Loans | Loans: Loan balances were as follows: (In Thousands of Dollars) June 30, 2017 December 31, 2016 Originated loans: Commercial real estate Owner occupied $ 124,664 $ 109,750 Non-owner occupied 182,900 165,861 Farmland 50,873 34,155 Other 78,496 70,823 Commercial Commercial and industrial 184,854 171,145 Agricultural 30,355 24,598 Residential real estate 1-4 family residential 246,771 224,222 Home equity lines of credit 66,035 59,642 Consumer Indirect 166,835 156,633 Direct 27,995 26,663 Other 8,066 7,611 Total originated loans $ 1,167,844 $ 1,051,103 Acquired loans: Commercial real estate Owner occupied $ 56,330 $ 60,928 Non-owner occupied 20,969 24,949 Farmland 47,884 54,204 Other 13,485 14,665 Commercial Commercial and industrial 30,822 33,626 Agricultural 13,575 16,024 Residential real estate 1-4 family residential 101,690 112,015 Home equity lines of credit 31,495 34,795 Consumer Direct 17,429 21,681 Other 129 247 Total acquired loans $ 333,808 $ 373,134 Net Deferred loan costs 3,621 3,398 Allowance for loan losses (11,746 ) (10,852 ) Net loans $ 1,493,527 $ 1,416,783 Purchased credit impaired loans As part of the NBOH acquisition the Company acquired various loans that displayed evidence of deterioration of credit quality since origination and which was probable that all contractually required payments would not be collected. The carrying amounts and contractually required payments of these loans which are included in the loan balances above are summarized in the following tables: (In Thousands of Dollars) June 30, 2017 December 31, 2016 Commercial real estate Owner occupied $ 707 $ 689 Non-owner occupied 394 436 Commercial Commercial and industrial 1,148 1,213 Total outstanding balance $ 2,249 $ 2,338 Carrying amount, net of allowance of $0 in 2017 and 2016 $ 1,815 $ 1,864 Accretable yield, or income expected to be collected, is shown in the table below: (In Thousands of Dollars) Six Months Ended June 30, 2017 Beginning balance $ 247 New loans purchased 0 Accretion of income (38 ) Ending balance $ 209 The key assumptions considered include probability of default and the amount of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income and principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary. There were no adjustments to forecasted cash flows that impacted the allowance for loan losses for the three and six month periods ended June 30, 2017. The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six month periods ended June 30, 2017 and 2016: Three Months Ended June 30, 2017 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,638 $ 1,846 $ 2,321 $ 2,813 $ 701 $ 11,319 Provision for loan losses 365 198 5 464 (82 ) 950 Loans charged off (67 ) (113 ) (36 ) (509 ) 0 (725 ) Recoveries 18 5 20 159 0 202 Total ending allowance balance $ 3,954 $ 1,936 $ 2,310 $ 2,927 $ 619 $ 11,746 Six Months Ended June 30, 2017 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,577 $ 1,874 $ 2,205 $ 2,766 $ 430 $ 10,852 Provision for loan losses 442 215 114 1,040 189 2,000 Loans charged off (207 ) (215 ) (42 ) (1,204 ) 0 (1,668 ) Recoveries 142 62 33 325 0 562 Total ending allowance balance $ 3,954 $ 1,936 $ 2,310 $ 2,927 $ 619 $ 11,746 Three Months Ended June 30, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,181 $ 1,452 $ 1,914 $ 2,218 $ 625 $ 9,390 Provision for loan losses 335 212 196 521 (274 ) 990 Loans charged off (307 ) (37 ) (44 ) (431 ) 0 (819 ) Recoveries 1 7 15 136 0 159 Total ending allowance balance $ 3,210 $ 1,634 $ 2,081 $ 2,444 $ 351 $ 9,720 Six Months Ended June 30, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,127 $ 1,373 $ 1,845 $ 2,160 $ 473 $ 8,978 Provision for loan losses 378 276 271 967 (122 ) 1,770 Loans charged off (307 ) (37 ) (78 ) (975 ) 0 (1,397 ) Recoveries 12 22 43 292 0 369 Total ending allowance balance $ 3,210 $ 1,634 $ 2,081 $ 2,444 $ 351 $ 9,720 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, based on impairment method as of June 30, 2017 and December 31, 2016. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees and costs, but excludes accrued interest receivable, which is not considered to be material: June 30, 2017 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 29 $ 4 $ 59 $ 0 $ 0 $ 92 Collectively evaluated for impairment 3,889 1,920 2,218 2,923 619 11,569 Acquired loans collectively evaluated for impairment 36 12 33 4 0 85 Acquired with deteriorated credit quality 0 0 0 0 0 0 Total ending allowance balance $ 3,954 $ 1,936 $ 2,310 $ 2,927 $ 619 $ 11,746 Loans: Loans individually evaluated for impairment $ 1,948 $ 253 $ 3,388 $ 108 $ 0 $ 5,697 Loans collectively evaluated for impairment 433,957 214,691 309,146 208,407 0 1,166,201 Acquired loans 137,534 43,550 132,947 17,529 0 331,560 Acquired with deteriorated credit quality 969 846 0 0 0 1,815 Total ending loans balance $ 574,408 $ 259,340 $ 445,481 $ 226,044 $ 0 $ 1,505,273 December 31, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 86 $ 111 $ 52 $ 0 $ 0 $ 249 Collectively evaluated for impairment 3,491 1,763 2,153 2,766 430 10,603 Acquired loans collectively evaluated for impairment 0 0 0 0 0 0 Acquired with deteriorated credit quality 0 0 0 0 0 0 Total ending allowance balance $ 3,577 $ 1,874 $ 2,205 $ 2,766 $ 430 $ 10,852 Loans: Loans individually evaluated for impairment $ 3,457 $ 477 $ 3,308 $ 96 $ 0 $ 7,338 Loans collectively evaluated for impairment 376,632 195,146 280,215 196,081 0 1,048,074 Acquired loans 153,228 48,536 146,672 21,923 0 370,359 Acquired with deteriorated credit quality 968 896 0 0 0 1,864 Total ending loans balance $ 534,285 $ 245,055 $ 430,195 $ 218,100 $ 0 $ 1,427,635 The following tables present information related to impaired loans by class of loans as of June 30, 2017 and December 31, 2016: (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated June 30, 2017 With no related allowance recorded: Commercial real estate Owner occupied $ 1,198 $ 681 $ 0 Non-owner occupied 18 18 0 Commercial Commercial and industrial 203 182 0 Agricultural 123 0 0 Residential real estate 1-4 family residential 2,466 2,221 0 Home equity lines of credit 306 284 0 Consumer 207 108 0 Subtotal 4,521 3,494 0 With an allowance recorded: Commercial real estate Owner occupied 163 163 7 Non-owner occupied 1,086 1,086 22 Commercial Commercial and industrial 71 71 4 Residential real estate 1-4 family residential 831 795 56 Home equity lines of credit 91 88 3 Subtotal 2,242 2,203 92 Total $ 6,763 $ 5,697 $ 92 (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated December 31, 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 1,974 $ 1,456 $ 0 Non-owner occupied 332 331 0 Commercial Commercial and industrial 205 184 0 Residential real estate 1-4 family residential 2,650 2,403 0 Home equity lines of credit 195 179 0 Consumer 205 96 0 Subtotal 5,561 4,649 0 With an allowance recorded: Commercial real estate Owner occupied 173 173 14 Non-owner occupied 1,118 1,118 30 Farmland 380 379 42 Commercial Commercial and industrial 75 75 4 Agricultural 219 218 107 Residential real estate 1-4 family residential 661 642 51 Home equity lines of credit 84 84 1 Subtotal 2,710 2,689 249 Total $ 8,271 $ 7,338 $ 249 The following tables present the average recorded investment in impaired loans by class and interest income recognized by loan class for the three and six month periods ended June 30, 2017 and 2016: Average Recorded Investment Interest Income Recognized For Three Months Ended June 30, For Three Months Ended June 30, (In Thousands of Dollars) 2017 2016 2017 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 682 $ 1,266 $ 2 $ 28 Non-owner occupied 18 334 0 0 Farmland 17 0 0 0 Commercial Commercial and industrial 182 331 1 5 Agricultural production 15 0 0 0 Residential real estate 1-4 family residential 2,251 2,249 35 33 Home equity lines of credit 326 227 3 3 Consumer 105 86 4 3 Subtotal 3,596 4,493 45 72 With an allowance recorded: Commercial real estate Owner occupied 164 908 2 9 Non-owner occupied 1,092 1,401 14 19 Commercial Commercial and industrial 72 78 1 1 Residential real estate 1-4 family residential 794 845 9 11 Home equity lines of credit 84 86 1 1 Consumer 0 0 0 0 Subtotal 2,206 3,318 27 41 Total $ 5,802 $ 7,811 $ 72 $ 113 Average Recorded Investment Interest Income Recognized For Six Months Ended June 30, For Six Months Ended June 30, (In Thousands of Dollars) 2017 2016 2017 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 851 $ 1,786 $ 5 $ 38 Non-owner occupied 122 335 1 4 Farmland 24 0 0 0 Commercial Commercial and industrial 183 472 2 10 Agricultural 21 0 0 0 Residential real estate 1-4 family residential 2,315 2,270 72 71 Home equity lines of credit 276 234 7 6 Consumer 90 101 6 6 Subtotal 3,882 5,198 93 135 With an allowance recorded: Commercial real estate Owner occupied 166 1,248 4 18 Non-owner occupied 1,099 1,435 28 38 Farmland 126 0 0 0 Commercial Commercial and industrial 73 79 2 2 Agricultural 100 0 0 0 Residential real estate 1-4 family residential 784 797 17 20 Home equity lines of credit 84 86 2 2 Subtotal 2,432 3,645 53 80 Total $ 6,314 $ 8,843 $ 146 $ 215 Cash basis interest recognized during the three and six month periods ended June 30, 2017 and 2016 was materially equal to interest income recognized. Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of June 30, 2017 and December 31, 2016: June 30, 2017 December 31, 2016 (In Thousands of Dollars) Nonaccrual Loans Past Due 90 Days or More Still Accruing Nonaccrual Loans Past Due 90 Days or More Still Accruing Originated loans: Commercial real estate Owner occupied $ 549 $ 0 $ 958 $ 0 Non-owner occupied 18 0 343 0 Farmland 51 0 58 0 Commercial Commercial and industrial 297 0 400 0 Agricultural 2 0 12 0 Residential real estate 1-4 family residential 1,667 537 1,929 295 Home equity lines of credit 532 22 202 118 Consumer Indirect 396 182 298 438 Direct 6 36 9 65 Other 0 0 0 16 Total originated loans $ 3,518 $ 777 $ 4,209 $ 932 Acquired loans: Commercial real estate Owner occupied $ 34 $ 0 $ 85 $ 0 Non-owner occupied 185 0 0 0 Other 0 0 24 0 Farmland 0 0 380 0 Commercial Commercial and industrial 879 0 961 0 Agricultural 18 0 236 0 Residential real estate 1-4 family residential 402 124 386 545 Home equity lines of credit 215 38 119 109 Consumer Direct 135 30 89 95 Total acquired loans $ 1,868 $ 192 $ 2,280 $ 749 Total loans $ 5,386 $ 969 $ 6,489 $ 1,681 The following tables present the aging of the recorded investment in past due loans as of June 30, 2017 and December 31, 2016 by class of loans: (In Thousands of Dollars) 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Nonaccrual Total Past Due Loans Not Past Due Total June 30, 2017 Originated loans: Commercial real estate Owner occupied $ 0 $ 0 $ 549 $ 549 $ 123,757 $ 124,306 Non-owner occupied 0 0 18 18 182,415 182,433 Farmland 0 0 51 51 50,763 50,814 Other 0 0 0 0 78,184 78,184 Commercial Commercial and industrial 121 0 297 418 184,079 184,497 Agricultural 35 0 2 37 30,409 30,446 Residential real estate 1-4 family residential 1,520 465 2,204 4,189 242,033 246,222 Home equity lines of credit 123 80 554 757 65,314 66,071 Consumer Indirect 1,924 430 578 2,932 169,298 172,230 Direct 456 240 42 738 27,452 28,190 Other 30 17 0 47 8,018 8,065 Total originated loans: $ 4,209 $ 1,232 $ 4,295 $ 9,736 $ 1,161,722 $ 1,171,458 Acquired loans: Commercial real estate Owner occupied $ 323 $ 49 $ 34 $ 406 $ 55,925 $ 56,331 Non-owner occupied 0 0 185 185 20,769 20,954 Farmland 0 0 0 0 47,885 47,885 Other 0 0 0 0 13,501 13,501 Commercial Commercial and industrial 69 1 879 949 29,872 30,821 Agricultural 10 0 18 28 13,548 13,576 Residential real estate 1-4 family residential 479 184 526 1,189 100,504 101,693 Home equity lines of credit 116 0 253 369 31,126 31,495 Consumer Direct 341 40 165 546 16,884 17,430 Other 0 0 0 0 129 129 Total acquired loans $ 1,338 $ 274 $ 2,060 $ 3,672 $ 330,143 $ 333,815 Total loans $ 5,547 $ 1,506 $ 6,355 $ 13,408 $ 1,491,865 $ 1,505,273 (In Thousands of Dollars) 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Nonaccrual Total Past Due Loans Not Past Due Total December 31, 2016 Originated loans: Commercial real estate Owner occupied $ 0 $ 0 $ 958 $ 958 $ 108,475 $ 109,433 Non-owner occupied 0 0 343 343 165,105 165,448 Farmland 0 0 58 58 34,057 34,115 Other 0 0 0 0 70,542 70,542 Commercial Commercial and industrial 90 0 400 490 170,242 170,732 Agricultural 0 29 12 41 24,632 24,673 Residential real estate 1-4 family residential 3,368 356 2,224 5,948 217,752 223,700 Home equity lines of credit 77 37 320 434 59,248 59,682 Consumer Indirect 2,844 696 736 4,276 157,437 161,713 Direct 744 213 74 1,031 25,815 26,846 Other 92 28 16 136 7,476 7,612 Total originated loans $ 7,215 $ 1,359 $ 5,141 $ 13,715 $ 1,040,781 $ 1,054,496 Acquired loans: Commercial real estate Owner occupied $ 8 $ 205 $ 85 $ 298 $ 60,630 $ 60,928 Non-owner occupied 134 0 0 134 24,815 24,949 Farmland 83 0 380 463 53,741 54,204 Other 0 0 24 24 14,642 14,666 Commercial Commercial and industrial 278 0 961 1,239 32,387 33,626 Agricultural 21 0 236 257 15,767 16,024 Residential real estate 1-4 family residential 1,556 504 931 2,991 109,027 112,018 Home equity lines of credit 152 9 228 389 34,406 34,795 Consumer Direct 938 184 184 1,306 20,376 21,682 Other 100 0 0 100 147 247 Total acquired loans $ 3,270 $ 902 $ 3,029 $ 7,201 $ 365,938 $ 373,139 Total loans $ 10,485 $ 2,261 $ 8,170 $ 20,916 $ 1,406,719 $ 1,427,635 |