LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR LOAN LOSSES The following table summarizes the Company’s loan portfolio by type of loan as of: September 30, 2017 December 31, 2016 Commercial and industrial $ 192,663 $ 223,997 Real estate: Construction and development 201,067 129,366 Commercial real estate 393,314 367,656 Farmland 54,349 62,362 1-4 family residential 365,889 362,952 Multi-family residential 23,235 26,079 Consumer 51,711 53,505 Agricultural 24,449 18,901 Overdrafts 698 317 Total loans 1,307,375 1,245,135 Less: Allowance for loan losses 12,528 11,484 Total net loans $ 1,294,847 $ 1,233,651 As of September 30, 2017 and December 31, 2016 , included in total loans above were $1,089 and $1,210 in unamortized loan costs, net of loan fees, respectively. The following tables present the activity in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method for the nine months ended September 30, 2017 , for the year ended December 31, 2016 and for the nine months ended September 30, 2016 : For the nine months ended September 30, 2017 Commercial Construction Commercial Farmland 1-4 family Multi-family Consumer Agricultural Overdrafts Total Allowance for loan losses: Beginning balance $ 1,592 $ 1,161 $ 3,264 $ 482 $ 3,960 $ 281 $ 585 $ 153 $ 6 $ 11,484 Provision for loan losses 602 762 1,019 (24 ) (585 ) (15 ) 149 258 84 2,250 Loans charged-off (737 ) — (84 ) — (307 ) — (230 ) (4 ) (117 ) (1,479 ) Recoveries 116 — — — 21 — 95 — 41 273 Ending balance $ 1,573 $ 1,923 $ 4,199 $ 458 $ 3,089 $ 266 $ 599 $ 407 $ 14 $ 12,528 Allowance ending balance: Individually evaluated for impairment $ 19 $ — $ 31 $ 85 $ 145 $ — $ — $ 240 $ — $ 520 Collectively evaluated for impairment 1,554 1,923 4,168 373 2,944 266 599 167 14 12,008 Ending balance $ 1,573 $ 1,923 $ 4,199 $ 458 $ 3,089 $ 266 $ 599 $ 407 $ 14 $ 12,528 Loans: Individually evaluated for impairment $ 354 $ — $ 4,029 $ 276 $ 1,097 $ 228 $ — $ 696 $ — $ 6,680 Collectively evaluated for impairment 192,309 201,067 389,285 54,073 364,792 23,007 51,711 23,753 698 1,300,695 Ending balance $ 192,663 $ 201,067 $ 393,314 $ 54,349 $ 365,889 $ 23,235 $ 51,711 $ 24,449 $ 698 $ 1,307,375 For the year ended December 31, 2016 Commercial Construction Commercial Farmland 1-4 family Multi-family Consumer Agricultural Overdrafts Total Allowance for loan losses: Beginning balance $ 1,878 $ 1,004 $ 2,106 $ 400 $ 2,839 $ 325 $ 562 $ 138 $ 11 $ 9,263 Provision for loan losses 910 162 1,158 82 1,117 (44 ) 171 15 69 3,640 Loans charged-off (1,213 ) (9 ) — — (71 ) — (269 ) — (200 ) (1,762 ) Recoveries 17 4 — — 75 — 121 — 126 343 Ending balance $ 1,592 $ 1,161 $ 3,264 $ 482 $ 3,960 $ 281 $ 585 $ 153 $ 6 $ 11,484 Allowance ending balance: Individually evaluated for impairment $ 64 $ — $ — $ 47 $ 108 $ — $ 34 $ — $ — $ 253 Collectively evaluated for impairment 1,528 1,161 3,264 435 3,852 281 551 153 6 11,231 Ending balance $ 1,592 $ 1,161 $ 3,264 $ 482 $ 3,960 $ 281 $ 585 $ 153 $ 6 $ 11,484 Loans: Individually evaluated for impairment $ 231 $ 1,825 $ 1,196 $ 258 $ 2,588 $ 5 $ 200 $ 15 $ — $ 6,318 Collectively evaluated for impairment 223,766 127,541 366,460 62,104 360,364 26,074 53,305 18,886 317 1,238,817 Ending balance $ 223,997 $ 129,366 $ 367,656 $ 62,362 $ 362,952 $ 26,079 $ 53,505 $ 18,901 $ 317 $ 1,245,135 For the nine months ended September 30, 2016 Commercial Construction Commercial Farmland 1-4 family Multi-family Consumer Agricultural Overdrafts Total Allowance for loan losses: Beginning balance $ 1,878 $ 1,004 $ 2,106 $ 400 $ 2,839 $ 325 $ 562 $ 138 $ 11 $ 9,263 Provision for loan losses 949 134 993 74 916 46 74 (10 ) 64 3,240 Loans charged-off (1,196 ) (9 ) — — (25 ) — (170 ) — (119 ) (1,519 ) Recoveries 14 4 — — — — 103 — 61 182 Ending balance $ 1,645 $ 1,133 $ 3,099 $ 474 $ 3,730 $ 371 $ 569 $ 128 $ 17 $ 11,166 Allowance ending balance: Individually evaluated for impairment $ 139 $ — $ — $ 47 $ 82 $ — $ 29 $ 1 $ — $ 298 Collectively evaluated for impairment 1,506 1,133 3,099 427 3,648 371 540 127 17 10,868 Ending balance $ 1,645 $ 1,133 $ 3,099 $ 474 $ 3,730 $ 371 $ 569 $ 128 $ 17 $ 11,166 Loans: Individually evaluated for impairment $ 236 $ — $ 1,464 $ 259 $ 2,177 $ — $ 208 $ 319 $ — $ 4,663 Collectively evaluated for impairment 224,381 125,045 359,212 61,643 346,224 34,538 54,137 18,904 594 1,224,678 Ending balance $ 224,617 $ 125,045 $ 360,676 $ 61,902 $ 348,401 $ 34,538 $ 54,345 $ 19,223 $ 594 $ 1,229,341 Credit Quality The Company closely monitors economic conditions and loan performance trends to manage and evaluate the exposure to credit risk. Key factors tracked by the Company and utilized in evaluating the credit quality of the loan portfolio include trends in delinquency ratios, the level of nonperforming assets, borrower’s repayment capacity, and collateral coverage. Assets are graded “pass” when the relationship exhibits acceptable credit risk and indicates repayment ability, tolerable collateral coverage and reasonable performance history. Lending relationships exhibiting potentially significant credit risk and marginal repayment ability and/or asset protection are graded “special mention.” Assets 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 must have a well-defined weakness that jeopardizes the liquidation of the debt. Substandard graded loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets graded “doubtful” are substandard graded loans that have added characteristics that make collection or liquidation in full improbable. The Company typically measures impairment based on the present value of expected future cash flows, discounted at the loan's effective interest rate, or based on the loan's observable market price or the fair value of the collateral if the loan is collateral-dependent. The following tables summarize the credit exposure in the Company’s consumer and commercial loan portfolios as of: September 30, 2017 Commercial and industrial Construction and development Commercial real estate Farmland 1-4 family residential Multi-family residential Consumer and Overdrafts Agricultural Total Grade: Pass $ 188,440 $ 181,879 $ 388,007 $ 53,649 $ 357,814 $ 21,659 $ 51,631 $ 22,525 $ 1,265,604 Special mention 3,705 19,188 1,030 413 3,059 1,348 362 1,147 30,252 Substandard 518 — 4,277 287 5,016 228 416 777 11,519 Total $ 192,663 $ 201,067 $ 393,314 $ 54,349 $ 365,889 $ 23,235 $ 52,409 $ 24,449 $ 1,307,375 December 31, 2016 Commercial and industrial Construction and development Commercial real estate Farmland 1-4 family residential Multi-family residential Consumer and Overdrafts Agricultural Total Grade: Pass $ 218,975 $ 127,537 $ 360,264 $ 61,713 $ 353,483 $ 25,871 $ 52,648 $ 17,965 $ 1,218,456 Special mention 4,299 4 1,927 248 4,311 — 524 478 11,791 Substandard 706 1,825 5,465 401 5,121 208 568 458 14,752 Doubtful 17 — — — 37 — 82 — 136 Total $ 223,997 $ 129,366 $ 367,656 $ 62,362 $ 362,952 $ 26,079 $ 53,822 $ 18,901 $ 1,245,135 The following tables summarize the payment status of loans in the Company’s total loan portfolio, including an aging of delinquent loans, loans 90 days or more past due continuing to accrue interest and loans classified as nonperforming as of: September 30, 2017 30 to 59 Days Past Due 60 to 89 Days Past Due 90 Days and Greater Past Due Total Past Due Current Total Loans Recorded Investment > 90 Days and Accruing Commercial and industrial $ 246 $ 60 $ 30 $ 336 $ 192,327 $ 192,663 $ — Real estate: Construction and development 77 — — 77 200,990 201,067 — Commercial real estate — 38 1,521 1,559 391,755 393,314 — Farmland 2 — 6 8 54,341 54,349 — 1-4 family residential 2,701 838 1,894 5,433 360,456 365,889 — Multi-family residential — — 228 228 23,007 23,235 — Consumer 617 201 94 912 50,799 51,711 — Agricultural 66 — 4 70 24,379 24,449 — Overdrafts — — — — 698 698 — Total $ 3,709 $ 1,137 $ 3,777 $ 8,623 $ 1,298,752 $ 1,307,375 $ — December 31, 2016 30 to 59 Days Past Due 60 to 89 Days Past Due 90 Days and Greater Past Due Total Past Due Current Total Recorded Investment > 90 Days and Accruing Commercial and industrial $ 941 $ 105 $ 25 $ 1,071 $ 222,926 $ 223,997 $ — Real estate: Construction and development 73 — 1,825 1,898 127,468 129,366 — Commercial real estate 1,629 32 134 1,795 365,861 367,656 — Farmland 100 26 7 133 62,229 62,362 — 1-4 family residential 3,724 803 1,041 5,568 357,384 362,952 — Multi-family residential 207 49 — 256 25,823 26,079 — Consumer 613 205 87 905 52,600 53,505 — Agricultural 59 — 15 74 18,827 18,901 — Overdrafts — — — — 317 317 — Total $ 7,346 $ 1,220 $ 3,134 $ 11,700 $ 1,233,435 $ 1,245,135 $ — The following table presents information regarding nonaccrual loans as of: September 30, 2017 December 31, 2016 Commercial and industrial $ 57 $ 82 Real estate: Construction and development — 1,825 Commercial real estate 2,113 415 Farmland 162 176 1-4 family residential 2,716 1,699 Multi-family residential 228 5 Consumer 164 192 Agricultural 315 15 Total $ 5,755 $ 4,409 Impaired Loans and Troubled Debt Restructurings A troubled debt restructuring (“TDR”) is a restructuring in which a bank, for economic or legal reasons related to a borrower's financial difficulties, grants a concession to the borrower that it would not otherwise consider. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with original contractual terms of the loan. Loans with insignificant delays or insignificant short falls in the amount of payments expected to be collected are not considered to be impaired. Loans defined as individually impaired, based on applicable accounting guidance, include larger balance nonperforming loans and TDRs. The outstanding balances of TDRs are shown below: September 30, 2017 December 31, 2016 Nonaccrual TDRs $ — $ 43 Performing TDRs 316 462 Total $ 316 $ 505 Specific reserves on TDRs $ 19 $ 4 The following tables present loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and 2016 : Nine Months Ended September 30, 2017 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Commercial and industrial 1 $ 34 $ 15 1-4 family residential 1 11 11 Total 2 $ 45 $ 26 There were no TDRs that have subsequently defaulted through September 30, 2017 . The TDRs described above increased the allowance for loan losses by $19 and resulted in no charge-offs during the nine months ended September 30, 2017 . Nine Months Ended September 30, 2016 Number of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Commercial and industrial 1 $ 90 $ 90 Commercial real estate 1 796 796 1-4 family residential 2 189 189 Total 4 $ 1,075 $ 1,075 There were no TDRs that subsequently defaulted in 2016 . The TDRs described above did not increase the allowance for loan losses and resulted in no charge-offs during the nine months ended September 30, 2016 . The following table presents information about the Company’s impaired loans as of: September 30, 2017 Unpaid Recorded Related Average With no related allowance recorded: Commercial and industrial $ 325 $ 325 $ — $ 381 Real estate: Construction and development — — — 415 Commercial real estate 3,746 3,746 — 4,363 Farmland 120 120 — 106 1-4 family residential 231 231 — 1,288 Multi-family residential 228 228 — 166 Consumer — — — 81 Agricultural 397 397 — 380 Subtotal 5,047 5,047 — 7,180 With allowance recorded: Commercial and industrial 29 29 19 411 Real estate: Construction and development — — — 10 Commercial real estate 283 283 31 580 Farmland 156 156 85 122 1-4 family residential 866 866 145 867 Multi-family residential — — — 26 Consumer — — — 56 Agricultural 299 299 240 176 Subtotal 1,633 1,633 520 2,248 Total $ 6,680 $ 6,680 $ 520 $ 9,428 The following table presents information about the Company’s impaired loans as of: December 31, 2016 Unpaid Recorded Related Allowance Average Recorded Investment With no related allowance recorded: Commercial and industrial $ 28 $ 28 $ — $ 809 Real estate: Construction and development 1,825 1,825 — 172 Commercial real estate 1,196 1,196 — 871 Farmland 89 89 — 109 1-4 family residential 1,799 1,799 — 1,575 Multi-family residential 5 5 — 2 Consumer 105 105 — 89 Agricultural 15 15 — 68 Subtotal 5,062 5,062 — 3,695 With allowance recorded: Commercial and industrial 203 203 64 3,153 Real estate: Farmland 169 169 47 169 1-4 family residential 789 789 108 639 Consumer 95 95 34 155 Agricultural — — — 2 Subtotal 1,256 1,256 253 4,118 Total $ 6,318 $ 6,318 $ 253 $ 7,813 During the nine months ended September 30, 2017 and 2016, total interest income and cash-based interest income recognized on impaired loans was minimal. |