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LOANS

6 Months Ended

Jun. 30, 2022

6. LOANS

The loans receivable portfolio is segmented into commercial, residential mortgage and consumer loans. Loans outstanding at June 30, 2022 and December 31, 2021 are summarized by segment, and by classes within each segment, as follows:

Summary of Loans by Type

(In Thousands)


	June 30,		December 31,
	2022		2021
Commercial:
Commercial loans secured by real estate	$	656,892	$	569,840
Commercial and industrial		171,999		159,073
Paycheck Protection Program - 1st Draw		44		1,356
Paycheck Protection Program - 2nd Draw		6,208		25,508
Political subdivisions		87,512		81,301
Commercial construction and land		58,786		60,579
Loans secured by farmland		12,967		11,121
Multi-family (5 or more) residential		53,753		50,089
Agricultural loans		2,628		2,351
Other commercial loans		15,767		17,153
Total commercial		1,066,556		978,371
Residential mortgage:
Residential mortgage loans - first liens		482,505		483,629
Residential mortgage loans - junior liens		23,036		23,314
Home equity lines of credit		40,887		39,252
1-4 Family residential construction		26,071		23,151
Total residential mortgage		572,499		569,346
Consumer		18,549		17,132
Total		1,657,604		1,564,849
Less: allowance for loan losses		(14,547)		(13,537)
Loans, net	$	1,643,057	$	1,551,312

In the table above, outstanding loan balances are presented net of deferred loan origination fees, net, of $4,031,000 at June 30, 2022 and $4,247,000 at December 31, 2021.

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in Northcentral Pennsylvania, the Southern tier of New York State, Southeastern Pennsylvania and Southcentral Pennsylvania. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A provision in the CARES Act includes creation of the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”) and Treasury Department. Under the PPP, the Corporation, as an SBA-certified lender, provided SBA-guaranteed loans to small businesses to pay their employees, rent, mortgage interest, and utilities. PPP loans are forgiven subject to clients’ providing documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. Information related to PPP loans advanced pursuant to the CARES Act are labeled “1st Draw” within the tables.

On December 27, 2020, the President of the United States signed into law the Consolidated Appropriations Act, 2021 (the “CAA”), which includes provisions that broadly address additional COVID-19 responses and relief. Among the additional relief measures included are certain extensions to elements of the CARES Act, including extension of relief from troubled debt restructurings reporting established under Section 4013 of the CARES Act to 60 days after the date on which the national COVID-19 emergency terminates. The CAA also includes additional funding for the PPP with additional eligibility requirements for borrowers with generally the same loan terms as provided under the CARES Act. Information related to PPP loans advanced pursuant to the CAA are labeled “2nd Draw” within the tables.

The maximum term of PPP loans is five years. Most of the Corporation’s 1st Draw PPP loans have two-year terms, while 2nd Draw PPP loans have five-year terms and the Corporation will be repaid sooner to the extent the loans are forgiven. The interest rate on PPP loans is 1%, and the Corporation has received fees from the SBA ranging between 1% and 5% per loan, depending on the size of the loan. Fees on PPP loans, net of origination costs and a market rate adjustment on acquired PPP loans, are recognized in interest income as a yield adjustment over the term of the loans.

As of June 30, 2022, the recorded investment in 1st Draw PPP loans was $44,000, including contractual principal balances of $49,000, reduced by net deferred origination fees of $5,000. The recorded investment in 2nd Draw PPP loans was $6,208,000, including contractual principal balances of $6,392,000 reduced by net deferred origination fees of $184,000. Interest and fees on PPP loans which are included in taxable interest and fees on loans in the unaudited consolidated statements of income totaled $206,000 in the second quarter 2022 and $1,249,000 in the second quarter 2021, and $781,000 in the six-month period ended June 30, 2022 and $3,247,000 in the six-month period ended June 30, 2021.

Acquired loans were initially recorded at fair value, with adjustments made to gross amortized cost based on movements in interest rates (market rate adjustment) and based on credit fair value adjustments on non-impaired loans and impaired loans. Subsequently, the Corporation has recognized amortization and accretion of a portion of the market rate adjustments and credit adjustments on non-impaired (performing) loans, and a partial recovery of purchased credit impaired (PCI) loans. For the three-month and six-month periods ended June 30, 2022 and 2021, adjustments to the initial market rate and credit fair value adjustments of performing loans were recognized as follows:


(In Thousands)	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	(885)	$	352	$	(637)	$	718
Accretion (amortization) recognized in interest income		19		(357)		(229)		(723)
Adjustments to gross amortized cost of loans at end of period	$	(866)	$	(5)	$	(866)	$	(5)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(2,782)	$	(5,182)	$	(3,335)	$	(5,979)
Accretion recognized in interest income		379		680		932		1,477
Adjustments to gross amortized cost of loans at end of period	$	(2,403)	$	(4,502)	$	(2,403)	$	(4,502)

A summary of PCI loans held at June 30, 2022 and December 31, 2021 is as follows:


(In Thousands)	June 30,		December 31,
	2022		2021
Outstanding balance	$	5,766	$	9,802
Carrying amount		3,879		6,558

In the second quarter 2022, the Corporation received repayments on PCI loans in excess of previous carrying amounts, resulting in income of $14,000 as compared to $18,000 in the second quarter 2021. In the six-month period ended June 30, 2022, the Corporation received repayments on PCI loans in excess of previous carrying amounts, resulting in income of $1,412,000 as compared to $18,000 in the six-month period ended June 30, 2021. These amounts are included in interest and fees on taxable loans in the unaudited consolidated statements of income.

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of June 30, 2022 and December 31, 2021, management determined that no allowance for credit losses related to unfunded loan commitments was required.

Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and six-month periods ended June 30, 2022 and 2021 were as follows:


Three Months Ended June 30, 2022	March 31, 2022								June 30, 2022
(In Thousands)	Balance		Charge-offs		Recoveries		Provision (Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	5,017	$	0	$	0	$	(35)	$	4,982
Commercial and industrial		2,841		0		0		(49)		2,792
Commercial construction and land		391		0		0		124		515
Loans secured by farmland		129		0		0		(17)		112
Multi-family (5 or more) residential		367		0		0		(28)		339
Agricultural loans		27		0		0		(4)		23
Other commercial loans		150		0		0		(19)		131
Total commercial		8,922		0		0		(28)		8,894
Residential mortgage:
Residential mortgage loans - first liens		3,810		0		1		(122)		3,689
Residential mortgage loans - junior liens		181		0		0		(1)		180
Home equity lines of credit		306		0		0		2		308
1-4 Family residential construction		148		0		0		67		215
Total residential mortgage		4,445		0		1		(54)		4,392
Consumer		237		(41)		8		57		261
Unallocated		667		0		0		333		1,000
Total Allowance for Loan Losses	$	14,271	$	(41)	$	9	$	308	$	14,547


Three Months Ended June 30, 2021	March 31, 2021								June 30, 2021
(In Thousands)	Balance		Charge-offs		Recoveries		Provision (Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	3,350	$	0	$	2	$	100	$	3,452
Commercial and industrial		2,187		0		0		594		2,781
Commercial construction and land		476		0		0		(24)		452
Loans secured by farmland		111		0		0		2		113
Multi-family (5 or more) residential		255		0		0		(105)		150
Agricultural loans		26		0		0		(1)		25
Other commercial loans		159		0		0		(14)		145
Total commercial		6,564		0		2		552		7,118
Residential mortgage:
Residential mortgage loans - first liens		3,507		(11)		1		39		3,536
Residential mortgage loans - junior liens		334		0		0		(7)		327
Home equity lines of credit		281		0		1		12		294
1-4 Family residential construction		78		0		0		120		198
Total residential mortgage		4,200		(11)		2		164		4,355
Consumer		220		(36)		13		34		231
Unallocated		677		0		0		(6)		671
Total Allowance for Loan Losses	$	11,661	$	(47)	$	17	$	744	$	12,375

For the three months ended June 30, 2022, the provision for loan losses was $308,000, a decrease in expense of $436,000 as compared to $744,000 for the three months ended June 30, 2021. The second quarter 2022 provision included a net recovery of $271,000 related to specific loans (net decrease in specific allowances on loans of $303,000 offset by net charge-offs of $32,000), an increase of $246,000 in the collectively determined portion of the allowance and an increase of $333,000 in the unallocated portion of the allowance. The second quarter 2021 provision included a net charge of $383,000 related to specific loans (net increase in specific allowances on loans of $353,000 and net charge-offs of $30,000), an increase of $367,000 in the collectively determined portion of the allowance and a $6,000 decrease in the unallocated portion.


	December 31,								June 30,
Six Months Ended June 30, 2022	2021						Provision		2022
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	4,405	$	0	$	0	$	577	$	4,982
Commercial and industrial		2,723		(150)		0		219		2,792
Commercial construction and land		637		0		0		(122)		515
Loans secured by farmland		115		0		0		(3)		112
Multi-family (5 or more) residential		215		0		0		124		339
Agricultural loans		25		0		0		(2)		23
Other commercial loans		173		0		0		(42)		131
Total commercial		8,293		(150)		0		751		8,894
Residential mortgage:
Residential mortgage loans - first liens		3,650		0		2		37		3,689
Residential mortgage loans - junior liens		184		0		0		(4)		180
Home equity lines of credit		302		0		15		(9)		308
1-4 Family residential construction		202		0		0		13		215
Total residential mortgage		4,338		0		17		37		4,392
Consumer		235		(71)		15		82		261
Unallocated		671		0		0		329		1,000
Total Allowance for Loan Losses	$	13,537	$	(221)	$	32	$	1,199	$	14,547


	December 31,								June 30,
Six Months Ended June 30, 2021	2020						Provision		2021
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	3,051	$	0	$	2	$	399	$	3,452
Commercial and industrial		2,245		0		14		522		2,781
Commercial construction and land		454		0		0		(2)		452
Loans secured by farmland		120		0		0		(7)		113
Multi-family (5 or more) residential		236		0		0		(86)		150
Agricultural loans		34		0		0		(9)		25
Other commercial loans		168		0		0		(23)		145
Total commercial		6,308		0		16		794		7,118
Residential mortgage:
Residential mortgage loans - first liens		3,524		(11)		2		21		3,536
Residential mortgage loans - junior liens		349		0		0		(22)		327
Home equity lines of credit		281		0		2		11		294
1-4 Family residential construction		99		0		0		99		198
Total residential mortgage		4,253		(11)		4		109		4,355
Consumer		239		(47)		25		14		231
Unallocated		585		0		0		86		671
Total Allowance for Loan Losses	$	11,385	$	(58)	$	45	$	1,003	$	12,375

For the six months ended June 30, 2022, the provision for loan losses was $1,199,000, an increase in expense of $196,000 as compared to $1,003,000 recorded for the first six months ended June 30, 2021. The provision for the six months ended June 30, 2022 includes a net recovery of $124,000 related to specific loans (net decrease in specific allowances on loans of $313,000 offset by net charge-offs of $189,000), an increase of $994,000 in the collectively determined portion of the allowance and a $329,000 increase in the unallocated portion. In comparison, the provision for loan losses for the six months ended June 30, 2021, includes a net charge of $565,000 related to specific loans (increase in specific allowances on loans of $552,000 and net charge-offs of $13,000), an increase of $352,000 in the collectively determined portion of the allowance and an $86,000 increase in the unallocated portion.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table that follows.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of June 30, 2022 and December 31, 2021:


June 30, 2022									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Commercial:
Commercial loans secured by real estate	$	631,192	$	7,558	$	14,367	$	0	$	3,775	$	656,892
Commercial and Industrial		159,902		8,370		3,691		0		36		171,999
Paycheck Protection Program - 1st Draw		44		0		0		0		0		44
Paycheck Protection Program - 2nd Draw		6,208		0		0		0		0		6,208
Political subdivisions		87,512		0		0		0		0		87,512
Commercial construction and land		58,025		714		47		0		0		58,786
Loans secured by farmland		10,999		628		1,340		0		0		12,967
Multi-family (5 or more) residential		52,891		0		862		0		0		53,753
Agricultural loans		2,009		25		594		0		0		2,628
Other commercial loans		15,767		0		0		0		0		15,767
Total commercial		1,024,549		17,295		20,901		0		3,811		1,066,556
Residential Mortgage:
Residential mortgage loans - first liens		468,054		7,518		6,865		0		68		482,505
Residential mortgage loans - junior liens		22,554		167		315		0		0		23,036
Home equity lines of credit		40,214		58		615		0		0		40,887
1-4 Family residential construction		26,071		0		0		0		0		26,071
Total residential mortgage		556,893		7,743		7,795		0		68		572,499
Consumer		18,485		0		64		0		0		18,549
Totals	$	1,599,927	$	25,038	$	28,760	$	0	$	3,879	$	1,657,604


December 31, 2021									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Commercial:
Commercial loans secured by real estate	$	538,966	$	10,510	$	16,220	$	0	$	4,144	$	569,840
Commercial and Industrial		142,775		10,841		4,694		0		763		159,073
Paycheck Protection Program - 1st Draw		1,356		0		0		0		0		1,356
Paycheck Protection Program - 2nd Draw		25,508		0		0		0		0		25,508
Political subdivisions		81,301		0		0		0		0		81,301
Commercial construction and land		59,816		715		48		0		0		60,579
Loans secured by farmland		10,011		186		924		0		0		11,121
Multi-family (5 or more) residential		47,638		0		873		0		1,578		50,089
Agricultural loans		1,802		0		549		0		0		2,351
Other commercial loans		17,150		3		0		0		0		17,153
Total commercial		926,323		22,255		23,308		0		6,485		978,371
Residential Mortgage:
Residential mortgage loans - first liens		469,044		7,981		6,534		0		70		483,629
Residential mortgage loans - junior liens		22,914		114		283		0		3		23,314
Home equity lines of credit		38,652		59		541		0		0		39,252
1-4 Family residential construction		23,151		0		0		0		0		23,151
Total residential mortgage		553,761		8,154		7,358		0		73		569,346
Consumer		17,092		0		40		0		0		17,132
Totals	$	1,497,176	$	30,409	$	30,706	$	0	$	6,558	$	1,564,849

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of June 30, 2022 and December 31, 2021.


June 30, 2022	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Commercial:
Commercial loans secured by real estate	$	7,340	$	649,552	$	656,892	$	427	$	4,555	$	4,982
Commercial and industrial		374		171,625		171,999		0		2,792		2,792
Paycheck Protection Program - 1st Draw		0		44		44		0		0		0
Paycheck Protection Program - 2nd Draw		0		6,208		6,208		0		0		0
Political subdivisions		0		87,512		87,512		0		0		0
Commercial construction and land		47		58,739		58,786		0		515		515
Loans secured by farmland		79		12,888		12,967		0		112		112
Multi-family (5 or more) residential		0		53,753		53,753		0		339		339
Agricultural loans		60		2,568		2,628		0		23		23
Other commercial loans		0		15,767		15,767		0		131		131
Total commercial		7,900		1,058,656		1,066,556		427		8,467		8,894
Residential mortgage:
Residential mortgage loans - first liens		648		481,857		482,505		0		3,689		3,689
Residential mortgage loans - junior liens		30		23,006		23,036		0		180		180
Home equity lines of credit		69		40,818		40,887		0		308		308
1-4 Family residential construction		0		26,071		26,071		0		215		215
Total residential mortgage		747		571,752		572,499		0		4,392		4,392
Consumer		0		18,549		18,549		0		261		261
Unallocated												1,000

Total	$	8,647	$	1,648,957	$	1,657,604	$	427	$	13,120	$	14,547


December 31, 2021	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Commercial:
Commercial loans secured by real estate	$	10,926	$	558,914	$	569,840	$	669	$	3,736	$	4,405
Commercial and industrial		2,503		156,570		159,073		71		2,652		2,723
Paycheck Protection Program - 1st Draw		0		1,356		1,356		0		0		0
Paycheck Protection Program - 2nd Draw		0		25,508		25,508		0		0		0
Political subdivisions		0		81,301		81,301		0		0		0
Commercial construction and land		0		60,579		60,579		0		637		637
Loans secured by farmland		83		11,038		11,121		0		115		115
Multi-family (5 or more) residential		1,578		48,511		50,089		0		215		215
Agricultural loans		0		2,351		2,351		0		25		25
Other commercial loans		0		17,153		17,153		0		173		173
Total commercial		15,090		963,281		978,371		740		7,553		8,293
Residential mortgage:
Residential mortgage loans - first liens		630		482,999		483,629		0		3,650		3,650
Residential mortgage loans - junior liens		14		23,300		23,314		0		184		184
Home equity lines of credit		0		39,252		39,252		0		302		302
1-4 Family residential construction		0		23,151		23,151		0		202		202
Total residential mortgage		644		568,702		569,346		0		4,338		4,338
Consumer		0		17,132		17,132		0		235		235
Unallocated												671

Total	$	15,734	$	1,549,115	$	1,564,849	$	740	$	12,126	$	13,537

Summary information related to impaired loans at June 30, 2022 and December 31, 2021 is provided in the table immediately below.


(In Thousands)	June 30, 2022						December 31, 2021
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Commercial loans secured by real estate	$	5,807	$	3,948	$	0	$	6,600	$	4,458	$	0
Commercial and industrial		2,145		374		0		5,213		2,431		0
Residential mortgage loans - first liens		762		648		0		656		630		0
Residential mortgage loans - junior liens		75		30		0		124		14		0
Home equity lines of credit		69		69		0		0		0		0
Loans secured by farmland		79		79		0		83		83		0
Agricultural loans		60		60		0		0		0		0
Construction and other land loans		47		47		0		0		0		0
Multi-family (5 or more) residential		0		0		0		2,734		1,578		0
Total with no related allowance recorded		9,044		5,255		0		15,410		9,194		0

With a related allowance recorded:
Commercial loans secured by real estate		3,392		3,392		427		6,468		6,468		668
Commercial and industrial		0		0		0		72		72		72
Total with a related allowance recorded		3,392		3,392		427		6,540		6,540		740
Total	$	12,436	$	8,647	$	427	$	21,950	$	15,734	$	740

The average balance of impaired loans and interest income recognized on these impaired loans is as follows:


(In Thousands)									Interest Income Recognized on
	Average Investment in Impaired Loans								Impaired Loans on a Cash Basis
	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Commercial:
Commercial loans secured by real estate	$	8,967	$	12,022	$	9,851	$	12,137	$	165	$	85	$	340	$	229
Commercial and industrial		519		2,754		1,073		1,927		6		9		203		21
Commercial construction and land		47		0		47		0		0		0		1		0
Loans secured by farmland		80		84		81		84		0		0		0		1
Multi-family (5 or more) residential		0		1,578		395		1,587		0		30		1,156		91
Agricultural loans		60		67		61		68		0		1		2		3
Total commercial		9,673		16,505		11,508		15,803		171		125		1,702		345
Residential mortgage:
Residential mortgage loans - first lien		585		1,717		575		2,084		5		20		12		57
Residential mortgage loans - junior lien		33		430		35		433		3		4		6		9
Home equity lines of credit		34		0		17		0		1		0		2		0
Total residential mortgage		652		2,147		627		2,517		9		24		20		66
Total	$	10,325	$	18,652	$	12,135	$	18,320	$	180	$	149	$	1,722	$	411

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:


(In Thousands)	June 30, 2022				December 31, 2021
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Commercial:
Commercial loans secured by real estate	$	1,215	$	7,350	$	738	$	10,885
Commercial and industrial		62		306		30		2,299
Commercial construction and land		0		47		0		48
Loans secured by farmland		0		79		28		83
Multi-family (5 or more) residential		0		0		0		1,578
Agricultural loans		60		0		65		0
Total commercial		1,337		7,782		861		14,893
Residential mortgage:
Residential mortgage loans - first liens		1,153		3,687		1,144		4,005
Residential mortgage loans - junior liens		64		0		69		3
Home equity lines of credit		113		125		102		82
Total residential mortgage		1,330		3,812		1,315		4,090
Consumer		27		48		43		16
Totals	$	2,694	$	11,642	$	2,219	$	18,999

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual. PCI loans with a total recorded investment of $3,879,000 at June 30, 2022 and $6,558,000 at December 31, 2021 are classified as nonaccrual.

The table below presents a summary of the contractual aging of loans as of June 30, 2022 and December 31, 2021. Loans modified under the Corporation’s program designed to work with clients impacted by COVID-19 are included in the current and past due less than 30 days category in the table that follows.


(In Thousands)	As of June 30, 2022								As of December 31, 2021
	Current &								Current &
	Past Due		Past Due		Past Due				Past Due		Past Due		Past Due
	Less than		30-89		90+				Less than		30-89		90+
	30 Days		Days		Days		Total		30 Days		Days		Days		Total
Commercial:
Commercial loans secured by real estate	$	652,741	$	1,984	$	2,167	$	656,892	$	563,658	$	762	$	5,420	$	569,840
Commercial and industrial		171,492		381		126		171,999		158,188		72		813		159,073
Paycheck Protection Program - 1st Draw		44		0		0		44		1,339		17		0		1,356
Paycheck Protection Program - 2nd Draw		6,208		0		0		6,208		25,508		0		0		25,508
Political subdivisions		87,512		0		0		87,512		81,301		0		0		81,301
Commercial construction and land		58,542		197		47		58,786		60,509		70		0		60,579
Loans secured by farmland		12,629		259		79		12,967		11,010		0		111		11,121
Multi-family (5 or more) residential		53,753		0		0		53,753		48,532		0		1,557		50,089
Agricultural loans		2,568		0		60		2,628		2,279		7		65		2,351
Other commercial loans		15,767		0		0		15,767		17,153		0		0		17,153
Total commercial		1,061,256		2,821		2,479		1,066,556		969,477		928		7,966		978,371

Residential mortgage:
Residential mortgage loans - first liens		476,500		3,009		2,996		482,505		475,637		5,038		2,954		483,629
Residential mortgage loans - junior liens		22,939		33		64		23,036		23,229		16		69		23,314
Home equity lines of credit		40,198		489		200		40,887		38,830		279		143		39,252
1-4 Family residential construction		26,071		0		0		26,071		23,151		0		0		23,151
Total residential mortgage		565,708		3,531		3,260		572,499		560,847		5,333		3,166		569,346
Consumer		18,422		52		75		18,549		17,001		72		59		17,132
Totals	$	1,645,386	$	6,404	$	5,814	$	1,657,604	$	1,547,325	$	6,333	$	11,191	$	1,564,849

Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at June 30, 2022 and December 31, 2021 is as follows:


(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
June 30, 2022 Nonaccrual Totals	$	7,200	$	1,322	$	3,120	$	11,642
December 31, 2021 Nonaccrual Totals	$	8,800	$	1,227	$	8,972	$	18,999

Loans whose terms are modified are classified as troubled debt restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at June 30, 2022 and December 31, 2021 is as follows:


(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Nonaccrual		Total
June 30, 2022 Totals	$	192	$	47	$	94	$	3,871	$	4,204
December 31, 2021 Totals	$	248	$	40	$	65	$	5,452	$	5,805

At June 30, 2022 and December 31, 2021, there were no commitments to loan additional funds to borrowers whose loans have been classified as TDRs.

TDRs that occurred during the three-month and six-month periods ended June 30, 2022 and 2021 are as follows:


(Balances in Thousands)	Three Months Ended			Three Months Ended
	June 30, 2022			June 30, 2021
		Post-			Post-
	Number	Modification		Number	Modification
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Residential mortgage - first liens,
Reduced monthly payments for a fifteen-month period	0	$	0	1	$	116
Total	0	$	0	1	$	116


	Six Months Ended			Six Months Ended
(Balances in Thousands)	June 30, 2022			June 30, 2021
		Post-			Post-
	Number	Modification		Number	Modification
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Residential mortgage - first liens:
Reduced monthly payments and extended maturity date	0	$	0	1	$	12
Reduced monthly payments for a fifteen-month period	0		0	1		116
Home equity lines of credit,
Reduced monthly payments and extended maturity date	0		0	1		24
Total	0	$	0	3	$	152

In the second quarters of 2022 and 2021, there were no defaults on loans for which TDRs were entered into within the previous 12 months. In the six-month periods ended June 30, 2022 and 2021, defaults on loans for which modifications that were considered to be TDR and were entered into within the previous 12 months are summarized as follows:


(Balances in Thousands)	Six Months Ended			Six Months Ended
	June 30, 2022			June 30, 2021
	Number			Number
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Commercial loans secured by real estate	0	$	0	1	$	3,392
Total	0	$	0	1	$	3,392

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in foreclosed assets held for sale in the unaudited consolidated balance sheets) is as follows:


(In Thousands)	June 30,		December 31,
	2022		2021
Foreclosed residential real estate	$	230	$	256

The recorded investment of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:


(In Thousands)	June 30,		December 31,
	2022		2021
Residential real estate in process of foreclosure	$	1,044	$	1,260