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Loans and Allowance for Credit Losses
 3 Months Ended
Jun. 30, 2020
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
 
Outstanding loans are summarized as follows:
Loan Type (Dollars in thousands)June 30, 2020% of Total
Loans		December 31, 2019% of Total
Loans
Commercial:    
Commercial and industrial$303,775  27.0 %$102,541  10.9 %
Agricultural production26,419  2.3 %23,159  2.6 %
Total commercial330,194  29.3 %125,700  13.5 %
Real estate:    
Owner occupied199,337  17.5 %197,946  21.0 %
Real estate construction and other land loans83,490  7.4 %73,718  7.8 %
Commercial real estate313,625  27.9 %329,333  34.9 %
Agricultural real estate72,994  6.4 %76,304  8.1 %
Other real estate32,649  2.9 %31,241  3.3 %
Total real estate702,095  62.1 %708,542  75.1 %
Consumer:    
Equity loans and lines of credit58,431  5.1 %64,841  6.9 %
Consumer and installment39,631  3.5 %42,782  4.5 %
Total consumer98,062  8.6 %107,623  11.4 %
Net deferred origination (fees) costs (4,460)  1,515   
Total gross loans1,125,891  100.0 %943,380  100.0 %
Allowance for credit losses(13,937)  (9,130)  
Total loans$1,111,954   $934,250   
 
        At June 30, 2020 and December 31, 2019, loans originated under Small Business Administration (SBA) programs totaling $7,015,000 and $21,910,000, respectively, were included in the real estate and commercial categories, of which, $5,204,000 or 74% and $16,372,000 or 75%, respectively, are secured by government guarantees. In addition, the Company participated in the SBA Paycheck protection Program (PPP) to help provide loans to our business customers to provide them with additional working capital. At June 30, 2020, 1,077 PPP loans totaling $211,575,000 were outstanding and included in the commercial and industrial line item above.

Allowance for Credit Losses

        The allowance for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The Allowance is established through a provision for credit losses which is charged to expense. Additions to the Allowance are expected to maintain the adequacy of the total Allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the Allowance. Cash received on previously charged-off credits is recorded as a recovery to the Allowance. The overall Allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.
        For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.
        The following table shows the summary of activities for the Allowance as of and for the three months ended June 30, 2020 and 2019 by portfolio segment (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, April 1, 2020$1,657  $7,555  $1,236  $98  $10,546  
Provision charged to operations7  2,834  76  83  3,000  
Losses charged to allowance—  —  (80) —  (80) 
Recoveries423  —  48  —  471  
Ending balance, June 30, 2020$2,087  $10,389  $1,280  $181  $13,937  
Allowance for credit losses:     
Beginning balance, April 1, 2019$1,450  $6,709  $895  $64  $9,118  
(Reversal) provision charged to operations372  (156) 7  77  300  
Losses charged to allowance(50) —  (6) —  (56) 
Recoveries28  —  15  —  43  
Ending balance, June 30, 2019$1,800  $6,553  $911  $141  $9,405  
 
The following table shows the summary of activities for the Allowance as of and for the six month ended June 30, 2020 and 2019 by portfolio segment (in thousands):

CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:
Beginning balance, January 1, 2020$1,428  $6,769  $897  $36  $9,130  
Provision charged to operations233  3,620  377  145  4,375  
Losses charged to allowance(29) —  (94) —  (123) 
Recoveries455  —  100  —  555  
Ending balance, June 30, 2020$2,087  $10,389  $1,280  $181  $13,937  
Allowance for credit losses:
Beginning balance, January 1, 2019$1,671  $6,539  $826  $68  $9,104  
(Reversal) provision charged to operations120  14  68  73  275  
Losses charged to allowance(50) —  (15) —  (65) 
Recoveries59  —  32  —  91  
Ending balance, June 30, 2019$1,800  $6,553  $911  $141  $9,405  

        The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2020 and December 31, 2019 (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Ending balance, June 30, 2020$2,087  $10,389  $1,280  $181  $13,937  
Ending balance: individually evaluated for impairment$255  $25  $14  $—  $294  
Ending balance: collectively evaluated for impairment$1,832  $10,364  $1,266  $181  $13,643  
Ending balance, December 31, 2019$1,428  $6,769  $897  $36  $9,130  
Ending balance: individually evaluated for impairment$2  $3  $35  $—  $40  
Ending balance: collectively evaluated for impairment$1,426  $6,766  $862  $36  $9,090  
        The following table shows the ending balances of loans as of June 30, 2020 and December 31, 2019 by portfolio segment and by impairment methodology (in thousands):
 CommercialReal EstateConsumerTotal
Loans:    
Ending balance, June 30, 2020$330,194  $702,095  $98,062  $1,130,351  
Ending balance: individually evaluated for impairment$11,231  $1,819  $1,137  $14,187  
Ending balance: collectively evaluated for impairment$318,963  $700,276  $96,925  $1,116,164  
Loans:    
Ending balance, December 31, 2019$125,700  $708,542  $107,623  $941,865  
Ending balance: individually evaluated for impairment$187  $2,036  $1,511  $3,734  
Ending balance: collectively evaluated for impairment
$125,513  $706,506  $106,112  $938,131  
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at June 30, 2020 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$278,630  $12,837  $12,308  $—  $303,775  
Agricultural production19,953  —  6,466  —  26,419  
Real Estate:
Owner occupied185,323  8,432  5,582  —  199,337  
Real estate construction and other land loans77,820  1,990  3,680  —  83,490  
Commercial real estate300,565  10,725  2,335  —  313,625  
Agricultural real estate64,567  1,350  7,077  —  72,994  
Other real estate32,488  161  —  —  32,649  
Consumer:
Equity loans and lines of credit56,967  240  1,224  —  58,431  
Consumer and installment39,631  —  —  —  39,631  
Total$1,055,944  $35,735  $38,672  $—  $1,130,351  
        The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2019 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$86,705  $2,635  $13,201  $—  $102,541  
Agricultural production18,814  —  4,345  —  23,159  
Real Estate:
Owner occupied186,370  6,881  4,695  —  197,946  
Real estate construction and other land loans
72,142  —  1,576  —  73,718  
Commercial real estate310,982  17,202  1,149  —  329,333  
Agricultural real estate68,032  946  7,326  —  76,304  
Other real estate31,241  —  —  —  31,241  
Consumer:
Equity loans and lines of credit62,776  519  1,546  —  64,841  
Consumer and installment42,782  —  —  —  42,782  
Total$879,844  $28,183  $33,838  $—  $941,865  
The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2020 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-accrual
Commercial:        
Commercial and industrial$148  $—  $—  $148  $303,627  $303,775  $—  $732  
Agricultural production—  —  —  —  26,419  26,419  —  —  
Real estate:—    —   
Owner occupied—  —  —  —  199,337  199,337  —  391  
Real estate construction and other land loans—  —  190  190  83,300  83,490  —  190  
Commercial real estate514  —  —  514  313,111  313,625  —  869  
Agricultural real estate—  —  —  —  72,994  72,994  —  182  
Other real estate—  —  —  —  32,649  32,649  —  —  
Consumer:   —   
Equity loans and lines of credit—  —  —  —  58,431  58,431  —  42  
Consumer and installment1  —  —  1  39,630  39,631  —  —  
Total$663  $—  $190  $853  $1,129,498  $1,130,351  $—  $2,406  
        The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2019 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-
accrual
Commercial:        
Commercial and industrial$17  $—  $—  $17  $102,524  $102,541  $—  $187  
Agricultural production—  —  —  —  23,159  23,159  —  —  
Real estate:—        
Owner occupied—  218  —  218  197,728  197,946  —  416  
Real estate construction and other land loans—  —  —  —  73,718  73,718  —  —  
Commercial real estate—  381  —  381  328,952  329,333  —  381  
Agricultural real estate—  —  —  —  76,304  76,304  —  321  
Other real estate—  —  —  —  31,241  31,241  —  —  
Consumer:       
Equity loans and lines of credit
—  —  —  —  64,841  64,841  —  388  
Consumer and installment168  —  —  168  42,614  42,782  —  —  
Total$185  $599  $—  $784  $941,081  $941,865  $—  $1,693  
 
The following table shows information related to impaired loans by class at June 30, 2020 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Real estate:   
Owner occupied$391  $417  $—  
Commercial real estate869  1,030  —  
Agricultural real estate182  189  —  
Total real estate1,442  1,636  —  
Consumer:   
Equity loans and lines of credit190  229  —  
Total with no related allowance recorded1,632  1,865  —  
With an allowance recorded:   
Commercial:   
Commercial and industrial10,456  10,463  239  
Agricultural production775  775  16  
Total commercial11,231  11,238  255  
Real estate:   
Real estate construction and other land loans190  191  24  
Commercial real estate150  151  1  
Agricultural real estate37  37  —  
Total real estate377  379  25  
Consumer:   
Equity loans and lines of credit947  947  14  
Total with an allowance recorded12,555  12,564  294  
Total$14,187  $14,429  $294  
        The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
        The following table shows information related to impaired loans by class at December 31, 2019 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Commercial:   
Commercial and industrial$163  $432  $—  
Real estate:   
Owner occupied416  426  —  
Real estate construction and other land loans—  —  —  
Commercial real estate1,110  1,361  —  
Agricultural real estate321  321  —  
Total real estate1,847  2,108  —  
Consumer:   
Equity loans and lines of credit220  256  —  
Total with no related allowance recorded2,230  2,796  —  
With an allowance recorded:   
Commercial:   
Commercial and industrial24  27  2  
Real estate:   
Commercial real estate152  153  3  
Agricultural real estate37  37  —  
Total real estate189  190  3  
Consumer:   
Equity loans and lines of credit1,291  1,292  35  
Total with an allowance recorded1,504  1,509  40  
Total$3,734  $4,305  $40  
 
        The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
        
The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended June 30, 2020 and 2019 (in thousands).
 Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Commercial:    
Commercial and industrial$7  $—  $223  $—  
Agricultural production212  —  —  —  
Total commercial219  —  223  —  
Real estate:    
Owner occupied401  —  209  —  
Real estate construction and other land loans—  —  1,058  16  
Commercial real estate848  —  1,417  12  
Agricultural real estate199  —  —  —  
Total real estate1,448  —  2,684  28  
Consumer:    
Equity loans and lines of credit232  3  739  1  
Total with no related allowance recorded1,899  3  3,646  29  
With an allowance recorded:    
Commercial:    
Commercial and industrial11,516  171  70  —  
Agricultural production619  12  —  —  
Total commercial12,135  183  70  —  
Real estate:    
Real estate construction and other land loans95  —  —  —  
Commercial real estate331  2  428  3  
Agricultural real estate28  1  44  1  
Total real estate454  3  472  4  
Consumer:    
Equity loans and lines of credit957  14  1,099  14  
Consumer and installment38  —  17  —  
Total consumer995  14  1,116  14  
Total with an allowance recorded13,584  200  1,658  18  
Total$15,483  $203  $5,304  $47  
The following tables present by class, information related to the average recorded investment and interest income recognized on impaired loans for the six months ended June 30, 2020 and 2019 (in thousands).
 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Commercial:    
Commercial and industrial$71  $—  $236  $—  
Agricultural production121  —  —  —  
Total commercial192  —  236  —  
Real estate:    
Owner occupied407  —  211  —  
Real estate construction and other land loans—  —  1,715  32  
Commercial real estate959  —  1,313  25  
Agricultural real estate228  —  —  —  
Total real estate1,594  —  3,239  57  
Consumer:    
Equity loans and lines of credit264  6  527  2  
Consumer and installment—  —  —  —  
Total consumer264  6  527  2  
Total with no related allowance recorded2,050  6  4,002  59  
With an allowance recorded:    
Commercial:    
Commercial and industrial6,589  344  77  1  
Agricultural production354  24  —  —  
Total commercial6,943  368  77  1  
Real estate:    
Real estate construction and other land loans54  —  —  —  
Commercial real estate254  5  472  6  
Agricultural real estate26  1  44  1  
Other real estate—  —  —  —  
Total real estate334  6  516  7  
Consumer:    
Equity loans and lines of credit1,052  28  1,102  28  
Consumer and installment24  —  9  —  
Total consumer1,076  28  1,111  28  
Total with an allowance recorded8,353  402  1,704  36  
Total$10,403  $408  $5,706  $95  
        
Foregone interest on nonaccrual loans totaled $74,000 and $85,000 for the six month period ended June 30, 2020 and 2019, respectively. Foregone interest on nonaccrual loans totaled $55,000 and $53,000 for the three month periods ended June 30, 2020 and 2019, respectively.
Troubled Debt Restructurings:
        As of June 30, 2020 and December 31, 2019, the Company has a recorded investment in troubled debt restructurings of $11,781,000 and $2,362,000, respectively. The Company has allocated $93,000 and $38,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2020 and December 31, 2019, respectively. The Company has committed to lend no additional amounts as of June 30, 2020 to customers with outstanding loans that are classified as troubled debt restructurings.
        During the six months ended June 30, 2020, two loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. During the same period, there were no troubled debt restructurings in which the amount of principal or accrued interest owed from the borrower was forgiven or which resulted in a charge-off or change to the allowance for loan losses.
As discussed in Note 1 to these financial statements, Section 4013 of the CARES Act and the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)” provided banks an option to elect to not account for certain loan modifications related to COVID-19 as TDRs as long as the borrowers were not more than 30 days past due as of December 31, 2019 or at the time of modification program implementation, respectively, and the borrowers meet other applicable criteria. The remaining TDRs disclosed below were not related to COVID-19 modifications. The Company executed loan deferrals on outstanding balances of approximately $179 million resulting from the COVID-19 pandemic that were not classified as a TDRs at June 30, 2020.

        The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2020 (in thousands):
Troubled Debt Restructurings:Number of LoansPre-Modification Outstanding Recorded Investment (1)Principal Modification (2)Post Modification Outstanding Recorded Investment (3)Outstanding Recorded Investment
Commercial:
Commercial and industrial1  $12,925  $—  $12,925  $9,725  
Agricultural production1  850  —  850  775  
Total2  $13,775  $—  $13,775  $10,500  
(1)Amounts represent the recorded investment in loans before recognizing effects of the Troubled Debt Restructurings, if any.
(2)Principal modification includes principal forgiveness at the time of modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with zero percent contractual interest rate.
(3)Balance outstanding after principal modification, if any borrower reduction to recorded investment.

        The following table presents loans by class modified as troubled debt restructurings that occurred during the six months ended June 30, 2019 (in thousands):
Troubled Debt Restructurings:Number of LoansPre-Modification Outstanding Recorded Investment (1)Principal Modification (2)Post Modification Outstanding Recorded Investment (3)Outstanding Recorded Investment
Consumer:
Equity loans and lines of credit2  $132  $—  $132  $128  
Total2  $132  $—  $132  $128  

During the quarter ended June 30, 2020 no loans were modified as troubled debt restructuring.
Troubled Debt Restructuring
The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended June 30, 2019 (in thousands):
Troubled Debt RestructuringNumber of LoansPre-Modification Outstanding Recorded Investment (1)Principal Modification (2)Post Modification Outstanding Recorded Investment (3)Outstanding Recorded Investment
Consumer:
Equity loans and lines of credit1  $119  $—  $119  $115  
Total1  $119  $—  $119  $115  
        
A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the six months ended and three months ended June 30, 2020 or June 30, 2019.