| Loans and ALLL | Loans and ALLL We grant commercial, agricultural, residential real estate, and consumer loans to customers situated primarily in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties in Michigan. The ability of the borrowers to honor their repayment obligations is often dependent upon the real estate, agricultural, manufacturing, retail, gaming, tourism, health care, higher education, and general economic conditions of this region. Substantially all of our consumer and residential real estate loans are secured by various items of property, while commercial loans are secured primarily by real estate, business assets, and personal guarantees. A portion of loans are unsecured. Loans that we have the intent and ability to hold in our portfolio are reported at their outstanding principal balance adjusted for any charge-offs, the ALLL, and deferred fees or costs. Unless a loan has a nonaccrual status, interest income is accrued over the term of the loan based on the principal amount outstanding. Loan origination fees and certain direct loan origination costs are capitalized and recognized as a component of interest income over the term of the loan using the appropriate amortization method. The accrual of interest on commercial and agricultural loans, as well as residential real estate loans, is discontinued at the time a loan is 90 days or more past due unless the credit is well-secured and in the process of short-term collection. Upon transferring a loan to nonaccrual status, we perform an evaluation to determine the net realizable value of the underlying collateral. This evaluation is used to help determine if a charge-off is necessary. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on the contractual term of the loan. In all cases, a loan is placed in nonaccrual status at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed in nonaccrual status, all interest accrued in the current calendar year, but not collected, is reversed against interest income while interest accrued in prior calendar years, but not collected, is charged against the ALLL. Loans may be returned to accrual status after six months of continuous performance and achievement of current payment status. Commercial and agricultural loans include loans for commercial real estate, commercial operating loans, advances to mortgage brokers, farmland and agricultural production, and loans to states and political subdivisions. Repayment of these loans is dependent upon the successful operation and management of a business. We minimize our risk by limiting the amount of direct credit exposure to any one borrower to $18,000. Borrowers with direct credit needs of more than $18,000 may be serviced through the use of loan participations with other commercial banks. Commercial and agricultural real estate loans commonly require loan-to-value limits of 80% or less. Depending upon the type of loan, past credit history, and current operating results, we may require the borrower to pledge accounts receivable, inventory, property, or equipment. Government agency guarantee may be required. Personal guarantees and/or life insurance beneficiary assignments are generally required from the owners of closely held corporations, partnerships, and sole proprietorships. In addition, we may require annual financial statements, prepare cash flow analyses, and review credit reports. We entered into a mortgage purchase program in 2016 with a financial institution where we participate in advances to mortgage brokers (“advances”). The mortgage brokers originate residential mortgage loans with the intent to sell them on the secondary market. We participate in the advance to the mortgage broker, which is secured by the underlying mortgage loan, until it is ultimately sold on the secondary market. As such, the average life of each participated advance is approximately 20-30 days. Funds from the sale of the loan are used to pay off our participation in the advance to the mortgage broker. We classify these advances as commercial loans and include the outstanding balance in commercial loans on our consolidated balance sheets. Under the participation agreement, we committed to a maximum outstanding aggregate amount of $40,000. The difference between our outstanding balance and the maximum outstanding aggregate amount is classified as an unfunded commitment. We offer adjustable rate mortgages, construction loans, and fixed rate residential real estate loans which have amortization periods up to a maximum of 30 years. We consider the anticipated direction of interest rates, balance sheet duration, the sensitivity of our balance sheet to changes in interest rates, our liquidity needs, and overall loan demand to determine whether or not to sell fixed rate loans to Freddie Mac. Our lending policies generally limit the maximum loan-to-value ratio on residential real estate loans to 100% of the lower of the appraised value of the property or the purchase price. Private mortgage insurance is typically required on loans with loan-to-value ratios in excess of 80% unless the loan qualifies for government guarantees. Underwriting criteria for originated residential real estate loans generally include: • Evaluation of the borrower’s ability to make monthly payments. • Evaluation of the value of the property securing the loan. • Ensuring the payment of principal, interest, taxes, and hazard insurance does not exceed 28% of a borrower’s gross income. • Ensuring all debt servicing does not exceed 40% of income. • Verification of acceptable credit reports. • Verification of employment, income, and financial information. Appraisals are performed by independent appraisers and are reviewed for appropriateness. Generally, mortgage loan requests are reviewed by our mortgage loan committee or through a secondary market underwriting system; loans in excess of $1,000 require the approval of our Internal Loan Committee, the Executive Loan Committee, the Board of Directors’ Loan Committee, or the Board of Directors. Consumer loans include secured and unsecured personal loans. Loans are amortized for a period of up to 15 years based on the age and value of the underlying collateral. The underwriting emphasis is on a borrower’s perceived intent and ability to pay rather than collateral value. No consumer loans are sold to the secondary market. The ALLL is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Full or partial loan balances are charged against the ALLL when we believe uncollectability is probable. Subsequent recoveries, if any, are credited to the ALLL. The ALLL is evaluated on a regular basis for appropriateness. Our periodic review of the collectability of a loan considers historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The primary factors behind the determination of the level of the ALLL are specific allocations for impaired loans, historical loss percentages, as well as unallocated components. Specific allocations for impaired loans are primarily determined based on the difference between the loan’s outstanding balance and the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Historical loss allocations are calculated at the loan class and segment levels based on a migration analysis of the loan portfolio, with the exception of advances to mortgage brokers, over the preceding five years. With no historical losses on advances to mortgage brokers, there is no allocation related to this portfolio. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. While we have experienced fluctuations in credit quality indicators in recent periods, credit quality remained strong at June 30, 2022. The COVID-19 pandemic led to the temporary and some permanent closures of businesses throughout the communities in which we serve, which also led to increased unemployment. We increased the ALLL during 2020 as a result of increased economic and environmental related risk factors, primarily driven by COVID-19. While these risk factors remain, improvement in credit quality indicators resulted in a reduction to the ALLL during 2021. There have been no material changes to the ALLL and credit quality remained strong during the first two quarters of 2022. Summaries of the ALLL and the recorded investment in loans by segments follows: Allowance for Loan Losses Three Months Ended June 30, 2022 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2022 $ 1,245 $ 383 $ 725 $ 708 $ 6,143 $ 9,204 Charge-offs (3) — — (103) — (106) Recoveries 26 1 42 48 — 117 Provision for loan losses 490 67 (128) 670 (614) 485 June 30, 2022 $ 1,758 $ 451 $ 639 $ 1,323 $ 5,529 $ 9,700 Allowance for Loan Losses Six Months Ended June 30, 2022 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2022 $ 1,740 $ 289 $ 747 $ 908 $ 5,419 $ 9,103 Charge-offs (3) — — (194) — (197) Recoveries 40 3 70 159 — 272 Provision for loan losses (19) 159 (178) 450 110 522 June 30, 2022 $ 1,758 $ 451 $ 639 $ 1,323 $ 5,529 $ 9,700 Allowance for Loan Losses and Recorded Investment in Loans June 30, 2022 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 27 $ — $ 488 $ — $ — $ 515 Collectively evaluated for impairment 1,731 451 151 1,323 5,529 9,185 Total $ 1,758 $ 451 $ 639 $ 1,323 $ 5,529 $ 9,700 Loans Individually evaluated for impairment $ 8,631 $ 11,357 $ 2,994 $ — $ 22,982 Collectively evaluated for impairment 763,936 83,369 326,801 74,822 1,248,928 Total $ 772,567 $ 94,726 $ 329,795 $ 74,822 $ 1,271,910 Allowance for Loan Losses Three Months Ended June 30, 2021 Commercial Agricultural Residential Real Estate Consumer Unallocated Total April 1, 2021 $ 1,699 $ 230 $ 1,163 $ 956 $ 5,223 $ 9,271 Charge-offs — — — (53) — (53) Recoveries 17 3 48 43 — 111 Provision for loan losses 595 15 (257) (8) (314) 31 June 30, 2021 $ 2,311 $ 248 $ 954 $ 938 $ 4,909 $ 9,360 Allowance for Loan Losses Six Months Ended June 30, 2021 Commercial Agricultural Residential Real Estate Consumer Unallocated Total January 1, 2021 $ 2,162 $ 311 $ 1,363 $ 798 $ 5,110 $ 9,744 Charge-offs (31) — — (181) — (212) Recoveries 99 5 103 113 — 320 Provision for loan losses 81 (68) (512) 208 (201) (492) June 30, 2021 $ 2,311 $ 248 $ 954 $ 938 $ 4,909 $ 9,360 Allowance for Loan Losses and Recorded Investment in Loans December 31, 2021 Commercial Agricultural Residential Real Estate Consumer Unallocated Total ALLL Individually evaluated for impairment $ 13 $ — $ 565 $ — $ — $ 578 Collectively evaluated for impairment 1,727 289 182 908 5,419 8,525 Total $ 1,740 $ 289 $ 747 $ 908 $ 5,419 $ 9,103 Loans Individually evaluated for impairment $ 9,267 $ 14,189 $ 3,454 $ — $ 26,910 Collectively evaluated for impairment 798,172 79,766 322,907 73,282 1,274,127 Total $ 807,439 $ 93,955 $ 326,361 $ 73,282 $ 1,301,037 The following tables display the internally assigned credit risk ratings for commercial and agricultural credit exposures as of: June 30, 2022 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ — $ 300 $ — $ 300 $ — $ — $ — $ 300 2 - High quality 9,368 9,103 — 18,471 383 30 413 18,884 3 - High satisfactory 72,155 39,176 37,291 148,622 9,420 5,546 14,966 163,588 4 - Low satisfactory 452,567 116,154 — 568,721 39,063 16,335 55,398 624,119 5 - Special mention 18,955 3,816 — 22,771 11,231 5,039 16,270 39,041 6 - Substandard 9,004 4,494 — 13,498 6,143 1,265 7,408 20,906 7 - Vulnerable 82 102 — 184 104 167 271 455 8 - Doubtful — — — — — — — — 9 - Loss — — — — — — — — Total $ 562,131 $ 173,145 $ 37,291 $ 772,567 $ 66,344 $ 28,382 $ 94,726 $ 867,293 December 31, 2021 Commercial Agricultural Real Estate Other Advances to Mortgage Brokers Total Real Estate Other Total Total Rating 1 - Excellent $ — $ 300 $ — $ 300 $ — $ — $ — $ 300 2 - High quality 9,010 6,881 — 15,891 453 — 453 16,344 3 - High satisfactory 86,135 46,087 72,001 204,223 9,361 4,295 13,656 217,879 4 - Low satisfactory 448,489 104,375 — 552,864 36,483 15,986 52,469 605,333 5 - Special mention 13,212 1,351 — 14,563 13,096 3,452 16,548 31,111 6 - Substandard 13,519 5,738 — 19,257 6,252 3,803 10,055 29,312 7 - Vulnerable 222 119 — 341 499 275 774 1,115 8 - Doubtful — — — — — — — — 9 - Loss — — — — — — — — Total $ 570,587 $ 164,851 $ 72,001 $ 807,439 $ 66,144 $ 27,811 $ 93,955 $ 901,394 Internally assigned credit risk ratings are reviewed, at a minimum, when loans are renewed or when management has knowledge of improvements or deterioration of the credit quality of individual credits. Descriptions of the internally assigned credit risk ratings for commercial and agricultural loans are as follows: 1. EXCELLENT – Substantially Risk Free Credit has strong financial condition and solid earnings history, characterized by: • High liquidity, strong cash flow, low leverage. • Unquestioned ability to meet all obligations when due. • Experienced management, with management succession in place. • Secured by cash. 2. HIGH QUALITY – Limited Risk Credit with sound financial condition and a positive trend in earnings supplemented by: • Favorable liquidity and leverage ratios. • Ability to meet all obligations when due. • Management with successful track record. • Steady and satisfactory earnings history. • If loan is secured, collateral is of high quality and readily marketable. • Access to alternative financing. • Well defined primary and secondary source of repayment. • If supported by guaranty, the financial strength and liquidity of the guarantor(s) are clearly evident. 3. HIGH SATISFACTORY – Reasonable Risk Credit with satisfactory financial condition and further characterized by: • Working capital adequate to support operations. • Cash flow sufficient to pay debts as scheduled. • Management experience and depth appear favorable. • Loan performing according to terms. • If loan is secured, collateral is acceptable and loan is fully protected. 4. LOW SATISFACTORY – Acceptable Risk Credit with bankable risks, although some signs of weaknesses are shown: • Would include most start-up businesses. • Occasional instances of trade slowness or repayment delinquency – may have been 10-30 days slow within the past year. • Management’s abilities are apparent yet unproven. • Weakness in primary source of repayment with adequate secondary source of repayment. • Loan structure generally in accordance with policy. • If secured, loan collateral coverage is marginal. To be classified as less than satisfactory, only one of the following criteria must be met. 5. SPECIAL MENTION – Criticized Credit constitutes an undue and unwarranted credit risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitutes an unwarranted risk in light of the circumstances surrounding a specific loan: • Downward trend in sales, profit levels, and margins. • Impaired working capital position. • Cash flow is strained in order to meet debt repayment. • Loan delinquency (30-60 days) and overdrafts may occur. • Shrinking equity cushion. • Diminishing primary source of repayment and questionable secondary source. • Management abilities are questionable. • Weak industry conditions. • Litigation pending against the borrower. • Loan may need to be restructured to improve collateral position or reduce payments. • Collateral or guaranty offers limited protection. • Negative debt service coverage, however the credit is well collateralized and payments are current. 6. SUBSTANDARD – Classified Credit is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged. There is a distinct possibility we will implement collection procedures if the loan deficiencies are not corrected. Any commercial loan placed in nonaccrual status will be rated “7” or worse. In addition, the following characteristics may apply: • Sustained losses have severely eroded the equity and cash flow. • Deteriorating liquidity. • Serious management problems or internal fraud. • Original repayment terms liberalized. • Likelihood of bankruptcy. • Inability to access other funding sources. • Reliance on secondary source of repayment. • Litigation filed against borrower. • Interest non-accrual may be warranted. • Collateral provides little or no value. • Requires excessive attention of the loan officer. • Borrower is uncooperative with loan officer. 7. VULNERABLE – Classified Credit is considered “Substandard” and warrants placing in nonaccrual status. Risk of loss is being evaluated and exit strategy options are under review. Other characteristics that may apply: • Insufficient cash flow to service debt. • Minimal or no payments being received. • Limited options available to avoid the collection process. • Transition status, expect action will take place to collect loan without immediate progress being made. 8. DOUBTFUL – Workout Credit has all the weaknesses inherent in a “Substandard” loan with the added characteristic that collection and/or liquidation is pending. The possibility of a loss is extremely high, but its classification as a loss is deferred until liquidation procedures are completed, or reasonably estimable. Other characteristics that may apply: • Normal operations are severely diminished or have ceased. • Seriously impaired cash flow. • Original repayment terms materially altered. • Secondary source of repayment is inadequate. • Survivability as a “going concern” is impossible. • Collection process has begun. • Bankruptcy petition has been filed. • Judgments have been filed. • Portion of the loan balance has been charged-off. 9. LOSS – Charge-off Credit is considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification is for charged-off loans but does not mean that the asset has absolutely no recovery or salvage value. These loans are further characterized by: • Liquidation or reorganization under Bankruptcy, with poor prospects of collection. • Fraudulently overstated assets and/or earnings. • Collateral has marginal or no value. • Debtor cannot be located. • Over 120 days delinquent. Our primary credit quality indicator for residential real estate and consumer loans is the individual loan’s past due aging. The following tables summarize the past due and current loans for the entire loan portfolio as of: June 30, 2022 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ — $ — $ — $ 82 $ 82 $ 562,049 $ 562,131 Commercial other 248 — — 102 350 172,795 173,145 Advances to mortgage brokers — — — — — 37,291 37,291 Total commercial 248 — — 184 432 772,135 772,567 Agricultural Agricultural real estate — — 104 104 66,240 66,344 Agricultural other — — — 167 167 28,215 28,382 Total agricultural — — — 271 271 94,455 94,726 Residential real estate Senior liens 91 50 119 85 345 295,373 295,718 Junior liens — — — — — 2,358 2,358 Home equity lines of credit — — — — — 31,719 31,719 Total residential real estate 91 50 119 85 345 329,450 329,795 Consumer Secured 77 — — 77 71,535 71,612 Unsecured 8 372 — — 380 2,830 3,210 Total consumer 85 372 — — 457 74,365 74,822 Total $ 424 $ 422 $ 119 $ 540 $ 1,505 $ 1,270,405 $ 1,271,910 December 31, 2021 Accruing Interest Total Past Due and Nonaccrual 30-59 60-89 90 Days Nonaccrual Current Total Commercial Commercial real estate $ 135 $ — $ — $ 222 $ 357 $ 570,230 $ 570,587 Commercial other 85 — — 119 204 164,647 164,851 Advances to mortgage brokers — — — — — 72,001 72,001 Total commercial 220 — — 341 561 806,878 807,439 Agricultural Agricultural real estate 213 — — 499 712 65,432 66,144 Agricultural other — — — 275 275 27,536 27,811 Total agricultural 213 — — 774 987 92,968 93,955 Residential real estate Senior liens 2,016 37 97 93 2,243 290,900 293,143 Junior liens — — — — — 2,439 2,439 Home equity lines of credit 7 — — 37 44 30,735 30,779 Total residential real estate 2,023 37 97 130 2,287 324,074 326,361 Consumer Secured 186 — — — 186 70,259 70,445 Unsecured 10 — — — 10 2,827 2,837 Total consumer 196 — — — 196 73,086 73,282 Total $ 2,652 $ 37 $ 97 $ 1,245 $ 4,031 $ 1,297,006 $ 1,301,037 Impaired Loans Loans may be classified as impaired if they meet one or more of the following criteria: 1. There has been a charge-off of its principal balance (in whole or in part); 2. The loan has been classified as a TDR; or 3. The loan is in nonaccrual status. Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by comparing the loan’s outstanding balance to the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, less costs to sell, if the loan is collateral dependent. Large groups of smaller-balance, homogeneous residential real estate and consumer loans are collectively evaluated for impairment by comparing the loan’s unpaid principal balance to the present value of expected future cash flows discounted at the loan’s effective interest rate. We do not recognize interest income on impaired loans in nonaccrual status. For impaired loans not classified as nonaccrual, interest income is recognized daily, as earned, according to the terms of the loan agreement and the principal amount outstanding. The following is a summary of impaired loans as of: June 30, 2022 December 31, 2021 Recorded Balance Unpaid Principal Balance Valuation Allowance Recorded Balance Unpaid Principal Balance Valuation Allowance Impaired loans with a valuation allowance Commercial real estate $ 190 $ 189 $ 19 $ 192 $ 193 $ 9 Commercial other 2,825 2,825 8 2,802 2,802 4 Residential real estate senior liens 2,994 3,266 488 3,417 3,688 565 Total impaired loans with a valuation allowance 6,009 6,280 515 6,411 6,683 578 Impaired loans without a valuation allowance Commercial real estate 5,399 5,715 5,829 6,145 Commercial other 217 217 444 444 Agricultural real estate 8,665 8,665 9,538 9,538 Agricultural other 2,692 2,692 4,651 4,651 Home equity lines of credit — — 37 37 Total impaired loans without a valuation allowance 16,973 17,289 20,499 20,815 Impaired loans Commercial 8,631 8,946 27 9,267 9,584 13 Agricultural 11,357 11,357 — 14,189 14,189 — Residential real estate 2,994 3,266 488 3,454 3,725 565 Total impaired loans $ 22,982 $ 23,569 $ 515 $ 26,910 $ 27,498 $ 578 The following is a summary of impaired loans for the: Three Months Ended June 30 2022 2021 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 191 $ 3 $ 2,681 $ 35 Commercial other 2,748 32 1,563 36 Agricultural real estate — — 607 — Residential real estate senior liens 3,142 31 3,912 35 Total impaired loans with a valuation allowance 6,081 66 8,763 106 Impaired loans without a valuation allowance Commercial real estate 5,570 89 6,406 93 Commercial other 343 4 2,503 10 Agricultural real estate 8,316 101 10,016 133 Agricultural other 2,913 26 4,529 55 Total impaired loans without a valuation allowance 17,142 220 23,454 291 Impaired loans Commercial 8,852 128 13,153 174 Agricultural 11,229 127 15,152 188 Residential real estate 3,142 31 3,912 35 Total impaired loans $ 23,223 $ 286 $ 32,217 $ 397 Six Months Ended June 30 2022 2021 Average Recorded Balance Interest Income Recognized Average Recorded Balance Interest Income Recognized Impaired loans with a valuation allowance Commercial real estate $ 192 $ 6 $ 2,553 $ 63 Commercial other 2,742 62 808 36 Agricultural real estate — — 1,058 11 Agricultural other — — 339 — Residential real estate senior liens 3,248 66 4,070 78 Total impaired loans with a valuation allowance 6,182 134 8,828 188 Impaired loans without a valuation allowance Commercial real estate 5,677 174 5,656 194 Commercial other 400 15 3,589 50 Agricultural real estate 8,534 225 9,717 265 Agricultural other 3,403 71 3,776 116 Home equity lines of credit 9 — — — Total impaired loans without a valuation allowance 18,023 485 22,738 625 Impaired loans Commercial 9,011 257 12,606 343 Agricultural 11,937 296 14,890 392 Residential real estate 3,257 66 4,070 78 Total impaired loans $ 24,205 $ 619 $ 31,566 $ 813 We had committed to advance $565 and $266 in additional funds to be disbursed in connection with impaired loans, which includes TDRs, of June 30, 2022 and December 31, 2021, respectively. Troubled Debt Restructurings A loan modification is considered to be a TDR when the modification includes terms outside of normal lending practices to a borrower who is experiencing financial difficulties. Typical concessions granted include, but are not limited to: • Agreeing to interest rates below prevailing market rates for debt with similar risk characteristics. • Extending the amortization period beyond typical lending guidelines for loans with similar risk characteristics. • Agreeing to an interest-only payment structure and delaying principal payments. • Forgiving principal. • Forgiving accrued interest. To determine if a borrower is experiencing financial difficulties, factors we consider include: • The borrower is currently in default on any debt. • The borrower would likely default on any debt if the concession is not granted. • The borrower’s cash flow is insufficient to service all debt if the concession is not granted. • The borrower has declared, or is in the process of declaring, bankruptcy. • The borrower is unlikely to continue as a going concern (if the entity is a business). The following is a summary of TDRs granted for the: Three Months Ended June 30 2022 2021 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Commercial other — $ — $ — 2 $ 109 $ 109 Six Months Ended June 30 2022 2021 Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Post-Modification Recorded Investment Commercial other — $ — $ — 5 $ 4,761 $ 4,761 Agricultural other — — — 6 3,712 3,712 Residential real estate 1 98 98 — — — Total 1 $ 98 $ 98 11 $ 8,473 $ 8,473 The following is a summary of concessions we granted to borrowers experiencing financial difficulty for the: Three Months Ended June 30 2022 2021 Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Commercial other — $ — — $ — — $ — 2 $ 109 Six Months Ended June 30 2022 2021 Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Below Market Interest Rate Below Market Interest Rate and Extension of Amortization Period Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Number of Loans Pre-Modification Recorded Investment Commercial other — $ — — $ — 1 $ 3,189 4 $ 1,572 Agricultural other — — — — 6 3,712 — — Residential real estate — — 1 98 — — — — Total — $ — 1 $ 98 7 $ 6,901 4 $ 1,572 We did not restructure any loans by forgiving principal or accrued interest in the three and six-month periods ended June 30, 2022 or 2021. Based on our historical loss experience, losses associated with TDRs are not significantly different than other impaired loans within the same loan segment. As such, TDRs, including TDRs that have been modified in the past 12 months that subsequently defaulted, are analyzed in the same manner as other impaired loans within their respective loan segment. We had no loans that defaulted in the three and six-month periods ended June 30, 2022 and 2021 which were modified within 12 months prior to the default date. The following is a summary of TDR loan balances as of: June 30 December 31 TDRs $ 22,394 $ 25,725 |
