
	June 30, 2022		December 31, 2021
Commercial and agricultural:
Commercial and industrial	$	258,474	$	256,893
Agricultural	89		394
Commercial mortgages:
Construction	94,937		82,204
Commercial mortgages, other	771,201		720,358
Residential mortgages	276,847		259,334
Consumer loans:

Home equity lines and loans	73,770		70,670
Indirect consumer loans	132,330		118,569
Direct consumer loans	9,914		9,827
Total loans, net of deferred loan fees and costs	1,617,562		1,518,249
Interest receivable on loans	4,431		4,133
Total recorded investment in loans	$	1,621,993	$	1,522,382

The Corporation's concentrations of credit risk by loan type are reflected in the preceding table. The concentrations of credit risk with standby letters of credit, committed lines of credit and commitments to originate new loans generally follow the loan classifications in the table above. As of June 30, 2022 and December 31, 2021, the Corporation had outstanding PPP loan balances of $3.0 million and $43.2 million, respectively, which were included in commercial and industrial loans in the table above. These loans require no allowance for loan losses as of June 30, 2022 and December 31, 2021 since they are government guaranteed loans.


	Three Months Ended June 30, 2022
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	3,485	$	12,963	$	1,606	$	1,874	$	19,928
Charge-offs	(16)		(687)		—		(128)		(831)
Recoveries	23		1		—		108		132
Net recoveries (charge-offs)	7		(686)		—		(20)		(699)
Provision	72		(1,963)		108		39		(1,744)
Ending balance	$	3,564	$	10,314	$	1,714	$	1,893	$	17,485


	Three Months Ended June 30, 2021
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	4,337	$	11,787	$	2,115	$	2,670	$	20,909
Charge-offs	(25)		—		(46)		(156)		(227)
Recoveries	10		1		10		123		144
Net recoveries (charge-offs)	(15)		1		(36)		(33)		(83)
Provision	(694)		1,175		(288)		(343)		(150)
Ending balance	$	3,628	$	12,963	$	1,791	$	2,294	$	20,676


	Six Months Ended June 30, 2022
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025
Charge-offs	(20)		(687)		—		(322)		(1,029)
Recoveries	30		2		—		346		378
Net recoveries (charge-offs)	10		(685)		—		24		(651)
Provision	(37)		(2,557)		(89)		(206)		(2,889)
Ending balance	$	3,564	$	10,314	$	1,714	$	1,893	$	17,485


	Six Months Ended June 30, 2021
Allowance for loan losses	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Beginning balance	$	4,493	$	11,496	$	2,079	$	2,856	$	20,924
Charge-offs	(25)		—		(71)		(320)		(416)
Recoveries	275		1		10		291		577
Net recoveries (charge-offs)	250		1		(61)		(29)		161
Provision	(1,115)		1,466		(227)		(533)		(409)
Ending balance	$	3,628	$	12,963	$	1,791	$	2,294	$	20,676


	June 30, 2022
Allowance for loan losses:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,239	$	44	$	—	$	43	$	1,326
Collectively evaluated for impairment	2,325		10,270		1,714		1,850		16,159

Total ending allowance balance	$	3,564	$	10,314	$	1,714	$	1,893	$	17,485


	December 31, 2021
Allowance for loan losses:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,394	$	1,571	$	—	$	65	$	3,030
Collectively evaluated for impairment	2,197		11,985		1,803		2,010		17,995

Total ending allowance balance	$	3,591	$	13,556	$	1,803	$	2,075	$	21,025


	June 30, 2022
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	1,925	$	4,210	$	924	$	290	$	7,349
Loans collectively evaluated for impairment	257,383		864,425		276,643		216,193		1,614,644

Total ending loans balance	$	259,308	$	868,635	$	277,567	$	216,483	$	1,621,993


	December 31, 2021
Loans:	Commercial and Agricultural		Commercial Mortgages		Residential Mortgages		Consumer Loans		Total
Loans individually evaluated for impairment	$	2,427	$	7,967	$	938	$	315	$	11,647
Loans collectively evaluated for impairment	255,586		796,858		259,029		199,262		1,510,735

Total ending loans balance	$	258,013	$	804,825	$	259,967	$	199,577	$	1,522,382


	June 30, 2022						December 31, 2021
With no related allowance recorded:	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
Commercial and agricultural:
Commercial and industrial	$	603	$	602	$	—	$	954	$	948	$	—
Commercial mortgages:
Construction	96		97		—		129		130		—
Commercial mortgages, other	4,071		4,069		—		6,940		4,278		—
Residential mortgages	934		924		—		951		938		—
Consumer loans:
Home equity lines and loans	169		154		—		185		169		—
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,321		1,323		1,239		5,350		1,479		1,394
Commercial mortgages:
Commercial mortgages, other	44		44		44		3,550		3,559		1,571
Consumer loans:
Home equity lines and loans	136		136		43		146		146		65
Total	$	7,374	$	7,349	$	1,326	$	18,205	$	11,647	$	3,030

The following table presents the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans for the three and six month periods ended June 30, 2022 and 2021 (in thousands):


	Three Months Ended June 30, 2022				Three Months Ended June 30, 2021				Six Months Ended June 30, 2022				Six Months Ended June 30, 2021
With no related allowance recorded:	Average Recorded Investment		Interest Income Recognized(1)		Average Recorded Investment		Interest Income Recognized(1)		Average Recorded Investment		Interest Income Recognized(1)		Average Recorded Investment		Interest Income Recognized(1)
Commercial and agricultural:
Commercial and industrial	$	764	$	—	$	1,823	$	13	$	825	$	3	$	1,869	$	26
Commercial mortgages:
Construction	105		1		168		2		113		2		175		3
Commercial mortgages, other	4,088		7		4,780		8		4,151		14		4,774		15
Residential mortgages	927		11		959		10		931		22		1,063		18
Consumer loans:
Home equity lines & loans	157		—		193		2		161		2		339		3
With an allowance recorded:
Commercial and agricultural:
Commercial and industrial	1,369		3		1,498		—		1,405		5		1,478		2
Commercial mortgages:
Commercial mortgages, other	1,326		—		1,946		—		2,071		21		1,353		—
Consumer loans:
Home equity lines and loans	139		—		158		—		141		—		162		—
Total	$	8,875	$	22	$	11,525	$	35	$	9,798	$	69	$	11,213	$	67


	Non-accrual				Loans Past Due 90 Days or More and Still Accruing
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Commercial and agricultural:
Commercial and industrial	$	1,748	$	1,932	$	2	$	4

Commercial mortgages:
Construction	17		34		—		—
Commercial mortgages, other	3,643		3,844		—		—
Residential mortgages	600		1,039		—		—
Consumer loans:

Home equity lines and loans	785		790		—		—
Indirect consumer loans	575		462		—		—
Direct consumer loans	6		13		—		—
Total	$	7,374	$	8,114	$	2	$	4


	June 30, 2022
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	56	$	51	$	14	$	121	$	259,098	$	259,219
Agricultural	—		—		—		—		89		89
Commercial mortgages:
Construction	616		—		—		616		94,594		95,210
Commercial mortgages, other	350		—		244		594		772,831		773,425
Residential mortgages	1,330		88		341		1,759		275,808		277,567
Consumer loans:

Home equity lines and loans	26		70		543		639		73,287		73,926
Indirect consumer loans	600		237		285		1,122		131,479		132,601
Direct consumer loans	3		—		6		9		9,947		9,956
Total	$	2,981	$	446	$	1,433	$	4,860	$	1,617,133	$	1,621,993


	December 31, 2021
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans Not Past Due		Total
Commercial and agricultural:
Commercial and industrial	$	413	$	148	$	26	$	587	$	257,031	$	257,618
Agricultural	—		—		—		—		395		395
Commercial mortgages:
Construction	—		—		—		—		82,435		82,435
Commercial mortgages, other	24		224		1,302		1,550		720,840		722,390
Residential mortgages	580		32		652		1,264		258,703		259,967
Consumer loans:

Home equity lines and loans	256		69		424		749		70,105		70,854
Indirect consumer loans	1,179		424		255		1,858		116,997		118,855
Direct consumer loans	24		11		13		48		9,820		9,868
Total	$	2,476	$	908	$	2,672	$	6,056	$	1,516,326	$	1,522,382

A modification of a loan may result in classification as a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Corporation offers various types of modifications which may involve a change in the schedule of payments, a reduction in the interest rate, an extension of the maturity date, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, requesting additional collateral, releasing collateral for consideration, substituting or adding a new borrower or guarantor, a permanent reduction of the recorded investment in the loan or a permanent reduction of the interest on the loan. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 were considered current for COVID-19 related modifications and therefore not be treated as TDRs, until January 1, 2022. At its highest point as of May 31, 2020, in conformance with Section 4013 of the CARES Act, total loan forbearances represented 15.77% of the Corporation's total loan portfolio, or $242.5 million. As of June 30, 2022, no loans remained in modified status.

As of June 30, 2022 and December 31, 2021, the Corporation had a recorded investment in TDRs of $6.2 million and $10.3 million, respectively. There were specific reserves of $0.3 million and $1.9 million allocated for TDRs at June 30, 2022 and December 31, 2021, respectively. As of June 30, 2022, TDRs totaling $1.7 million were accruing interest under the modified terms and $4.5 million were on non-accrual status. As of December 31, 2021, TDRs totaling $5.6 million were accruing interest under the modified terms and $4.7 million were on non-accrual status. The Corporation committed no additional amounts as of both June 30, 2022 and December 31, 2021, to customers with outstanding loans that are classified as TDRs.

During the three months ended June 30, 2022, no loans were modified as TDRs. During the three month period ended June 30, 2021, the terms and conditions of two commercial mortgage loans were modified as TDRs. The modification of the terms of both of these loans included a postponement or reduction of the scheduled amortized payments for greater than a three month period.

During the six months ended June 30, 2022, no loans were modified as TDRs. During the six month period ended June 30, 2021, the terms and conditions of four commercial mortgage loan were modified as TDRs. The modification of the terms of all of these loans included a postponement or reduction of the scheduled amortized payments for greater than a three month period.


June 30, 2021	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:



Commercial mortgages:
Commercial mortgages, other	2	$	3,606	$	3,606



Total	2	$	3,606	$	3,606


June 30, 2021	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:



Commercial mortgages:
Commercial mortgages, other	4	$	6,094	$	6,094
Residential mortgages	—	—		—


Total	4	$	6,094	$	6,094

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no payment defaults on any loans previously modified as TDRs within twelve months following the modification during the three and six month periods ended June 30, 2022 and 2021.

The Corporation establishes a risk rating at origination for all commercial loans. The main factors considered in assigning risk ratings include, but are not limited to: historic and future debt service coverage, collateral position, operating performance, liquidity, leverage, payment history, management ability, and the customer’s industry. Commercial relationship managers monitor all loans in their respective portfolios for any changes in the borrower’s ability to service its debt and affirm the risk ratings for the loans at least annually.

For the retail loans, which include residential mortgages, indirect and direct consumer loans, home equity lines and loans, and credit cards, once a loan is properly approved and closed, the Corporation evaluates credit quality based upon loan repayment. Retail loans are not rated until they become 90 days past due.

The Corporation uses the risk rating system to identify criticized and classified loans. Commercial relationships within the criticized and classified risk ratings are analyzed quarterly. The Corporation uses the following definitions for criticized and classified loans (which are consistent with regulatory guidelines):

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 the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capability 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.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Commercial loans not meeting the criteria above to be considered criticized or classified, are considered to be pass rated loans. Loans listed as not rated, are included in groups of homogeneous loans performing under terms of the loan notes. Based on the analyses performed as of June 30, 2022 and December 31, 2021, the risk category of the recorded investment of loans by class of loans is as follows (in thousands):


	June 30, 2022
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	251,866	$	3,188	$	3,186	$	979	$	259,219
Agricultural	—		89		—		—		—		89
Commercial mortgages:
Construction	—		95,193		—		17		—		95,210
Commercial mortgages	—		735,183		30,367		7,831		44		773,425
Residential mortgages	276,967		—		—		600		—		277,567
Consumer loans:

Home equity lines and loans	73,141		—		—		785		—		73,926
Indirect consumer loans	132,026		—		—		575		—		132,601
Direct consumer loans	9,950		—		—		6		—		9,956
Total	$	492,084	$	1,082,331	$	33,555	$	13,000	$	1,023	$	1,621,993


	December 31, 2021
	Not Rated		Pass		Special Mention		Substandard		Doubtful		Total
Commercial and agricultural:
Commercial and industrial	$	—	$	250,529	$	2,892	$	3,108	$	1,089	$	257,618
Agricultural	—		395		—		—		—		395
Commercial mortgages:
Construction	—		82,404		—		31		—		82,435
Commercial mortgages	—		672,741		31,072		17,458		1,119		722,390
Residential mortgages	258,928		—		—		1,039		—		259,967
Consumer loans:

Home equity lines and loans	70,064		—		—		790		—		70,854
Indirect consumer loans	118,393		—		—		462		—		118,855
Direct consumer loans	9,855		—		—		13		—		9,868
Total	$	457,240	$	1,006,069	$	33,964	$	22,901	$	2,208	$	1,522,382

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Corporation 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 recorded investment in residential and consumer loans based on payment activity as of June 30, 2022 and December 31, 2021 (in thousands):


	June 30, 2022
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	276,967	$	73,141	$	132,026	$	9,950
Non-Performing	600		785		575		6
	$	277,567	$	73,926	$	132,601	$	9,956


	December 31, 2021
			Consumer Loans
	Residential Mortgages		Home Equity Lines and Loans		Indirect Consumer Loans		Other Direct Consumer Loans
Performing	$	258,928	$	70,064	$	118,393	$	9,855
Non-Performing	1,039		790		462		13
	$	259,967	$	70,854	$	118,855	$	9,868