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LOANS AND ALLOWANCE FOR LOAN LOSSES | 3 Months Ended
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Mar. 31, 2023
Credit Loss [Abstract] |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES The composition of the loan portfolio, net of deferred origination fees and costs, is summarized as follows (in thousands):
|  | March 31, 2023 |  | December 31, 2022
Commercial and agricultural: |  |  |  |
Commercial and industrial |  | $ | 244,174 |  |  | $ | 252,044 |
Agricultural |  | 333 |  |  | 249 |
Commercial mortgages: |  |  |  |
Construction |  | 118,660 |  |  | 108,243 |
Commercial mortgages, other |  | 917,637 |  |  | 888,670 |
Residential mortgages |  | 285,944 |  |  | 285,672 |
Consumer loans: |  |  |  |
Home equity lines and loans |  | 84,537 |  |  | 81,401 |
Indirect consumer loans |  | 211,270 |  |  | 202,124 |
Direct consumer loans |  | 11,146 |  |  | 11,045 |
Total loans, net of deferred loan fees and costs |  | 1,873,701 |  |  | 1,829,448 |
Allowance for credit losses |  | (20,075) |  |  | (19,659) |
Loans, net |  | $ | 1,853,626 |  |  | $ | 1,809,789 |
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. Accrued interest receivable on loans amounted to $6.3 million at March 31, 2023 and $6.5 million million at December 31, 2022. Accrued interest receivable on loans is included in the "accrued interest receivable and other assets" line item on the Corporation's Consolidated Balance Sheets, and is excluded from the estimate of credit losses. The following table presents the activity in the allowance for credit losses by portfolio segment for the three month period ended March 31, 2023 (in thousands):
| Three Months Ended March 31, 2023
Allowance for credit losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Beginning balance | $ | 3,373 |  |  | $ | 11,576 |  |  | $ | 1,845 |  |  | $ | 2,865 |  |  | $ | 19,659 |
Cumulative effect adjustment for the adoption of ASC 326 | 909 |  |  | (695) |  |  | (16) |  |  | 176 |  |  | 374 |
Beginning balance after cumulative effect adjustment | 4,282 |  |  | 10,881 |  |  | 1,829 |  |  | 3,041 |  |  | 20,033 |
Charge-offs | (190) |  |  | — |  |  | — |  |  | (193) |  |  | (383) |
Recoveries | 6 |  |  | — |  |  | — |  |  | 108 |  |  | 114 |
Net recoveries (charge-offs) | (184) |  |  | — |  |  | — |  |  | (85) |  |  | (269) |
Provision (1) | (45) |  |  | 102 |  |  | 63 |  |  | 191 |  |  | 311 |
Ending balance | $ | 4,053 |  |  | $ | 10,983 |  |  | $ | 1,892 |  |  | $ | 3,147 |  |  | $ | 20,075 |
(1) Additional credit provision related to off-balance sheet exposure was $34 thousand for the three months ended March 31, 2023. Refer to Note 1-Summary of Significant Accounting Policies in our Annual report on Form 10-K for the fiscal year ended December 31, 2022, for the allowance for loan losses policy effective prior to the adoption of ASC 326-Financial Instruments-Credit Losses, as of December 31, 2022. The following table presents the activity in the allowance for loan losses by portfolio segment for the three month period ended March 31, 2022.
| Three Months Ended March 31, 2022
Allowance for loan losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Beginning balance | $ | 3,591 |  |  | $ | 13,556 |  |  | $ | 1,803 |  |  | $ | 2,075 |  |  | $ | 21,025 |
Charge-offs | (4) |  |  | — |  |  | — |  |  | (194) |  |  | (198) |
Recoveries | 6 |  |  | 1 |  |  | — |  |  | 239 |  |  | 246 |
Net recoveries (charge-offs) | 2 |  |  | 1 |  |  | — |  |  | 45 |  |  | 48 |
Provision | (110) |  |  | (593) |  |  | (197) |  |  | (245) |  |  | (1,145) |
Ending balance | $ | 3,483 |  |  | $ | 12,964 |  |  | $ | 1,606 |  |  | $ | 1,875 |  |  | $ | 19,928 |
Unfunded Commitments The allowance for credit losses on unfunded commitments is recognized as a liability (other liabilities in the Consolidated Balance Sheets), with adjustments to the reserve recognized in the provision for credit losses on the Consolidated Statements of Income. The Corporation established a reserve for unfunded commitments in conjunction with its adoption of ASC 326-Financial Instruments-Credit Losses. The following table presents the activity in the allowance for credit losses on unfunded commitments for the three month periods ended March 31, 2023 and 2022:
| For the Three Months Ended
Allowance for credit losses on unfunded commitments | March 31, 2023 |  | March 31, 2022
Beginning balance | $ | — |  |  | $ | — |
Impact of ASC 326 adoption | 1,082 |  |  | — |
Provision for unfunded commitments | (34) |  |  | — |
Ending balance | $ | 1,048 |  |  | $ | — |
The following table presents the provision for credit losses on loans and unfunded commitments for the three month period ended March 31, 2023, based upon the current expected credit loss methodology, and the provision for loan losses on loans for the three month period ended March 31, 2022, based upon the incurred loss methodology:
|  | For the Three Months Ended
| Provision for credit losses | March 31, 2023 |  | March 31, 2022
| Provision for credit losses on loans | $ | 311 |  |  | $ | (1,145) |
| Provision for unfunded commitments | (34) |  |  | — |
| Total provision (credit) for credit losses | $ | 277 |  |  | $ | (1,145) |
The following tables present the balance in the allowance for credit losses and allowance for loan losses, and the amortized cost basis in loans by portfolio segment, as of March 31, 2023 and December 31, 2022 (in thousands):
| March 31, 2023
Allowance for credit losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |
Individually analyzed | $ | 1,040 |  |  | $ | 36 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,076 |
Collectively analyzed | 3,013 |  |  | 10,947 |  |  | 1,892 |  |  | 3,147 |  |  | 18,999 |
Total ending allowance balance | $ | 4,053 |  |  | $ | 10,983 |  |  | $ | 1,892 |  |  | $ | 3,147 |  |  | $ | 20,075 |
| December 31, 2022
Allowance for loan losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 1,078 |  |  | $ | 38 |  |  | $ | — |  |  | $ | 31 |  |  | $ | 1,147 |
Collectively evaluated for impairment | 2,295 |  |  | 11,538 |  |  | 1,845 |  |  | 2,834 |  |  | 18,512 |
Total ending allowance balance | $ | 3,373 |  |  | $ | 11,576 |  |  | $ | 1,845 |  |  | $ | 2,865 |  |  | $ | 19,659 |
| March 31, 2023
Loans: | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Loans individually analyzed | $ | 1,779 |  |  | $ | 4,089 |  |  | $ | 715 |  |  | $ | 254 |  |  | $ | 6,837 |
Loans collectively analyzed | 242,728 |  |  | 1,032,208 |  |  | 285,229 |  |  | 306,699 |  |  | 1,866,864 |
Total ending loans balance | $ | 244,507 |  |  | $ | 1,036,297 |  |  | $ | 285,944 |  |  | $ | 306,953 |  |  | $ | 1,873,701 |
| December 31, 2022
Loans: | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Loans individually evaluated for impairment | $ | 2,112 |  |  | $ | 4,383 |  |  | $ | 723 |  |  | $ | 264 |  |  | $ | 7,482 |
Loans collectively evaluated for impairment | 250,181 |  |  | 992,530 |  |  | 284,949 |  |  | 294,306 |  |  | 1,821,966 |
Total ending loans balance | $ | 252,293 |  |  | $ | 996,913 |  |  | $ | 285,672 |  |  | $ | 294,570 |  |  | $ | 1,829,448 |
Modifications to Loans Made to Borrowers Experiencing Financial Difficulty Effective January 1, 2023, the Corporation adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326)-Troubled Debt Restructurings and Vintage Disclosures. The Corporation may occasionally make modifications to loans where the borrower is considered to be experiencing financial difficulty. Types of modifications considered under ASU 2022-02 include principal reductions, interest rate reductions, term extensions, or a combination thereof. The following table summarizes the amortized cost basis of loans modified as of March 31, 2023:
| March 31, 2023
Loans modified under ASU 2022-02: | Principal Reduction |  | Interest Rate Reduction |  | Term Extension |  | Combination |  | Total |  | (%) of Loan Class (1)
Commercial mortgages | $ | — |  |  | $ | — |  |  | $ | 277 |  |  | $ | — |  |  | $ | 277 |  |  | 0.03 | %
Total | $ | — |  |  | $ | — |  |  | $ | 277 |  |  | $ | — |  |  | $ | 277 |  |  |
(1) Represents the amortized cost basis of loans modified during the period as a percentage of the period-end loan balances by class. The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three month period ended March 31, 2023:
| March 31, 2023
Effect of loan modifications under ASU 2022-02: | Principal Reduction (in thousands) |  | Weighted-average interest rate reduction (%) |  | Weighted-average term extension (in months) |
Commercial mortgages | $— |  | —% |  | 60 |
Individually Analyzed Loans Effective January 1, 2023, the Corporation began analyzing loans on an individual basis when management determined that the loan no longer exhibited risk characteristics consistent with the risk characteristics existing in its designated pool of loans, under the Corporation's CECL methodology. Loans individually analyzed include certain non-accrual commercial and consumer loans, as well as certain loans previously identified under prior troubled debt restructuring (TDR) guidance. As of March 31, 2023, the amortized cost basis of individually analyzed loans amounted to $6.8 million, of which $6.0 million were considered collateral dependent. For collateral dependent loans where the borrower is experiencing financial difficulty and repayment is likely to be substantially provided through the sale or operation of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan, at measurement date. Certain assets held as collateral may be exposed to future deterioration in fair value, particularly due to changes in real estate markets or usage. The following table presents the amortized cost basis and related allowance for credit loss of individually analyzed loans considered to be collateral dependent as of March 31, 2023 (in thousands):
|  | March 31, 2023
|  | Amortized Cost Basis |  | Related Allowance
Commercial and agricultural: |  |  |  |
Commercial and industrial (1) (3) |  | $ | 573 |  |  | $ | 168 |
Commercial mortgages: |  |  |  |
Commercial mortgages, other (1) |  | 4,413 |  |  | 36 |
Residential mortgages (2) |  | 715 |  |  | — |
Consumer loans |  |  |  |
Home equity lines and loans (2) |  | 254 |  |  | — |
Total |  | $ | 5,955 |  |  | $ | 204 |
(1) Secured by commercial real estate (2) Secured by residential real estate (3) Secured by business assets Prior to January 1, 2023, the Corporation considered a loan to be impaired when, based on currently available information, it was deemed probable that the Corporation would not be able to collect on the loan's contractually determined principal and interest payments. Impaired loans included loans on non-accrual status and troubled debt restructurings (TDRs). The Corporation identified loss allocations for impaired loans on an individual basis, and in conformity with its methodology under the incurred loss framework. The following is a summary of impaired loans as of December 31, 2022 (in thousands):
|  | December 31, 2022
With no related allowance recorded: |  | Unpaid Principal Balance |  | Recorded Investment |  | Allowance for Loan Losses Allocated
Commercial and agricultural: |  |  |  |  |  |
Commercial and industrial |  | $ | 1,026 |  |  | $ | 1,025 |  |  | $ | — |
Commercial mortgages: |  |  |  |  |  |
Construction |  | 5 |  |  | 5 |  |  | — |
Commercial mortgages, other |  | 4,346 |  |  | 4,341 |  |  | — |
Residential mortgages |  | 767 |  |  | 760 |  |  | — |
Consumer loans: |  |  |  |  |  |
Home equity lines and loans |  | 154 |  |  | 138 |  |  | — |
With an allowance recorded: |  |  |  |  |  |
Commercial and agricultural: |  |  |  |  |  |
Commercial and industrial |  | 1,086 |  |  | 1,088 |  |  | 1,078 |
Commercial mortgages: |  |  |  |  |  |
Commercial mortgages, other |  | 38 |  |  | 38 |  |  | 38 |
Consumer loans: |  |  |  |  |  |
Home equity lines and loans |  | 126 |  |  | 127 |  |  | 31 |
Total |  | $ | 7,548 |  |  | $ | 7,522 |  |  | $ | 1,147 |
The following table presents the amortized cost basis and interest income of loans individually evaluated recognized by class of loans for the three month periods ended March 31, 2023 and 2022 (in thousands):
|  | Three Months Ended March 31, 2023 |  | Three Months Ended March 31, 2022 |  |  |  |
With no related allowance recorded: |  | Amortized Cost Basis |  | Interest Income Recognized (1) |  | Amortized Cost Basis |  | Interest Income Recognized (1) |  |  |  |  |  |  |  |
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 729 |  |  | $ | — |  |  | $ | 926 |  |  | $ | 3 |  |  |  |  |  |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction |  | — |  |  | — |  |  | 113 |  |  | 1 |  |  |  |  |  |  |  |  |
Commercial mortgages, other |  | 4,053 |  |  | 7 |  |  | 4,105 |  |  | 7 |  |  |  |  |  |  |  |  |
Residential mortgages |  | 715 |  |  | 9 |  |  | 895 |  |  | 11 |  |  |  |  |  |  |  |  |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines & loans |  | 254 |  |  | — |  |  | 161 |  |  | 1 |  |  |  |  |  |  |  |  |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | 1,049 |  |  | 2 |  |  | 1,414 |  |  | 3 |  |  |  |  |  |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial mortgages, other |  | 36 |  |  | — |  |  | 2,601 |  |  | 21 |  |  |  |  |  |  |  |  |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans |  | — |  |  | — |  |  | 141 |  |  | — |  |  |  |  |  |  |  |  |
Total |  | $ | 6,836 |  |  | $ | 18 |  |  | $ | 10,356 |  |  | $ | 47 |  |  |  |  |  |  |  |  |
(1)Cash basis interest income approximates interest income recognized. The following table presents the amortized cost basis in non-accrual and loans past due 90 days or more and still accruing by class of loan as of March 31, 2023 and December 31, 2022 (in thousands):
| Non-accrual with no allowance for credit losses |  | Non-accrual |  | Loans Past Due 90 Days or More and Still Accruing
| March 31, 2023 |  | March 31, 2023 |  | December 31, 2022 |  | March 31, 2023 |  | December 31, 2022
Commercial and agricultural: |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 730 |  |  | $ | 1,623 |  |  | $ | 1,946 |  |  | $ | 6 |  |  | $ | 1 |
Commercial mortgages: |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | 5 |  |  | — |  |  | — |
Commercial mortgages, other | 3,611 |  |  | 3,647 |  |  | 3,928 |  |  | — |  |  | — |
Residential mortgages | 1,036 |  |  | 1,036 |  |  | 986 |  |  | — |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |
Home equity lines and loans | 866 |  |  | 866 |  |  | 760 |  |  | — |  |  | — |
Indirect consumer loans | 556 |  |  | 556 |  |  | 540 |  |  | — |  |  | — |
Direct consumer loans | 3 |  |  | 3 |  |  | 13 |  |  | — |  |  | — |
Total | $ | 6,802 |  |  | $ | 7,731 |  |  | $ | 8,178 |  |  | $ | 6 |  |  | $ | 1 |
The following tables present the aging of the amortized cost basis of loans as of March 31, 2023 and December 31, 2022 (in thousands):
| March 31, 2023
| 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 | $ | 67 |  |  | $ | 8 |  |  | $ | 16 |  |  | $ | 91 |  |  |  |  | $ | 244,083 |  |  | $ | 244,174 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 333 |  |  | 333 |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | 2,284 |  |  | — |  |  | — |  |  | 2,284 |  |  |  |  | 116,376 |  |  | 118,660 |
Commercial mortgages, other | 246 |  |  | — |  |  | 297 |  |  | 543 |  |  |  |  | 917,094 |  |  | 917,637 |
Residential mortgages | 933 |  |  | 57 |  |  | 412 |  |  | 1,402 |  |  |  |  | 284,542 |  |  | 285,944 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans | 261 |  |  | 57 |  |  | 568 |  |  | 886 |  |  |  |  | 83,651 |  |  | 84,537 |
Indirect consumer loans | 1,036 |  |  | 52 |  |  | 265 |  |  | 1,353 |  |  |  |  | 209,917 |  |  | 211,270 |
Direct consumer loans | 10 |  |  | — |  |  | — |  |  | 10 |  |  |  |  | 11,136 |  |  | 11,146 |
Total | $ | 4,837 |  |  | $ | 174 |  |  | $ | 1,558 |  |  | $ | 6,569 |  |  |  |  | $ | 1,867,132 |  |  | $ | 1,873,701 |
| December 31, 2022
| 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 | $ | 74 |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | 78 |  |  |  |  | $ | 251,966 |  |  | $ | 252,044 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 249 |  |  | 249 |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 108,243 |  |  | 108,243 |
Commercial mortgages, other | 1,058 |  |  | — |  |  | 486 |  |  | 1,544 |  |  |  |  | 887,126 |  |  | 888,670 |
Residential mortgages | 1,360 |  |  | 709 |  |  | 294 |  |  | 2,363 |  |  |  |  | 283,309 |  |  | 285,672 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans | 193 |  |  | 121 |  |  | 442 |  |  | 756 |  |  |  |  | 80,645 |  |  | 81,401 |
Indirect consumer loans | 1,397 |  |  | 193 |  |  | 250 |  |  | 1,840 |  |  |  |  | 200,284 |  |  | 202,124 |
Direct consumer loans | 2 |  |  | 19 |  |  | 1 |  |  | 22 |  |  |  |  | 11,023 |  |  | 11,045 |
Total | $ | 4,084 |  |  | $ | 1,045 |  |  | $ | 1,474 |  |  | $ | 6,603 |  |  |  |  | $ | 1,822,845 |  |  | $ | 1,829,448 |
Credit Quality Indicators 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. For 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 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 March 31, 2023, the risk category of the amortized cost basis of loans by class of loans and vintage, as well as the gross charge-offs by loan class and vintage for the period, are as follows (in thousands):
| Term Loans Amortized Cost by Origination Year |  | Revolving Loans Amortized Cost |  | Revolving Loans Converted to Term |  | Total
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  |  |
Commercial & industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 7,750 |  |  | $ | 43,899 |  |  | $ | 21,452 |  |  | $ | 14,723 |  |  | $ | 38,017 |  |  | $ | 12,844 |  |  | $ | 88,666 |  |  | $ | — |  |  | $ | 227,351 |
Special mention | 100 |  |  | 104 |  |  | 350 |  |  | 3 |  |  | 86 |  |  | 457 |  |  | 3,478 |  |  | 9,315 |  |  | 13,893 |
Substandard | — |  |  | 36 |  |  | — |  |  | 412 |  |  | 28 |  |  | 370 |  |  | 629 |  |  | 588 |  |  | 2,063 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 867 |  |  | — |  |  | — |  |  | 867 |
Total | 7,850 |  |  | 44,039 |  |  | 21,802 |  |  | 15,138 |  |  | 38,131 |  |  | 14,538 |  |  | 92,773 |  |  | 9,903 |  |  | 244,174 |
Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 190 |  |  | $ | — |  |  | $ | — |  |  | $ | 190 |
Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | — |  |  | 17 |  |  | 170 |  |  | — |  |  | — |  |  | — |  |  | 146 |  |  | — |  |  | 333 |
Special mention | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | — |  |  | 17 |  |  | 170 |  |  | — |  |  | — |  |  | — |  |  | 146 |  |  | — |  |  | 333 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 8,311 |  |  | 2,819 |  |  | 1,975 |  |  | — |  |  | 2,317 |  |  | 1,205 |  |  | 101,857 |  |  | — |  |  | 118,484 |
Special mention | — |  |  | 176 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 176 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | 8,311 |  |  | 2,995 |  |  | 1,975 |  |  | — |  |  | 2,317 |  |  | 1,205 |  |  | 101,857 |  |  | — |  |  | 118,660 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 31,729 |  |  | 214,915 |  |  | 129,614 |  |  | 99,057 |  |  | 40,489 |  |  | 180,523 |  |  | 192,038 |  |  | — |  |  | 888,365 |
Special mention | — |  |  | 2,563 |  |  | 8,828 |  |  | 1,033 |  |  | — |  |  | 3,867 |  |  | — |  |  | 6,154 |  |  | 22,445 |
Substandard | 277 |  |  | 1,186 |  |  | — |  |  | — |  |  | — |  |  | 4,790 |  |  | 97 |  |  | 441 |  |  | 6,791 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 36 |  |  | — |  |  | — |  |  | 36 |
Total | 32,006 |  |  | 218,664 |  |  | 138,442 |  |  | 100,090 |  |  | 40,489 |  |  | 189,216 |  |  | 192,135 |  |  | 6,595 |  |  | 917,637 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Residential mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 5,594 |  |  | 52,576 |  |  | 52,443 |  |  | 75,198 |  |  | 16,416 |  |  | 52,615 |  |  | 30,066 |  |  | — |  |  | 284,908 |
Substandard | — |  |  | 107 |  |  | 64 |  |  | 111 |  |  | 181 |  |  | 573 |  |  | — |  |  | — |  |  | 1,036 |
Total | 5,594 |  |  | 52,683 |  |  | 52,507 |  |  | 75,309 |  |  | 16,597 |  |  | 53,188 |  |  | 30,066 |  |  | — |  |  | 285,944 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Home equity lines and loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 3,945 |  |  | 19,073 |  |  | 6,477 |  |  | 3,827 |  |  | 3,110 |  |  | 12,740 |  |  | 34,500 |  |  | — |  |  | 83,672 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 121 |  |  | 392 |  |  | 352 |  |  | — |  |  | 865 |
Total | 3,945 |  |  | 19,073 |  |  | 6,477 |  |  | 3,827 |  |  | 3,231 |  |  | 13,132 |  |  | 34,852 |  |  | — |  |  | 84,537 |
Gross charge-offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | 8 |
Indirect consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 26,012 |  |  | 123,593 |  |  | 32,138 |  |  | 14,374 |  |  | 7,385 |  |  | 7,211 |  |  | — |  |  | — |  |  | 210,713 |
Substandard | — |  |  | 186 |  |  | 98 |  |  | 59 |  |  | 73 |  |  | 141 |  |  | — |  |  | — |  |  | 557 |
Total | 26,012 |  |  | 123,779 |  |  | 32,236 |  |  | 14,433 |  |  | 7,458 |  |  | 7,352 |  |  | — |  |  | — |  |  | 211,270 |
Gross charge-offs | — |  |  | 43 |  |  | 36 |  |  | 30 |  |  | 12 |  |  | 23 |  |  | — |  |  | — |  |  | 144 |
Direct consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 1,121 |  |  | 3,956 |  |  | 1,330 |  |  | 630 |  |  | 266 |  |  | 478 |  |  | 3,362 |  |  | — |  |  | 11,143 |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | 3 |
Total | 1,121 |  |  | 3,956 |  |  | 1,330 |  |  | 630 |  |  | 266 |  |  | 481 |  |  | 3,362 |  |  | — |  |  | 11,146 |
Gross charge-offs | — |  |  | — |  |  | 1 |  |  | 4 |  |  | — |  |  | 36 |  |  | — |  |  | — |  |  | 41 |
Total loans | $ | 84,839 |  |  | $ | 465,206 |  |  | $ | 254,939 |  |  | $ | 209,427 |  |  | $ | 108,489 |  |  | $ | 279,112 |  |  | $ | 455,191 |  |  | $ | 16,498 |  |  | $ | 1,873,701 |
Total gross charge-offs | $ | — |  |  | $ | 43 |  |  | $ | 37 |  |  | $ | 34 |  |  | $ | 12 |  |  | $ | 249 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 383 |
Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, loans not meeting the criteria above that were analyzed individually as part of the above described process were considered pass rated loans as of December 31, 2022. Based upon the analyses performed as of December 31, 2022, the risk category of the recorded investment of loans by class of loans was as follows (in thousands):
| December 31, 2022
| Not Rated |  | Pass |  | Special Mention |  | Substandard |  | Doubtful |  |  |  | Total
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | 235,900 |  |  | $ | 13,349 |  |  | $ | 2,899 |  |  | $ | 893 |  |  |  |  | $ | 253,041 |
Agricultural | — |  |  | 250 |  |  | — |  |  | — |  |  | — |  |  |  |  | 250 |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | 108,488 |  |  | 178 |  |  | 5 |  |  | — |  |  |  |  | 108,671 |
Commercial mortgages | — |  |  | 860,389 |  |  | 23,938 |  |  | 7,825 |  |  | 38 |  |  |  |  | 892,190 |
Residential mortgages | 285,459 |  |  | — |  |  | — |  |  | 986 |  |  | — |  |  |  |  | 286,445 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans | 80,942 |  |  | — |  |  | — |  |  | 760 |  |  | — |  |  |  |  | 81,702 |
Indirect consumer loans | 202,050 |  |  | — |  |  | — |  |  | 540 |  |  | — |  |  |  |  | 202,590 |
Direct consumer loans | 11,094 |  |  | — |  |  | — |  |  | 13 |  |  | — |  |  |  |  | 11,107 |
Total | $ | 579,545 |  |  | $ | 1,205,027 |  |  | $ | 37,465 |  |  | $ | 13,028 |  |  | $ | 931 |  |  |  |  | $ | 1,835,996 |
For residential and consumer loan classes, the Corporation also evaluated credit quality based on the aging status of the loan, which was previously presented, by payment activity. The following table presents the amortized cost basis in residential and consumer loans based on payment activity as of March 31, 2023 (in thousands):
| Consumer Loans
March 31, 2023 | Residential Mortgages |  |  |  | Home Equity Lines and Loans |  | Indirect Consumer Loans |  | Other Direct Consumer Loans
Performing | $ | 284,908 |  |  |  |  | $ | 83,672 |  |  | $ | 210,713 |  |  | $ | 11,143 |
Non-Performing | 1,036 |  |  |  |  | 865 |  |  | 557 |  |  | 3 |
Total | $ | 285,944 |  |  |  |  | $ | 84,537 |  |  | $ | 211,270 |  |  | $ | 11,146 |
Prior to the adoption of ASC 326-Financial Instruments-Credit Losses, the Corporation also evaluated credit quality based on the aging status of the loan, which was previously presented, by payment activity. The following table presents the recorded investment in residential and consumer loans based on payment activity as of December 31, 2022 (in thousands):
| Consumer Loans
December 31, 2022 | Residential Mortgages |  |  |  | Home Equity Lines and Loans |  | Indirect Consumer Loans |  | Other Direct Consumer Loans
Performing | $ | 285,459 |  |  |  |  | $ | 80,942 |  |  | $ | 202,050 |  |  | $ | 11,094 |
Non-Performing | 986 |  |  |  |  | 760 |  |  | 540 |  |  | 13 |
Total | $ | 286,445 |  |  |  |  | $ | 81,702 |  |  | $ | 202,590 |  |  | $ | 11,107 |

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