
	December 31, 2021		December 31, 2020
Commercial and agricultural:
Commercial and industrial	$	256,893	$	368,663
Agricultural	394		283
Commercial mortgages:
Construction	82,204		61,945
Commercial mortgages	720,358		654,663
Residential mortgages	259,334		239,401
Consumer loans:

Home equity lines and loans	70,670		78,547
Indirect consumer loans	118,569		120,538
Direct consumer loans	9,827		12,423
Total loans, net of deferred loan fees	1,518,249		1,536,463
Interest receivable on loans	4,133		5,035
Total recorded investment in loans	$	1,522,382	$	1,541,498

As of December 31, 2021, the Corporation had outstanding loan balances of $43.2 million for PPP loans which are included in commercial and industrial loans in the table above. These loans require no allowance for loan losses as of December 31, 2021 since they are government guaranteed loans.


	December 31, 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:	(28)		(43)		(75)		(593)		(739)
Recoveries:	312		3		10		498		823
Net (charge offs) recoveries	284		(40)		(65)		(95)		84
Provision	(1,186)		2,100		(211)		(686)		17
Ending balance	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025


	December 31, 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:	(4,068)		(2,143)		(56)		(1,113)		(7,380)
Recoveries:	89		14		86		398		587
Net recoveries (charge offs)	(3,979)		(2,129)		30		(715)		(6,793)
Provision	(1,755)		4,756		797		441		4,239
Ending balance	$	4,493	$	11,496	$	2,079	$	2,856	$	20,924


	December 31, 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	$	1,394	$	1,571	$	—	$	65	$	3,030
Collectively evaluated for impairment	2,197		11,985		1,803		2,010		17,995

Total ending allowance balance	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025


	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


	December 31, 2021
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,427	$	7,967	$	938	$	315	$	11,647
Loans collectively evaluated for impairment	255,586		796,858		259,029		199,262		1,510,735

Total ending loans balance	$	258,013	$	804,825	$	259,967	$	199,577	$	1,522,382


	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

The following tables present loans individually evaluated for impairment recognized by class of loans as of December 31, 2021 and December 31, 2020, the average recorded investment and interest income recognized by class of loans as of the years ended December 31, 2021 and 2020 (in thousands):


	December 31, 2021						December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial and agricultural:
Commercial and industrial	$	954	$	948	$	—	$	1,960	$	1,963	$	—
Commercial mortgages:
Construction	129		130		—		188		189		—
Commercial mortgages	6,940		4,278		—		6,814		4,760		—
Residential mortgages	951		938		—		1,283		1,271		—
Consumer loans:
Home equity lines and loans	185		169		—		645		631		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	5,350		1,479		1,394		5,228		1,437		1,401
Commercial mortgages:
Commercial mortgages	3,550		3,559		1,571		258		168		74
Consumer loans:
Home equity lines and loans	146		146		65		170		170		52
Total	$	18,205	$	11,647	$	3,030	$	16,546	$	10,589	$	1,527


	December 31, 2021				December 31, 2020
	Average Recorded Investment		Interest Income Recognized (1)		Average Recorded Investment		Interest Income Recognized (1)
With no related allowance recorded:
Commercial and agricultural:
Commercial and industrial	$	1,505	$	6	$	936	$	16
Commercial mortgages:
Construction	159		6		219		8
Commercial mortgages	4,650		30		4,103		16
Residential mortgages	1,015		40		952		25
Consumer loans:
Home equity lines & loans	273		7		446		7
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,505		8		4,981		4
Commercial mortgages:

Commercial mortgages	2,236		49		2,949		—

Consumer loans:
Home equity lines and loans	157		—		104		—

Total	$	11,500	$	146	$	14,690	$	76


	Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	2021		2020		2021		2020
Commercial and agricultural:
Commercial and industrial	$	1,932	$	2,167	$	4	$	2

Commercial mortgages:
Construction	34		55		—		—
Commercial mortgages	3,844		4,415		—		—
Residential mortgages	1,039		1,632		—		—
Consumer loans:

Home equity lines and loans	790		1,159		—		—
Indirect consumer loans	462		519		—		—
Direct consumer loans	13		5		—		—
Total	$	8,114	$	9,952	$	4	$	2


	December 31, 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	$	413	$	148	$	26	$	587	$	257,031	$	257,618
Agricultural	—		—		—		—		395		395
Commercial mortgages:
Construction	—		—		—		—		82,435		82,435
Commercial mortgages	24		224		1,302		1,550		720,840		722,390
Residential mortgages	580		32		652		1,264		258,703		259,967
Consumer loans:

Home equity lines and loans	256		69		424		749		70,105		70,854
Indirect consumer loans	1,179		424		255		1,858		116,997		118,855
Direct consumer loans	24		11		13		48		9,820		9,868
Total	$	2,476	$	908	$	2,672	$	6,056	$	1,516,326	$	1,522,382


	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	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 December 31, 2021, in conformance with Section 4013 of the CARES Act, no loans remained in modified status.

As of December 31, 2021 and 2020, the Corporation has a recorded investment in TDRs of $10.3 million and $6.7 million, respectively. There were specific reserves of $1.9 million allocated for TDRs at December 31, 2021 and $0.4 million allocated for December 31, 2020. As of December 31, 2021, TDRs totaling $5.6 million were accruing interest under the modified terms and $4.7 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 to customers with outstanding loans that are classified as TDRs as of December 31, 2021 and 2020.

During the years ended December 31, 2021 and 2020, the terms of certain loans were modified as TDRs. During the year ended December 31, 2021, the terms and conditions of two commercial and industrial and four 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.

During the year ended December 31, 2020, the modification of the terms of one residential mortgage loan included the postponement of scheduled amortized payments for a period of 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. Additionally, two commercial and industrial loans had payments deferred 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 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 30 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.


December 31, 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
Commercial mortgages:
Commercial mortgages	4	6,094		6,094



Total	6	$	6,596	$	6,596


December 31, 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
Commercial mortgages:
Commercial mortgages	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 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 their debt and affirm the risk ratings for the loans at least annually.

For the retail loans, which include residential mortgages, indirect and direct consumer loans, home equity lines and loans, and credit cards, once a loan is properly approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans are not rated until they become 90 days past due.

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 as 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.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are included in groups of homogeneous loans. Based on the analyses performed as of December 31, 2021 and 2020, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):


	December 31, 2021
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	250,529	$	2,892	$	3,108	$	1,089	$	257,618
Agricultural	—		395		—		—		—		395
Commercial mortgages:
Construction	—		82,404		—		31		—		82,435
Commercial mortgages	—		672,741		31,072		17,458		1,119		722,390
Residential mortgages	258,928				—		1,039		—		259,967
Consumer loans

Home equity lines and loans	70,064		—		—		790		—		70,854
Indirect consumer loans	118,393		—		—		462		—		118,855
Direct consumer loans	9,855		—		—		13		—		9,868
Total	$	457,240	$	1,006,069	$	33,964	$	22,901	$	2,208	$	1,522,382


	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. Non-performing loans include non-accrual loans and non-accrual troubled debt restructurings.