103	46	40
Recovery of prior write-downs	6	$ 64		$ 106
Non-recurring | Carrying Value
Other real estate owned, net:
Other real estate owned	611		611
Loan servicing rights
Mortgage servicing rights	1,310		1,310		1,083
Non-recurring | Significant Unobservable Inputs (Level 3)
Other real estate owned, net:
Other real estate owned	611		611
Loan servicing rights
Mortgage servicing rights	1,310		1,310		1,083
Non-recurring | 1-4 family residential | Carrying Value
Impaired Loans
Impaired loans, at fair value	353		353		1,685
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3)
Impaired Loans
Impaired loans, at fair value	353		353		1,685
Non-recurring | Agricultural | Carrying Value
Impaired Loans
Impaired loans, at fair value					2,234
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3)
Impaired Loans
Impaired loans, at fair value					2,234
Non-recurring | Residential | Carrying Value
Other real estate owned, net:
Other real estate owned					956
Non-recurring | Residential | Significant Unobservable Inputs (Level 3)
Other real estate owned, net:
Other real estate owned					956
Non-recurring | Commercial | Carrying Value
Other real estate owned, net:
Other real estate owned	57		57		272
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3)
Other real estate owned, net:
Other real estate owned	$ 57		$ 57		$ 272

FAIR VALUE MEASUREMENTS - QUANT

FAIR VALUE MEASUREMENTS - QUANTITATIVE INFORMATION (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Measurements
Mortgage servicing rights	$ 1,485	$ 1,321
Non-recurring
Fair Value Measurements
Impaired loans, at fair value	353	3,900
Other real estate owned	668	1,600
Mortgage servicing rights	1,300	1,100
Non-recurring | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	611
Mortgage servicing rights	1,310	1,083
Non-recurring | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Mortgage servicing rights	1,310	1,083
Non-recurring | 1-4 family residential | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value	353	1,685
Non-recurring | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value	353	1,685
Non-recurring | Agricultural | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		2,234
Non-recurring | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Impaired loans, at fair value		2,234
Non-recurring | Residential | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned		956
Non-recurring | Residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	611	956
Non-recurring | Commercial | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	57	272
Non-recurring | Commercial | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Other real estate owned	$ 57
Non-recurring | Commercial | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Mortgage servicing rights		$ 272
Non-recurring | Minimum | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Discount rate	8.00%	8.00%
Non-recurring | Minimum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	0.00%	0.00%
Non-recurring | Minimum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)		2.00%
Non-recurring | Minimum | Residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	1.00%	1.00%
Non-recurring | Minimum | Commercial | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	10.00%
Non-recurring | Minimum | Commercial | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)		10.00%
Non-recurring | Maximum | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Discount rate	50.00%	45.00%
Non-recurring | Maximum | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	12.00%	21.00%
Non-recurring | Maximum | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)		75.00%
Non-recurring | Maximum | Residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	16.00%	16.00%
Non-recurring | Maximum | Commercial | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)		10.00%
Adjustment for differences between the comparable sales (as a percent)	10.00%
Non-recurring | Weighted average | Discounted cash flow | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	11.00%
Discount rate		13.00%
Non-recurring | Weighted average | 1-4 family residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	6.00%	10.00%
Non-recurring | Weighted average | Agricultural | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)		9.00%
Non-recurring | Weighted average | Residential | Sales comparison | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Adjustment for differences between the comparable sales (as a percent)	(9.00%)	9.00%
Non-recurring | Weighted average | Residential | Income approach | Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Capitalization rate (as a percent)	10.00%	10.00%

FAIR VALUE MEASUREMENTS - FAI49

FAIR VALUE MEASUREMENTS - FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial assets
Interest bearing time deposits	$ 1,830	$ 5,029
Securities available for sale	289,956	273,770
Trading assets	5,714	5,592
Loans held for sale	1,316	724
Interest receivable	3,785	3,715
Financial liabilities
Federal funds purchased	17,302
Short-term Federal Home Loan Bank advances	8,530
Long-term Federal Home Loan Bank advances	93,665	92,500
Interest payable	796	692
Carrying Value
Financial assets
Cash and cash equivalents	18,612	43,250
Interest bearing time deposits	1,830	5,029
Securities available for sale	289,956	273,770
Trading assets	5,714	5,592
Loans held for sale	1,316
Mortgage loans held for sale		724
Net Loans	641,210	648,466
Federal Home Loan Bank stock	7,034	7,034
Interest receivable	3,785	3,715
Financial liabilities
Total deposits	748,379	802,981
Federal funds purchased	17,302
Repurchase agreements	24,070	20,873
Short-term Federal Home Loan Bank advances	8,530
Long-term Federal Home Loan Bank advances	93,665
Federal Home Loan Bank advances		92,500
Note payable	3,762	4,090
Subordinated debentures	7,217	7,217
Interest payable	796	692
Fair Value
Financial assets
Cash and cash equivalents	18,612	43,250
Interest bearing time deposits	1,830	5,029
Securities available for sale	289,956	273,770
Trading assets	5,714	5,592
Loans held for sale	1,350
Mortgage loans held for sale		750
Net Loans	640,915	648,234
Interest receivable	3,785	3,715
Financial liabilities
Total deposits	749,295	803,145
Federal funds purchased	17,302
Repurchase agreements	24,125	21,006
Short-term Federal Home Loan Bank advances	8,532
Long-term Federal Home Loan Bank advances	88,557
Federal Home Loan Bank advances		91,015
Note payable	4,208	4,564
Subordinated debentures	7,213	7,210
Interest payable	796	692
Quoted Prices In Active Markets for Identical Assets (Level 1) | Fair Value
Financial assets
Cash and cash equivalents	18,612	43,250
Interest bearing time deposits	1,830	5,029
Securities available for sale	342	340
Trading assets	1,959	1,608
Financial liabilities
Total deposits	559,820	607,617
Federal funds purchased	17,302
Significant Other Observable Inputs (Level 2) | Fair Value
Financial assets
Securities available for sale	289,614	273,430
Trading assets	3,755	3,984
Loans held for sale	1,350
Mortgage loans held for sale		750
Interest receivable	1,338	1,334
Financial liabilities
Total deposits	189,475	195,528
Repurchase agreements	24,125	21,006
Short-term Federal Home Loan Bank advances	8,532
Long-term Federal Home Loan Bank advances	88,557
Federal Home Loan Bank advances		91,015
Note payable	4,208	4,564
Interest payable	736	639
Significant Unobservable Inputs (Level 3) | Fair Value
Financial assets
Net Loans	640,915	648,234
Interest receivable	2,447	2,381
Financial liabilities
Subordinated debentures	7,213	7,210
Interest payable	$ 60	$ 53

CHANGES IN ACCUMULATED OTHER 50

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Changes in accumulated other comprehensive income (loss) by component
Beginning Balance			$ 92,972
Less reclassification adjustment for:
Net current period other comprehensive income (loss)	$ (348)	$ (800)	1,821	$ 3,243
Ending Balance	100,269		100,269
Accumulated Other Comprehensive Income/(Loss)
Changes in accumulated other comprehensive income (loss) by component
Beginning Balance	1,213	4,402	(956)	359
Less reclassification adjustment for:
Ending Balance	865	3,602	865	3,602
Unrealized Gains and Losses on Available for Sale Securities
Changes in accumulated other comprehensive income (loss) by component
Unrealized holding gains (losses) for the period, net of tax	(308)	(774)	1,889	3,452
Less reclassification adjustment for:
Securities gains realized in income	60	40	103	317
Income taxes	(20)	(14)	(35)	(108)
Reclassification, net of tax	$ 40	$ 26	68	209
Net current period other comprehensive income (loss)			$ 1,821	$ 3,243

CHANGES IN ACCUMULATED OTHER 51

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME BY COMPONENT - RECLASSIFIED (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Reclassifications out of AOCI by component
Gain on sale of available for sale securities, net	$ 60	$ 40	$ 103	$ 317
Income taxes	568	8	1,920	580
Net income	$ 2,592	$ 2,365	8,139	6,284
Unrealized Gains and Losses on Available for Sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income
Reclassifications out of AOCI by component
Gain on sale of available for sale securities, net			103	317
Income taxes			35	108
Net income			$ 68	$ 209