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LOANS

12 Months Ended

Dec. 31, 2020

8. LOANS

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. Loans outstanding at December 31, 2020 and December 31, 2019 are summarized by segment, and by classes within each segment, as follows:

Summary of Loans by Type

(In Thousands)


	Dec. 31,		Dec. 31,
	2020		2019
Residential mortgage:
Residential mortgage loans - first liens	$	532,947	$	510,641
Residential mortgage loans - junior liens		27,311		27,503
Home equity lines of credit		39,301		33,638
1-4 Family residential construction		20,613		14,798
Total residential mortgage		620,172		586,580
Commercial:
Commercial loans secured by real estate		531,810		301,227
Commercial and industrial		159,577		126,374
Small Business Administration - Paycheck Protection Program		132,269		0
Political subdivisions		53,221		53,570
Commercial construction and land		42,874		33,555
Loans secured by farmland		11,736		12,251
Multi-family (5 or more) residential		55,811		31,070
Agricultural loans		3,164		4,319
Other commercial loans		17,289		16,535
Total commercial		1,007,751		578,901
Consumer		16,286		16,741
Total		1,644,209		1,182,222
Less: allowance for loan losses		(11,385)		(9,836)
Loans, net	$	1,632,824	$	1,172,386

In the table above, outstanding loan balances are presented net of deferred loan origination fees, of $6,286,000 at December 31, 2020 and $2,482,000 at December 31, 2019.

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the northern tier and northcentral Pennsylvania, the southern tier of New York State and southeastern Pennsylvania. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10%of total loans at either December 31, 2020 or December 31, 2019.

On March 27, 2020, the CARES Act was signed into law. The CARES Act is a $2 trillion stimulus package designed to provide relief to U.S. businesses and consumers struggling as a result of the pandemic. A provision in the CARES Act includes creation of the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”) and Treasury Department. Under the PPP, the Corporation, as an SBA-certified lender, provides SBA-guaranteed loans to small businesses to pay their employees, rent, mortgage

interest, and utilities. PPP loans will be forgiven subject to clients’ providing documentation evidencing their compliant use of funds and otherwise complying with the terms of the program.

The maximum term of PPP loans is five years, though most of the Corporation’s PPP loans have two-year terms, and the Corporation will be repaid sooner to the extent the loans are forgiven. The interest rate on PPP loans is 1%, and the Corporation has received fees from the SBA ranging between 1% and 5% per loan, depending on the size of the loan. Fees on PPP loans, net of origination costs and a market rate adjustment on PPP loans acquired from Covenant, are recognized in interest income as a yield adjustment over the term of the loans.

The Corporation began accepting and processing applications for loans under the PPP on April 3, 2020. Covenant also engaged in PPP lending starting in early April 2020. As of December 31, 2020, the recorded investment in PPP loans was $132,269,000, including contractual principal balances of $134,802,000, increased by a market rate adjustment on PPP loans acquired from Covenant of $504,000 and reduced by net deferred origination fees of $3,037,000. Net deferred origination fees and the market rate adjustment on PPP loans are recognized in interest income as yield adjustments (net accretion over the term of the loans). Accretion of fees received on PPP loans, net of amortization of the market rate adjustment on PPP loans acquired from Covenant, was $1,945,000 for the year ended December 31, 2020.

Section 4013 of the CARES Act provides that, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the coronavirus (COVID-19) pandemic declared by the President of the United States under the National Emergencies Act terminates (the “applicable period”), the Corporation may elect to suspend U.S. GAAP for loan modifications related to the pandemic that would otherwise be categorized as TDRs and suspend any determination of a loan modified as a result of the effects of the pandemic as being a TDR, including impairment for accounting purposes. The suspension is applicable for the term of the loan modification that occurs during the applicable period for a loan that was not more than 30 days past due as of December 31, 2019. The suspension is not applicable to any adverse impact on the credit of a borrower that is not related to the pandemic.

On December 27, 2020, the President of the United States signed into law the Consolidated Appropriations Act, 2021 (the “CAA Act”), which both funds the federal government until September 30, 2021 and broadly addresses additional COVID-19 responses and relief. Among the additional relief measures included are certain extensions to elements of the CARES Act, including extension of temporary relief from troubled debt restructurings established under Section 4013 of the CARES Act to the earlier of a) January 1, 2022, or b) the date that is 60 days after the date on which the national COVID-19 emergency terminates. The CAA also includes additional funding for the PPP with additional eligibility requirements for borrowers with generally the same loan terms as provided under the CARES Act.

In addition, the banking regulators and other financial regulators, on March 22, 2020 and revised April 7, 2020, issued a joint interagency statement titled the “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” that encourages financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of the COVID-19 pandemic. Pursuant to the interagency statement, loan modifications that do not meet the conditions of Section 4013 of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. Specifically, the agencies confirmed with the FASB staff that short-term modifications made in good faith in response to the pandemic to borrowers who were current prior to any relief are not TDRs under U.S. GAAP. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. Appropriate allowances for loan and lease losses are expected to be maintained. With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to the pandemic as past due because of the deferral. The interagency statement also states that during short-term pandemic-related loan modifications, these loans generally should not be reported as nonaccrual.

To work with clients impacted by COVID-19, the Corporation is offering short-term loan modifications on a case-by-case basis to borrowers who were current in their payments at the inception of the loan modification program. Prior to the merger, Covenant had a similar program in place, and these modified loans have been incorporated into the Corporation’s program. These efforts have been designed to assist borrowers as they deal with the current crisis and help the Corporation mitigate credit risk. For loans subject to the program, each borrower is required to resume making regularly scheduled loan payments at the end of the modification period and the

deferred amounts will be moved to the end of the loan term. Consistent with Section 4013 of the CARES Act, the modified loans have not been reported as past due, nonaccrual or as TDRs at December 31, 2020. Most of the modifications under the program became effective in March and the second quarter 2020 and provided a deferral of interest or principal and interest for 90-to-180 days. Accordingly, many of the loans for which deferrals were granted returned to full payment status prior to December 31, 2020. The quantity and balances of modifications outstanding under the program at December 31, 2020 are as follows:


	Deferrals Remaining
	As of December 31, 2020
(Dollars in Thousands)	Number
	of	Recorded
	Loans	Investment
COVID-19-related loan modifications:
Residential mortgage	15	$	2,334
Consumer	3		61
Commercial	27		35,002
Total	45	$	37,397

The ultimate effect of COVID-19 on the local or broader economy is not known. In 2020, the Corporation increased the allowance for loan losses $785,000 based on an increase in qualitative factors related to potential deterioration in economic conditions. Further, in June, September and December 2020, the Corporation’s credit administration and commercial lending staffs performed reviews of commercial credits with “Pass” ratings in an effort to reduce the risk of failing to identify loans that should be evaluated for risk rating downgrade or a specific allowance. Updated risk ratings and specific allowances based on the December 2020 review have been included in the December 31, 2020 information presented below. Because of the significant uncertainties related to the ultimate duration of the COVID-19 pandemic and its economic impact, the total impact on the Corporation’s loan portfolio is not determinable.

As described in Note 3, effective July 1, 2020, the Corporation acquired loans pursuant to its acquisition of Covenant, and effective April 1, 2019, the Corporation acquired loans pursuant to the acquisition of Monument. The acquired loans were recorded at their initial fair value, with adjustments made to the gross amortized cost of loans based on movements in interest rates (market rate adjustment) and based on credit fair value adjustments on non-impaired loans and impaired loans. In the last three quarters of 2019 and year ended December 31, 2020, the Corporation recognized amortization and accretion of a portion of the market rate adjustments and credit adjustments on non-impaired (performing) loans, and a partial recovery of purchased credit impaired (PCI) loans. For the years ended December 31, 2020 and 2019, adjustments to the initial market rate and credit fair value adjustments of performing loans were recognized as follows:


(In Thousands)
	Year Ended
	December 31,		December 31,
	2020		2019
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	(1,415)	$	0
Market rate adjustment recorded in acquisition		2,909		(1,807)
(Amortization) accretion recognized in interest income		(776)		392
Adjustments to gross amortized cost of loans at end of period	$	718	$	(1,415)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(1,216)	$	0
Credit adjustment recorded in acquisition		(7,219)		(1,914)
Accretion recognized in interest income		2,456		698
Adjustments to gross amortized cost of loans at end of period	$	(5,979)	$	(1,216)

The following table presents the components of the purchase accounting adjustments related to the PCI loans acquired from Covenant as of July 1, 2020:


(In Thousands)	July 1, 2020
Contractually required principal at acquisition	$	10,114
Non-accretable discount		(3,466)
Expected cash flows	$	6,648

A summary of PCI loans held at December 31, 2020 and December 31, 2019 is as follows:


(In Thousands)	December 31,		December 31,
	2020		2019
Outstanding balance	$	10,316	$	759
Carrying amount		6,841		441

Transactions within the allowance for loan losses, summarized by segment and class, were as follows:


	December 31,								December 31,
Year Ended December 31, 2020	2019						Provision		2020
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	3,405	$	0	$	39	$	80	$	3,524
Residential mortgage loans - junior liens		384		0		1		(36)		349
Home equity lines of credit		276		0		4		1		281
1-4 Family residential construction		117		0		0		(18)		99
Total residential mortgage		4,182		0		44		27		4,253
Commercial:
Commercial loans secured by real estate		1,921		0		0		1,130		3,051
Commercial and industrial		1,391		(2,236)		16		3,074		2,245
Commercial construction and land		966		(107)		0		(405)		454
Loans secured by farmland		158		0		0		(38)		120
Multi-family (5 or more) residential		156		0		0		80		236
Agricultural loans		41		0		0		(7)		34
Other commercial loans		155		0		0		13		168
Total commercial		4,788		(2,343)		16		3,847		6,308
Consumer		281		(122)		41		39		239
Unallocated		585		0		0		0		585
Total Allowance for Loan Losses	$	9,836	$	(2,465)	$	101	$	3,913	$	11,385


	December 31,								December 31,
Year Ended December 31, 2019	2018						Provision		2019
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	3,156	$	(166)	$	4	$	411	$	3,405
Residential mortgage loans - junior liens		325		(24)		2		81		384
Home equity lines of credit		302		0		5		(31)		276
1-4 Family residential construction		203		0		1		(87)		117
Total residential mortgage		3,986		(190)		12		374		4,182
Commercial:
Commercial loans secured by real estate		2,538		0		0		(617)		1,921
Commercial and industrial		1,553		(6)		6		(162)		1,391
Commercial construction and land		110		0		0		856		966
Loans secured by farmland		102		0		0		56		158
Multi-family (5 or more) residential		114		0		0		42		156
Agricultural loans		46		0		0		(5)		41
Other commercial loans		128		0		0		27		155
Total commercial		4,591		(6)		6		197		4,788
Consumer		233		(183)		39		192		281
Unallocated		499		0		0		86		585
Total Allowance for Loan Losses	$	9,309	$	(379)	$	57	$	849	$	9,836

For the year ended December 31, 2020, the provision for loan losses was $3,913,000, an increase in expense of $3,064,000 as compared to 2019. The provision included the impact of a $2,219,000 charge-off on a commercial loan of $3,500,000. In total, the provision for 2020 included a net charge of $2,238,000 related to specific loans (net decrease in specific allowances on loans of $126,000 and net charge-offs of $2,364,000) and a $1,675,000 increase in the collectively determined portion of the allowance for loan losses. The increase in the collectively determined portion of the allowance includes the impact of an increase in the net charge-off experience factor for commercial loans and an increase in qualitative factors.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of December 31, 2020 and 2019:


December 31, 2020									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Residential Mortgage:
Residential Mortgage loans - first liens	$	516,685	$	6,192	$	9,994	$	0	$	76	$	532,947
Residential Mortgage loans - junior liens		26,480		141		621		0		69		27,311
Home equity lines of credit		38,529		59		713		0		0		39,301
1-4 Family residential construction		20,613		0		0		0		0		20,613
Total residential mortgage		602,307		6,392		11,328		0		145		620,172
Commercial:
Commercial loans secured by real estate		494,876		17,374		15,262		0		4,298		531,810
Commercial and Industrial		143,500		8,025		7,268		0		784		159,577
Small Business Administration - Paycheck Protection Program		132,269		0		0		0		0		132,269
Political subdivisions		53,221		0		0		0		0		53,221
Commercial construction and land		42,110		715		49		0		0		42,874
Loans secured by farmland		10,473		405		858		0		0		11,736
Multi-family (5 or more) residential		50,563		2,405		1,229		0		1,614		55,811
Agricultural loans		2,569		0		595		0		0		3,164
Other commercial loans		17,289		0		0		0		0		17,289
Total commercial		946,870		28,924		25,261		0		6,696		1,007,751
Consumer		16,172		0		114		0		0		16,286
Totals	$	1,565,349	$	35,316	$	36,703	$	0	$	6,841	$	1,644,209


December 31, 2019									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Residential Mortgage:
Residential Mortgage loans - first liens	$	500,963	$	193	$	9,324	$	84	$	77	$	510,641
Residential Mortgage loans - junior liens		26,953		79		471		0		0		27,503
Home equity lines of credit		33,170		59		409		0		0		33,638
1-4 Family residential construction		14,798		0		0		0		0		14,798
Total residential mortgage		575,884		331		10,204		84		77		586,580
Commercial:
Commercial loans secured by real estate		294,397		4,773		1,693		0		364		301,227
Commercial and Industrial		114,293		9,538		2,543		0		0		126,374
Political subdivisions		53,570		0		0		0		0		53,570
Commercial construction and land		32,224		0		1,331		0		0		33,555
Loans secured by farmland		6,528		4,681		1,042		0		0		12,251
Multi-family (5 or more) residential		30,160		0		910		0		0		31,070
Agricultural loans		3,343		335		641		0		0		4,319
Other commercial loans		16,416		0		119		0		0		16,535
Total commercial		550,931		19,327		8,279		0		364		578,901
Consumer		16,720		0		21		0		0		16,741
Totals	$	1,143,535	$	19,658	$	18,504	$	84	$	441	$	1,182,222

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of December 31, 2020 and 2019:


December 31, 2020	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,385	$	530,562	$	532,947	$	9	$	3,515	$	3,524
Residential mortgage loans - junior liens		414		26,897		27,311		153		196		349
Home equity lines of credit		0		39,301		39,301		0		281		281
1-4 Family residential construction		0		20,613		20,613		0		99		99
Total residential mortgage		2,799		617,373		620,172		162		4,091		4,253
Commercial:
Commercial loans secured by real estate		11,962		519,848		531,810		692		2,359		3,051
Commercial and industrial		1,359		158,218		159,577		71		2,174		2,245
Small Business Administration - Paycheck Protection Program		0		132,269		132,269		0		0		0
Political subdivisions		0		53,221		53,221		0		0		0
Commercial construction and land		0		42,874		42,874		0		454		454
Loans secured by farmland		84		11,652		11,736		0		120		120
Multi-family (5 or more) residential		1,614		54,197		55,811		0		236		236
Agricultural loans		0		3,164		3,164		0		34		34
Other commercial loans		0		17,289		17,289		0		168		168
Total commercial		15,019		992,732		1,007,751		763		5,545		6,308
Consumer		0		16,286		16,286		0		239		239
Unallocated												585

Total	$	17,818	$	1,626,391	$	1,644,209	$	925	$	9,875	$	11,385


December 31, 2019	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	1,023	$	509,618	$	510,641	$	0	$	3,405	$	3,405
Residential mortgage loans - junior liens		368		27,135		27,503		176		208		384
Home equity lines of credit		0		33,638		33,638		0		276		276
1-4 Family residential construction		0		14,798		14,798		0		117		117
Total residential mortgage		1,391		585,189		586,580		176		4,006		4,182
Commercial:
Commercial loans secured by real estate		684		300,543		301,227		0		1,921		1,921
Commercial and industrial		1,467		124,907		126,374		149		1,242		1,391
Political subdivisions		0		53,570		53,570		0		0		0
Commercial construction and land		1,261		32,294		33,555		678		288		966
Loans secured by farmland		607		11,644		12,251		48		110		158
Multi-family (5 or more) residential		0		31,070		31,070		0		156		156
Agricultural loans		76		4,243		4,319		0		41		41
Other commercial loans		0		16,535		16,535		0		155		155
Total commercial		4,095		574,806		578,901		875		3,913		4,788
Consumer		0		16,741		16,741		0		281		281
Unallocated												585

Total	$	5,486	$	1,176,736	$	1,182,222	$	1,051	$	8,200	$	9,836

Summary information related to impaired loans as of December 31, 2020 and 2019 is as follows:


(In Thousands)	December 31, 2020						December 31, 2019
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Residential mortgage loans - first liens	$	1,248	$	1,248	$	0	$	645	$	617	$	0
Residential mortgage loans - junior liens		160		105		0		42		42		0
Commercial loans secured by real estate		7,168		5,398		0		684		684		0
Commercial and industrial		1,781		1,287		0		563		563		0
Loans secured by farmland		84		84		0		129		129		0
Multi-family (5 or more) residential		2,770		1,614		0		0		0		0
Agricultural loans		0		0		0		76		76		0
Total with no related allowance recorded		13,211		9,736		0		2,139		2,111		0

With a related allowance recorded:
Residential mortgage loans - first liens		1,200		1,200		9		406		406		0
Residential mortgage loans - junior liens		309		309		153		326		326		176
Commercial loans secured by real estate		6,501		6,501		691		0		0		0
Commercial and industrial		72		72		72		904		904		149
Construction and other land loans		0		0		0		1,261		1,261		678
Loans secured by farmland		0		0		0		478		478		48
Total with a related allowance recorded		8,082		8,082		925		3,375		3,375		1,051
Total	$	21,293	$	17,818	$	925	$	5,514	$	5,486	$	1,051

In the table immediately above, loans to two borrowers are presented under the Residential mortgage loans – first liens and Residential mortgage loans – junior liens classes. Each of these loans is collateralized by one property, and the allowance associated with each of these loans was determined based on an analysis of the total amounts of the Corporation’s exposure in comparison to the estimated net proceeds if the Corporation were to sell the property. The total allowance related to these two borrowers was $153,000 at December 31, 2020 and $176,000 at December 31, 2019.

The average balance of impaired loans and interest income recognized on impaired loans is as follows:


(In Thousands)					Interest Income Recognized on
	Average Investment in				on Impaired Loans
	Impaired Loans				on a Cash Basis
	Year Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
Residential mortgage:
Residential mortgage loans - first lien	$	1,853	$	1,440	$	116	$	87
Residential mortgage loans - junior lien		392		288		22		12
Home equity lines of credit		57		26		3		4
Total residential mortgage		2,302		1,754		141		103
Commercial:
Commercial loans secured by real estate		5,266		1,562		258		19
Commercial and industrial		2,542		1,186		34		25
Commercial construction and land		521		556		15		71
Loans secured by farmland		319		1,276		27		49
Multi-family (5 or more) residential		202		0		0		0
Agricultural loans		76		399		4		31
Other commercial loans		18		20		1		4
Total commercial		8,944		4,999		339		199
Consumer		0		3		0		0
Total	$	11,246	$	6,756	$	480	$	302

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:


(In Thousands)	December 31, 2020				December 31, 2019
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	838	$	6,387	$	878	$	4,679
Residential mortgage loans - junior liens		52		378		53		326
Home equity lines of credit		233		299		71		73
Total residential mortgage		1,123		7,064		1,002		5,078
Commercial:
Commercial loans secured by real estate		395		11,550		107		1,148
Commercial and industrial		142		970		15		1,051
Commercial construction and land		0		49		0		1,311
Loans secured by farmland		188		84		43		565
Multi-family (5 or more) residential		0		1,614		0		0
Other commercial		71		0		0		49
Total commercial		796		14,267		165		4,124
Consumer		56		85		40		16
Totals	$	1,975	$	21,416	$	1,207	$	9,218

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual. PCI loans with a total recorded investment of $6,841,000 at December 31, 2020 and $441,000 at December 31, 2019 are classified as nonaccrual.

The table below presents a summary of the contractual aging of loans as of December 31, 2020 and 2019. Loans modified under the Corporation’s program designed to work with clients impacted by COVID-19, as described above, are included in the current and past due less than 30 days category in the table that follows:


(In Thousands)	As of December 31, 2020								As of December 31, 2019
	Current &								Current &
	Past Due		Past Due		Past Due				Past Due		Past Due		Past Due
	Less than		30-89		90+				Less than		30-89		90+
	30 Days		Days		Days		Total		30 Days		Days		Days		Total
Residential mortgage:
Residential mortgage loans - first liens	$	523,191	$	5,703	$	4,053	$	532,947	$	499,024	$	7,839	$	3,778	$	510,641
Residential mortgage loans - junior liens		27,009		111		191		27,311		27,041		83		379		27,503
Home equity lines of credit		38,919		101		281		39,301		33,115		452		71		33,638
1-4 Family residential construction		20,457		156		0		20,613		14,758		40		0		14,798
Total residential mortgage		609,576		6,071		4,525		620,172		573,938		8,414		4,228		586,580

Commercial:
Commercial loans secured by real estate		529,998		66		1,746		531,810		299,640		737		850		301,227
Commercial and industrial		158,523		55		999		159,577		126,221		16		137		126,374
Small Business Administration - Paycheck Protection Program		132,269		0		0		132,269		0		0		0		0
Political subdivisions		53,221		0		0		53,221		53,570		0		0		53,570
Commercial construction and land		42,590		284		0		42,874		33,505		0		50		33,555
Loans secured by farmland		11,419		95		222		11,736		11,455		666		130		12,251
Multi-family (5 or more) residential		53,860		1,951		0		55,811		31,070		0		0		31,070
Agricultural loans		3,091		2		71		3,164		4,318		1		0		4,319
Other commercial loans		17,289		0		0		17,289		16,535		0		0		16,535
Total commercial		1,002,260		2,453		3,038		1,007,751		576,314		1,420		1,167		578,901
Consumer		16,063		83		140		16,286		16,496		189		56		16,741
Totals	$	1,627,899	$	8,607	$	7,703	$	1,644,209	$	1,166,748	$	10,023	$	5,451	$	1,182,222

Nonaccrual loans are included in the contractual aging immediately above. A summary of the contractual aging of nonaccrual loans at December 31, 2020 and 2019 is as follows:


(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
December 31, 2020 Nonaccrual Totals	$	12,999	$	2,689	$	5,728	$	21,416
December 31, 2019 Nonaccrual Totals	$	3,840	$	1,134	$	4,244	$	9,218

Loans whose terms are modified are classified as TDRs if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired and reviewed each quarter to determine if a specific allowance for loan losses is required. Loans deferred under COVID-19 CARES Act Section 4013 are not classified as TDRs as they meet COVID-19 relief guidance. The outstanding balance of loans subject to TDRs, as well as the contractual aging information at December 31, 2020 and 2019 is as follows:

Troubled Debt Restructurings (TDRs):


(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Nonaccrual		Total
December 31, 2020 Totals	$	166	$	0	$	418	$	6,867	$	7,451
December 31, 2019 Totals	$	889	$	0	$	0	$	1,737	$	2,626

At December 31, 2020 and 2019, there were no commitments to loan additional funds to borrowers whose loans have been classified as TDRs.

A summary of TDRs that occurred during 2020 and 2019 is as follows:


(Balances in Thousands)	2020			2019
		Post-			Post-
	Number	Modification		Number	Modification
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Residential mortgage - junior liens:
Reduced monthly payments and extended maturity date	0	$	0	1	$	18
New loan at lower than risk-adjusted market rate to borrower from whom short sale of other collateral was accepted	1		30	0		0
Commercial loans secured by real estate:
Interest only payments for a nine-month period	1		240	0		0
Principal and interest payment deferral non-COVID related	2		4,831	0		0
Extended interest only payments and reduced monthly payments with a balloon payment at maturity	0		0	1		1,261
Commercial and industrial,
Reduced monthly payments and extended maturity date	0		0	9		448
Multi-family (5 or more) residential,
Principal and interest payment deferral non-COVID related	3		2,170	0		0
Agricultural loans,
Reduced monthly payments and extended maturity date	0		0	1		84
Total	7	$	7,271	12	$	1,811

In the year ended December 31, 2020, the Corporation recorded a specific allowance for loan losses of $416,000 related to a loan secured by commercial real estate for which a TDR concession was also made in 2020 and included in the table above. The other loans for which TDRs were granted in 2020 had no specific impact on the provision or allowance for loan losses.

In the year ended December 31, 2019, the Corporation recorded a specific allowance for loan losses of $678,000 related to the commercial loan secured by real estate in the table above. This loan was subsequently paid off in the first quarter of 2020 for less than the full principal balance, resulting in a charge-off of $107,000.

In 2020 and 2019, payment defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are summarized as follows:


	2020			2019
	Number			Number
	of	Recorded		of	Recorded
(Balances in Thousands)	Loans	Investment		Loans	Investment
Residential mortgage - first liens	0	$	0	1	$	261
Residential mortgage - junior liens	1		240	1		18
Commercial and industrial	0		0	8		170
Agricultural loans	0		0	1		81
Total	1	$	240	11	$	530

In 2020, one commercial real estate loan experienced a payment default. This loan was individually evaluated for impairment at December 31, 2020 and no specific allowance was recorded as the estimated value of collateral exceeded the outstanding balance. All of the TDRs for which payment defaults occurred in 2019 were related to one commercial relationship. These loans were individually evaluated for impairment at December 31, 2020 and 2019, and no specific allowance for loan losses was recognized because the estimated values of collateral and U.S. Government (Small Business Administration) guarantees exceeded the outstanding balances of the loans.

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in Foreclosed assets held for sale in the consolidated balance sheets) is as follows:


(In Thousands)	December 31,		December 31,
	2020		2019
Foreclosed residential real estate	$	80	$	292

The recorded investment of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:


(In Thousands)	December 31,		December 31,
	2020		2019
Residential real estate in process of foreclosure	$	1,246	$	1,717