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Note 3 - Loans and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2021
Notes to Financial Statements |
Financing Receivables [Text Block] | NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES Activity in the allowance for loan losses and balances in the loan portfolio were as follows:
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 374 |  |  | $ | 1,523 |  |  | $ | 243 |  |  | $ | 4,377 |  |  | $ | 74 |  |  | $ | 860 |  |  | $ | 499 |  |  | $ | 7,950 |
Charge-offs |  |  | - |  |  |  | (96 | ) |  |  | (98 | ) |  |  | (63 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (257 | )
Recoveries |  |  | - |  |  |  | 7 |  |  |  | 54 |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | 62 |
Provision |  |  | 144 |  |  |  | 168 |  |  |  | 33 |  |  |  | (154 | ) |  |  | 39 |  |  |  | 80 |  |  |  | (310 | ) |  |  | - |
Ending balance |  | $ | 518 |  |  | $ | 1,602 |  |  | $ | 232 |  |  | $ | 4,160 |  |  | $ | 113 |  |  | $ | 941 |  |  | $ | 189 |  |  | $ | 7,755 |
Allowance for Loan Losses Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 257 |  |  | $ | 1,327 |  |  | $ | 317 |  |  | $ | 4,178 |  |  | $ | 97 |  |  | $ | 1,300 |  |  | $ | 117 |  |  | $ | 7,593 |
Charge-offs |  |  | - |  |  |  | (195 | ) |  |  | (244 | ) |  |  | (111 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (550 | )
Recoveries |  |  | - |  |  |  | 80 |  |  |  | 168 |  |  |  | 43 |  |  |  | - |  |  |  | 5 |  |  |  | - |  |  |  | 296 |
Provision |  |  | 261 |  |  |  | 390 |  |  |  | (9 | ) |  |  | 50 |  |  |  | 16 |  |  |  | (364 | ) |  |  | 72 |  |  |  | 416 |
Ending balance |  | $ | 518 |  |  | $ | 1,602 |  |  | $ | 232 |  |  | $ | 4,160 |  |  | $ | 113 |  |  | $ | 941 |  |  | $ | 189 |  |  | $ | 7,755 |
Individually evaluated for impairment |  | $ | 124 |  |  | $ | 174 |  |  | $ | - |  |  | $ | 8 |  |  | $ | - |  |  | $ | 177 |  |  | $ | - |  |  | $ | 483 |
Collectively evaluated for impairment |  | $ | 394 |  |  | $ | 1,428 |  |  | $ | 232 |  |  | $ | 4,152 |  |  | $ | 113 |  |  | $ | 764 |  |  | $ | 189 |  |  | $ | 7,272 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,051 |  |  | $ | 296 |  |  | $ | - |  |  | $ | 418 |  |  | $ | - |  |  | $ | 2,191 |  |  |  |  |  |  | $ | 5,956 |
Collectively evaluated for impairment |  |  | 60,394 |  |  |  | 211,695 |  |  |  | 33,793 |  |  |  | 474,425 |  |  |  | 18,238 |  |  |  | 165,913 |  |  |  |  |  |  |  | 964,458 |
Acquired with deteriorated credit quality |  |  | - |  |  |  | 5,251 |  |  |  | 13 |  |  |  | 10,489 |  |  |  | - |  |  |  | 2,190 |  |  |  |  |  |  |  | 17,943 |
Ending balance |  | $ | 63,445 |  |  | $ | 217,242 |  |  | $ | 33,806 |  |  | $ | 485,332 |  |  | $ | 18,238 |  |  | $ | 170,294 |  |  |  |  |  |  | $ | 988,357 |
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Three Months Ended September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 252 |  |  | $ | 1,398 |  |  | $ | 243 |  |  | $ | 2,833 |  |  | $ | 79 |  |  | $ | 945 |  |  | $ | - |  |  | $ | 5,750 |
Charge-offs |  |  | - |  |  |  | (29 | ) |  |  | (58 | ) |  |  | (255 | ) |  |  | - |  |  |  | (1 | ) |  |  | - |  |  |  | (343 | )
Recoveries |  |  | - |  |  |  | 1 |  |  |  | 46 |  |  |  | 4 |  |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | 53 |
Provision |  |  | 17 |  |  |  | (285 | ) |  |  | 48 |  |  |  | 961 |  |  |  | 31 |  |  |  | 122 |  |  |  | 331 |  |  |  | 1,225 |
Ending balance |  | $ | 269 |  |  | $ | 1,085 |  |  | $ | 279 |  |  | $ | 3,543 |  |  | $ | 110 |  |  | $ | 1,068 |  |  | $ | 331 |  |  | $ | 6,685 |
Allowance for Loan Losses Nine Months Ended September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 471 |  |  | $ | 655 |  |  | $ | 270 |  |  | $ | 1,663 |  |  | $ | 76 |  |  | $ | 640 |  |  | $ | 282 |  |  | $ | 4,057 |
Charge-offs |  |  | - |  |  |  | (46 | ) |  |  | (242 | ) |  |  | (255 | ) |  |  | - |  |  |  | (8 | ) |  |  | - |  |  |  | (551 | )
Recoveries |  |  | - |  |  |  | 2 |  |  |  | 156 |  |  |  | 4 |  |  |  | - |  |  |  | 17 |  |  |  | - |  |  |  | 179 |
Provision |  |  | (202 | ) |  |  | 474 |  |  |  | 95 |  |  |  | 2,131 |  |  |  | 34 |  |  |  | 419 |  |  |  | 49 |  |  |  | 3,000 |
Ending balance |  | $ | 269 |  |  | $ | 1,085 |  |  | $ | 279 |  |  | $ | 3,543 |  |  | $ | 110 |  |  | $ | 1,068 |  |  | $ | 331 |  |  | $ | 6,685 |
Individually evaluated for impairment |  | $ | - |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 13 |  |  | $ | - |  |  | $ | 218 |  |  | $ | - |  |  | $ | 233 |
Collectively evaluated for impairment |  | $ | 269 |  |  | $ | 1,084 |  |  | $ | 278 |  |  | $ | 3,530 |  |  | $ | 110 |  |  | $ | 850 |  |  | $ | 331 |  |  | $ | 6,452 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 373 |  |  | $ | 345 |  |  | $ | 19 |  |  | $ | 2,149 |  |  | $ | - |  |  | $ | 2,203 |  |  |  |  |  |  | $ | 5,089 |
Collectively evaluated for impairment |  |  | 53,130 |  |  |  | 297,886 |  |  |  | 34,104 |  |  |  | 449,041 |  |  |  | 16,489 |  |  |  | 199,930 |  |  |  |  |  |  |  | 1,050,580 |
Acquired with deteriorated credit quality |  |  | - |  |  |  | 7,889 |  |  |  | 30 |  |  |  | 12,116 |  |  |  | - |  |  |  | 3,092 |  |  |  |  |  |  |  | 23,127 |
Ending balance |  | $ | 53,503 |  |  | $ | 306,120 |  |  | $ | 34,153 |  |  | $ | 463,306 |  |  | $ | 16,489 |  |  | $ | 205,225 |  |  |  |  |  |  | $ | 1,078,796 |
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | - |  |  | $ | 19 |  |  | $ | 1 |  |  | $ | 157 |  |  | $ | - |  |  | $ | 254 |  |  | $ | - |  |  | $ | 431 |
Collectively evaluated for impairment |  | $ | 257 |  |  | $ | 1,308 |  |  | $ | 316 |  |  | $ | 4,021 |  |  | $ | 97 |  |  | $ | 1,046 |  |  | $ | 117 |  |  | $ | 7,162 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 348 |  |  | $ | 1,663 |  |  | $ | 8 |  |  | $ | 3,032 |  |  | $ | 80 |  |  | $ | 2,720 |  |  |  |  |  |  | $ | 7,851 |
Collectively evaluated for impairment |  |  | 53,387 |  |  |  | 295,154 |  |  |  | 33,982 |  |  |  | 453,681 |  |  |  | 16,559 |  |  |  | 186,982 |  |  |  |  |  |  |  | 1,039,745 |
Acquired with deteriorated credit quality |  |  | - |  |  |  | 6,710 |  |  |  | 24 |  |  |  | 12,534 |  |  |  | - |  |  |  | 2,804 |  |  |  |  |  |  |  | 22,072 |
Ending balance |  | $ | 53,735 |  |  | $ | 303,527 |  |  | $ | 34,014 |  |  | $ | 469,247 |  |  | $ | 16,639 |  |  | $ | 192,506 |  |  |  |  |  |  | $ | 1,069,668 |
The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows: Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations. Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne Bank will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual assets classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to determine which direction the relationship will move. Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and Retail loans must be at a minimum graded a risk code “7”. Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral. Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne Bank. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future. Information regarding ChoiceOne Bank's credit exposure was as follows: Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category
(Dollars in thousands) |  | Agricultural |  |  | Commercial and Industrial |  |  | Commercial Real Estate |
|  | September 30, |  |  | December 31, |  |  | September 30, |  |  | December 31, |  |  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Pass |  | $ | 60,042 |  |  | $ | 50,185 |  |  | $ | 214,493 |  |  | $ | 294,614 |  |  | $ | 477,227 |  |  | $ | 453,080 |
Special Mention |  |  | 352 |  |  |  | 3,202 |  |  |  | 1,133 |  |  |  | 4,101 |  |  |  | 2,105 |  |  |  | 6,006 |
Substandard |  |  | 3,051 |  |  |  | 348 |  |  |  | 1,320 |  |  |  | 4,812 |  |  |  | 5,758 |  |  |  | 8,925 |
Doubtful |  |  | - |  |  |  | - |  |  |  | 296 |  |  |  | - |  |  |  | 242 |  |  |  | 1,236 |
|  | $ | 63,445 |  |  | $ | 53,735 |  |  | $ | 217,242 |  |  | $ | 303,527 |  |  | $ | 485,332 |  |  | $ | 469,247 |
Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity
(Dollars in thousands) |  | Consumer |  |  | Construction Real Estate |  |  | Residential Real Estate |
|  | September 30, |  |  | December 31, |  |  | September 30, |  |  | December 31, |  |  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Performing |  | $ | 33,806 |  |  | $ | 34,006 |  |  | $ | 18,238 |  |  | $ | 16,559 |  |  | $ | 169,443 |  |  | $ | 191,125 |
Nonperforming |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  |  | - |  |  |  | 8 |  |  |  | - |  |  |  | 80 |  |  |  | 851 |  |  |  | 1,381 |
|  | $ | 33,806 |  |  | $ | 34,014 |  |  | $ | 18,238 |  |  | $ | 16,639 |  |  | $ | 170,294 |  |  | $ | 192,506 |
The following table provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the three and nine months ended September 30, 2021 and September 30, 2020.
|  | Three Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2021 |
|  |  |  |  |  | Pre- |  |  | Post- |  |  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |  |  |  |  |  |  | Modification |  |  | Modification |
|  |  |  |  |  | Outstanding |  |  | Outstanding |  |  |  |  |  |  | Outstanding |  |  | Outstanding |
(Dollars in thousands) |  | Number of |  |  | Recorded |  |  | Recorded |  |  | Number of |  |  | Recorded |  |  | Recorded |
|  | Loans |  |  | Investment |  |  | Investment |  |  | Loans |  |  | Investment |  |  | Investment |
Agricultural |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 6 |  |  | $ | 2,210 |  |  | $ | 2,210 |
Commercial Real Estate |  |  | 1 |  |  |  | 493 |  |  |  | 493 |  |  |  | 2 |  |  |  | 931 |  |  |  | 931 |
Total |  |  | 1 |  |  | $ | 493 |  |  | $ | 493 |  |  |  | 8 |  |  | $ | 3,141 |  |  | $ | 3,141 |
|  | Three Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2020 |
|  |  |  |  |  | Pre- |  |  | Post- |  |  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |  |  |  |  |  |  | Modification |  |  | Modification |
|  |  |  |  |  | Outstanding |  |  | Outstanding |  |  |  |  |  |  | Outstanding |  |  | Outstanding |
(Dollars in thousands) |  | Number of |  |  | Recorded |  |  | Recorded |  |  | Number of |  |  | Recorded |  |  | Recorded |
|  | Loans |  |  | Investment |  |  | Investment |  |  | Loans |  |  | Investment |  |  | Investment |
Agricultural |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 67 |  |  | $ | 67 |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 1,666 |  |  |  | 1,666 |
Total |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 3 |  |  | $ | 1,733 |  |  | $ | 1,733 |
There were no TDRs as of September 30, 2021 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and nine months ended September 30, 2021, which loans had been modified and classified as TDRs during the year prior to the default. The following schedule provides information on TDRs as of September 30, 2020 where the borrower was past due with respect to principal and/or interest for 30 days or more during the three and nine months ended September 30, 2020, which loans had been modified and classified as TDRs during the year prior to the default.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, 2020 |  |  | September 30, 2020 |
(Dollars in thousands) |  | Number |  |  | Recorded |  |  | Number |  |  | Recorded |
|  | of Loans |  |  | Investment |  |  | of Loans |  |  | Investment |
Agricultural |  |  | 1 |  |  | $ | 67 |  |  |  | 1 |  |  | $ | 67 |
Commercial Real Estate |  |  | 2 |  |  |  | 1,666 |  |  |  | 2 |  |  |  | 1,666 |
Total |  |  | 3 |  |  | $ | 1,733 |  |  |  | 3 |  |  | $ | 1,733 |
In March of 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was passed into law. Among other things, the CARES Act provides that certain loans subject to modifications related to the COVID-19 pandemic need not be classified as TDRs. Further, the federal banking agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” on March 22, 2020, followed by a revised statement on April 7, 2020, providing in part that short-term modifications to loans made on a good faith basis to borrowers who were current as of the implementation date of the statements are not considered TDRs. As a result of the pandemic, ChoiceOne provided a modification program to borrowers that included certain concessions such as interest only payments or payment deferrals. As of September 30, 2021, all deferments had resumed payments in accordance with loan terms. Impaired loans by loan category follow:
|  |  |  |  |  | Unpaid |  |  |  |  |
(Dollars in thousands) |  | Recorded |  |  | Principal |  |  | Related |
|  | Investment |  |  | Balance |  |  | Allowance |
September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | 341 |  |  | $ | 434 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | - |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 242 |  |  |  | 242 |  |  |  | - |
Residential real estate |  |  | 171 |  |  |  | 175 |  |  |  | - |
Subtotal |  |  | 754 |  |  |  | 851 |  |  |  | - |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 2,710 |  |  |  | 2,709 |  |  |  | 124 |
Commercial and industrial |  |  | 296 |  |  |  | 312 |  |  |  | 174 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | 176 |  |  |  | - |
Commercial real estate |  |  | 176 |  |  |  | - |  |  |  | 8 |
Residential real estate |  |  | 2,020 |  |  |  | 2,075 |  |  |  | 177 |
Subtotal |  |  | 5,202 |  |  |  | 5,272 |  |  |  | 483 |
Total |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 3,051 |  |  |  | 3,143 |  |  |  | 124 |
Commercial and industrial |  |  | 296 |  |  |  | 312 |  |  |  | 174 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | 176 |  |  |  | - |
Commercial real estate |  |  | 418 |  |  |  | 242 |  |  |  | 8 |
Residential real estate |  |  | 2,191 |  |  |  | 2,250 |  |  |  | 177 |
Total |  | $ | 5,956 |  |  | $ | 6,123 |  |  | $ | 483 |
|  |  |  |  |  | Unpaid |  |  |  |  |
(Dollars in thousands) |  | Recorded |  |  | Principal |  |  | Related |
|  | Investment |  |  | Balance |  |  | Allowance |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | 348 |  |  | $ | 434 |  |  | $ | - |
Commercial and industrial |  |  | 1,516 |  |  |  | 1,629 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | 80 |  |  |  | 80 |  |  |  | - |
Commercial real estate |  |  | 1,852 |  |  |  | 2,664 |  |  |  | - |
Residential real estate |  |  | 162 |  |  |  | 162 |  |  |  | - |
Subtotal |  |  | 3,958 |  |  |  | 4,969 |  |  |  | - |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 147 |  |  |  | 147 |  |  |  | 19 |
Consumer |  |  | 8 |  |  |  | 8 |  |  |  | 1 |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 1,180 |  |  |  | 1,180 |  |  |  | 157 |
Residential real estate |  |  | 2,558 |  |  |  | 2,651 |  |  |  | 254 |
Subtotal |  |  | 3,893 |  |  |  | 3,986 |  |  |  | 431 |
Total |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 348 |  |  |  | 434 |  |  |  | - |
Commercial and industrial |  |  | 1,663 |  |  |  | 1,776 |  |  |  | 19 |
Consumer |  |  | 9 |  |  |  | 8 |  |  |  | 1 |
Construction real estate |  |  | 80 |  |  |  | 80 |  |  |  | - |
Commercial real estate |  |  | 3,031 |  |  |  | 3,844 |  |  |  | 157 |
Residential real estate |  |  | 2,720 |  |  |  | 2,813 |  |  |  | 254 |
Total |  | $ | 7,851 |  |  | $ | 8,955 |  |  | $ | 431 |
The following schedule provides information regarding average balances of impaired loans and interest recognized on impaired loans for the three and nine month periods ended September 30, 2021 and 2020:
|  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Income |
|  | Investment |  |  | Recognized |
Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |
Agricultural |  | $ | 989 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | - |
Consumer |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 507 |  |  |  | 2 |
Residential real estate |  |  | 320 |  |  |  | - |
Subtotal |  |  | 1,816 |  |  |  | 2 |
With an allowance recorded |  |  |  |  |  |  |  |
Agricultural |  |  | 2,119 |  |  |  | 36 |
Commercial and industrial |  |  | 240 |  |  |  | 2 |
Consumer |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 272 |  |  |  | 2 |
Residential real estate |  |  | 1,943 |  |  |  | 14 |
Subtotal |  |  | 4,574 |  |  |  | 54 |
Total |  |  |  |  |  |  |  |
Agricultural |  |  | 3,108 |  |  |  | 36 |
Commercial and industrial |  |  | 240 |  |  |  | 2 |
Consumer |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 779 |  |  |  | 4 |
Residential real estate |  |  | 2,263 |  |  |  | 14 |
Total |  | $ | 6,390 |  |  | $ | 56 |
|  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Income |
|  | Investment |  |  | Recognized |
Three Months Ended September 30, 2020 |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |
Agricultural |  | $ | 376 |  |  | $ | - |
Commercial and industrial |  |  | 142 |  |  |  | - |
Consumer |  |  | 2 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 929 |  |  |  | 3 |
Residential real estate |  |  | 109 |  |  |  | 1 |
Subtotal |  |  | 1,558 |  |  |  | 4 |
With an allowance recorded |  |  |  |  |  |  |  |
Agricultural |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 191 |  |  |  | - |
Consumer |  |  | 20 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 1,268 |  |  |  | 4 |
Residential real estate |  |  | 2,163 |  |  |  | 17 |
Subtotal |  |  | 3,642 |  |  |  | 21 |
Total |  |  |  |  |  |  |  |
Agricultural |  |  | 376 |  |  |  | - |
Commercial and industrial |  |  | 333 |  |  |  | - |
Consumer |  |  | 22 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 2,197 |  |  |  | 7 |
Residential real estate |  |  | 2,272 |  |  |  | 18 |
Total |  | $ | 5,200 |  |  | $ | 25 |
|  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Income |
|  | Investment |  |  | Recognized |
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |
Agricultural |  | $ | 669 |  |  | $ | 52 |
Commercial and industrial |  |  | 745 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |
Construction real estate |  |  | 20 |  |  |  | - |
Commercial real estate |  |  | 1,372 |  |  |  | 34 |
Residential real estate |  |  | 243 |  |  |  | - |
Subtotal |  |  | 3,049 |  |  |  | 86 |
With an allowance recorded |  |  |  |  |  |  |  |
Agricultural |  |  | 1,766 |  |  |  | 71 |
Commercial and industrial |  |  | 198 |  |  |  | 3 |
Consumer |  |  | 2 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 525 |  |  |  | 8 |
Residential real estate |  |  | 2,215 |  |  |  | 47 |
Subtotal |  |  | 4,706 |  |  |  | 129 |
Total |  |  |  |  |  |  |  |
Agricultural |  |  | 2,435 |  |  |  | 123 |
Commercial and industrial |  |  | 943 |  |  |  | 3 |
Consumer |  |  | 2 |  |  |  | - |
Construction real estate |  |  | 20 |  |  |  | - |
Commercial real estate |  |  | 1,897 |  |  |  | 42 |
Residential real estate |  |  | 2,458 |  |  |  | 47 |
Total |  | $ | 7,755 |  |  | $ | 215 |
|  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Income |
|  | Investment |  |  | Recognized |
Nine Months Ended September 30, 2020 |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |
Agricultural |  | $ | 324 |  |  | $ | - |
Commercial and industrial |  |  | 201 |  |  |  | - |
Consumer |  |  | 1 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 1,405 |  |  |  | 11 |
Residential real estate |  |  | 84 |  |  |  | 5 |
Subtotal |  |  | 2,015 |  |  |  | 16 |
With an allowance recorded |  |  |  |  |  |  |  |
Agricultural |  |  | 190 |  |  |  | - |
Commercial and industrial |  |  | 102 |  |  |  | - |
Consumer |  |  | 18 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 826 |  |  |  | 16 |
Residential real estate |  |  | 2,273 |  |  |  | 71 |
Subtotal |  |  | 3,409 |  |  |  | 87 |
Total |  |  |  |  |  |  |  |
Agricultural |  |  | 514 |  |  |  | - |
Commercial and industrial |  |  | 303 |  |  |  | - |
Consumer |  |  | 19 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |
Commercial real estate |  |  | 2,231 |  |  |  | 27 |
Residential real estate |  |  | 2,357 |  |  |  | 76 |
Total |  | $ | 5,424 |  |  | $ | 103 |
An aging analysis of loans by loan category follows:
|  |  |  |  |  |  |  |  |  | Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Past Due |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |
|  | Past Due |  |  | Past Due |  |  | Greater |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 Days Past |
(Dollars in thousands) |  | 30 to 59 |  |  | 60 to 89 |  |  | Than 90 |  |  |  |  |  |  | Loans Not |  |  | Total |  |  | Due and |
|  | Days (1) |  |  | Days (1) |  |  | Days (1) |  |  | Total (1) |  |  | Past Due |  |  | Loans |  |  | Accruing |
September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 63,445 |  |  | $ | 63,445 |  |  | $ | - |
Commercial and industrial |  |  | 83 |  |  |  | 305 |  |  |  | 296 |  |  |  | 684 |  |  |  | 216,558 |  |  |  | 217,242 |  |  |  | - |
Consumer |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | 5 |  |  |  | 33,801 |  |  |  | 33,806 |  |  |  | - |
Commercial real estate |  |  | 94 |  |  |  | - |  |  |  | 243 |  |  |  | 337 |  |  |  | 484,995 |  |  |  | 485,332 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 18,238 |  |  |  | 18,238 |  |  |  | - |
Residential real estate |  |  | 12 |  |  |  | 276 |  |  |  | 182 |  |  |  | 470 |  |  |  | 169,824 |  |  |  | 170,294 |  |  |  | - |
|  | $ | 194 |  |  | $ | 581 |  |  | $ | 721 |  |  | $ | 1,496 |  |  | $ | 986,861 |  |  | $ | 988,357 |  |  | $ | - |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 53,735 |  |  | $ | 53,735 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | 109 |  |  |  | 515 |  |  |  | 624 |  |  |  | 302,903 |  |  |  | 303,527 |  |  |  | - |
Consumer |  |  | 39 |  |  |  | - |  |  |  | - |  |  |  | 39 |  |  |  | 33,975 |  |  |  | 34,014 |  |  |  | - |
Commercial real estate |  |  | 532 |  |  |  | 44 |  |  |  | 1,744 |  |  |  | 2,320 |  |  |  | 466,927 |  |  |  | 469,247 |  |  |  | - |
Construction real estate |  |  | 1,076 |  |  |  | 180 |  |  |  | 80 |  |  |  | 1,336 |  |  |  | 15,303 |  |  |  | 16,639 |  |  |  | - |
Residential real estate |  |  | 1,563 |  |  |  | 256 |  |  |  | 352 |  |  |  | 2,171 |  |  |  | 190,335 |  |  |  | 192,506 |  |  |  | - |
|  | $ | 3,210 |  |  | $ | 589 |  |  | $ | 2,691 |  |  | $ | 6,490 |  |  | $ | 1,063,178 |  |  | $ | 1,069,668 |  |  | $ | - |
(1) Includes nonaccrual loans. Nonaccrual loans by loan category follow:
(Dollars in thousands) |  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Agricultural |  | $ | 342 |  |  | $ | 348 |
Commercial and industrial |  |  | 296 |  |  |  | 1,802 |
Consumer |  |  | - |  |  |  | 8 |
Commercial real estate |  |  | 242 |  |  |  | 3,088 |
Construction real estate |  |  | - |  |  |  | 80 |
Residential real estate |  |  | 851 |  |  |  | 1,381 |
|  | $ | 1,731 |  |  | $ | 6,707 |
The table below details the outstanding balances of the County Bank Corp. acquired loan portfolio and the acquisition fair value adjustments at acquisition date of October 1, 2019 (dollars in thousands):
|  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Loans acquired - contractual payments |  | $ | 7,729 |  |  | $ | 387,394 |  |  | $ | 395,123 |
Nonaccretable difference |  |  | (2,928 | ) |  |  | - |  |  |  | (2,928 | )
Expected cash flows |  |  | 4,801 |  |  |  | 387,394 |  |  |  | 392,195 |
Accretable yield |  |  | (185 | ) |  |  | (1,894 | ) |  |  | (2,079 | )
Carrying balance at acquisition date |  | $ | 4,616 |  |  | $ | 385,500 |  |  | $ | 390,116 |
The table below presents a roll forward of the accretable yield on County Bank Corp. acquired loan portfolio for the year ended December 31, 2020 and the nine months ended September 30, 2021 (dollars in thousands):
(Dollars in thousands) |  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Balance, January 1, 2020 |  | $ | 185 |  |  | $ | 1,819 |  |  | $ | 2,004 |
Accretion January 1, 2020 through December 31, 2020 |  |  | (50 | ) |  |  | (295 | ) |  |  | (345 | )
Balance, December 31, 2020 |  |  | 135 |  |  |  | 1,524 |  |  |  | 1,659 |
Accretion January 1, 2021 through September 30, 2021 |  |  | - |  |  |  | (233 | ) |  |  | (233 | )
Transfer from non-accretable to accretable yield |  |  | 400 |  |  |  | - |  |  |  | 400 |
Balance, September 30, 2021 |  | $ | 535 |  |  | $ | 1,291 |  |  | $ | 1,826 |
The table below details the outstanding balances of the Community Shores Bank Corporation acquired loan portfolio and the acquisition fair value adjustments at acquisition date of July 1, 2020 (dollars in thousands):
|  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Loans acquired - contractual payments |  | $ | 20,491 |  |  | $ | 158,495 |  |  | $ | 178,986 |
Nonaccretable difference |  |  | (2,719 | ) |  |  | - |  |  |  | (2,719 | )
Expected cash flows |  |  | 17,772 |  |  |  | 158,495 |  |  |  | 176,267 |
Accretable yield |  |  | (869 | ) |  |  | (596 | ) |  |  | (1,465 | )
Carrying balance at acquisition date |  | $ | 16,903 |  |  | $ | 157,899 |  |  | $ | 174,802 |
The table below presents a roll forward of the accretable yield on Community Shores Bank Corporation acquired loan portfolio for the year ended December 31, 2020 and the nine months ended September 30, 2021 (dollars in thousands):
|  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Balance, January 1, 2020 |  | $ | - |  |  | $ | - |  |  | $ | - |
Merger with Community Shores Bank Corporation on July 1, 2020 |  |  | 869 |  |  |  | 596 |  |  |  | 1,465 |
Accretion July 1, 2020 through December 31, 2020 |  |  | (26 | ) |  |  | (141 | ) |  |  | (167 | )
Balance, December 31, 2020 |  |  | 843 |  |  |  | 455 |  |  |  | 1,298 |
Accretion January 1, 2021 through September 30, 2021 |  |  | (298 | ) |  |  | (258 | ) |  |  | (556 | )
Balance, September 30, 2021 |  | $ | 545 |  |  | $ | 197 |  |  | $ | 742 |

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