
	March 31, 2022		December 31, 2021
Commercial:
Commercial and Industrial Loans	$	580,819	$	493,005
Commercial Real Estate Loans	1,938,528		1,530,677
Agricultural Loans	387,764		358,150
Leases	55,700		55,345
Retail:
Home Equity Loans	249,024		222,525
Consumer Loans	86,522		70,302
Credit Cards	15,537		14,357
Residential Mortgage Loans	342,140		263,565

Subtotal	3,656,034		3,007,926
Less: Unearned Income	(3,582)		(3,662)
Allowance for Credit Losses	(45,078)		(37,017)
Loans, net	$	3,607,374	$	2,967,247

As previously disclosed, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law in March 2020, providing an approximately $2 trillion stimulus package that included direct payments to individual taxpayers, economic stimulus to significantly impacted industry sectors, emergency funding for hospitals and providers, small business loans, increased unemployment benefits, and a variety of tax incentives. For small businesses, eligible nonprofits and certain others, the CARES Act established a Paycheck Protection Program (“PPP”), a lending program administered by the Small Business Administration (“SBA”) that is intended to incentivize participants to retain their employees by providing them with loans that are fully guaranteed by the U.S. government and subject to forgiveness if program guidelines are met. The PPP was later extended and modified by the Paycheck Protection Program and Health Care Enhancement Act in April 2020 and the Paycheck Protection Program Flexibility Act in June 2020, with PPP funding under this initial round expiring on August 8, 2020.

In December 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was signed into law as part of the Consolidated Appropriations Act, 2021 (the “CAA”). In addition to direct stimulus payments and other aid, this Act provided for a second round of PPP loans through March 31, 2021. Under the American Rescue Plan Act of 2021 and the PPP Extension Act of 2021, which were both enacted during March 2021, additional funds were provided for the program and the

The Company actively participated in both rounds of the PPP, lending funds primarily to its existing loan and/or deposit customers. The PPP loans carry an interest rate of 1.00% and included a processing fee that varied depending on the balance of the loan at origination (which fee is recognized over the life of the loan). The vast majority of the Company’s PPP loans made during 2020 had two-year maturities, while PPP loans made during 2021 have five-year maturities.

Under the first round of the PPP (i.e., the 2020 round), the Company originated loans totaling approximately $351,260 in principal amount, with approximately $12,024 of related net processing fees on 3,070 PPP loan relationships. As of March 31, 2022, $350,529 of those first round PPP loans had been forgiven by the SBA and repaid to the Company pursuant to the terms of the program, with $12,022 in net processing fees having been recognized by the Company.

Under the second round of the PPP (i.e., the 2021 round), the Company originated loans totaling approximately $157,042 in principal amount, with approximately $9,022 of related net processing fees, on 2,601 PPP loan relationships. As of March 31, 2022, $150,850 of second round PPP loans had been forgiven by the SBA and repaid to the Company, with $8,713 in net processing fees having been recognized by the Company. As a result of the forgiveness of the first and second round PPP loans, $6,923 of total PPP loans remain outstanding as of March 31, 2022, with approximately $311 of net fees remaining deferred on that date.


March 31, 2022	Commercial and Industrial Loans		Commercial Real Estate Loans		Agricultural Loans		Leases		Consumer Loans		Home Equity Loans		Credit Cards		Residential Mortgage Loans		Unallocated		Total
Allowance for Credit Losses:
Beginning balance	$	9,554	$	19,245	$	4,505	$	200	$	507	$	1,061	$	240	$	1,705	$	—	$	37,017
Allowance from PCD Loans Acquired in the Current Period	376		1,945		689		—		2		—		—		105		—		3,117
Provision (Benefit) for credit loss expense	2,788		2,095		(435)		(4)		225		183		7		341		—		5,200
Loans charged-off	(5)		(78)		—		—		(210)		(37)		(39)		—		—		(369)
Recoveries collected	7		10		—		—		92		—		4		—		—		113
Total ending allowance balance	$	12,720	$	23,217	$	4,759	$	196	$	616	$	1,207	$	212	$	2,151	$	—	$	45,078


March 31, 2021	Commercial and Industrial Loans		Commercial Real Estate Loans		Agricultural Loans		Leases		Consumer Loans		Home Equity Loans		Credit Cards		Residential Mortgage Loans		Unallocated		Total
Allowance for Credit Losses:
Beginning balance	$	6,445	$	29,878	$	6,756	$	200	$	490	$	996	$	150	$	1,944	$	—	$	46,859
Provision (Benefit) for credit loss expense	(22)		(1,334)		(294)		1		(18)		(31)		59		139		—		(1,500)
Loans charged-off	(190)		(9)		—		—		(125)		—		(47)		(1)		—		(372)
Recoveries collected	15		5		—		—		92		—		—		—		—		112
Total ending allowance balance	$	6,248	$	28,540	$	6,462	$	201	$	439	$	965	$	162	$	2,082	$	—	$	45,099

The Company utilizes the Static Pool methodology in determining expected future credit losses. Static pool analysis means segmenting and tracking loans over a period of time based on similar risk characteristics such as loan structure, collateral type, industry of borrower and concentrations, contractual terms and credit risk indicators. Static pool calculates a loss rate on a closed pool of loans that existed on a specified start date based upon the remaining life of each segment.

Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration industry and collateral concentrations, acquired loan portfolio characteristics and other credit-related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.

The Company estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in underwriting standards, portfolio mix, delinquency level, changes in environmental conditions, unemployment rates, risk classifications and collateral values. The allowance for credit losses is measured on a collective (pooled) basis when similar risk characteristics exist. Based on the potential increased losses related to the economic impact of the COVID-19 pandemic, the bank has considered this loss experience may align with loss experience from the recessionary period from 2008-2011 and qualitative adjustments have been made accordingly.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date adjusted for selling costs.

Post CUB acquisition and for the three months ended March 31, 2022, the allowance for credit losses decreased primarily due to a decline in individually analyzed loans as well as a decline in the reserve attributable to pandemic-related stressed sectors. While there continues to be great uncertainty related to COVID-19 on our borrowers and communities, we have recognized improvements in employment and gross domestic product which are key indicators utilized in our forecasting for our allowance calculations. Since PPP loans are guaranteed by the Small Business Administration (SBA), they have minimal impact on the allowance for credit losses.

All classes of loans, including loans acquired with deteriorated credit quality, are generally placed on non-accrual status when scheduled principal or interest payments are past due for 90 days or more or when the borrower’s ability to repay becomes doubtful. For purchased loans, the determination is made at the time of acquisition as well as over the life of the loan. Uncollected accrued interest for each class of loans is reversed against income at the time a loan is placed on non-accrual. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. All classes of loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans are typically charged-off at 180 days past due, or earlier if deemed uncollectible. Exceptions to the non-accrual and charge-off policies are made when the loan is well secured and in the process of collection.


March 31, 2022	Non-Accrual With No Allowance for Credit Loss (1)		Total Non-Accrual		Loans Past Due Over 89 Days Still Accruing

Commercial and Industrial Loans	$	2,014	$	10,470	$	383
Commercial Real Estate Loans	58		2,124		—
Agricultural Loans	1,027		1,055		—
Leases	—		—		—
Home Equity Loans	138		216		—
Consumer Loans	17		17		—
Credit Cards	61		61		—
Residential Mortgage Loans	986		986		—
Total	$	4,301	$	14,929	$	383


December 31, 2021	Non-Accrual With No Allowance for Credit Loss (1)		Total Non-Accrual		Loans Past Due Over 89 Days Still Accruing

Commercial and Industrial Loans	$	1,989	$	10,530	$	—
Commercial Real Estate Loans	145		2,243		156
Agricultural Loans	1,041		1,136		—
Leases	—		—		—
Home Equity Loans	1		24		—
Consumer Loans	16		18		—
Credit Cards	64		64		—
Residential Mortgage Loans	587		587		—
Total	$	3,843	$	14,602	$	156


March 31, 2022	Real Estate		Equipment		Accounts Receivable		Other		Total

Commercial and Industrial Loans	$	4,392	$	2,467	$	6,016	$	519	$	13,394
Commercial Real Estate Loans	26,025		37		—		—		26,062
Agricultural Loans	4,386		524		—		—		4,910
Leases	—		—		—		—		—
Home Equity Loans	496		—		—		—		496
Consumer Loans	6		4		—		—		10
Credit Cards	—		—		—		—		—
Residential Mortgage Loans	819		—		—		—		819
Total	$	36,124	$	3,032	$	6,016	$	519	$	45,691


December 31, 2021	Real Estate		Equipment		Accounts Receivable		Other		Total

Commercial and Industrial Loans	$	1,716	$	2,444	$	549	$	5,822	$	10,531
Commercial Real Estate Loans	4,610		—		—		—		4,610
Agricultural Loans	1,522		—		—		—		1,522
Leases	—		—		—		—		—
Home Equity Loans	441		—		—		—		441
Consumer Loans	6		—		—		2		8
Credit Cards	—		—		—		—		—
Residential Mortgage Loans	652		—		—		—		652
Total	$	8,947	$	2,444	$	549	$	5,824	$	17,764


March 31, 2022	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and Industrial Loans	$	137	$	1,235	$	7,673	$	9,045	$	571,774	$	580,819
Commercial Real Estate Loans	956		133		635		1,724		1,936,804		1,938,528
Agricultural Loans	1,005		—		—		1,005		386,759		387,764
Leases	—		—		—		—		55,700		55,700
Home Equity Loans	490		28		216		734		248,290		249,024
Consumer Loans	112		68		—		180		86,342		86,522
Credit Cards	56		7		61		124		15,413		15,537
Residential Mortgage Loans	3,160		177		621		3,958		338,182		342,140
Total	$	5,916	$	1,648	$	9,206	$	16,770	$	3,639,264	$	3,656,034


December 31, 2021	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and Industrial Loans	$	12	$	—	$	6,147	$	6,159	$	486,846	$	493,005
Commercial Real Estate Loans	—		5		891		896		1,529,781		1,530,677
Agricultural Loans	—		—		—		—		358,150		358,150
Leases	—		—		—		—		55,345		55,345
Home Equity Loans	225		229		25		479		222,046		222,525
Consumer Loans	158		58		4		220		70,082		70,302
Credit Cards	61		9		64		134		14,223		14,357
Residential Mortgage Loans	2,726		507		369		3,602		259,963		263,565
Total	$	3,182	$	808	$	7,500	$	11,490	$	2,996,436	$	3,007,926

In certain instances, the Company may choose to restructure the contractual terms of loans. A troubled debt restructuring occurs when the Bank grants a concession to the borrower that it would not otherwise consider due to a borrower’s financial difficulty. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without modification. This evaluation is performed under the Company’s internal underwriting policy. The Company uses the same methodology for loans acquired with deteriorated credit quality as for all other loans when determining whether the loan is a troubled debt restructuring.

As of March 31, 2022, the Company had troubled debt restructurings totaling $102. The Company had no specific allocation of allowance for these loans at March 31, 2022. As of December 31, 2021, the Company had troubled debt restructurings totaling $104. The Company had no specific allocation of allowance for these loans at December 31, 2021.

For the three months ended March 31, 2022 and 2021, the Company had no loans modified as troubled debt restructurings. Additionally, there were no loans modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the three months ended March 31, 2022 and 2021.

On April 7, 2020, the federal banking regulators issued a revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions, which, among other things, encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, and stated that institutions generally do not need to categorize COVID-19-related modifications as troubled debt restructurings and that the agencies will not direct supervised institutions to automatically categorize all COVID-19 related loan modifications as troubled debt restructurings. Similarly, under the CARES Act, provisions were included that allow for loan modifications to not be classified as TDRs if certain criteria are met. This TDR exemption, which was set to expire on December 31, 2020, was extended under the CAA to, effectively, January 1, 2022.

In response to requests from borrowers who had experienced pandemic-related business or personal cash flow interruptions, and in accordance with regulatory guidance, the Company began making short-term loan modifications involving both partial and full payment deferrals in April 2020. As of both March 31, 2022 and December 31, 2021, the Company had just one commercial real estate loan, in the principal amount of $3.5 million, with a payment modification that was still in effect, with such credit relationship making full interest payments.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company classifies loans as to credit risk by individually analyzing loans. This analysis includes commercial and industrial loans, commercial real estate loans, and agricultural loans with an outstanding balance greater than $250. This analysis is typically performed on at least an annual basis. The Company uses the following definitions for risk ratings:

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.


	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial and Industrial:
Risk Rating
Pass	$	40,839	$	141,045	$	55,388	$	61,429	$	32,911	$	71,811	$	156,335	$	559,758
Special Mention	—		109		598		206		1,124		897		2,210		5,144
Substandard	—		170		1,641		453		1,111		3,813		8,729		15,917
Doubtful	—		—		—		—		—		—		—		—
Total Commercial & Industrial Loans	$	40,839	$	141,324	$	57,627	$	62,088	$	35,146	$	76,521	$	167,274	$	580,819

Commercial Real Estate:
Risk Rating
Pass	$	73,592	$	524,161	$	323,046	$	187,795	$	157,093	$	545,026	$	42,879	$	1,853,592
Special Mention	767		1,896		5,230		703		16,420		39,276		—		64,292
Substandard	—		196		—		8,360		4,108		7,980		—		20,644
Doubtful	—		—		—		—		—		—		—		—
Total Commercial Real Estate Loans	$	74,359	$	526,253	$	328,276	$	196,858	$	177,621	$	592,282	$	42,879	$	1,938,528

Agricultural:
Risk Rating
Pass	$	10,349	$	54,878	$	55,868	$	28,967	$	25,582	$	106,671	$	62,604	$	344,919
Special Mention	150		1,605		7,108		5,500		2,943		13,940		5,894		37,140
Substandard	—		219		—		57		379		4,754		296		5,705
Doubtful	—		—		—		—		—		—		—		—
Total Agricultural Loans	$	10,499	$	56,702	$	62,976	$	34,524	$	28,904	$	125,365	$	68,794	$	387,764

Leases:
Risk Rating
Pass	$	5,106	$	18,166	$	11,958	$	12,028	$	4,706	$	3,736	$	—	$	55,700
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total Leases	$	5,106	$	18,166	$	11,958	$	12,028	$	4,706	$	3,736	$	—	$	55,700

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following tables present the amortized cost in residential, home equity and consumer loans based on payment activity.


	Term Loans Amortized Cost Basis by Origination Year
As of March 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
Consumer:
Payment performance
Performing	$	10,783	$	44,901	$	15,779	$	4,531	$	4,320	$	2,423	$	3,768	$	86,505
Nonperforming	—		—		—		—		3		14		—		17
Total Consumer Loans	$	10,783	$	44,901	$	15,779	$	4,531	$	4,323	$	2,437	$	3,768	$	86,522

Home Equity:
Payment performance
Performing	$	34	$	—	$	—	$	—	$	21	$	821	$	247,932	$	248,808
Nonperforming	—		—		—		—		—		9		207		216
Total Home Equity Loans	$	34	$	—	$	—	$	—	$	21	$	830	$	248,139	$	249,024

Residential Mortgage:
Payment performance
Performing	$	18,859	$	104,561	$	54,014	$	22,424	$	20,538	$	120,669	$	90	$	341,155
Nonperforming	—		—		113		—		75		797		—		985
Total Residential Mortgage Loans	$	18,859	$	104,561	$	54,127	$	22,424	$	20,613	$	121,466	$	90	$	342,140


	Term Loans Amortized Cost Basis by Origination Year
As of December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost Basis		Total
Consumer:
Payment performance
Performing	$	39,923	$	15,900	$	4,325	$	4,531	$	600	$	1,655	$	3,350	$	70,284
Nonperforming	3		—		—		—		—		15		—		18
Total Consumer Loans	$	39,926	$	15,900	$	4,325	$	4,531	$	600	$	1,670	$	3,350	$	70,302

Home Equity:
Payment performance
Performing	$	—	$	—	$	—	$	21	$	—	$	835	$	221,644	$	222,500
Nonperforming	—		—		—		—		—		1		24		25
Total Home Equity Loans	$	—	$	—	$	—	$	21	$	—	$	836	$	221,668	$	222,525

Residential Mortgage:
Payment performance
Performing	$	84,809	$	38,717	$	15,244	$	17,369	$	19,688	$	87,164	$	—	$	262,991
Nonperforming	—		—		—		—		—		574		—		574
Total Residential Mortgage Loans	$	84,809	$	38,717	$	15,244	$	17,369	$	19,688	$	87,738	$	—	$	263,565

The Company considers the performance of the loan portfolio and its impact on the allowance for credit loan losses. For certain retail loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in credit cards based on payment activity: