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LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES (Tables)
 12 Months Ended
Dec. 31, 2022
LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES [Abstract]  
Loan Portfolio and Allowance for Loan Losses

The Company grants commercial, industrial, agricultural, residential, and consumer loans primarily to customers throughout north central, central and south central Pennsylvania, southern New York and Wilmington and Dover, Delaware.  Although the Company had a diversified loan portfolio at December 31, 2022 and 2021, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio, as well as how those segments are analyzed within the allowance for loan losses as of December 31, 2022 and 2021 (in thousands):

2022
  
Total Loans
    
Individually
evaluated for
impairment
    
Loans acquired
with deteriorated
credit quality
    
Collectively
evaluated for
impairment
  
Real estate loans:
                        
Residential
  
$
210,213
    
$
335
    
$
9
    
$
209,869
  
Commercial
    
876,569
      
5,675
      
1,856
      
869,038
  
Agricultural
    
313,614
      
5,380
      
1,441
      
307,055
  
Construction
    
80,691
      
-
      
-
      
80,691
  
Consumer
    
86,650
      
4
      
-
      
86,646
  
Other commercial loans
    
63,222
      
102
      
-
      
63,120
  
Other agricultural loans
    
34,832
      
473
      
-
      
34,097
  
State and political subdivision loans
    
59,208
      
-
      
-
      
59,208
  
Total
    
1,724,999
      
11,969
      
3,306
      
1,709,724
  
Allowance for loan losses
    
18,552
      
102
      
-
      
18,450
  
Net loans
  
$
1,706,447
    
$
11,867
    
$
3,306
    
$
1,691,274
  

2021
  


                          


                             


                      
 
Real estate loans:
                        
Residential
  
$
201,097
    
$
620
    
$
14
    
$
200,463
  
Commercial
    
687,338
      
8,381
      
2,145
      
676,812
  
Agricultural
    
312,011
      
5,355
      
1,643
      
305,013
  
Construction
    
55,036
      
-
      
-
      
55,036
  
Consumer
    
25,858
      
-
      
-
      
25,858
  
Other commercial loans
    
74,585
      
186
      
-
      
74,399
  
Other agricultural loans
    
39,852
      
991
      
-
      
38,861
  
State and political subdivision loans
    
45,756
      
-
      
-
      
45,756
  
Total
    
1,441,533
      
15,533
      
3,802
      
1,422,198
  
Allowance for loan losses
    
17,304
      
121
      
-
      
17,183
  
Net loans
  
$
1,424,229
    
$
15,412
    
$
3,802
    
$
1,405,015
  
Purchase Accounting Adjustments Related to Purchased Impaired Loans Acquired

The table below presents the components of the purchase accounting adjustments related to the purchased impaired loans acquired in the MidCoast Acquisition as of April 17, 2020 (in thousands):

 
April 17, 2020
  
Contractually required principal and interest at acquisition
  
$
8,801
  
Non-accretable discount
    
(2,966
)
Expected cash flows
    
5,835
  
Accretable discount
    
(966
)
Estimated fair value
  
$
4,869
  
Accretable Yield for Purchased Credit Impaired Loans

Changes in the accretable discount for PCI loans were as follows for the years ended December 31, 2022 and 2021 (in thousands):

 
December 31, 2022
    
December 31, 2021
  
Balance at beginning of period
  
$
370
    
$
788
  
Accretion
    
(759
)
    
(499
)
Reclassification of non-accretable discount
     1,212       81  
Balance at end of period
  
$
823
    
$
370
  
Loans Acquired with Specific Evidence of Deterioration in Credit Quality

The following table presents additional information regarding PCI loans (in thousands):

 
December 31, 2022
    
December 31, 2021
  
Outstanding balance
  
$
5,758
    
$
6,159
  
Carrying amount
    
3,306
      
3,802
  
Impaired Loan Receivables with Associated Allowance Amount

The following table includes the recorded investment and unpaid principal balances for impaired loans by class, with the associated allowance amount as of December 31, 2022 and 2021, if applicable (in thousands):


  
Unpaid
Principal
Balance
    
Recorded
Investment
With No
Allowance
    
Recorded
Investment
With
Allowance
    
Total
Recorded
Investment
    
Related
Allowance
  
2022
  
   
   
   
   
 
Real estate loans:
                              
Mortgages
  
$
395
    
$
242
    
$
39
    
$
281
    
$
4
  
Home Equity
    
71
      
39
      
15
      
54
      
-
  
Commercial
    
6,655
      
5,314
      
361
      
5,675
      
57
  
Agricultural
    
6,062
      
5,192
      
188
      
5,380
      
24
  
Consumer
    
4
      
-
      
4
      
4
      
4
  
Other commercial loans
    
797
      
32
      
70
      
102
      
13
  
Other agricultural loans
    
669
      
473
      
-
      
473
      
-
  
Total
  
$
14,653
    
$
11,292
    
$
677
    
$
11,969
    
$
102
  
                        
                              
                               
                               
                            
 
2021
                                        
Real estate loans:
                                        
Mortgages
  
$
697
    
$
495
    
$
45
    
$
540
    
$
6
  
Home Equity
    
97
      
37
      
43
      
80
      
6
  
Commercial
    
9,330
      
8,096
      
285
      
8,381
      
61
  
Agricultural
    
5,694
      
5,167
      
188
      
5,355
      
14
  
Other commercial loans
    
813
      
92
      
94
      
186
      
34
  
Other agricultural loans
    
1,274
      
991
      
-
      
991
      
-
  
Total
  
$
17,905
    
$
14,878
    
$
655
    
$
15,533
    
$
121
  


The following table includes the average investment in impaired loans and the income recognized on impaired loans for 2022, 2021 and 2020 (in thousands):

             
Interest
  
   
Average
    
Interest
    
Income
  
   
Recorded
    
Income
    
Recognized
  
2022
  
Investment
    
Recognized
    
Cash Basis
  
Real estate loans:
                  
Mortgages
  
$
421
    
$
12
    
$
-
  
Home Equity
    
64
      
4
      
-
  
Commercial
    
6,216
      
207
      
10
  
Agricultural
    
5,540
      
126
      
-
  
Consumer
     1       -       -  
Other commercial loans
    
260
      
3
      
-
  
Other agricultural loans
    
538
      
4
      
-
  
Total
  
$
13,040
    
$
356
    
$
10
  

2021
  





                       
 
Real estate loans:
                               
             
Mortgages
  
$
682
    
$
16
    
$
-
  
Home Equity
    
99
      
4
      
-
  
Commercial
    
8,789
      
288
      
31
  
Agricultural
    
4,562
      
82
      
-
  
Other commercial loans
    
704
      
2
      
-
  
Other agricultural loans
    
1,044
      
3
      
-
  
Total
  
$
15,880
    
$
395
    
$
31
  

                Interest  
    Average     Interest     Income  
    Recorded     Income     Recognized  
2020
   Investment

Recognized

Cash Basis  
Real estate loans:
                  
Mortgages
  
$
956
    
$
20
    
$
-
  
Home Equity
    
139
      
6
      
-
  
Commercial
    
10,354
      
358
      
27
  
Agricultural
    
3,918
      
75
      
-
  
Consumer
    
3
      
-
      
-
  
Other commercial loans
    
1,671
      
3
      
-
  
Other agricultural loans
    
1,237
      
6
      
-
  
Total
  
$
18,278
    
$
468
    
$
27
  
Financing Receivable Credit Exposures by Internally Assigned Grades

The following tables represent credit exposures by internally assigned grades as of December 31, 2022 and 2021 (in thousands):

2022
  
Pass
    
Special Mention
    
Substandard
    
Doubtful
    
Loss
    
Ending Balance
  
Real estate loans:
                                    
Commercial
  
$
842,912
    
$
28,047
    
$
5,610
    
$
-
    
$
-
    
$
876,569
  
Agricultural
    
295,443
      
11,960
      
6,211
      
-
      
-
      
313,614
  
Construction
    
75,703
      
2,642
      
2,346
      
-
      
-
      
80,691
  
Other commercial loans
    
59,902
      
2,953
      
337
      
30
      
-
      
63,222
  
Other agricultural loans
    
32,708
      
1,307
      
817
      
-
      
-
      
34,832
  
State and political subdivision loans
    
59,208
      
-
      
-
      
-
      
-
      
59,208
  
Total
  
$
1,365,876
    
$
46,909
    
$
15,321
    
$
30
    
$
-
    
$
1,428,136
  
                                                 
2021
  
                                 
                              
                               
                         
   
                         
 
Real estate loans:
                                                
Commercial
  
$
646,137
    
$
35,332
    
$
5,869
    
$
-
    
$
-
    
$
687,338
  
Agricultural
    
291,537
      
15,105
      
5,369
      
-
      
-
      
312,011
  
Construction
    
55,036
      
-
      
-
      
-
      
-
      
55,036
  
Other commercial loans
    
70,932
      
3,289
      
316
      
48
      
-
      
74,585
  
Other agricultural loans
    
37,800
      
1,351
      
701
      
-
      
-
      
39,852
  
State and political subdivision loans
    
45,588
      
168
      
-
      
-
      
-
      
45,756
  
Total
  
$
1,147,030
    
$
55,245
    
$
12,255
    
$
48
    
$
-
    
$
1,214,578
  


For residential real estate mortgages, home equities and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail below and all loans past due 90 or more days. The following table presents the recorded investment in those loan classes based on payment activity as of December 31, 2022 and 2021 (in thousands):

2022
  
Performing
    
Non-performing
    
PCI
    
Total
  
Real estate loans:
                        
Mortgages
  
$
161,998
    
$
562
    
$
9
    
$
162,569
  
Home Equity
    
47,615
      
29
      
-
      
47,644
  
Consumer
    
86,643
      
7
      
-
      
86,650
  
Total
  
$
296,256
    
$
598
    
$
9
    
$
296,863
  
                         
2021
  
Performing
    
Non-performing
    
PCI
    
Total
  
Real estate loans:
                        
Mortgages
  
$
150,320
    
$
608
    
$
14
    
$
150,942
  
Home Equity
    
50,122
      
33
      
-
      
50,155
  
Consumer
    
25,858
      
-
      
-
      
25,858
  
Total
  
$
226,300
    
$
641
    
$
14
    
$
226,955
  
Aging Analysis of Past Due Loan Receivables

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due loans as of December 31, 2022 and 2021 (in thousands):

   
30-59 Days
    
60-89 Days
    
90 Days
    
Total Past
                
Total
Financing
    
90 Days
and
  
2022
  
Past Due
    
Past Due
    
Or Greater
    
Due
    
Current
    
PCI
    
Receivables
    
Accruing
  
Real estate loans:
                                                
Mortgages
  
$
356
    
$
132
    
$
229
    
$
717
    
$
161,843
    
$
9
    
$
162,569
    
$
-
  
Home Equity
    
48
      
9
      
29
      
86
      
47,558
      
-
      
47,644
      
-
  
Commercial
    
1,065
      
115
      
1,788
      
2,968
      
871,745
      
1,856
      
876,569
      
-
  
Agricultural
    
-
      
-
      
1,368
      
1,368
      
310,805
      
1,441
      
313,614
      
-
  
Construction
    
-
      
-
      
-
      
-
      
80,691
      
-
      
80,691
      
-
  
Consumer
    
147
      
-
      
7
      
154
      
86,496
      
-
      
86,650
      
7
  
Other commercial loans
    
1,660
      
35
      
32
      
1,727
      
61,495
      
-
      
63,222
      
-
  
Other agricultural loans
    
-
      
-
      
-
      
-
      
34,832
      
-
      
34,832
      
-
  
State and political
                                                                
subdivision loans
    
-
      
-
      
-
      
-
      
59,208
      
-
      
59,208
      
-
  
Total
  
$
3,276
    
$
291
    
$
3,453
    
$
7,020
    
$
1,714,673
    
$
3,306
    
$
1,724,999
    
$
7
  
                                                                 
Loans considered non-accrual
  
$
46
    
$
76
    
$
3,446
    
$
3,568
    
$
3,370
    
$
-
    
$
6,938
          
Loans still accruing
    
3,230
      
215
      
7
      
3,452
      
1,711,303
      
3,306
      
1,718,061
          
Total
  
$
3,276
    
$
291
    
$
3,453
    
$
7,020
    
$
1,714,673
    
$
3,306
    
$
1,724,999
          
                                                                 
2021
  
                   



                       



                  



                 



                   



                 



                   



                   

Real estate loans:
         
                                                         
Mortgages
  
$
220
    
$
170
    
$
209
    
$
599
    
$
150,329
    
$
14
    
$
150,942
    
$
13
  
Home Equity
    
103
      
-
      
33
      
136
      
50,019
      
-
      
50,155
      
33
  
Commercial
    
127
      
115
      
1,969
      
2,211
      
682,982
      
2,145
      
687,338
      
-
  
Agricultural
    
31
      
-
      
1,367
      
1,398
      
308,970
      
1,643
      
312,011
      
-
  
Construction
    
-
      
-
      
-
      
-
      
55,036
      
-
      
55,036
      
-
  
Consumer
    
163
      
1
      
-
      
164
      
25,694
      
-
      
25,858
      
-
  
Other commercial loans
    
17
      
10
      
92
      
119
      
74,466
      
-
      
74,585
      
-
  
Other agricultural loans
    
10
      
-
      
-
      
10
      
39,842
      
-
      
39,852
      
-
  
State and political
                                                                
subdivision loans
    
-
      
-
      
-
      
-
      
45,756
      
-
      
45,756
      
-
  
Total
  
$
671
    
$
296
    
$
3,670
    
$
4,637
    
$
1,433,094
    
$
3,802
    
$
1,441,533
    
$
46
  
                                                                 
Loans considered non-accrual
  
$
-
    
$
-
    
$
3,624
    
$
3,624
    
$
3,992
    
$
-
    
$
7,616
          
Loans still accruing
    
671
      
296
      
46
      
1,013
      
1,429,102
      
3,802
      
1,433,917
          
Total
  
$
671
    
$
296
    
$
3,670
    
$
4,637
    
$
1,433,094
    
$
3,802
    
$
1,441,533
          
Loan Receivables on Nonaccrual Status

The following table reflects the loans on nonaccrual status as of December 31, 2022 and 2021, respectively. The balances are presented by class of loan (in thousands):

 
2022
    
2021
  
Real estate loans:
            
Mortgages
  
$
562
    
$
595
  
Home Equity
    
29
      
-
  
Commercial
    
2,778
      
2,945
  
Agricultural
    
3,222
      
3,133
  
Other commercial loans
    
62
      
140
  
Other agricultural loans
    
285
      
803
  
   
$
6,938
    
$
7,616
  
Troubled Debt Restructurings on Financing Receivables

Loan modifications that are considered TDRs completed during the years ended December 31, 2022, 2021 and 2020 were as follows (dollars in thousands):


  
Number of contracts
    
Pre-modification Outstanding
Recorded Investment
    
Post-Modification Outstanding
Recorded Investment
  

2022 		 
Interest
Modification
    
Term
Modification
    
Interest
Modification
    
Term
Modification
    
Interest
Modification
    
Term
Modification
  
Real estate loans:
                                    
Home Equity
     -       1     $
 -     $
 8     $
 -     $
 8  
Commercial
    
-
      
4
      
-
    
2,301
    
-
      
2,301
  
Agricultural
    
-
      
2
      
-
      
1,137
      
-
      
1,137
  
Total
    
-
      
7
    
$
-
    
$
3,446
    
$
-
    
$
3,446
  

2021
                        


                         


                 


                       


                        


                       

Real estate loans:
                                    
Commercial
    
-
      
4
     $
-
     $
1,469
     $
-
     $
1,469
  
Agricultural
    
-
      
4
      
-
      
2,090
      
-
      
2,090
  
Total
    
-
      
8
    
$
-
    
$
3,559
    
$
-
    
$
3,559
  

2020
                            

                         

                 

                       

                       

                        
Real estate loans:
                                    
Mortgages
    
-
      
1
    
$
-
    
$
2
    
$
-
    
$
2
  
Commercial
    
-
      
10
      
-
      
2,456
      
-
      
2,456
  
Agricultural
    
-
      
2
      
-
      
494
      
-
      
494
  
Consumer
     -       1       -       3       -       3  
Other commercial loans
    -       2       -       1,094       -       1,094  
Other agricultural loans
    
-
      
1
      
-
      
19
      
-
      
19
  
Total
    
-
      
17
    
$
-
    
$
4,068
    
$
-
    
$
4,068
  
Subsequent Default Recorded Investment

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. The following table presents the recorded investment in loans that were modified as TDRs during each 12-month period prior to the current reporting periods, which begin January 1, 2022, 2021 and 2020, respectively, and that subsequently defaulted during these reporting periods (dollars in thousands):

 
December 31, 2022
    
December 31, 2021
    
December 31, 2020
  
   
Number of
contracts
    
Recorded investment
    
Number of
contracts
    
Recorded investment
    
Number of
contracts
    
Recorded investment
  
Real estate loans:
                                    
Commercial
    
-
    
$
-
      
-
    
$
-
      
1
    
$
110
  
Total recidivism
    
-
    
$
-
      
-
    
$
-
      
1
    
$
110
  
Roll forward of Allowance for Loan Losses by Portfolio Segment

The following tables roll forward the balance of the allowance for loan and lease losses for the years ended December 31, 2022, 2021 and 2020 and is segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2022, 2021 and 2020 (in thousands):

 
Balance at
December 31, 2021
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
December 31, 2022
    
Individually
evaluated for
impairment
    
Collectively
evaluated for
impairment
  
Real estate loans:
                                          
Residential
  
$
1,147
    
$
-
    
$
-
    
$
(91
)
  
$
1,056
    
$
4
    
$
1,052
  
Commercial
    
8,099
      
-
      
3
      
2,018
      
10,120
      
57
      
10,063
  
Agricultural
    
4,729
      
-
      
-
      
(140
)
    
4,589
      
24
      
4,565
  
Construction
    
434
      
-
      
-
      
367
      
801
      
-
      
801
  
Consumer
    
262
      
(37
)
    
21
      
(111
)
    
135
      
4
      
131
  
Other commercial loans
    
1,023
      
(435
)
    
13
      
439
      
1,040
      
13
      
1,027
  
Other agricultural loans
    
558
      
-
      
-
      
(69
)
    
489
      
-
      
489
  
State and political subdivision loans
    
281
      
-
      
-
      
41
      
322
      
-
      
322
  
Unallocated
    
771
      
-
      
-
      
(771
)
    
-
      
-
      
-
  
Total
  
$
17,304
    
$
(472
)
  
$
37
    
$
1,683
    
$
18,552
    
$
102
    
$
18,450
  
                                                         
 
Balance at
December 31, 2020
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
December 31, 2021
    
Individually
evaluated for
impairment
    
Collectively
evaluated for
impairment
  
Real estate loans:
                                          
Residential
  
$
1,174
    
$
-
    
$
-
    
$
(27
)
  
$
1,147
    
$
12
    
$
1,135
  
Commercial
    
6,216
      
(54
)
    
89
      
1,848
      
8,099
      
61
      
8,038
  
Agricultural
    
4,953
      
-
      
-
      
(224
)
    
4,729
      
14
      
4,715
  
Construction
    
122
      
-
      
-
      
312
      
434
      
-
      
434
  
Consumer
    
321
      
(27
)
    
21
      
(53
)
    
262
      
-
      
262
  
Other commercial loans
    
1,226
      
(133
)
    
43
      
(113
)
    
1,023
      
34
      
989
  
Other agricultural loans
    
864
      
-
      
-
      
(306
)
    
558
      
-
      
558
  
State and political subdivision loans
    
479
      
-
      
-
      
(198
)
    
281
      
-
      
281
  
Unallocated
    
460
      
-
      
-
      
311
      
771
      
-
      
771
  
Total
  
$
15,815
    
$
(214
)
  
$
153
    
$
1,550
    
$
17,304
    
$
121
    
$
17,183
  

 
Balance at
December 31, 2019
    
Charge-offs
    
Recoveries
    
Provision
    
Balance at
December 31, 2020
    
Individually
evaluated for
impairment
    
Collectively
evaluated for
impairment
  
Real estate loans:
                                          
Residential
  
$
1,114
    
$
-
    
$
14
    
$
46
    
$
1,174
    
$
18
    
$
1,156
  
Commercial
    
4,549
      
(435
)
    
37
      
2,065
      
6,216
      
95
      
6,121
  
Agricultural
    
5,022
      
(4
)
    
19
      
(84
)
    
4,953
      
83
      
4,870
  
Construction
    
43
      
-
      
-
      
79
      
122
      
-
      
122
  
Consumer
    
112
      
(50
)
    
21
      
238
      
321
      
-
      
321
  
Other commercial loans
    
1,255
      
(44
)
    
12
      
3
      
1,226
      
170
      
1,056
  
Other agricultural loans
    
961
      
-
      
-
      
(97
)
    
864
      
144
      
720
  
State and political subdivision loans
    
536
      
-
      
-
      
(57
)
    
479
      
-
      
479
  
Unallocated
    
253
      
-
      
-
      
207
      
460
      
-
      
460
  
Total
  
$
13,845
    
$
(533
)
  
$
103
    
$
2,400
    
$
15,815
    
$
510
    
$
15,305