Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2021

Loans and Leases Receivable Disclosure [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure

Loans and Allowance for Credit Losses

Loans are presented in the Consolidated Statements of Financial Condition net of deferred fees and costs, and discounts related to purchased loans. Net deferred fees were $7.1 million and $6.0 million as of June 30, 2021 and December 31, 2020, respectively, and discounts on purchased loans were $6.5 million and $7.0 million at March 31, 2021 and December 31, 2020, respectively. The following table provides outstanding balances related to each of our loan types:

 

	June 30, 2021		December 31, 2020
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,374,177	$	1,555,986
Time and demand	1,360,065		1,541,382
Commercial credit cards	14,112		14,604
Real estate construction	414,816		427,221
Residential real estate	1,828,783		1,750,592
Residential first lien	1,218,300		1,144,323
Residential junior lien/home equity	610,483		606,269
Commercial real estate	2,205,758		2,211,569
Multifamily	385,905		371,239
Nonowner occupied	1,429,192		1,421,151
Owner occupied	390,661		419,179
Loans to individuals	917,001		815,815
Automobile	829,150		712,800
Consumer credit cards	10,834		12,360
Consumer other	77,017		90,655
Total loans	$	6,740,535	$	6,761,183

In the table above, Commercial, financial, agricultural and other loans at June 30, 2021 and December 31, 2020 includes $292.4 million and $478.9 million, respectively, in Paycheck Protection Program ("PPP") loans for small businesses who meet the necessary eligibility requirements. PPP loans are 100% guaranteed by the Small Business Administration ("SBA") under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the PPP requirements. Because PPP loans are fully

guaranteed by the SBA, there is no allowance for credit losses recognized for these loans. Although the Company believes that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program, there could be risks and liability to the Company associated with participation in the program.

On March 27, 2020, the CARES Act was signed into law, providing banking organizations with optional, temporary relief from complying with CECL. The Company elected to defer its adoption of CECL until the fourth quarter 2020. At the end of the deferral period, CECL was adopted effective January 1, 2020. The allowance for credit losses for the interim period ending June 30, 2020, was calculated in accordance with previously applicable GAAP.

First Commonwealth’s loan portfolio includes five primary loan categories. When calculating the allowance for credit losses these categories are classified into eleven portfolio segments. The composition of loans by portfolio segment includes:

Commercial, financial, agricultural and other

Time & Demand - Consists primarily of commercial and industrial loans. This category consists of loans that are typically cash flow dependent and therefore have different risk and loss characteristics than other commercial loans. Loans in this category include revolving and term structures with fixed and variable interest rates. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Commercial Credit Cards - Consists of unsecured credit cards for commercial customers. These commercial credit cards have separate characteristics outside of normal commercial non-real estate loans, as they tend to have shorter overall duration. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Real estate construction

Includes both 1-4 family and commercial construction loans. The risk and loss characteristics of the construction category are different than other real estate secured categories due to the collateral being at various stages of completion. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and measures of completed construction projects.

Residential real estate

Residential first lien - Consists of loans with collateral of 1-4 family residencies with a senior lien position. The risk and loss characteristics are unique for this group because the collateral for these loans are the borrower’s primary residence. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Residential Junior Lien/Home Equity - Consists of loans with collateral of 1-4 family residencies with an open end line of credit or junior lien position. The junior lien position for the majority of these loans provides a higher risk of loss than other residential real estate loans. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Commercial real estate

Multifamily - Consists of loans secured by commercial multifamily properties. Real estate related to rentals to consumers could provide unique risk and loss characteristics. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of commercial real estate values and rental vacancy.

Nonowner Occupied - Consists of loans secured by commercial real estate non-owner occupied and provides different loss characteristics than other real estate categories. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Owner Occupied - Consists of loans secured by commercial real estate owner occupied properties. The risk and loss characteristics of this category were considered different than other real estate categories because it is owner occupied and would impact the ability to conduct business. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Loans to individuals

Automobile - Consists of both direct and indirect loans with automobiles and recreational vehicles held as collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and automobile retention value.

Consumer Credit Cards – Consists of unsecured consumer credit cards. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and economic conditions measured by GDP.

Other Consumer - Consists of lines of credit, student loans and other consumer loans, not secured by real estate or autos. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and the level of household debt.

The allowance for credit losses is calculated by pooling loans of similar credit risk characteristics and applying a discounted cash flow methodology after incorporating probability of default and loss given default estimates. Probability of default represents an estimate of the likelihood of default and loss given default measures the expected loss upon default. Inputs impacting the expected losses include a forecast of macroeconomic factors, using a weighted forecast from a nationally recognized firm. Our model incorporates a one-year forecast of macroeconomic factors, after which the factors revert back to the historical mean over a one-year period. The most significant macroeconomic factor used in estimating credit losses is the national unemployment rate. The forecasted value for national unemployment at June 30, 2021 was 5.76% and during the one-year forecast period it was projected to average 5.37%, with a peak of 5.76%.

Credit Quality Information

As part of the on-going monitoring of credit quality within the loan portfolio, the following credit worthiness categories are used in grading our loans:

Pass	Acceptable levels of risk exist in the relationship. Includes all loans not classified as OAEM, substandard or doubtful.
Other Assets Especially Mentioned (OAEM)	Potential weaknesses that deserve management’s close attention. The potential weaknesses may result in deterioration of the repayment prospects or weaken the Company’s credit position at some future date. The credit risk may be relatively minor, yet constitute an undesirable risk in light of the circumstances surrounding the specific credit. No loss of principal or interest is expected.
Substandard	Well-defined weakness or a weakness that jeopardizes the repayment of the debt. A loan may be classified as substandard as a result of deterioration of the borrower’s financial condition and repayment capacity. Loans for which repayment plans have not been met or collateral equity margins do not protect the Company may also be classified as substandard.
Doubtful	Loans with the characteristics of substandard loans with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable.

The Company’s internal creditworthiness grading system provides a measurement of credit risk based primarily on an evaluation of the borrower’s cash flow and collateral. Category ratings are reviewed each quarter, at which time management analyzes the results, as well as other external statistics and factors related to loan performance.

The following tables represent our credit risk profile by creditworthiness:

	June 30, 2021
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,329,974	$	28,567	$	15,636	$	—	$	—	$	44,203	$	1,374,177
Time and demand	1,315,862		28,567		15,636		—		—		44,203		1,360,065
Commercial credit cards	14,112		—		—		—		—		—		14,112
Real estate construction	413,059		1,703		54		—		—		1,757		414,816
Residential real estate	1,820,506		1,531		6,746		—		—		8,277		1,828,783
Residential first lien	1,213,599		1,457		3,244		—		—		4,701		1,218,300
Residential junior lien/home equity	606,907		74		3,502		—		—		3,576		610,483
Commercial real estate	2,009,839		162,669		33,250		—		—		195,919		2,205,758
Multifamily	370,681		14,703		521		—		—		15,224		385,905
Nonowner occupied	1,263,952		138,440		26,800		—		—		165,240		1,429,192
Owner occupied	375,206		9,526		5,929		—		—		15,455		390,661
Loans to individuals	916,730		—		271		—		—		271		917,001
Automobile	828,936		—		214		—		—		214		829,150
Consumer credit cards	10,834		—		—		—		—		—		10,834
Consumer other	76,960		—		57		—		—		57		77,017
Total loans	$	6,490,108	$	194,470	$	55,957	$	—	$	—	$	250,427	$	6,740,535

 

	December 31, 2020
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,491,916	$	48,233	$	15,837	$	—	$	—	$	64,070	$	1,555,986
Time and demand	1,477,312		48,233		15,837		—		—		64,070		1,541,382
Commercial credit cards	14,604		—		—		—		—		—		14,604
Real estate construction	426,663		504		54		—		—		558		427,221
Residential real estate	1,740,992		1,902		7,698		—		—		9,600		1,750,592
Residential first lien	1,138,409		1,780		4,134		—		—		5,914		1,144,323
Residential junior lien/home equity	602,583		122		3,564		—		—		3,686		606,269
Commercial real estate	1,983,258		175,995		52,316		—		—		228,311		2,211,569
Multifamily	369,883		131		1,225		—		—		1,356		371,239
Nonowner occupied	1,216,252		161,336		43,563		—		—		204,899		1,421,151
Owner occupied	397,123		14,528		7,528		—		—		22,056		419,179
Loans to individuals	815,541		—		274		—		—		274		815,815
Automobile	712,539		—		261		—		—		261		712,800
Consumer credit cards	12,360		—		—		—		—		—		12,360
Consumer other	90,642		—		13		—		—		13		90,655
Total loans	$	6,458,370	$	226,634	$	76,179	$	—	$	—	$	302,813	$	6,761,183

The following table summarizes the loan risk rating category by loan type including term loans on an amortized cost basis by origination year:

	June 30, 2021
	Term Loans												Revolving Loans
	2021		2020		2019		2018		2017		Prior				Total
	(dollars in thousands)
Time and demand	$	335,532	$	188,651	$	160,849	$	109,102	$	59,017	$	133,929	$	372,985	$	1,360,065
Pass	335,532		188,552		149,819		108,430		52,920		118,387		362,222		1,315,862
OAEM	—		89		10,943		135		2,147		7,373		7,880		28,567
Substandard	—		10		87		537		3,950		8,169		2,883		15,636
Commercial credit cards	—		—		—		—		—		—		14,112		14,112
Pass	—		—		—		—		—		—		14,112		14,112
Real estate construction	42,696		172,170		137,732		49,029		10,255		1,799		1,135		414,816
Pass	42,694		170,912		137,732		49,029		10,255		1,548		889		413,059
OAEM	2		1,258		—		—		—		197		246		1,703
Substandard	—		—		—		—		—		54		—		54
Residential first lien	195,705		354,035		150,421		108,962		89,214		317,986		1,977		1,218,300
Pass	195,694		354,013		150,391		108,596		89,073		313,932		1,900		1,213,599
OAEM	—		—		—		75		—		1,305		77		1,457
Substandard	11		22		30		291		141		2,749		—		3,244
Residential junior lien/home equity	25,133		2,458		4,511		3,680		1,442		6,836		566,423		610,483
Pass	25,133		2,458		4,430		3,680		1,442		6,676		563,088		606,907
OAEM	—		—		—		—		—		64		10		74
Substandard	—		—		81		—		—		96		3,325		3,502
Multifamily	56,127		75,824		16,654		55,568		72,187		108,109		1,436		385,905
Pass	56,127		75,824		16,654		55,568		58,027		107,045		1,436		370,681
OAEM	—		—		—		—		14,160		543		—		14,703
Substandard	—		—		—		—		—		521		—		521
Nonowner occupied	62,682		106,872		201,303		165,753		208,921		679,702		3,959		1,429,192
Pass	62,682		106,872		201,303		155,781		181,049		552,582		3,683		1,263,952
OAEM	—		—		—		9,972		20,955		107,392		121		138,440
Substandard	—		—		—		—		6,917		19,728		155		26,800
Owner occupied	42,351		56,499		61,763		39,319		34,847		150,834		5,048		390,661
Pass	42,351		54,856		60,212		37,655		33,528		141,773		4,831		375,206
OAEM	—		1,430		658		877		1,295		5,233		33		9,526
Substandard	—		213		893		787		24		3,828		184		5,929
Automobile	261,079		302,782		159,487		69,074		28,644		8,084		—		829,150
Pass	261,079		302,782		159,399		69,058		28,616		8,002		—		828,936
Substandard	—		—		88		16		28		82		—		214
Consumer credit cards	—		—		—		—		—		—		10,834		10,834
Pass	—		—		—		—		—		—		10,834		10,834
Consumer other	2,414		6,060		11,100		7,362		1,171		6,131		42,779		77,017
Pass	2,414		6,060		11,100		7,362		1,171		6,086		42,767		76,960
Substandard	—		—		—		—		—		45		12		57
Total	$	1,023,719	$	1,265,351	$	903,820	$	607,849	$	505,698	$	1,413,410	$	1,020,688	$	6,740,535

	December 31, 2020
	Term Loans												Revolving Loans
	2020		2019		2018		2017		2016		Prior				Total
	(dollars in thousands)
Time and demand	$	598,053	$	193,601	$	142,224	$	72,277	$	74,228	$	83,313	$	377,686	$	1,541,382
Pass	597,405		189,834		140,473		63,137		68,007		65,418		353,038		1,477,312
OAEM	93		3,373		972		8,820		6,182		8,043		20,750		48,233
Substandard	555		394		779		320		39		9,852		3,898		15,837
Commercial credit cards	—		—		—		—		—		—		14,604		14,604
Pass	—		—		—		—		—		—		14,604		14,604
Real estate construction	150,493		133,195		104,167		34,803		389		1,009		3,165		427,221
Pass	150,493		133,195		104,167		34,803		389		709		2,907		426,663
OAEM	—		—		—		—		—		246		258		504
Substandard	—		—		—		—		—		54		—		54
Residential first lien	316,052		184,550		142,823		110,365		91,495		297,057		1,981		1,144,323
Pass	316,028		184,533		142,467		110,260		91,059		292,158		1,904		1,138,409
OAEM	—		—		83		—		100		1,520		77		1,780
Substandard	24		17		273		105		336		3,379		—		4,134
Residential junior lien/home equity	3,055		5,783		4,545		2,005		1,303		7,127		582,451		606,269
Pass	3,055		5,698		4,545		2,005		1,303		6,909		579,068		602,583
OAEM	—		—		—		—		—		112		10		122
Substandard	—		85		—		—		—		106		3,373		3,564
Multifamily	76,249		16,287		69,439		66,963		34,383		106,328		1,590		371,239
Pass	76,249		16,287		69,439		66,963		34,383		104,972		1,590		369,883
OAEM	—		—		—		—		—		131		—		131
Substandard	—		—		—		—		—		1,225		—		1,225
Nonowner occupied	105,861		199,280		161,018		214,915		217,883		518,052		4,142		1,421,151
Pass	105,861		190,301		139,643		181,659		175,148		419,900		3,740		1,216,252
OAEM	—		8,979		21,375		26,339		37,762		66,752		129		161,336
Substandard	—		—		—		6,917		4,973		31,400		273		43,563
Owner occupied	59,519		72,313		61,079		40,796		27,415		152,555		5,502		419,179
Pass	58,551		70,726		55,478		39,351		26,359		141,376		5,282		397,123
OAEM	968		684		4,736		1,421		114		6,572		33		14,528
Substandard	—		903		865		24		942		4,607		187		7,528
Automobile	350,293		202,923		96,355		45,218		14,285		3,726		—		712,800
Pass	350,293		202,827		96,336		45,187		14,255		3,641		—		712,539
Substandard	—		96		19		31		30		85		—		261
Consumer credit cards	—		—		—		—		—		—		12,360		12,360
Pass	—		—		—		—		—		—		12,360		12,360
Consumer other	7,814		14,464		10,752		1,965		711		6,383		48,566		90,655
Pass	7,814		14,464		10,752		1,965		711		6,373		48,563		90,642
Substandard	—		—		—		—		—		10		3		13
Total	$	1,667,389	$	1,022,396	$	792,402	$	589,307	$	462,092	$	1,175,550	$	1,052,047	$	6,761,183

Portfolio Risks

The credit quality of our loan portfolio can potentially represent significant risk to our earnings, capital and liquidity. First Commonwealth devotes substantial resources to managing this risk primarily through our credit administration department that develops and administers policies and procedures for underwriting, maintaining, monitoring and collecting loans. Credit administration is independent of lending departments and oversight is provided by the Credit Committee of the First Commonwealth Board of Directors.

Total net charge-offs for the six months ended June 30, 2021 and 2020 were $7.2 million and $8.0 million, respectively.

Age Analysis of Past Due Loans by Segment

The following tables delineate the aging analysis of the recorded investments in past due loans as of June 30, 2021 and December 31, 2020. Also included in these tables are loans that are 90 days or more past due and still accruing because they are well-secured and in the process of collection.

	June 30, 2021
	30 - 59 days past due			60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	166		$	48	$	8	$	12,349	$	12,571	$	1,361,606	$	1,374,177
Time and demand	116			6		—		12,349		12,471		1,347,594		1,360,065
Commercial credit cards	50		1	42		8		—		100		14,012		14,112
Real estate construction	—			—		—		54		54		414,762		414,816
Residential real estate	3,064			578		434		6,102		10,178		1,818,605		1,828,783
Residential first lien	2,116			381		367		2,817		5,681		1,212,619		1,218,300
Residential junior lien/home equity	948			197		67		3,285		4,497		605,986		610,483
Commercial real estate	91			149		—		27,424		27,664		2,178,094		2,205,758
Multifamily	—			—		—		445		445		385,460		385,905
Nonowner occupied	—			101		—		24,726		24,827		1,404,365		1,429,192
Owner occupied	91			48		—		2,253		2,392		388,269		390,661
Loans to individuals	1,350			449		461		271		2,531		914,470		917,001
Automobile	945		1	322		66		214		1,547		827,603		829,150
Consumer credit cards	38			23		120		—		181		10,653		10,834
Consumer other	367			104		275		57		803		76,214		77,017
Total loans	$	4,671		$	1,224	$	903	$	46,200	$	52,998	$	6,687,537	$	6,740,535

 

	December 31, 2020
	30 - 59 days past due			60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	146		$	62	$	112	$	3,317	$	3,637	$	1,552,349	$	1,555,986
Time and demand	97			28		23		3,317		3,465		1,537,917		1,541,382
Commercial credit cards	49		1	34		89		—		172		14,432		14,604
Real estate construction	936			—		—		54		990		426,231		427,221
Residential real estate	3,883			1,492		769		6,824		12,968		1,737,624		1,750,592
Residential first lien	1,775			660		267		3,489		6,191		1,138,132		1,144,323
Residential junior lien/home equity	2,108			832		502		3,335		6,777		599,492		606,269
Commercial real estate	237			160		3		35,072		35,472		2,176,097		2,211,569
Multifamily	—			—		—		460		460		370,779		371,239
Nonowner occupied	18			104		—		31,822		31,944		1,389,207		1,421,151
Owner occupied	219			56		3		2,790		3,068		416,111		419,179
Loans to individuals	2,870			852		639		274		4,635		811,180		815,815
Automobile	2,090		1	417		94		261		2,862		709,938		712,800
Consumer credit cards	52			39		123		—		214		12,146		12,360
Consumer other	728			396		422		13		1,559		89,096		90,655
Total loans	$	8,072		$	2,566	$	1,523	$	45,541	$	57,702	$	6,703,481	$	6,761,183

Nonaccrual Loans

The previous tables summarize nonaccrual loans by loan segment. The Company generally places loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain, when part of the principal balance has been charged off and no restructuring has occurred, or the loans reach a certain number of days past due. Generally, loans 90 days or more past due are placed on nonaccrual status, except for consumer loans, which are placed on nonaccrual status at 150 days past due.

When a loan is placed on nonaccrual, the accrued unpaid interest receivable is reversed against interest income and all future payments received are applied as a reduction to the loan principal. Generally, the loan is returned to accrual status when (a) all delinquent interest and principal becomes current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer in doubt.

Nonperforming Loans

Management considers loans to be nonperforming when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Nonperforming loans include nonaccrual loans and all troubled debt restructured loans. When management identifies a loan as nonperforming, the credit loss is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole source for repayment of the loan is the operation or liquidation of collateral. When the loan is collateral dependent, the appraised value less estimated cost to sell is utilized. If management determines the value of the loan is less than the recorded investment in the loan, a credit loss is recognized through an allowance estimate or a charge-off to the allowance for credit losses.

When the ultimate collectability of the total principal of a nonperforming loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of a nonperforming loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

At June 30, 2021, there were no nonperforming loans held for sale. At December 31, 2020, there was one nonperforming loan totaling $13 thousand classified as held for sale. During the six months ended June 30, 2021, a $5.0 million nonperforming

relationship was transferred to held for sale and sold, resulting in a $0.4 million gain. During the six months ended June 30, 2020, there were no gains recognized on the sale of nonperforming loans.

The following tables include the recorded investment and unpaid principal balance for nonperforming loans with the associated allowance amount, if applicable, as of June 30, 2021 and December 31, 2020. Also presented are the average recorded investment in nonperforming loans and the related amount of interest recognized while the loan was considered nonperforming. Average balances are calculated using month-end balances of the loans for the period reported and are included in the table below based on their period-end allowance position.

	June 30, 2021						December 31, 2020
	Recorded investment		Unpaid principal balance		Related allowance		Recorded investment		Unpaid principal balance		Related allowance
	(dollars in thousands)
With no related allowance recorded:
Commercial, financial, agricultural and other	$	5,598	$	14,230			$	2,025	$	2,725
Time and demand	5,598		14,230				2,025		2,725
Real estate construction	54		53				54		53
Residential real estate	10,029		12,207				10,939		13,258
Residential first lien	5,364		6,746				6,062		7,575
Residential junior lien/home equity	4,665		5,461				4,877		5,683
Commercial real estate	13,575		14,388				20,650		23,641
Multifamily	—		—				1		82
Nonowner occupied	11,134		11,621				16,786		19,459
Owner occupied	2,441		2,767				3,863		4,100
Loans to individuals	476		513				418		447
Automobile	419		452				405		430
Consumer other	57		61				13		17
Subtotal	29,732		41,391				34,086		40,124
With an allowance recorded:
Commercial, financial, agricultural and other	8,737		8,889		2,358		4,210		9,377		1,268
Time and demand	8,737		8,889		2,358		4,210		9,377		1,268
Real estate construction	—		—		—		—		—		—
Residential real estate	—		—		—		—		—		—
Residential first lien	—		—		—		—		—		—
Residential junior lien/home equity	—		—		—		—		—		—
Commercial real estate	14,324		15,850		588		15,757		15,830		3,638
Multifamily	445		463		113		459		470		116
Nonowner occupied	13,614		15,122		475		15,060		15,122		3,508
Owner occupied	265		265		—		238		238		14
Loans to individuals	—		—		—		—		—		—
Automobile	—		—		—		—		—		—
Consumer other	—		—		—		—		—		—
Subtotal	23,061		24,739		2,946		19,967		25,207		4,906
Total	$	52,793	$	66,130	$	2,946	$	54,053	$	65,331	$	4,906

	For the Six Months Ended June 30,
	2021				2020
	Total Loans				Originated Loans				Acquired Loans
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
	(dollars in thousands)
With no related allowance recorded:
Commercial, financial, agricultural and other	$	3,966	$	43	$	6,894	$	34	$	74	$	—
Time and demand	3,966		43
Real estate construction	54		—		—		—		—		—
Residential real estate	10,726		221		10,182		159		1,922		17
Residential first lien	5,822		176
Residential junior lien/home equity	4,904		45
Commercial real estate	15,879		30		14,367		67		238		—
Multifamily	—		—
Nonowner occupied	13,079		10
Owner occupied	2,800		20
Loans to individuals	477		6		457		6		11		—
Automobile	426		6
Consumer other	51		—
Subtotal	31,102		300		31,900		266		2,245		17
With an allowance recorded:
Commercial, financial, agricultural and other	6,813		36		1,881		1		—		—
Time and demand	6,813		36
Real estate construction	—		—		—		—		51		—
Residential real estate	—		—		290		—		—		—
Residential first lien	—		—
Residential junior lien/home equity	—		—
Commercial real estate	14,730		—		11,509		4		1,222		—
Multifamily	457		—
Nonowner occupied	14,096		—
Owner occupied	177		—
Loans to individuals	—		—		—		—		—		—
Automobile	—		—
Consumer other	—		—
Subtotal	21,543		36		13,680		5		1,273		—
Total	$	52,645	$	336	$	45,580	$	271	$	3,518	$	17

	For the Three Months Ended June 30,
	2021					2020
	Total Loans					Originated Loans				Acquired Loans
	Average recorded investment			Interest income recognized		Average recorded investment		Interest Income Recognized		Average recorded investment		Interest Income Recognized
	(dollars in thousands)
With no related allowance recorded:
Commercial, financial, agricultural and other	$	5,591		$	31	$	6,758	$	12	$	74	$	—
Time and demand	5,591			31
Real estate construction	54			—		—		—		—		—
Residential real estate	10,560		1	159		9,836		80		1,753		15
Residential first lien	5,661			132
Residential junior lien/home equity	4,899			27
Commercial real estate	13,689			7		17,411		48		246		—
Multifamily	—			—
Nonowner occupied	11,227			2
Owner occupied	2,462			5
Loans to individuals	475			4		468		4		11		—
Automobile	415			4
Consumer other	60			—
Subtotal	30,369			201		34,473		144		2,084		15
With an allowance recorded:
Commercial, financial, agricultural and other	8,791		1	19		2,028		—		—		—
Time and demand	8,791			19
Real estate construction	—			—		—		—		103		—
Residential real estate	—		1	—		254		—		—		—
Residential first lien	—			—
Residential junior lien/home equity	—			—
Commercial real estate	14,329			—		17,142		—		1,828		—
Multifamily	450			—
Nonowner occupied	13,614			—
Owner occupied	265			—
Loans to individuals	—			—		—		—		—		—
Automobile	—			—
Consumer other	—			—
Subtotal	23,120			19		19,424		—		1,931		—
Total	$	53,489		$	220	$	53,897	$	144	$	4,015	$	15

Unfunded commitments related to nonperforming loans were $0.2 million at both June 30, 2021 and December 31, 2020. After consideration of the requirements to draw and available collateral related to these commitments, it was determined that no reserve was required at June 30, 2021. At December 31, 2020, a reserve of $26 thousand was established for these off balance sheet exposures.

Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as result of the financial difficulties experienced by the borrower, who could not obtain comparable terms from alternative financing sources. Troubled debt restructured loans are considered to be nonperforming loans.

In March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. These modifications typically provide for the deferral of both principal and interest for 90 days. The CARES Act,

along with a joint agency statement issued by banking regulators, provides that short-term modifications, meeting certain criteria and in response to COVID-19, do not need to be accounted for as a troubled debt restructured loans. Additionally, short-term loan modifications that are not accounted for as a troubled debt restructured loan, in accordance with the CARES Act, would remain classified as current during the deferral period and therefore are not reflected in the past due loan tables provided on the prior page. As of June 30, 2021, loans with an aggregate principal balance of $59.5 million were in a forbearance period granted under the CARES Act.

The following table provides detail as to the total troubled debt restructured loans and total commitments outstanding on troubled debt restructured loans:

	June 30, 2021		December 31, 2020
	(dollars in thousands)
Troubled debt restructured loans
Accrual status	$	6,593	$	8,512
Nonaccrual status	23,981		14,740
Total	$	30,574	$	23,252
Commitments
Letters of credit	$	60	$	60
Unused lines of credit	12		11
Total	$	72	$	71

The following tables provide detail, including specific reserves and reasons for modification, related to loans identified as troubled debt restructurings:

	For the Six Months Ended June 30, 2021
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Commercial, financial, agricultural and other	3	$	6,373	$	—	$	6,596	$	12,969	$	10,167	$	1,091
Time and demand	3	6,373		—		6,596		12,969		10,167		1,091
Residential real estate	7	—		105		186		291		287		—
Residential first lien	6	—		105		172		277		274		—
Residential junior lien/home equity	1	—		—		14		14		13		—
Loans to individuals	4	—		93		—		93		85		—
Automobile	4	—		93		—		93		85		—
Total	14	$	6,373	$	198	$	6,782	$	13,353	$	10,539	$	1,091

	For the Six Months Ended June 30, 2020
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Residential real estate	4	—		—		264		264		256		—
Commercial real estate	2	—		—		12		12		9		—
Loans to individuals	10	—		71		124		195		186		—
Total	16	$	—	$	71	$	400	$	471	$	451	$	—

The troubled debt restructurings included in the above tables are also included in the nonperforming loan tables provided earlier in this note. Loans defined as modified due to a change in rate may include loans that were modified for a change in rate as well as a re-amortization of the principal and an extension of the maturity. For the six months ended June 30, 2021 and 2020, $198 thousand and $71 thousand, respectively, of total rate modifications represent loans with modifications to the rate as well as payment as a result of re-amortization. For both 2021 and 2020, the changes in loan balances between the pre-modification balance and the post-modification balance are due to customer payments.

The following tables provide detail, including specific reserves and reasons for modification, related to loans identified as troubled debt restructurings:

	For the Three Months Ended June 30, 2021
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Commercial, financial, agricultural and other	1	$	—	$	—	$	6,596	$	6,596	$	3,916	$	—
Time and demand	1	—		—		6,596		6,596		3,916		—
Residential real estate	4	—		—		172		172		169		—
Residential first lien	4	—		—		172		172		169		—
Loans to individuals	2	—		29		—		29		29		—
Automobile	2	—		29		—		29		29		—
Total	7	$	—	$	29	$	6,768	$	6,797	$	4,114	$	—

	For the Three Months Ended June 30, 2020
		Type of Modification
	Number of Contracts	Extend Maturity		Modify Rate		Modify Payments		Total Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Specific Reserve
	(dollars in thousands)
Residential real estate	2	$	—	$	—	$	146	$	146	$	142	$	—
Loans to individuals	3	—		53		1		54		55		—
Total	5	$	—	$	53	$	147	$	200	$	197	$	—

The troubled debt restructurings included in the above tables are also included in the nonperforming loan tables provided earlier in this note. Loans defined as modified due to a change in rate may include loans that were modified for a change in rate as well as a re-amortization of the principal and an extension of the maturity. For the six months ended June 30, 2021 and 2020, $29 thousand and $53 thousand, respectively, of total rate modifications represent loans with modifications to the rate as well as payment as a result of re-amortization. For both 2021 and 2020 the changes in loan balances between the pre-modification balance and the post-modification balance are due to customer payments.

A troubled debt restructuring is considered to be in default when a restructured loan is 90 days or more past due. The following table provides information related to loans that were restructured within the past twelve months and that were considered to be in default during the six months ended June 30:

	2021			2020
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars in thousands)
Residential real estate	—	$	—	1	$	50
Total	—	$	—	1	$	50

The following table provides information related to loans that were restructured within the past twelve months and that were considered to be in default during the three months ended June 30:

	2021			2020
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(dollars in thousands)
Residential real estate	—	$	—	1	$	50
Total	—	$	—	1	$	50

The following tables provide detail related to the allowance for credit losses:

	For the Six Months Ended June 30, 2021
	Beginning balance			Charge-offs		Recoveries		Provision (credit)a		Ending balance
	(dollars in thousands)
Commercial, financial, agricultural and other	$	17,187		$	(4,456)	$	193	$	8,542	$	21,466
Time and demand	16,838			(4,338)		188		8,410		21,098
Commercial credit cards	349			(118)		5		132		368
Real estate construction	7,966			—		135		(3,816)		4,285
Residential real estate	14,358		—	(119)		211		(1,517)		12,933
Residential first lien	7,919			(36)		182		(671)		7,394
Residential junior lien/home equity	6,439			(83)		29		(846)		5,539
Commercial real estate	41,953			(1,557)		40		(4,641)		35,795
Multifamily	6,240			(1)		—		(1,860)		4,379
Nonowner occupied	28,414			(1,556)		40		13		26,911
Owner occupied	7,299		—	—		—		(2,794)		4,505
Loans to individuals	19,845			(2,472)		828		4,358		22,559
Automobile	16,133			(1,068)		575		3,658		19,298
Consumer credit cards	635			(247)		42		98		528
Consumer other	3,077			(1,157)		211		602		2,733
Total loans	$	101,309		$	(8,604)	$	1,407	$	2,926	$	97,038

a) The provision expense(credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

	For the Six Months Ended June 30, 2021
							Loans
	Ending balance		Ending balance: individually evaluated for credit losses		Ending balance: collectively evaluated for credit losses		Ending balance		Ending balance: individually evaluated for credit losses		Ending balance: collectively evaluated for credit losses
	(dollars in thousands)
Commercial, financial, agricultural and other	$	21,466	$	2,358	$	19,108	$	1,374,177	$	13,688	$	1,360,489
Time and demand	21,098		2,358		18,740		1,360,065		13,688		1,346,377
Commercial credit cards	368		—		368		14,112		—		14,112
Real estate construction	4,285		—		4,285		414,816		—		414,816
Residential real estate	12,933		—		12,933		1,828,783		541		1,828,242
Residential first lien	7,394		—		7,394		1,218,300		—		1,218,300
Residential junior lien/home equity	5,539		—		5,539		610,483		541		609,942
Commercial real estate	35,795		588		35,207		2,205,758		27,099		2,178,659
Multifamily	4,379		113		4,266		385,905		445		385,460
Nonowner occupied	26,911		475		26,436		1,429,192		24,624		1,404,568
Owner occupied	4,505		—		4,505		390,661		2,030		388,631
Loans to individuals	22,559		—		22,559		917,001		—		917,001
Automobile	19,298		—		19,298		829,150		—		829,150
Consumer credit cards	528		—		528		10,834		—		10,834
Consumer other	2,733		—		2,733		77,017		—		77,017
Total loans	$	97,038	$	2,946	$	94,092	$	6,740,535	$	41,328	$	6,699,207

	For the Six Months Ended June 30, 2020
	Commercial, financial, agricultural and other		Real estate construction		Residential real estate		Commercial real estate		Loans to individuals		Total
	(dollars in thousands)
Allowance for credit losses:
Originated loans:
Beginning balance	$	20,221	$	2,558	$	4,091	$	19,731	$	4,984	$	51,585
Charge-offs	(1,771)		—		(559)		(2,415)		(3,809)		(8,554)
Recoveries	117		26		121		44		476		784
Provision (credit)	6,245		483		5,586		15,770		7,683		35,767
Ending balance	24,812		3,067		9,239		33,130		9,334		79,582
Acquired loans:
Beginning balance	13		—		2		37		—		52
Charge-offs	—		—		(91)		(2)		(207)		(300)
Recoveries	15		—		25		—		8		48
Provision (credit)	304		171		64		1,321		199		2,059
Ending balance	332		171		—		1,356		—		1,859
Total ending balance	$	25,144	$	3,238	$	9,239	$	34,486	$	9,334	$	81,441
Ending balance: individually evaluated for impairment	$	958	$	171	$	—	$	5,766	$	—	$	6,895
Ending balance: collectively evaluated for impairment	24,186		3,067		9,239		28,720		9,334		74,546
Loans:
Ending balance	1,773,099		416,329		1,723,288		2,224,710		784,649		6,922,075
Ending balance: individually evaluated for impairment	3,336		308		1,498		32,537		—		37,679
Ending balance: collectively evaluated for impairment	1,769,763		416,021		1,721,790		2,192,173		784,649		6,884,396

	For the Three Months Ended June 30, 2021
	Beginning balance			Charge-offs		Recoveries		Provision (credit)a		Ending balance
	(dollars in thousands)
Commercial, financial, agricultural and other	$	21,801		$	(3,887)	$	103	$	3,449	$	21,466
Time and demand	21,427			(3,878)		99		3,450		21,098
Commercial credit cards	374			(9)		4		(1)		368
Real estate construction	4,021			—		135		129		4,285
Residential real estate	12,829		—	(14)		174		(56)		12,933
Residential first lien	7,227			(13)		159		21		7,394
Residential junior lien/home equity	5,602			(1)		15		(77)		5,539
Commercial real estate	37,668			(7)		1		(1,867)		35,795
Multifamily	4,251			—		—		128		4,379
Nonowner occupied	27,889			(7)		1		(972)		26,911
Owner occupied	5,528		—	—		—		(1,023)		4,505
Loans to individuals	20,444			(931)		499		2,547		22,559
Automobile	16,888			(388)		394		2,404		19,298
Consumer credit cards	689			(79)		25		(107)		528
Consumer other	2,867			(464)		80		250		2,733
Total loans	$	96,763		$	(4,839)	$	912	$	4,202	$	97,038

a) The provision expense(credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

	For the Three Months Ended June 30, 2020
	Commercial, financial, agricultural and other		Real estate construction		Residential real estate		Commercial real estate		Loans to individuals		Total
	(dollars in thousands)
Allowance for credit losses:
Originated loans:
Beginning balance	$	27,378	$	2,852	$	7,724	$	31,265	$	8,268	$	77,487
Charge-offs	(1,285)		—		(7)		(2,150)		(1,326)		(4,768)
Recoveries	49		26		59		—		264		398
Provision (credit)	(1,330)		189		1,463		4,015		2,128		6,465
Ending balance	24,812		3,067		9,239		33,130		9,334		79,582
Acquired loans:
Beginning balance	350		—		—		1,238		—		1,588
Charge-offs	—		—		(66)		(1)		(71)		(138)
Recoveries	2		—		12		—		1		15
Provision (credit)	(20)		171		54		119		70		394
Ending balance	332		171		—		1,356		—		1,859
Total ending balance	$	25,144	$	3,238	$	9,239	$	34,486	$	9,334	$	81,441