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Loans and Allowance for Credit Losses
 3 Months Ended
Jun. 30, 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)June 30, 2022% of Total
Loans		December 31, 2021% of Total
Loans
Commercial:    
Commercial and industrial$115,037 10.1 %$136,847 13.2 %
Agricultural production41,039 3.6 %40,860 3.9 %
Total commercial156,076 13.7 %177,707 17.1 %
Real estate:    
Owner occupied199,116 17.5 %212,234 20.4 %
Real estate construction and other land loans83,561 7.4 %61,586 5.9 %
Commercial real estate409,496 36.1 %369,529 35.6 %
Agricultural real estate105,330 9.3 %98,481 9.5 %
Other real estate89,484 7.9 %26,084 2.5 %
Total real estate886,987 78.2 %767,914 73.9 %
Consumer:    
Equity loans and lines of credit56,759 5.0 %55,620 5.4 %
Consumer and installment34,866 3.1 %36,999 3.6 %
Total consumer91,625 8.1 %92,619 9.0 %
Net deferred origination fees 1,276  871  
Total gross loans1,135,964 100.0 %1,039,111 100.0 %
Allowance for credit losses(9,873) (9,600) 
Total loans$1,126,091  $1,029,511  
 
    At June 30, 2022 and December 31, 2021, loans originated under Small Business Administration (SBA) programs totaling $21,074,000 and $23,024,000, respectively, were included in the real estate and commercial categories, of which, $16,153,000 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 June 30, 2022, 7 PPP loans totaling $1,137,000 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 54 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, 2022 and 2021 by portfolio segment (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, April 01, 2022$1,993 $7,048 $525 $298 $9,864 
(Reversal) provision charged to operations(30)(54)245 (161)— 
Charge-offs— — (16)— (16)
Recoveries10 — 15 — 25 
Ending balance, June 30, 2022$1,973 $6,994 $769 $137 $9,873 
Allowance for credit losses:     
Beginning balance, April 1, 2021$2,483 $8,352 $888 $333 $12,056 
Reversal charged to operations(307)(1,302)91 18 (1,500)
Charge-offs— — (171)— (171)
Recoveries34 — 20 — 54 
Ending balance, June 30, 2021$2,210 $7,050 $828 $351 $10,439 
The following table shows the summary of activities for the Allowance as of and for the six months ended June 30, 2022 and 2021 by portfolio segment (in thousands):
 
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2022$2,011 $6,741 $568 $280 $9,600 
Reversal charged to operations(387)253 277 (143)— 
Losses charged to allowance(17)— (100)— (117)
Recoveries366 — 24 — 390 
Ending balance, June 30, 2022$1,973 $6,994 $769 $137 $9,873 
Allowance for credit losses:     
Beginning balance, January 1, 2021$2,019 $9,174 $1,091 $631 $12,915 
Provision (reversal) charged to operations(439)(2,443)(138)(280)(3,300)
Losses charged to allowance(31)— (197)— (228)
Recoveries661 319 72 — 1,052 
Ending balance, June 30, 2021$2,210 $7,050 $828 $351 $10,439 


    The following is a summary of the Allowance by impairment methodology and portfolio segment as of June 30, 2022 and December 31, 2021 (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Ending balance, June 30, 2022$1,973 $6,994 $769 $137 $9,873 
Ending balance: individually evaluated for impairment$533 $7 $— $— $540 
Ending balance: collectively evaluated for impairment$1,440 $6,987 $769 $137 $9,333 
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 June 30, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):
 CommercialReal EstateConsumerTotal
Loans:    
Ending balance, June 30, 2022$156,076 $886,987 $91,625 $1,134,688 
Ending balance: individually evaluated for impairment$2,261 $152 $1,034 $3,447 
Ending balance: collectively evaluated for impairment$153,815 $886,835 $90,591 $1,131,241 
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 June 30, 2022 (in thousands):
PassSpecial MentionSub-StandardDoubtfulTotal
Commercial:
Commercial and industrial$108,609 $3,930 $2,498 $— $115,037 
Agricultural production35,986 2,875 2,178 — 41,039 
Real Estate:
Owner occupied192,260 3,314 3,542 — 199,116 
Real estate construction and other land loans71,997 11,564 — — 83,561 
Commercial real estate404,162 2,878 2,456 — 409,496 
Agricultural real estate95,395 9,935 — — 105,330 
Other real estate89,484 — — — 89,484 
Consumer:
Equity loans and lines of credit56,713 — 46 — 56,759 
Consumer and installment34,817 13 36 — 34,866 
Total$1,089,423 $34,509 $10,756 $— $1,134,688 
    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 $— $1,038,240 
The following table shows an aging analysis of the loan portfolio by class and the time past due at June 30, 2022 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 90 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Recorded
Investment
> 90 Days
Accruing		Non-accrual
Commercial:        
Commercial and industrial$— $— $— $— $115,037 $115,037 $— $271 
Agricultural production— — — — 41,039 41,039 — — 
Real estate:—   —  
Owner occupied— — — — 199,116 199,116 — — 
Real estate construction and other land loans— — — — 83,561 83,561 — — 
Commercial real estate— — — — 409,496 409,496 — — 
Agricultural real estate— — — — 105,330 105,330 — — 
Other real estate— — — — 89,484 89,484 — — 
Consumer:   —  
Equity loans and lines of credit145 — — 145 56,614 56,759 — — 
Consumer and installment62 — — 62 34,804 34,866 — — 
Total$207 $— $— $207 $1,134,481 $1,134,688 $— $271 
    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 June 30, 2022 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Consumer:   
Equity loans and lines of credit$1,034 $1,069 $— 
Total with no related allowance recorded1,034 1,069 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial2,261 2,310 533 
Real estate:   
Commercial real estate131 132 2 
Agricultural real estate21 21 5 
Total real estate152 153 7 
Total with an allowance recorded2,413 2,463 540 
Total$3,447 $3,532 $540 
    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 June 30, 2022 and 2021 (in thousands).
 Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Real estate:    
Real estate construction and other land loans$— $— $333 $5 
Commercial real estate— — 490 — 
Total real estate— — 823 5 
Consumer:    
Equity loans and lines of credit1,036 16 142 3 
Total with no related allowance recorded1,036 16 965 8 
With an allowance recorded:    
Commercial:    
Commercial and industrial2,270 28 5,831 67 
Agricultural production— — 1,328 — 
Total commercial2,270 28 7,159 67 
Real estate:    
Real estate construction and other land loans— — 746 — 
Commercial real estate132 2 144 2 
Agricultural real estate21 — 30 1 
Total real estate153 2 920 3 
Consumer:    
Equity loans and lines of credit— — 928 14 
Total consumer— — 928 14 
Total with an allowance recorded2,423 30 9,007 84 
Total$3,459 $46 $9,972 $92 
Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
With no related allowance recorded:    
Commercial:    
Commercial and industrial$82 $— $9 $— 
Agricultural land and production47 — — — 
Total commercial129 — 9 — 
Real estate:    
Owner occupied— — 103 — 
Real estate construction and other land loans— — 201 11 
Commercial real estate— — 498 — 
Total real estate— — 802 11 
Consumer:    
Equity loans and lines of credit522 32 142 6 
Total with no related allowance recorded651 32 953 17 
With an allowance recorded:    
Commercial:    
Commercial and industrial2,875 55 6,475 153 
Agricultural land and production91 — 969 — 
Total commercial2,966 55 7,444 153 
Real estate:    
Real estate construction and other land loans163 — 1,077 — 
Commercial real estate134 4 145 5 
Agricultural real estate21 1 30 1 
Total real estate318 5 1,252 6 
Consumer:    
Equity loans and lines of credit520 — 931 27 
Consumer and installment— — 25 — 
Total consumer520 — 956 27 
Total with an allowance recorded3,804 60 9,652 186 
Total$4,455 $92 $10,605 $203 
Foregone interest on nonaccrual loans totaled $57,000 and $72,000 for the six month period ended June 30, 2022 and 2021, respectively. Foregone interest on nonaccrual loans totaled 53,000 and 34,000 for the three month period ended June 30, 2022 and 2021, respectively.

Troubled Debt Restructurings:
    As of June 30, 2022 and December 31, 2021, the Company has a recorded investment in troubled debt restructurings (“TDR”) of $3,447,000 and $7,640,000, respectively. The Company has allocated $540,000 and $538,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of June 30, 2022 and December 31, 2021, respectively.
    For the six months ended June 30, 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 June 30, 2022, there were no such loans remaining on deferral.

During the six months ended June 30, 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 six months ended June 30, 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 $317 
(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 six months ended June 30, 2022 or June 30, 2021.