Loans | Loans: Loan balances were as follows: (In Thousands of Dollars) September 30, 2018 December 31, 2017 Originated loans: Commercial real estate Owner occupied $ 153,088 $ 140,321 Non-owner occupied 240,871 199,080 Farmland 94,987 70,534 Other 91,962 89,025 Commercial Commercial and industrial 213,552 193,347 Agricultural 33,946 32,587 Residential real estate 1-4 family residential 303,337 272,421 Home equity lines of credit 78,082 71,507 Consumer Indirect 168,643 155,950 Direct 30,628 28,519 Other 10,874 8,876 Total originated loans $ 1,419,970 $ 1,262,167 Acquired loans: Commercial real estate Owner occupied $ 47,438 $ 53,031 Non-owner occupied 18,190 20,286 Farmland 42,257 47,754 Other 10,723 11,964 Commercial Commercial and industrial 19,636 27,094 Agricultural 10,848 12,206 Residential real estate 1-4 family residential 83,268 96,759 Home equity lines of credit 25,165 28,755 Consumer Direct 10,523 14,378 Other 157 128 Total acquired loans $ 268,205 $ 312,355 Net Deferred loan costs 3,357 2,859 Allowance for loan losses (13,377 ) (12,315 ) Net loans $ 1,678,155 $ 1,565,066 Purchased credit impaired loans As part of past acquisitions 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, 2018 December 31, 2017 Commercial real estate Owner occupied $ 0 $ 670 Non-owner occupied 309 387 Commercial Commercial and industrial 928 1,072 Total outstanding balance $ 1,237 $ 2,129 Carrying amount, net of allowance of $0 in 2018 and 2017 $ 898 $ 1,733 Accretable yield, or income expected to be collected, is shown in the table below: Three Months Ended Nine Months Ended (In Thousands of Dollars) September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Beginning balance $ 132 $ 209 $ 170 $ 247 New loans purchased 0 0 0 0 Accretion of income (19 ) (19 ) (57 ) (57 ) Ending balance $ 113 $ 190 $ 113 $ 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, 2018. 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, 2018 and 2017: Three Months Ended September 30, 2018 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 4,339 $ 1,937 $ 2,651 $ 3,050 $ 787 $ 12,764 Provision for loan losses 380 96 177 309 (12 ) 950 Loans charged off 0 (32 ) (48 ) (464 ) 0 (544 ) Recoveries 21 6 40 140 0 207 Total ending allowance balance $ 4,740 $ 2,007 $ 2,820 $ 3,035 $ 775 $ 13,377 Nine Months Ended September 30, 2018 (In Thousands of Dollars) Commercial Real Estate Commercial Residential Real Estate Consumer Unallocated Total Allowance for loan losses Beginning balance $ 4,260 $ 2,011 $ 2,521 $ 2,848 $ 675 $ 12,315 Provision for loan losses 426 182 345 1,422 100 2,475 Loans charged off 0 (194 ) (172 ) (1,737 ) 0 (2,103 ) Recoveries 54 8 126 502 0 690 Total ending allowance balance $ 4,740 $ 2,007 $ 2,820 $ 3,035 $ 775 $ 13,377 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 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, 2018 and December 31, 2017. 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, 2018 (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 $ 6 $ 4 $ 308 $ 0 $ 0 $ 318 Collectively evaluated for impairment 4,676 1,987 2,469 3,031 775 12,938 Acquired loans collectively evaluated for impairment 58 16 43 4 0 121 Acquired with deteriorated credit quality 0 0 0 0 0 0 Total ending allowance balance $ 4,740 $ 2,007 $ 2,820 $ 3,035 $ 775 $ 13,377 Loans: Loans individually evaluated for impairment $ 804 $ 147 $ 5,539 $ 64 $ 0 $ 6,554 Loans collectively evaluated for impairment 579,225 247,094 375,708 215,774 0 1,417,801 Acquired loans 117,907 29,791 107,903 10,678 0 266,279 Acquired with deteriorated credit quality 236 662 0 0 0 898 Total ending loans balance $ 698,172 $ 277,694 $ 489,150 $ 226,516 $ 0 $ 1,691,532 December 31, 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 $ 0 $ 4 $ 158 $ 0 $ 0 $ 162 Collectively evaluated for impairment 4,214 1,993 2,322 2,844 675 12,048 Acquired loans collectively evaluated for impairment 46 14 41 4 0 105 Acquired with deteriorated credit quality 0 0 0 0 0 0 Total ending allowance balance $ 4,260 $ 2,011 $ 2,521 $ 2,848 $ 675 $ 12,315 Loans: Loans individually evaluated for impairment $ 658 $ 260 $ 4,559 $ 59 $ 0 $ 5,536 Loans collectively evaluated for impairment 497,168 225,312 339,143 198,370 0 1,259,993 Acquired loans 131,926 38,503 125,182 14,507 0 310,118 Acquired with deteriorated credit quality 948 786 0 0 0 1,734 Total ending loans balance $ 630,700 $ 264,861 $ 468,884 $ 212,936 $ 0 $ 1,577,381 The following tables present information related to impaired loans by class of loans as of September 30, 2018 and December 31, 2017: (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated September 30, 2018 With no related allowance recorded: Commercial real estate Owner occupied $ 532 $ 507 $ 0 Non-owner occupied 41 40 0 Commercial Commercial and industrial 108 74 0 Residential real estate 1-4 family residential 3,608 2,943 0 Home equity lines of credit 345 294 0 Consumer 163 64 0 Subtotal 4,797 3,922 0 With an allowance recorded: Commercial real estate Farmland 258 257 6 Commercial Commercial and industrial 73 73 4 Residential real estate 1-4 family residential 2,145 2,125 227 Home equity lines of credit 190 177 81 Subtotal 2,666 2,632 318 Total $ 7,463 $ 6,554 $ 318 (In Thousands of Dollars) Unpaid Principal Balance Recorded Investment Allowance for Loan Losses Allocated December 31, 2017 With no related allowance recorded: Commercial real estate Owner occupied $ 659 $ 658 $ 0 Commercial Commercial and industrial 214 192 0 Residential real estate 1-4 family residential 2,923 2,697 0 Home equity lines of credit 341 319 0 Consumer 145 59 0 Subtotal 4,282 3,925 0 With an allowance recorded: Commercial Commercial and industrial 68 68 4 Residential real estate 1-4 family residential 1,409 1,387 84 Home equity lines of credit 159 156 74 Subtotal 1,636 1,611 162 Total $ 5,918 $ 5,536 $ 162 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, 2018 and 2017: Average Recorded Investment Interest Income Recognized For Three Months Ended September 30, For Three Months Ended September 30, (In Thousands of Dollars) 2018 2017 2018 2017 With no related allowance recorded: Commercial real estate Owner occupied $ 512 $ 680 $ 8 $ 2 Non-owner occupied 40 16 1 1 Commercial Commercial and industrial 155 181 1 1 Residential real estate 1-4 family residential 2,941 2,208 40 32 Home equity lines of credit 294 326 4 4 Consumer 68 91 2 2 Subtotal 4,010 3,502 56 42 With an allowance recorded: Commercial real estate Owner occupied 0 159 0 2 Non-owner occupied 0 362 0 0 Farmland 257 0 0 0 Commercial Commercial and industrial 78 70 1 1 Residential real estate 1-4 family residential 2,132 785 19 10 Home equity lines of credit 170 97 2 1 Consumer 11 9 0 0 Subtotal 2,648 1,482 22 14 Total $ 6,658 $ 4,984 $ 78 $ 56 Average Recorded Investment Interest Income Recognized For Nine Months Ended September 30, For Nine Months Ended September 30, (In Thousands of Dollars) 2018 2017 2018 2017 With no related allowance recorded: Commercial real estate Owner occupied $ 487 $ 794 $ 23 $ 7 Non-owner occupied 22 87 1 2 Farmland 0 16 0 0 Commercial Commercial and industrial 411 182 3 3 Agricultural 0 14 0 0 Residential real estate 1-4 family residential 2,751 2,279 131 104 Home equity lines of credit 307 293 12 11 Consumer 69 90 8 8 Subtotal 4,047 3,755 178 135 With an allowance recorded: Commercial real estate Owner occupied 0 164 0 6 Non-owner occupied 0 854 0 28 Farmland 171 84 0 0 Commercial Commercial and industrial 71 72 3 3 Agricultural 0 66 0 0 Residential real estate 1-4 family residential 1,837 784 38 27 Home equity lines of credit 161 88 5 3 Consumer 4 3 0 0 Subtotal 2,244 2,115 46 67 Total $ 6,291 $ 5,870 $ 224 $ 202 Cash basis interest recognized during the three and nine month periods ended September 30, 2018 and 2017 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, 2018 and December 31, 2017: September 30, 2018 December 31, 2017 (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 $ 353 $ 0 $ 501 $ 0 Farmland 33 0 45 0 Commercial Commercial and industrial 178 0 249 0 Agricultural 177 0 2 0 Residential real estate 1-4 family residential 3,256 633 2,653 393 Home equity lines of credit 610 183 602 8 Consumer Indirect 344 228 457 361 Direct 51 119 63 153 Other 0 3 0 14 Total originated loans $ 5,002 $ 1,166 $ 4,572 $ 929 Acquired loans: Commercial real estate Non-owner occupied $ 88 $ 0 $ 216 $ 0 Farmland 257 0 0 0 Commercial Commercial and industrial 762 42 943 19 Agricultural 297 10 9 0 Residential real estate 1-4 family residential 882 220 613 69 Home equity lines of credit 176 123 170 0 Consumer Direct 147 50 140 15 Total acquired loans $ 2,609 $ 445 $ 2,091 $ 103 Total loans $ 7,611 $ 1,611 $ 6,663 $ 1,032 The following tables present the aging of the recorded investment in past due loans as of September 30, 2018 and December 31, 2017 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, 2018 Originated loans: Commercial real estate Owner occupied $ 58 $ 0 $ 353 $ 411 $ 152,303 $ 152,714 Non-owner occupied 0 0 0 0 240,304 240,304 Farmland 419 0 33 452 94,430 94,882 Other 0 0 0 0 91,673 91,673 Commercial Commercial and industrial 237 98 178 513 212,653 213,166 Agricultural 112 0 177 289 33,757 34,046 Residential real estate 1-4 family residential 1,385 730 3,889 6,004 296,610 302,614 Home equity lines of credit 83 9 793 885 77,220 78,105 Consumer Indirect 1,888 818 572 3,278 170,836 174,114 Direct 802 330 170 1,302 29,546 30,848 Other 16 26 3 45 10,829 10,874 Total originated loans: $ 5,000 $ 2,011 $ 6,168 $ 13,179 $ 1,410,161 $ 1,423,340 Acquired loans: Commercial real estate Owner occupied $ 512 $ 0 $ 0 $ 512 $ 46,988 $ 47,500 Non-owner occupied 60 0 88 148 17,973 18,121 Farmland 527 75 257 859 41,397 42,256 Other 0 0 0 0 10,722 10,722 Commercial Commercial and industrial 246 57 804 1,107 18,527 19,634 Agricultural 20 6 307 333 10,515 10,848 Residential real estate 1-4 family residential 1,289 100 1,102 2,491 80,775 83,266 Home equity lines of credit 168 14 299 481 24,684 25,165 Consumer Direct 303 237 197 737 9,786 10,523 Other 1 0 0 1 156 157 Total acquired loans $ 3,126 $ 489 $ 3,054 $ 6,669 $ 261,523 $ 268,192 Total loans $ 8,126 $ 2,500 $ 9,222 $ 19,848 $ 1,671,684 $ 1,691,532 (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, 2017 Originated loans: Commercial real estate Owner occupied $ 4 $ 340 $ 501 $ 845 $ 139,081 $ 139,926 Non-owner occupied 0 0 0 0 198,588 198,588 Farmland 0 0 45 45 70,398 70,443 Other 0 0 0 0 88,703 88,703 Commercial Commercial and industrial 292 3 249 544 192,335 192,879 Agricultural 74 0 2 76 32,605 32,681 Residential real estate 1-4 family residential 2,044 403 3,046 5,493 266,338 271,831 Home equity lines of credit 155 18 610 783 70,754 71,537 Consumer Indirect 2,429 829 818 4,076 156,772 160,848 Direct 632 250 216 1,098 27,608 28,706 Other 115 11 14 140 8,736 8,876 Total originated loans $ 5,745 $ 1,854 $ 5,501 $ 13,100 $ 1,251,918 $ 1,265,018 Acquired loans: Commercial real estate Owner occupied $ 0 $ 0 $ 0 $ 0 $ 53,051 $ 53,051 Non-owner occupied 0 0 216 216 20,042 20,258 Farmland 454 0 0 454 47,301 47,755 Other 0 0 0 0 11,976 11,976 Commercial Commercial and industrial 327 96 962 1,385 25,709 27,094 Agricultural 87 0 9 96 12,111 12,207 Residential real estate 1-4 family residential 858 77 682 1,617 95,144 96,761 Home equity lines of credit 161 0 170 331 28,424 28,755 Consumer Direct 380 151 155 686 13,692 14,378 Other 0 1 0 1 127 128 Total acquired loans $ 2,267 $ 325 $ 2,194 $ 4,786 $ 307,577 $ 312,363 Total loans $ 8,012 $ 2,179 $ 7,695 $ 17,886 $ 1,559,495 $ 1,577,381 |