Loans and ALLL

We grant commercial, agricultural, residential real estate, and consumer loans to customers situated primarily in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of the borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, health care, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans are unsecured.

Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ALLL, and deferred fees or costs. Unless a loan has a nonaccrual status, interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the appropriate amortization method.

The accrual of interest on commercial and agricultural loans, as well as residential real estate loans, is discontinued at the time a loan is 90 days or more past due unless the credit is well-secured and in the process of short-term collection. Upon transferring a loan to nonaccrual status, we perform an evaluation to determine the net realizable value of the underlying collateral. This evaluation is used to help determine if a charge-off is necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on the contractual term of the loan. In all cases, a loan is placed in nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful.

When a loan is placed in nonaccrual status or charged-off, all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL. Loans may be returned to accrual status after six months of continuous performance and achievement of current payment status.

Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $15,000. Borrowers with direct credit needs of more than $15,000 may be serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, property, or equipment. Government agency guarantee may be required. Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports.

We entered into a mortgage purchase program in 2016 with a financial institution where we participate in advances to mortgage brokers (“advances”). The mortgage brokers originate residential mortgage loans with the intent to sell them on the secondary market. We participate in the advance to the mortgage broker, which is secured by the underlying mortgage loan, until it is ultimately sold on the secondary market. As such, the average life of each participated advance is approximately 20-30 days. Funds from the sale of the loan are used to pay off our participation in the advance to the mortgage broker. We classify these advances as commercial loans and include the outstanding balance in commercial loans on our consolidated balance sheets. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $50,000. The difference between our outstanding balance and the maximum outstanding aggregate amount is classified as “Unfunded commitments under lines of credit” in the “Contractual Obligations and Loan Commitments” section of the Management's Discussion and Analysis of Financial Condition and Results of Operations of this report.

We offer adjustable rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac.

Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees.

Underwriting criteria for originated residential real estate loans generally include:


•	Evaluation of the borrower’s ability to make monthly payments.


•	Evaluation of the value of the property securing the loan.


•	Ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income.


•	Ensuring all debt servicing does not exceed 40% of income.


•	Verification of acceptable credit reports.


•	Verification of employment, income, and financial information.

Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $1,000 require the approval of our Internal Loan Committee, the Executive Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors.

Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market.

The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Full or partial loan balances are charged against the ALLL when we believe uncollectability is probable. Subsequent recoveries, if any, are credited to the ALLL.

The ALLL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the loan’s outstanding balance and the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Historical loss allocations are calculated at the loan class and segment levels based on a migration analysis of the loan portfolio, with the exception of advances to mortgage brokers, over the preceding five years. With no historical losses on advances to mortgage brokers, there is no allocation related to this portfolio. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

While we have experienced fluctuations in credit quality indicators in recent periods, credit quality remained strong at March 31, 2020. However, the COVID-19 pandemic has led to the temporary closure of businesses throughout the communities in which we serve, which has also led to increased unemployment. Therefore, we increased the ALLL during the quarter to account for inherent risk within the loan portfolio as of March 31, 2020. We continue to monitor the economic impact from COVID-19 as it relates to credit risk to ensure the ALLL is appropriate.

A summary of the ALLL and the recorded investment in loans by segments follows:



	Allowance for Loan Losses
	Three Months Ended March 31, 2020
	Commercial			Agricultural			Residential Real Estate			Consumer			Unallocated		Total
January 1, 2020	$	1,914		$	634		$	2,047		$	922		$	2,422	$	7,939
Charge-offs	(4		)	(16		)	(15		)	(123		)	—		(158		)
Recoveries	22			33			27			46			—		128
Provision for loan losses	443			(161		)	(342		)	116			732		788
March 31, 2020	$	2,375		$	490		$	1,717		$	961		$	3,154	$	8,697



	Allowance for Loan Losses and Recorded Investment in Loans
	March 31, 2020
	Commercial		Agricultural		Residential Real Estate		Consumer		Unallocated		Total
ALLL
Individually evaluated for impairment	$	179	$	78	$	1,052	$	—	$	—	$	1,309
Collectively evaluated for impairment	2,196		412		665		961		3,154		7,388
Total	$	2,375	$	490	$	1,717	$	961	$	3,154	$	8,697
Loans
Individually evaluated for impairment	$	8,598	$	13,660	$	5,374	$	3			$	27,635
Collectively evaluated for impairment	686,680		95,196		296,642		69,783				1,148,301
Total	$	695,278	$	108,856	$	302,016	$	69,786			$	1,175,936



	Allowance for Loan Losses
	Three Months Ended March 31, 2019
	Commercial			Agricultural			Residential Real Estate			Consumer			Unallocated			Total
January 1, 2019	$	2,563		$	775		$	1,992		$	857		$	2,188		$	8,375
Charge-offs	(8		)	—			(2		)	(128		)	—			(138		)
Recoveries	51			1			27			48			—			127
Provision for loan losses	(358		)	(1		)	288			114			(9		)	34
March 31, 2019	$	2,248		$	775		$	2,305		$	891		$	2,179		$	8,398



	Allowance for Loan Losses and Recorded Investment in Loans
	December 31, 2019
	Commercial		Agricultural		Residential Real Estate		Consumer		Unallocated		Total
ALLL
Individually evaluated for impairment	$	15	$	26	$	1,073	$	—	$	—	$	1,114
Collectively evaluated for impairment	1,899		608		974		922		2,422		6,825
Total	$	1,914	$	634	$	2,047	$	922	$	2,422	$	7,939
Loans
Individually evaluated for impairment	$	7,865	$	14,840	$	5,486	$	—			$	28,191
Collectively evaluated for impairment	693,076		102,080		293,083		70,140				1,158,379
Total	$	700,941	$	116,920	$	298,569	$	70,140			$	1,186,570

The following tables display the internally assigned credit risk ratings for commercial and agricultural credit exposures as of:



	March 31, 2020
	Commercial								Agricultural
	Real Estate		Other		Advances to Mortgage Brokers		Total		Real Estate		Other		Total		Total
Rating
1 - Excellent	$	—	$	10	$	—	$	10	$	—	$	—	$	—	$	10
2 - High quality	4,326		10,760		—		15,086		894		13		907		15,993
3 - High satisfactory	93,092		43,940		34,416		171,448		16,835		4,976		21,811		193,259
4 - Low satisfactory	381,334		92,789		—		474,123		42,602		19,671		62,273		536,396
5 - Special mention	15,404		3,530		—		18,934		5,601		2,164		7,765		26,699
6 - Substandard	7,177		6,857		—		14,034		8,236		3,258		11,494		25,528
7 - Vulnerable	29		1,339		—		1,368		2,839		1,579		4,418		5,786
8 - Doubtful	275		—		—		275		188		—		188		463
9 - Loss	—		—		—		—		—		—		—		—
Total	$	501,637	$	159,225	$	34,416	$	695,278	$	77,195	$	31,661	$	108,856	$	804,134



	December 31, 2019
	Commercial								Agricultural
	Real Estate		Other		Advances to Mortgage Brokers		Total		Real Estate		Other		Total		Total
Rating
1 - Excellent	$	—	$	390	$	—	$	390	$	—	$	—	$	—	$	390
2 - High quality	2,582		8,844		—		11,426		1,452		99		1,551		12,977
3 - High satisfactory	109,737		42,858		35,523		188,118		16,765		6,769		23,534		211,652
4 - Low satisfactory	377,198		94,847		—		472,045		42,798		20,861		63,659		535,704
5 - Special mention	15,372		3,470		—		18,842		7,165		3,754		10,919		29,761
6 - Substandard	4,874		3,625		—		8,499		9,136		3,836		12,972		21,471
7 - Vulnerable	390		1,231		—		1,621		2,711		1,574		4,285		5,906
8 - Doubtful	—		—		—		—		—		—		—		—
9 - Loss	—		—		—		—		—		—		—		—
Total	$	510,153	$	155,265	$	35,523	$	700,941	$	80,027	$	36,893	$	116,920	$	817,861

Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows:

1. EXCELLENT – Substantially Risk Free

Credit has strong financial condition and solid earnings history, characterized by:


•	High liquidity, strong cash flow, low leverage.


•	Unquestioned ability to meet all obligations when due.


•	Experienced management, with management succession in place.


•	Secured by cash.

2. HIGH QUALITY – Limited Risk

Credit with sound financial condition and a positive trend in earnings supplemented by:


•	Favorable liquidity and leverage ratios.


•	Ability to meet all obligations when due.


•	Management with successful track record.


•	Steady and satisfactory earnings history.


•	If loan is secured, collateral is of high quality and readily marketable.


•	Access to alternative financing.


•	Well defined primary and secondary source of repayment.


•	If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident.

3. HIGH SATISFACTORY – Reasonable Risk

Credit with satisfactory financial condition and further characterized by:


•	Working capital adequate to support operations.


•	Cash flow sufficient to pay debts as scheduled.


•	Management experience and depth appear favorable.


•	Loan performing according to terms.


•	If loan is secured, collateral is acceptable and loan is fully protected.

4. LOW SATISFACTORY – Acceptable Risk

Credit with bankable risks, although some signs of weaknesses are shown:


•	Would include most start-up businesses.


•	Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year.


•	Management’s abilities are apparent yet unproven.


•	Weakness in primary source of repayment with adequate secondary source of repayment.


•	Loan structure generally in accordance with policy.


•	If secured, loan collateral coverage is marginal.

To be classified as less than satisfactory, only one of the following criteria must be met.

5. SPECIAL MENTION – Criticized

Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan:


•	Downward trend in sales, profit levels, and margins.


•	Impaired working capital position.


•	Cash flow is strained in order to meet debt repayment.


•	Loan delinquency (30-60 days) and overdrafts may occur.


•	Shrinking equity cushion.


•	Diminishing primary source of repayment and questionable secondary source.


•	Management abilities are questionable.


•	Weak industry conditions.


•	Litigation pending against the borrower.


•	Loan may need to be restructured to improve collateral position or reduce payments.


•	Collateral or guaranty offers limited protection.


•	Negative debt service coverage, however the credit is well collateralized and payments are current.

6. SUBSTANDARD – Classified

Credit is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. There is a distinct possibility we will implement collection procedures if the loan deficiencies are not corrected. Any commercial loan placed in nonaccrual status will be rated “7” or worse. In addition, the following characteristics may apply:


•	Sustained losses have severely eroded the equity and cash flow.


•	Deteriorating liquidity.


•	Serious management problems or internal fraud.


•	Original repayment terms liberalized.


•	Likelihood of bankruptcy.


•	Inability to access other funding sources.


•	Reliance on secondary source of repayment.


•	Litigation filed against borrower.


•	Interest non-accrual may be warranted.


•	Collateral provides little or no value.


•	Requires excessive attention of the loan officer.


•	Borrower is uncooperative with loan officer.

7. VULNERABLE – Classified

Credit is considered “Substandard” and warrants placing in nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply:


•	Insufficient cash flow to service debt.


•	Minimal or no payments being received.


•	Limited options available to avoid the collection process.


•	Transition status, expect action will take place to collect loan without immediate progress being made.

8. DOUBTFUL – Workout

Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply:


•	Normal operations are severely diminished or have ceased.


•	Seriously impaired cash flow.


•	Original repayment terms materially altered.


•	Secondary source of repayment is inadequate.


•	Survivability as a “going concern” is impossible.


•	Collection process has begun.


•	Bankruptcy petition has been filed.


•	Judgments have been filed.


•	Portion of the loan balance has been charged-off.

9. LOSS – Charge-off

Credit is considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification is for charged-off loans but does not mean that the asset has absolutely no recovery or salvage value. These loans are further characterized by:


•	Liquidation or reorganization under Bankruptcy, with poor prospects of collection.


•	Fraudulently overstated assets and/or earnings.


•	Collateral has marginal or no value.


•	Debtor cannot be located.


•	Over 120 days delinquent.

Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due aging. The following tables summarize the past due and current loans for the entire loan portfolio as of:



	March 31, 2020
	Accruing Interest and Past Due:								Total Past Due and Nonaccrual
	30-59 Days		60-89 Days		90 Days or More		Nonaccrual				Current		Total
Commercial
Commercial real estate	$	2,199	$	94	$	—	$	304	$	2,597	$	499,040	$	501,637
Commercial other	2,135		109		—		1,339		3,583		155,642		159,225
Advances to mortgage brokers	—		—		—		—		—		34,416		34,416
Total commercial	4,334		203		—		1,643		6,180		689,098		695,278
Agricultural
Agricultural real estate	233		—		—		3,027		3,260		73,935		77,195
Agricultural other	—		31		—		1,579		1,610		30,051		31,661
Total agricultural	233		31		—		4,606		4,870		103,986		108,856
Residential real estate
Senior liens	2,472		77		40		576		3,165		258,959		262,124
Junior liens	35		—		—		—		35		5,509		5,544
Home equity lines of credit	141		—		—		85		226		34,122		34,348
Total residential real estate	2,648		77		40		661		3,426		298,590		302,016
Consumer
Secured	356		—		—		—		356		66,105		66,461
Unsecured	7		—		—		3		10		3,315		3,325
Total consumer	363		—		—		3		366		69,420		69,786
Total	$	7,578	$	311	$	40	$	6,913	$	14,842	$	1,161,094	$	1,175,936



	December 31, 2019
	Accruing Interest and Past Due:								Total Past Due and Nonaccrual
	30-59 Days		60-89 Days		90 Days or More		Nonaccrual				Current		Total
Commercial
Commercial real estate	$	139	$	30	$	—	$	390	$	559	$	509,594	$	510,153
Commercial other	531		156		—		1,231		1,918		153,347		155,265
Advances to mortgage brokers	—		—		—		—		—		35,523		35,523
Total commercial	670		186		—		1,621		2,477		698,464		700,941
Agricultural
Agricultural real estate	—		—		—		2,711		2,711		77,316		80,027
Agricultural other	—		—		—		1,574		1,574		35,319		36,893
Total agricultural	—		—		—		4,285		4,285		112,635		116,920
Residential real estate
Senior liens	3,463		258		—		557		4,278		253,894		258,172
Junior liens	65		—		—		—		65		5,766		5,831
Home equity lines of credit	157		—		—		72		229		34,337		34,566
Total residential real estate	3,685		258		—		629		4,572		293,997		298,569
Consumer
Secured	68		—		—		—		68		66,547		66,615
Unsecured	3		—		—		—		3		3,522		3,525
Total consumer	71		—		—		—		71		70,069		70,140
Total	$	4,426	$	444	$	—	$	6,535	$	11,405	$	1,175,165	$	1,186,570

Impaired Loans

Loans may be classified as impaired if they meet one or more of the following criteria:


1.	There has been a charge-off of its principal balance (in whole or in part);


2.	The loan has been classified as a TDR; or


3.	The loan is in nonaccrual status.

Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Large groups of smaller-balance, homogeneous residential real estate and consumer loans are collectively evaluated for impairment by comparing the loan’s unpaid principal balance to the present value of expected future cash flows discounted at the loan’s effective interest rate.

We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not classified as nonaccrual, interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding. The following is a summary of impaired loans as of:



	March 31, 2020						December 31, 2019
	Recorded Balance		Unpaid Principal Balance		Valuation Allowance		Recorded Balance		Unpaid Principal Balance		Valuation Allowance
Impaired loans with a valuation allowance
Commercial real estate	$	1,125	$	1,367	$	66	$	517	$	635	$	15
Commercial other	919		919		113		—		—		—
Agricultural real estate	2,247		2,297		70		1,509		1,509		12
Agricultural other	1,355		1,355		8		1,355		1,355		14
Residential real estate senior liens	5,285		5,713		1,052		5,401		5,830		1,073
Total impaired loans with a valuation allowance	10,931		11,651		1,309		8,782		9,329		1,114
Impaired loans without a valuation allowance
Commercial real estate	4,162		4,301				4,961		5,224
Commercial other	2,392		2,392				2,387		2,387
Agricultural real estate	7,192		7,192				8,372		8,422
Agricultural other	2,866		2,866				3,604		3,604
Home equity lines of credit	89		389				85		385
Consumer secured	3		3				—		—
Total impaired loans without a valuation allowance	16,704		17,143				19,409		20,022
Impaired loans
Commercial	8,598		8,979		179		7,865		8,246		15
Agricultural	13,660		13,710		78		14,840		14,890		26
Residential real estate	5,374		6,102		1,052		5,486		6,215		1,073
Consumer	3		3		—		—		—		—
Total impaired loans	$	27,635	$	28,794	$	1,309	$	28,191	$	29,351	$	1,114

The following is a summary of impaired loans for the:



	Three Months Ended March 31
	2020				2019
	Average Recorded Balance		Interest Income Recognized		Average Recorded Balance		Interest Income Recognized
Impaired loans with a valuation allowance
Commercial real estate	$	821	$	25	$	3,409	$	49
Commercial other	460		6		12		—
Agricultural real estate	1,878		24		390		6
Agricultural other	1,355		22		44		—
Residential real estate senior liens	5,343		55		6,682		68
Residential real estate junior liens	—		—		12		—
Total impaired loans with a valuation allowance	9,857		132		10,549		123
Impaired loans without a valuation allowance
Commercial real estate	4,562		59		3,287		53
Commercial other	2,390		15		2,970		21
Agricultural real estate	7,782		59		7,623		7
Agricultural other	3,235		7		6,087		70
Home equity lines of credit	87		6		43		6
Consumer secured	2		—		9		—
Total impaired loans without a valuation allowance	18,058		146		20,019		157
Impaired loans
Commercial	8,233		105		9,678		123
Agricultural	14,250		112		14,144		83
Residential real estate	5,430		61		6,737		74
Consumer	2		—		9		—
Total impaired loans	$	27,915	$	278	$	30,568	$	280

As a result of line of credit agreements with borrowers, we had committed to advance $459 and $175 in additional funds to be disbursed in connection with impaired loans as of March 31, 2020 and December 31, 2019, respectively.

Troubled Debt Restructurings

A loan modification is considered to be a TDR when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties.

Typical concessions granted include, but are not limited to:

•Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics.

•Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics.

•Agreeing to an interest only payment structure and delaying principal payments.

•Forgiving principal.

•Forgiving accrued interest.

To determine if a borrower is experiencing financial difficulties, factors we consider include:


•	The borrower is currently in default on any of their debt.


•	The borrower would likely default on any of their debt if the concession is not granted.


•	The borrower’s cash flow is insufficient to service all of their debt if the concession is not granted.


•	The borrower has declared, or is in the process of declaring, bankruptcy.


•	The borrower is unlikely to continue as a going concern (if the entity is a business).

The following is a summary of TDRs granted for the:



	Three Months Ended March 31
	2020					2019
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial other	2	$	963	$	963	1	$	147	$	147
Agricultural other	2	593		593		2	523		523
Residential real estate	2	93		93		—	—		—
Total	6	$	1,649	$	1,649	3	$	670	$	670

The following is a summary of concessions we granted to borrowers in financial difficulty for the:



	Three Months Ended March 31
	2020						2019
	Below Market Interest Rate			Below Market Interest Rate and Extension of Amortization Period			Below Market Interest Rate			Below Market Interest Rate and Extension of Amortization Period
	Number of Loans	Pre-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment
Commercial other	1	$	919	1	$	44	—	$	—	1	$	147
Agricultural other	—	—		2	593		—	—		2	523
Residential real estate	—	—		2	93		—	—		—	—
Total	1	$	919	5	$	730	—	$	—	3	$	670

We did not restructure any loans by forgiving principal or accrued interest in the three-month periods ended March 31, 2020 or 2019.

Based on our historical loss experience, losses associated with TDRs are not significantly different than other impaired loans within the same loan segment. As such, TDRs, including TDRs that have been modified in the past 12 months that subsequently defaulted, are analyzed in the same manner as other impaired loans within their respective loan segment.

We had no loans that defaulted in the three-month periods ended March 31, 2020 and March 31, 2019 which were modified within 12 months prior to the default date.

The following is a summary of TDR loan balances as of:



	March 31 2020		December 31 2019
TDRs	$	24,117	$	24,737

Measures we have taken to assist our customers in connection with the COVID-19 pandemic include loan programs that provide short-term payment relief. Under these programs, borrowers who were in good standing as of March 1, 2020 can elect to defer full or partial payments for a 90-day period. Bank regulators issued a statement on March 22, 2020, and a revised statement on April 7, 2020, which provides confirmation that short-term loan modifications made on a good faith basis in response to COVID-19 to borrowers with a current payment status are not categorized as TDRs.