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Loans | 3 Months Ended
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Mar. 31, 2020
Loans [Abstract] |
Loans | Note 5 – Loans The Company grants loans primarily to customers throughout north central, central and south central Pennsylvania and the southern tier of New York. The recently completed MidCoast acquisition has expanded our lending market into Wilmington and Dover, Delaware. Although the Company had a diversified loan portfolio at March 31, 2020 and December 31, 2019, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio and how those segments are analyzed within the allowance for loan losses as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020 |  | Total Loans |  |  | Individually evaluated for impairment |  |  | Loans acquired with deteriorated credit quality (PCI) |  |  | Collectively evaluated for impairment |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 216,179 |  |  | $ | 1,220 |  |  | $ | 23 |  |  | $ | 214,936 |
Commercial |  |  | 338,490 |  |  |  | 11,480 |  |  |  | 1,195 |  |  |  | 325,815 |
Agricultural |  |  | 300,606 |  |  |  | 3,893 |  |  |  | - |  |  |  | 296,713 |
Construction |  |  | 17,926 |  |  |  | - |  |  |  | - |  |  |  | 17,926 |
Consumer |  |  | 9,533 |  |  |  | 3 |  |  |  | - |  |  |  | 9,530 |
Other commercial loans |  |  | 71,038 |  |  |  | 1,842 |  |  |  | 30 |  |  |  | 69,166 |
Other agricultural loans |  |  | 46,170 |  |  |  | 1,293 |  |  |  | - |  |  |  | 44,877 |
State and political subdivision loans |  |  | 93,778 |  |  |  | - |  |  |  | - |  |  |  | 93,778 |
Total |  |  | 1,093,720 |  |  |  | 19,731 |  |  |  | 1,248 |  |  |  | 1,072,741 |
Less: allowance for loan losses |  |  | 14,247 |  |  |  | 753 |  |  |  | - |  |  |  | 13,494 |
Net loans |  | $ | 1,079,473 |  |  | $ | 18,978 |  |  | $ | 1,248 |  |  | $ | 1,059,247 |
December 31 , 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 217,088 |  |  | $ | 1,166 |  |  | $ | 23 |  |  | $ | 215,899 |
Commercial |  |  | 342,023 |  |  |  | 11,537 |  |  |  | 1,210 |  |  |  | 329,276 |
Agricultural |  |  | 311,464 |  |  |  | 3,782 |  |  |  | - |  |  |  | 307,682 |
Construction |  |  | 15,519 |  |  |  | - |  |  |  | - |  |  |  | 15,519 |
Consumer |  |  | 9,947 |  |  |  | 4 |  |  |  | - |  |  |  | 9,943 |
Other commercial loans |  |  | 69,970 |  |  |  | 1,902 |  |  |  | 49 |  |  |  | 68,019 |
Other agricultural loans |  |  | 55,112 |  |  |  | 1,281 |  |  |  | - |  |  |  | 53,831 |
State and political subdivision loans |  |  | 94,446 |  |  |  | - |  |  |  | - |  |  |  | 94,446 |
Total |  |  | 1,115,569 |  |  |  | 19,672 |  |  |  | 1,282 |  |  |  | 1,094,615 |
Less: allowance for loan losses |  |  | 13,845 |  |  |  | 735 |  |  |  | - |  |  |  | 13,110 |
Net loans |  | $ | 1,101,724 |  |  | $ | 18,937 |  |  | $ | 1,282 |  |  | $ | 1,081,505 |
Upon acquisition, the Company evaluates whether an acquired loan is within the scope of ASC 310-30, Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality. PCI, defined above, loans are loans that have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. The fair value of PCI loans, on the acquisition date, was determined, primarily based on the fair value of the loans’ collateral. The carrying value of PCI loans was $1,248,000 and $1,282,000 at March 31, 2020 and December 31, 2019, respectively. The carrying value of the PCI loans was determined by projected discounted contractual cash flows. Changes in the accretable yield for PCI loans were as follows for the three months ended March 31, 2020 and 2019, respectively (in thousands):
|  | Three months ended |
|  | March 31 |
|  | 2020 |  |  | 2019 |
Balance at beginning of period |  | $ | 89 |  |  | $ | 104 |
Accretion |  |  | (1 | ) |  |  | (2 | )
Balance at end of period |  | $ | 88 |  |  | $ | 102 |
The following table presents additional information regarding loans acquired with specific evidence of deterioration in credit quality under ASC 310-30 (in thousands):
|  | March 31, 2020 |  |  | December 31, 2019 |
Outstanding balance |  | $ | 4,057 |  |  | $ | 4,072 |
Carrying amount |  |  | 1,248 |  |  |  | 1,282 |
The segments of the Company’s loan portfolio are disaggregated into classes to a level that allows management to monitor risk and performance. Residential real estate mortgages consist primarily of 15 to 30 year first mortgages on residential real estate, while residential real estate home equity loans are consumer purpose installment loans or lines of credit with terms of 15 years or less secured by a mortgage which is often a second lien on residential real estate. Commercial real estate loans are business purpose loans secured by a mortgage on commercial real estate. Agricultural real estate loans are loans secured by a mortgage on real estate used in agriculture production. Construction real estate loans are loans secured by residential, commercial or agricultural real estate used during the construction phase of residential, commercial or agricultural projects. Consumer loans are typically unsecured or primarily secured by assets other than real estate and overdraft lines of credit are typically secured by customer deposit accounts. Other commercial loans are loans for commercial purposes primarily secured by non-real estate collateral. Other agricultural loans are loans for agricultural purposes primarily secured by non-real estate collateral. State and political subdivision loans are loans to state and local municipalities for capital and operating expenses or tax free loans used to finance commercial development. Management considers other commercial loans, other agricultural loans, state and political subdivision loans, commercial real estate loans and agricultural real estate loans which are 90 days or more past due to be impaired. Management will also consider a loan impaired based on other factors it becomes aware of, including the customer’s results of operations and cash flows or if the loan is modified in a troubled debt restructuring. In addition, certain residential mortgages, home equity and consumer loans that are cross collateralized with commercial relationships that are determined to be impaired may also be classified as impaired. Impaired loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allocation of the allowance for loan losses or a charge-off to the allowance for loan losses. The following table includes the recorded investment and unpaid principal balances for impaired loan receivables by class, excluding PCI loans, with the associated allowance amount, if applicable (in thousands):
|  |  |  |  | Recorded |  |  | Recorded |  |  |  |  |  |  |
|  | Unpaid |  |  | Investment |  |  | Investment |  |  | Total |  |  |  |
|  | Principal |  |  | With No |  |  | With |  |  | Recorded |  |  | Related |
March 31, 2020 |  | Balance |  |  | Allowance |  |  | Allowance |  |  | Investment |  |  | Allowance |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 1,282 |  |  | $ | 776 |  |  | $ | 300 |  |  | $ | 1,076 |  |  | $ | 20 |
Home Equity |  |  | 166 |  |  |  | 80 |  |  |  | 64 |  |  |  | 144 |  |  |  | 11 |
Commercial |  |  | 12,000 |  |  |  | 10,668 |  |  |  | 812 |  |  |  | 11,480 |  |  |  | 335 |
Agricultural |  |  | 4,046 |  |  |  | 1,549 |  |  |  | 2,344 |  |  |  | 3,893 |  |  |  | 86 |
Consumer |  |  | 3 |  |  |  | 3 |  |  |  | - |  |  |  | 3 |  |  |  | - |
Other commercial loans |  |  | 2,459 |  |  |  | 1,499 |  |  |  | 343 |  |  |  | 1,842 |  |  |  | 148 |
Other agricultural loans |  |  | 1,381 |  |  |  | 129 |  |  |  | 1,164 |  |  |  | 1,293 |  |  |  | 153 |
Total |  | $ | 21,337 |  |  | $ | 14,704 |  |  | $ | 5,027 |  |  | $ | 19,731 |  |  | $ | 753 |
|  |  |  |  | Recorded |  |  | Recorded |  |  |  |  |  |  |
|  | Unpaid |  |  | Investment |  |  | Investment |  |  | Total |  |  |  |
|  | Principal |  |  | With No |  |  | With |  |  | Recorded |  |  | Related |
December 31, 2019 |  | Balance |  |  | Allowance |  |  | Allowance |  |  | Investment |  |  | Allowance |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 1,212 |  |  | $ | 794 |  |  | $ | 223 |  |  | $ | 1,017 |  |  | $ | 20 |
Home Equity |  |  | 170 |  |  |  | 83 |  |  |  | 66 |  |  |  | 149 |  |  |  | 12 |
Commercial |  |  | 12,070 |  |  |  | 10,723 |  |  |  | 814 |  |  |  | 11,537 |  |  |  | 251 |
Agricultural |  |  | 3,900 |  |  |  | 1,580 |  |  |  | 2,202 |  |  |  | 3,782 |  |  |  | 151 |
Consumer |  |  | 4 |  |  |  | 4 |  |  |  | - |  |  |  | 4 |  |  |  | - |
Other commercial loans |  |  | 2,517 |  |  |  | 1,555 |  |  |  | 347 |  |  |  | 1,902 |  |  |  | 147 |
Other agricultural loans |  |  | 1,347 |  |  |  | 126 |  |  |  | 1,155 |  |  |  | 1,281 |  |  |  | 154 |
Total |  | $ | 21,220 |  |  | $ | 14,865 |  |  | $ | 4,807 |  |  | $ | 19,672 |  |  | $ | 735 |
The following tables includes the average balance of impaired loan receivables by class and the income recognized on these receivables for the three month periods ended March 31, 2020 and 2019(in thousands):
|  | For the Three Months Ended |
|  | March 31, 2020 |  |  | March 31, 2019 |
|  |  |  |  |  |  |  | Interest |  |  |  |  |  |  |  |  | Interest |
|  | Average |  |  | Interest |  |  | Income |  |  | Average |  |  | Interest |  |  | Income |
|  | Recorded |  |  | Income |  |  | Recognized |  |  | Recorded |  |  | Income |  |  | Recognized |
|  | Investment |  |  | Recognized |  |  | Cash Basis |  |  | Investment |  |  | Recognized |  |  | Cash Basis |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 1,031 |  |  | $ | 5 |  |  | $ | - |  |  | $ | 1,103 |  |  | $ | 4 |  |  | $ | - |
Home Equity |  |  | 146 |  |  |  | 2 |  |  |  | - |  |  |  | 85 |  |  |  | 1 |  |  |  | - |
Commercial |  |  | 11,486 |  |  |  | 104 |  |  |  | 2 |  |  |  | 12,548 |  |  |  | 119 |  |  |  | 6 |
Agricultural |  |  | 3,777 |  |  |  | 21 |  |  |  | - |  |  |  | 5,575 |  |  |  | 32 |  |  |  | - |
Consumer |  |  | 3 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other commercial loans |  |  | 1,839 |  |  |  | 1 |  |  |  | - |  |  |  | 2,137 |  |  |  | 1 |  |  |  | - |
Other agricultural loans |  |  | 1,276 |  |  |  | 2 |  |  |  | - |  |  |  | 1,431 |  |  |  | 2 |  |  |  | - |
Total |  | $ | 19,558 |  |  | $ | 135 |  |  | $ | 2 |  |  | $ | 22,879 |  |  | $ | 159 |  |  | $ | 6 |
Credit Quality Information For commercial real estate, agricultural real estate, construction, other commercial, other agricultural and state and political subdivision loans, management uses a nine grade internal risk rating system to monitor and assess credit quality. The first five categories are considered not criticized and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The definitions of each rating are defined below:
• | Pass (Grades 1-5) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.
• | Special Mention (Grade 6) – This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.
• | Substandard (Grade 7) – This loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
• | Doubtful (Grade 8) – This loan grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.
• | Loss (Grade 9) – This loan grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that continuance as an asset is not warranted.
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay the loan as agreed, the Company’s loan rating process includes several layers of internal and external oversight. The Company’s loan officers are responsible for the timely and accurate risk rating of the loans in each of their portfolios at origination and on an ongoing basis under the supervision of management. All commercial, agricultural and state and political relationships over $500,000 are reviewed annually to ensure the appropriateness of the loan grade. In addition, the Company engages an external consultant on at least an annual basis to: 1) review a minimum of 50% of the dollar volume of the commercial, agricultural and municipal loan portfolios on an annual basis, 2) review a sample of new loans originated for over $1.0 million in the last year, 3) review a sample of borrowers with commitments greater than or equal to $1.0 million, 4) review selected loan relationships over $750,000 which are over 30 days past due or classified Special Mention, Substandard, Doubtful, or Loss, and 5) such other loans which management or the consultant deems appropriate. The following tables represent credit exposures by internally assigned grades as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Ending Balance |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 326,415 |  |  | $ | 4,256 |  |  | $ | 7,780 |  |  | $ | 39 |  |  | $ | - |  |  | $ | 338,490 |
Agricultural |  |  | 276,091 |  |  |  | 14,648 |  |  |  | 9,867 |  |  |  | - |  |  |  | - |  |  |  | 300,606 |
Construction |  |  | 17,926 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 17,926 |
Other commercial loans |  |  | 68,042 |  |  |  | 986 |  |  |  | 1,948 |  |  |  | 62 |  |  |  | - |  |  |  | 71,038 |
Other agricultural loans |  |  | 42,917 |  |  |  | 1,030 |  |  |  | 2,223 |  |  |  | - |  |  |  | - |  |  |  | 46,170 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | 93,369 |  |  |  | - |  |  |  | 409 |  |  |  | - |  |  |  | - |  |  |  | 93,778 |
Total |  | $ | 824,760 |  |  | $ | 20,920 |  |  | $ | 22,227 |  |  | $ | 101 |  |  | $ | - |  |  | $ | 868,008 |
December 31, 2019 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Ending Balance |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 329,831 |  |  | $ | 4,305 |  |  | $ | 7,848 |  |  | $ | 39 |  |  | $ | - |  |  | $ | 342,023 |
Agricultural |  |  | 287,044 |  |  |  | 14,261 |  |  |  | 10,159 |  |  |  | - |  |  |  | - |  |  |  | 311,464 |
Construction |  |  | 15,519 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15,519 |
Other commercial loans |  |  | 66,880 |  |  |  | 984 |  |  |  | 2,042 |  |  |  | 64 |  |  |  | - |  |  |  | 69,970 |
Other agricultural loans |  |  | 51,711 |  |  |  | 1,077 |  |  |  | 2,324 |  |  |  | - |  |  |  | - |  |  |  | 55,112 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | 93,993 |  |  |  | - |  |  |  | 453 |  |  |  | - |  |  |  | - |  |  |  | 94,446 |
Total |  | $ | 844,978 |  |  | $ | 20,627 |  |  | $ | 22,826 |  |  | $ | 103 |  |  | $ | - |  |  | $ | 888,534 |
For residential real estate mortgages, home equity and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail below, and all loans past due 90 or more days and still accruing. The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2020 and December 31, 2019 (in thousands):
March 31, 2020 |  | Performing |  |  | Non-performing |  |  | PCI |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 156,630 |  |  | $ | 915 |  |  | $ | 23 |  |  | $ | 157,568 |
Home Equity |  |  | 58,555 |  |  |  | 56 |  |  |  | - |  |  |  | 58,611 |
Consumer |  |  | 9,514 |  |  |  | 19 |  |  |  | - |  |  |  | 9,533 |
Total |  | $ | 224,699 |  |  | $ | 990 |  |  | $ | 23 |  |  | $ | 225,712 |
December 31, 2019 |  | Performing |  |  | Non-performing |  |  | PCI |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 156,151 |  |  | $ | 904 |  |  | $ | 23 |  |  | $ | 157,078 |
Home Equity |  |  | 59,950 |  |  |  | 60 |  |  |  | - |  |  |  | 60,010 |
Consumer |  |  | 9,939 |  |  |  | 8 |  |  |  | - |  |  |  | 9,947 |
Total |  | $ | 226,040 |  |  | $ | 972 |  |  | $ | 23 |  |  | $ | 227,035 |
Aging Analysis of Past Due Loan Receivables Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due loan receivables as of March 31, 2020 and December 31, 2019 (in thousands):
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | 90 Days or |
|  | 30-59 Days |  |  | 60-89 Days |  |  | 90 Days |  |  | Total Past |  |  |  |  |  |  |  |  | Loan |  |  | Greater and |
March 31, 2020 |  | Past Due |  |  | Past Due |  |  | Or Greater |  |  | Due |  |  | Current |  |  | PCI |  |  | Receivables |  |  | Accruing |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 559 |  |  | $ | 212 |  |  | $ | 345 |  |  | $ | 1,116 |  |  | $ | 156,429 |  |  | $ | 23 |  |  | $ | 157,568 |  |  | $ | - |
Home Equity |  |  | 165 |  |  |  | 89 |  |  |  | 53 |  |  |  | 307 |  |  |  | 58,304 |  |  |  | - |  |  |  | 58,611 |  |  |  | - |
Commercial |  |  | 2,044 |  |  |  | 350 |  |  |  | 3,905 |  |  |  | 6,299 |  |  |  | 330,996 |  |  |  | 1,195 |  |  |  | 338,490 |  |  |  | 55 |
Agricultural |  |  | 201 |  |  |  | - |  |  |  | 413 |  |  |  | 614 |  |  |  | 299,992 |  |  |  | - |  |  |  | 300,606 |  |  |  | 98 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 17,926 |  |  |  | - |  |  |  | 17,926 |  |  |  | - |
Consumer |  |  | 115 |  |  |  | 25 |  |  |  | 19 |  |  |  | 159 |  |  |  | 9,374 |  |  |  | - |  |  |  | 9,533 |  |  |  | 11 |
Other commercial loans |  |  | 63 |  |  |  | 77 |  |  |  | 1,715 |  |  |  | 1,855 |  |  |  | 69,153 |  |  |  | 30 |  |  |  | 71,038 |  |  |  | - |
Other agricultural loans |  |  | 50 |  |  |  | - |  |  |  | 20 |  |  |  | 70 |  |  |  | 46,100 |  |  |  | - |  |  |  | 46,170 |  |  |  | - |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 93,778 |  |  |  | - |  |  |  | 93,778 |  |  |  | - |
Total |  | $ | 3,197 |  |  | $ | 753 |  |  | $ | 6,470 |  |  | $ | 10,420 |  |  | $ | 1,082,052 |  |  | $ | 1,248 |  |  | $ | 1,093,720 |  |  | $ | 164 |
Loans considered non-accrual |  | $ | 786 |  |  | $ | 5 |  |  | $ | 6,306 |  |  | $ | 7,097 |  |  | $ | 4,205 |  |  | $ | - |  |  | $ | 11,302 |  |  |  |  |
Loans still accruing |  |  | 2,411 |  |  |  | 748 |  |  |  | 164 |  |  |  | 3,323 |  |  |  | 1,077,847 |  |  |  | 1,248 |  |  |  | 1,082,418 |  |  |  |  |
Total |  | $ | 3,197 |  |  | $ | 753 |  |  | $ | 6,470 |  |  | $ | 10,420 |  |  | $ | 1,082,052 |  |  | $ | 1,248 |  |  | $ | 1,093,720 |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |  |  | 90 Days or |
|  | 30-59 Days |  |  | 60-89 Days |  |  | 90 Days |  |  | Total Past |  |  |  |  |  |  |  |  | Loan |  |  | Greater and |
December 31, 2019 |  | Past Due |  |  | Past Due |  |  | Or Greater |  |  | Due |  |  | Current |  |  | PCI |  |  | Receivables |  |  | Accruing |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 581 |  |  | $ | 57 |  |  | $ | 319 |  |  | $ | 957 |  |  | $ | 156,098 |  |  | $ | 23 |  |  | $ | 157,078 |  |  | $ | 1 |
Home Equity |  |  | 334 |  |  |  | 11 |  |  |  | 56 |  |  |  | 401 |  |  |  | 59,609 |  |  |  | - |  |  |  | 60,010 |  |  |  | 1 |
Commercial |  |  | 750 |  |  |  | 573 |  |  |  | 3,720 |  |  |  | 5,043 |  |  |  | 335,770 |  |  |  | 1,210 |  |  |  | 342,023 |  |  |  | - |
Agricultural |  |  | 118 |  |  |  | - |  |  |  | 785 |  |  |  | 903 |  |  |  | 310,561 |  |  |  | - |  |  |  | 311,464 |  |  |  | 299 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 15,519 |  |  |  | - |  |  |  | 15,519 |  |  |  | - |
Consumer |  |  | 113 |  |  |  | 10 |  |  |  | 8 |  |  |  | 131 |  |  |  | 9,816 |  |  |  | - |  |  |  | 9,947 |  |  |  | 2 |
Other commercial loans |  |  | 217 |  |  |  | 71 |  |  |  | 1,946 |  |  |  | 2,234 |  |  |  | 67,687 |  |  |  | 49 |  |  |  | 69,970 |  |  |  | 184 |
Other agricultural loans |  |  | 29 |  |  |  | 32 |  |  |  | - |  |  |  | 61 |  |  |  | 55,051 |  |  |  | - |  |  |  | 55,112 |  |  |  | - |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 94,446 |  |  |  | - |  |  |  | 94,446 |  |  |  | - |
Total |  | $ | 2,142 |  |  | $ | 754 |  |  | $ | 6,834 |  |  | $ | 9,730 |  |  | $ | 1,104,557 |  |  | $ | 1,282 |  |  | $ | 1,115,569 |  |  | $ | 487 |
Loans considered non-accrual |  | $ | 90 |  |  | $ | 95 |  |  | $ | 6,347 |  |  | $ | 6,532 |  |  | $ | 5,004 |  |  | $ | - |  |  | $ | 11,536 |  |  |  |  |
Loans still accruing |  |  | 2,052 |  |  |  | 659 |  |  |  | 487 |  |  |  | 3,198 |  |  |  | 1,099,553 |  |  |  | 1,282 |  |  |  | 1,104,033 |  |  |  |  |
Total |  | $ | 2,142 |  |  | $ | 754 |  |  | $ | 6,834 |  |  | $ | 9,730 |  |  | $ | 1,104,557 |  |  | $ | 1,282 |  |  | $ | 1,115,569 |  |  |  |  |
Nonaccrual Loans Loans are considered for non-accrual status upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans, or if full payment of principal and interest is not expected. Additionally, if management is made aware of other information including bankruptcy, repossession, death, or legal proceedings, the loan may be placed on non-accrual status. If a loan is 90 days or more past due and is well secured and in the process of collection, it may still be considered accruing. The following table reflects the loan receivables, excluding PCI loans, on non-accrual status as of March 31, 2020 and December 31, 2019, respectively. The balances are presented by class of loan receivable (in thousands):
|  | March 31, 2020 |  |  | December 31, 2019 |
Real estate loans: |  |  |  |  |  |
Mortgages |  | $ | 915 |  |  | $ | 903 |
Home Equity |  |  | 56 |  |  |  | 59 |
Commercial |  |  | 5,038 |  |  |  | 5,080 |
Agricultural |  |  | 2,464 |  |  |  | 2,578 |
Consumer |  |  | 8 |  |  |  | 6 |
Other commercial loans |  |  | 1,786 |  |  |  | 1,837 |
Other agricultural loans |  |  | 1,035 |  |  |  | 1,073 |
|  | $ | 11,302 |  |  | $ | 11,536 |
Troubled Debt Restructurings In situations where, for economic or legal reasons related to a borrower's financial difficulties, management may grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a Troubled Debt Restructuring (TDR). Management strives to identify borrowers in financial difficulty early and work with them to structure more affordable terms before their loan reaches nonaccrual status. These restructured terms may include rate reductions, principal forgiveness, payment forbearance and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. In cases where borrowers are granted new terms that provide for a reduction of interest or principal, or both, management measures any impairment on the restructuring by calculating the present value of the revised loan terms and comparing this balance to the Company’s investment in the loan prior to the restructuring. As these loans are individually evaluated, they are excluded from pooled portfolios when calculating the allowance for loan and lease losses and a separate allocation within the allowance for loan and lease losses is provided. Management continually evaluates loans that are considered TDRs, including payment history under the modified loan terms, the borrower’s ability to continue to repay the loan based on continued evaluation of their operating results and cash flows from operations. As of March 31, 2020 and December 31, 2019, included within the allowance for loan losses are reserves of $273,000 and $345,000 respectively, that are associated with loans modified as TDRs. Loan modifications that are considered TDRs completed during the three months ended March 31, 2020 and 2019 were as follows (dollars in thousands):
|  | For the Three Months Ended March 31, 2020 |
|  | Number of contracts |  |  | Pre-modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
|  | Interest Modification |  |  | Term Modification |  |  | Interest Modification |  |  | Term Modification |  |  | Interest Modification |  |  | Term Modification |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | - |  |  |  | 1 |  |  | $ | - |  |  | $ | 150 |  |  | $ | - |  |  | $ | 150 |
Total |  |  | - |  |  |  | 1 |  |  | $ | - |  |  | $ | 150 |  |  | $ | - |  |  | $ | 150 |
|  | For the Three Months Ended March 31, 2019 |
|  | Number of contracts |  |  | Pre-modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |
|  | Interest Modification |  |  | Term Modification |  |  | Interest Modification |  |  | Term Modification |  |  | Interest Modification |  |  | Term Modification |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  | - |  |  |  | 1 |  |  | $ | - |  |  | $ | 548 |  |  | $ | - |  |  | $ | 548 |
Total |  |  | - |  |  |  | 1 |  |  | $ | - |  |  | $ | 548 |  |  | $ | - |  |  | $ | 548 |
Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism on modified loans occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The following table presents the recorded investment in loans that were modified as TDRs during each 12-month period prior to the current reporting periods, which began January 1, 2020 and 2019 (3 month periods), respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):
|  | For the Three Months Ended |
|  | March 31, 2020 |  |  | March 31, 2019 |
|  | Number of contracts |  |  | Recorded investment |  |  | Number of contracts |  |  | Recorded investment |
Other agricultural loans |  |  | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 124 |
Total recidivism |  |  | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 124 |
Allowance for Loan Losses The following table segregates the allowance for loan losses (ALLL) into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of March 31, 2020 and December 31, 2019, respectively (in thousands):
|  | March 31, 2020 |  |  | December 31, 2019 |
|  | Individually evaluated for impairment |  |  | Collectively evaluated for impairment |  |  | Total |  |  | Individually evaluated for impairment |  |  | Collectively evaluated for impairment |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 31 |  |  | $ | 1,123 |  |  | $ | 1,154 |  |  | $ | 32 |  |  | $ | 1,082 |  |  | $ | 1,114 |
Commercial |  |  | 335 |  |  |  | 4,394 |  |  |  | 4,729 |  |  |  | 251 |  |  |  | 4,298 |  |  |  | 4,549 |
Agricultural |  |  | 86 |  |  |  | 4,792 |  |  |  | 4,878 |  |  |  | 151 |  |  |  | 4,871 |  |  |  | 5,022 |
Construction |  |  | - |  |  |  | 56 |  |  |  | 56 |  |  |  | - |  |  |  | 43 |  |  |  | 43 |
Consumer |  |  | - |  |  |  | 117 |  |  |  | 117 |  |  |  | - |  |  |  | 112 |  |  |  | 112 |
Other commercial loans |  |  | 148 |  |  |  | 1,149 |  |  |  | 1,297 |  |  |  | 147 |  |  |  | 1,108 |  |  |  | 1,255 |
Other agricultural loans |  |  | 153 |  |  |  | 682 |  |  |  | 835 |  |  |  | 154 |  |  |  | 807 |  |  |  | 961 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | - |  |  |  | 558 |  |  |  | 558 |  |  |  | - |  |  |  | 536 |  |  |  | 536 |
Unallocated |  |  | - |  |  |  | 623 |  |  |  | 623 |  |  |  | - |  |  |  | 253 |  |  |  | 253 |
Total |  | $ | 753 |  |  | $ | 13,494 |  |  | $ | 14,247 |  |  | $ | 735 |  |  | $ | 13,110 |  |  | $ | 13,845 |
The following tables roll forward the balance of the ALLL by portfolio segment for the three months ended March 31, 2020 and 2019, respectively (in thousands):
|  | For the three months ended March 31, 2020 |
|  | Balance at December 31, 2019 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at March 31, 2020 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,114 |  |  | $ | - |  |  | $ | - |  |  | $ | 40 |  |  | $ | 1,154 |
Commercial |  |  | 4,549 |  |  |  | (1 | ) |  |  | 1 |  |  |  | 180 |  |  |  | 4,729 |
Agricultural |  |  | 5,022 |  |  |  | - |  |  |  | - |  |  |  | (144 | ) |  |  | 4,878 |
Construction |  |  | 43 |  |  |  | - |  |  |  | - |  |  |  | 13 |  |  |  | 56 |
Consumer |  |  | 112 |  |  |  | (8 | ) |  |  | 8 |  |  |  | 5 |  |  |  | 117 |
Other commercial loans |  |  | 1,255 |  |  |  | - |  |  |  | 2 |  |  |  | 40 |  |  |  | 1,297 |
Other agricultural loans |  |  | 961 |  |  |  | - |  |  |  | - |  |  |  | (126 | ) |  |  | 835 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | 536 |  |  |  | - |  |  |  | - |  |  |  | 22 |  |  |  | 558 |
Unallocated |  |  | 253 |  |  |  | - |  |  |  | - |  |  |  | 370 |  |  |  | 623 |
Total |  | $ | 13,845 |  |  | $ | (9 | ) |  | $ | 11 |  |  | $ | 400 |  |  | $ | 14,247 |
|  | For the three months ended March 31, 2019 |
|  | Balance at December 31, 2018 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at March 31, 2019 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,105 |  |  | $ | - |  |  | $ | - |  |  | $ | (16 | ) |  | $ | 1,089 |
Commercial |  |  | 4,115 |  |  |  | (200 | ) |  |  | - |  |  |  | 215 |  |  |  | 4,130 |
Agricultural |  |  | 4,264 |  |  |  | - |  |  |  |  |  |  |  | 128 |  |  |  | 4,392 |
Construction |  |  | 58 |  |  |  | - |  |  |  | - |  |  |  | (26 | ) |  |  | 32 |
Consumer |  |  | 120 |  |  |  | (14 | ) |  |  | 11 |  |  |  | 7 |  |  |  | 124 |
Other commercial loans |  |  | 1,354 |  |  |  | - |  |  |  | 3 |  |  |  | (74 | ) |  |  | 1,283 |
Other agricultural loans |  |  | 752 |  |  |  | - |  |  |  | - |  |  |  | 4 |  |  |  | 756 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | 762 |  |  |  | - |  |  |  | - |  |  |  | (197 | ) |  |  | 565 |
Unallocated |  |  | 354 |  |  |  | - |  |  |  | - |  |  |  | 359 |  |  |  | 713 |
Total |  | $ | 12,884 |  |  | $ | (214 | ) |  | $ | 14 |  |  | $ | 400 |  |  | $ | 13,084 |
The Company allocates the ALLL based on the factors described below, which conform to the Company’s loan classification policy and credit quality measurements. In reviewing risk within the Company’s loan portfolio, management has determined there to be several different risk categories within the loan portfolio. The ALLL consists of amounts applicable to: (i) residential real estate loans; (ii) residential real estate home equity loans; (iii) commercial real estate loans; (iv) agricultural real estate loans; (v) real estate construction loans; (vi) other commercial and agricultural loans; (vii) consumer loans; (viii) other agricultural loans and (ix) state and political subdivision loans. Factors considered in this process include general loan terms, collateral, and availability of historical data to support the analysis. Historical loss percentages are calculated and used as the basis for calculating allowance allocations. Certain qualitative factors are evaluated to determine additional inherent risks in the loan portfolio, which are not necessarily reflected in the historical loss percentages. These factors are then added to the historical allocation percentage to get the adjusted factor to be applied to non-classified loans. The following qualitative factors are analyzed:
• | Level of and trends in delinquencies and impaired/classified loans
◾ | Change in volume and severity of past due loans
◾ | Volume of non-accrual loans
◾ | Volume and severity of classified, adversely or graded loans;
• | Level of and trends in charge-offs and recoveries;
• | Trends in volume, terms and nature of the loan portfolio;
• | Effects of any changes in risk selection and underwriting standards and any other changes in lending and recovery policies, procedures and practices;
• | Changes in the quality of the Company’s loan review system;
• | Experience, ability and depth of lending management and other relevant staff;
• | National, state, regional and local economic trends and business conditions
◾ | General economic conditions
◾ | Unemployment rates
◾ | Inflation rate/ Consumer Price Index
◾ | Changes in values of underlying collateral for collateral-dependent loans;
• | Industry conditions including the effects of external factors such as competition, legal, and regulatory requirements on the level of estimated credit losses;
• | Existence and effect of any credit concentrations, and changes in the level of such concentrations; and
• | Any change in the level of board oversight.
The Company analyzes its loan portfolio at least each quarter to determine the adequacy of its ALLL. Loans determined to be TDRs are impaired and for purposes of estimating the ALLL must be individually evaluated for impairment. In calculating the impairment, the Company calculates the present value utilizing an analysis of discounted cash flows. If the present value calculated is below the recorded investment of the loan, impairment is recognized by a charge to the provision for loan and lease losses and a credit to the ALLL. For the three months ended March 31, 2020, the allowance for all categories was increased due to a general deterioration in economic activity and unemployment as a result of the Covid-19 pandemic. In addition, commercial real estate was increased due to an increase in past due loans. The decrease in the provision for agricultural real estate loans and other agricultural loans is due to the decrease in outstanding loans in these loan portfolios as of March 31, 2020 compared to December 31, 2019. For the three months ended March 31, 2019, the allowance for commercial real estate was decreased in general reserves due to a decrease in the amount of non-accrual, classified and past due loans, which was offset by an specific reserves. This was represented as an increase in the provision. The allowance for agricultural real estate loans was increased in general reserves as a result of higher loan balances, an increase in the amount of loans classified as non-accrual and past due. The result of this was represented as an increase in the provision. The allowance for other commercial loans was decreased as a result of a decrease in specific reserves and a decrease in the volume of classified loans. The result of these changes was represented as a decrease in the provision. The allowance for state and political subdivision was decreased as a result a decrease in the volume of classified loans. The result of this change was represented as a decrease in the provision. Foreclosed Assets Held For Sale Foreclosed assets acquired in settlement of loans are carried at fair value, less estimated costs to sell, and are included in other assets on the Consolidated Balance Sheet. As of March 31, 2020 and December 31, 2019, included within other assets are $3,056,000 and $3,404,000, respectively, of foreclosed assets. As of March 31, 2020, included within the foreclosed assets are $167,000 of consumer residential mortgages that were foreclosed on or received via a deed in lieu transaction prior to the period end. As of March 31, 2020, the Company had initiated formal foreclosure proceedings on $743,000 of consumer residential mortgages, which had not yet been transferred into foreclosed assets.

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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