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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans and Allowance for Credit Losses
LOANS AND ALLOWANCE FOR CREDIT LOSSES

The Corporation's primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale. Loans held for sale at December 31, 2021 and December 31, 2020, were $11.2 million and $4.0 million, respectively.

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the periods indicated:
December 31, 2021December 31, 2020
Commercial and industrial loans$2,714,565 $2,776,699 
Agricultural land, production and other loans to farmers246,442 281,884 
Real estate loans:
Construction523,066 484,723 
Commercial real estate, non-owner occupied2,135,459 2,220,949 
Commercial real estate, owner occupied986,720 958,501 
Residential1,159,127 1,234,741 
Home equity523,754 508,259 
Individuals' loans for household and other personal expenditures146,092 129,479 
Public finance and other commercial loans806,636 647,939 
Loans$9,241,861 $9,243,174 


As of December 31, 2021, the Corporation had $106.6 million of Paycheck Protection Program ("PPP") loans compared to the December 31, 2020 balance of $667.1 million. PPP loans are included in the commercial and industrial loan class. Additional details of the PPP are included in
the "IMPACT OF COVID-19" section of NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements.

Credit Quality
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 possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation's credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification.

•Substandard - A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

•Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable.

•Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.
The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Loans that evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected are included in the applicable categories below. Commercial and industrial loan balances as of December 31, 2021 with an origination year of 2021 and 2020 include PPP loans of $100.3 million and $6.3 million, respectively.


Term Loans (amortized cost basis by origination year)
20212020201920182017PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Commercial and industrial loans
Pass$1,019,757 $362,372 $144,520 $65,165 $21,575 $30,420 $990,335 $— $2,634,144 
Special Mention10,559 11,088 190 730 1,930 1,825 15,026 — 41,348 
Substandard2,811 2,127 7,432 2,932 431 747 22,593 — 39,073 
Total Commercial and industrial loans1,033,127 375,587 152,142 68,827 23,936 32,992 1,027,954 — 2,714,565 
Agricultural land, production and other loans to farmers
Pass50,251 45,164 22,195 7,689 6,153 36,074 74,871 — 242,397 
Special Mention— 1,543 — — — 252 264 — 2,059 
Substandard524 506 108 371 — 27 450 — 1,986 
Total Agricultural land, production and other loans to farmers50,775 47,213 22,303 8,060 6,153 36,353 75,585 — 246,442 
Real estate loans:
Construction
Pass215,167 200,169 63,589 979 1,762 2,453 17,201 — 501,320 
Special Mention20,737 270 — — — 46 — — 21,053 
Substandard— 693 — — — — — — 693 
Total Construction235,904 201,132 63,589 979 1,762 2,499 17,201 — 523,066 
Commercial real estate, non-owner occupied
Pass589,296 688,406 227,332 111,971 103,400 126,837 26,779 — 1,874,021 
Special Mention68,279 149,480 — — — 1,723 — — 219,482 
Substandard19,314 14,912 178 1,118 6,156 278 — — 41,956 
Total Commercial real estate, non-owner occupied676,889 852,798 227,510 113,089 109,556 128,838 26,779 — 2,135,459 
Commercial real estate, owner occupied
Pass299,186 392,383 92,338 43,252 46,044 48,571 33,998 — 955,772 
Special Mention5,665 5,953 738 1,532 902 1,301 149 — 16,240 
Substandard7,025 5,763 — 53 113 1,754 — — 14,708 
Total Commercial real estate, owner occupied311,876 404,099 93,076 44,837 47,059 51,626 34,147 — 986,720 
Residential
Pass349,726 353,691 103,028 69,745 55,240 210,669 2,955 73 1,145,127 
Special Mention1,034 1,394 1,456 306 172 2,106 — — 6,468 
Substandard1,004 1,575 335 1,248 108 3,257 — 5 7,532 
Total Residential351,764 356,660 104,819 71,299 55,520 216,032 2,955 78 1,159,127 
Home equity
Pass63,845 17,556 1,977 2,127 1,250 3,432 427,437 194 517,818 
Special Mention— 85 48 — — 24 3,451 — 3,608 
Substandard520 — — 8 91 70 1,639 — 2,328 
Total Home Equity64,365 17,641 2,025 2,135 1,341 3,526 432,527 194 523,754 
Individuals' loans for household and other personal expenditures
Pass67,749 23,452 11,893 11,197 2,008 4,928 24,406 — 145,633 
Special Mention79 85 50 33 20 58 134 — 459 
Substandard— — — — — — — — — 
Total Individuals' loans for household and other personal expenditures67,828 23,537 11,943 11,230 2,028 4,986 24,540 — 146,092 
Public finance and other commercial loans
Pass231,319 178,316 100,679 39,098 105,964 128,942 22,318 — 806,636 
Total Public finance and other commercial loans231,319 178,316 100,679 39,098 105,964 128,942 22,318 — 806,636 
Loans$3,023,847 $2,456,983 $778,086 $359,554 $353,319 $605,794 $1,664,006 $272 $9,241,861 
December 31, 2020
Commercial
Pass		Commercial
Special
Mention		Commercial SubstandardCommercial
Doubtful		Commercial LossConsumer PerformingConsumer
Non-Performing		Total
Commercial and industrial loans$2,562,077 $117,503 $97,119 $— $— $— $— $2,776,699 
Agricultural land, production and other loans to farmers243,991 26,835 9,885 — — 1,173 — 281,884 
Real estate loans:
Construction446,846 10,445 5,549 — — 21,763 120 484,723 
Commercial real estate, non-owner occupied1,979,827 160,304 80,818 — — — — 2,220,949 
Commercial real estate, owner occupied907,566 17,641 33,294 — — — — 958,501 
Residential199,338 2,261 7,058 — — 1,020,687 5,397 1,234,741 
Home equity12,714 — 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 loans647,939 — — — — — — 647,939 
Loans$7,000,298 $334,989 $234,712 $— $— $1,666,062 $7,113 $9,243,174 


Total past due loans equaled $34.7 million as of December 31, 2021, a $38.0 million decrease from the total of $72.8 million for December 31, 2020. At December 31, 2021, 30-59 Days Past Due loans totaled $15.0 million, a decrease of $4.6 million from December 31, 2020. The primary decreases were in commercial and industrial and owner-occupied commercial real estate loans. At December 31, 2021, 60-89 Days Past Due loans totaled $7.1 million, a decrease of $4.1 million from December 31, 2020. The primary decrease was in commercial and industrial loans and non-owner occupied commercial real estate, offset by an increase in the residential portfolio. At December 31, 2021, 90 Days or More Past Due loans totaled $12.7 million, a decrease of $29.3 million from December 31, 2020. The primary decrease was in non-owner occupied commercial real estate, due to the payoff of a $23.4 million relationship. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, for the years indicated:
December 31, 2021
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 90 Days or More Past Due
And Accruing
Commercial and industrial loans$2,708,539 $2,602 $2,437 $987 $2,714,565 $675 
Agricultural land, production and other loans to farmers246,380 36 — 26 246,442 — 
Real estate loans:
Construction522,349 717 — — 523,066 — 
Commercial real estate, non-owner occupied2,124,853 3,327 — 7,279 2,135,459 — 
Commercial real estate, owner occupied985,785 643 — 292 986,720 — 
Residential1,148,294 3,979 4,255 2,599 1,159,127 — 
Home equity518,643 3,327 281 1,503 523,754 288 
Individuals' loans for household and other personal expenditures145,634 375 83 — 146,092 — 
Public finance and other commercial loans806,636 — — — 806,636 — 
Loans$9,207,113 $15,006 $7,056 $12,686 $9,241,861 $963 


December 31, 2020
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 90 Days or More Past Due
And Accruing
Commercial and industrial loans$2,761,473 $5,866 $6,571 $2,789 $2,776,699 $594 
Agricultural land, production and other loans to farmers280,615 146 226 897 281,884 — 
Real estate loans:
Construction484,706 — 17 — 484,723 — 
Commercial real estate, non-owner occupied2,184,681 2,525 2,109 31,634 2,220,949 — 
Commercial real estate, owner occupied951,561 4,854 180 1,906 958,501 — 
Residential1,226,779 3,269 1,429 3,264 1,234,741 133 
Home equity503,596 2,644 559 1,460 508,259 19 
Individuals' loans for household and other personal expenditures129,049 334 96 — 129,479 — 
Public finance and other commercial loans647,939 — — — 647,939 — 
Loans$9,170,399 $19,638 $11,187 $41,950 $9,243,174 $746 
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. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in the prior year, if any, is charged to the allowance for credit losses. 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.

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

December 31, 2021December 31, 2020
Non-Accrual LoansNon-Accrual Loans with no Allowance for Credit LossesNon-Accrual Loans
Commercial and industrial loans$7,598 $263 $2,329 
Agricultural land, production and other loans to farmers631 5241,012 
Real estate loans:
Construction685 — 123 
Commercial real estate, non-owner occupied23,029 6,13346,316 
Commercial real estate, owner occupied411 — 3,040 
Residential9,153 2,1606,517 
Home equity1,552 — 2,095 
Individuals' loans for household and other personal expenditures3 — 39 
Loans$43,062 $9,080 $61,471 


There was no interest income recognized on non-accrual loans for the twelve months ended December 31, 2021 and 2020, respectively.

Determining fair value for collateral dependent loans 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 table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses:
December 31, 2021
Commercial Real EstateResidential Real EstateOtherTotalAllowance on Collateral Dependent Loans
Commercial and industrial loans$— $— $8,075 $8,075 $2,672 
Agricultural land, production and other loans to farmers524 — 251 775 — 
Real estate loans:
Construction— 685 — 685 82 
Commercial real estate, non-owner occupied23,652 — — 23,652 5,510 
Commercial real estate, owner occupied1,044 — — 1,044 — 
Residential— 4,906 — 4,906 305 
Home equity— 394 — 394 64 
Loans$25,220 $5,985 $8,326 $39,531 $8,633 
As detailed in NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements, the Bank's banking regulators issued guidance in March 2020 encouraging financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations due to the effects of COVID-19. Additionally, Section 4013 of the CARES Act had further provided that a qualified loan modification is exempt by law from classification as a troubled debt restructure as defined by GAAP, from the period beginning March 1, 2020 until the earlier of December 31, 2020 or the date that is 60 days after the date on which the national emergency concerning the COVID-19 outbreak under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates. In accordance with that guidance, the Bank has offered short-term modifications made in response to COVID-19 to borrowers who were current and otherwise not past due. These included short-term, 180 days or less, modifications in the form of payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The 2021 CAA extended the expiration date for COVID-related loan modifications exempt from troubled debt restructuring classification until January 1, 2022. At December 31, 2021, the Corporation did not have any outstanding COVID modifications, compared to $120.3 million on 87 loans at December 31, 2020.

In certain loan restructuring situations, the Corporation may grant a concession to a debtor experiencing financial difficulty, resulting in a troubled 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 repaid.

The following tables summarize troubled debt restructures in the Corporation's loan portfolio that occurred during the twelve months ended December 31, 2021 and 2020, respectively.

Twelve Months Ended December 31, 2021
Pre- Modification Recorded BalanceTerm ModificationRate ModificationCombinationPost - Modification Recorded BalanceNumber of Loans
Commercial and industrial loans$348 $348 $— $— $348 2
Real estate loans:
Construction16 — 16— 161
Commercial real estate, non owner occupied12,922 12,976 — — 12,976 1
Commercial real estate, owner occupied5129 — 21502
Residential6914491261186939
Total$14,028 $13,802 $142 $139 $14,083 15 


Twelve Months Ended December 31, 2020
Pre- Modification Recorded BalanceTerm ModificationRate ModificationCombinationPost - Modification Recorded BalanceNumber of Loans
Commercial and industrial loans$654 $654 $— $— $654 3
Agricultural land, production and other loans to farmers458458— — 4581
Real estate loans:
Construction113— — 1231231
Commercial real estate, owner occupied107107— — 1071
Residential2,730 2,393 1632242,780 38
Home Equity33223795— 3323
Individuals' loans for household and other personal expenditures1919— — 192
Total$4,413 $3,868 $258 $347 $4,473 49 


Loans secured by commercial real estate, non-owner occupied made up 92.1 percent of the post-modification balances of the troubled debt restructured loans that occurred during the twelve months ending December 31, 2021. During the twelve months ended December 31, 2020, residential made up and 62.2 percent of the post-modification balance of the troubled debt restructured loans that occurred in the period.

The following tables summarize troubled debt restructures that occurred during the twelve months ended December 31, 2021 and 2020, 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, 2021
Number of LoansRecorded Balance
Real estate loans:
Residential5 $475 
Total5 $475 
Twelve Months Ended December 31, 2020
Number of LoansRecorded Balance
Commercial and industrial loans2 $585 
Real estate loans:
Residential8 610 
Home equity1 93 
Total11 $1,288 


Commercial troubled debt restructured loans risk graded special mention, substandard, doubtful and loss are individually evaluated for apparent loss and may result in a specific reserve allocation in the allowance for credit loss. Commercial troubled debt restructures that aren't individually evaluated for a specific reserve are included in the calculation of allowance for credit losses through the loan segment loss analysis.

For all consumer loan modifications, an evaluation to identify if a troubled debt restructure has occurred is performed prior to making the modification. Any subsequent deterioration is addressed through the charge-off process or through a specific reserve allocation included in the allowance for credit loss. Consumer troubled debt restructures that are not individually evaluated for a specific reserve are included in the calculation of the allowance for credit losses through the loan segment loss analysis. Consumer loans secured by residential real estate properties for which formal foreclosure proceedings are in process totaled $4.2 million and $2.8 million at December 31, 2021 and December 31, 2020, respectively.

Allowance for Credit Losses on Loans

The Allowance for Credit Losses on Loans ("ACL - Loans") is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge offs for loans, net or recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.

The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The current expected credit loss ("CECL") calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the allowance for credit losses is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the allowance for credit losses, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, CRE price index and the home price index.

The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other things, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending management and staff, and (vi) other environmental factors such as regulatory, legal and technological considerations, as well as competition.
In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

No allowance for credit losses has been recognized for PPP loans as such loans are fully guaranteed by the Small Business Administration ("SBA").

The risk characteristics of the Corporation’s 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
Commercial real estate 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. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans.

Construction
Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower's ability to successfully complete a project on time, within budget and stabilize the projected as originally projected.

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 and can also 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.

The following tables summarize changes in the allowance for credit losses by loan segment for the twelve months ended December 31, 2021:

Twelve Months Ended December 31, 2021
CommercialCommercial Real EstateConstructionConsumerResidentialConsumer & ResidentialTotal
Allowance for credit losses
Balances, December 31, 2020$47,115 $51,070 $— $9,648 $22,815 $— $130,648 
Credit risk reclassifications— (10,284)10,284 (9,648)(22,815)32,463 — 
Balances, December 31, 2020 after reclassifications47,115 40,786 10,284 — — 32,463 130,648 
Impact of adopting ASC 32620,024 34,925 8,805 — — 10,301 74,055 
Balances, January 1, 2021 Post-ASC 326 adoption67,139 75,711 19,089 — — 42,764 204,703 
Provision for credit losses7,921 (11,093)1,122 — — 2,050 — 
Recoveries on loans724 580 1 — — 1,273 2,578 
Loans charged off(5,849)(4,533)(6)— — (1,496)(11,884)
Balances, December 31, 2021$69,935 $60,665 $20,206 $— $— $44,591 $195,397 
Allowance for Loan Losses under prior GAAP ("Incurred Loss Model")

Prior to the adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on January 1, 2021, the Corporation maintained an allowance for loan losses in accordance with the incurred loss model as disclosed in the Corporation's 2020 Annual Report on Form 10-K.

The following tables summarize changes in the allowance for loan losses by loan segment for the twelve months ended December 31, 2020 and 2019:
Twelve Months Ended December 31, 2020
CommercialCommercial
Real Estate		ConsumerResidentialTotal
Allowance for loan losses:
Balances, December 31, 2019$32,902 $28,778 $4,035 $14,569 $80,284 
Provision for losses21,930 22,174 5,996 8,573 58,673 
Recoveries on loans819 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
CommercialCommercial Real EstateConsumerResidentialTotal
Allowance for loan losses:
Balances, December 31, 2018$32,657 $29,609 $3,964 $14,322 $80,552 
Provision for losses733 1,555 239 273 2,800 
Recoveries on loans1,244 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 


The table below shows the Corporation’s allowance for loan losses under the incurred loss model and loan portfolio by loan segment as of December 31, 2020.
December 31, 2020
CommercialCommercial
Real Estate		ConsumerResidentialTotal
Allowance Balances:
Individually evaluated for impairment$223 $12,246 $— $432 $12,901 
Collectively evaluated for impairment46,892 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 impairment3,505,863 3,805,808 129,477 1,739,709 9,180,857 
Loans acquired with deteriorated credit quality577 5,584 — — 6,161 
Loans$3,507,698 $3,862,997 $129,479 $1,743,000 $9,243,174 
The following tables show the composition of the Corporation’s impaired loans and related allowance by loan class under the incurred loss model and the interest income recognized for the periods indicated:
December 31, 2020
Unpaid
Principal
Balance		Recorded
Investment		Related
Allowance
Impaired loans with no related allowance:
Commercial and industrial loans$1,059 $991 $— 
Real estate Loans:
Commercial real estate, non-owner occupied4,958 4,694 — 
Commercial real estate, owner occupied2,125 1,310 — 
Residential957 816 — 
Individuals' loans for household and other personal expenditures2 2 — 
Total$9,101 $7,813 $— 
Impaired loans with related allowance:
Commercial and industrial loans$268 $268 $223 
Agricultural land, production and other loans to farmers640 562 3 
Real estate Loans:
Commercial real estate, non-owner occupied44,016 43,715 11,686 
Commercial real estate, owner occupied2,061 1,323 557 
Residential2,041 2,014 352 
Home equity487 461 80 
Total$49,513 $48,343 $12,901 
Total Impaired Loans$58,614 $56,156 $12,901 


December 31, 2019
Unpaid Principal
Balance		Recorded
Investment		Related
Allowance
Impaired loans with no related allowance:
Commercial and industrial loans$320 $320 $— 
Agricultural land, production and other loans to farmers752 381 — 
Real estate loans:
Construction1,206 970 — 
Commercial real estate, non-owner occupied6,202 5,299 — 
Commercial real estate, owner occupied1,382 306 — 
Residential93 76 — 
Total$9,955 $7,352 $— 
Impaired loans with related allowance:
Agricultural land, production and other loans to farmers588 585 107 
Real estate loans:
Commercial real estate, owner occupied2,060 1,324 124 
Residential2,070 2,044 383 
Home equity41740075
Individuals' loans for household and other personal expenditures4 4 — 
Total$5,139 $4,357 $689 
Total Impaired Loans$15,094 $11,709 $689 
Twelve Months Ended December 31, 2020
Average
Recorded Investment		Interest
Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans$991 $— 
Real estate Loans:
Commercial real estate, non-owner occupied4,850 145 
Commercial real estate, owner occupied 1,429 — 
Residential840 3 
Individuals' loans for household and other personal expenditures3 — 
Total$8,113 $148 
Impaired loans with related allowance:
Commercial and industrial loans$267 $— 
Agricultural land, production and other loans to farmers589 — 
Real estate Loans:
Commercial real estate, non-owner occupied 44,119 — 
Commercial real estate, owner occupied 1,447 — 
Residential2,108 70 
Home equity473 14 
Total$49,003 $84 
Total Impaired Loans$57,116 $232 


Twelve Months Ended December 31, 2019
Average Recorded InvestmentInterest Income Recognized
Impaired loans with no related allowance:
Commercial and industrial loans$320 $— 
Agricultural land, production and other loans to farmers542 — 
Real estate loans:
Construction1,229 — 
Commercial real estate, non-owner occupied5,399 156 
Commercial real estate, owner occupied357 — 
Residential77 3 
Total$7,924 $159 
Impaired loans with related allowance:
Agricultural land, production and other loans to farmers585 — 
Real estate loans:
Commercial real estate, owner occupied1,324 — 
Residential2,083 63 
Home equity409 12 
Individuals' loans for household and other personal expenditures4 — 
Total$4,405 $75 
Total Impaired Loans$12,329 $234 
Off-Balance Sheet Arrangements, Commitments And Contingencies

In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee.

Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

Financial instruments with off-balance sheet risk were as follows:
December 31, 2021December 31, 2020
Amounts of commitments:
Loan commitments to extend credit$3,917,215 $3,443,514 
Standby letters of credit$34,613 $29,555 


The adoption of the CECL methodology for measuring credit losses, as discussed more fully in the Allowance for Credit Loss on Loans section of this Note, and in NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements, increased the opening balance of our accrual for off-balance sheet commitments at adoption by $20.5 million. This reserve level remains appropriate and is reported in Other Liabilities as of December 31, 2021 in the CONSOLIDATED BALANCE SHEETS.

The following table details activity in the allowance for credit losses on off-balance sheet commitments:
Twelve Months Ended December 31, 2021
Balances, January 1, 2021$20,500 
Provision for credit losses— 
Balances, December 31, 2021$20,500