Loans | Loans: Loan balances were as follows: (In Thousands of Dollars) September 30, 2017 December 31, 2016 Originated loans: Commercial real estate Owner occupied $ 137,557 $ 109,750 Non-owner occupied 191,592 165,861 Farmland 58,342 34,155 Other 80,767 70,823 Commercial Commercial and industrial 187,576 171,145 Agricultural 32,006 24,598 Residential real estate 1-4 family residential 259,568 224,222 Home equity lines of credit 68,513 59,642 Consumer Indirect 160,804 156,633 Direct 28,314 26,663 Other 8,461 7,611 Total originated loans $ 1,213,500 $ 1,051,103 Acquired loans: Commercial real estate Owner occupied $ 54,073 $ 60,928 Non-owner occupied 23,152 24,949 Farmland 51,231 54,204 Other 13,285 14,665 Commercial Commercial and industrial 31,370 33,626 Agricultural 13,757 16,024 Residential real estate 1-4 family residential 101,284 112,015 Home equity lines of credit 30,338 34,795 Consumer Direct 16,226 21,681 Other 113 247 Total acquired loans $ 334,829 $ 373,134 Net Deferred loan costs 3,108 3,398 Allowance for loan losses (12,104 ) (10,852 ) Net loans $ 1,539,333 $ 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) September 30, 2017 December 31, 2016 Commercial real estate Owner occupied $ 745 $ 689 Non-owner occupied 394 436 Commercial Commercial and industrial 1,087 1,213 Total outstanding balance $ 2,226 $ 2,338 Carrying amount, net of allowance of $0 in 2017 and 2016 $ 1,811 $ 1,864 There were no purchased credit impaired loans identified as part of the Monitor or Tri-State acquisitions. Accretable yield, or income expected to be collected, is shown in the table below: (In Thousands of Dollars) Nine Months Ended September 30, 2017 Beginning balance $ 247 New loans purchased 0 Accretion of income (57 ) Ending balance $ 190 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 nine month periods ended September 30, 2017. The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine month periods ended September 30, 2017 and 2016: Three Months Ended September 30, 2017 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,954 $ 1,936 $ 2,310 $ 2,927 $ 619 $ 11,746 Provision for loan losses 264 87 36 552 11 950 Loans charged off 0 (10 ) (74 ) (725 ) 0 (809 ) Recoveries 1 2 61 153 0 217 Total ending allowance balance $ 4,219 $ 2,015 $ 2,333 $ 2,907 $ 630 $ 12,104 Nine Months Ended September 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 706 302 150 1,592 200 2,950 Loans charged off (207 ) (225 ) (116 ) (1,929 ) 0 (2,477 ) Recoveries 143 64 94 478 0 779 Total ending allowance balance $ 4,219 $ 2,015 $ 2,333 $ 2,907 $ 630 $ 12,104 Three Months Ended September 30, 2016 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 3,210 $ 1,634 $ 2,081 $ 2,444 $ 351 $ 9,720 Provision for loan losses 138 188 105 423 256 1,110 Loans charged off (8 ) 0 (87 ) (467 ) 0 (562 ) Recoveries 1 0 48 201 0 250 Total ending allowance balance $ 3,341 $ 1,822 $ 2,147 $ 2,601 $ 607 $ 10,518 Nine Months Ended September 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 516 464 376 1,390 134 2,880 Loans charged off (315 ) (37 ) (165 ) (1,442 ) 0 (1,959 ) Recoveries 13 22 91 493 0 619 Total ending allowance balance $ 3,341 $ 1,822 $ 2,147 $ 2,601 $ 607 $ 10,518 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 September 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: September 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 $ 3 $ 4 $ 70 $ 0 $ 0 $ 77 Collectively evaluated for impairment 4,179 1,999 2,230 2,904 630 11,942 Acquired loans collectively evaluated for impairment 37 12 33 3 0 85 Acquired with deteriorated credit quality 0 0 0 0 0 0 Total ending allowance balance $ 4,219 $ 2,015 $ 2,333 $ 2,907 $ 630 $ 12,104 Loans: Loans individually evaluated for impairment $ 853 $ 250 $ 3,591 $ 98 $ 0 $ 4,792 Loans collectively evaluated for impairment 466,325 218,907 324,201 202,780 0 1,212,213 Acquired loans 140,558 44,337 131,385 16,341 0 332,621 Acquired with deteriorated credit quality 1,019 792 0 0 0 1,811 Total ending loans balance $ 608,755 $ 264,286 $ 459,177 $ 219,219 $ 0 $ 1,551,437 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 September 30, 2017 and December 31, 2016: (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated September 30, 2017 With no related allowance recorded: Commercial real estate Owner occupied $ 1,196 $ 680 $ 0 Non-owner occupied 15 15 0 Commercial Commercial and industrial 202 181 0 Residential real estate 1-4 family residential 2,603 2,369 0 Home equity lines of credit 330 323 0 Consumer 261 98 0 Subtotal 4,607 3,666 0 With an allowance recorded: Commercial real estate Owner occupied 158 158 3 Commercial Commercial and industrial 70 70 4 Residential real estate 1-4 family residential 838 803 56 Home equity lines of credit 99 96 14 Subtotal 1,165 1,127 77 Total $ 5,772 $ 4,793 $ 77 (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 nine month periods ended September 30, 2017 and 2016: Average Recorded Investment Interest Income Recognized For Three Months Ended September 30, For Three Months Ended September 30, (In Thousands of Dollars) 2017 2016 2017 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 680 $ 1,266 $ 2 $ 28 Non-owner occupied 16 334 1 0 Commercial Commercial and industrial 181 331 1 5 Residential real estate 1-4 family residential 2,208 2,249 32 33 Home equity lines of credit 326 227 4 3 Consumer 91 86 2 3 Subtotal 3,502 4,493 42 72 With an allowance recorded: Commercial real estate Owner occupied 159 908 2 9 Non-owner occupied 362 1,401 0 19 Commercial Commercial and industrial 70 78 1 1 Residential real estate 1-4 family residential 785 845 10 11 Home equity lines of credit 97 86 1 1 Consumer 9 0 0 0 Subtotal 1,482 3,318 14 41 Total $ 4,984 $ 7,811 $ 56 $ 113 Average Recorded Investment Interest Income Recognized For Nine Months Ended September 30, For Nine Months Ended September 30, (In Thousands of Dollars) 2017 2016 2017 2016 With no related allowance recorded: Commercial real estate Owner occupied $ 794 $ 1,786 $ 7 $ 38 Non-owner occupied 87 335 2 4 Farmland 16 0 0 0 Commercial Commercial and industrial 182 472 3 10 Agricultural 14 0 0 0 Residential real estate 1-4 family residential 2,279 2,270 104 71 Home equity lines of credit 293 234 11 6 Consumer 90 101 8 6 Subtotal 3,755 5,198 135 135 With an allowance recorded: Commercial real estate Owner occupied 164 1,248 6 18 Non-owner occupied 854 1,435 28 38 Farmland 84 0 0 0 Commercial Commercial and industrial 72 79 3 2 Agricultural 66 0 0 0 Residential real estate 1-4 family residential 784 797 27 20 Home equity lines of credit 88 86 3 2 Consumer 3 0 0 0 Subtotal 2,115 3,645 67 80 Total $ 5,870 $ 8,843 $ 202 $ 215 Cash basis interest recognized during the three and nine month periods ended September 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 September 30, 2017 and December 31, 2016: September 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 $ 536 $ 0 $ 958 $ 0 Non-owner occupied 15 0 343 0 Farmland 47 0 58 0 Commercial Commercial and industrial 290 0 400 0 Agricultural 2 0 12 0 Residential real estate 1-4 family residential 1,800 593 1,929 295 Home equity lines of credit 550 70 202 118 Consumer Indirect 397 160 298 438 Direct 60 42 9 65 Other 0 16 0 16 Total originated loans $ 3,697 $ 881 $ 4,209 $ 932 Acquired loans: Commercial real estate Owner occupied $ 8 $ 0 $ 85 $ 0 Non-owner occupied 174 42 0 0 Other 0 0 24 0 Farmland 47 0 380 0 Commercial Commercial and industrial 1,004 65 961 0 Agricultural 10 0 236 0 Residential real estate 1-4 family residential 469 157 386 545 Home equity lines of credit 212 0 119 109 Consumer Direct 134 0 89 95 Total acquired loans $ 2,058 $ 264 $ 2,280 $ 749 Total loans $ 5,755 $ 1,145 $ 6,489 $ 1,681 The following tables present the aging of the recorded investment in past due loans as of September 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 September 30, 2017 Originated loans: Commercial real estate Owner occupied $ 5 $ 0 $ 536 $ 541 $ 136,633 $ 137,174 Non-owner occupied 0 0 15 15 191,075 191,090 Farmland 0 0 47 47 58,223 58,270 Other 0 0 0 0 80,478 80,478 Commercial Commercial and industrial 136 0 290 426 186,633 187,059 Agricultural 95 0 2 97 32,001 32,098 Residential real estate 1-4 family residential 1,799 835 2,393 5,027 253,982 259,009 Home equity lines of credit 3 18 620 641 67,904 68,545 Consumer Indirect 1,995 625 557 3,177 162,739 165,916 Direct 567 318 102 987 27,516 28,503 Other 11 21 16 48 8,413 8,461 Total originated loans: $ 4,611 $ 1,817 $ 4,578 $ 11,006 $ 1,205,597 $ 1,216,603 Acquired loans: Commercial real estate Owner occupied $ 0 $ 0 $ 8 $ 8 $ 54,066 $ 54,074 Non-owner occupied 105 0 216 321 22,805 23,126 Farmland 0 150 47 197 51,034 51,231 Other 0 0 0 0 13,312 13,312 Commercial Commercial and industrial 479 74 1,069 1,622 29,749 31,371 Agricultural 49 5 10 64 13,693 13,757 Residential real estate 1-4 family residential 753 112 626 1,491 99,795 101,286 Home equity lines of credit 0 0 212 212 30,126 30,338 Consumer Direct 371 153 134 658 15,568 16,226 Other 1 0 0 1 112 113 Total acquired loans $ 1,758 $ 494 $ 2,322 $ 4,574 $ 330,260 $ 334,834 Total loans $ 6,369 $ 2,311 $ 6,900 $ 15,580 $ 1,535,857 $ 1,551,437 (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 |