XML 23 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2021
Allowance for Credit Losses [Abstract]  
Allowance for Credit Losses

6. Allowance for Credit Losses

The Company was originally scheduled to implement ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“CECL”) as of January 1, 2020. The CARES Act and H.R. 133 provide the election to defer CECL implementation until January 1, 2022. The Company has elected to delay CECL implementation.

The following tables show the allocation of the allowance for credit losses by portfolio segment and by impairment methodology at the dates indicated (in thousands):

March 31, 2021
  
Commercial
Real Estate
    
Agricultural
Real Estate
    
Real Estate
Construction
    
Residential 1st
Mortgages
    
Home Equity
Lines & Loans
    
Agricultural
    
Commercial
    
Consumer
& Other
    
Leases
    
Unallocated
    
Total
  
                                                                   
Year-To-Date Allowance for Credit Losses:
                                                              
Beginning Balance- December 31, 2020
  
$
27,679
    
$
8,633
    
$
1,643
    
$
960
    
$
2,024
    
$
4,814
    
$
9,961
    
$
333
    
$
1,731
    
$
1,084
    
$
58,862
  
Charge-Offs
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(8
)
    
-
      
-
      
(8
)
Recoveries
    
-
      
-
      
-
      
28
      
4
      
3
      
29
      
7
      
-
      
-
      
71
  
Provision
    
1,387
      
415
      
4
      
(21
)
    
(114
)
    
(570
)
    
(14
)
    
(36
)
    
(57
)
    
256
      
1,250
  
Ending Balance- March 31, 2021
  
$
29,066
    
$
9,048
    
$
1,647
    
$
967
    
$
1,914
    
$
4,247
    
$
9,976
    
$
296
    
$
1,674
    
$
1,340
    
$
60,175
  
Ending Balance Individually Evaluated for Impairment
    
-
      
-
      
-
      
107
      
8
      
-
      
15
      
48
      
-
      
-
      
178
  
Ending Balance Collectively Evaluated for Impairment
    
29,066
      
9,048
      
1,647
      
860
      
1,906
      
4,247
      
9,961
      
248
      
1,674
      
1,340
      
59,997
  
Loans & Leases:
                                                                                        
Ending Balance
  
$
1,008,032
    
$
634,244
    
$
208,573
    
$
305,085
    
$
32,407
    
$
221,152
    
$
367,875
    
$
232,209
    
$
101,434
    
$
-
    
$
3,111,011
  
Ending Balance Individually Evaluated for Impairment
    
99
      
-
      
2,149
      
2
      
153
      
6,122
      
228
      
186
      
-
      
-
      
8,939
  
Ending Balance Collectively Evaluated for Impairment
  
$
1,007,933
    
$
634,244
    
$
206,424
    
$
305,083
    
$
32,254
    
$
215,030
    
$
367,647
    
$
232,023
    
$
101,434
    
$
-
    
$
3,102,072
  


December 31, 2020
  
Commercial
Real Estate
    
Agricultural
Real Estate
    
Real Estate
Construction
    
Residential 1st
Mortgages
    
Home Equity
Lines & Loans
    
Agricultural
    
Commercial
    
Consumer
& Other
    
Leases
    
Unallocated
    
Total
  
                                                                   
Year-To-Date Allowance for Credit Losses:
                                                              
Beginning Balance- December 31, 2019
  
$
11,053
    
$
15,128
    
$
1,949
    
$
855
    
$
2,675
    
$
8,076
    
$
11,466
    
$
456
    
$
3,162
    
$
192
    
$
55,012
  
Charge-Offs
    
-
      
-
      
-
      
-
      
(7
)
    
-
      
(1,101
)
    
(66
)
    
-
      
-
      
(1,174
)
Recoveries
    
-
      
-
      
-
      
52
      
78
      
81
      
280
      
33
      
-
      
-
      
524
  
Provision
    
16,626
      
(6,495
)
    
(306
)
    
53
      
(722
)
    
(3,343
)
    
(684
)
    
(90
)
    
(1,431
)
    
892
      
4,500
  
Ending Balance- December 31, 2020
  
$
27,679
    
$
8,633
    
$
1,643
    
$
960
    
$
2,024
    
$
4,814
    
$
9,961
    
$
333
    
$
1,731
    
$
1,084
    
$
58,862
  
Ending Balance Individually Evaluated for Impairment
    
-
      
-
      
-
      
117
      
8
      
92
      
20
      
52
      
-
      
-
      
289
  
Ending Balance Collectively Evaluated for Impairment
    
27,679
      
8,633
      
1,643
      
843
      
2,016
      
4,722
      
9,941
      
281
      
1,731
      
1,084
      
58,573
  
Loans & Leases:
                                                                                        
Ending Balance
  
$
958,980
    
$
643,014
    
$
185,741
    
$
299,379
    
$
34,239
    
$
264,372
    
$
374,816
    
$
235,529
    
$
103,522
    
$
-
    
$
3,099,592
  
Ending Balance Individually Evaluated for Impairment
    
104
      
5,629
      
-
      
2,365
      
158
      
495
      
233
      
254
      
-
      
-
      
9,238
  
Ending Balance Collectively Evaluated for Impairment
  
$
958,876
    
$
637,385
    
$
185,741
    
$
297,014
    
$
34,081
    
$
263,877
    
$
374,583
    
$
235,275
    
$
103,522
    
$
-
    
$
3,090,354
  

March 31, 2020
  
Commercial
Real Estate
    
Agricultural
Real Estate
    
Real Estate
Construction
    
Residential 1st
Mortgages
    
Home Equity
Lines & Loans
    
Agricultural
    
Commercial
    
Consumer
& Other
    
Leases
    
Unallocated
    
Total
  
                                                                   
Year-To-Date Allowance for Credit Losses:
                                                              
Beginning Balance- December 31, 2019
  
$
11,053
    
$
15,128
    
$
1,949
    
$
855
    
$
2,675
    
$
8,076
    
$
11,466
    
$
456
    
$
3,162
    
$
192
    
$
55,012
  
Charge-Offs
    
-
      
-
      
-
      
-
      
-
      
-
      
(244
)
    
(21
)
    
-
      
-
      
(265
)
Recoveries
    
-
      
-
      
-
      
19
      
20
      
28
      
2
      
8
      
-
      
-
      
77
  
Provision
    
69
      
(659
)
    
(22
)
    
163
      
88
      
(1,145
)
    
990
      
(61
)
    
26
      
551
      
-
  
Ending Balance- March 31, 2020
  
$
11,122
    
$
14,469
    
$
1,927
    
$
1,037
    
$
2,783
    
$
6,959
    
$
12,214
    
$
382
    
$
3,188
    
$
743
    
$
54,824
  
Ending Balance Individually Evaluated for Impairment
    
-
      
-
      
-
      
116
      
10
      
398
      
11
      
60
      
-
      
-
      
595
  
Ending Balance Collectively Evaluated for Impairment
    
11,122
      
14,469
      
1,927
      
921
      
2,773
      
6,561
      
12,203
      
322
      
3,188
      
743
      
54,229
  
Loans & Leases:
                                                                                        
Ending Balance
  
$
861,311
    
$
594,154
    
$
126,956
    
$
256,732
    
$
40,747
    
$
264,771
    
$
404,329
    
$
14,839
    
$
106,270
    
$
-
    
$
2,670,109
  
Ending Balance Individually Evaluated for Impairment
    
4,486
      
5,629
      
-
      
2,310
      
200
      
733
      
1,517
      
196
      
-
      
-
      
15,071
  
Ending Balance Collectively Evaluated for Impairment
  
$
856,825
    
$
588,525
    
$
126,956
    
$
254,422
    
$
40,547
    
$
264,038
    
$
402,812
    
$
14,643
    
$
106,270
    
$
-
    
$
2,655,038
  

The ending balance of loans individually evaluated for impairment includes restructured loans in the amount of $601,000 at March 31, 2021, $876,000 at December 31, 2020 and $2.5 million at March 31, 2020, which are no longer disclosed or classified as TDRs, since they were restricted at market terms.

The following tables show the loan & lease portfolio allocated by management’s internal risk ratings at the dates indicated (in thousands):

March 31, 2021
  
Pass(1)
    
Special
Mention
    
Substandard
    
Total Loans
& Leases
  
Loans & Leases:
                        
Commercial Real Estate
  
$
995,679
    
$
7,843
    
$
4,510
    
$
1,008,032
  
Agricultural Real Estate
    
621,696
      
977
      
11,571
      
634,244
  
Real Estate Construction
    
208,573
      
-
      
-
      
208,573
  
Residential 1st Mortgages
    
304,237
      
-
      
848
      
305,085
  
Home Equity Lines & Loans
    
32,228
      
-
      
179
      
32,407
  
Agricultural
    
220,294
      
365
      
493
      
221,152
  
Commercial
    
366,022
      
1,196
      
657
      
367,875
  
Consumer & Other
    
230,919
      
-
      
1,290
      
232,209
  
Leases
    
101,434
      
-
      
-
      
101,434
  
Total
  
$
3,081,082
    
$
10,381
    
$
19,548
    
$
3,111,011
  

(1) Includes “Watch” loans of $1.0 billion.

December 31, 2020
  
Pass(1)
    
Special
Mention
    
Substandard
    
Total Loans
  
Loans & Leases:
                        
Commercial Real Estate
  
$
946,621
    
$
7,849
    
$
4,510
    
$
958,980
  
Agricultural Real Estate
    
631,043
      
400
      
11,571
      
643,014
  
Real Estate Construction
    
185,741
      
-
      
-
      
185,741
  
Residential 1st Mortgages
    
298,689
      
-
      
690
      
299,379
  
Home Equity Lines and Loans
    
34,058
      
-
      
181
      
34,239
  
Agricultural
    
263,781
      
96
      
495
      
264,372
  
Commercial
    
373,038
      
1,060
      
718
      
374,816
  
Consumer & Other
    
235,063
      
-
      
466
      
235,529
  
Leases
    
103,522
      
-
      
-
      
103,522
  
Total
  
$
3,071,556
    
$
9,405
    
$
18,631
    
$
3,099,592
  

(1) Includes “Watch” loans of $958.2 million.

March 31, 2020
  
Pass(1)
    
Special
Mention
    
Substandard
    
Total Loans
& Leases
  
Loans & Leases:
                        
Commercial Real Estate
  
$
854,346
    
$
6,965
    
$
-
    
$
861,311
  
Agricultural Real Estate
    
580,205
      
1,136
      
12,813
      
594,154
  
Real Estate Construction
    
126,956
      
-
      
-
      
126,956
  
Residential 1st Mortgages
    
256,027
      
-
      
705
      
256,732
  
Home Equity Lines & Loans
    
40,577
      
-
      
170
      
40,747
  
Agricultural
    
263,794
      
-
      
977
      
264,771
  
Commercial
    
400,735
      
2,321
      
1,273
      
404,329
  
Consumer & Other
    
14,392
      
-
      
447
      
14,839
  
Leases
    
106,270
      
-
      
-
      
106,270
  
Total
  
$
2,643,302
    
$
10,422
    
$
16,385
    
$
2,670,109
  

(1) Includes “Watch” loans of $802.7 million.

See “Note 1. Significant Accounting Policies - Allowance for Credit Losses” for a description of the internal risk ratings used by the Company. There were no loans or leases outstanding at March 31, 2021, December 31, 2020, and March 31, 2020, rated doubtful or loss.

The following tables show an aging analysis of the loan & lease portfolio, including unearned income, by the time past due at the dates indicated (in thousands):

March 31, 2021
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
90 Days and
Still Accruing
    
Nonaccrual
    
Total Past
Due
    
Current
    
Total
Loans & Leases
  
Loans & Leases:
                                          
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
1,008,032
    
$
1,008,032
  
Agricultural Real Estate
    
-
      
-
      
-
      
493
      
493
      
633,751
      
634,244
  
Real Estate Construction
    
-
      
-
      
-
      
-
      
-
      
208,573
      
208,573
  
Residential 1st Mortgages
    
-
      
-
      
-
      
-
      
-
      
305,085
      
305,085
  
Home Equity Lines & Loans
    
-
      
-
      
-
      
-
      
-
      
32,407
      
32,407
  
Agricultural
    
-
      
73
      
-
      
-
      
73
      
221,079
      
221,152
  
Commercial
    
-
      
-
      
-
      
-
      
-
      
367,875
      
367,875
  
Consumer & Other
    
253
      
-
      
-
      
-
      
253
      
231,956
      
232,209
  
Leases
    
-
      
-
      
-
      
-
      
-
      
101,434
      
101,434
  
Total
  
$
253
    
$
73
    
$
-
    
$
493
    
$
819
    
$
3,110,192
    
$
3,111,011
  

December 31, 2020
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
90 Days and
Still Accruing
    
Nonaccrual
    
Total Past
Due
    
Current
    
Total
Loans & Leases
  
Loans & Leases:
                                          
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
958,980
    
$
958,980
  
Agricultural Real Estate
    
-
      
-
      
-
      
495
      
495
      
642,519
      
643,014
  
Real Estate Construction
    
-
      
-
      
-
      
-
      
-
      
185,741
      
185,741
  
Residential 1st Mortgages
    
-
      
-
      
-
      
-
      
-
      
299,379
      
299,379
  
Home Equity Lines and Loans
    
-
      
-
      
-
      
-
      
-
      
34,239
      
34,239
  
Agricultural
    
-
      
-
      
-
      
-
      
-
      
264,372
      
264,372
  
Commercial
    
-
      
-
      
-
      
-
      
-
      
374,816
      
374,816
  
Consumer & Other
    
11
      
-
      
-
      
-
      
11
      
235,518
      
235,529
  
Leases
    
-
      
-
      
-
      
-
      
-
      
103,522
      
103,522
  
Total
  
$
11
    
$
-
    
$
-
    
$
495
    
$
506
    
$
3,099,086
    
$
3,099,592
  

March 31, 2020
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
90 Days and
Still Accruing
    
Nonaccrual
    
Total Past
Due
    
Current
    
Total
Loans & Leases
  
Loans & Leases:
                                          
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
861,311
    
$
861,311
  
Agricultural Real Estate
    
-
      
-
      
-
      
-
      
-
      
594,154
      
594,154
  
Real Estate Construction
    
-
      
-
      
-
      
-
      
-
      
126,956
      
126,956
  
Residential 1st Mortgages
    
-
      
-
      
-
      
-
      
-
      
256,732
      
256,732
  
Home Equity Lines & Loans
    
226
      
-
      
-
      
-
      
226
      
40,521
      
40,747
  
Agricultural
    
-
      
-
      
-
      
549
      
549
      
264,222
      
264,771
  
Commercial
    
250
      
-
      
-
      
-
      
250
      
404,079
      
404,329
  
Consumer & Other
    
7
      
-
      
-
      
-
      
7
      
14,832
      
14,839
  
Leases
    
-
      
-
      
-
      
-
      
-
      
106,270
      
106,270
  
Total
  
$
483
    
$
-
    
$
-
    
$
549
    
$
1,032
    
$
2,669,077
    
$
2,670,109
  

Non-accrual loans & leases were $493,000 at March 31, 2021, $495,000 at December 31, 2020 and $549,000 at March 31, 2020. Foregone interest income on non-accrual loans & leases, which would have been recognized during the period, if all such loans & leases had been current in accordance with their original terms, totaled $12,000, $22,000, and $2,000 at March 31, 2021, December 31, 2020 and March 31, 2020 respectively.

The following tables show information related to impaired loans & leases for the periods indicated (in thousands):

March 31, 2021
  
Recorded
Investment
    
Unpaid
Principal
Balance
    
Related
Allowance
    
Average
Recorded
Investment
    
Interest
Income
Recognized
  
With no related allowance recorded:
                              
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
42
    
$
-
  
Agricultural Real Estate
    
5,629
      
5,629
      
-
      
5,629
      
149
  
Agricultural
    
493
      
536
      
-
      
248
      
-
  
   
$
6,122
    
$
6,165
    
$
-
    
$
5,919
    
$
149
  
With an allowance recorded:
                                        
Commercial Real Estate
  
$
83
    
$
83
    
$
1
    
$
42
    
$
3
  
Residential 1st Mortgages
    
1,661
      
1,884
      
83
      
1,666
      
20
  
Home Equity Lines & Loans
    
63
      
74
      
3
      
64
      
1
  
Agricultural
    
-
      
-
      
-
      
246
      
-
  
Commercial
    
228
      
228
      
15
      
231
      
4
  
Consumer & Other
    
186
      
187
      
48
      
188
      
4
  
   
$
2,221
    
$
2,456
    
$
150
    
$
2,437
    
$
32
  
Total
  
$
8,343
    
$
8,621
    
$
150
    
$
8,356
    
$
181
  

December 31, 2020
  
Recorded
Investment
    
Unpaid
Principal
Balance
    
Related
Allowance
    
Average
Recorded
Investment
    
Interest
Income
Recognized
  
With no related allowance recorded:
                              
Commercial Real Estate
  
$
84
    
$
84
    
$
-
    
$
764
    
$
35
  
Agricultural Real Estate
    
5,629
      
5,629
      
-
      
5,629
      
352
  
Agricultural
    
3
      
3
      
-
      
2
      
-
  
Commercial
    
-
      
-
      
-
      
377
      
16
  
   
$
5,716
    
$
5,716
    
$
-
    
$
6,772
    
$
403
  
With an allowance recorded:
                                        
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
21
    
$
1
  
Agricultural Real Estate
    
-
      
-
      
-
      
137
      
-
  
Residential 1st Mortgages
    
1,671
      
1,895
      
84
      
1,652
      
76
  
Home Equity Lines and Loans
    
64
      
75
      
3
      
66
      
4
  
Agricultural
    
492
      
534
      
92
      
410
      
59
  
Commercial
    
234
      
234
      
13
      
123
      
18
  
Consumer & Other
    
190
      
191
      
56
      
194
      
13
  
   
$
2,651
    
$
2,929
    
$
248
    
$
2,603
    
$
171
  
Total
  
$
8,367
    
$
8,645
    
$
248
    
$
9,375
    
$
574
  

March 31, 2020
  
Recorded
Investment
    
Unpaid
Principal
Balance
    
Related
Allowance
    
Average
Recorded
Investment
    
Interest
Income
Recognized
  
With no related allowance recorded:
              
Commercial Real Estate
  
$
2,888
    
$
2,888
    
$
-
    
$
1,487
    
$
29
  
Agricultural Real Estate
    
5,629
      
5,629
      
-
      
5,642
      
89
  
Commercial
    
1,507
      
1,507
      
-
      
754
      
15
  
   
$
10,024
    
$
10,024
    
$
-
    
$
7,883
    
$
133
  
With an allowance recorded:
                          
Commercial Real Estate
  
$
-
    
$
-
    
$
-
    
$
1,411
    
$
-
  
Agricultural Real Estate
    
549
      
549
      
214
      
275
      
-
  
Residential 1st Mortgages
    
1,550
      
1,761
      
77
      
1,556
      
19
  
Home Equity Lines & Loans
    
67
      
78
      
3
      
68
      
1
  
Agricultural
    
184
      
184
      
184
      
186
      
2
  
Commercial
    
11
      
11
      
11
      
770
      
-
  
Consumer & Other
    
196
      
196
      
61
      
198
      
4
  
   
$
2,557
    
$
2,779
    
$
550
    
$
4,464
    
$
26
  
Total
  
$
12,581
    
$
12,803
    
$
550
    
$
12,347
    
$
159
  

Total recorded investment shown in the prior table will not equal the total ending balance of loans & leases individually evaluated for impairment on the allocation of allowance table. This is because this table does not include impaired loans that were previously modified in a troubled debt restructuring, are currently performing and are no longer disclosed or classified as TDR’s, since they were restructured at market terms.

Since April 2020, we have restructured $278.1 million of loans under the CARES Act and H.R. 133 guidelines. As of March 31, 2021, $1.2 million of these loans remain in a deferral status, the other loans having returned to making principal and/or interest payments. We believe that these actions will assist these borrowers in getting through these difficult times, but no guaranties can be made that at some time in the future these loans will not be required to be accounted for as a TDR. For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a more than insignificant concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. See “Note 2 – Risks and Uncertainties” for additional information on the CARES Act, H.R. 133 and the impact of COVID-19 on the Company.

At March 31, 2021, there were no formal foreclosure proceedings in process for consumer mortgage loans secured by residential real estate properties.

At March 31, 2021, the Company allocated $150,000 of specific reserves to $7.8 million of troubled debt restructured loans & leases, all of which were performing. The Company had no commitments at March 31, 2021 to lend additional amounts to customers with outstanding loans or leases that are classified as TDRs.

During the three-month period ended March 31, 2021, no loans or leases were modified as a troubled debt restructuring.

At December 31, 2020, there were no formal foreclosure proceedings in process for consumer mortgage loans secured by residential real estate properties.

At December 31, 2020, the Company allocated $158,000 of specific reserves to $7.9 million of troubled debt restructured loans, all of which were performing. The Company had no commitments at December 31, 2020 to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

Modifications involving a reduction of the stated interest rate of the loan were for 5 years. Modifications involving an extension of the maturity date range from 3 months to 10 years.

The following tables present loans by class modified as troubled debt restructured loans for the periods ended indicated (in thousands):

  
December 31, 2020
  
Troubled Debt Restructurings
  
Number of
Loans
    
Pre-Modification
Outstanding
Recorded
Investment
    
Post-Modification
Outstanding
Recorded
Investment
  
Residential 1st Mortgages
    
2
    
$
156
    
$
156
  
Agricultural
    
3
      
495
      
495
  
Commercial
    
1
      
224
      
224
  
Total
    
6
    
$
875
    
$
875
  

The troubled debt restructurings described above increased the allowance for credit losses by $120,000. There were no charge-offs for the twelve months ended December 31, 2020.

During the year ended December 31, 2020, there were no payment defaults on loans modified as troubled debt restructurings within twelve months following the modification.

At March 31, 2020, there were no formal foreclosure proceedings in process for consumer mortgage loans secured by residential real estate properties.

At March 31, 2020, the Company allocated $336,000 of specific reserves to $12.6 million of troubled debt restructured loans & leases, all of which were performing. The Company had no commitments at March 31, 2020 to lend additional amounts to customers with outstanding loans or leases that are classified as TDRs.

During the three-month period ended March 31, 2020, no loans or leases were modified as a troubled debt restructuring.