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LOANS AND ALLOWANCE FOR CREDIT LOSSES | 12 Months Ended
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Dec. 31, 2023
Loans and Leases Receivable Disclosure [Abstract] |
LOANS AND ALLOWANCE FOR LOAN LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES The composition of the loan portfolio, net of deferred loan fees at December 31, 2023 and 2022 is summarized as follows (in thousands):
| 2023 |  | 2022
Commercial and agricultural: |  |  |
Commercial and industrial | $ | 264,140 |  |  | $ | 252,044 |
Agricultural | 256 |  |  | 249 |
Commercial mortgages: |  |  |
Construction | 138,887 |  |  | 108,243 |
Commercial mortgages, other | 984,038 |  |  | 888,670 |
Residential mortgages | 277,992 |  |  | 285,672 |
Consumer loans: |  |  |
Home equity lines and loans | 87,056 |  |  | 81,401 |
Indirect consumer loans | 210,423 |  |  | 202,124 |
Direct consumer loans | 9,872 |  |  | 11,045 |
Total loans, net of deferred loan fees | 1,972,664 |  |  | 1,829,448 |
Allowance for credit losses | (22,517) |  |  | (19,659) |
Loans, net of allowance for credit losses | $ | 1,950,147 |  |  | $ | 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 $7.8 million at December 31, 2023 and $6.5 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 amortized cost basis of loans and estimate of the allowance for credit losses, as presented in this Note. Recorded investment balances of loans as of December 31, 2022 included accrued interest receivable. The Corporation had no residential mortgages held for sale as of December 31, 2023 and December 31, 2022. When the Corporation has loans classified as held for sale, they are not included in the table above. Residential mortgage and home equity loans totaling $254.6 million at December 31, 2023 and $254.4 million at December 31, 2022 were pledged under a blanket collateral agreement for the Corporation's line of credit with the FHLBNY. The following tables present the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023 and the allowance for loan losses for the year ended December 31, 2022 , respectively (in thousands):
| December 31, 2023
Allowance for credit losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  |  |  | Total
Beginning balance, January 1, 2023 | $ | 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, January 1, 2023 | 4,282 |  |  | 10,881 |  |  | 1,829 |  |  | 3,041 |  |  |  |  | 20,033 |
Charge Offs: | (281) |  |  | — |  |  | (32) |  |  | (1,070) |  |  |  |  | (1,383) |
Recoveries: | 22 |  |  | 4 |  |  | — |  |  | 416 |  |  |  |  | 442 |
Net (charge offs) recoveries | (259) |  |  | 4 |  |  | (32) |  |  | (654) |  |  |  |  | (941) |
Provision (1) | 1,032 |  |  | 1,141 |  |  | 397 |  |  | 855 |  |  |  |  | 3,425 |
Ending balance, December 31, 2023 | $ | 5,055 |  |  | $ | 12,026 |  |  | $ | 2,194 |  |  | $ | 3,242 |  |  |  |  | $ | 22,517 |
(1) Additional provision related to off-balance sheet exposure was a credit of $163 thousand for the year ended December 31, 2023.
| December 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: | (20) |  |  | (687) |  |  | (17) |  |  | (770) |  |  |  |  | (1,494) |
Recoveries: | 42 |  |  | 3 |  |  | 40 |  |  | 597 |  |  |  |  | 682 |
Net recoveries (charge offs) | 22 |  |  | (684) |  |  | 23 |  |  | (173) |  |  |  |  | (812) |
Provision | (240) |  |  | (1,296) |  |  | 19 |  |  | 963 |  |  |  |  | (554) |
Ending balance | $ | 3,373 |  |  | $ | 11,576 |  |  | $ | 1,845 |  |  | $ | 2,865 |  |  |  |  | $ | 19,659 |
Unfunded Commitments The allowance for credit losses on unfunded commitments represents the amount held against credit exposures that are not represented on the Consolidated Balance Sheets. The allowance is recognized as a liability, a component of Other liabilities on the Consolidated Balance Sheets, with adjustments to the allowance recognized in the provision for credit losses line item 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 years ended December 31, 2023 and 2022:
Allowance for credit losses on unfunded commitments | For the Twelve Months Ended December 31,
| 2023 |  | 2022
Beginning balance | $ | — |  |  | $ | — |
Impact of adoption of ASC-326 | 1,082 |  |  | — |
Provision for credit losses on unfunded commitments | (163) |  |  | — |
Ending balance | $ | 919 |  |  | $ | — |
The following table presents the provision for credit losses on loans and unfunded commitments for the year ended December 31, 2023 , based upon the current expected credit loss methodology, and the provision for loan losses on loans for the year ended December 31, 2022, based upon the incurred loss methodology:
| For the Twelve Months Ended December 31,
Provision for credit losses | 2023 |  | 2022
Provision for credit losses on loans | $ | 3,425 |  |  | $ | (554) |
Provision for credit losses on unfunded commitments | (163) |  |  | — |
Total provision (credit) for credit losses | $ | 3,262 |  |  | $ | (554) |
The following tables present the balance in the Allowance for credit losses and the amortized cost basis in loans by portfolio segment and based on analysis status as of December 31, 2023 and the allowance for loan losses and the amortized cost basis in loans by portfolio as of December 31, 2022, respectively (in thousands):
| December 31, 2023
Allowance for credit losses | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Ending allowance balance attributable to loans: |  |  |  |  |  |  |  |  |
Individually analyzed | $ | 1,928 |  |  | $ | 27 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,955 |
Collectively analyzed | 3,127 |  |  | 11,999 |  |  | 2,194 |  |  | 3,242 |  |  | 20,562 |
Total ending allowance balance | $ | 5,055 |  |  | $ | 12,026 |  |  | $ | 2,194 |  |  | $ | 3,242 |  |  | $ | 22,517 |
| 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 |
| December 31, 2023
Loans | Commercial and Agricultural |  | Commercial Mortgages |  | Residential Mortgages |  | Consumer Loans |  | Total
Loans individually analyzed | $ | 2,067 |  |  | $ | 5,968 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,035 |
Loans collectively analyzed | 262,329 |  |  | 1,116,957 |  |  | 277,992 |  |  | 307,351 |  |  | 1,964,629 |
Total ending loans balance | $ | 264,396 |  |  | $ | 1,122,925 |  |  | $ | 277,992 |  |  | $ | 307,351 |  |  | $ | 1,972,664 |
| 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, on a prospective basis. 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, significant payment delays, or a combination thereof. The following table summarizes the amortized cost basis of loans modified during the year ended December 31, 2023 (in thousands):
| December 31, 2023
Loans modified under ASU 2022-02 | Principal Reduction |  | Interest Rate Reduction |  | Term Extension |  | Payment Delay |  | Combination |  | Total |  | (%) of Loan Class (1)
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | — |  |  | $ | — |  |  | $ | 1,011 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,011 |  |  | 0.38 | %
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Commercial mortgages, other | — |  |  | — |  |  | 272 |  |  | 1,878 |  |  | — |  |  | 2,150 |  |  | 0.22 | %
Residential mortgages | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans | — |  |  | — |  |  | 116 |  |  | — |  |  | — |  |  | 116 |  |  | 0.13 | %
Indirect consumer loans | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Direct consumer loans | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — | %
Total | $ | — |  |  | $ | — |  |  | $ | 1,399 |  |  | $ | 1,878 |  |  | $ | — |  |  | $ | 3,277 |  |  |
(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 year ended December 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) |  | Weighted-average payment delay (in months)
Commercial and agricultural: |  |  |  |  |  |  |
Commercial & industrial | $ | — |  |  | — | % |  | 12 months |  |
Agricultural | $ | — |  |  | — | % |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |
Construction | $ | — |  |  | — | % |  |  |  |
Commercial mortgages, other | $ | — |  |  | — | % |  | 60 months |  | 4 months
Residential mortgages | $ | — |  |  | — | % |  |  |  |
Consumer loans: |  |  |  |  |  |  |
Home equity lines and loans | $ | — |  |  | — | % |  | 180 months |  |
Indirect consumer loans | $ | — |  |  | — | % |  |  |  |
Direct consumer loans | $ | — |  |  | — | % |  |  |  |
The Corporation closely monitors the performance of loans that have been modified in accordance with ASU 2022-02 in order to understand the effectiveness of its modification efforts. There was one commercial and industrial loan modified to borrowers experiencing financial difficulty during the prior twelve months that sustained a payment default on the modified terms during the year ended December 31, 2023. An allocation totaling $0.9 million was included for this modified loan in the allowance for credit losses as of December 31, 2023. 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, as well as certain accruing loans previously identified under prior troubled debt restructuring (TDR) guidance. As of December 31, 2023, the amortized cost basis of individually analyzed loans was $8.0 million, of which $6.3 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 December 31, 2023 (in thousands):
|  | December 31, 2023 |  |
|  | Amortized Cost Basis |  | Related Allowance |  |  |  |
Commercial and agricultural: |  |  |  |  |  |  |  |
Commercial and industrial (1) (2) |  | $ | 353 |  |  | $ | 214 |  |  |  |  |
Agricultural (2) |  | 26 |  |  | 26 |  |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |  |
Construction (1) |  | 2,209 |  |  | — |  |  |  |  |
Commercial mortgages, other (1) (2) (3) |  | 3,759 |  |  | 27 |  |  |  |  |
Total |  | $ | 6,347 |  |  | $ | 267 |  |  |  |  |
(1) Secured by commercial real estate (2) Secured by business assets (3) Secured by residential real estate Differing from the methodology for analyzing loans on an individual basis used as of December 31, 2023, as described above, prior to January 1, 2023, the Corporation considered a loan to be impaired for credit analysis purposes 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 | 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 | 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 average amortized basis and interest income recognized for loans individually analyzed, by class, as of December 31, 2023 and loans individually evaluated for impairment, by class, as of December 31, 2022, (in thousands):
| December 31, 2023 |  | December 31, 2022 |  |
With no related allowance recorded: | Average Amortized Cost Basis |  | Interest Income Recognized (1) |  | Average Amortized Cost Basis |  | Interest Income Recognized (1) |  |  |  |
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 431 |  |  | $ | — |  |  | $ | 814 |  |  | $ | — |  |  |  |  |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |
Construction | 443 |  |  | 103 |  |  | 71 |  |  | — |  |  |  |  |
Commercial mortgages | 3,988 |  |  | 5 |  |  | 4,211 |  |  | 14 |  |  |  |  |
Residential mortgages | 288 |  |  | — |  |  | 864 |  |  | 37 |  |  |  |  |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |
Home equity lines & loans | 99 |  |  | — |  |  | 153 |  |  | — |  |  |  |  |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | 1,328 |  |  | 55 |  |  | 1,453 |  |  | 5 |  |  |  |  |
Agricultural | 11 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |
Construction | — |  |  | — |  |  | — |  |  | — |  |  |  |  |
Commercial mortgages | 33 |  |  | — |  |  | 1,258 |  |  | — |  |  |  |  |
Residential mortgages | — |  |  | — |  |  | — |  |  | — |  |  |  |  |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |
Home equity lines and loans | 25 |  |  | — |  |  | 137 |  |  | — |  |  |  |  |
Direct consumer loans | — |  |  | — |  |  | — |  |  | — |  |  |  |  |
Total | $ | 6,646 |  |  | $ | 163 |  |  | $ | 8,961 |  |  | $ | 56 |  |  |  |  |
(1) Cash basis interest income approximates interest income recognized. The following table presents the amortized cost basis of non-accrual loans with no related allowance for credit losses, total non-accrual loans, and loans pasts due for 90 days or greater which are still accruing, by class of loans, as of December 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
| 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 76 |  |  | $ | 1,035 |  |  | $ | 1,904 |  |  | $ | 1,946 |  |  | $ | 10 |  |  | $ | 1 |
Agricultural | — |  |  | — |  |  | 26 |  |  | — |  |  | — |  |  | — |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |
Construction | 2,209 |  |  | 5 |  |  | 2,209 |  |  | 5 |  |  | — |  |  | — |
Commercial mortgages | 3,732 |  |  | 3,890 |  |  | 3,760 |  |  | 3,928 |  |  | — |  |  | — |
Residential mortgages | 1,315 |  |  | 986 |  |  | 1,315 |  |  | 986 |  |  | — |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |
Credit cards | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Home equity lines and loans | 508 |  |  | 729 |  |  | 508 |  |  | 760 |  |  | — |  |  | — |
Indirect consumer loans | 687 |  |  | 540 |  |  | 687 |  |  | 540 |  |  | — |  |  | — |
Direct consumer loans | 2 |  |  | 13 |  |  | 2 |  |  | 13 |  |  | — |  |  | — |
Total | $ | 8,529 |  |  | $ | 7,198 |  |  | $ | 10,411 |  |  | $ | 8,178 |  |  | $ | 10 |  |  | $ | 1 |
The following tables present the aging of the amortized cost basis in loans as of December 31, 2023 and December 31, 2022 (in thousands):
| December 31, 2023
| 30 - 59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 89 Days Past Due |  | Total Past Due |  |  |  | Loans Not Past Due |  | Total
Commercial and agricultural: |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | 1,196 |  |  | $ | 31 |  |  | $ | 10 |  |  | $ | 1,237 |  |  |  |  | $ | 262,903 |  |  | $ | 264,140 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 256 |  |  | 256 |
Commercial mortgages: |  |  |  |  |  |  |  |  |  |  |  |  |
Construction | 2,164 |  |  | — |  |  | 2,207 |  |  | 4,371 |  |  |  |  | 134,516 |  |  | 138,887 |
Commercial mortgages | 1,022 |  |  | 103 |  |  | 261 |  |  | 1,386 |  |  |  |  | 982,652 |  |  | 984,038 |
Residential mortgages | 2,244 |  |  | 201 |  |  | 585 |  |  | 3,030 |  |  |  |  | 274,962 |  |  | 277,992 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
Home equity lines and loans | 461 |  |  | 87 |  |  | 366 |  |  | 914 |  |  |  |  | 86,142 |  |  | 87,056 |
Indirect consumer loans | 2,473 |  |  | 501 |  |  | 426 |  |  | 3,400 |  |  |  |  | 207,023 |  |  | 210,423 |
Direct consumer loans | 2 |  |  | 20 |  |  | — |  |  | 22 |  |  |  |  | 9,850 |  |  | 9,872 |
Total | $ | 9,562 |  |  | $ | 943 |  |  | $ | 3,855 |  |  | $ | 14,360 |  |  |  |  | $ | 1,958,304 |  |  | $ | 1,972,664 |
| December 31, 2022
| 30 - 59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 89 Days 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 | 1,058 |  |  | — |  |  | 486 |  |  | 1,544 |  |  |  |  | 887,126 |  |  | 888,670 |
Residential mortgages | 1,360 |  |  | 709 |  |  | 294 |  |  | 2,363 |  |  |  |  | 283,309 |  |  | 285,672 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | — |
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, and home equity lines and loans, once a loan is appropriately 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 its 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 December 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 | $ | 41,601 |  |  | $ | 35,768 |  |  | $ | 17,506 |  |  | $ | 10,195 |  |  | $ | 33,436 |  |  | $ | 7,746 |  |  | $ | 92,114 |  |  | $ | — |  |  | $ | 238,366 |
Special Mention | 185 |  |  | 2,103 |  |  | — |  |  | — |  |  | — |  |  | 432 |  |  | 9,730 |  |  | 10,672 |  |  | 23,122 |
Substandard | — |  |  | 24 |  |  | 991 |  |  | 109 |  |  | 23 |  |  | 456 |  |  | — |  |  | 161 |  |  | 1,764 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 790 |  |  | 75 |  |  | 23 |  |  | 888 |
Total | 41,786 |  |  | 37,895 |  |  | 18,497 |  |  | 10,304 |  |  | 33,459 |  |  | 9,424 |  |  | 101,919 |  |  | 10,856 |  |  | 264,140 |
Gross charge offs | — |  |  | — |  |  | — |  |  | — |  |  | 9 |  |  | 272 |  |  | — |  |  | — |  |  | 281 |
Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | — |  |  | 15 |  |  | 150 |  |  | — |  |  | — |  |  | — |  |  | 65 |  |  | — |  |  | 230 |
Special Mention | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 26 |  |  | 26 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | — |  |  | 15 |  |  | 150 |  |  | — |  |  | — |  |  | — |  |  | 65 |  |  | 26 |  |  | 256 |
Gross charge offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 11,275 |  |  | 1,445 |  |  | — |  |  | — |  |  | 28 |  |  | 1,178 |  |  | 122,752 |  |  | — |  |  | 136,678 |
Special Mention | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard | — |  |  | — |  |  | — |  |  | — |  |  | 2,207 |  |  | 2 |  |  | — |  |  | — |  |  | 2,209 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | 11,275 |  |  | 1,445 |  |  | — |  |  | — |  |  | 2,235 |  |  | 1,180 |  |  | 122,752 |  |  | — |  |  | 138,887 |
Gross charge offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 91,636 |  |  | 207,277 |  |  | 123,040 |  |  | 90,635 |  |  | 39,175 |  |  | 168,878 |  |  | 233,999 |  |  | — |  |  | 954,640 |
Special Mention | — |  |  | 2,533 |  |  | 8,189 |  |  | 2,609 |  |  | — |  |  | 3,216 |  |  | — |  |  | 5,426 |  |  | 21,973 |
Substandard | 272 |  |  | 1,107 |  |  | 345 |  |  | 1,022 |  |  | — |  |  | 4,143 |  |  | 97 |  |  | 412 |  |  | 7,398 |
Doubtful | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27 |  |  | — |  |  | — |  |  | 27 |
Total | 91,908 |  |  | 210,917 |  |  | 131,574 |  |  | 94,266 |  |  | 39,175 |  |  | 176,264 |  |  | 234,096 |  |  | 5,838 |  |  | 984,038 |
Gross charge offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Residential mortgages |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 14,027 |  |  | 50,556 |  |  | 49,428 |  |  | 69,070 |  |  | 15,093 |  |  | 44,628 |  |  | 33,875 |  |  | — |  |  | 276,677 |
Substandard | — |  |  | 75 |  |  | 346 |  |  | — |  |  | 169 |  |  | 725 |  |  | — |  |  | — |  |  | 1,315 |
Total | 14,027 |  |  | 50,631 |  |  | 49,774 |  |  | 69,070 |  |  | 15,262 |  |  | 45,353 |  |  | 33,875 |  |  | — |  |  | 277,992 |
Gross charge offs | — |  |  | 32 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 32 |
Home equity lines and loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 13,743 |  |  | 16,621 |  |  | 5,797 |  |  | 3,110 |  |  | 2,845 |  |  | 10,342 |  |  | 34,090 |  |  | — |  |  | 86,548 |
Substandard | — |  |  | 77 |  |  | — |  |  | — |  |  | — |  | (1) |  | 293 |  |  | 25 |  |  | 113 |  |  | 508 |
Total | 13,743 |  |  | 16,698 |  |  | 5,797 |  |  | 3,110 |  |  | 2,845 |  |  | 10,635 |  |  | 34,115 |  |  | 113 |  |  | 87,056 |
Gross charge offs | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Indirect consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 72,264 |  |  | 98,008 |  |  | 23,015 |  |  | 9,192 |  |  | 3,870 |  |  | 3,387 |  |  | — |  |  | — |  |  | 209,736 |
Substandard | 119 |  |  | 246 |  |  | 135 |  |  | 48 |  |  | 36 |  |  | 103 |  |  | — |  |  | — |  |  | 687 |
Total | 72,383 |  |  | 98,254 |  |  | 23,150 |  |  | 9,240 |  |  | 3,906 |  |  | 3,490 |  |  | — |  |  | — |  |  | 210,423 |
Gross charge offs | 184 |  |  | 375 |  |  | 215 |  |  | 121 |  |  | 21 |  |  | 55 |  |  | — |  |  | — |  |  | 971 |
Direct consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not rated | 3,005 |  |  | 2,745 |  |  | 785 |  |  | 256 |  |  | 53 |  |  | 357 |  |  | 2,669 |  |  | — |  |  | 9,870 |
Substandard | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2 |
Total | 3,005 |  |  | 2,745 |  |  | 785 |  |  | 258 |  |  | 53 |  |  | 357 |  |  | 2,669 |  |  | — |  |  | 9,872 |
Gross charge offs | 4 |  |  | 15 |  |  | 8 |  |  | 6 |  |  | — |  |  | 54 |  |  | 6 |  |  | — |  |  | 93 |
| — |  |  |  |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |
Total loans | $ | 248,127 |  |  | $ | 418,600 |  |  | $ | 229,727 |  |  | $ | 186,248 |  |  | $ | 96,935 |  |  | $ | 246,703 |  |  | $ | 529,491 |  |  | $ | 16,833 |  |  | $ | 1,972,664 |
Total Gross charge-offs | $ | 188 |  |  | $ | 422 |  |  | $ | 223 |  |  | $ | 127 |  |  | $ | 30 |  |  | $ | 381 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 1,383 |
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 |  |  |  |  |  |  |  |  |  |  |  |  |
Credit cards | — |  |  | — |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
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 |
The Corporation considers the performance of the loan portfolio and its impact on the allowance for credit 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. For residential and consumer loan classes, the Corporation evaluated credit quality based on the aging status of the loan, which was presented by payment activity. The following table presents the amortized cost basis in residential and consumer loans based on payment activity as of December 31, 2023 (in thousands):
| December 31, 2023
|  |  |  |  | Consumer Loans
| Residential Mortgages |  |  |  | Home Equity Lines and Loans |  | Indirect Consumer Loans |  | Other Direct Consumer Loans
Performing | $ | 276,677 |  |  |  |  | $ | 86,548 |  |  | $ | 209,736 |  |  | $ | 9,870 |
Non-Performing | 1,315 |  |  |  |  | 508 |  |  | 687 |  |  | 2 |
Total | $ | 277,992 |  |  |  |  | $ | 87,056 |  |  | $ | 210,423 |  |  | $ | 9,872 |
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 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):
| December 31, 2022
|  |  |  |  | Consumer Loans
| 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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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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