Loans and Allowance

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Loans and Allowance

LOANS AND ALLOWANCE

Loans are stated at the amount of unpaid principal, reduced by deferred income (net of costs). Interest on loans is recognized using the simple interest method on the daily balances of the principal amounts outstanding. Loan origination fees, net of direct loan origination costs, and commitment fees are deferred and amortized as an adjustment to yield over the life of the loan, or over the commitment period, as applicable. The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio, the allowance for loan losses and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at December 31, 2020 and 2019, were $4.0 million and $9.0 million, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the years indicated:

	December 31, 2020		December 31, 2019
Commercial and industrial loans	$	2,776,699	$	2,109,879
Agricultural land, production and other loans to farmers	281,884		334,172
Real estate loans:
Construction	484,723		787,568
Commercial real estate, non-owner occupied	2,220,949		1,902,692
Commercial real estate, owner occupied	958,501		909,695
Residential	1,234,741		1,143,217
Home equity	508,259		588,984
Individuals' loans for household and other personal expenditures	129,479		135,989
Public finance and other commercial loans	647,939		547,114
Loans	9,243,174		8,459,310
Allowance for loan losses	(130,648)		(80,284)
Net Loans	$	9,112,526	$	8,379,026

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law, providing an approximate $2 trillion stimulus package that includes 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”), which is administered by the Small Business Administration (“SBA”). On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was enacted. Among other things, this legislation amends the initial CARES Act program by raising the appropriation level for PPP loans from $349 billion to $670 billion. The PPP was further modified on June 5, 2020 with the adoption of the Paycheck Protection Program Flexibility Act ("the Flexibility Act"), which extended the maturity date for PPP loans from two years to five years for loans disbursed on or after the date of enactment of the Flexibility Act. For PPP loans disbursed prior to such enactment, the Flexibility Act permits the borrower and lender to mutually agree to extend the term of the loan to five years. The Bank has actively participated in assisting its customers with applications for resources through the program. PPP loans earn interest at a fixed rate of 1 percent and primarily have a two year term. The Bank anticipates that the majority of these loans will ultimately be forgiven, in whole or in part, by the SBA as, in accordance with the terms of the PPP, the loans are fully guaranteed by the SBA. As of December 31, 2020, the Bank had over 4,400 PPP loans, primarily in the commercial and industrial loan class, totaling $667.1 million, which is net of $12.5 million of deferred processing fee income and costs. The weighted-average deferred processing fee on PPP loans was approximately 3.09 percent and is recognized over the term of the loan. If a loan is forgiven by the SBA or paid off by the borrower prior to maturity, any unamortized portion of the fee will be recognized immediately. During the year ended December 31, 2020, the Corporation recognized interest income on PPP loans of $6.2 million and $16.2 million of PPP loan related deferred processing fee income as a yield adjustment.

The Bank borrowed from the Paycheck Protection Program Liquidity Facility ("PPPL Facility") to supplement liquidity to fund the PPP loans in the second quarter 2020. At December 31, 2020, the Corporation did not have an outstanding balance with the PPPL Facility.

Allowance, Credit Quality and Loan Portfolio

Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit losses on Financial Instruments ("CECL") had an original adoption date of January 1, 2020, which included a day 1 measurement date of January 1, 2020. The CARES Act, passed by Congress on March 27, 2020 in response to the COVID-19 pandemic, created an optional deferral of the CECL adoption date. Pursuant to the CARES Act and the related joint statement of federal banking regulators (which also became effective as of March 27, 2020), and consistent with guidance from the SEC and FASB, the Corporation elected to delay implementation of ASU No. 2016-13, which was set to expire on December 31, 2020. However, the 2021 Consolidated Appropriations Act ("CAA"), signed into law on December 27, 2020, amended the CARES Act by extending the temporary relief from CECL compliance to the earlier of the first day of the fiscal year that begins after the date on which the national emergency concerning COVID-19 terminates, or January 1, 2022. The Corporation elected to delay implementation of CECL following the approval of the CARES Act and, with the enactment of the CAA, the Corporation has elected to further delay adoption of CECL to January 1, 2021. As a result of the Corporation’s election, its 2020 financial statements have been prepared under the existing incurred loss model.

The Corporation maintains an allowance for loan losses to cover probable credit losses identified during its loan review process. Management believes that the allowance for loan losses is adequate to cover probable losses inherent in the loan portfolio at December 31, 2020. The process for determining the adequacy of the allowance for loan losses is critical to the Corporation’s financial results.  It requires management to make difficult, subjective and complex judgments to estimate the effect of uncertain matters. The allowance for loan losses considers current factors, including economic conditions and ongoing internal and external examinations, and will increase or decrease as deemed necessary to ensure it remains adequate. In addition, the allowance as a percentage of charge-offs and nonperforming loans will change at different points in time based on credit performance, portfolio mix and collateral values.

The allowance for loan losses is maintained through the provision for loan losses, which is a charge against earnings. The allowance is increased by provision expense and decreased by charge-offs less recoveries. All charge-offs are approved by the Bank's senior credit officers and in accordance with established policies. The Bank charges off a loan when a determination is made that all or a portion of the loan is uncollectible. The amount provided for loan losses in a given period may be greater than or less than net loan losses experienced during the period, and is based on management’s judgment as to the appropriate level of the allowance for loan losses. The determination of the provision amount is based on management’s ongoing review and evaluation of the loan portfolio, including an internally administered loan "watch" list and independent loan reviews.  The evaluation takes into consideration identified credit problems, the possibility of losses inherent in the loan portfolio that are not specifically identified and management’s judgment as to the impact of the current environment and economic conditions on the portfolio.

The allowance consists of specific impairment reserves as required by ASC 310-10-35, a component for historical losses in accordance with ASC 450 and the consideration of current environmental factors in accordance with ASC 450. A loan is deemed impaired when, based on current information or events, it is probable that all amounts due of principal and interest according to the contractual terms of the loan agreement will not be collected.

The historical loss allocation for loans not deemed impaired according to ASC 450 is the product of the volume of loans within the non-impaired criticized and non-criticized risk grade classifications, each segmented by call code, and the historical loss factor for each respective classification and call code segment. The historical loss factors are based upon actual loss experience within each risk and call code classification. The historical look back period for non-criticized loans looks to the most recent rolling-four-quarter average and aligns with the look back period for non-impaired criticized loans. Each of the rolling four quarter periods used to obtain the average, include all charge-offs for the previous twelve-month period, therefore the historical look back period includes seven quarters. Criticized loans are grouped based on the risk grade assigned to the loan. Loans with a special mention grade are assigned a loss factor, and loans with a classified grade but not impaired are assigned a separate loss factor. The loss factor computation for this allocation includes a segmented historical loss migration analysis of risk grades to charge-off.

In addition to the specific reserves and historical loss components of the allowance, consideration is given to various environmental factors to ensure that losses inherent in the portfolio are reflected in the allowance for loan losses. Environmental factors that management reviews in the analysis include: national and local economic trends and conditions; trends in growth in the loan portfolio and growth in higher risk areas; levels of, and trends in, delinquencies and non-accruals; experience and depth of lending management and staff; adequacy of, and adherence to, lending policies and procedures including those for underwriting; industry concentrations of credit; and adequacy of risk identification systems and controls through the internal loan review and internal audit processes.

In conformance with ASC 805 and ASC 820, loans purchased after December 31, 2008 are recorded at the acquisition date fair value. Such loans are included in the allowance to the extent a specific impairment is identified that exceeds the fair value adjustment on an impaired loan or the historical loss and environmental factor analysis indicates losses inherent in a purchased portfolio exceeds the fair value adjustment on the portion of the purchased portfolio not deemed impaired.

At December 31, 2020, the allowance for loan losses was $130.6 million, an increase of $50.3 million from the December 31, 2019 balance of $80.3 million. Net charge-offs for the twelve months ended December 31, 2020, were $8.3 million, an increase of $5.2 million from the same period in 2019. The provision for loan losses for the twelve months ended December 31, 2020 was $58.7 million, an increase of $55.9 million from the same period in 2019. The determination of the provision for loan losses in any period is based on management’s continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio.

The following tables summarize changes in the allowance for loan losses by loan segment for the twelve months ended December 31, 2020, 2019, and 2018:

	Twelve Months Ended December 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2019	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Provision for losses	21,930		22,174		5,996		8,573		58,673
Recoveries on loans	819		431		260		666		2,176
Loans charged off	(8,536)		(313)		(643)		(993)		(10,485)
Balances, December 31, 2020	$	47,115	$	51,070	$	9,648	$	22,815	$	130,648

	Twelve Months Ended December 31, 2019
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2018	$	32,657	$	29,609	$	3,964	$	14,322	$	80,552
Provision for losses	733		1,555		239		273		2,800
Recoveries on loans	1,244		1,289		401		619		3,553
Loans charged off	(1,732)		(3,675)		(569)		(645)		(6,621)
Balances, December 31, 2019	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284

	Twelve Months Ended December 31, 2018
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance for loan losses:
Balances, December 31, 2017	$	30,420	$	27,343	$	3,732	$	13,537	$	75,032
Provision for losses	2,097		2,482		679		1,969		7,227
Recoveries on loans	2,456		2,525		302		993		6,276
Loans charged off	(2,316)		(2,741)		(749)		(2,177)		(7,983)
Balances, December 31, 2018	$	32,657	$	29,609	$	3,964	$	14,322	$	80,552

The tables below show the Corporation’s allowance for loan losses and loan portfolio by loan segment for the years indicated.

	December 31, 2020
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance balances:
Individually evaluated for impairment	$	223	$	12,246	$	—	$	432	$	12,901
Collectively evaluated for impairment	46,892		38,824		9,648		22,383		117,747
Total allowance for loan losses	$	47,115	$	51,070	$	9,648	$	22,815	$	130,648
Loan balances:
Individually evaluated for impairment	$	1,258	$	51,605	$	2	$	3,291	$	56,156
Collectively evaluated for impairment	3,505,863		3,805,808		129,477		1,739,709		9,180,857
Loans acquired with deteriorated credit quality	577		5,584		—		—		6,161
Loans	$	3,507,698	$	3,862,997	$	129,479	$	1,743,000	$	9,243,174

	December 31, 2019
	Commercial		Commercial Real Estate		Consumer		Residential		Total
Allowance balances:
Individually evaluated for impairment	$	—	$	231	$	—	$	458	$	689
Collectively evaluated for impairment	32,902		28,547		4,035		14,111		79,595
Total allowance for loan losses	$	32,902	$	28,778	$	4,035	$	14,569	$	80,284
Loan balances:
Individually evaluated for impairment	$	457	$	8,728	$	4	$	2,520	$	11,709
Collectively evaluated for impairment	2,748,681		3,821,660		135,985		1,727,966		8,434,292
Loans acquired with deteriorated credit quality	1,716		9,878		—		1,715		13,309
Loans	$	2,750,854	$	3,840,266	$	135,989	$	1,732,201	$	8,459,310

Loans individually evaluated for impairment are comprised of commercial and consumer loans deemed impaired in accordance with ASC 310-10. This includes loans acquired with subsequent deterioration of credit quality totaling $1.3 million with $557,000 of related allowance for loan losses at December 31, 2020 and $2.8 million with $124,000 related allowance for loan losses at December 31, 2019.

The risk characteristics of the Corporation’s material portfolio segments are as follows:

Commercial

Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate

These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Management monitors and evaluates commercial real estate loans based on collateral and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.

Consumer and Residential

With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment on loans secured by 1-4 family residences can be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. When the interest accrual is discontinued, all unpaid accrued interest is reversed against earnings when considered uncollectible. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance. Payments received on impaired accruing or delinquent loans are applied to interest income as accrued.

The following table summarizes the Corporation’s non-accrual loans by loan class for the years indicated:

	December 31, 2020		December 31, 2019
Commercial and industrial loans	$	2,329	$	1,255
Agricultural land, production and other loans to farmers	1,012		1,180
Real estate loans:
Construction	123		977
Commercial real estate, non-owner occupied	46,316		3,351
Commercial real estate, owner occupied	3,040		2,659
Residential	6,517		5,062
Home equity	2,095		1,421
Individuals' loans for household and other personal expenditures	39		44
Total	$	61,471	$	15,949

Impaired loans include loans deemed impaired according to the guidance set forth in ASC 310-10. Commercial loans under $500,000 and

consumer loans, with the exception of troubled debt restructures, are not individually evaluated for impairment.

Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method for measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The following tables show the composition of the Corporation’s impaired loans, related allowance and interest income recognized while impaired by loan class for the years indicated:

	December 31, 2020
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	1,059	$	991	$	—	$	991	$	—
Real estate loans:
Commercial real estate, non-owner occupied	4,958		4,694		—		4,850		145
Commercial real estate, owner occupied	2,125		1,310		—		1,429		—
Residential	957		816		—		840		3
Individuals' loans for household and other personal expenditures	2		2		—		3		—
Total	$	9,101	$	7,813	$	—	$	8,113	$	148
Impaired loans with related allowance:
Commercial and industrial loans	$	268	$	268	$	223	$	267	$	—
Agricultural land, production and other loans to farmers	640		562		3		589		—
Real estate loans:
Commercial real estate, non-owner occupied	44,016		43,715		11,686		44,119		—
Commercial real estate, owner occupied	2,061		1,323		557		1,447		—
Residential	2,041		2,014		352		2,108		70
Home equity	487		461		80		473		14
Total	$	49,513	$	48,343	$	12,901	$	49,003	$	84
Total Impaired Loans	$	58,614	$	56,156	$	12,901	$	57,116	$	232

	December 31, 2019
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	320	$	320	$	—	$	320	$	—
Agricultural land, production and other loans to farmers	752		381		—		542		—
Real estate loans:
Construction	1,206		970		—		1,229		—
Commercial real estate, non-owner occupied	6,202		5,299				5,399		156
Commercial real estate, owner occupied	1,382		306		—		357		—
Residential	93		76		—		77		3
Total	$	9,955	$	7,352	$	—	$	7,924	$	159
Impaired loans with related allowance:
Agricultural land, production and other loans to farmers	$	588	$	585	$	107	$	585	$	—
Real estate loans:
Commercial real estate, owner occupied	2,060		1,324		124		1,324		—
Residential	2,070		2,044		383		2,083		63
Home equity	417		400		75		409		12
Individuals' loans for household and other personal expenditures	4		4		—		4		—
Total	$	5,139	$	4,357	$	689	$	4,405	$	75
Total Impaired Loans	$	15,094	$	11,709	$	689	$	12,329	$	234

	December 31, 2018
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans	$	828	$	806	$	—	$	833	$	—
Agricultural land, production and other loans to farmers	679		679		—		1,213		—
Real estate loans:
Construction	1,352		614		—		835		—
Commercial real estate, non-owner occupied	7,795		6,891		—		10,239		—
Commercial real estate, owner occupied	3,381		2,103				2,202		165
Residential	118		100		—		101		3
Home equity	49		48		—		48		—
Public finance and other commercial loans	353		353		—		353		—
Total	$	14,555	$	11,594	$	—	$	15,824	$	168
Impaired loans with related allowance:
Real estate loans:
Construction	$	7,978	$	7,977	$	1,429	$	7,977	$	—
Commercial real estate, owner occupied	171		171		6		171
Residential	1,958		1,907		362		1,915		57
Home equity	376		358		74		365		10
Individuals' loans for household and other personal expenditures	18		18		1		20		1
Total	$	10,501	$	10,431	$	1,872	$	10,448	$	68
Total Impaired Loans	$	25,056	$	22,025	$	1,872	$	26,272	$	236

Impaired loans in the above tables do not include loans accounted for under ASC 310-30, or any other loan, unless deemed impaired in

accordance with ASC 310-10.

As part of the ongoing monitoring of the credit quality of the Corporation's loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) non-performing loans, (iv) covenant failures and (v) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

•Pass - Loans that are considered to be of acceptable credit quality.

•Special Mention - Loans which have a potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.

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

•Doubtful - Loans will have all the weaknesses inherent in those classified Substandard with the added characteristics that the weakness make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

•Loss – Loans are considered uncollectible and of such little value that their continuation as bankable assets is not warranted. This     classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

The following tables summarize the credit quality of the Corporation’s loan portfolio, by loan class for the years indicated. Consumer non-performing loans include accruing consumer loans 90-days or more delinquent and consumer non-accrual loans. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified date. Loans that evidenced deterioration of credit quality since origination and the probability, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below.

	December 31, 2020
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	2,562,077	$	117,503	$	97,119	$	—	$	—	$	—	$	—	$	2,776,699
Agricultural land, production and other loans to farmers	243,991		26,835		9,885		—		—		1,173		—		281,884
Real estate loans:
Construction	446,846		10,445		5,549		—		—		21,763		120		484,723
Commercial real estate, non-owner occupied	1,979,827		160,304		80,818		—		—		—		—		2,220,949
Commercial real estate, owner occupied	907,566		17,641		33,294		—		—		—		—		958,501
Residential	199,338		2,261		7,058		—		—		1,020,687		5,397		1,234,741
Home equity	12,714		—		989		—		—		492,999		1,557		508,259
Individuals' loans for household and other personal expenditures	—		—		—		—		—		129,440		39		129,479
Public finance and other commercial loans	647,939		—		—		—		—		—		—		647,939
Loans	$	7,000,298	$	334,989	$	234,712	$	—	$	—	$	1,666,062	$	7,113	$	9,243,174

	December 31, 2019
	Commercial Pass		Commercial Special Mention		Commercial Substandard		Commercial Doubtful		Commercial Loss		Consumer Performing		Consumer Non Performing		Total
Commercial and industrial loans	$	1,956,985	$	81,179	$	71,715	$	—	—		$	—	$	—	$	2,109,879
Agricultural land, production and other loans to farmers	291,790		11,008		29,393		—		—		1,981		—		334,172
Real estate loans:
Construction	749,249		1,613		1,634		—		—		35,072		—		787,568
Commercial real estate, non-owner occupied	1,814,187		38,366		50,139		—		—		—		—		1,902,692
Commercial real estate, owner occupied	866,947		14,028		28,720		—		—		—		—		909,695
Residential	196,710		877		8,075		—		—		932,743		4,812		1,143,217
Home equity	24,211		257		682		—		—		562,507		1,327		588,984
Individuals' loans for household and other personal expenditures	—		—		—		—		—		135,944		45		135,989
Public finance and other commercial loans	547,114		—		—		—		—		—		—		547,114
Loans	$	6,447,193	$	147,328	$	190,358	$	—	$	—	$	1,668,247	$	6,184	$	8,459,310

The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:

	December 31, 2020
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total		Past due 90+ days and still accruing
Commercial and industrial loans	$	2,761,473	$	5,866	$	6,571	$	2,789	$	15,226	$	2,776,699	$	594
Agricultural land, production and other loans to farmers	280,615		146		226		897		1,269		281,884		—
Real estate loans:
Construction	484,706		—		17		—		17		484,723		—
Commercial real estate, non-owner occupied	2,184,681		2,525		2,109		31,634		36,268		2,220,949		—
Commercial real estate, owner occupied	951,561		4,854		180		1,906		6,940		958,501		—
Residential	1,226,779		3,269		1,429		3,264		7,962		1,234,741		133
Home equity	503,596		2,644		559		1,460		4,663		508,259		19
Individuals' loans for household and other personal expenditures	129,049		334		96		—		430		129,479		—
Public finance and other commercial loans	647,939		—		—		—		—		647,939		—
Loans	$	9,170,399	$	19,638	$	11,187	$	41,950	$	72,775	$	9,243,174	$	746

	December 31, 2019
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Total		Past due 90+ days and still accruing
Commercial and industrial loans	$	2,105,757	$	3,086	$	154	$	882	$	4,122	$	2,109,879	$	4
Agricultural land, production and other loans to farmers	333,012		46		64		1,050		1,160		334,172		—
Real estate loans:
Construction	785,936		1,632		—		—		1,632		787,568		—
Commercial real estate, non-owner occupied	1,899,190		1,348		544		1,610		3,502		1,902,692		—
Commercial real estate, owner occupied	906,881		976		208		1,630		2,814		909,695		—
Residential	1,134,650		4,976		1,279		2,312		8,567		1,143,217		22
Home equity	584,506		3,083		611		784		4,478		588,984		42
Individuals' loans for household and other personal expenditures	135,445		439		105		—		544		135,989		1
Public finance and other commercial loans	547,114		—		—		—		—		547,114		—
Loans	$	8,432,491	$	15,586	$	2,965	$	8,268	$	26,819	$	8,459,310	$	69

 

On occasion, borrowers experience declines in income and cash flow. As a result, these borrowers seek to reduce contractual cash outlays including debt payments. Concurrently, in an effort to preserve and protect its earning assets, specifically troubled loans, the Corporation works to maintain its relationship with certain customers who are experiencing financial difficulty by contractually modifying the borrower's debt agreement with the Corporation. In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a trouble debt restructuring. A concession is deemed to be granted when, as a result of the restructuring, the Corporation does not expect to collect all original amounts due, including interest accrued at the original contract rate. If the payment of principal at original maturity is primarily dependent on the value of collateral, the current value of the collateral is considered in determining whether the principal will be paid.

The following tables summarize troubled debt restructures in the Corporation's loan portfolio that occurred during the periods ended December 31, 2020 and 2019:

	December 31, 2020
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Commercial and industrial loans	$	654	$	654	3
Agricultural land, production and other loans to farmers	458		458		1
Real estate loans:
Construction	113		123		1
Commercial real estate, owner occupied	107		107		1
Residential	2,730		2,780		38
Home equity	332		332		3
Individuals' loans for household and other personal expenditures	19		19		2
Total	$	4,413	$	4,473	49

	December 31, 2019
	Pre-Modification Recorded Balance		Post-Modification Recorded Balance		Number of Loans
Real estate loans:
Residential	$	636	$	629	11
Home equity	56		61		2
Total	$	692	$	690	13

The following tables summarize the recorded investment of troubled debt restructures as of December 31, 2020 and 2019, by modification type, that occurred during the years indicated:

	December 31, 2020
	Term Modification		Rate Modification		Combination		Total Modification
Commercial and industrial loans	$	585	$	—	$	—	$	585
Real estate loans:
Construction	—		—		120		120
Commercial real estate, owner occupied	103		—		—		103
Residential	2,253		159		220		2,632
Home equity	236		93		—		329
Individuals' loans for household and other personal expenditures	16		—		—		16
Total	$	3,193	$	252	$	340	$	3,785

	December 31, 2019
	Term Modification		Rate Modification		Combination		Total Modification
Real estate loans:
Residential	$	95	$	87	$	432	$	614
Home equity	—		—		61		61
Total	$	95	$	87	$	493	$	675

Loans secured by 1- 4 family residential real estate made up 70 percent of the post-modification balances of the troubled debt restructured loans that occurred during the twelve months ending December 31, 2020. The same classification made up 100 percent of the post-modification balance of the troubled debt restructured loans for the twelve months ending December 31, 2019.

The following tables summarize troubled debt restructures that occurred during the twelve months ended December 31, 2020 and 2019, that subsequently defaulted during the period indicated and remained in default at period end. For purposes of this schedule, a loan is considered in default if it is 30-days or more past due.

	Twelve Months Ended December 31, 2020
	Number of Loans	Recorded Balance
Commercial and industrial loans	2	$	585
Real estate loans:
Residential	8	610
Home equity	1	93
Total	11	$	1,288

	Twelve Months Ended December 31, 2019
	Number of Loans	Recorded Balance
Real estate loans:
Residential	1	$	37
Total	1	$	37

For potential consumer loan restructures, impairment evaluation occurs prior to modification. Any subsequent impairment is addressed through the charge-off process or through a specific reserve. Consumer troubled debt restructures are generally included in the general historical allowance for loan loss at the post modification balance. Consumer non-accrual and delinquent troubled debt restructures are also considered in the calculation of the non-accrual and delinquency trend environmental allowance allocation. Consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $2.8 million and $1.0 million at December 31, 2020 and 2019, respectively.

Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for impairment under ASC 310. Any resulting specific reserves are included in the allowance for loan losses. Commercial 30 - 89 day delinquent troubled debt restructures are included in the calculation of the delinquency trend environmental allowance allocation. With the exception of the acquired loans excluded from the allowance for loan losses, all commercial non-impaired loans, including non-accrual and 90-days or more delinquents, are included in the ASC 450 loss estimate.