Major classifications within the Company’s held for investment loan portfolio at March 31, 2021 and December 31, 2020 is as follows:

The Bank grants real estate, commercial, installment, and other consumer loans to customers located within the Missouri communities surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, St. Louis, and the greater Kansas City metropolitan area. As such, the Bank is susceptible to changes in the economic environment in these communities. The Bank does not have a concentration of credit in any one economic sector. Installment and other consumer loans consist primarily of the financing of automotive vehicles. At March 31, 2021, loans of $552.5 million were pledged to the Federal Home Loan Bank as collateral for borrowings and letters of credit.

Allowance for Loan Losses

The following table illustrates the changes in the allowance for loan losses by portfolio segment:


	Three Months Ended March 31, 2021
	Commercial,		Real Estate		Real Estate		Real Estate		Real Estate		Installment
	Financial, &		Construction -		Construction -		Mortgage -		Mortgage -		and Other		Un-
(in thousands)	Agricultural		Residential		Commercial		Residential		Commercial		Consumer		allocated		Total
Balance at beginning of period	$	5,121	$	213	$	475	$	2,679	$	9,354	$	264	$	7	$	18,113
Additions:
Provision for loan losses		(567)		83		57		(253)		573		13		94		—
Deductions:
Loans charged off		27		—		—		—		23		57		—		107
Less recoveries on loans		(149)		(13)		—		(168)		—		(25)		—		(355)
Net loan charge-offs (recoveries)		(122)		(13)		—		(168)		23		32		—		(248)
Balance at end of period	$	4,676	$	309	$	532	$	2,594	$	9,904	$	245	$	101	$	18,361


	Three Months Ended March 31, 2020
	Commercial,		Real Estate		Real Estate		Real Estate		Real Estate		Installment
	Financial, &		Construction -		Construction -		Mortgage -		Mortgage -		and Other		Un-
(in thousands)	Agricultural		Residential		Commercial		Residential		Commercial		Consumer		allocated		Total
Balance at beginning of period	$	2,918	$	64	$	369	$	2,118	$	6,547	$	381	$	80	$	12,477
Additions:
Provision for loan losses		721		53		253		255		2,087		8		(77)		3,300
Deductions:
Loans charged off		41		—		—		19		22		52		—		134
Less recoveries on loans		(25)		—		—		(9)		(2)		(14)		—		(50)
Net loan charge-offs		16		—		—		10		20		38		—		84
Balance at end of period	$	3,623	$	117	$	622	$	2,363	$	8,614	$	351	$	3	$	15,693

Loans, or portions of loans, are charged off to the extent deemed uncollectible or a loss is confirmed. Loan charge-offs reduce the allowance for loan losses, and recoveries of loans previously charged off are added back to the allowance. If management determines that it is probable that all amounts due on a loan will not be collected under the original terms of the loan agreement, the loan is considered to be impaired. These loans are evaluated individually for impairment, and in conjunction with current economic conditions and loss experience, specific reserves are estimated as further discussed below. Loans not individually evaluated are aggregated by risk characteristics and reserves are recorded using a consistent methodology that considers historical loan loss experience by loan type, delinquencies, current economic conditions, loan risk ratings and industry concentration.

These historical loss rates for each risk group are used as the starting point to determine loss rates for measurement purposes. The historical loan loss rates are multiplied by loss emergence periods (LEP) which represent the estimated time period between a borrower first experiencing financial difficulty and the recognition of a loss. Management's look-back period began with loss history in the first quarter 2012 as the starting point through the current quarter and it will continue to include this starting point going forward. The look-back period will continue to be evaluated and will be adjusted once a sustained loss producing downturn is recognized and found to be representative of historical losses expected for the current portfolio.

The Company’s methodology includes qualitative risk factors that allow management to adjust its estimates of losses based on the most recent information available and to address other limitations in the quantitative component that is based on historical loss rates. Such risk factors are generally reviewed and updated quarterly, as appropriate, and are adjusted to reflect changes in national and local economic conditions and developments, the nature, volume and terms of loans in the portfolio, including changes in volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans, loan concentrations, assessment of trends in collateral values, assessment of changes in the quality of the Company’s internal loan review department, and changes in lending policies and procedures, including underwriting standards and collections, charge-off and recovery practices.

When the COVID-19 pandemic surfaced in the first quarter of 2020, management reassessed the calculation of the allowance for loan loss by increasing the economic qualitative factor in order to capture the impact on the credit risk present in the loan portfolio given the economic environment that existed at that time. As of the fourth quarter of 2020, management reassessed the qualitative factor and economic indicators. Enough time had passed so that data after the outbreak would be available and a better interpretation of the impact of the virus on the economy. Management determined that the local market and economy had been able to transition to a functional level while adapting to the new requirements aimed at stopping the spread of the virus and returned to calculating the qualitative adjustment according to the Company's methodology detailed above.

Additionally, the funding of $88.4 million and $40.2 million in SBA PPP loans during 2020 and 2021, respectively, required management to assess the methodology that would be adopted in regard to the allowance for loan losses applicable to these loans. As the SBA PPP loans are expected to be mostly paid off in the next six to twelve months and carry a 100% credit guarantee from the SBA, management determined that no allowance for loan losses was deemed necessary for these loans. At March 31, 2021 the net balance of the PPP loans totaled $56.3 million.

All SBA PPP loans have a 1% interest rate and the Company earns a fee that is based upon a tiered schedule corresponding with the amount of the loan to the borrower, which is deferred and recognized over the life of the loan. Based upon the borrower meeting certain criteria as defined by the CARES Act, the loan may be forgiven by the SBA. The Company reports these loans at their principal amount outstanding, net of unearned income, unamortized deferred loan fee income and loan origination costs. Interest is accrued as earned and loan origination fees and direct costs are deferred and accreted or amortized into interest income, as an adjustment to the yield, over the life of the loan using the level yield method. When a PPP loan is paid off or forgiven by the SBA, the remaining unaccreted or unamortized net origination fees or costs are immediately recognized into income.

The following table illustrates the allowance for loan losses and recorded investment by portfolio segment:


	Commercial,		Real Estate		Real Estate		Real Estate		Real Estate		Installment
	Financial, and		Construction -		Construction -		Mortgage -		Mortgage -		and Other		Un-
(in thousands)	Agricultural		Residential		Commercial		Residential		Commercial		Consumer		allocated		Total
March 31, 2021
Allowance for loan losses:
Individually evaluated for impairment	$	2,134	$	26	$	28	$	256	$	2,691	$	9	$	—	$	5,144
Collectively evaluated for impairment		2,542		283		504		2,338		7,213		236		101		13,217
Total	$	4,676	$	309	$	532	$	2,594	$	9,904	$	245	$	101	$	18,361
Loans outstanding:
Individually evaluated for impairment	$	7,408	$	189	$	198	$	3,134	$	25,647	$	71	$	—	$	36,647
Collectively evaluated for impairment		244,535		33,773		78,378		255,125		602,531		25,196		—		1,239,538
Total	$	251,943	$	33,962	$	78,576	$	258,259	$	628,178	$	25,267	$	—	$	1,276,185

December 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	2,187	$	27	$	28	$	263	$	2,594	$	14	$	—	$	5,113
Collectively evaluated for impairment		2,934		186		447		2,416		6,760		250		7		13,000
Total	$	5,121	$	213	$	475	$	2,679	$	9,354	$	264	$	7	$	18,113
Loans outstanding:
Individually evaluated for impairment	$	7,552	$	192	$	200	$	3,626	$	25,657	$	108	$	—	$	37,335
Collectively evaluated for impairment		265,366		29,500		77,944		258,713		591,476		26,633		—		1,249,632
Total	$	272,918	$	29,692	$	78,144	$	262,339	$	617,133	$	26,741	$	—	$	1,286,967

Impaired Loans

Loans evaluated under ASC 310-10-35 include loans which are individually evaluated for impairment. All other loans are collectively evaluated for impairment under ASC 450-20. Impaired loans individually evaluated for impairment totaled $36.6 million and $37.3 million at March 31, 2021 and December 31, 2020, respectively, and are comprised of loans on non-accrual status and loans which have been classified as troubled debt restructurings (TDRs).

The net carrying value of impaired loans is based on the fair values of collateral obtained through independent appraisals or internal evaluations, or by discounting the total expected future cash flows. At March 31, 2021, $31.8 million of impaired loans were evaluated based on the fair value less estimated selling costs of the loans' collateral compared to $32.2 million at December 31, 2020. Once the impairment amount is calculated, a specific reserve allocation is recorded. At March 31, 2021, $5.1 million of the Company’s allowance for loan losses was allocated to impaired loans totaling $36.6 million compared to $5.1 million of the Company’s allowance for loan losses allocated to impaired loans totaling approximately $37.3 million at December 31, 2020. Management determined that $12.6 million, or 34%, of total impaired loans required no reserve allocation at March 31, 2021 compared to $11.9 million, or 32%, at December 31, 2020, primarily due to adequate collateral values, acceptable payment history and adequate cash flow ability.

The categories of impaired loans at March 31, 2021 and December 31, 2020 are as follows:


	March 31,		December 31,
(in thousands)	2021		2020
Non-accrual loans	$	34,233	$	34,559
Performing TDRs		2,414		2,776
Total impaired loans	$	36,647	$	37,335

The following tables provide additional information about impaired loans at March 31, 2021 and December 31, 2020, respectively, segregated between loans for which an allowance has been provided and loans for which no allowance has been provided.


			Unpaid
	Recorded		Principal		Specific
(in thousands)	Investment		Balance		Reserves
March 31, 2021
With no related allowance recorded:
Commercial, financial and agricultural	$	1,837	$	1,882	$	—
Real estate mortgage − residential		1,275		1,377		—
Real estate mortgage − commercial		9,457		9,467		—
Total	$	12,569	$	12,726	$	—
With an allowance recorded:
Commercial, financial and agricultural	$	5,571	$	5,645	$	2,134
Real estate construction − residential		189		189		26
Real estate construction − commercial		198		251		28
Real estate mortgage − residential		1,859		2,304		256
Real estate mortgage − commercial		16,190		16,257		2,691
Installment and other consumer		71		75		9
Total	$	24,078	$	24,721	$	5,144
Total impaired loans	$	36,647	$	37,447	$	5,144


			Unpaid
	Recorded		Principal		Specific
(in thousands)	Investment		Balance		Reserves
December 31, 2020
With no related allowance recorded:
Commercial, financial and agricultural	$	1,703	$	1,731	$	—
Real estate mortgage − residential		1,300		1,395		—
Real estate mortgage − commercial		8,943		8,943		—
Total	$	11,946	$	12,069	$	—
With an allowance recorded:
Commercial, financial and agricultural	$	5,849	$	6,180	$	2,187
Real estate construction − residential		192		192		27
Real estate construction − commercial		200		251		28
Real estate mortgage − residential		2,326		2,786		263
Real estate mortgage − commercial		16,714		16,787		2,594
Installment and other consumer		108		112		14
Total	$	25,389	$	26,308	$	5,113
Total impaired loans	$	37,335	$	38,377	$	5,113

The following table presents by class, information related to the average recorded investment and interest income recognized on impaired loans during the periods indicated.


	Three Months Ended March 31,
	2021				2020
			Interest				Interest
	Average		Recognized		Average		Recognized
	Recorded		For the		Recorded		For the
(in thousands)	Investment		Period Ended		Investment		Period Ended
With no related allowance recorded:
Commercial, financial and agricultural	$	1,742	$	8	$	1,014	$	—
Real estate construction − commercial		—		—		227		—
Real estate mortgage − residential		1,424		9		1,581		—
Real estate mortgage − commercial		9,457		—		1,163		6
Installment and other consumer		—		—		12		—
Total	$	12,623	$	17	$	3,997	$	6
With an allowance recorded:
Commercial, financial and agricultural	$	5,696	$	7	$	1,195	$	8
Real estate construction − residential		190		—		—		—
Real estate construction − commercial		199		—		—		—
Real estate mortgage − residential		1,958		6		2,550		20
Real estate mortgage − commercial		16,195		7		370		2
Installment and other consumer		85		3		117		6
Total	$	24,323	$	23	$	4,232	$	36
Total impaired loans	$	36,946	$	40	$	8,229	$	42

The recorded investment varies from the unpaid principal balance primarily due to partial charge-offs taken resulting from current appraisals received. The amount recognized as interest income on impaired loans continuing to accrue interest, primarily related to troubled debt restructurings, was $40,000 for the three months ended March 31, 2021 compared to $42,000 for the three months ended March 31, 2020. The average recorded investment in impaired loans is calculated on a monthly basis during the periods reported.

Delinquent and Non-Accrual Loans

The delinquency status of loans is determined based on the contractual terms of the notes. Borrowers are generally classified as delinquent once payments become 30 days or more past due. The Company’s policy is to discontinue the accrual of interest income on any loan when, in the opinion of management, the ultimate collectability of interest or principal is no longer probable. In general, loans are placed on non-accrual when they become 90 days or more past due. However, management considers many factors before placing a loan on non-accrual, including the delinquency status of the loan, the overall financial condition of the borrower, the progress of management’s collection efforts and the value of the underlying collateral. Subsequent interest payments received on non-accrual loans are applied to principal if any doubt exists as to the collectability of such principal; otherwise, such receipts are recorded as interest income on a cash basis. Non-accrual loans are returned to accrual status when, in the opinion of management, the financial condition of the borrower indicates that the timely collectability of interest and principal is probable and the borrower demonstrates the

ability to pay under the terms of the note through a sustained period of repayment performance, which is generally six months.

The following table provides aging information for the Company’s past due and non-accrual loans at March 31, 2021 and December 31, 2020.


	Current or				90 Days
	Less Than				Past Due
	30 Days		30 - 89 Days		And Still
(in thousands)	Past Due		Past Due		Accruing		Non-Accrual		Total
March 31, 2021
Commercial, Financial, and Agricultural	$	245,019	$	333	$	—	$	6,591	$	251,943
Real estate construction − residential		33,773		—		—		189		33,962
Real estate construction − commercial		78,378		—		—		198		78,576
Real estate mortgage − residential		255,172		1,170		—		1,917		258,259
Real estate mortgage − commercial		602,502		367		—		25,309		628,178
Installment and Other Consumer		25,181		57		—		29		25,267
Total	$	1,240,025	$	1,927	$	—	$	34,233	$	1,276,185
December 31, 2020
Commercial, Financial, and Agricultural	$	265,821	$	380	$	—	$	6,717	$	272,918
Real estate construction − residential		29,500		—		—		192		29,692
Real estate construction − commercial		77,944		—		—		200		78,144
Real estate mortgage − residential		259,688		546		—		2,105		262,339
Real estate mortgage − commercial		591,815		4		—		25,314		617,133
Installment and Other Consumer		26,576		117		17		31		26,741
Total	$	1,251,344	$	1,047	$	17	$	34,559	$	1,286,967

The Company's past due and non-accrual loans at March 31, 2021 and December 31, 2020 do not include $43.5 million and $57.1 million of loans accepting forbearance under the CARES Act, respectively. Their delinquency status will not change through the forbearance period as they are fulfilling the agreement they have made with the Company. Of the total remaining $72.8 million loan modifications under the CARES Act, $29.3 million, are on nonaccrual status at March 31, 2021.

Credit Quality

The Company categorizes loans into risk categories based upon an internal rating system reflecting management’s risk assessment. Loans are placed on watch status when one or more weaknesses are identified that may result in the borrower being unable to meet repayment terms or the Company’s credit position could deteriorate at some future date. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Loans so classified may have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Such loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. A loan is classified as a troubled debt restructuring (TDR) when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs that are accruing interest are classified as performing TDRs. Loans classified as TDRs, that are not accruing interest are classified as nonperforming

TDRs and are included with all other nonaccrual loans for presentation purposes. It is the Company’s policy to discontinue the accrual of interest income on loans when management believes that the collection of interest or principal is doubtful.

The following table presents the risk categories by class at March 31, 2021 and December 31, 2020.


	Commercial,		Real Estate		Real Estate		Real Estate		Real Estate		Installment
	Financial, &		Construction -		Construction -		Mortgage -		Mortgage -		and other
(in thousands)	Agricultural		Residential		Commercial		Residential		Commercial		Consumer		Total
At March 31, 2021
Watch	$	8,675	$	540	$	7,013	$	15,694	$	71,375	$	—	$	103,297
Substandard		581		—		2,670		954		1,645		—		5,850
Performing TDRs		817		—		—		1,217		338		42		2,414
Non-accrual loans		6,591		189		198		1,917		25,309		29		34,233
Total	$	16,664	$	729	$	9,881	$	19,782	$	98,667	$	71	$	145,794
At December 31, 2020
Watch	$	9,649	$	545	$	10,806	$	15,835	$	66,936	$	—	$	103,771
Substandard		598		—		—		1,002		1,662		—		3,262
Performing TDRs		835		—		—		1,521		343		77		2,776
Non-accrual loans		6,717		192		200		2,105		25,314		31		34,559
Total	$	17,799	$	737	$	11,006	$	20,463	$	94,255	$	108	$	144,368

Troubled Debt Restructurings

At March 31, 2021, loans classified as TDRs totaled $3.3 million, of which $0.9 million were classified as non-performing TDRs and $2.4 million were classified as performing TDRs. At December 31, 2020, loans classified as TDRs totaled $3.7 million, of which $0.9 million were classified as non-performing TDRs and $2.8 million were classified as performing TDRs. Both performing and nonperforming TDRs are considered impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. Accordingly, specific reserves of $172,000 and $214,000 related to TDRs were allocated to the allowance for loan losses at March 31, 2021 and December 31, 2020, respectively.

As provided for by the CARES Act, the Company offered payment modifications to borrowers. At March 31, 2021, $72.8 million, or 5.7% of total loans, remained in some form of a modification. These loan modifications include $28.1 million, or 38.5%, on interest only, $39.6 million, or 54.5%, on full deferral and $5.1 million, or 7.0%, with extended amortization. (See table below titled – Loan Modifications under the CARES Act by NAICS Code.)

	Total Remaining Loan Modifications under the CARES Act by NAICS Code as of March 31, 2021
			% of					% of					% of
			Total Remaining			Full		Total Remaining					Total Remaining
	Interest		Loan			Deferral		Loan			Extended		Loan
Industry Category	Only		Modifications			(1)		Modifications			Amortizations		Modifications			Totals
(in thousands)
Real Estate and Rental and Leasing	$	4,521		6.2	%	$	5,790		8.0	%	$	499		0.7	%	$	10,810
Accommodations and Food Services		10,590		14.5			29,007		39.8			4,592		6.3			44,189
Construction		144		0.2			—		—			—		—			144
Lands and lots		1,553		2.1			—		—			—		—			1,553
Cinemas		1,086		1.5			4,691		6.4			—		—			5,777
Arts, Entertainment, Recreation		10,164		14.0			—		—			—		—			10,164
Non-NAICS (Consumer)		—		0.0			161		0.3			—		—			161
Total modifications	$	28,058		38.5	%	$	39,649		54.5	%	$	5,091		7.0	%	$	72,798

Remaining loan modifications under the CARES Act as a percent of the total loan portfolio 5.7%

(1)

Of the $39.6 million loan modifications on full deferral, $29.3 million, or 40.3% of the total remaining loan modifications, were determined to be on nonaccrual status as of March 31, 2021.

The following table summarizes loans that were modified as TDRs during the periods indicated.


	Three Months Ended March 31,
	2021					2020
	Recorded Investment (1)					Recorded Investment (1)
	Number of	Pre-		Post-		Number of	Pre-			Post-
(in thousands)	Contracts	Modification		Modification		Contracts	Modification			Modification
Troubled Debt Restructurings
Installment and other consumer	—	$	—	$	—	1	$	6	$		5
Total	—	$	—	$	—	1	$	6		$	5

(1)	The amounts reported post-modification are inclusive of all partial pay-downs and charge-offs, and no portion of the debt was forgiven. Loans modified as a TDR that were fully paid down, charged-off or foreclosed upon during the period ended are not reported.

The Company’s portfolio of loans classified as TDRs include concessions for the borrower given their financial condition such as interest rates below the current market rate, deferring principal payments, and extending maturity dates. There were no loans meeting the TDR criteria that were modified during the three months ended March 31, 2021 and one loan during the three months ended March 31, 2020. The Company considers a TDR to be in default when it is 90 days or more past due under the modified terms, a charge-off occurs, or in the process of foreclosure. There were no loans modified as a TDR that defaulted during any of the three months ended March 31, 2021 and 2020, respectively, and within twelve months of their modification date. See Lending and Credit Management section for further information.

Loans Held For Sale

The Company designates certain long-term fixed rate personal real estate loans as held for sale, and the Company carries them at the lower of cost or fair value. The loans are primarily sold to Freddie Mac, Fannie Mae, PennyMac, and other various secondary market investors. At March 31, 2021, the carrying amount of these loans was $6.3 million compared to $5.1 million and $4.3 million at December 31, 2020 and March 31, 2020, respectively.