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 March 31. Allowance for Credit Losses: March 31, 2022 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 18,883 $ 18,316 $ 10,721 $ 385 $ 48,305 Provision for credit losses (1,040) (5,144) (300) (66) (6,550) Loans charged-off (883) (466) (1,905) — (3,254) Recoveries 340 529 1,146 — 2,015 Ending Balance $ 17,300 $ 13,235 $ 9,662 $ 319 $ 40,516 Allowance for Credit Losses: March 31, 2021 (Dollar amounts in thousands) Commercial Residential Consumer Unallocated Total Beginning balance $ 13,925 $ 19,142 $ 11,009 $ — $ 44,076 Provision for credit losses (478) (262) 1,028 164 452 Loans charged-off (186) (188) (1,964) — (2,338) Recoveries 478 147 985 — 1,610 Ending Balance $ 13,739 $ 18,839 $ 11,058 $ 164 $ 43,800 The tables below present the recorded investment in non-performing loans by class of loans. March 31, 2022 Loans Past Nonaccrual (Dollar amounts in thousands) Accruing Nonaccrual For Credit Loss Commercial Commercial & Industrial $ 4 $ 689 $ 352 Farmland — 15 — Non Farm, Non Residential — 2,717 2,703 Agriculture — 84 — All Other Commercial — 4 — Residential First Liens 279 2,036 18 Home Equity — 66 — Junior Liens 89 244 — Multifamily — 211 — All Other Residential — 101 — Consumer Motor Vehicle 362 863 — All Other Consumer 13 682 — TOTAL $ 747 $ 7,712 $ 3,073 December 31, 2021 Loans Past Nonaccrual (Dollar amounts in thousands) Accruing Nonaccrual For Credit Loss Commercial Commercial & Industrial $ 14 $ 1,950 $ 1,662 Farmland — 15 — Non Farm, Non Residential — 2,911 2,898 Agriculture — 111 — All Other Commercial — 4 — Residential First Liens 346 2,339 33 Home Equity — 84 — Junior Liens 89 294 — Multifamily — 225 — All Other Residential — 107 — Consumer Motor Vehicle 94 864 — All Other Consumer — 686 — TOTAL $ 543 $ 9,590 $ 4,593 The following tables present the amortized cost basis of collateral dependent loans by class of loans: March 31, 2022 Collateral Type (Dollar amounts in thousands) Real Estate Other Commercial Commercial & Industrial $ 6,008 $ 546 Farmland 3,650 Non Farm, Non Residential 13,796 Agriculture — — All Other Commercial — — Residential First Liens 18 — Home Equity — — Junior Liens — — Multifamily 920 — All Other Residential — — Consumer Motor Vehicle — — All Other Consumer — — Total $ 24,392 $ 546 December 31, 2021 Collateral Type (Dollar amounts in thousands) Real Estate Other Commercial Commercial & Industrial $ 17,734 $ 720 Farmland 3,669 Non Farm, Non Residential 6,135 Agriculture — — All Other Commercial — — Residential First Liens 33 — Home Equity — — Junior Liens — — Multifamily 935 — All Other Residential — — Consumer Motor Vehicle — — All Other Consumer — — Total $ 28,506 $ 720 The following tables presents the aging of the recorded investment in loans by past due category and class of loans. March 31, 2022 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 $ 1,086 $ 382 $ 227 $ 1,695 $ 705,981 $ 707,676 Farmland 94 205 — 299 134,430 134,729 Non Farm, Non Residential 48 — — 48 386,785 386,833 Agriculture — — 49 49 114,251 114,300 All Other Commercial 162 — — 162 364,273 364,435 Residential First Liens 3,628 446 747 4,821 329,788 334,609 Home Equity 233 57 38 328 60,287 60,615 Junior Liens 301 110 200 611 51,008 51,619 Multifamily 386 — — 386 161,473 161,859 All Other Residential 93 — — 93 27,978 28,071 Consumer Motor Vehicle 5,935 883 686 7,504 426,290 433,794 All Other Consumer 178 50 17 245 31,875 32,120 TOTAL $ 12,144 $ 2,133 $ 1,964 $ 16,241 $ 2,794,419 $ 2,810,660 December 31, 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 $ 1,132 $ 388 $ 1,614 $ 3,134 $ 693,949 $ 697,083 Farmland 57 — — 57 141,189 141,246 Non Farm, Non Residential 62 — — 62 361,174 361,236 Agriculture 90 42 89 221 141,682 141,903 All Other Commercial 390 — — 390 340,076 340,466 Residential First Liens 4,686 680 949 6,315 336,064 342,379 Home Equity 131 24 58 213 62,085 62,298 Junior Liens 179 120 283 582 50,048 50,630 Multifamily 342 146 — 488 178,849 179,337 All Other Residential 284 291 — 575 30,843 31,418 Consumer Motor Vehicle 7,633 1,105 486 9,224 433,095 442,319 All Other Consumer 192 37 — 229 33,425 33,654 TOTAL $ 15,178 $ 2,833 $ 3,479 $ 21,490 $ 2,802,479 $ 2,823,969 During the three months ended March 31, 2022 and 2021, the terms of certain loans were modified as troubled debt restructurings (TDRs). The following tables present the activity for TDRs. 2022 (Dollar amounts in thousands) Commercial Residential Consumer Total January 1, $ 407 $ 3,686 $ 706 $ 4,799 Added — 27 68 95 Charged Off — — — — Payments — (268) (84) (352) March 31, $ 407 $ 3,445 $ 690 $ 4,542 2021 (Dollar amounts in thousands) Commercial Residential Consumer Total January 1, — 3,589 617 4,206 Added — 378 48 426 Charged Off — — (43) (43) Payments — (79) (46) (125) March 31, — 3,888 576 4,464 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 2022 or 2021 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 March 31, 2022 and 2021 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 March 31, 2022 and 2021. The Corporation has not committed to lend additional amounts as of March 31, 2022 and 2021 to customers with outstanding loans that are classified as troubled debt restructurings. None of the charge-offs during the three months ended March 31, 2022 and 2021 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 March 31, 2022, 1,105 loans totaling $225 million were modified, related to COVID-19, that were not considered troubled debt restructurings. 863 loans totaling $183 million have resumed normal scheduled payments. 184 remaining loans are still under a debt relief plan, which include 9 commercial loans totaling $35 million that have been provided additional payment relief since the initial payment relief plan. 1 loan totaling $16 thousand is 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: March 31, 2022 Term Loans at Amortized Cost Basis by Origination Year Revolving 2022 2021 2020 2019 2018 Prior Loans Total Commercial Commercial and Industrial Pass $54,640 $142,201 $67,137 $76,940 $34,752 $127,934 $146,245 $649,849 Special Mention 3,098 4,603 356 1,750 2,192 4,576 722 $17,297 Substandard — 390 453 536 3,187 6,455 13,372 $24,393 Doubtful — — — — — 5 — $5 Not Rated 9,715 2,002 1,288 815 362 246 — $14,428 Subtotal $67,453 $149,196 $69,234 $80,041 $40,493 $139,216 $160,339 $705,972 Farmland Pass $3,965 $24,146 $11,567 $11,594 $11,783 $56,064 $1,253 $120,372 Special Mention — 3,346 1,191 914 — 3,496 — $8,947 Substandard — — — — 426 3,346 — $3,772 Doubtful — — — — — — — $0 Not Rated — — — — — 58 — $58 Subtotal $3,965 $27,492 $12,758 $12,508 $12,209 $62,964 $1,253 $133,149 Non Farm, Non Residential Pass $29,516 $86,348 $32,771 $22,486 $32,792 $144,708 $10,382 $359,003 Special Mention — — — 1,089 180 3,876 — $5,145 Substandard — 1,766 — 537 2,434 16,835 — $21,572 Doubtful — — — — — — — $0 Not Rated — — — — — 425 — $425 Subtotal $29,516 $88,114 $32,771 $24,112 $35,406 $165,844 $10,382 $386,145 Agriculture Pass $1,280 $11,482 $9,663 $9,697 $2,357 $20,269 $47,047 $101,795 Special Mention — — — 1,000 — 803 6,495 $8,298 Substandard 89 — 10 137 — 449 1,593 $2,278 Doubtful — — — — — — — $0 Not Rated 38 105 93 101 35 — — $372 Subtotal $1,407 $11,587 $9,766 $10,935 $2,392 $21,521 $55,135 $112,743 Other Commercial Pass $12,561 $93,145 $75,132 $21,401 $36,150 $114,794 $3,028 $356,211 Special Mention — — — — — 5,978 — $5,978 Substandard — 68 — 20 468 9 — $565 Doubtful — — — — — — — $0 Not Rated — 87 — — 35 622 — $744 Subtotal $12,561 $93,300 $75,132 $21,421 $36,653 $121,403 $3,028 $363,498 Residential Multifamily >5 Residential Pass $7,261 $39,771 $46,791 $12,371 $6,698 $37,737 $2,046 $152,675 Special Mention — — — — — 6,478 — $6,478 Substandard — — — — — 933 — $933 Doubtful — — — — — — — $0 Not Rated — 1,143 — — — 272 — $1,415 Subtotal $7,261 $40,914 $46,791 $12,371 $6,698 $45,420 $2,046 $161,501 Total Pass $109,223 $397,093 $243,061 $154,489 $124,532 $501,506 $210,001 $1,739,905 Special Mention 3,098 7,949 1,547 4,753 2,372 25,207 7,217 $52,143 Substandard 89 2,224 463 1,230 6,515 28,027 14,965 $53,513 Doubtful — — — — — 5 — $5 Not Rated 9,753 3,337 1,381 916 432 1,623 — $17,442 Total commercial loans $122,163 $410,603 $246,452 $161,388 $133,851 $556,368 $232,183 $1,863,008 December 31, 2021 Term Loans at Amortized Cost Basis by Origination Year Revolving 2021 2020 2019 2018 2017 Prior Loans Total Commercial Commercial and Industrial Pass $163,588 $71,271 $80,668 $40,441 $37,739 $113,887 $111,594 $619,188 Special Mention 7,561 393 1,841 5,375 263 4,523 7,482 $27,438 Substandard 4,521 896 348 5,148 2,325 7,934 2,648 $23,820 Doubtful — — — — — — — $0 Not Rated 21,134 1,610 959 466 189 140 — $24,498 Subtotal $196,804 $74,170 $83,816 $51,430 $40,516 $126,484 $121,724 $694,944 Farmland Pass $25,673 $12,060 $13,111 $13,246 $11,049 $49,158 $1,418 $125,715 Special Mention — 1,191 914 — 342 3,247 — $5,694 Substandard 3,455 444 — 326 558 2,876 — $7,659 Doubtful — — — — — — — $0 Not Rated — — — — — — — $0 Subtotal $29,128 $13,695 $14,025 $13,572 $11,949 $55,281 $1,418 $139,068 Non Farm, Non Residential Pass $81,203 $37,971 $24,716 $32,775 $54,732 $97,241 $10,548 $339,186 Special Mention — — 1,103 182 1,948 1,996 — $5,229 Substandard — — 910 — 1,440 13,391 — $15,741 Doubtful — — — — — — — $0 Not Rated — — — — — 402 — $402 Subtotal $81,203 $37,971 $26,729 $32,957 $58,120 $113,030 $10,548 $360,558 Agriculture Pass $14,426 $10,386 $10,135 $2,585 $4,932 $15,755 $68,937 $127,156 Special Mention — — 1,000 — 537 271 5,257 $7,065 Substandard — 20 216 — 46 485 4,828 $5,595 Doubtful — — — — — — — $0 Not Rated 110 120 131 55 1 — — $417 Subtotal $14,536 $10,526 $11,482 $2,640 $5,516 $16,511 $79,022 $140,233 Other Commercial Pass $77,821 $69,117 $33,231 $36,495 $53,479 $58,819 $3,488 $332,450 Special Mention — — — — — 6,106 — $6,106 Substandard 72 — 25 475 — 9 — $581 Doubtful — — — — — — — $0 Not Rated 89 — — 37 — — — $126 Subtotal $77,982 $69,117 $33,256 $37,007 $53,479 $64,934 $3,488 $339,263 Residential Multifamily >5 Residential Pass $37,244 $63,312 $16,037 $7,471 $5,370 $35,284 $1,434 $166,152 Special Mention — — — — — 10,282 — $10,282 Substandard — — — — — 958 — $958 Doubtful — — — — — — — $0 Not Rated 1,149 — — — 44 384 — $1,577 Subtotal $38,393 $63,312 $16,037 $7,471 $5,414 $46,908 $1,434 $178,969 Total Pass $399,955 $264,117 $177,898 $133,013 $167,301 $370,144 $197,419 $1,709,847 Special Mention 7,561 1,584 4,858 5,557 3,090 26,425 12,739 $61,814 Substandard 8,048 1,360 1,499 5,949 4,369 25,653 7,476 $54,354 Doubtful — — — — — — — $0 Not Rated 22,482 1,730 1,090 558 234 926 — $27,020 Total commercial loans $438,046 $268,791 $185,345 $145,077 $174,994 $423,148 $217,634 $1,853,035 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: March 31, 2022 Term Loans at Amortized Cost Basis by Origination Year Revolving 2022 2021 2020 2019 2018 Prior Loans Total Residential First Liens Performing $14,671 $82,001 $46,694 $20,505 $22,331 $142,807 $2,432 $331,441 Non-performing — — — 34 67 2,218 — $2,319 Subtotal $14,671 $82,001 $46,694 $20,539 $22,398 $145,025 $2,432 $333,760 Home Equity Performing $1,191 $481 $65 $128 $711 $1,311 $56,549 $60,436 Non-performing — — 24 — — 42 — $66 Subtotal $1,191 $481 $89 $128 $711 $1,353 $56,549 $60,502 Junior Liens Performing $4,469 $12,836 $9,292 $7,590 $7,049 $8,828 $1,115 $51,179 Non-performing — — — 25 119 186 — $330 Subtotal $4,469 $12,836 $9,292 $7,615 $7,168 $9,014 $1,115 $51,509 Other Residential Performing $553 $17,731 $5,533 $1,474 $640 $1,942 $0 $27,873 Non-performing — — — 54 41 24 — $119 Subtotal $553 $17,731 $5,533 $1,528 $681 $1,966 $0 $27,992 Consumer Motor Vehicle Performing $48,190 $170,684 $134,583 $50,638 $18,668 $8,085 $— $430,848 Non-performing — 259 613 176 91 53 — $1,192 Subtotal $48,190 $170,943 $135,196 $50,814 $18,759 $8,138 $— $432,040 Other Consumer Performing $2,941 $12,991 $6,934 $2,448 $794 $1,161 $4,023 $31,292 Non-performing 21 323 220 85 29 20 5 $703 Subtotal $2,962 $13,314 $7,154 $2,533 $823 $1,181 $4,028 $31,995 Total Performing $72,015 $296,724 $203,101 $82,783 $50,193 $164,134 $64,119 $933,069 Non-performing 21 582 857 374 347 2,543 5 $4,729 Total other loans $72,036 $297,306 $203,958 $83,157 $50,540 $166,677 $64,124 $937,798 December 31, 2021 Term Loans at Amortized Cost Basis by Origination Year Revolving 2021 2020 2019 2018 2017 Prior Loans Total Residential First Liens Performing $86,224 $49,633 $22,262 $24,377 $26,437 $126,828 $3,061 $338,822 Non-performing — — 35 69 160 2,421 — $2,685 Subtotal $86,224 $49,633 $22,297 $24,446 $26,597 $129,249 $3,061 $341,507 Home Equity Performing $757 $9 $152 $719 $62 $1,332 $59,059 $62,090 Non-performing — 25 — — 3 57 — $85 Subtotal $757 $34 $152 $719 $65 $1,389 $59,059 $62,175 Junior Liens Performing $13,255 $10,189 $8,124 $7,888 $4,158 $5,554 $968 $50,136 Non-performing — 6 64 97 119 94 — $380 Subtotal $13,255 $10,195 $8,188 $7,985 $4,277 $5,648 $968 $50,516 Other Residential Performing $20,218 $6,665 $1,697 $662 $883 $1,092 $0 $31,217 Non-performing — — 55 43 — 27 — $125 Subtotal $20,218 $6,665 $1,752 $705 $883 $1,119 $0 $31,342 Consumer Motor Vehicle Performing $188,675 $155,156 $60,676 $23,367 $9,307 $2,384 $— $439,565 Non-performing 199 373 191 109 43 23 — $938 Subtotal $188,874 $155,529 $60,867 $23,476 $9,350 $2,407 $— $440,503 Other Consumer Performing $14,924 $8,225 $3,119 $948 $304 $1,121 $4,194 $32,835 Non-performing 342 181 107 35 18 3 2 $688 Subtotal $15,266 $8,406 $3,226 $983 $322 $1,124 $4,196 $33,523 Total Performing $324,053 $229,877 $96,030 $57,961 $41,151 $138,311 $67,282 $954,665 Non-performing 541 585 452 353 343 2,625 2 $4,901 Total other loans $324,594 $230,462 $96,482 $58,314 $41,494 $140,936 $67,284 $959,566 |