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Loans Receivable and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2022
Loans Receivable and Allowance for Loan Losses [Abstract] |
Loans Receivable and Allowance for Loan Losses | 8. Loans Receivable and Allowance for Loan Losses Set forth below is selected data relating to the composition of the loan portfolio at the dates indicated (dollars in thousands):
| September 30, 2022 |  |  | December 31, 2021 |
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |
Residential | $ | 295,125 |  | 20.6 | % |  | $ | 273,040 |  | 20.1 | %
Commercial |  | 644,607 |  | 45.0 |  |  |  | 628,724 |  | 46.4 |
Agricultural |  | 69,356 |  | 4.8 |  |  |  | 61,925 |  | 4.6 |
Construction |  | 26,637 |  | 1.9 |  |  |  | 21,990 |  | 1.6 |
Commercial loans |  | 184,729 |  | 12.9 |  |  |  | 186,031 |  | 13.7 |
Other agricultural loans |  | 35,733 |  | 2.5 |  |  |  | 37,930 |  | 2.8 |
Consumer loans to individuals |  | 176,680 |  | 12.3 |  |  |  | 146,400 |  | 10.8 |
Total loans |  | 1,432,867 |  | 100.0 | % |  |  | 1,356,040 |  | 100.0 | %
Deferred fees, net |  | (579) |  |  |  |  |  | (1,109) |  |  |
Total loans receivable |  | 1,432,288 |  |  |  |  |  | 1,354,931 |  |  |
Allowance for loan losses |  | (16,931) |  |  |  |  |  | (16,442) |  |  |
Net loans receivable | $ | 1,415,357 |  |  |  |  | $ | 1,338,489 |  |  |
During 2020 and 2021 the Company participated in the Paycheck Protection Program (“PPP”), administered directly by the United States Small Business Administration (“SBA”). The PPP provides loans to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. As of September 30, 2022 and December 31, 2021, the Company had outstanding principal balances of $755,000 and $15.2 million, respectively, in PPP loans. The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the commercial loan category. In accordance with the SBA terms and conditions on these PPP loans, the Company received approximately $5.1 million in fees associated with the processing of these loans. Upon funding of the loan, these fees were deferred and will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2. As of September 30, 2022, the carrying value of these unamortized loan fees was $20,000. The following table presents information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):
| September 30, 2022 |  | December 31, 2021
Outstanding Balance | $ | 9,272 |  | $ | 12,862
Carrying Amount | $ | 6,614 |  | $ | 8,304
As a result of the acquisition of UpState New York Bancorp, Inc. (“UpState”), the Company added $15,410,000 of loans that were accounted for in accordance with ASC 310-30. Based on a review of the loans acquired by the Company’s senior lending management, which included an analysis of credit deterioration of the loans since origination, the Company recorded a specific credit fair value adjustment of $6,937,000. For loans that were acquired with specific evidence of deterioration in credit quality, loan losses will be accounted for through a reduction of the specific reserve and will not impact the allowance for loan losses until actual losses exceed the allotted reserves. For loans acquired without a deterioration of credit quality, losses incurred will result in adjustments to the allowance for loan losses through the allowance for loan loss adequacy calculation. Changes in the accretable yield for purchased credit impaired loans for the nine-months ended September 30, 2022 and 2021, were as follows (in thousands):
| 2022 |  | 2021
Balance at beginning of period | $ | 1,884 |  | $ | 1,365
Additions |  | — |  |  | —
Accretion |  | (558) |  |  | (523)
Reclassification and other |  | 523 |  |  | 993
Balance at end of period | $ | 1,849 |  | $ | 1,835
Loans acquired with credit deterioration of $15,410,000 and accounted for in accordance with ASC 310-30 were individually evaluated to estimate credit losses and a net recovery amount for each loan. The net cash flows for each loan were then discounted to present value using a risk-adjusted market rate. The table below presents the components of the purchase accounting adjustments:
(In Thousands) | July 7, 2020
Contractually required principal and interest | $ | 15,410
Non-accretable discount |  | (5,213)
Expected cash flows |  | 10,197
Accretable discount |  | (1,724)
Estimated fair value | $ | 8,473
The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. We do not aggregate such loans for evaluation purposes. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired, or are classified as a troubled debt restructuring. Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in foreclosed real estate owned on the Consolidated Balance Sheets. As of September 30, 2022 and December 31, 2021, foreclosed real estate owned totaled $346,000 and $1,742,000, respectively. During the nine months ended September 30, 2022, there were no additions to the foreclosed real estate category. The Co mpany disposed of a parcel of one property that was previously transferred to foreclosed real estate owned with a carrying value of $364,000, and disposed of another property with a carrying value of $1,032,000 through the sale of the property. As of September 30, 2022, the Company has initiated formal foreclosure proceedings on four properties classified as consumer residential mortgages with an aggregate carrying value of $160,000. The following table shows the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated:
| Real Estate Loans |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Other |  | Consumer |  |  |
| Residential |  | Commercial |  |  | Agricultural |  | Construction |  | Loans |  |  | Agricultural |  | Loans |  | Total
September 30, 2022 | (In thousands)
Individually evaluated for impairment | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 12 |  | $ | — |  | $ | — |  | $ | 12
Loans acquired with deteriorated credit quality |  | 571 |  |  | 2,284 |  |  | 2,336 |  |  | — |  |  | — |  |  | 1,423 |  |  | — |  |  | 6,614
Collectively evaluated for impairment |  | 294,554 |  |  | 642,323 |  |  | 67,020 |  |  | 26,637 |  |  | 184,717 |  |  | 34,310 |  |  | 176,680 |  |  | 1,426,241
Total Loans | $ | 295,125 |  | $ | 644,607 |  | $ | 69,356 |  | $ | 26,637 |  | $ | 184,729 |  | $ | 35,733 |  | $ | 176,680 |  | $ | 1,432,867
| Real Estate Loans |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  | Commercial |  |  | Other |  | Consumer |  |  |
| Residential |  | Commercial |  |  | Agricultural |  | Construction |  | Loans |  |  | Agricultural |  | Loans |  | Total
| (In thousands)
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | - |  | $ | 1,658 |  | $ | — |  | $ | - |  | $ | 16 |  | $ | — |  | $ | - |  | $ | 1,674
Loans acquired with deteriorated credit quality |  | 784 |  |  | 3,285 |  |  | 1,918 |  |  | - |  |  | 198 |  |  | 2,119 |  |  | - |  |  | 8,304
Collectively evaluated for impairment |  | 272,256 |  |  | 623,781 |  |  | 60,007 |  |  | 21,990 |  |  | 185,817 |  |  | 35,811 |  |  | 146,400 |  |  | 1,346,062
Total Loans | $ | 273,040 |  | $ | 628,724 |  | $ | 61,925 |  | $ | 21,990 |  | $ | 186,031 |  | $ | 37,930 |  | $ | 146,400 |  | $ | 1,356,040
The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable.
|  |  |  | Unpaid |  |  |
| Recorded |  | Principal |  | Associated
| Investment |  | Balance |  | Allowance
September 30, 2022 |  |  |  |  | (in thousands) |  |
With no related allowance recorded: |  |  |  |  |  |  |  |
Commercial Loans | $ | 12 |  | $ | 12 |  |  | —
Subtotal | $ | 12 |  | $ | 12 |  | $ | —
Total: |  |  |  |  |  |  |  |
Commercial Loans | $ | 12 |  | $ | 12 |  |  | —
Total Impaired Loans | $ | 12 |  | $ | 12 |  | $ | —
|  |  |  | Unpaid |  |  |
| Recorded |  | Principal |  | Associated
| Investment |  | Balance |  | Allowance
December 31, 2021 |  |  |  |  | (in thousands) |  |
With no related allowance recorded: |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |
Commercial | $ | 141 |  | $ | 141 |  | $ | —
Commercial Loans |  | 16 |  |  | 16 |  |  | —
Subtotal |  | 157 |  |  | 157 |  |  | —
With an allowance recorded: |  |  |  |  |  |  |  |
Real Estate Loans |  |  |  |  |  |  |  |
Commercial |  | 1,517 |  |  | 1,517 |  |  | 272
Subtotal |  | 1,517 |  |  | 1,517 |  |  | 272
Total: |  |  |  |  |  |  |  |
Real Estate Loans: |  |  |  |  |  |  |  |
Commercial |  | 1,658 |  |  | 1,658 |  |  | 272
Commercial Loans |  | 16 |  |  | 16 |  |  | —
Total Impaired Loans | $ | 1,674 |  | $ | 1,674 |  | $ | 272
The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended September 30, 2022 and 2021, respectively (in thousands):
| Average Recorded |  | Interest Income
| Investment |  | Recognized
| 2022 |  | 2021 |  | 2022 |  | 2021
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | — |  | $ | 1,405 |  | $ | 18 |  | $ | 55
Agriculture |  | — |  |  | 858 |  |  | — |  |  | —
Commercial Loans |  | 13 |  |  | 19 |  |  | — |  |  | —
Other agricultural loans |  | — |  |  | 125 |  |  | — |  |  | —
Total | $ | 13 |  | $ | 2,407 |  | $ | 18 |  | $ | 55
The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the nine-month periods ended September 30, 2022 and 2021, respectively (in thousands):
| Average Recorded |  | Interest Income
| Investment |  | Recognized
| 2022 |  | 2021 |  | 2022 |  | 2021
Real Estate Loans: |  |  |  |  |  |  |  |  |  |  |
Commercial | $ | 825 |  | $ | 1,560 |  | $ | 55 |  | $ | 56
Agriculture |  | — |  |  | 858 |  |  | — |  |  | —
Commercial Loans |  | 14 |  |  | 19 |  |  | 3 |  |  | —
Other agricultural loans |  | — |  |  | 114 |  |  | — |  |  | —
Total | $ | 839 |  | $ | 2,551 |  | $ | 58 |  | $ | 56
Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of financial difficulties experienced by the borrower, who could not obtain comparable terms from alternate financing sources. As of September 30, 2022 and December 31, 2021, the Company had no troubled debt restructured loans to report. For the nine-month period ended September 30, 2022 and 2021, there were no new loans identified as troubled debt restructurings. Management uses an eight point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category. To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as nonperformance, repossession, or death occurs to raise awareness of a possible credit event. The Company’s Loan Review Department is responsible for the timely and accurate risk rating of the loans on an ongoing basis. Every credit which must be approved by Loan Committee or the Board of Directors is assigned a risk rating at time of consideration. Loan Review also annually reviews relationships of $1,500,000 and over to assign or re-affirm risk ratings. Loans in the Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance. The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, Doubtful and Loss within the internal risk rating system as of September 30, 2022 and December 31, 2021 (in thousands):
|  |  |  | Special |  |  |  |  | Doubtful |  |  |
| Pass |  | Mention |  | Substandard |  | or Loss |  | Total
September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate loans | $ | 639,609 |  | $ | 1,284 |  | $ | 3,714 |  | $ | — |  | $ | 644,607
Real estate - agricultural |  | 66,813 |  |  | 2,543 |  |  | — |  |  | — |  |  | 69,356
Commercial loans |  | 184,474 |  |  | 187 |  |  | 68 |  |  | — |  |  | 184,729
Other agricultural loans |  | 34,433 |  |  | 708 |  |  | 592 |  |  | — |  |  | 35,733
Total | $ | 925,329 |  | $ | 4,722 |  | $ | 4,374 |  | $ | — |  | $ | 934,425
|  |  |  | Special |  |  |  |  | Doubtful |  |  |
| Pass |  | Mention |  | Substandard |  | or Loss |  | Total
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate loans | $ | 618,541 |  | $ | 5,146 |  | $ | 4,765 |  | $ | 272 |  | $ | 628,724
Real estate - agricultural |  | 60,193 |  |  | — |  |  | 1,732 |  |  | — |  |  | 61,925
Commercial loans |  | 185,729 |  |  | 199 |  |  | 103 |  |  | — |  |  | 186,031
Other agricultural loans |  | 35,573 |  |  | 210 |  |  | 2,147 |  |  | — |  |  | 37,930
Total | $ | 900,036 |  | $ | 5,555 |  | $ | 8,747 |  | $ | 272 |  | $ | 914,610
For residential real estate loans, construction loans and consumer loans, the Company evaluates credit quality based on the performance of the individual credits. The following table presents the recorded investment in the loan classes based on payment activity as of September 30, 2022 and December 31, 2021 (in thousands):
| Performing |  | Nonperforming |  | Total
September 30, 2022 |  |  |  |  |  |  |  |
Residential real estate loans | $ | 294,684 |  | $ | 441 |  | $ | 295,125
Construction |  | 26,637 |  |  | — |  |  | 26,637
Consumer loans to individuals |  | 176,515 |  |  | 165 |  |  | 176,680
Total | $ | 497,836 |  | $ | 606 |  | $ | 498,442
| Performing |  | Nonperforming |  | Total
December 31, 2021 |  |  |  |  |  |  |  |
Residential real estate loans | $ | 272,571 |  | $ | 469 |  | $ | 273,040
Construction |  | 21,990 |  |  | — |  |  | 21,990
Consumer loans to individuals |  | 146,345 |  |  | 55 |  |  | 146,400
Total | $ | 440,906 |  | $ | 524 |  | $ | 441,430
Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2022 and December 31, 2021 (in thousands):
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due and still accruing |  | Nonaccrual |  | Total Past Due and Non-Accrual |  | Purchased Credit-Impaired |  | Total Loans
September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential | $ | 293,400 |  | $ | 649 |  | $ | 64 |  | $ | - |  | $ | 441 |  | $ | 1,154 |  | $ | 571 |  | $ | 295,125
Commercial |  | 641,958 |  |  | 365 |  |  | - |  |  | - |  |  | - |  |  | 365 |  |  | 2,284 |  |  | 644,607
Agricultural |  | 67,020 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - |  |  | 2,336 |  |  | 69,356
Construction |  | 26,611 |  |  | - |  |  | 26 |  |  | - |  |  | - |  |  | 26 |  |  | - |  |  | 26,637
Commercial loans |  | 184,716 |  |  | 1 |  |  | - |  |  | - |  |  | 12 |  |  | 13 |  |  | - |  |  | 184,729
Other agricultural loans |  | 34,310 |  |  | - |  |  |  |  |  | - |  |  | - |  |  | - |  |  | 1,423 |  |  | 35,733
Consumer loans |  | 175,722 |  |  | 663 |  |  | 130 |  |  | - |  |  | 165 |  |  | 958 |  |  | - |  |  | 176,680
Total | $ | 1,423,737 |  | $ | 1,678 |  | $ | 220 |  | $ | - |  | $ | 618 |  | $ | 2,516 |  | $ | 6,614 |  | $ | 1,432,867
| Current |  | 31-60 Days Past Due |  | 61-90 Days Past Due |  | Greater than 90 Days Past Due and still accruing |  | Nonaccrual |  | Total Past Due and Non-Accrual |  | Purchased Credit-Impaired |  | Total Loans
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real Estate loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential | $ | 271,622 |  | $ | 155 |  | $ | 10 |  | $ | - |  | $ | 469 |  | $ | 634 | - | $ | 784 |  | $ | 273,040
Commercial |  | 625,336 |  |  | - |  |  | - |  |  | - |  |  | 103 |  |  | 103 | - |  | 3,285 |  |  | 628,724
Agricultural |  | 59,982 |  |  | 25 |  |  | - |  |  |  |  |  | - |  |  | 25 |  |  | 1,918 |  |  | 61,925
Construction |  | 21,990 |  |  | - |  |  | - |  |  | - |  |  | - |  |  | - | - |  | - |  |  | 21,990
Commercial loans |  | 185,801 |  |  | 3 |  |  | 13 |  |  | 91 |  |  | 16 |  |  | 32 | - |  | 198 |  |  | 186,031
Other agricultural loans |  | 35,811 |  |  | - |  |  | - |  |  |  |  |  | - |  |  | - |  |  | 2,119 |  |  | 37,930
Consumer loans |  | 145,986 |  |  | 248 |  |  | 111 |  |  | - |  |  | 55 |  |  | 414 | - |  | - |  |  | 146,400
Total | $ | 1,346,528 |  | $ | 431 |  | $ | 134 |  | $ | 91 |  | $ | 643 |  | $ | 1,208 | - | $ | 8,304 |  | $ | 1,356,040
Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the allowance. As of September 30, 2022, the allocation of the allowance includes an allocation for loans secured by farmland and other agricultural loans. As of September 30 2022, the Company has also continued to incorporate qualitative factors related to the pandemic to capture some of the risk associated with higher-risk industries, although the factor has been reduced from the December 31, 2021 level. The qualitative factor related to the deferral of payments due to COVID-19 has been eliminated. At September 30, 2022, the allowance for loan losses includes $583,000 of COVID related factors, compared to $2.3 million at December 31, 2021. The 2022 allowance for loan losses excludes Paycheck Protection Program loans which are fully guaranteed by the Small Business Association as well as loans acquired from UpState which were recorded at fair value. The following table presents the allowance for loan losses by the classes of the loan portfolio:
(In thousands) | Residential Real Estate |  | Commercial Real Estate |  |  | Agricultural |  |  | Construction |  | Commercial |  |  | Other Agricultural |  | Consumer |  | Total
Beginning balance, December 31, 2021 | $ | 2,175 |  | $ | 10,878 |  | $ | - |  | $ | 133 |  | $ | 1,490 |  | $ | - |  | $ | 1,766 |  | $ | 16,442
Charge Offs |  | (120) |  |  | (1) |  |  | - |  |  | - |  |  | (16) |  |  | - |  |  | (249) |  |  | (386)
Recoveries |  | 122 |  |  | 80 |  |  | - |  |  | - |  |  | 36 |  |  | - |  |  | 37 |  |  | 275
Provision for loan losses |  | 736 |  |  | (2,354) |  |  | 220 |  |  | 186 |  |  | 910 |  |  | 123 |  |  | 779 |  |  | 600
Ending balance, September 30, 2022 | $ | 2,913 |  | $ | 8,603 |  | $ | 220 |  | $ | 319 |  | $ | 2,420 |  | $ | 123 |  | $ | 2,333 |  | $ | 16,931
Ending balance individually evaluated ‎for impairment | $ | - |  | $ | — |  | $ | - |  | $ | - |  | $ | — |  | $ | - |  | $ | - |  | $ | —
Ending balance collectively evaluated ‎for impairment | $ | 2,913 |  | $ | 8,603 |  | $ | 220 |  | $ | 319 |  | $ | 2,420 |  | $ | 123 |  | $ | 2,333 |  | $ | 16,931
(In thousands) | Residential Real Estate |  | Commercial Real Estate |  |  | Farmland |  |  | Construction |  | Commercial |  |  | Other Agricultural |  | Consumer |  | Total
Beginning balance, June 30, 2022 | $ | 2,740 |  | $ | 9,155 |  | $ | 218 |  | $ | 242 |  | $ | 2,504 |  | $ | 112 |  | $ | 2,046 |  | $ | 17,017
Charge Offs |  | - |  |  | (1) |  |  | - |  |  | - |  |  | (1) |  |  | - |  |  | (115) |  |  | (117)
Recoveries |  | 4 |  |  | - |  |  | - |  |  | - |  |  | 13 |  |  | - |  |  | 14 |  |  | 31
Provision for loan losses |  | 169 |  |  | (551) |  |  | 2 |  |  | 77 |  |  | (96) |  |  | 11 |  |  | 388 |  |  | —
Ending balance, September 30, 2022 | $ | 2,913 |  | $ | 8,603 |  | $ | 220 |  | $ | 319 |  | $ | 2,420 |  | $ | 123 |  | $ | 2,333 |  | $ | 16,931
(In thousands) | Residential Real Estate |  | Commercial Real Estate |  |  | Agricultural |  |  | Construction |  | Commercial |  |  | Other Agricultural |  | Consumer |  | Total
Beginning balance, December 31, 2020 | $ | 1,960 |  | $ | 8,004 |  | $ | - |  | $ | 150 |  | $ | 1,360 |  | $ | - |  | $ | 1,676 |  | $ | 13,150
Charge Offs |  | (5) |  |  | (452) |  |  | - |  |  | - |  |  | (174) |  |  | - |  |  | (368) |  |  | (999)
Recoveries |  | 64 |  |  | 15 |  |  | - |  |  | - |  |  | 33 |  |  | - |  |  | 90 |  |  | 202
Provision for loan losses |  | 424 |  |  | 2,324 |  |  | - |  |  | 13 |  |  | 386 |  |  | - |  |  | 603 |  |  | 3,750
Ending balance, September 30, 2021 | $ | 2,443 |  | $ | 9,891 |  | $ | — |  | $ | 163 |  | $ | 1,605 |  | $ | — |  | $ | 2,001 |  | $ | 16,103
Ending balance individually evaluated ‎for impairment | $ | - |  | $ | 275 |  | $ | - |  | $ | - |  | $ | — |  | $ | - |  | $ | — |  | $ | 275
Ending balance collectively evaluated ‎for impairment | $ | 2,443 |  | $ | 9,616 |  | $ | — |  | $ | 163 |  | $ | 1,605 |  | $ | — |  | $ | 2,001 |  | $ | 15,828
(In thousands) | Residential Real Estate |  | Commercial Real Estate |  |  | Farmland |  |  | Construction |  | Commercial |  |  | Other Agricultural |  | Consumer |  | Total
Beginning balance, June 30, 2021 | $ | 2,233 |  | $ | 9,580 |  | $ | - |  | $ | 137 |  | $ | 1,503 |  | $ | - |  | $ | 1,887 |  | $ | 15,340
Charge Offs |  | — |  |  | (13) |  |  | - |  |  | — |  |  | — |  |  | - |  |  | (107) |  |  | (120)
Recoveries |  | 59 |  |  | 5 |  |  | - |  |  | — |  |  | 9 |  |  | - |  |  | 60 |  |  | 133
Provision for loan losses |  | 151 |  |  | 319 |  |  | - |  |  | 26 |  |  | 93 |  |  | - |  |  | 161 |  |  | 750
Ending balance, September 30, 2021 | $ | 2,443 |  | $ | 9,891 |  | $ | — |  | $ | 163 |  | $ | 1,605 |  | $ | — |  | $ | 2,001 |  | $ | 16,103
The Company’s primary business activity as of September 30, 2022 was with customers located in northeastern Pennsylvania and the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates. Accordingly, the Company has extended credit primarily to commercial entities and individuals in this area whose ability to repay their loans is influenced by the region’s economy. As of September 30, 2022, the Company considered its concentration of credit risk to be acceptable. The highest concentrations are in commercial rentals with $152.4 million of loans outstanding, or 10.6 % of total loans outstanding, and residential rentals with loans outstanding of $121.4 million, or 8.5% of loans outstanding. For the nine months ended September 30, 2022, the Company did not recognize any charge offs on loans in the named concentrations.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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