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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2022
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, 2022% of Total
Loans		December 31, 2021% of Total
Loans
Commercial:    
Commercial and industrial$116,927 11.6 %$136,847 13.2 %
Agricultural production32,045 3.2 %40,860 3.9 %
Total commercial148,972 14.8 %177,707 17.1 %
Real estate:    
Owner occupied204,272 20.2 %212,234 20.4 %
Real estate construction and other land loans73,358 7.2 %61,586 5.9 %
Commercial real estate375,017 37.2 %369,529 35.6 %
Agricultural real estate94,462 9.3 %98,481 9.5 %
Other real estate25,351 2.5 %26,084 2.5 %
Total real estate772,460 76.4 %767,914 73.9 %
Consumer:    
Equity loans and lines of credit54,706 5.4 %55,620 5.4 %
Consumer and installment34,825 3.4 %36,999 3.6 %
Total consumer89,531 8.8 %92,619 9.0 %
Net deferred origination fees 1,079  871  
Total gross loans1,012,042 100.0 %1,039,111 100.0 %
Allowance for credit losses(9,864) (9,600) 
Total loans$1,002,178  $1,029,511  
 
    At March 31, 2022 and December 31, 2021, loans originated under Small Business Administration (SBA) programs totaling $20,625,000 and $23,024,000, respectively, were included in the real estate and commercial categories, of which, $15,922,000 or 77% and $17,720,000 or 77%, 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, 2022, 23 PPP loans totaling $3,554,000 were outstanding and included in the commercial and industrial line item above. At December 31, 2021, 70 PPP loans totaling $18,553,000 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 53 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, 2022 and 2021 by portfolio segment (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 01, 2022$2,011 $6,741 $568 $280 $9,600 
(Reversal) provision charged to operations(356)307 31 18 — 
Charge-offs(18)— (83)— (101)
Recoveries356 — 9 — 365 
Ending balance, March 31, 2022$1,993 $7,048 $525 $298 $9,864 
Allowance for credit losses:     
Beginning balance, January 1, 2021$2,019 $9,174 $1,091 $631 $12,915 
Reversal charged to operations(132)(1,141)(229)(298)(1,800)
Charge-offs(31)— (26)— (57)
Recoveries627 319 52 — 998 
Ending balance, March 31, 2021$2,483 $8,352 $888 $333 $12,056 
 
    The following is a summary of the Allowance by impairment methodology and portfolio segment as of March 31, 2022 and December 31, 2021 (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Ending balance, March 31, 2022$1,993 $7,048 $525 $298 $9,864 
Ending balance: individually evaluated for impairment$556 $25 $2 $— $583 
Ending balance: collectively evaluated for impairment$1,437 $7,023 $523 $298 $9,281 
Ending balance, December 31, 2021$2,011 $6,741 $568 $280 $9,600 
Ending balance: individually evaluated for impairment$607 $38 $4 $— $649 
Ending balance: collectively evaluated for impairment$1,404 $6,703 $564 $280 $8,951 
    
The following table shows the ending balances of loans as of March 31, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):
 CommercialReal EstateConsumerTotal
Loans:    
Ending balance, March 31, 2022$148,972 $772,460 $89,531 $1,010,963 
Ending balance: individually evaluated for impairment$2,281 $435 $1,043 $3,759 
Ending balance: collectively evaluated for impairment$146,691 $772,025 $88,488 $1,007,204 
Loans:    
Ending balance, December 31, 2021$177,707 $767,914 $92,619 $1,038,240 
Ending balance: individually evaluated for impairment$7,086 $450 $1,050 $8,586 
Ending balance: collectively evaluated for impairment
$170,621 $767,464 $91,569 $1,029,654 

The following table shows the loan portfolio by class allocated by management’s internal risk ratings at March 31, 2022 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$110,393 $3,992 $2,542 $— $116,927 
Agricultural production27,132 2,829 2,084 — 32,045 
Real Estate:
Owner occupied197,143 3,575 3,554 — 204,272 
Real estate construction and other land loans63,724 9,634 — — 73,358 
Commercial real estate358,421 14,119 2,477 — 375,017 
Agricultural real estate88,726 5,736 — — 94,462 
Other real estate25,351 — — — 25,351 
Consumer:
Equity loans and lines of credit54,660 — 46 — 54,706 
Consumer and installment34,773 16 36 — 34,825 
Total$960,323 $39,901 $10,739 $— $1,010,963 
    The following table shows the loan portfolio by class allocated by management’s internally assigned risk grade ratings at December 31, 2021 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$125,537 $8,724 $2,586 $— $136,847 
Agricultural production37,179 1,325 2,356 — 40,860 
Real Estate:
Owner occupied205,092 3,582 3,560 — 212,234 
Real estate construction and other land loans
54,066 7,520 — — 61,586 
Commercial real estate351,395 18,134 — — 369,529 
Agricultural real estate96,949 1,532 — — 98,481 
Other real estate26,084 — — — 26,084 
Consumer:
Equity loans and lines of credit55,611 9 — — 55,620 
Consumer and installment36,942 19 38 — 36,999 
Total$988,855 $40,845 $8,540 $— $1,038,240 
The following table shows an aging analysis of the loan portfolio by class and the time past due at March 31, 2022 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-accrual
Commercial:        
Commercial and industrial$— $— $— $— $116,927 $116,927 $— $292 
Agricultural production— — — — 32,045 32,045 — — 
Real estate:—   —  
Owner occupied— — — — 204,272 204,272 — — 
Real estate construction and other land loans— — — — 73,358 73,358 — — 
Commercial real estate— — — — 375,017 375,017 — — 
Agricultural real estate— — — — 94,462 94,462 — — 
Other real estate— — — — 25,351 25,351 — — 
Consumer:   —  
Equity loans and lines of credit— — — — 54,706 54,706 — — 
Consumer and installment17 — — 17 34,808 34,825 — — 
Total$17 $— $— $17 $1,010,946 $1,010,963 $— $292 
    The following table shows an aging analysis of the loan portfolio by class and the time past due at December 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$1 $— $— $1 $136,846 $136,847 $— $312 
Agricultural production— — — — 40,860 40,860 — 634 
Real estate:—       
Owner occupied— — — — 212,234 212,234 — — 
Real estate construction and other land loans— — — — 61,586 61,586 — — 
Commercial real estate— — — — 369,529 369,529 — — 
Agricultural real estate— — — — 98,481 98,481 — — 
Other real estate— — — — 26,084 26,084 — — 
Consumer:       
Equity loans and lines of credit
— — — — 55,620 55,620 — — 
Consumer and installment79 — — 79 36,920 36,999 — — 
Total$80 $— $— $80 $1,038,160 $1,038,240 $— $946 
 
The following table shows information related to impaired loans by class at March 31, 2022 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Consumer:   
Equity loans and lines of credit$135 $170 $— 
Total with no related allowance recorded135 170 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial2,281 2,325 556 
Real estate:   
Real estate construction and other land loans280 280 18 
Commercial real estate134 135 2 
Agricultural real estate21 21 5 
Total real estate435 436 25 
Consumer:   
Equity loans and lines of credit908 908 2 
  Total consumer908 908 2 
Total with an allowance recorded3,624 3,669 583 
Total$3,759 $3,839 $583 
    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, 2021 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Consumer:   
Equity loans and lines of credit$136 $172 $— 
Total with no related allowance recorded136 172 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial6,452 6,491 544 
Agricultural production634 714 63 
Total commercial7,086 7,205 607 
Real estate:   
Real estate construction and other land loans292 292 30 
Commercial real estate137 138 3 
Agricultural real estate21 21 5 
Total real estate450 451 38 
Consumer:   
Equity loans and lines of credit914 914 4 
Total consumer914 914 4 
Total with an allowance recorded8,450 8,570 649 
Total$8,586 $8,742 $649 
 
    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, 2022 and 2021 (in thousands).
 Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Commercial:    
Commercial and industrial$143 $— $15 $— 
Agricultural production83 — — — 
Total commercial226 — 15 — 
Real estate:    
Owner occupied— — 180 — 
Real estate construction and other land loans— — 108 — 
Commercial real estate— — 505 — 
Total real estate— — 793 — 
Consumer:    
Equity loans and lines of credit136 3 144 12 
Total with no related allowance recorded362 3 952 12 
With an allowance recorded:    
Commercial:    
Commercial and industrial3,329 27 7,002 582 
Agricultural production158 — 717 — 
Total commercial3,487 27 7,719 582 
Real estate:    
Real estate construction and other land loans286 5 1,513 — 
Commercial real estate136 2 147 11 
Agricultural real estate21 — 30 2 
Total real estate443 7 1,690 13 
Consumer:    
Equity loans and lines of credit911 13 933 55 
Consumer and installment— — 44 — 
Total consumer911 13 977 55 
Total with an allowance recorded4,841 47 10,386 650 
Total$5,203 $50 $11,338 $662 
Foregone interest on nonaccrual loans totaled $4,000 and $56,000 for the three month period ended March 31, 2022 and 2021, respectively.

Troubled Debt Restructurings:
    As of March 31, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDR”) of $3,467,000 and $7,640,000, respectively. The Company has allocated $543,000 and $538,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2022 and December 31, 2021, respectively.
    For the three months ended March 31, 2022 and 2021, the terms of certain loans were modified as TDRs. 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. In accordance with such guidance, during 2020 and throughout 2021 the Company offered short-term modifications in response to COVID-19 to borrowers who were current and otherwise not past due. As of March 31, 2022, there were no such loans remaining on deferral.

During the three months ended March 31, 2022, no loans were modified as troubled debt restructuring.
Troubled Debt Restructurings:
    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
Commercial:
Commercial and Industrial1 $333 $— $333 $325 
(1)Amounts represent the recorded investment in loans before recognizing effects of the TDR, if any.
(2)Balance outstanding after principal modification, if any borrower reduction to recorded investment.
Troubled Debt Restructurings:
Consumer:
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 March 31, 2022 or March 31, 2021.