Loans and Allowance for Loan Losses | 90 Days & Accruing
June 30, 2020
Construction and land development
$
85
$
141
$
—
$
226
$
180,708
$
180,934
$
—
Agricultural real estate
6
544
—
550
250,832
251,382
—
1-4 Family residential properties
3,548
1,260
1,676
6,484
335,552
342,036
—
Multifamily residential properties
2,201
0
—
2,201
138,814
141,015
—
Commercial real estate
637
1,146
2,519
4,302
1,119,238
1,123,540
—
Loans secured by real estate
6,477
3,091
4,195
13,763
2,025,144
2,038,907
—
Agricultural loans
0
0
26
26
149,017
149,043
—
Commercial and industrial loans
715
125
2,380
3,220
807,949
811,169
—
Consumer loans
263
54
165
482
81,602
82,084
—
All other loans
—
—
—
—
124,059
124,059
—
Total loans
$
7,455
$
3,270
$
6,766
$
17,491
$
3,187,771
$
3,205,262
$
—
December 31, 2019
Construction and land development
$
235
$
—
$
—
$
235
$
93,907
$
94,142
$
—
Agricultural real estate
1,595
—
47
1,642
238,599
240,241
—
1-4 Family residential properties
3,834
2,288
4,713
10,835
325,592
336,427
—
Multifamily residential properties
1,348
46
1,131
2,525
151,423
153,948
—
Commercial real estate
602
495
2,241
3,338
992,364
995,702
—
Loans secured by real estate
7,614
2,829
8,132
18,575
1,801,885
1,820,460
—
Agricultural loans
300
—
307
607
135,517
136,124
—
Commercial and industrial loans
767
855
5,989
7,611
521,362
528,973
—
Consumer loans
454
196
150
800
82,383
83,183
—
All other loans
—
—
—
0
126,607
126,607
—
Total loans
$
9,135
$
3,880
$
14,578
$
27,593
$
2,667,754
$
2,695,347
$
—
Impaired Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest" id="sjs-B4">Note 4 – Loans and Allowance for Loan Losses Loans are stated at amortized cost net of an allowance for credit losses. Amortized cost is the unpaid principal net of unearned premiums and discounts, and net deferred origination fees and costs. Deferred loan origination fees are reduced by loan origination costs and are amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at June 30, 2020 and December 31, 2019 follows (in thousands): June 30, 2020 December 31, 2019 Construction and land development $ 181,362 $ 94,462 Agricultural real estate 251,695 240,481 1-4 Family residential properties 341,691 336,553 Multifamily residential properties 140,415 155,132 Commercial real estate 1,125,584 997,175 Loans secured by real estate 2,040,747 1,823,803 Agricultural loans 149,072 136,023 Commercial and industrial loans 818,686 528,987 Consumer loans 81,980 83,544 All other loans 123,937 126,807 Total Gross loans 3,214,422 2,699,164 Less: Loans held for sale 5,981 1,820 3,208,441 2,697,344 Less: Net deferred loan fees, premiums and discounts 9,160 3,817 Allowance for credit losses 38,381 26,911 Net loans $ 3,160,900 $ 2,666,616 Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at the lower of aggregate cost or fair value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties. Accrued interest on loans, which is excluded from the amortized cost of the balances above, totaled $14.1 million and $12.4 million at June 30, 2020 and December 31, 2019, respectively. 16 Most of the Company’s business activities are with customers located near the Company's branch locations in Illinois and Missouri. At June 30, 2020, the Company’s loan portfolio included $400.8 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $330.5 million was concentrated in corn and other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $24.4 million from $376.4 million at December 31, 2019 due to seasonal timing of cash flow requirements. Loans concentrated in corn and other grain farming increased $29.0 million from $301.5 million at December 31, 2019. The Company's underwriting practices include collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry, however these could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, the Company has $126.5 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $401.5 million of The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the board of directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation and most borrowers are below regulatory thresholds. The Company can occasionally have outstanding balances to one borrower up to but not exceeding the regulatory threshold should underwriting guidelines warrant. Most of the the Company’s loans are to businesses located in the The Company’s lending can be summarized into the following primary areas: Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x. Amortization periods for commercial real estate loans are generally limited to twenty years. The Company’s commercial real estate portfolio is well below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators. Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years. Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government- assisted lending programs through the Small Business Administration and U.S. Department of Agriculture. Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 65% and have amortization periods limited to twenty-five years. Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate. 17 Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells most of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. The Company retains all residential real estate loans with balloon payment features. Balloon periods are limited to five years. Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty-five years or less. The Company does not originate subprime mortgage loans. Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral. Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality. Allowance for Credit Losses The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating large impaired loans separately from non-impaired loans. Impaired loans The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns. This evaluation considers expected future cash flows, the value of collateral and also other factors that may impact the borrower’s ability to make payments when due. For loans greater than $250,000, and loans identified as troubled debt restructurings, impairment is individually measured each quarter using one of three alternatives: (1) the present value of expected future cash flows discounted at the loan’s Non-Impaired loans Non-impaired loans comprise the vast majority of the Company’s total loan portfolio and include loans in accrual status and those credits not identified as troubled debt restructurings. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Special Mention, Substandard, or Doubtful. 18 Beginning January 1 , 2020, the allowance for credit losses was estimated using the current expected credit loss model ("CECL"). The Company uses the Loss Rate method to estimate the historical loss rate for all non-impaired loans. Under this method, the allowance for credit losses is measured on a collective (pool) basis for non-impaired loans with similar risk characteristics. Historical credit loss experience provides the basis for the estimate of expected credit losses. For each pool, a historical loss rate is computed based on the average remaining contractual life of the pool. Adjustments to historical loss rates are made using qualitative factors relevant to each pool including merger & acquisition activity, economic conditions, changes in policies, procedures & underwriting, and concentrations. In addition, a twelve-month forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period. The Within During Construction and Land Development Loans. The average life of the construction and land development segment was determined to be twelve months. Historical losses in this segment remained very low. Current activity in this industry was deemed essential and has continued during COVID-19, however, projects may be hampered by COVID-19 restrictions which could increase costs and duration. T he qualitative factor for this segment was increased to account for these potential risks. Agricultural Real Estate Loans. The average life of the agricultural real estate segment was determined to be thirty-six months. Historical losses in the segment remain very low. Farmland values have remained steady over an extended period of time and there are no indications that this will change in the next year. More pressure on landowners to lower cash rents as farmers struggle to cover expenses is expected which would lower the return to landowners and impact the market value of the land. The qualitative factor for this segment was increased to account for this potential risk. 1- 4 Family Residential Properties Loans. The average life of the 1-4 Family Residential segment was determined to be: Residential Real Estate-non-owner occupied, sixty months; Residential Real Estate-owner occupied, sixty months; Home Equity lines of credit, thirty months. COVID-19 has impacted the finances of consumers from layoffs and furloughs resulting from employers that must reduce or suspend operations. Increased risk in this segment includes consumer ability to make mortgage and rent payments. Some of this impact has been offset by governmental actions such as stimulus payments and extended unemployment benefits. First Mid Bank has also offered short-term loan payment deferral to borrowers in this segment. The historical loss rate for this segment declined for the period but was offset by an increase in the qualitative factor to account for these potential risks. Commercial Real Estate Loans. The average life of the commercial real estate segment was determined to be thirty-six months. This segment includes the Company's majority of exposure to the hotel industry which has been significantly impacted by COVID-19 events. Other impacted industries in this segment include restaurants and retail establishments. First Mid Bank has implemented a deferral program for borrowers in this segment in order to ease the impact to these borrowers. While there was a slight decrease in the historical loss rate, the qualitative factor for this segment was increased to account for these risks. Agricultural Loans. The average life of the agricultural segment was determined to be eighteen months. Losses in this segment are very low and it is believed that borrowers in this segment will benefit from current governmental programs such as PPP and MFP. Many farmers are holding grain from the 2019 operating season waiting for an increase in prices, however, as of June 30, prices were down compared to the beginning of the year. It is now believed that many farmers will likely not be able to cover their operating expenses. The qualitative factor of this segment was increased to account for this new risk. 19 Commercial and Industrial Loans. The average life of the commercial and industrial segment was determined to be twenty-four months. The COVID-19 impacts include forced closures and scaled-back services for many industries within this segment including retailers, restaurants and video gaming establishments. Some of this risk is offset by government relief programs as well as, First Mid Bank's payment deferral program. In addition to an increase in the historical loss rate, the qualitative factor for this segment was increased to account for these new risks. Consumer Loans. The average life of the consumer segment was determined to be thirty-six months. The financial status of many borrowers has been impacted by COVID-19 events including layoffs and reduced hours. Some of this impact has been offset by government stimulus programs, increased paid leave and increased and extended unemployment benefits. Additionally, First Mid Bank has offered a short-term payment deferral program. While the historical loss rate decreased for this period, the qualitative factor for the segment was increased to account for these risks. Acquired Loans. Prior to January 1, 2020 loans acquired with evidence of credit deterioration since origination and for which it was probable that all contractually required payments would not be collected were considered purchased credit impaired at the time of acquisition. Purchase credit-impaired ("PCI") loans were accounted for under ASC 310-30, Receivables--Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"), and were initially measured at fair value, which included the estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. The cash flows expected to be collected were estimated using current key assumptions, such as default rates, value of underlying collateral, severity and prepayment speeds. Subsequent to January 1, 2020, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the For acquired loans not deemed purchased credit deteriorated at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans. At the acquisition date, an initial allowance for expected credit losses is estimated and recorded as credit loss expense. The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans. The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and six months ended June 30, 2020 (in thousands): Construction & Land Development Agricultural Real Estate 1-4 Family Residential Properties Commercial Real Estate Agricultural Loans Commercial & Industrial Consumer Loans Total Three months ended June 30, 2020 Beginning Balance $ 1,620 $ 1,335 $ 1,931 $ 13,621 $ 1,064 $ 11,294 $ 2,011 $ 32,876 Provision for credit loss expense 738 299 483 3,118 259 1,286 (47 ) 6,136 Loans charged off — — 69 467 0 311 116 963 Recoveries collected — — 141 — — 91 100 332 Ending balance $ 2,358 $ 1,634 $ 2,486 $ 16,272 $ 1,323 $ 12,360 $ 1,948 $ 38,381 Six months ended June 30, 2020 Beginning Balance $ 1,146 $ 1,093 $ 1,386 $ 11,198 $ 1,386 $ 9,273 $ 1,429 $ 26,911 Impact of adopting ASU 2016-13 (113 ) 230 756 541 (363 ) 155 466 1,672 Provision for credit loss expense 1,325 311 406 5,079 300 4,101 95 11,617 Loans charged off — — 265 551 — 1,283 287 2,386 Recoveries collected — — 203 5 — 114 245 567 Ending balance $ 2,358 $ 1,634 $ 2,486 $ 16,272 $ 1,323 $ 12,360 $ 1,948 $ 38,381 20 Prior to the adoption of ASU 2016-13, the appropriate level of the allowance for loan losses for all non-impaired loans was based on a migration analysis of net losses over a rolling twelve quarter period by loan segment. A weighted average of the net losses was determined by assigning more weight to the most recent quarters in order to recognize current risk factors influencing the various segments of the loan portfolio more prominently than past periods. Due to weakened economic conditions during historical years, the Company established qualitative factor adjustments for each of the loan segments at levels above the historical net loss averages. Some of the economic factors included the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices and increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the allowance for loan losses. The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and six months ended June 30, 2019 and for the year ended December 31, 2019 (in thousands): Construction & Land Development Agricultural Real Estate 1-4 Family Residential Properties Commercial Real Estate Agricultural Loans Commercial & Industrial Consumer Loans Total Three months ended June 30, 2019 Beginning Balance $ 552 $ 1,282 $ 1,341 $ 10,565 $ 1,130 $ 10,830 $ 1,004 $ 26,704 Provision for credit loss expense 187 2 367 335 542 (1,558 ) 216 91 Loans charged off — — 66 105 0 155 216 542 Recoveries collected — — 7 1 — 12 86 106 Ending balance $ 739 $ 1,284 $ 1,649 $ 10,796 $ 1,672 $ 9,129 $ 1,090 $ 26,359 Six months ended June 30, 2019 Beginning Balance $ 561 $ 1,246 $ 1,504 $ 11,102 $ 951 $ 9,893 $ 932 $ 26,189 Provision for credit loss expense 178 38 326 (146 ) 730 (546 ) 458 1,038 Loans charged off — — 197 161 9 258 485 1,110 Recoveries collected — — 16 1 — 40 185 242 Ending balance $ 739 $ 1,284 $ 1,649 $ 10,796 $ 1,672 $ 9,129 $ 1,090 $ 26,359 Twelve months ended December 31, 2019 Beginning Balance $ 561 $ 1,246 $ 1,504 $ 11,102 $ 951 $ 9,893 $ 932 $ 26,189 Provision for credit loss expense 585 (153 ) 1,268 1,827 459 1,053 1,394 6,433 Loans charged off — — 1,478 1,743 24 1,828 1,253 6,326 Recoveries collected — — 92 12 — 155 356 615 Ending balance $ 1,146 $ 1,093 $ 1,386 $ 11,198 $ 1,386 $ 9,273 $ 1,429 $ 26,911 Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. For The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off. 21 The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of June 30, 2020 (in thousands): Collateral Allowance Real Estate Business Assets Other Total for Credit Losses Construction and land development $ 532 $ — $ — $ 532 $ 261 Agricultural real estate — — — — — 1-4 Family residential properties 3,292 — — 3,292 157 Multifamily residential properties 1,960 — — 1,960 — Commercial real estate 6,858 — — 6,858 863 Loans secured by real estate 12,642 0 0 12,642 1,281 Agricultural loans 0 — — 0 — Commercial and industrial loans 301 3,699 18 4,018 88 Consumer loans — — 11 11 — Total loans $ 12,943 $ 3,699 $ 29 $ 16,671 $ 1,369 Credit Quality The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings which are commensurate with a loan considered “criticized”: 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 of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current sound-worthiness and paying capacity 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, based on currently existing factors, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. 22 The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of June 30, 2020 (in thousands): Term Loans by Origination Year Revolving Risk Rating 2020 2019 2018 2017 2016 Prior Loans Total June 30, 2020 Construction & Land Development Loans Pass $ 56,357 $ 61,418 $ 4,145 $ 2,848 $ 519 $ 54,361 $ — $ 179,648 Special Mention — 0 — — 390 — — 390 Substandard — 308 — 532 — 56 — 896 Total $ 56,357 $ 61,726 $ 4,145 $ 3,380 $ 909 $ 54,417 $ — $ 180,934 Agricultural Real Estate Loans Pass $ 44,876 $ 42,885 $ 43,297 $ 18,278 $ 15,940 $ 69,084 $ — $ 234,360 Special Mention 300 3,110 387 143 875 11,186 — 16,001 Substandard — 0 487 218 67 249 — 1,021 Total $ 45,176 $ 45,995 $ 44,171 $ 18,639 $ 16,882 $ 80,519 $ — $ 251,382 1-4 Family Residential Property Loans Pass $ 40,654 $ 36,389 $ 37,176 $ 30,446 $ 33,476 $ 117,666 $ 27,209 $ 323,016 Special Mention 200 159 295 1,050 252 1,452 30 3,438 Substandard 55 635 2,036 1,871 1,991 7,719 1,275 15,582 Total $ 40,909 $ 37,183 $ 39,507 $ 33,367 $ 35,719 $ 126,837 $ 28,514 $ 342,036 Commercial Real Estate Loans Pass $ 111,880 $ 206,159 $ 174,472 $ 197,260 $ 174,120 $ 355,666 $ — $ 1,219,557 Special Mention 1,857 23 4,158 1,781 4,818 2,822 — 15,459 Substandard 1,254 99 1,400 3,115 4,588 19,083 — 29,539 Total $ 114,991 $ 206,281 $ 180,030 $ 202,156 $ 183,526 $ 377,571 $ — $ 1,264,555 Agricultural Loans Pass $ 72,118 $ 38,483 $ 8,353 $ 3,169 $ 959 $ 3,400 $ — $ 126,482 Special Mention 9,754 11,078 296 11 701 35 — 21,875 Substandard 607 43 25 — — 11 — 686 Total $ 82,479 $ 49,604 $ 8,674 $ 3,180 $ 1,660 $ 3,446 $ — $ 149,043 Commercial & Industrial Loans Pass $ 362,238 $ 148,476 $ 100,766 $ 84,972 $ 55,893 $ 138,743 $ — $ 891,088 Special Mention 1,642 33,847 185 58 407 952 — 37,091 Substandard 1,122 2,328 382 1,371 208 1,638 — 7,049 Total $ 365,002 $ 184,651 $ 101,333 $ 86,401 $ 56,508 $ 141,333 $ — $ 935,228 Consumer Loans Pass $ 20,116 $ 30,739 $ 17,657 $ 10,147 $ 148 $ 9 $ — $ 78,816 Special Mention 5 — 72 1 960 1,154 — 2,192 Substandard 17 30 156 129 140 604 — 1,076 Total $ 20,138 $ 30,769 $ 17,885 $ 10,277 $ 1,248 $ 1,767 $ — $ 82,084 Total Loans Pass $ 708,239 $ 564,549 $ 385,866 $ 347,120 $ 281,055 $ 738,929 $ 27,209 $ 3,052,967 Special Mention 13,758 48,217 5,393 3,044 8,403 17,601 30 96,446 Substandard 3,055 3,443 4,486 7,236 6,994 29,360 1,275 55,849 Total $ 725,052 $ 616,209 $ 395,745 $ 357,400 $ 296,452 $ 785,890 $ 28,514 $ 3,205,262 The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category as of December 31, 2019 (in thousands): December 31, 2019 Pass Special Mention Substandard Total Construction & land development $ 93,413 $ 413 $ 316 $ 94,142 Agricultural real estate 231,227 6,902 2,112 240,241 1-4 Family residential property loans 314,999 5,743 15,685 336,427 Commercial real estate 1,103,543 14,156 31,951 1,149,650 Loans secured by real estate 1,743,182 27,214 50,064 1,820,460 Agricultural loans 129,811 3,862 2,451 136,124 Commercial & industrial loans 603,047 40,395 12,138 655,580 Consumer loans 82,117 140 926 83,183 Total loans $ 2,558,157 $ 71,611 $ 65,579 $ 2,695,347 The following table presents the Company’s loan portfolio aging analysis at June 30, 2020 and December 31, 2019 (in 23 thousands): 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Total Loans > 90 Days & Accruing June 30, 2020 Construction and land development $ 85 $ 141 $ — $ 226 $ 180,708 $ 180,934 $ — Agricultural real estate 6 544 — 550 250,832 251,382 — 1-4 Family residential properties 3,548 1,260 1,676 6,484 335,552 342,036 — Multifamily residential properties 2,201 0 — 2,201 138,814 141,015 — Commercial real estate 637 1,146 2,519 4,302 1,119,238 1,123,540 — Loans secured by real estate 6,477 3,091 4,195 13,763 2,025,144 2,038,907 — Agricultural loans 0 0 26 26 149,017 149,043 — Commercial and industrial loans 715 125 2,380 3,220 807,949 811,169 — Consumer loans 263 54 165 482 81,602 82,084 — All other loans — — — — 124,059 124,059 — Total loans $ 7,455 $ 3,270 $ 6,766 $ 17,491 $ 3,187,771 $ 3,205,262 $ — December 31, 2019 Construction and land development $ 235 $ — $ — $ 235 $ 93,907 $ 94,142 $ — Agricultural real estate 1,595 — 47 1,642 238,599 240,241 — 1-4 Family residential properties 3,834 2,288 4,713 10,835 325,592 336,427 — Multifamily residential properties 1,348 46 1,131 2,525 151,423 153,948 — Commercial real estate 602 495 2,241 3,338 992,364 995,702 — Loans secured by real estate 7,614 2,829 8,132 18,575 1,801,885 1,820,460 — Agricultural loans 300 — 307 607 135,517 136,124 — Commercial and industrial loans 767 855 5,989 7,611 521,362 528,973 — Consumer loans 454 196 150 800 82,383 83,183 — All other loans — — — 0 126,607 126,607 — Total loans $ 9,135 $ 3,880 $ 14,578 $ 27,593 $ 2,667,754 $ 2,695,347 $ — Impaired Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest |