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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2022

Schedule of Composition of the Loan Portfolio by Type

The composition of the loan portfolio, net of deferred origination fees and costs, is summarized as follows (in thousands):


	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

Schedule of Allowance for Loan Losses by Portfolio Segment

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2022 and 2021 (in thousands):


	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

The following tables present the activity in the allowance for loan losses by portfolio segment for the six month periods ended June 30, 2022 and 2021 (in thousands):


	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

Schedule of Allowance for Loan Losses and the Recorded Investment in Loans Based on Impairment Method

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2022 and December 31, 2021 (in thousands):


	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

Schedule of Impaired Financing Receivables

The following table presents loans individually evaluated for impairment recognized by class of loans as of June 30, 2022 and December 31, 2021 (in thousands):


	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

(1)Cash basis interest income approximates interest income recognized.

Schedule of Recorded Investment in Past Due and Non-Accrual Status by Class of Loans

The following table presents the recorded investment in non-accrual and loans past due 90 days or more and still accruing by class of loans as of June 30, 2022 and December 31, 2021 (in thousands):


	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

The following tables present the aging of the recorded investment in loans as of June 30, 2022 and December 31, 2021 (in thousands):


	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

Schedule of Loans by Class Modified as Troubled Debt Restructurings

The following table presents loans by class modified as TDRs that occurred during the three month period ended June 30, 2021 (dollars in thousands):


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

Schedule of Risk Category of the Recorded Investment of Loans by Class of Loans

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

Schedule of Recorded Investment in Residential and Consumer Loans Based on 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