Loans are stated at the amount of unpaid principal, reduced by deferred income (net of costs). Interest on loans is recognized using the simple interest method on the daily balances of the principal amounts outstanding. Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable. The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio, the allowance for loan losses and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale as of June 30, 2020, and December 31, 2019, were $901,000 and $9,037,000, respectively.



	June 30, 2020			December 31, 2019
Commercial and industrial loans	$	2,898,329		$	2,109,879
Agricultural production financing and other loans to farmers	93,838			93,861
Real estate loans:
Construction	640,560			787,568
Commercial and farmland	3,239,998			3,052,698
Residential	1,145,187			1,143,217
Home equity	532,314			588,984
Individuals' loans for household and other personal expenditures	123,611			135,989
Public finance and other commercial loans	624,704			547,114
Loans	9,298,541			8,459,310
Allowance for loan losses	(121,119		)	(80,284		)
Net Loans	$	9,177,422		$	8,379,026

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law, providing an approximately $2 trillion stimulus package that includes direct payments to individual taxpayers, economic stimulus to significantly impacted industry sectors, emergency funding for hospitals and providers, small business loans, increased unemployment benefits, and a variety of tax incentives.

For small businesses, eligible nonprofits and certain others, the CARES Act established a Paycheck Protection Program (“PPP”), which is administered by the Small Business Administration (“SBA”). On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was enacted. Among other things, this legislation amends the initial CARES Act program by raising the appropriation level for PPP loans from $349 billion to $670 billion. The PPP was further modified on June 5, 2020 with the adoption of the Paycheck Protection Program Flexibility Act (the Flexibility Act), which extended the maturity date for PPP loans from two years to five years for loans disbursed on or after the date of enactment of the Flexibility Act. For PPP loans disbursed prior to such enactment, the Flexibility Act permits the borrower and lender to mutually agree to extend the term of the loan to five years. The Bank has actively participated in assisting its customers with applications for resources through the program. PPP loans earn interest at a fixed rate of 1 percent and primarily have a two year term. The Bank anticipates that the majority of these loans will ultimately be forgiven, in whole or in part, by the SBA in accordance with the terms of the program. As of June 30, 2020, the Bank had funded over 5,000 PPP loans representing $882.9 million, which is net of deferred processing fees and costs of $24.6 million, and is primarily included in the commercial and industrial loan class. Under the terms of the PPP, the loans are fully guaranteed by the U.S. government. The Bank borrowed from the Paycheck Protection Program Liquidity Facility ("PPPL Facility") to supplement liquidity to fund the PPP loans. The outstanding balance of the PPPL Facility borrowings at June 30, 2020 was $166.9 million. Details of the borrowings from the PPPL Facility are included in the "LIQUIDITY" section of this Management's Discussion and Analysis of Financial Condition and Results of Operations on this Form 10-Q.

The original implementation date of the Current Expected Credit Loss (CECL) model for calculating the Allowance for Credit Losses guided by FASB Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments was January 1, 2020. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13. As discussed below, ASU No. 2016-13, provides for the replacement of the incurred loss model for recording the allowance for loan losses with CECL. However, as a result of the Corporation’s election, its 2020 financial statements have been prepared under the existing incurred loss model. The temporary relief applicable to the Corporation’s compliance with CECL ends on the earlier of: (1) the termination date of the national emergency concerning the COVID-19 outbreak, declared by the President of the United States on March 13, 2020, under the National Emergencies Act; or (2) December 31, 2020.

The Corporation maintains an allowance for loan losses to cover probable credit losses identified during its loan review process. Management believes the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio at June 30, 2020. The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results. It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters. The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examinations, and will increase or decrease as deemed necessary to ensure it remains adequate. In addition, the allowance as a percentage of charge-offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values.

The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings. The allowance is increased by provision expense and decreased by charge-offs less recoveries. All charge-offs are approved by the Bank's senior credit officers and in accordance with established policies. The Bank charges off a loan when a determination is made that all or a portion of the loan is uncollectable. The amount provided for loan losses in a given period may be greater than or less than net loan losses experienced during the period, and is based on management’s judgment as to the appropriate level of the allowance for loan losses. The determination of the provision amount is based on management’s ongoing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and independent loan reviews. The evaluation takes into consideration identified credit problems, the possibility of losses inherent in the loan portfolio that are not specifically identified and management’s judgment as to the impact of the current environment and economic conditions on the portfolio.

The allowance consists of specific impairment reserves as required by ASC 310-10-35, a component for historical losses in accordance with ASC 450 and the consideration of current environmental factors in accordance with ASC 450. A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected.

The historical loss allocation for loans not deemed impaired according to ASC 450 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment. The historical loss factors are based upon actual loss experience within each risk and call code classification. The historical look back period for non-criticized loans looks to the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans. Each of the rolling four quarter periods used to obtain the average, include all charge-offs for the previous twelve-month period, therefore the historical look back period includes seven quarters. The resulting allocation is reflective of current conditions. Criticized loans are grouped based on the risk grade assigned to the loan. Loans with a special mention grade but not impaired are assigned a loss factor, and loans with a classified grade but not impaired are assigned a separate loss factor. The loss factor computation for this allocation includes a segmented historical loss migration analysis of risk grades to charge-off.

In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to ensure that losses inherent in the portfolio are reflected in the allowance for loan losses. The environmental component adjusts the historical loss allocations for non-impaired loans to reflect relevant current conditions that, in management's opinion, have an impact on loss recognition. Environmental factors that management reviews in the analysis include: national and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes.

In conformance with ASC 805 and ASC 820, purchased loans are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan or the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceeds the fair value adjustment on the portion of the purchased portfolio not deemed impaired.



	Three Months Ended June 30, 2020
	Commercial			Commercial Real Estate			Consumer			Residential			Total
Allowance for loan losses:
Balances, March 31, 2020	$	38,431		$	37,907		$	5,752		$	17,364		$	99,454
Provision for losses	6,240			8,945			2,783			3,927			21,895
Recoveries on loans	106			107			56			48			317
Loans charged off	(99		)	(41		)	(146		)	(261		)	(547		)
Balances, June 30, 2020	$	44,678		$	46,918		$	8,445		$	21,078		$	121,119



	Six Months Ended June 30, 2020
	Commercial			Commercial Real Estate			Consumer			Residential			Total
Allowance for loan losses:
Balances, December 31, 2019	$	32,902		$	28,778		$	4,035		$	14,569		$	80,284
Provision for losses	11,941			18,139			4,707			6,860			41,647
Recoveries on loans	549			225			98			118			990
Loans charged off	(714		)	(224		)	(395		)	(469		)	(1,802		)
Balances, June 30, 2020	$	44,678		$	46,918		$	8,445		$	21,078		$	121,119



	Three Months Ended June 30, 2019
	Commercial			Commercial Real Estate			Consumer			Residential			Total
Allowance for loan losses:
Balances, March 31, 2019	$	33,069		$	29,434		$	4,026		$	14,373		$	80,902
Provision for losses	100			320			36			44			500
Recoveries on loans	344			778			100			212			1,434
Loans charged off	(311		)	(1,001		)	(92		)	(158		)	(1,562		)
Balances, June 30, 2019	$	33,202		$	29,531		$	4,070		$	14,471		$	81,274



	Six Months Ended June 30, 2019
	Commercial			Commercial Real Estate			Consumer			Residential			Total
Allowance for loan losses:
Balances, December 31, 2018	$	32,657		$	29,609		$	3,964		$	14,322		$	80,552
Provision for losses	336			1,089			141			134			1,700
Recoveries on loans	886			1,023			218			312			2,439
Loans charged off	(677		)	(2,190		)	(253		)	(297		)	(3,417		)
Balances, June 30, 2019	$	33,202		$	29,531		$	4,070		$	14,471		$	81,274



	June 30, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance Balances:
Individually evaluated for impairment	$	7,466	$	4,943	$	—	$	590	$	12,999
Collectively evaluated for impairment	37,212		41,975		8,445		20,488		108,120
Total Allowance for Loan Losses	$	44,678	$	46,918	$	8,445	$	21,078	$	121,119
Loan Balances:
Individually evaluated for impairment	$	15,312	$	26,512	$	3	$	3,453	$	45,280
Collectively evaluated for impairment	3,600,395		3,847,884		123,608		1,673,093		9,244,980
Loans acquired with deteriorated credit quality	1,164		6,162		—		955		8,281
Loans	$	3,616,871	$	3,880,558	$	123,611	$	1,677,501	$	9,298,541



	December 31, 2019
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance Balances:
Individually evaluated for impairment	$	—	$	231	$	—	$	458	$	689
Collectively evaluated for impairment	32,902		28,547		4,035		14,111		79,595
Total Allowance for Loan Losses	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Loan Balances:
Individually evaluated for impairment	$	457	$	8,728	$	4	$	2,520	$	11,709
Collectively evaluated for impairment	2,748,681		3,821,660		135,985		1,727,966		8,434,292
Loans acquired with deteriorated credit quality	1,716		9,878		—		1,715		13,309
Loans	$	2,750,854	$	3,840,266	$	135,989	$	1,732,201	$	8,459,310

Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

With respect to residential loans that are secured by 1-4 family residences and are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment on loans secured by 1-4 family residences can be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. When the interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectable. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance. Payments received on impaired accruing or delinquent loans are applied to interest income as accrued.

Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method for measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.



	June 30, 2020
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Impaired loans with no related allowance:
Commercial and industrial loans	$	5,024	$	5,008	$	—
Real estate Loans:
Commercial and farmland	9,675		7,602		—
Residential	75		59		—
Individuals' loans for household and other personal expenditures	3		3		—
Total	$	14,777	$	12,672	$	—
Impaired loans with related allowance:
Commercial and industrial loans	$	10,342	$	10,304	$	7,466
Real estate Loans:
Commercial and farmland	19,650		18,910		4,943
Residential	3,134		3,009		520
Home equity	401		385		70
Total	$	33,527	$	32,608	$	12,999
Total Impaired Loans	$	48,304	$	45,280	$	12,999



	December 31, 2019
	Unpaid Principal Balance		Recorded Investment		Related Allowance
Impaired loans with no related allowance:
Commercial and industrial loans	$	320	$	320	$	—
Agriculture production financing and other loans to farmers	299		137		—
Real estate Loans:
Construction	1,206		970		—
Commercial and farmland	8,037		5,849		—
Residential	93		76		—
Total	$	9,955	$	7,352	$	—
Impaired loans with related allowance:
Real estate Loans:
Commercial and farmland	$	2,648	$	1,909	$	231
Residential	2,070		2,044		383
Home equity	417		400		75
Individuals' loans for household and other personal expenditures	4		4		—
Total	$	5,139	$	4,357	$	689
Total Impaired Loans	$	15,094	$	11,709	$	689



	Three Months Ended June 30, 2020				Six Months Ended June 30, 2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	5,008	$	—	$	5,008	$	—
Real estate Loans:
Commercial and farmland	7,637		37		7,910		75
Residential	59		1		59		2
Individuals' loans for household and other personal expenditures	3		—		3		—
Total	$	12,707	$	38	$	12,980	$	77
Impaired loans with related allowance:
Commercial and industrial loans	$	10,304	$	—	$	10,304	$	—
Real estate Loans:
Commercial and farmland	18,910		—		19,156		—
Residential	3,020		19		3,032		38
Home equity	387		3		390		6
Total	$	32,621	$	22	$	32,882	$	44
Total Impaired Loans	$	45,328	$	60	$	45,862	$	121



	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	1,013	$	—	$	1,021	$	—
Agriculture production financing and other loans to farmers	668		—		672		—
Real estate Loans:
Construction	7,314		—		7,792		—
Commercial and farmland	7,998		39		8,187		78
Residential	38		1		38		2
Home equity	49		—		49		—
Public finance and other commercial loans	353		—		353		—
Total	$	17,433	$	40	$	18,112	$	80
Impaired loans with related allowance:
Commercial and industrial loans	$	940	$	—	$	940	$	—
Agriculture production financing and other loans to farmers	2,117		—		2,134		—
Real estate Loans:
Commercial and farmland	157		—		164		—
Residential	2,021		16		2,029		32
Home equity	351		3		352		6
Individuals' loans for household and other personal expenditures	14		—		15		—
Total	$	5,600	$	19	$	5,634	$	38
Total Impaired Loans	$	23,033	$	59	$	23,746	$	118

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the periods indicated. Consumer non-performing loans include accruing consumer loans 90-days or more delinquent and consumer non-accrual loans. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.



	June 30, 2020
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing		Consumer Non-Performing		Total
Commercial and industrial loans	$	2,722,071	$	87,069	$	89,189	$	—	$	—	$	—	$	—	$	2,898,329
Agriculture production financing and other loans to farmers	78,645		6,082		9,111		—		—		—		—		93,838
Real estate Loans:
Construction	590,889		791		20,229		—		—		28,536		115		640,560
Commercial and farmland	3,035,363		103,921		99,330		—		—		1,384		—		3,239,998
Residential	189,053		1,637		6,684		—		—		943,222		4,591		1,145,187
Home equity	20,214		—		1,342		—		—		508,457		2,301		532,314
Individuals' loans for household and other personal expenditures	—		—		—		—		—		123,524		87		123,611
Public finance and other commercial loans	624,655		49		—		—		—		—		—		624,704
Loans	$	7,260,890	$	199,549	$	225,885	$	—	$	—	$	1,605,123	$	7,094	$	9,298,541



	December 31, 2019
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing		Consumer Non-Performing		Total
Commercial and industrial loans	$	1,956,985	$	81,179	$	71,715	$	—	$	—	$	—	$	—	$	2,109,879
Agriculture production financing and other loans to farmers	78,558		5,626		9,677		—		—		—		—		93,861
Real estate Loans:
Construction	749,249		1,613		1,634		—		—		35,072		—		787,568
Commercial and farmland	2,894,366		57,776		98,575		—		—		1,981		—		3,052,698
Residential	196,710		877		8,075		—		—		932,743		4,812		1,143,217
Home equity	24,211		257		682		—		—		562,507		1,327		588,984
Individuals' loans for household and other personal expenditures	—		—		—		—		—		135,944		45		135,989
Public finance and other commercial loans	547,114		—		—		—		—		—		—		547,114
Loans	$	6,447,193	$	147,328	$	190,358	$	—	$	—	$	1,668,247	$	6,184	$	8,459,310



	June 30, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans 90 Days or More Past Due And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	2,871,366	$	9,435	$	1,038	$	136	$	16,354	$	26,963	$	2,898,329
Agriculture production financing and other loans to farmers	92,735		1,103		—		—		—		1,103		93,838
Real estate loans:
Construction	634,706		5,235		500		—		119		5,854		640,560
Commercial and farmland	3,172,688		18,948		18,458		4,499		25,405		67,310		3,239,998
Residential	1,136,131		2,679		329		275		5,773		9,056		1,145,187
Home equity	526,096		2,110		1,673		59		2,376		6,218		532,314
Individuals' loans for household and other personal expenditures	123,126		227		171		12		75		485		123,611
Public finance and other commercial loans	624,704		—		—		—		—		—		624,704
Loans	$	9,181,552	$	39,737	$	22,169	$	4,981	$	50,102	$	116,989	$	9,298,541



	December 31, 2019
	Current		30-59 Days Past Due		60-89 Days Past Due		Loans 90 Days or More Past Due And Accruing		Non-Accrual		Total Past Due & Non-Accrual		Total
Commercial and industrial loans	$	2,105,445	$	3,039	$	136	$	4	$	1,255	$	4,434	$	2,109,879
Agriculture production financing and other loans to farmers	93,678		—		—		—		183		183		93,861
Real estate loans:
Construction	784,961		1,630		—		—		977		2,607		787,568
Commercial and farmland	3,043,318		2,324		49		—		7,007		9,380		3,052,698
Residential	1,133,476		4,290		367		22		5,062		9,741		1,143,217
Home equity	584,023		2,960		538		42		1,421		4,961		588,984
Individuals' loans for household and other personal expenditures	135,399		440		105		1		44		590		135,989
Public finance and other commercial loans	547,114		—		—		—		—		—		547,114
Loans	$	8,427,414	$	14,683	$	1,195	$	69	$	15,949	$	31,896	$	8,459,310

As shown in the tables above, the level of loan delinquencies increased in the 30-59, 60-89 and 90 days or more past due categories during the first six months of 2020. Four relationships totaling $28.6 million, which matured in May 2020 and were in the process of renewal at June 30, 2020, were included in the $25.1 million increase in the 30-59 days past due. Three real estate secured loans, totaling $17.8 million, accounted for 69 percent of the increase in the 60-89 days and 90 days or more past due categories. These loans were either well secured, in the process of collection, or under review for a deferral.

On occasion, borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays including debt payments. Concurrently, in an effort to preserve and protect its earning assets, specifically troubled loans, the Corporation works to maintain its relationship with certain customers who are experiencing financial difficulty by contractually modifying the borrower's debt agreement with the Corporation.

On March 22, 2020, a statement was issued by the Bank's banking regulators and titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” (the "Interagency Statement") that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act further provides that a qualified loan modification is exempt by law from classification as a TDR as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. The Interagency Statement was subsequently revised on April 7, 2020 to clarify the interaction of the original guidance with Section 4013 of the CARES Act, as well as setting forth the banking regulators’ views on consumer protection considerations. In accordance with such guidance, the Bank is offering short-term modifications made in response to COVID-19 to borrowers who are current and otherwise not past due. These include short-term, typically 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Under the applicable guidance, none of these loans were considered troubled debt restructures at June 30, 2020. Details of the Corporation's modifications are included in the "LOAN QUALITY/PROVISION FOR LOAN LOSSES" section of Management's Discussion and Analysis of Financial Condition and Results of Operations on this Form 10-Q.

In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a troubled debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be repaid.



	Three Months Ended June 30, 2020					Six Months Ended June 30, 2020
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Commercial and industrial loans	$	654	$	654	3	$	654	$	654	3
Real estate loans:
Commercial and farmland	565		565		2	565		565		2
Residential	300		337		6	300		337		6
Total	$	1,519	$	1,556	11	$	1,519	$	1,556	11

The following tables summarize troubled debt restructures that occurred during the twelve months ended June 30, 2020 and 2019, that subsequently defaulted during the period indicated and remained in default at period end. A loan is considered in default if it is 30-days or more past due.



	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
	Number of Loans	Recorded Balance		Number of Loans	Recorded Balance
Commercial and industrial loans	1	$	268	1	$	268
Total	1	$	268	1	$	268



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
	Number of Loans	Recorded Balance		Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	62	1	$	62
Total	1	$	62	1	$	62

For potential consumer loan restructures, impairment evaluation occurs prior to modification. Any subsequent impairment is typically addressed through the charge-off process, or may be addressed through a specific reserve. Consumer troubled debt loan restructures are generally included in the general historical allowance for loan loss at the post modification balance. Consumer non-accrual and delinquent troubled debt loan restructures are also considered in the calculation of the non-accrual and delinquency trend environmental allowance allocation. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $492,000 and $1,033,000 at June 30, 2020 and December 31, 2019, respectively.

Commercial troubled debt restructured loans that are risk graded special mention, substandard, doubtful or loss are individually evaluated for impairment under ASC 310. Any resulting specific reserves are included in the allowance for loan losses. Commercial troubled debt loan restructures 30-89 days delinquent are included in the calculation of the delinquency trend environmental allocation in the allowance for loan losses. With the exception of the acquired loans excluded from the allowance for loan losses, all commercial non-impaired loans, including non-accrual and 90-days or more delinquent, are included in the ASC 450 loss estimate.