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Loans and ALLL

3 Months Ended

Mar. 31, 2021

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 at an earlier date if collection of principal or interest is considered doubtful.

When a loan is placed in nonaccrual status, 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 $40,000. 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, 2021. The COVID-19 pandemic led to the temporary and some permanent closures of businesses throughout the communities in which we serve, which also led to increased unemployment. We increased the ALLL during 2020 as a result of increased economic and environmental related risk factors, primarily driven by COVID-19. While these risk factors remain in 2021, improvement in credit quality indicators and a reduction in loans outstanding resulted in a reduction to the ALLL as of March 31, 2021.

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


	Allowance for Loan Losses
	Three Months Ended March 31, 2021
	Commercial		Agricultural		Residential Real Estate		Consumer		Unallocated		Total
January 1, 2021	$	2,162	$	311	$	1,363	$	798	$	5,110	$	9,744
Charge-offs	(31)		—		—		(128)		—		(159)
Recoveries	82		2		55		70		—		209
Provision for loan losses	(514)		(83)		(255)		216		113		(523)
March 31, 2021	$	1,699	$	230	$	1,163	$	956	$	5,223	$	9,271


	Allowance for Loan Losses and Recorded Investment in Loans
	March 31, 2021
	Commercial		Agricultural		Residential Real Estate		Consumer		Unallocated		Total
ALLL
Individually evaluated for impairment	$	587	$	25	$	768	$	—	$	—	$	1,380
Collectively evaluated for impairment	1,112		205		395		956		5,223		7,891
Total	$	1,699	$	230	$	1,163	$	956	$	5,223	$	9,271
Loans
Individually evaluated for impairment	$	14,300	$	15,459	$	4,136	$	—			$	33,895
Collectively evaluated for impairment	711,240		76,170		301,773		72,840				1,162,023
Total	$	725,540	$	91,629	$	305,909	$	72,840			$	1,195,918


	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
	December 31, 2020
	Commercial		Agricultural		Residential Real Estate		Consumer		Unallocated		Total
ALLL
Individually evaluated for impairment	$	84	$	56	$	771	$	—	$	—	$	911
Collectively evaluated for impairment	2,078		255		592		798		5,110		8,833
Total	$	2,162	$	311	$	1,363	$	798	$	5,110	$	9,744
Loans
Individually evaluated for impairment	$	9,821	$	13,796	$	4,319	$	—			$	27,936
Collectively evaluated for impairment	746,865		86,665		303,224		73,621				1,210,375
Total	$	756,686	$	100,461	$	307,543	$	73,621			$	1,238,311

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


	March 31, 2021
	Commercial								Agricultural
	Real Estate		Other		Advances to Mortgage Brokers		Total		Real Estate		Other		Total		Total
Rating
1 - Excellent	$	—	$	76	$	—	$	76	$	—	$	—	$	—	$	76
2 - High quality	1,552		12,688		—		14,240		536		11		547		14,787
3 - High satisfactory	74,559		50,682		9,457		134,698		11,565		3,823		15,388		150,086
4 - Low satisfactory	401,410		130,470		—		531,880		33,333		12,922		46,255		578,135
5 - Special mention	13,941		6,206		—		20,147		12,490		3,307		15,797		35,944
6 - Substandard	16,180		6,991		—		23,171		7,173		3,418		10,591		33,762
7 - Vulnerable	46		1,282		—		1,328		2,587		276		2,863		4,191
8 - Doubtful	—		—		—		—		188		—		188		188
9 - Loss	—		—		—		—		—		—		—		—
Total	$	507,688	$	208,395	$	9,457	$	725,540	$	67,872	$	23,757	$	91,629	$	817,169


	December 31, 2020
	Commercial								Agricultural
	Real Estate		Other		Advances to Mortgage Brokers		Total		Real Estate		Other		Total		Total
Rating
1 - Excellent	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2 - High quality	2,308		13,406		—		15,714		541		11		552		16,266
3 - High satisfactory	69,327		51,093		50,258		170,678		14,411		5,312		19,723		190,401
4 - Low satisfactory	403,733		122,025		—		525,758		34,464		17,600		52,064		577,822
5 - Special mention	15,049		6,174		—		21,223		13,137		3,240		16,377		37,600
6 - Substandard	15,854		6,130		—		21,984		5,267		2,693		7,960		29,944
7 - Vulnerable	26		1,303		—		1,329		3,208		387		3,595		4,924
8 - Doubtful	—		—		—		—		190		—		190		190
9 - Loss	—		—		—		—		—		—		—		—
Total	$	506,297	$	200,131	$	50,258	$	756,686	$	71,218	$	29,243	$	100,461	$	857,147

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, 2021
	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	$	—	$	64	$	—	$	46	$	110	$	507,578	$	507,688
Commercial other	42		—		—		1,282		1,324		207,071		208,395
Advances to mortgage brokers	—		—		—		—		—		9,457		9,457
Total commercial	42		64		—		1,328		1,434		724,106		725,540
Agricultural
Agricultural real estate	—		—		—		2,775		2,775		65,097		67,872
Agricultural other	—		—		—		276		276		23,481		23,757
Total agricultural	—		—		—		3,051		3,051		88,578		91,629
Residential real estate
Senior liens	1,153		4		—		153		1,310		270,688		271,998
Junior liens	—		—		—		—		—		3,533		3,533
Home equity lines of credit	34		—		—		—		34		30,344		30,378
Total residential real estate	1,187		4		—		153		1,344		304,565		305,909
Consumer
Secured	30		—		—		—		30		69,873		69,903
Unsecured	4		—		—		—		4		2,933		2,937
Total consumer	34		—		—		—		34		72,806		72,840
Total	$	1,263	$	68	$	—	$	4,532	$	5,863	$	1,190,055	$	1,195,918


	December 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	$	333	$	—	$	—	$	26	$	359	$	505,938	$	506,297
Commercial other	486		—		—		1,303		1,789		198,342		200,131
Advances to mortgage brokers	—		—		—		—		—		50,258		50,258
Total commercial	819		—		—		1,329		2,148		754,538		756,686
Agricultural
Agricultural real estate	—		—		—		3,398		3,398		67,820		71,218
Agricultural other	1		—		—		387		388		28,855		29,243
Total agricultural	1		—		—		3,785		3,786		96,675		100,461
Residential real estate
Senior liens	3,203		145		—		199		3,547		269,425		272,972
Junior liens	25		—		—		—		25		3,791		3,816
Home equity lines of credit	8		—		—		—		8		30,747		30,755
Total residential real estate	3,236		145		—		199		3,580		303,963		307,543
Consumer
Secured	93		—		—		—		93		70,349		70,442
Unsecured	3		—		—		—		3		3,176		3,179
Total consumer	96		—		—		—		96		73,525		73,621
Total	$	4,152	$	145	$	—	$	5,313	$	9,610	$	1,228,701	$	1,238,311

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, 2021						December 31, 2020
	Recorded Balance		Unpaid Principal Balance		Valuation Allowance		Recorded Balance		Unpaid Principal Balance		Valuation Allowance
Impaired loans with a valuation allowance
Commercial real estate	$	2,805	$	2,805	$	587	$	2,048	$	2,290	$	79
Commercial other	—		—		—		107		107		5
Agricultural real estate	1,025		1,075		25		1,994		1,994		54
Agricultural other	—		—		—		1,355		1,355		2
Residential real estate senior liens	4,136		4,394		768		4,319		4,661		771
Total impaired loans with a valuation allowance	7,966		8,274		1,380		9,823		10,407		911
Impaired loans without a valuation allowance
Commercial real estate	6,807		7,123				3,006		3,080
Commercial other	4,688		4,688				4,660		4,660
Agricultural real estate	10,155		10,155				8,681		8,731
Agricultural other	4,279		4,279				1,766		1,766
Total impaired loans without a valuation allowance	25,929		26,245				18,113		18,237
Impaired loans
Commercial	14,300		14,616		587		9,821		10,137		84
Agricultural	15,459		15,509		25		13,796		13,846		56
Residential real estate	4,136		4,394		768		4,319		4,661		771
Total impaired loans	$	33,895	$	34,519	$	1,380	$	27,936	$	28,644	$	911

The following is a summary of impaired loans for the:


	Three Months Ended March 31
	2021				2020
	Average Recorded Balance		Interest Income Recognized		Average Recorded Balance		Interest Income Recognized
Impaired loans with a valuation allowance
Commercial real estate	$	2,424	$	28	$	821	$	25
Commercial other	54		—		460		6
Agricultural real estate	1,510		11		1,878		24
Agricultural other	678		—		1,355		22
Residential real estate senior liens	4,228		43		5,343		55
Total impaired loans with a valuation allowance	8,894		82		9,857		132
Impaired loans without a valuation allowance
Commercial real estate	4,907		101		4,562		59
Commercial other	4,674		40		2,390		15
Agricultural real estate	9,418		132		7,782		59
Agricultural other	3,023		61		3,235		7
Home equity lines of credit	—		—		87		6
Consumer secured	—		—		2		—
Total impaired loans without a valuation allowance	22,022		334		18,058		146
Impaired loans
Commercial	12,059		169		8,233		105
Agricultural	14,629		204		14,250		112
Residential real estate	4,228		43		5,430		61
Consumer	—		—		2		—
Total impaired loans	$	30,916	$	416	$	27,915	$	278

As a result of line of credit agreements with borrowers, we had committed to advance $816 and $98 in additional funds to be disbursed in connection with impaired loans as of March 31, 2021 and December 31, 2020, 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 debt.

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

•The borrower’s cash flow is insufficient to service all 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
	2021					2020
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment
Commercial other	3	$	4,652	$	4,652	2	$	963	$	963
Agricultural other	6	3,712		3,712		2	593		593
Residential real estate	—	—		—		2	93		93
Total	9	$	8,364	$	8,364	6	$	1,649	$	1,649

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


	Three Months Ended March 31
	2021						2020
	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	$	3,189	2	$	1,463	1	$	919	1	$	44
Agricultural other	6	3,712		—	—		—	—		2	593
Residential real estate	—	—		—	—		—	—		2	93
Total	7	$	6,901	2	$	1,463	1	$	919	5	$	730

We did not restructure any loans by forgiving principal or accrued interest in the three-month periods ended March 31, 2021 or 2020.

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, 2021 and 2020 which were modified within 12 months prior to the default date.

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


	March 31 2021		December 31 2020
TDRs	$	31,515	$	24,930

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 whose loans were in good standing as of March 1, 2020 could elect to defer full or partial payments for a period not to exceed 180 days. Bank regulators issued a statement on March 22, 2020, and a revised statement on April 7, 2020, which provided 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. Pursuant to this guidance, borrowers granted a short-term loan modification meeting this criteria were not categorized as TDR as of March 31, 2021.