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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2021
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)March 31, 2021% of Total
Loans		December 31, 2020% of Total
Loans
Commercial:    
Commercial and industrial$271,251 24.8 %$273,994 24.9 %
Agricultural production21,049 1.9 %21,971 2.0 %
Total commercial292,300 26.7 %295,965 26.9 %
Real estate:    
Owner occupied203,441 18.5 %208,843 18.9 %
Real estate construction and other land loans57,966 5.3 %55,419 5.0 %
Commercial real estate340,673 31.2 %338,886 30.7 %
Agricultural real estate83,107 7.6 %84,258 7.6 %
Other real estate26,976 2.5 %28,718 2.6 %
Total real estate712,163 65.1 %716,124 64.8 %
Consumer:    
Equity loans and lines of credit52,512 4.8 %55,634 5.0 %
Consumer and installment36,536 3.4 %37,236 3.3 %
Total consumer89,048 8.2 %92,870 8.3 %
Net deferred origination (fees) costs (3,171) (2,612) 
Total gross loans1,090,340 100.0 %1,102,347 100.0 %
Allowance for credit losses(12,056) (12,915) 
Total loans$1,078,284  $1,089,432  
 
    At March 31, 2021 and December 31, 2020, loans originated under Small Business Administration (SBA) programs totaling $22,969,000 and $24,220,000, respectively, were included in the real estate and commercial categories, of which, $17,252,000 or 75% and $18,180,000 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 March 31, 2021, 994 PPP loans totaling $190,900,000 were outstanding and included in the commercial and industrial line item above. At December 31, 2020, 989 PPP loans totaling $192,916,000 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 49 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 March 31, 2021 and 2020 by portfolio segment (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2021$2,019 $9,174 $1,091 $631 $12,915 
Provision (reversal) charged to operations(132)(1,141)(229)(298)(1,800)
Losses charged to allowance(31)— (26)— (57)
Recoveries627 319 52 — 998 
Ending balance, March 31, 2021$2,483 $8,352 $888 $333 $12,056 
Allowance for credit losses:     
Beginning balance, January 1, 2020$1,428 $6,769 $897 $36 $9,130 
Provision charged to operations225 786 302 62 1,375 
Losses charged to allowance(28)— (15)— (43)
Recoveries32 — 52 — 84 
Ending balance, March 31, 2020$1,657 $7,555 $1,236 $98 $10,546 
 
    The following is a summary of the Allowance by impairment methodology and portfolio segment as of March 31, 2021 and December 31, 2020 (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Ending balance, March 31, 2021$2,483 $8,352 $888 $333 $12,056 
Ending balance: individually evaluated for impairment$1,006 $246 $7 $— $1,259 
Ending balance: collectively evaluated for impairment$1,477 $8,106 $881 $333 $10,797 
Ending balance, December 31, 2020$2,019 $9,174 $1,091 $631 $12,915 
Ending balance: individually evaluated for impairment$339 $271 $21 $— $631 
Ending balance: collectively evaluated for impairment$1,680 $8,903 $1,070 $631 $12,284 
    The following table shows the ending balances of loans as of March 31, 2021 and December 31, 2020 by portfolio segment and by impairment methodology (in thousands):
 CommercialReal EstateConsumerTotal
Loans:    
Ending balance, March 31, 2021$292,300 $712,163 $89,048 $1,093,511 
Ending balance: individually evaluated for impairment$7,412 $2,521 $1,073 $11,006 
Ending balance: collectively evaluated for impairment$284,888 $709,642 $87,975 $1,082,505 
Loans:    
Ending balance, December 31, 2020$295,965 $716,124 $92,870 $1,104,959 
Ending balance: individually evaluated for impairment$7,402 $2,616 $1,168 $11,186 
Ending balance: collectively evaluated for impairment
$288,563 $713,508 $91,702 $1,093,773 
The following table shows the loan portfolio by class allocated by management’s internal risk ratings at March 31, 2021 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$259,370 $2,825 $9,056 $— $271,251 
Agricultural production16,474 1,333 3,242 — 21,049 
Real Estate:
Owner occupied192,859 3,568 7,014 — 203,441 
Real estate construction and other land loans49,769 4,998 3,199 — 57,966 
Commercial real estate314,087 16,988 9,598 — 340,673 
Agricultural real estate73,122 8,812 1,173 — 83,107 
Other real estate26,815 161 — — 26,976 
Consumer:
Equity loans and lines of credit50,947 635 930 — 52,512 
Consumer and installment36,386 86 64 — 36,536 
Total$1,019,829 $39,406 $34,276 $— $1,093,511 
    The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2020 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$258,587 $5,004 $10,403 $— $273,994 
Agricultural production18,289 377 3,305 — 21,971 
Real Estate:
Owner occupied197,721 3,870 7,252 — 208,843 
Real estate construction and other land loans
50,560 1,622 3,237 — 55,419 
Commercial real estate314,710 14,537 9,639 — 338,886 
Agricultural real estate72,875 10,195 1,188 — 84,258 
Other real estate28,557 161 — — 28,718 
Consumer:
Equity loans and lines of credit54,034 640 960 — 55,634 
Consumer and installment37,084 — 152 — 37,236 
Total$1,032,417 $36,406 $36,136 $— $1,104,959 
The following table shows an aging analysis of the loan portfolio by class and the time past due at March 31, 2021 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-accrual
Commercial:        
Commercial and industrial$— $— $— $— $271,251 $271,251 $— $362 
Agricultural production— — — — 21,049 21,049 — 1,399 
Real estate:—   —  
Owner occupied— — — — 203,441 203,441 — — 
Real estate construction and other land loans— — — — 57,966 57,966 — 1,524 
Commercial real estate— — — — 340,673 340,673 — 498 
Agricultural real estate— — — — 83,107 83,107 — — 
Other real estate— — — — 26,976 26,976 — — 
Consumer:   —  
Equity loans and lines of credit— — — — 52,512 52,512 — — 
Consumer and installment— — — — 36,536 36,536 — — 
Total$— $— $— $— $1,093,511 $1,093,511 $— $3,783 
    The following table shows an aging analysis of the loan portfolio by class and the time past due at December 31, 2020 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-
accrual
Commercial:        
Commercial and industrial$— $— $60 $60 $273,934 $273,994 $— $752 
Agricultural production— — — — 21,971 21,971 — — 
Real estate:—       
Owner occupied— — — — 208,843 208,843 — 370 
Real estate construction and other land loans— — — — 55,419 55,419 — 1,556 
Commercial real estate— — — — 338,886 338,886 — 512 
Agricultural real estate— — — — 84,258 84,258 — — 
Other real estate— — — — 28,718 28,718 — — 
Consumer:       
Equity loans and lines of credit
— 24 — 24 55,610 55,634 — — 
Consumer and installment5 — — 5 37,231 37,236 — 88 
Total$5 $24 $60 $89 $1,104,870 $1,104,959 $— $3,278 
 
The following table shows information related to impaired loans by class at March 31, 2021 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Real estate:   
Real estate construction and other land loans$350 $352 $— 
Commercial real estate498 553 — 
Total real estate848 905 — 
Consumer:   
Equity loans and lines of credit143 178 — 
Total with no related allowance recorded991 1,083 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial6,013 6,038 742 
Agricultural production1,399 1,419 264 
Total commercial7,412 7,457 1,006 
Real estate:   
Real estate construction and other land loans1,498 1,552 236 
Commercial real estate145 146 3 
Agricultural real estate30 30 7 
Total real estate1,673 1,728 246 
Consumer:   
Equity loans and lines of credit930 930 7 
Total with an allowance recorded10,015 10,115 1,259 
Total$11,006 $11,198 $1,259 
    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, 2020 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Commercial:   
Commercial and industrial$60 $61 $— 
Real estate:   
Owner occupied370 409 — 
Real estate construction and other land loans28 28 — 
Commercial real estate512 561 — 
Total real estate910 998 — 
Consumer:   
Equity loans and lines of credit144 180 — 
Total with no related allowance recorded1,114 1,239 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial7,342 7,373 339 
Real estate:   
Real estate construction and other land loans1,528 1,552 268 
Commercial real estate148 149 3 
Agricultural real estate30 29 — 
Total real estate1,706 1,730 271 
Consumer:   
Equity loans and lines of credit936 936 9 
Consumer and installment88 93 12 
Total consumer1,024 1,029 21 
Total with an allowance recorded10,072 10,132 631 
Total$11,186 $11,371 $631 
 
    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 March 31, 2021 and 2020 (in thousands).
 Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Commercial:    
Commercial and industrial$15 $— $121 $— 
Real estate:    
Owner occupied180 — 413 — 
Real estate construction and other land loans108 — — — 
Commercial real estate505 — 1,101 12 
Agricultural real estate— — 258 — 
Total real estate793 — 1,772 12 
Consumer:    
Equity loans and lines of credit144 12 300 3 
Total with no related allowance recorded952 12 2,193 15 
With an allowance recorded:    
Commercial:    
Commercial and industrial7,002 582 3,048 173 
Agricultural production717 212 12 
Total commercial7,719 582 3,260 185 
Real estate:    
Real estate construction and other land loans1,513 — — — 
Commercial real estate147 11 151 3 
Agricultural real estate30 2 19 — 
Total real estate1,690 13 170 3 
Consumer:    
Equity loans and lines of credit933 55 1,124 14 
Consumer and installment44 — 3 — 
Total consumer977 55 1,127 14 
Total with an allowance recorded10,386 650 4,557 202 
Total$11,338 $662 $6,750 $217 
Foregone interest on nonaccrual loans totaled $56,000 and $24,000 for the three months period ended March 31, 2021 and 2020, respectively.
Troubled Debt Restructurings:
    As of March 31, 2021 and December 31, 2020, the Company has a recorded investment in troubled debt restructurings of $7,223,000 and $7,908,000, respectively. The Company has allocated $590,000 and $20,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2021 and December 31, 2020, respectively.
    During the three months ended March 31, 2021, one loan was 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 $2.80 million resulting from the COVID-19 pandemic that were not classified as a TDRs at March 31, 2021.

    The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ended March 31, 2021 (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
Real Estate:
Real estate-construction and other land loans1$333 $— $333 $325 
(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 three months ended March 31, 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 $12,125 
Agricultural production1850— 850850
Total2 $13,775 $— $13,775 $12,975 

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 three months ended and three months ended March 31, 2021 or March 31, 2020.