
	September 30, 2020		December 31, 2019
Commercial, industrial and agricultural	$	1,312,395	$	1,046,665
Commercial mortgages	993,986		814,002
Residential real estate	940,559		814,030
Consumer	95,848		124,785
Credit cards	7,766		7,569
Overdrafts	180		2,146
Less: unearned discount	(4,924)		(5,162)
allowance for loan losses	(26,887)		(19,473)
Loans, net	$	3,318,923	$	2,784,562

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within central and northwest Pennsylvania, central and northeast Ohio and western New York. CNB Bank (the "Bank") attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.

Commercial, industrial and agricultural loans comprised 39% and 37% of the Corporation’s total loan portfolio at September 30, 2020 and December 31, 2019, respectively. Commercial mortgage loans comprised 30% and 29% of the Corporation’s total loan portfolio at September 30, 2020 and December 31, 2019, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 70% of the value of accounts receivable, and a maximum of 60% of the value of business inventory at loan origination. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.

Residential real estate loans comprised 28% and 29% of the Corporation’s total loan portfolio at September 30, 2020 and December 31, 2019, respectively. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market. Loans so originated are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represented less than 3% of the total loan portfolio at both September 30, 2020 and December 31, 2019. Terms and collateral requirements vary depending on the size and nature of the loan.


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses, July 1, 2020	$	9,802	$	9,628	$	2,676	$	2,140	$	114	$	169	$	24,529
Charge-offs	(62)		(522)		(69)		(305)		(48)		(102)		(1,108)
Recoveries	15		3		64		45		2		31		160
Provision for loan losses	(106)		2,052		941		329		75		15		3,306
Allowance for loan losses, September 30, 2020	$	9,649	$	11,161	$	3,612	$	2,209	$	143	$	113	$	26,887


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses, January 1, 2020	$	8,287	$	6,952	$	1,499	$	2,411	$	84	$	240	$	19,473
Charge-offs	(2,710)		(522)		(231)		(1,310)		(120)		(316)		(5,209)
Recoveries	40		177		67		126		13		135		558
Provision for loan losses	4,032		4,554		2,277		982		166		54		12,065
Allowance for loan losses, September 30, 2020	$	9,649	$	11,161	$	3,612	$	2,209	$	143	$	113	$	26,887


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses, July 1, 2019	$	8,108	$	9,538	$	1,403	$	2,141	$	87	$	160	$	21,437
Charge-offs	(160)		(2,650)		(38)		(547)		(3)		(113)		(3,511)
Recoveries	5		65		5		58		6		24		163
Provision (benefit) for loan losses	997		30		116		693		15		267		2,118
Allowance for loan losses, September 30, 2019	$	8,950	$	6,983	$	1,486	$	2,345	$	105	$	338	$	20,207


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses, January 1, 2019	$	7,341	$	7,490	$	2,156	$	2,377	$	103	$	237	$	19,704
Charge-offs	(160)		(2,652)		(282)		(1,609)		(55)		(329)		(5,087)
Recoveries	13		66		72		132		12		83		378
Provision (benefit) for loan losses	1,756		2,079		(460)		1,445		45		347		5,212
Allowance for loan losses, September 30, 2019	$	8,950	$	6,983	$	1,486	$	2,345	$	105	$	338	$	20,207

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of September 30, 2020 and December 31, 2019. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,001	$	882	$	109	$	0	$	0	$	0	$	1,992
Collectively evaluated for impairment	8,151		9,970		3,503		2,209		143		113		24,089
Acquired with deteriorated credit quality	0		0		0		0		0		0		0
Modified in a troubled debt restructuring	497		309		0		0		0		0		806
Total ending allowance balance	$	9,649	$	11,161	$	3,612	$	2,209	$	143	$	113	$	26,887
Loans:
Individually evaluated for impairment	$	2,367	$	12,022	$	1,177	$	0	$	0	$	0	$	15,566
Collectively evaluated for impairment	1,301,810		974,660		939,273		95,848		7,766		180		3,319,537
Acquired with deteriorated credit quality	3,839		822		0		0		0		0		4,661
Modified in a troubled debt restructuring	4,379		6,482		109		0		0		0		10,970
Total ending loans balance	$	1,312,395	$	993,986	$	940,559	$	95,848	$	7,766	$	180	$	3,350,734


	Commercial, Industrial and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	645	$	1,264	$	34	$	0	$	0	$	0	$	1,943
Collectively evaluated for impairment	7,614		5,358		1,465		2,411		84		240		17,172
Acquired with deteriorated credit quality	0		0		0		0		0		0		0
Modified in a troubled debt restructuring	28		330		0		0		0		0		358
Total ending allowance balance	$	8,287	$	6,952	$	1,499	$	2,411	$	84	$	240	$	19,473
Loans:
Individually evaluated for impairment	$	8,078	$	2,410	$	465	$	0	$	0	$	0	$	10,953
Collectively evaluated for impairment	1,035,494		804,360		813,565		124,785		7,569		2,146		2,787,919
Acquired with deteriorated credit quality	0		523		0		0		0		0		523
Modified in a troubled debt restructuring	3,093		6,709		0		0		0		0		9,802
Total ending loans balance	$	1,046,665	$	814,002	$	814,030	$	124,785	$	7,569	$	2,146	$	2,809,197

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of September 30, 2020 and December 31, 2019 and for the three and nine months ended September 30, 2020 and 2019:


	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial and agricultural	$	2,847	$	2,767	$	1,498
Commercial mortgage	5,166		3,673		1,191
Residential real estate	1,197		1,177		109
With no related allowance recorded:
Commercial, industrial and agricultural	4,177		3,979		0
Commercial mortgage	17,262		14,831		0
Residential real estate	115		109		0
Total	$	30,764	$	26,536	$	2,798


	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial and agricultural	$	2,657	$	1,476	$	673
Commercial mortgage	6,541		4,349		1,594
Residential real estate	485		465		34

With no related allowance recorded:
Commercial, industrial and agricultural	9,845		9,695		0
Commercial mortgage	4,903		4,770		0
Residential real estate	0		0		0

Total	$	24,431	$	20,755	$	2,301


	Three months ended September 30, 2020						Three months ended September 30, 2019
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial and agricultural	$	2,409	$	33	$	33	$	1,480	$	32	$	32
Commercial mortgage	$	4,002	$	0	$	0	7,024		12		12
Residential real estate	$	819	$	11	$	11	245		8		8
With no related allowance recorded:
Commercial, industrial and agricultural	$	5,623	$	51	$	51	3,977		42		42
Commercial mortgage	$	14,758	$	59	$	59	2,435		29		29
Residential real estate	$	112	$	4	$	4	236		0		0
Total	$	27,723	$	158	$	158	$	15,397	$	123	$	123


	Nine months ended September 30, 2020						Nine months ended September 30, 2019
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized		Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial and agricultural	$	3,341	$	78	$	78	$	1,819	$	74	$	74
Commercial mortgage	4,166		41		41		7,145		100		100
Residential real estate	641		16		16		122		8		8
With no related allowance recorded:
Commercial, industrial and agricultural	6,392		142		142		3,676		128		128
Commercial mortgage	12,178		283		283		3,250		62		62
Residential real estate	56		6		6		368		11		11
Total	$	26,774	$	566	$	566	$	16,380	$	383	$	383


	September 30, 2020				December 31, 2019
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial and agricultural	$	6,983	$	189	$	11,644	$	0
Commercial mortgages	14,199		0		4,533		0
Residential real estate	5,183		58		4,724		59
Consumer	479		0		835		0
Credit cards	0		18		0		2
Total	$	26,844	$	265	$	21,736	$	61


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial and agricultural	$	673	$	317	$	3,596	$	4,586	$	1,307,809	$	1,312,395
Commercial mortgages	476		722		2,403		3,601		990,385		993,986
Residential real estate	1,729		1,322		2,918		5,969		934,590		940,559
Consumer	375		129		198		702		95,146		95,848
Credit cards	57		49		18		124		7,642		7,766
Overdrafts	0		0		0		0		180		180
Total	$	3,310	$	2,539	$	9,133	$	14,982	$	3,335,752	$	3,350,734


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial and agricultural	$	1,273	$	548	$	3,784	$	5,605	$	1,041,060	$	1,046,665
Commercial mortgages	162		183		2,594		2,939		811,063		814,002
Residential real estate	3,383		1,270		2,714		7,367		806,663		814,030
Consumer	412		311		415		1,138		123,647		124,785
Credit cards	48		54		2		104		7,465		7,569
Overdrafts	0		0		0		0		2,146		2,146
Total	$	5,278	$	2,366	$	9,509	$	17,153	$	2,792,044	$	2,809,197

The terms of certain loans have been modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.


	September 30, 2020					December 31, 2019
	Number of Loans	Loan Balance		Specific Reserve		Number of Loans	Loan Balance		Specific Reserve
Commercial, industrial and agricultural	17	$	4,379	$	497	10	$	3,093	$	28
Commercial mortgages	14	6,482		309		13	6,709		330
Residential real estate	1	109		0		0	0		0
Consumer	0	0		0		0	0		0
Credit cards	0	0		0		0	0		0
Total	32	$	10,970	$	806	23	$	9,802	$	358

There were one and ten loans modified as troubled debt restructurings during the three and nine months ended September 30, 2020, respectively, and one loan modified as troubled debt restructurings during the three and nine months ended September 30, 2019.


	Three months ended September 30, 2020
	Number of Loans	Pre-Modification Outstanding Recorded Investment Balance		Post-Modification Outstanding Recorded Investment Reserve
Commercial, industrial and agricultural	0	$	0	$	0
Commercial mortgages	1	46		46
Residential real estate	0	0		0
Consumer	0	0		0
Credit cards	0	0		0
Total	1	$	46	$	46


	Nine months ended September 30, 2020
	Number of Loans	Pre-Modification Outstanding Recorded Investment Balance		Post-Modification Outstanding Recorded Investment Reserve
Commercial, industrial and agricultural	8	$	1,593	$	1,593
Commercial mortgages	1	46		46
Residential real estate	1	116		116
Consumer	0	0		0
Credit cards	0	0		0
Total	10	$	1,755	$	1,755


	Three and nine months ended September 30, 2019
	Number of Loans	Pre-Modification Outstanding Recorded Investment Balance		Post-Modification Outstanding Recorded Investment Reserve
Commercial, industrial and agricultural	0	$	0	$	0
Commercial mortgages	1	383		383
Residential real estate	0	0		0
Consumer	0	0		0
Credit cards	0	0		0
Total	1	$	383	$	383

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. There were no loans modified as troubled debt restructurings for which there was a payment default within a twelve-month cycle following the modification during the three and nine months ended September 30, 2020 and September 30, 2019. There were no principal balances forgiven in connection with the loan restructurings.

In order to determine whether a borrower is experiencing financial difficulty, the Corporation evaluates the probability that the borrower will default on any of its debt payments in the foreseeable future without a loan modification. This evaluation is performed using the Corporation’s internal underwriting policies. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, nonperforming troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Corporation classifies commercial, industrial and agricultural loans and commercial mortgage loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize 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 classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.


	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial and agricultural	$	1,263,928	$	18,849	$	29,618	$	0	$	1,312,395
Commercial mortgages	947,943		11,131		34,912		0		993,986
Total	$	2,211,871	$	29,980	$	64,530	$	0	$	2,306,381


	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial and agricultural	$	1,004,445	$	16,696	$	25,524	$	0	$	1,046,665
Commercial mortgages	780,798		18,837		14,367		0		814,002
Total	$	1,785,243	$	35,533	$	39,891	$	0	$	1,860,667

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in residential, consumer, and credit card loans based on payment activity as of September 30, 2020 and December 31, 2019:


	September 30, 2020						December 31, 2019
	Residential Real Estate		Consumer		Credit Cards		Residential Real Estate		Consumer		Credit Cards
Performing	$	935,318	$	95,369	$	7,748	$	809,247	$	123,950	$	7,567
Nonperforming	5,241		479		18		4,783		835		2
Total	$	940,559	$	95,848	$	7,766	$	814,030	$	124,785	$	7,569

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”) are considered to be subprime loans. Holiday is a subsidiary that offers small balance unsecured and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio.