
	September 30, 2021		December 31, 2020
Commercial and agricultural:
Commercial and industrial	$	270,656	$	368,663
Agricultural	419		283
Commercial mortgages:
Construction	67,445		61,945
Commercial mortgages, other	721,709		654,663
Residential mortgages	253,991		239,401
Consumer loans:

Home equity lines and loans	72,471		78,547
Indirect consumer loans	119,772		120,538
Direct consumer loans	10,205		12,423
Total loans, net of deferred loan fees and costs	1,516,668		1,536,463
Interest receivable on loans	4,261		5,035
Total recorded investment in loans	$	1,520,929	$	1,541,498

The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk with standby letters of credit, committed lines of credit and commitments to originate new loans generally follow the loan classifications in the table above. As of September 30, 2021 and December 31, 2020, the Corporation had outstanding PPP loan balances of $68.1 million and $150.9 million, respectively, which were included in commercial and industrial loans in the table above. These loans require no allowance for loan losses as of September 30, 2021 since they are government guaranteed loans.


	Three Months Ended September 30, 2021
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	3,628	$	12,963	$	1,791	$	2,294	$	20,676
Charge-offs	—		(44)		—		(190)		(234)
Recoveries	8		1		—		133		142
Net recoveries (charge-offs)	8		(43)		—		(57)		(92)
Provision	(15)		361		80		(70)		356
Ending balance	$	3,621	$	13,281	$	1,871	$	2,167	$	20,940


	Three Months Ended September 30, 2020
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	8,327	$	10,549	$	1,891	$	3,363	$	24,130
Charge-offs	(68)		—		(42)		(216)		(326)
Recoveries	18		2		—		87		107
Net recoveries (charge-offs)	(50)		2		(42)		(129)		(219)
Provision	180		361		232		(94)		679
Ending balance	$	8,457	$	10,912	$	2,081	$	3,140	$	24,590


	Nine Months Ended September 30, 2021
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	4,493	$	11,496	$	2,079	$	2,856	$	20,924
Charge-offs	(25)		(44)		(71)		(510)		(650)
Recoveries	283		2		10		424		719
Net recoveries (charge-offs)	258		(42)		(61)		(86)		69
Provision	(1,130)		1,827		(147)		(603)		(53)
Ending balance	$	3,621	$	13,281	$	1,871	$	2,167	$	20,940


	Nine Months Ended September 30, 2020
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	10,227	$	8,869	$	1,252	$	3,130	$	23,478
Charge-offs	(134)		(2,143)		(56)		(915)		(3,248)
Recoveries	27		2		49		293		371
Net recoveries (charge-offs)	(107)		(2,141)		(7)		(622)		(2,877)
Provision	(1,663)		4,184		836		632		3,989
Ending balance	$	8,457	$	10,912	$	2,081	$	3,140	$	24,590


	September 30, 2021
Allowance for loan losses:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,525	$	1,800	$	—	$	73	$	3,398
Collectively evaluated for impairment	2,096		11,481		1,871		2,094		17,542

Total ending allowance balance	$	3,621	$	13,281	$	1,871	$	2,167	$	20,940


	December 31, 2020
Allowance for loan losses:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,401	$	74	$	—	$	52	$	1,527
Collectively evaluated for impairment	3,092		11,422		2,079		2,804		19,397

Total ending allowance balance	$	4,493	$	11,496	$	2,079	$	2,856	$	20,924


	September 30, 2021
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,582	$	8,356	$	946	$	333	$	12,217
Loans collectively evaluated for impairment	269,290		783,120		253,695		202,607		1,508,712

Total ending loans balance	$	271,872	$	791,476	$	254,641	$	202,940	$	1,520,929


	December 31, 2020
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	3,400	$	5,117	$	1,271	$	801	$	10,589
Loans collectively evaluated for impairment	366,852		714,028		238,742		211,287		1,530,909

Total ending loans balance	$	370,252	$	719,145	$	240,013	$	212,088	$	1,541,498


	September 30, 2021						December 31, 2020
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	995	$	970	$	—	$	1,960	$	1,963	$	—
Commercial mortgages:
Construction	143		143		—		188		189		—
Commercial mortgages, other	7,312		4,651		—		6,814		4,760		—
Residential mortgages	960		946		—		1,283		1,271		—
Consumer loans:
Home equity lines and loans	195		179		—		645		631		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	5,487		1,612		1,525		5,228		1,437		1,401
Commercial mortgages:
Commercial mortgages, other	3,554		3,562		1,800		258		168		74
Consumer loans:
Home equity lines and loans	154		154		73		170		170		52
Total	$	18,800	$	12,217	$	3,398	$	16,546	$	10,589	$	1,527


	Three Months Ended September 30, 2021				Three Months Ended September 30, 2020				Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
With no related allowance recorded:	Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)
Commercial and agricultural:
Commercial and industrial	$	1,378	$	3	$	1,239	$	2	$	1,645	$	3	$	679	$	2
Commercial mortgages:
Construction	151		1		213		2		167		5		226		6
Commercial mortgages, other	4,665		8		4,515		—		4,743		23		3,938		—
Residential mortgages	950		12		1,224		7		1,034		29		873		17
Consumer loans:
Home equity lines & loans	184		2		650		2		299		5		399		5
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,545		4		5,804		2		1,511		6		5,867		4
Commercial mortgages:
Commercial mortgages, other	3,644		25		2,229		8		1,905		25		3,645		16
Consumer loans:
Home equity lines and loans	155		—		175		—		160		—		88		—
Total	$	12,672	$	55	$	16,049	$	23	$	11,464	$	96	$	15,715	$	50


	Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Commercial and agricultural:
Commercial and industrial	$	2,080	$	2,167	$	4	$	2

Commercial mortgages:
Construction	36		55		—		—
Commercial mortgages, other	4,212		4,415		—		—
Residential mortgages	845		1,632		—		—
Consumer loans:

Home equity lines and loans	819		1,159		—		—
Indirect consumer loans	367		519		—		—
Direct consumer loans	14		5		—		—
Total	$	8,373	$	9,952	$	4	$	2


	September 30, 2021
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	1,110	$	1,375	$	45	$	2,530	$	268,921	$	271,451
Agricultural	—		—		—		—		421		421
Commercial mortgages:
Construction	—		—		—		—		67,644		67,644
Commercial mortgages, other	2,056		2,615		217		4,888		718,944		723,832
Residential mortgages	1,226		131		436		1,793		252,848		254,641
Consumer loans:

Home equity lines and loans	115		161		542		818		71,835		72,653
Indirect consumer loans	764		83		161		1,008		119,037		120,045
Direct consumer loans	13		7		8		28		10,214		10,242
Total	$	5,284	$	4,372	$	1,409	$	11,065	$	1,509,864	$	1,520,929


	December 31, 2020
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	520	$	14	$	30	$	564	$	369,404	$	369,968
Agricultural	—		—		—		—		284		284
Commercial mortgages:
Construction	—		—		—		—		62,164		62,164
Commercial mortgages, other	1,438		3,696		308		5,442		651,539		656,981
Residential mortgages	817		406		461		1,684		238,329		240,013
Consumer loans:

Home equity lines and loans	521		41		474		1,036		77,725		78,761
Indirect consumer loans	1,268		198		252		1,718		119,135		120,853
Direct consumer loans	34		2		—		36		12,438		12,474
Total	$	4,598	$	4,357	$	1,525	$	10,480	$	1,531,018	$	1,541,498

A modification of a loan may result in classification as a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Corporation offers various types of modifications which may involve a change in the schedule of payments, a reduction in the interest rate, an extension of the maturity date, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, requesting additional collateral, releasing collateral for consideration, substituting or adding a new borrower or guarantor, a permanent reduction of the recorded investment in the loan or a permanent reduction of the interest on the loan. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 will be considered current for COVID-19 related modifications and therefore will not be treated as TDRs. At its highest point as of May 31, 2020, in conformance with Section 4013 of the CARES Act, total loan forbearances represented 15.77% of the Corporation's total loan portfolio, or $242.5 million. As of September 30, 2021, 11 loans totaling $3.0 million remained in modified status, representing 0.20% of the Corporation's total loan portfolio, of which 5 loans totaling $2.9 million had been modified more than once.

As of September 30, 2021 and December 31, 2020, the Corporation has a recorded investment in TDRs of $10.8 million and $6.7 million, respectively. There were specific reserves of $2.2 million and $0.4 million allocated for TDRs at September 30, 2021 and December 31, 2020, respectively. As of September 30, 2021, TDRs totaling $5.7 million were accruing interest under the modified terms and $5.1 million were on non-accrual status. As of December 31, 2020, TDRs totaling $2.8 million were accruing interest under the modified terms and $3.9 million were on non-accrual status. The Corporation has committed no additional amounts as of both September 30, 2021 and December 31, 2020, to customers with outstanding loans that are classified as TDRs.

During the three months ended September 30, 2021, the terms and conditions of two commercial and industrial loans were modified as TDRs. The modification of the terms of both of these loans included a postponement or reduction of the scheduled amortized payments for greater than a three month period. During the three month period ended September 30, 2020, the terms of certain loans were modified as TDRs. During the three months ended September 30, 2020, the modification of terms of one residential mortgage loan included the postponement of scheduled amortized payments for a period greater than three-months. Additionally, two commercial and industrial loans were modified with the maturity date extended on both loans and one with an extension at a stated rate lower than the current market rate for new debt with similar risk.

In addition to the modifications noted above, during the nine months ended September 30, 2021 the terms and conditions of two commercial and industrial loans and two commercial mortgage loans were modified as TDRs. The modification of the terms of all of these loans included a postponement or reduction of the scheduled amortized payments for greater than a three month period.

In addition to the modifications noted above, during the nine month period ended September 30, 2020 modifications included two commercial and industrial loans where deferral of payments were granted and both loans were risk rated Substandard while one loan was in non-accrual status prior to the modification. The modifications of four commercial mortgage loans included the deferral of payments with three of the the loans risk rated Substandard and in non-accrual status, three of the borrowers were over one year past due in real estate taxes and two of the loans were over 30 days past due in payments. The modifications of three residential mortgages included the deferral of payments while all three were in non-accrual status prior to the modifications, two were risk rated Substandard and one was over thirty days past due in payments. The modifications of three home equity lines and loans included the deferral of payments while all three loans were risk rated Substandard and in non-accrual status prior to the modifications.


September 30, 2020	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:

Commercial and industrial	2	$	1,138	$	1,138



Residential mortgages	1	320		320


Total	3	$	1,458	$	1,458

The TDRs described above increased the allowance for loan losses by $0.2 million and resulted in no charge-offs during the three month period ended September 30, 2021. The TDRs described above did not increase the allowance for loan losses and resulted in no charge-offs during the three month period ended September 30, 2020.


September 30, 2021	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	2	$	502	$	502
Agricultural
Commercial mortgages:
Commercial mortgages, other	4	$	6,094	$	6,094



Total	6	$	6,596	$	6,596


September 30, 2020	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Commercial and agricultural:
Commercial and industrial	4	$	2,068	$	2,068
Agricultural
Commercial mortgages:
Commercial mortgages, other	4	1,297		1,297
Residential mortgages	4	997		997
Consumer loans:
Home equity lines and loans	3	738		738
Total	15	$	5,100	$	5,100

The TDRs described above increased the allowance for loan losses by $1.9 million and resulted in no charge-offs during the nine month period ended September 30, 2021. The TDRs described above increased the allowance for loan losses by $0.1 million and resulted in no charge-offs during the nine month period ended September 30, 2020.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no payment defaults on any loans previously modified as TDRs within twelve months following the modification during the three and nine month periods ended September 30, 2021 and 2020.

The Corporation establishes a risk rating at origination for all commercial loans. The main factors considered in assigning risk ratings include, but are not limited to: historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.

The Corporation uses the risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly. The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Commercial loans not meeting the criteria above to be considered criticized or classified are considered to be pass rated loans. Loans listed as not rated are included in groups of homogeneous loans performing under terms of the loan notes. Based on the analyses performed as of September 30, 2021 and December 31, 2020, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):


	September 30, 2021
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	264,526	$	2,565	$	3,166	$	1,194	$	271,451
Agricultural	—		421		—		—		—		421
Commercial mortgages:
Construction	—		67,607		—		37		—		67,644
Commercial mortgages	—		670,350		33,937		18,422		1,123		723,832
Residential mortgages	253,796		—		—		845		—		254,641
Consumer loans:

Home equity lines and loans	71,834		—		—		819		—		72,653
Indirect consumer loans	119,678		—		—		367		—		120,045
Direct consumer loans	10,228		—		—		14		—		10,242
Total	$	455,536	$	1,002,904	$	36,502	$	23,670	$	2,317	$	1,520,929


	December 31, 2020
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	360,500	$	2,999	$	5,092	$	1,377	$	369,968
Agricultural	—		284		—		—		—		284
Commercial mortgages:
Construction	—		59,885		—		2,279		—		62,164
Commercial mortgages	—		616,090		23,631		16,128		1,132		656,981
Residential mortgages	238,381		—		—		1,632		—		240,013
Consumer loans:

Home equity lines and loans	77,602		—		—		1,159		—		78,761
Indirect consumer loans	120,334		—		—		519		—		120,853
Direct consumer loans	12,470		—		—		4		—		12,474
Total	$	448,787	$	1,036,759	$	26,630	$	26,813	$	2,509	$	1,541,498

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the recorded investment in residential and consumer loans based on payment activity as of September 30, 2021 and December 31, 2020 (in thousands):