LOANS

9 Months Ended

Sep. 30, 2022

LOANS

LOANS

6. LOANS

The loans receivable portfolio is segmented into commercial, residential mortgage and consumer loans. Loans outstanding at September 30, 2022 and December 31, 2021 are summarized by segment, and by classes within each segment, as follows:

Summary of Loans by Type

(In Thousands)

	September 30,		December 31,
	2022		2021
Commercial:
Commercial loans secured by real estate	$	658,861	$	569,840
Commercial and industrial		172,258		159,073
Paycheck Protection Program - 1st Draw		24		1,356
Paycheck Protection Program - 2nd Draw		2,011		25,508
Political subdivisions		83,725		81,301
Commercial construction and land		76,194		60,579
Loans secured by farmland		12,839		11,121
Multi-family (5 or more) residential		59,315		50,089
Agricultural loans		2,492		2,351
Other commercial loans		14,636		17,153
Total commercial		1,082,355		978,371
Residential mortgage:
Residential mortgage loans - first liens		492,854		483,629
Residential mortgage loans - junior liens		24,208		23,314
Home equity lines of credit		42,972		39,252
1-4 Family residential construction		29,950		23,151
Total residential mortgage		589,984		569,346
Consumer		17,907		17,132
Total		1,690,246		1,564,849
Less: allowance for loan losses		(16,170)		(13,537)
Loans, net	$	1,674,076	$	1,551,312

In the table above, outstanding loan balances are presented net of deferred loan origination fees, net, of $4,221,000 at September 30, 2022 and $4,247,000 at December 31, 2021.

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in Northcentral Pennsylvania, the Southern tier of New York State, Southeastern Pennsylvania and Southcentral Pennsylvania. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. A provision in the CARES Act includes creation of the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”) and Treasury Department. Under the PPP, the Corporation, as an SBA-certified lender, provided SBA-guaranteed loans to small businesses to pay their employees, rent, mortgage interest, and utilities. PPP loans are forgiven subject to clients’ providing documentation evidencing their compliant use of funds and otherwise complying with the terms of the program. Information related to PPP loans advanced pursuant to the CARES Act are labeled “1st Draw” within the tables.

On December 27, 2020, the President of the United States signed into law the Consolidated Appropriations Act, 2021 (the “CAA”), which includes provisions that broadly address additional COVID-19 responses and relief. Among the additional relief measures included are certain extensions to elements of the CARES Act, including extension of relief from troubled debt restructurings reporting established under Section 4013 of the CARES Act to 60 days after the date on which the national COVID-19 emergency terminates.

The CAA also includes additional funding for the PPP with additional eligibility requirements for borrowers with generally the same loan terms as provided under the CARES Act. Information related to PPP loans advanced pursuant to the CAA are labeled “2nd Draw” within the tables.

The maximum term of PPP loans is five years. Most of the Corporation’s 1st Draw PPP loans have two-year terms, while 2nd Draw PPP loans have  five-year terms and the Corporation will be repaid sooner to the extent the loans are forgiven. The interest rate on PPP loans is 1%, and the Corporation has received fees from the SBA ranging between 1% and 5% per loan, depending on the size of the loan. Fees on PPP loans, net of origination costs and a market rate adjustment on acquired PPP loans, are recognized in interest income as a yield adjustment over the term of the loans.

As of September 30, 2022, the recorded investment in 1st Draw PPP loans was $24,000, including contractual principal balances of $26,000, reduced by net deferred origination fees of $2,000. The recorded investment in 2nd Draw PPP loans was $2,011,000, including contractual principal balances of $2,093,000 reduced by net deferred origination fees of $82,000. Interest and fees on PPP loans which are included in taxable interest and fees on loans in the unaudited consolidated statements of income totaled $118,000 in the third quarter 2022 and $1,639,000 in the third quarter 2021, and $899,000 in the nine-month period ended September 30, 2022 and $4,886,000 in the nine-month period ended September 30, 2021.

Acquired loans were initially recorded at fair value, with adjustments made to gross amortized cost based on movements in interest rates (market rate adjustment) and based on credit fair value adjustments on non-impaired loans and impaired loans. Subsequently, the Corporation has recognized amortization and accretion of a portion of the market rate adjustments and credit adjustments on non-impaired (performing) loans, and a partial recovery of purchased credit impaired (PCI) loans. For the three-month and nine-month periods ended September 30, 2022 and 2021, adjustments to the initial market rate and credit fair value adjustments of performing loans were recognized as follows:

(In Thousands)	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2022		2021		2022		2021
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	(866)	$	(5)	$	(637)	$	718
Accretion (amortization) recognized in interest income		5		(368)		(224)		(1,091)
Adjustments to gross amortized cost of loans at end of period	$	(861)	$	(373)	$	(861)	$	(373)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(2,403)	$	(4,502)	$	(3,335)	$	(5,979)
Accretion recognized in interest income		308		666		1,240		2,143
Adjustments to gross amortized cost of loans at end of period	$	(2,095)	$	(3,836)	$	(2,095)	$	(3,836)

A summary of PCI loans held at September 30, 2022 and December 31, 2021 is as follows:

(In Thousands)	September 30,		December 31,
	2022		2021
Outstanding balance	$	5,564	$	9,802
Carrying amount		3,783		6,558

In the third quarter 2022, the Corporation received repayments on PCI loans in excess of previous carrying amounts, resulting in income of $173,000 as compared to $17,000 in the third quarter 2021. In the nine-month period ended September 30, 2022, the Corporation received repayments on PCI loans in excess of previous carrying amounts, resulting in income of $1,585,000 as compared to $35,000 in the nine-month period ended September 30, 2021. These amounts are included in interest and fees on taxable loans in the unaudited consolidated statements of income.

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition

of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of September 30, 2022 and December 31, 2021, management determined that no allowance for credit losses related to unfunded loan commitments was required.

Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and nine-month periods ended September 30, 2022 and 2021 were as follows:

Three Months Ended September 30, 2022	June 30, 2022								September 30, 2022
(In Thousands)	Balance		Charge-offs		Recoveries		Provision (Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	4,982	$	(2,160)	$	0	$	3,225	$	6,047
Commercial and industrial		2,792		0		0		31		2,823
Commercial construction and land		515		0		0		169		684
Loans secured by farmland		112		0		0		1		113
Multi-family (5 or more) residential		339		0		0		88		427
Agricultural loans		23		0		0		(1)		22
Other commercial loans		131		0		0		(9)		122
Total commercial		8,894		(2,160)		0		3,504		10,238
Residential mortgage:
Residential mortgage loans - first liens		3,689		0		1		229		3,919
Residential mortgage loans - junior liens		180		0		0		14		194
Home equity lines of credit		308		0		0		25		333
1-4 Family residential construction		215		0		0		36		251
Total residential mortgage		4,392		0		1		304		4,697
Consumer		261		(36)		24		(14)		235
Unallocated		1,000		0		0		0		1,000
Total Allowance for Loan Losses	$	14,547	$	(2,196)	$	25	$	3,794	$	16,170

Three Months Ended September 30, 2021	June 30, 2021								September 30, 2021
(In Thousands)	Balance		Charge-offs		Recoveries		Provision (Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	3,452	$	0	$	0	$	368	$	3,820
Commercial and industrial		2,781		(1,194)		6		947		2,540
Commercial construction and land		452		0		0		107		559
Loans secured by farmland		113		0		0		(1)		112
Multi-family (5 or more) residential		150		0		0		46		196
Agricultural loans		25		0		0		8		33
Other commercial loans		145		0		0		28		173
Total commercial		7,118		(1,194)		6		1,503		7,433
Residential mortgage:
Residential mortgage loans - first liens		3,536		0		1		29		3,566
Residential mortgage loans - junior liens		327		0		0		(6)		321
Home equity lines of credit		294		0		0		(11)		283
1-4 Family residential construction		198		0		0		(9)		189
Total residential mortgage		4,355		0		1		3		4,359
Consumer		231		(26)		8		24		237
Unallocated		671		0		0		0		671
Total Allowance for Loan Losses	$	12,375	$	(1,220)	$	15	$	1,530	$	12,700

For the three months ended September 30, 2022, the provision for loan losses was $3,794,000, an increase in expense of $2,264,000 as compared to $1,530,000 for the three months ended September 30, 2021. The third quarter 2022 provision included net charge-offs of $2,171,000 and an increase of $1,623,000 in the collectively determined portion of the allowance. In the third quarter 2022, the Corporation recorded a partial charge-off of $2,160,000 on a commercial real estate secured loan with a principal balance of $6,920,000 at the time of charge-off. This is a participation loan to a borrower in the health care industry. The charge-off resulted from the borrower’s default due to deterioration in financial performance accompanied by a significant decrease in the appraised value of property at a recently closed facility that had been one of the primary sources of collateral on the loan. Realization of the recorded investment in the loan of $4,760,000 at September 30, 2022 is principally dependent upon the amount of proceeds from sales of the real estate and, if necessary, payments of any shortfall by the guarantors.

The third quarter 2021 provision included a net charge of $611,000 related to specific loans (net charge-offs of $1,205,000 offset by a net decrease in specific allowances on loans of $594,000), and an increase of $919,000 in the collectively determined portion of the allowance. In the third quarter 2021, the Corporation recorded a partial charge-off of $1,194,000 on a commercial loan with an outstanding balance of $3,496,000 at the time of the charge-off. At September 30, 2022, the recorded investment in this loan was $196,000. In addition, there is a PPP loan to this borrower with a balance of $727,000 at September 30, 2022 that is in the process of collection. At September 30, 2022, there was no specific allowance related to loans to this borrower.

	December 31,								September 30,
Nine Months Ended September 30, 2022	2021						Provision		2022
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	4,405	$	(2,160)	$	0	$	3,802	$	6,047
Commercial and industrial		2,723		(150)		0		250		2,823
Commercial construction and land		637		0		0		47		684
Loans secured by farmland		115		0		0		(2)		113
Multi-family (5 or more) residential		215		0		0		212		427
Agricultural loans		25		0		0		(3)		22
Other commercial loans		173		0		0		(51)		122
Total commercial		8,293		(2,310)		0		4,255		10,238
Residential mortgage:
Residential mortgage loans - first liens		3,650		0		3		266		3,919
Residential mortgage loans - junior liens		184		0		0		10		194
Home equity lines of credit		302		0		15		16		333
1-4 Family residential construction		202		0		0		49		251
Total residential mortgage		4,338		0		18		341		4,697
Consumer		235		(107)		39		68		235
Unallocated		671		0		0		329		1,000
Total Allowance for Loan Losses	$	13,537	$	(2,417)	$	57	$	4,993	$	16,170

	December 31,								September 30,
Nine Months Ended September 30, 2021	2020						Provision		2021
(In Thousands)	Balance		Charge-offs		Recoveries		(Credit)		Balance
Allowance for Loan Losses:
Commercial:
Commercial loans secured by real estate	$	3,051	$	0	$	2	$	767	$	3,820
Commercial and industrial		2,245		(1,194)		20		1,469		2,540
Commercial construction and land		454		0		0		105		559
Loans secured by farmland		120		0		0		(8)		112
Multi-family (5 or more) residential		236		0		0		(40)		196
Agricultural loans		34		0		0		(1)		33
Other commercial loans		168		0		0		5		173
Total commercial		6,308		(1,194)		22		2,297		7,433
Residential mortgage:
Residential mortgage loans - first liens		3,524		(11)		3		50		3,566
Residential mortgage loans - junior liens		349		0		0		(28)		321
Home equity lines of credit		281		0		2		0		283
1-4 Family residential construction		99		0		0		90		189
Total residential mortgage		4,253		(11)		5		112		4,359
Consumer		239		(73)		33		38		237
Unallocated		585		0		0		86		671
Total Allowance for Loan Losses	$	11,385	$	(1,278)	$	60	$	2,533	$	12,700

For the nine months ended September 30, 2022, the provision for loan losses was $4,993,000, an increase in expense of $2,460,000 as compared to $2,533,000 recorded for the first nine months ended September 30, 2021. The provision for the first nine months of 2022 includes $2,047,000 related to specific loans (net decrease in specific allowances on loans of $313,000 and net charge-offs of $2,360,000), an increase of $2,617,000 in the collectively determined portion of the allowance and a $329,000 increase in the unallocated portion. In comparison, the provision for loan losses in the first nine months of 2021 includes $1,176,000 related to specific loans (net charge-offs of $1,218,000 and a decrease in specific allowances on loans of $42,000), an increase of $1,271,000 in the collectively determined portion of the allowance and an $86,000 increase in the unallocated portion.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table that follows.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of September 30, 2022 and December 31, 2021:

September 30, 2022									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Commercial:
Commercial loans secured by real estate	$	637,390	$	5,938	$	11,789	$	0	$	3,744	$	658,861
Commercial and Industrial		159,735		9,085		3,399		0		39		172,258
Paycheck Protection Program - 1st Draw		24		0		0		0		0		24
Paycheck Protection Program - 2nd Draw		2,011		0		0		0		0		2,011
Political subdivisions		83,725		0		0		0		0		83,725
Commercial construction and land		75,433		714		47		0		0		76,194
Loans secured by farmland		10,903		618		1,318		0		0		12,839
Multi-family (5 or more) residential		58,458		0		857		0		0		59,315
Agricultural loans		1,875		29		588		0		0		2,492
Other commercial loans		14,636		0		0		0		0		14,636
Total commercial		1,044,190		16,384		17,998		0		3,783		1,082,355
Residential Mortgage:
Residential mortgage loans - first liens		478,768		7,398		6,688		0		0		492,854
Residential mortgage loans - junior liens		23,739		164		305		0		0		24,208
Home equity lines of credit		42,424		59		489		0		0		42,972
1-4 Family residential construction		29,950		0		0		0		0		29,950
Total residential mortgage		574,881		7,621		7,482		0		0		589,984
Consumer		17,844		0		63		0		0		17,907
Totals	$	1,636,915	$	24,005	$	25,543	$	0	$	3,783	$	1,690,246

December 31, 2021									Purchased
(In Thousands)			Special						Credit
	Pass		Mention		Substandard		Doubtful		Impaired		Total
Commercial:
Commercial loans secured by real estate	$	538,966	$	10,510	$	16,220	$	0	$	4,144	$	569,840
Commercial and Industrial		142,775		10,841		4,694		0		763		159,073
Paycheck Protection Program - 1st Draw		1,356		0		0		0		0		1,356
Paycheck Protection Program - 2nd Draw		25,508		0		0		0		0		25,508
Political subdivisions		81,301		0		0		0		0		81,301
Commercial construction and land		59,816		715		48		0		0		60,579
Loans secured by farmland		10,011		186		924		0		0		11,121
Multi-family (5 or more) residential		47,638		0		873		0		1,578		50,089
Agricultural loans		1,802		0		549		0		0		2,351
Other commercial loans		17,150		3		0		0		0		17,153
Total commercial		926,323		22,255		23,308		0		6,485		978,371
Residential Mortgage:
Residential mortgage loans - first liens		469,044		7,981		6,534		0		70		483,629
Residential mortgage loans - junior liens		22,914		114		283		0		3		23,314
Home equity lines of credit		38,652		59		541		0		0		39,252
1-4 Family residential construction		23,151		0		0		0		0		23,151
Total residential mortgage		553,761		8,154		7,358		0		73		569,346
Consumer		17,092		0		40		0		0		17,132
Totals	$	1,497,176	$	30,409	$	30,706	$	0	$	6,558	$	1,564,849

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of September 30, 2022 and December 31, 2021.

September 30, 2022	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Commercial:
Commercial loans secured by real estate	$	12,080	$	646,781	$	658,861	$	427	$	5,620	$	6,047
Commercial and industrial		369		171,889		172,258		0		2,823		2,823
Paycheck Protection Program - 1st Draw		0		24		24		0		0		0
Paycheck Protection Program - 2nd Draw		0		2,011		2,011		0		0		0
Political subdivisions		0		83,725		83,725		0		0		0
Commercial construction and land		47		76,147		76,194		0		684		684
Loans secured by farmland		78		12,761		12,839		0		113		113
Multi-family (5 or more) residential		0		59,315		59,315		0		427		427
Agricultural loans		60		2,432		2,492		0		22		22
Other commercial loans		0		14,636		14,636		0		122		122
Total commercial		12,634		1,069,721		1,082,355		427		9,811		10,238
Residential mortgage:
Residential mortgage loans - first liens		576		492,278		492,854		0		3,919		3,919
Residential mortgage loans - junior liens		31		24,177		24,208		0		194		194
Home equity lines of credit		68		42,904		42,972		0		333		333
1-4 Family residential construction		0		29,950		29,950		0		251		251
Total residential mortgage		675		589,309		589,984		0		4,697		4,697
Consumer		0		17,907		17,907		0		235		235
Unallocated												1,000
Total	$	13,309	$	1,676,937	$	1,690,246	$	427	$	14,743	$	16,170

December 31, 2021	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Commercial:
Commercial loans secured by real estate	$	10,926	$	558,914	$	569,840	$	669	$	3,736	$	4,405
Commercial and industrial		2,503		156,570		159,073		71		2,652		2,723
Paycheck Protection Program - 1st Draw		0		1,356		1,356		0		0		0
Paycheck Protection Program - 2nd Draw		0		25,508		25,508		0		0		0
Political subdivisions		0		81,301		81,301		0		0		0
Commercial construction and land		0		60,579		60,579		0		637		637
Loans secured by farmland		83		11,038		11,121		0		115		115
Multi-family (5 or more) residential		1,578		48,511		50,089		0		215		215
Agricultural loans		0		2,351		2,351		0		25		25
Other commercial loans		0		17,153		17,153		0		173		173
Total commercial		15,090		963,281		978,371		740		7,553		8,293
Residential mortgage:
Residential mortgage loans - first liens		630		482,999		483,629		0		3,650		3,650
Residential mortgage loans - junior liens		14		23,300		23,314		0		184		184
Home equity lines of credit		0		39,252		39,252		0		302		302
1-4 Family residential construction		0		23,151		23,151		0		202		202
Total residential mortgage		644		568,702		569,346		0		4,338		4,338
Consumer		0		17,132		17,132		0		235		235
Unallocated												671
Total	$	15,734	$	1,549,115	$	1,564,849	$	740	$	12,126	$	13,537

Summary information related to impaired loans at September 30, 2022 and December 31, 2021 is provided in the table immediately below.

(In Thousands)	September 30, 2022						December 31, 2021
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Commercial loans secured by real estate	$	12,680	$	8,684	$	0	$	6,600	$	4,458	$	0
Commercial and industrial		2,135		369		0		5,213		2,431		0
Residential mortgage loans - first liens		601		576		0		656		630		0
Residential mortgage loans - junior liens		71		31		0		124		14		0
Home equity lines of credit		68		68		0		0		0		0
Loans secured by farmland		78		78		0		83		83		0
Agricultural loans		60		60		0		0		0		0
Construction and other land loans		47		47		0		0		0		0
Multi-family (5 or more) residential		0		0		0		2,734		1,578		0
Total with no related allowance recorded		15,740		9,913		0		15,410		9,194		0
With a related allowance recorded:
Commercial loans secured by real estate		3,396		3,396		427		6,468		6,468		668
Commercial and industrial		0		0		0		72		72		72
Total with a related allowance recorded		3,396		3,396		427		6,540		6,540		740
Total	$	19,136	$	13,309	$	427	$	21,950	$	15,734	$	740

The average balance of impaired loans and interest income recognized on these impaired loans is as follows:

(In Thousands)									Interest Income Recognized on
	Average Investment in Impaired Loans								Impaired Loans on a Cash Basis
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Commercial:
Commercial loans secured by real estate	$	9,710	$	11,252	$	9,804	$	11,811	$	143	$	172	$	483	$	401
Commercial and industrial		371		3,844		839		2,566		4		4		207		25
Commercial construction and land		47		48		47		48		0		2		1		2
Loans secured by farmland		79		84		81		84		0		0		0		1
Multi-family (5 or more) residential		0		1,578		263		1,584		0		31		1,156		122
Agricultural loans		59		66		61		67		0		0		2		3
Total commercial		10,266		16,872		11,095		16,160		147		209		1,849		554
Residential mortgage:
Residential mortgage loans - first lien		612		1,322		587		1,830		5		11		17		68
Residential mortgage loans - junior lien		31		386		33		417		0		1		6		10
Home equity lines of credit		68		0		34		0		1		0		3		0
Total residential mortgage		711		1,708		654		2,247		6		12		26		78
Total	$	10,977	$	18,580	$	11,749	$	18,407	$	153	$	221	$	1,875	$	632

The increase in interest income recognized on a cash basis on impaired loans in 2022 resulted mainly from repayments received on loans that had been classified as purchased credit impaired at December 31, 2021.

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

(In Thousands)	September 30, 2022				December 31, 2021
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Commercial:
Commercial loans secured by real estate	$	1,898	$	12,079	$	738	$	10,885
Commercial and industrial		248		304		30		2,299
Commercial construction and land		25		47		0		48
Loans secured by farmland		0		78		28		83
Multi-family (5 or more) residential		0		0		0		1,578
Agricultural loans		59		0		65		0
Total commercial		2,230		12,508		861		14,893
Residential mortgage:
Residential mortgage loans - first liens		985		4,271		1,144		4,005
Residential mortgage loans - junior liens		55		0		69		3
Home equity lines of credit		186		132		102		82
Total residential mortgage		1,226		4,403		1,315		4,090
Consumer		43		48		43		16
Totals	$	3,499	$	16,959	$	2,219	$	18,999

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual. PCI loans with a total recorded investment of $3,783,000 at September 30, 2022 and $6,558,000 at December 31, 2021 are classified as nonaccrual.

The table below presents a summary of the contractual aging of loans as of September 30, 2022 and December 31, 2021.

(In Thousands)	As of September 30, 2022								As of December 31, 2021
	Current &								Current &
	Past Due		Past Due		Past Due				Past Due		Past Due		Past Due
	Less than		30-89		90+				Less than		30-89		90+
	30 Days		Days		Days		Total		30 Days		Days		Days		Total
Commercial:
Commercial loans secured by real estate	$	655,851	$	0	$	3,010	$	658,861	$	563,658	$	762	$	5,420	$	569,840
Commercial and industrial		171,819		129		310		172,258		158,188		72		813		159,073
Paycheck Protection Program - 1st Draw		24		0		0		24		1,339		17		0		1,356
Paycheck Protection Program - 2nd Draw		1,062		949		0		2,011		25,508		0		0		25,508
Political subdivisions		83,725		0		0		83,725		81,301		0		0		81,301
Commercial construction and land		75,925		197		72		76,194		60,509		70		0		60,579
Loans secured by farmland		12,675		86		78		12,839		11,010		0		111		11,121
Multi-family (5 or more) residential		59,315		0		0		59,315		48,532		0		1,557		50,089
Agricultural loans		2,433		0		59		2,492		2,279		7		65		2,351
Other commercial loans		14,636		0		0		14,636		17,153		0		0		17,153
Total commercial		1,077,465		1,361		3,529		1,082,355		969,477		928		7,966		978,371
Residential mortgage:
Residential mortgage loans - first liens		487,629		1,934		3,291		492,854		475,637		5,038		2,954		483,629
Residential mortgage loans - junior liens		24,106		47		55		24,208		23,229		16		69		23,314
Home equity lines of credit		42,465		227		280		42,972		38,830		279		143		39,252
1-4 Family residential construction		29,950		0		0		29,950		23,151		0		0		23,151
Total residential mortgage		584,150		2,208		3,626		589,984		560,847		5,333		3,166		569,346
Consumer		17,674		142		91		17,907		17,001		72		59		17,132
Totals	$	1,679,289	$	3,711	$	7,246	$	1,690,246	$	1,547,325	$	6,333	$	11,191	$	1,564,849

Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at September 30, 2022 and December 31, 2021 is as follows:

(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
September 30, 2022 Nonaccrual Totals	$	12,542	$	670	$	3,747	$	16,959
December 31, 2021 Nonaccrual Totals	$	8,800	$	1,227	$	8,972	$	18,999

Loans whose terms are modified are classified as troubled debt restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at September 30, 2022 and December 31, 2021 is as follows:

(In Thousands)	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Nonaccrual		Total
September 30, 2022 Totals	$	211	$	20	$	92	$	3,868	$	4,191
December 31, 2021 Totals	$	248	$	40	$	65	$	5,452	$	5,805

At September 30, 2022 and December 31, 2021, there were no commitments to loan additional funds to borrowers whose loans have been classified as TDRs.

TDRs that occurred during the three-month and nine-month periods ended September 30, 2022 and 2021 are as follows:

(Balances in Thousands)	Three Months Ended			Three Months Ended
	September 30, 2022			September 30, 2021
		Post-			Post-
	Number	Modification		Number	Modification
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Home equity lines of credit,
Reduced monthly payments for an eighteen-month period	0	$	0	1	$	70
Total	0	$	0	1	$	70

	Nine Months Ended			Nine Months Ended
(Balances in Thousands)	September 30, 2022			September 30, 2021
		Post-			Post-
	Number	Modification		Number	Modification
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Residential mortgage - first liens:
Reduced monthly payments and extended maturity date	0	$	0	1	$	12
Reduced monthly payments for a fifteen-month period	0		0	1		116
Home equity lines of credit:
Reduced monthly payments and extended maturity date	0		0	1		24
Reduced monthly payments for an eighteen-month period	0		0	1		70
Total	0	$	0	4	$	222

In the third quarters of 2022 and 2021, there were no defaults on loans for which TDRs were entered into within the previous 12 months. In the nine-month periods ended September 30, 2022 and 2021, defaults on loans for which modifications that were considered to be TDR and were entered into within the previous 12 months are summarized as follows:

(Balances in Thousands)	Nine Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2021
	Number			Number
	of	Recorded		of	Recorded
	Loans	Investment		Loans	Investment
Commercial loans secured by real estate	0	$	0	1	$	3,392
Total	0	$	0	1	$	3,392

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in foreclosed assets held for sale in the unaudited consolidated balance sheets) is as follows:

(In Thousands)	September 30,		December 31,
	2022		2021
Foreclosed residential real estate	$	179	$	256

The recorded investment of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:

(In Thousands)	September 30,		December 31,
	2022		2021
Residential real estate in process of foreclosure	$	1,306	$	1,260