Allowance for Loan Losses | Allowance for Credit Losses The following table presents the activity of the allowance for credit losses by portfolio segment for the three months ended September 30. Allowance for Credit Losses: September 30, 2021 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 15,693 $ 17,837 $ 10,988 $ 214 $ 44,732 Provision for credit losses (531) (1,387) 173 245 (1,500) Loans charged-off (313) (61) (1,240) — (1,614) Recoveries 182 130 1,032 — 1,344 Ending Balance $ 15,031 $ 16,519 $ 10,953 $ 459 $ 42,962 Allowance for Credit Losses: September 30, 2020 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 10,149 $ 1,876 $ 10,054 $ 1,206 $ 23,285 Provision for credit losses 1,992 17 1,695 721 4,425 Loans charged-off (160) (296) (1,542) — (1,998) Recoveries 147 185 916 — 1,248 Ending Balance $ 12,128 $ 1,782 $ 11,123 $ 1,927 $ 26,960 The following table presents the activity of the allowance for credit losses by portfolio segment for the nine months ended September 30. Allowance for Credit Losses: September 30, 2021 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 16,901 $ 19,142 $ 11,009 $ — $ 47,052 Provision for credit losses (2,067) (2,577) 941 459 (3,244) Loans charged -off (612) (492) (3,999) — (5,103) Recoveries 809 446 3,002 — 4,257 Ending Balance $ 15,031 $ 16,519 $ 10,953 $ 459 $ 42,962 Allowance for Credit Losses: September 30, 2020 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 8,945 $ 1,302 $ 8,304 $ 1,392 $ 19,943 Provision for credit losses 3,325 795 5,425 535 10,080 Loans charged -off (834) (719) (4,889) — (6,442) Recoveries 692 404 2,283 — 3,379 Ending Balance $ 12,128 $ 1,782 $ 11,123 $ 1,927 $ 26,960 The following table presents loans individually evaluated for impairment by class of loans. Three Months Ended Nine Months Ended Average Interest Cash Basis Average Interest Cash Basis (Dollar amounts in thousands) Investment Recognized Recognized Investment Recognized Recognized With no related allowance recorded: Commercial Commercial & Industrial $ 1,026 $ — $ — $ 1,048 $ — $ — Farmland 662 — — 1,161 — — Non Farm, Non Residential 3,436 — — 2,596 — — Agriculture — — — — — — All Other Commercial 25 — — 26 — — Residential First Liens 3,452 — — 3,609 — — Home Equity — — — — — — Junior Liens — — — — — — Multifamily — — — — — — All Other Residential — — — — — — Consumer Motor Vehicle — — — — — — All Other Consumer — — — — — — With an allowance recorded: Commercial Commercial & Industrial 2,136 — — 1,140 — — Farmland — — — — — — Non Farm, Non Residential 171 — — 86 — — Agriculture 190 — — 95 — — All Other Commercial 754 — — 377 — — Residential First Liens — — — — — — Home Equity — — — — — — Junior Liens — — — — — — Multifamily 1,346 — — 673 — — All Other Residential — — — — — — Consumer Motor Vehicle — — — — — — All Other Consumer — — — — — — TOTAL $ 13,198 $ — $ — $ 10,811 $ — $ — The tables below present the recorded investment in non-performing loans by class of loans. September 30, 2021 Loans Past Nonaccrual (Dollar amounts in thousands) Accruing Nonaccrual For Credit Loss Commercial Commercial & Industrial $ — $ 3,451 $ 750 Farmland — 1,039 1,014 Non Farm, Non Residential — 3,100 2,990 Agriculture — 1,214 1,150 All Other Commercial — 252 — Residential First Liens 1,173 2,723 46 Home Equity 13 86 — Junior Liens 35 300 — Multifamily — 205 — All Other Residential — 114 — Consumer Motor Vehicle 191 528 — All Other Consumer — 638 — TOTAL $ 1,412 $ 13,650 $ 5,950 December 31, 2020 Loans Past Nonaccrual (Dollar amounts in thousands) Accruing Nonaccrual For Credit Loss Commercial Commercial & Industrial $ — $ 4,838 $ 1,080 Farmland — 195 — Non Farm, Non Residential — 3,729 3,267 Agriculture — 409 — All Other Commercial — 533 24 Residential First Liens 1,746 2,604 86 Home Equity 88 30 — Junior Liens 252 206 — Multifamily — 1,380 — All Other Residential — 135 — Consumer Motor Vehicle 372 754 — All Other Consumer — 554 — TOTAL $ 2,458 $ 15,367 $ 4,457 The following tables present the amortized cost basis of collateral dependent loans by class of loans: September 30, 2021 Collateral Type (Dollar amounts in thousands) Real Estate Other Commercial Commercial & Industrial $ 2,993 $ 1,053 Farmland 3,699 Non Farm, Non Residential 6,367 Agriculture — 1,150 All Other Commercial 248 — Residential First Liens 46 — Home Equity — — Junior Liens — — Multifamily 205 — All Other Residential — — Consumer Motor Vehicle — — All Other Consumer — — Total $ 13,558 $ 2,203 December 31, 2020 Collateral Type (Dollar amounts in thousands) Real Estate Other Commercial Commercial & Industrial $ 3,293 $ 2,221 Farmland 2,771 Non Farm, Non Residential 6,838 Agriculture — 599 All Other Commercial 528 24 Residential First Liens 86 — Home Equity — — Junior Liens — — Multifamily 1,380 — All Other Residential — — Consumer Motor Vehicle — — All Other Consumer — — Total $ 14,896 $ 2,844 The following tables presents the aging of the recorded investment in loans by past due category and class of loans. September 30, 2021 30-59 Days 60-89 Days 90 Days and Greater Total (Dollar amounts in thousands) Past Due Past Due Past Due Past Due Current Total Commercial Commercial & Industrial $ 2,283 $ 59 $ 2,741 $ 5,083 $ 569,962 $ 575,045 Farmland — — — — 114,045 114,045 Non Farm, Non Residential 63 68 7 138 342,073 342,211 Agriculture 96 — 1,188 1,284 122,284 123,568 All Other Commercial 77 — — 77 310,325 310,402 Residential First Liens 858 873 1,840 3,571 302,634 306,205 Home Equity 304 210 86 600 57,099 57,699 Junior Liens 81 71 188 340 50,794 51,134 Multifamily — — — — 106,564 106,564 All Other Residential — 45 — 45 15,556 15,601 Consumer Motor Vehicle 5,147 836 229 6,212 444,294 450,506 All Other Consumer 127 50 — 177 33,380 33,557 TOTAL $ 9,036 $ 2,212 $ 6,279 $ 17,527 $ 2,469,010 $ 2,486,537 December 31, 2020 30-59 Days 60-89 Days 90 Days and Greater Total (Dollar amounts in thousands) Past Due Past Due Past Due Past Due Current Total Commercial Commercial & Industrial $ 685 $ 746 $ 3,364 $ 4,795 $ 603,777 $ 608,572 Farmland 22 — 91 113 118,528 118,641 Non Farm, Non Residential 155 — 271 426 350,681 351,107 Agriculture 28 30 275 333 146,147 146,480 All Other Commercial — — 24 24 305,612 305,636 Residential First Liens 5,506 1,866 2,365 9,737 314,730 324,467 Home Equity 260 29 104 393 60,362 60,755 Junior Liens 421 68 341 830 53,346 54,176 Multifamily — — — — 151,042 151,042 All Other Residential — 50 — 50 15,918 15,968 Consumer Motor Vehicle 6,975 1,294 560 8,829 441,283 450,112 All Other Consumer 164 19 13 196 31,401 31,597 TOTAL $ 14,216 $ 4,102 $ 7,408 $ 25,726 $ 2,592,827 $ 2,618,553 During the three and nine months ended September 30, 2021 and 2020, the terms of certain loans were modified as troubled debt restructurings (TDRs). The following tables present the activity for TDRs. 2021 (Dollar amounts in thousands) Commercial Residential Consumer Total July 1, $ — $ 3,904 $ 556 $ 4,460 Added — — 172 172 Charged Off — — — — Payments — (91) (52) (143) September 30, $ — $ 3,813 $ 676 $ 4,489 2021 (Dollar amounts in thousands) Commercial Residential Consumer Total January 1, $ — $ 3,589 $ 617 $ 4,206 Added — 491 294 785 Charged Off — (27) (75) (102) Payments — (240) (160) (400) September 30, $ — $ 3,813 $ 676 $ 4,489 2020 (Dollar amounts in thousands) Commercial Residential Consumer Total July 1, — 3,231 668 3,899 Added — 313 81 394 Charged Off — — (30) (30) Payments — (112) (54) (166) September 30, — 3,432 665 4,097 2020 (Dollar amounts in thousands) Commercial Residential Consumer Total January 1, 11 3,485 698 4,194 Added — 436 216 652 Charged Off — (6) (80) (86) Payments (11) (483) (169) (663) September 30, — 3,432 665 4,097 Modification of the terms of such loans typically include one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. No modification in 2021 or 2020 resulted in the permanent reduction of the recorded investment in the loan. Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from twelve months to five years. Modifications involving an extension of the maturity date were for periods ranging from twelve months to ten years. Troubled debt restructurings during the three months ended September 30, 2021 and 2020 did not result in any material charge-offs or additional provision expense. The Corporation has no allocations of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2021 and 2020. The Corporation has not committed to lend additional amounts as of September 30, 2021 and 2020 to customers with outstanding loans that are classified as troubled debt restructurings. None of the charge-offs during the three and nine months ended September 30, 2021 and 2020 were of restructurings that had occurred in the previous 12 months. The CARES Act includes a provision that permits a financial institution to elect to suspend temporarily troubled debt restructuring accounting under ASC Subtopic 310-40 in certain circumstances (“section 4013”). To be eligible under section 4013, a loan modification must be (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the National Emergency or (B) December 31, 2020. In response to this section of the CARES Act, the federal banking agencies issued a revised interagency statement on April 7, 2020 that, in consultation with the Financial Accounting Standards Board, confirmed that for loans not subject to section 4013, short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not troubled debt restructurings under ASC Subtopic 310-40. This includes short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. From the inception of the CARES Act through September 30, 2021, 1,332 loans totaling $268 million were modified, related to COVID-19, that were not considered troubled debt restructurings. 1,053 loans totaling $224 million have resumed normal scheduled payments. 217 remaining loans are still under a debt relief plan, which include 12 commercial loans totaling $36 million that have been provided additional payment relief since the initial payment relief plan. 5 loans totaling $232 thousand are under the original payment relief plan. Credit Quality Indicators: The Corporation 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, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial loans, with an outstanding balance greater than $100 thousand. Any consumer loans outstanding to a borrower who had commercial loans analyzed will be similarly risk rated. This analysis is performed on a quarterly basis. The Corporation uses the following definitions for risk ratings: 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 net worth and debt service capacity of the borrower or of any pledged collateral. These loans have a well-defined weakness or weaknesses which have clearly jeopardized repayment of principal and interest as originally intended. They are characterized by the distinct possibility that the institution will sustain some future loss if the deficiencies are not corrected. Doubtful: Loans classified as doubtful have all the weaknesses inherent in those graded substandard, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Furthermore, non-homogeneous loans which were not individually analyzed, but are 90+ days past due or on non-accrual are classified as substandard. Loans included in homogeneous pools, such as residential or consumer may be classified as substandard due to 90+ days delinquency, non-accrual status, bankruptcy, or loan restructuring. The following tables present the commercial loan portfolio by risk category: September 30, 2021 Term Loans at Amortized Cost Basis by Origination Year Revolving 2021 2020 2019 2018 2017 Prior Loans Total Commercial Commercial and Industrial Pass $122,680 $50,449 $77,006 $39,487 $30,908 $108,292 $88,924 $517,746 Special Mention 1,818 244 1,190 6,835 315 4,421 7,780 $22,603 Substandard 2,780 14 359 3,519 418 3,769 268 $11,127 Doubtful — — — — — — — $0 Not Rated 17,933 1,841 1,065 630 266 162 — $21,897 Subtotal $145,211 $52,548 $79,620 $50,471 $31,907 $116,644 $96,972 $573,373 Farmland Pass $11,133 $9,892 $11,010 $11,103 $8,471 $46,333 $1,315 $99,257 Special Mention — — 914 — 221 3,257 — $4,392 Substandard 3,455 1,635 — — 680 2,595 — $8,365 Doubtful — — — — — — — $0 Not Rated — — — — — 27 — $27 Subtotal $14,588 $11,527 $11,924 $11,103 $9,372 $52,212 $1,315 $112,041 Non Farm, Non Residential Pass $42,941 $37,200 $28,621 $34,126 $59,981 $104,483 $8,969 $316,321 Special Mention — — 1,112 183 1,973 3,344 — $6,612 Substandard — — 927 — 1,456 15,694 — $18,077 Doubtful — — — — — — — $0 Not Rated — — — — — 508 — $508 Subtotal $42,941 $37,200 $30,660 $34,309 $63,410 $124,029 $8,969 $341,518 Agriculture Pass $5,246 $10,723 $10,609 $2,831 $4,667 $17,305 $55,670 $107,051 Special Mention — — 1,403 — 570 2,699 4,587 $9,259 Substandard — — 286 1 13 1,699 3,091 $5,090 Doubtful — — — — — — — $0 Not Rated 5 131 159 57 5 — — $357 Subtotal $5,251 $10,854 $12,457 $2,889 $5,255 $21,703 $63,348 $121,757 Other Commercial Pass $32,312 $65,747 $42,256 $36,953 $55,929 $69,970 $5,736 $308,903 Special Mention — — — — — — — $0 Substandard — — — — — 259 — $259 Doubtful — — — — — — — $0 Not Rated 90 — — 43 — — — $133 Subtotal $32,402 $65,747 $42,256 $36,996 $55,929 $70,229 $5,736 $309,295 Residential Multifamily >5 Residential Pass $8,658 $48,145 $8,903 $6,982 $2,757 $18,865 $1,467 $95,777 Special Mention — — — — — 10,386 — $10,386 Substandard — — — 205 — — — $205 Doubtful — — — — — — — $0 Not Rated — — — — — — — $0 Subtotal $8,658 $48,145 $8,903 $7,187 $2,757 $29,251 $1,467 $106,368 Total Pass $222,970 $222,156 $178,405 $131,482 $162,713 $365,248 $162,081 $1,445,055 Special Mention 1,818 244 4,619 7,018 3,079 24,107 12,367 $53,252 Substandard 6,235 1,649 1,572 3,725 2,567 24,016 3,359 $43,123 Doubtful — — — — — — — $0 Not Rated 18,028 1,972 1,224 730 271 697 — $22,922 Total commercial loans $249,051 $226,021 $185,820 $142,955 $168,630 $414,068 $177,807 $1,564,352 December 31, 2020 Term Loans at Amortized Cost Basis by Origination Year Revolving 2020 2019 2018 2017 2016 Prior Loans Total Commercial Commercial and Industrial Pass $159,494 $77,253 $64,298 $41,806 $20,564 $103,598 $91,615 $558,628 Special Mention 4,848 1,331 4,427 216 1,278 4,566 3,695 $20,361 Substandard 3,780 323 4,187 1,148 3,543 2,565 3,124 $18,670 Doubtful — — — — — — — $0 Not Rated 2,618 1,772 1,446 580 105 2,255 — $8,776 Subtotal $170,740 $80,679 $74,358 $43,750 $25,490 $112,984 $98,434 $606,435 Farmland Pass $10,010 $12,775 $12,149 $10,089 $15,863 $40,338 $1,386 $102,610 Special Mention 988 947 — 230 1,900 2,656 — $6,721 Substandard 1,718 2,303 — 716 1,628 826 — $7,191 Doubtful — — — — — — — $0 Not Rated — — — — — — — $0 Subtotal $12,716 $16,025 $12,149 $11,035 $19,391 $43,820 $1,386 $116,522 Non Farm, Non Residential Pass $39,914 $33,261 $38,111 $63,371 $49,511 $83,052 $4,092 $311,312 Special Mention — 998 — 305 9,982 6,811 — $18,096 Substandard — 1,188 — 4,310 7,484 7,028 — $20,010 Doubtful — — — — — — — $0 Not Rated — — — — — 682 — $682 Subtotal $39,914 $35,447 $38,111 $67,986 $66,977 $97,573 $4,092 $350,100 Agriculture Pass $13,336 $8,330 $3,485 $5,329 $3,732 $16,792 $67,052 $118,056 Special Mention — 1,483 1,203 664 5 428 7,611 $11,394 Substandard — 3,834 18 223 2,435 1,988 5,926 $14,424 Doubtful — — — — — — — $0 Not Rated 159 216 110 6 13 — — $504 Subtotal $13,495 $13,863 $4,816 $6,222 $6,185 $19,208 $80,589 $144,378 Other Commercial Pass $44,673 $57,200 $41,470 $61,442 $40,196 $50,325 $5,162 $300,468 Special Mention — — — 7 — 2,786 — $2,793 Substandard — — — 24 528 24 — $576 Doubtful — — — — — — — $0 Not Rated — 3 52 39 345 — — $439 Subtotal $44,673 $57,203 $41,522 $61,512 $41,069 $53,135 $5,162 $304,276 Residential Multifamily >5 Residential Pass $44,599 $9,892 $36,563 $19,749 $4,676 $21,704 $1,293 $138,476 Special Mention — — — — 102 10,662 — $10,764 Substandard — — 1,380 — — — — $1,380 Doubtful — — — — — — — $0 Not Rated — — — — — — — $0 Subtotal $44,599 $9,892 $37,943 $19,749 $4,778 $32,366 $1,293 $150,620 Total Pass $312,026 $198,711 $196,076 $201,786 $134,542 $315,809 $170,600 $1,529,550 Special Mention 5,836 4,759 5,630 1,422 13,267 27,909 11,306 $70,129 Substandard 5,498 7,648 5,585 6,421 15,618 12,431 9,050 $62,251 Doubtful — — — — — — — $0 Not Rated 2,777 1,991 1,608 625 463 2,937 — $10,401 Total commercial loans $326,137 $213,109 $208,899 $210,254 $163,890 $359,086 $190,956 $1,672,331 The Corporation evaluates the credit quality of its other loan portfolios, which includes residential real estate, consumer and lease financing loans, based primarily on the aging status of the loan and payment activity. Accordingly, loans on non-accrual status, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings are considered to be nonperforming for purposes of credit quality evaluation. The following table presents the balance of our other loan portfolio based on the credit risk profile of loans that are performing and loans that are nonperforming: September 30, 2021 Term Loans at Amortized Cost Basis by Origination Year Revolving 2021 2020 2019 2018 2017 Prior Loans Total Residential First Liens Performing $50,313 $41,216 $22,039 $24,469 $26,484 $134,510 $2,417 $301,448 Non-performing — 150 528 70 319 2,801 — $3,868 Subtotal $50,313 $41,366 $22,567 $24,539 $26,803 $137,311 $2,417 $305,316 Home Equity Performing $1,643 $9 $191 $131 $64 $1,367 $54,088 $57,493 Non-performing — — — — 3 96 — $99 Subtotal $1,643 $9 $191 $131 $67 $1,463 $54,088 $57,592 Junior Liens Performing $10,379 $10,642 $8,962 $8,640 $4,650 $6,306 $1,102 $50,681 Non-performing — 7 39 74 122 99 — $341 Subtotal $10,379 $10,649 $9,001 $8,714 $4,772 $6,405 $1,102 $51,022 Other Residential Performing $7,849 $4,493 $1,405 $325 $281 $1,072 $0 $15,425 Non-performing — — 57 45 — 30 — $132 Subtotal $7,849 $4,493 $1,462 $370 $281 $1,102 $0 $15,557 Consumer Motor Vehicle Performing $155,728 $176,592 $71,421 $28,477 $12,091 $3,674 $— $447,983 Non-performing 29 203 266 144 50 11 — $703 Subtotal $155,757 $176,795 $71,687 $28,621 $12,141 $3,685 $— $448,686 Other Consumer Performing $13,309 $9,441 $3,651 $1,065 $327 $982 $4,013 $32,788 Non-performing 251 199 125 41 19 4 2 $641 Subtotal $13,560 $9,640 $3,776 $1,106 $346 $986 $4,015 $33,429 Total Performing $239,221 $242,393 $107,669 $63,107 $43,897 $147,911 $61,620 $905,818 Non-performing 280 559 1,015 374 513 3,041 2 $5,784 Total other loans $239,501 $242,952 $108,684 $63,481 $44,410 $150,952 $61,622 $911,602 December 31, 2020 Term Loans at Amortized Cost Basis by Origination Year Revolving 2020 2019 2018 2017 2016 Prior Loans Total Residential First Liens Performing $47,875 $33,737 $31,634 $36,426 $30,419 $135,456 $3,235 $318,782 Non-performing — 40 95 343 107 4,062 — $4,647 Subtotal $47,875 $33,777 $31,729 $36,769 $30,526 $139,518 $3,235 $323,429 Home Equity Performing $854 $135 $644 $20 $— $1,525 $57,334 $60,512 Non-performing — — 1 — — 91 24 $116 Subtotal $854 $135 $645 $20 $— $1,616 $57,358 $60,628 Junior Liens Performing $13,125 $12,742 $11,139 $6,214 $3,948 $5,099 $1,333 $53,600 Non-performing — 129 48 198 9 66 — $450 Subtotal $13,125 $12,871 $11,187 $6,412 $3,957 $5,165 $1,333 $54,050 Other Residential Performing $9,773 $2,775 $1,372 $292 $178 $733 $651 $15,774 Non-performing — 62 50 — — 39 — $151 Subtotal $9,773 $2,837 $1,422 $292 $178 $772 $651 $15,925 Consumer Motor Vehicle Performing $245,839 $113,293 $51,649 $24,786 $10,026 $1,600 $— $447,193 Non-performing 318 355 257 127 36 11 — $1,104 Subtotal $246,157 $113,648 $51,906 $24,913 $10,062 $1,611 $— $448,297 Other Consumer Performing $15,298 $7,328 $2,622 $724 $854 $703 $3,352 $30,881 Non-performing 231 200 92 22 — 8 19 $572 Subtotal $15,529 $7,528 $2,714 $746 $854 $711 $3,371 $31,453 Total Performing $332,764 $170,010 $99,060 $68,462 $45,425 $145,116 $65,905 $926,742 Non-performing 549 786 543 690 152 4,277 43 $7,040 Total other loans $333,313 $170,796 $99,603 $69,152 $45,577 $149,393 $65,948 $933,782 |