UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
 
(Mark one)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2022
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________ to _______________
 
Commission File Number 000-30707
 
FIRST NORTHERN COMMUNITY BANCORP
(Exact name of registrant as specified in its charter)
 
California
 
68-0450397
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
195 N. First Street, Dixon, California
 
95620
(Address of principal executive offices)
 
(Zip Code)

707 -678-3041
(Registrant’s telephone number including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbols(s)
 
Name of each exchange on which registered
None
 
Not Applicable
 
Not Applicable

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
 
Yes 
No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Yes 
No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer 
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes
No  
 
The number of shares of Common Stock outstanding as of May 6, 2022 was 13,929,829.



FIRST NORTHERN COMMUNITY BANCORP
 
INDEX

Page
3
   
3
   
3
   
4
   
5
   
6
   
7
   
8
   
30
   
45
   
45
   
45
   
45
   
45
   
47
   
47
   
47
   
47
   
47
   
48
 
2

PART I – FINANCIAL INFORMATION
 
FIRST NORTHERN COMMUNITY BANCORP
 
ITEM I.    – FINANCIAL STATEMENTS (UNAUDITED) 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
 
(in thousands, except share amounts)
 
March 31, 2022
   
December 31, 2021
 
 
           
Assets
           
 
           
Cash and cash equivalents
 
$
274,750
   
$
345,929
 
Certificates of deposit
   
11,067
     
13,272
 
Investment securities – available-for-sale
   
645,155
     
632,213
 
Loans, net of allowance for loan losses of $14,258 at March 31, 2022 and $13,952 at December 31, 2021
   
874,005
     
852,717
 
Loans held-for-sale
   
350
     
1,063
 
Stock in Federal Home Loan Bank and other equity securities, at cost
   
7,097
     
7,097
 
Premises and equipment, net
   
6,372
     
6,552
 
Interest receivable and other assets
   
48,873
     
40,244
 
 
               
Total Assets
 
$
1,867,669
   
$
1,899,087
 
 
               
Liabilities and Stockholders’ Equity
               
 
               
Liabilities:
               
 
               
Demand deposits
 
$
789,397
   
$
820,412
 
Interest-bearing transaction deposits
   
434,188
     
432,479
 
Savings and MMDA's
   
443,711
     
426,026
 
Time, $250,000 or less
   
37,956
     
38,388
 
Time, over $250,000
   
10,744
     
10,997
 
Total deposits
   
1,715,996
     
1,728,302
 
 
               
Interest payable and other liabilities
   
17,543
     
19,874
 
 
               
Total Liabilities
   
1,733,539
     
1,748,176
 
                 
Commitments and contingencies (Note 7)
   
     
 
                 
Stockholders' Equity:
               
Common stock, no par value; 16,000,000 shares authorized; 13,929,829 shares issued and outstanding at March 31, 2022 and 13,848,904 shares issued and outstanding at December 31, 2021
   
110,308
     
109,793
 
Additional paid-in capital
   
977
     
977
 
Retained earnings
   
47,005
     
44,338
 
Accumulated other comprehensive loss, net
   
(24,160
)
   
(4,197
)
Total Stockholders’ Equity
   
134,130
     
150,911
 
 
               
Total Liabilities and Stockholders’ Equity
 
$
1,867,669
   
$
1,899,087
 
 
See notes to unaudited condensed consolidated financial statements.

3

FIRST NORTHERN COMMUNITY BANCORP
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
(in thousands, except per share amounts)
 
Three months ended
March 31, 2022
   
Three months ended
March 31, 2021
 
Interest and dividend income:
           
Loans
 
$
9,657
   
$
9,237
 
Due from banks interest bearing accounts
   
166
     
148
 
Investment securities
               
Taxable
   
1,728
     
1,486
 
Non-taxable
   
178
     
143
 
Other earning assets
   
118
     
82
 
Total interest and dividend income
   
11,847
     
11,096
 
Interest expense:
               
Deposits
   
209
     
224
 
Total interest expense
   
209
     
224
 
Net interest income
   
11,638
     
10,872
 
Provision for loan losses
   
300
     
300
 
Net interest income after provision for loan losses
   
11,338
     
10,572
 
Non-interest income:
               
Service charges on deposit accounts
   
443
     
360
 
Gains on sales of loans held-for-sale
   
68
     
639
 
Investment and brokerage services income
   
161
     
144
 
Loan servicing income
   
384
     
355
 
Debit card income
   
623
     
599
 
Losses on sales/calls of available-for-sale securities
   
     
(10
)
Other income
   
239
     
203
 
Total non-interest income
   
1,918
     
2,290
 
Non-interest expenses:
               
Salaries and employee benefits
   
5,683
     
5,639
 
Occupancy and equipment
   
866
     
827
 
Data processing
   
839
     
791
 
Stationery and supplies
   
64
     
57
 
Advertising
   
103
     
66
 
Directors’ fees
   
63
     
38
 
Other expense
    1,484       1,083  
Total non-interest expenses
   
9,102
     
8,501
 
Income before provision for income taxes
   
4,154
     
4,361
 
Provision for income taxes
   
1,113
     
1,183
 
 
               
Net income
 
$
3,041
   
$
3,178
 
 
               
Basic earnings per common share
 
$
0.22
   
$
0.22
 
Diluted earnings per common share
 
$
0.22
   
$
0.22
 

See notes to unaudited condensed consolidated financial statements.

4


FIRST NORTHERN COMMUNITY BANCORP
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(in thousands)
 
Three months ended
March 31, 2022
   
Three months ended
March 31, 2021
 
Net income
 
$
3,041
   
$
3,178
 
Other comprehensive loss, net of tax:
               
Unrealized holding losses on securities:
               
Unrealized holding losses arising during the period, net of tax effect of $(8,054) and $(1,687) for the three-month periods ended March 31, 2022 and March 31, 2021, respectively
   
(19,963
)
   
(4,179
)
Less: reclassification adjustment due to losses realized on sales of securities, net of tax effect of $0 and $3 for the three-month periods ended March 31, 2022 and March 31, 2021, respectively
   
     
7
 
Other comprehensive loss
 
$
(19,963
)
 
$
(4,172
)
Comprehensive loss
 
$
(16,922
)
 
$
(994
)

See notes to unaudited condensed consolidated financial statements.

5


FIRST NORTHERN COMMUNITY BANCORP
 
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share data)

 
 
Common Stock
   
Additional
Paid-in
   
Retained
   
Accumulated
Other
Comprehensive
       
 
 
Shares
   
Amounts
   
Capital
   
Earnings
   
Income (Loss)
   
Total
 
 
                                   
Balance at December 31, 2020
   
13,634,463
   
$
107,527
   
$
977
   
$
37,115
   
$
5,038
   
$
150,657
 
Net income
                           
3,178
             
3,178
 
Other comprehensive loss, net of tax
                                   
(4,172
)
   
(4,172
)
Stock dividend adjustment
   
1,282
     
329
             
(329
)
           
 
Cash in lieu of fractional shares
   
(168
)
                   
(8
)
           
(8
)
Stock-based compensation
           
144
                             
144
 
Common shares issued related to restricted stock grants
   
38,400
     
                             
 
Stock options exercised, net of swapped shares
   
6,108
     
                             
 
Balance at March 31, 2021
   
13,680,085
   
$
108,000
   
$
977
   
$
39,956
   
$
866
   
$
149,799
 
                                                 
Balance at December 31, 2021
   
13,848,904
   
$
109,793
   
$
977
   
$
44,338
   
$
(4,197
)
 
$
150,911
 
Net income
                           
3,041
             
3,041
 
Other comprehensive loss, net of tax
                                   
(19,963
)
   
(19,963
)
Stock dividend adjustment
   
3,276
     
366
             
(366
)
           
 
Cash in lieu of fractional shares
   
(161
)
                   
(8
)
           
(8
)
Stock-based compensation
           
164
                             
164
 
Common shares issued related to restricted stock grants
   
67,596
     
                             
 
Stock options exercised, net of swapped shares
   
11,615
     
                             
 
Stock repurchase and retirement
    (1,401 )     (15 )                             (15 )
Balance at March 31, 2022
   
13,929,829
   
$
110,308
   
$
977
   
$
47,005
   
$
(24,160
)
 
$
134,130
 

See notes to unaudited condensed consolidated financial statements.

6


FIRST NORTHERN COMMUNITY BANCORP
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
 
(in thousands)
 
 
 
Three months ended
March 31, 2022
   
Three months ended
March 31, 2021
 
Cash Flows From Operating Activities
           
Net income
 
$
3,041
   
$
3,178
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation
   
192
     
188
 
Accretion and amortization of investment securities premiums and discounts, net
   
1,292
     
845
 
Valuation adjustment on mortgage servicing rights
   
(276
)
   
(123
)
(Decrease) increase in deferred loan origination fees and costs, net
   
(801
)
   
2,357
 
Provision for loan losses
   
300
     
300
 
Stock-based compensation
   
164
     
144
 
Losses on sales/calls of available-for-sale securities
   
     
10
 
Amortization of operating lease right-of-use asset
   
279
     
251
 
Gain on sales of loans held-for-sale
   
(68
)
   
(639
)
Proceeds from sales of loans held-for-sale
   
6,499
     
22,165
 
Originations of loans held-for-sale
   
(5,718
)
   
(22,507
)
Changes in assets and liabilities:
               
Decrease (increase) in interest receivable and other assets
   
129
     
(1,294
)
Net decrease in interest payable and other liabilities
   
(3,038
)
   
(3,412
)
Net cash provided by operating activities
   
1,995
     
1,463
 
 
               
Cash Flows From Investing Activities
               
Proceeds from calls or maturities of available-for-sale securities
   
5,590
     
5,750
 
Proceeds from sales of available-for-sale securities
   
     
3,643
 
Principal repayments on available-for-sale securities
   
27,822
     
19,984
 
Purchase of available-for-sale securities
   
(75,663
)
   
(67,054
)
Proceeds from maturities of certificates of deposit
   
2,453
     
2,205
 
Purchase of certificates of deposit
   
(248
)
   
 
Net increase in loans
   
(20,787
)
   
(67,466
)
Purchases of premises and equipment
   
(12
)
   
(140
)
Net cash used in investing activities
   
(60,845
)
   
(103,078
)
 
               
Cash Flows From Financing Activities
               
Net (decrease) increase in deposits
   
(12,306
)
   
128,875
 
Cash dividends paid in lieu of fractional shares
   
(8
)
   
(8
)
Repurchases and retirements of common stock
   
(15
)
   
 
Net cash (used in) provided by financing activities
   
(12,329
)
   
128,867
 
 
               
Net (decrease) increase in Cash and Cash Equivalents
   
(71,179
)
   
27,252
 
Cash and Cash Equivalents, beginning of period
   
345,929
     
267,177
 
Cash and Cash Equivalents, end of period
 
$
274,750
   
$
294,429
 
 
               
Supplemental Disclosures of Cash Flow Information:
               
Cash paid during the period for:
               
Interest
 
$
192
   
$
219
 
Supplemental disclosures of non-cash investing and financing activities:
               
Stock dividend distributed
 
$
6,992
   
$
6,636
 
Unrealized holding losses on available for sale securities, net of taxes
 
$
(19,963
)
 
$
(4,172
)
Transfer of loans held-for-sale to loans held-for-investment
 
$
   

1,765
 
Market value of shares tendered in-lieu of cash to pay for exercise of options
  $
65     $
32  

See notes to unaudited condensed consolidated financial statements.

7

FIRST NORTHERN COMMUNITY BANCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.
BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of First Northern Community Bancorp (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Articles 9 and 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  The results of operations for any interim period are not necessarily indicative of results expected for the full year.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as reported amounts of revenue and expense during the reporting period.  Actual results could differ from those estimates.  All material intercompany balances and transactions have been eliminated in consolidation.

2.
ACCOUNTING POLICIES

The most significant accounting policies followed by the Company are presented in Note 1 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, Management has identified the allowance for loan losses accounting to be the accounting area requiring the most subjective or complex judgments, and as such the accounting area that could be most subject to revision as new information becomes available. A discussion of the factors affecting accounting for the allowance for loan losses is included in the “Asset Quality” and “Allowance for Loan Losses” discussions below.

Application of these principles requires the Company to make certain estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment writedown or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available.

Recently Issued Accounting Pronouncements:


The CARES Act was passed by Congress and signed into law on March 27, 2020. Section 4013 of the CARES Act provides that a financial institution may elect to not apply GAAP requirements to loan modifications related to the COVID-19 pandemic that would otherwise be categorized as a TDR, and suspends the determination of loan modifications related to the COVID-19 pandemic from being treated as TDRs.  The relief from TDR guidance applies to modifications of loans that were not more than 30 days past due as of December 31, 2019, and modifications that occurred beginning on March 1, 2020 until the earlier of: sixty days after the date on which the national emergency related to the COVID-19 outbreak is terminated or December 31, 2020. The suspension of TDR accounting and reporting guidance may not be applied to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic.  In December 2020, the Consolidated Appropriations Act, 2021 was signed into law. Section 541 of this legislation, “Extension of Temporary Relief From Troubled Debt Restructurings and Insurer Clarification,” extends Section 4013 of the CARES Act to the earlier of January 1, 2022 or 60 days after the termination of the national emergency declaration relating to COVID-19.


8


On April 3, 2020, the SEC Office of the Chief Accountant issued a public statement communicating that for eligible entities that elect to apply Section 4013 of the CARES Act, the SEC staff would not object that this is in accordance with GAAP for the periods for which such elections are available. In June 2020, the American Institute of Certified Public Accountants published Q&A Section 2130.41 regarding a technical question regarding the recognition of interest income on Section 4013 loans which provided multiple permitted policy elections regarding the recognition of interest on Section 4013 restructured loans.



The Bank actively assisted its communities by providing temporary loan relief under Section 4013 of the CARES Act. This relief included loan modifications which include forbearance programs (both full payment deferrals and interest only payments) to customers who have been negatively impacted by the pandemic. For loans that have been provided temporary full payment deferrals, the Bank has made a policy election to cease recognition of interest income during the term of the payment deferrals (generally three to six months). Upon completion of the forbearance period, the foregone interest over the deferral period is capitalized as deferred interest and recognized as an adjustment to the effective interest rate over the life of the loan using the effective yield method.  Loans that were provided interest only payment relief will continue to accrue interest over the interest only period provided that the loans continue to perform as agreed. This policy election does not impact the Bank’s existing policies regarding non-accrual determinations if reasonable doubt exists as to the full and timely collection of interest or principal or when a loan becomes contractually past due by ninety days or more with respect to interest or principal regardless of whether a loan was modified under Section 4013 of the CARES Act.  On March 22, 2020, the Federal bank regulatory agencies issued joint guidance advising that the agencies have confirmed with the staff of the Financial Accounting Standards Board that short-term modifications due to COVID-19, made on a good faith basis to borrowers who were current prior to relief, are not TDRs.  The CARES Act also provided relief from TDR classification for certain COVID-19 loan modifications.  The Bank elected not to classify modifications as TDRs that meet the criteria under either the CARES Act or the criteria specified by the regulatory agencies as TDRs.


In March 2020, the FASB issued ASU 2020-02, Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842).  This ASU adds an SEC paragraph pursuant to the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to the FASB Codification Topic 326. This ASU also updates the SEC section of the Codification for the change in the effective date of Topic 842.  This ASU was effective upon addition to the FASB Codification.  The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019.  ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), is effective on January 1, 2023 for smaller reporting companies with less than $250 million in public float as defined in the SEC's rules.  The Company is a smaller reporting company.  The Company will apply the amendment's provisions as a cumulative-effect adjustment to retained earnings at the beginning of the first period the amendment is effective.  The Company has formed a team that is working on an implementation plan to adopt the amendment.  The implementation plan will include developing policies, procedures and internal controls over the model.  The Company is also working with a software vendor to measure expected losses required by the amendment.  The Company is currently evaluating the effects that the adoption of this amendment will have on its consolidated financial statements and expects that the portfolio composition and economic conditions at the time of adoption will influence the accounting adjustment made at the time the amendment is adopted.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).  This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform.  This ASU provides optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference LIBOR or other reference rates expected to be discontinued because of reference rate reform.   This ASU was effective for all entities as of March 12, 2020 through December 31, 2022.  As of January 1, 2022, the Company is no longer originating LIBOR-based loans and is originating new variable rate loans using the Secured Overnight Financing Rate (SOFR).  For existing LIBOR based loans, the Company is monitoring the development and reporting of fallback indices.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.  These amendments eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.  For public business entities, these amendments require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.  This ASU is effective on January 1, 2023, the same effective date as ASU 2016-13.  The Company is currently evaluating the effects that the adoption of this amendment will have on its consolidated financial statements.

9

3. 
INVESTMENT SECURITIES

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at March 31, 2022 are summarized as follows:

(in thousands)
 
Amortized
cost
   
Unrealized
gains
   
Unrealized
losses
   
Estimated
fair value
 
 
                       
Investment securities available-for-sale:
                       
U.S. Treasury securities
 
$
108,594
   
$
126
   
$
(3,189
)
 
$
105,531
 
Securities of U.S. government agencies and corporations
   
110,716
     
39
     
(5,453
)
   
105,302
 
Obligations of states and political subdivisions
   
45,636
     
285
     
(2,800
)
   
43,121
 
Collateralized mortgage obligations
   
129,553
     
22
     
(8,999
)
   
120,576
 
Mortgage-backed securities
   
282,552
     
111
     
(12,038
)
   
270,625
 
Total debt securities
 
$
677,051
   
$
583
   
$
(32,479
)
 
$
645,155
 

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at December 31, 2021 are summarized as follows:

(in thousands)
 
Amortized
cost
   
Unrealized
gains
   
Unrealized
losses
   
Estimated
fair value
 
 
                       
Investment securities available-for-sale:
                       
U.S. Treasury securities
 
$
86,534
   
$
388
   
$
(711
)
 
$
86,211
 
Securities of U.S. government agencies and corporations
   
104,106
     
330
     
(1,826
)
   
102,610
 
Obligations of states and political subdivisions
   
44,842
     
1,444
     
(301
)
   
45,985
 
Collateralized mortgage obligations
   
137,872
     
665
     
(2,885
)
   
135,652
 
Mortgage-backed securities
   
262,738
     
1,971
     
(2,954
)
   
261,755
 
Total debt securities
 
$
636,092
   
$
4,798
   
$
(8,677
)
 
$
632,213
 

The Company had $— and $3,643,000 proceeds from sales of available-for-sale securities for the three months ended March 31, 2022 and March 31, 2021, respectively.  Gross realized gains on sales/calls of available-for-sale securities were $0 and $25,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.  Gross realized losses on sales of available-for-sale securities were $0 and $35,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.

The amortized cost and estimated fair value of debt and other securities at March 31, 2022, by contractual maturity, are shown in the following table:

(in thousands)
 
Amortized
cost
   
Estimated
fair value
 
 
           
Maturity in years:
           
Due in one year or less
 
$
22,255
   
$
22,316
 
Due after one year through five years
   
171,580
     
165,608
 
Due after five years through ten years
   
44,081
     
41,114
 
Due after ten years
   
27,030
     
24,916
 
Subtotal
   
264,946
     
253,954
 
MBS & CMO
   
412,105
     
391,201
 
Total
 
$
677,051
   
$
645,155
 

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  In addition, factors such as prepayments and interest rates may affect the yield on the carrying value of mortgage-related securities.

10

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of March 31, 2022, follows:


 
Less than 12 months
   
12 months or more
   
Total
 
(in thousands)  
Fair Value
   
Unrealized
losses
   
Fair Value
   
Unrealized
losses
   
Fair Value
   
Unrealized
losses
 
 
                                   
U.S. Treasury securities
 
$
78,054
   
$
(2,725
)
 
$
9,957
   
$
(464
)
 
$
88,011
   
$
(3,189
)
Securities of U.S. government agencies and corporations
   
39,241
     
(1,180
)
   
50,456
     
(4,273
)
   
89,697
     
(5,453
)
Obligations of states and political subdivisions
   
28,790
     
(2,339
)
   
2,848
     
(461
)
   
31,638
     
(2,800
)
Collateralized mortgage obligations
   
110,237
     
(8,208
)
   
7,892
     
(791
)
   
118,129
     
(8,999
)
Mortgage-backed securities
   
172,065
     
(7,113
)
   
66,549
     
(4,925
)
   
238,614
     
(12,038
)
Total
 
$
428,387
   
$
(21,565
)
 
$
137,702
   
$
(10,914
)
 
$
566,089
   
$
(32,479
)

No decline in value was considered “other-than-temporary” during the first three months of 2022.  Three hundred forty-seven securities, all considered investment grade, which had an aggregate fair value of $428,387,000 and a total unrealized loss of $21,565,000, have been in an unrealized loss position for less than twelve months as of March 31, 2022.  Sixty-seven securities, all considered investment grade, have been in an unrealized loss position for more than twelve months as of March 31, 2022.  The unrealized losses on the Company's investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates.  The decline in fair value is attributable to changes in interest rates and not credit quality and the Company does not intend to sell the securities.  The Company has concluded it is not more likely than not that the Company will be required to sell these securities prior to recovery of their anticipated cost basis. Therefore, the Company does not consider these investments to be other than temporarily impaired as of March 31, 2022.

The fair value of investment securities could decline in the future if the general economy deteriorates, inflation increases, credit ratings decline, the issuer's financial condition deteriorates, or the liquidity for securities declines. As a result, other than temporary impairments may occur in the future.  The coronavirus pandemic and the impact of governmental health measures in response thereto may increase the likelihood of such other than temporary impairments.

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2021, follows:


 
Less than 12 months
   
12 months or more
   
Total
 
(in thousands)  
Fair Value
   
Unrealized
losses
   
Fair Value
   
Unrealized
losses
   
Fair Value
   
Unrealized
losses
 
 
                                   
U.S. Treasury Securities
 
$
63,254
   
$
(673
)
 
$
2,066
   
$
(38
)
 
$
65,320
   
$
(711
)
Securities of U.S. government agencies and corporations
   
48,288
     
(942
)
   
30,158
     
(884
)
   
78,446
     
(1,826
)
Obligations of states and political subdivisions
   
11,680
     
(233
)
   
934
     
(68
)
   
12,614
     
(301
)
Collateralized Mortgage obligations
   
90,299
     
(2,850
)
   
1,298
     
(35
)
   
91,597
     
(2,885
)
Mortgage-backed securities
   
175,943
     
(2,816
)
   
6,997
     
(138
)
   
182,940
     
(2,954
)
Total
 
$
389,464
   
$
(7,514
)
 
$
41,453
   
$
(1,163
)
 
$
430,917
   
$
(8,677
)

Investment securities carried at $37,677,000 and $39,695,000 at March 31, 2022 and December 31, 2021, respectively, were pledged to secure public deposits or for other purposes as required or permitted by law.

11

4. 
LOANS

The composition of the Company’s loan portfolio, by loan class, as of March 31, 2022 and December 31, 2021 was as follows:
 
($ in thousands)
 
March 31,
2022
   
December 31,
2021
 
 
           
Commercial
 
$
123,462
   
$
135,894
 
Commercial Real Estate
   
562,684
     
526,924
 
Agriculture
   
99,500
     
107,183
 
Residential Mortgage
   
77,761
     
76,160
 
Residential Construction
   
7,749
     
4,482
 
Consumer
   
17,538
     
17,258
 
 
   
888,694
     
867,901
 
Allowance for loan losses
   
(14,258
)
   
(13,952
)
Net deferred origination fees and costs
   
(431
)
   
(1,232
)
Loans, net
 
$
874,005
   
$
852,717
 

The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans and delinquencies, with particular attention to portfolio dynamics and loan mix. The Company strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of collectability and current collateral values and to maintain an adequate allowance for loan losses at all times. Asset quality reviews of loans and other non-performing assets are administered using credit risk rating standards and criteria similar to those employed by state and federal banking regulatory agencies.

Commercial loans, whether secured or unsecured, generally are made to support the short-term operations and other needs of small businesses. These loans are generally secured by the receivables, equipment, and other real property of the business and are susceptible to the related risks described above.  Problem commercial loans are generally identified by periodic review of financial information that may include financial statements, tax returns, and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation.  Paycheck Protection Program (“PPP”) loans outstanding included in Commercial loans totaled $15 million and $37 million as of March 31, 2022 and December 31, 2021, respectively.

Commercial real estate loans generally fall into two categories, owner-occupied and non-owner occupied. Loans secured by owner-occupied real estate are primarily susceptible to changes in the market conditions of the related business. This may be driven by, among other things, industry changes, geographic business changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business cycles. These same risks apply to commercial loans whether secured by equipment, receivables or other personal property or unsecured.  Problem commercial real estate loans are generally identified by periodic review of financial information that may include financial statements, tax returns, payment history of the borrower, and site inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary.  Losses on loans secured by owner occupied real estate, equipment, or other personal property generally are dictated by the value of underlying collateral at the time of default and liquidation of the collateral. When default is driven by issues related specifically to the business owner, collateral values tend to provide better repayment support and may result in little or no loss. Alternatively, when default is driven by more general economic conditions, underlying collateral generally has devalued more and results in larger losses due to default.  Loans secured by non-owner occupied real estate are primarily susceptible to risks associated with swings in occupancy or vacancy and related shifts in lease rates, rental rates or room rates. Most often, these shifts are a result of changes in general economic or market conditions or overbuilding and resulting over-supply of space. Losses are dependent on the value of underlying collateral at the time of default. Values are generally driven by these same factors and influenced by interest rates and required rates of return as well as changes in occupancy costs. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, sales invoices, or other appropriate means.

12

Agricultural loans, whether secured or unsecured, generally are made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Agricultural loans are generally secured by inventory, receivables, equipment, and other real property. Agricultural loans primarily are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions and changes in business cycles, as well as adverse weather conditions such as drought or floods. Problem agricultural loans are generally identified by periodic review of financial information that may include financial statements, tax returns, crop budgets, payment history, and crop inspections. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors. Notwithstanding, when repayment becomes unlikely based on the borrower's income and cash flow, repossession or foreclosure of the underlying collateral may become necessary.

Residential mortgage loans, which are secured by real estate, are primarily susceptible to four risks; non-payment due to diminished or lost income, over-extension of credit, a lack of borrower's cash flow to sustain payments, and shortfalls in collateral value. In general, non-payment is usually due to loss of employment and follows general economic trends in the economy, particularly the upward movement in the unemployment rate, loss of collateral value, and demand shifts.

Construction loans, whether owner-occupied or non-owner occupied residential development loans, are not only susceptible to the related risks described above but the added risks of construction, including cost over-runs, mismanagement of the project, or lack of demand and market changes experienced at time of completion. Losses are primarily related to underlying collateral value and changes therein as described above. Problem construction loans are generally identified by periodic review of financial information that may include financial statements, tax returns and payment history of the borrower. Based on this information, the Company may decide to take any of several courses of action, including demand for repayment, requiring the borrower to provide a significant principal payment and/or additional collateral or requiring similar support from guarantors, or repossession or foreclosure of the underlying collateral. Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation.

Consumer loans, whether unsecured or secured, are primarily susceptible to four risks: non-payment due to diminished or lost income, over-extension of credit, a lack of borrower's cash flow to sustain payments, and shortfall in collateral value. In general, non-payment is usually due to loss of employment and will follow general economic trends in the economy, particularly the upward movements in the unemployment rate, loss of collateral value, inflation and demand shifts. 

Collateral values may be determined by appraisals obtained through Bank-approved, licensed appraisers, qualified independent third parties, purchase invoices, or other appropriate documentation.  Collateral valuations are obtained at origination of the credit. Once repayment is questionable, and the loan has been deemed classified, collateral valuations are obtained periodically (generally annually but may be more frequent depending on the collateral type).

As of March 31, 2022, approximately 14% in principal amount of the Company’s loans were for general commercial uses, including professional, retail and small businesses; approximately 63% in principal amount of the Company’s loans were secured by commercial real estate, consisting primarily of loans secured by commercial properties and construction and land development loans; approximately 11% in principal amount of the Company’s loans were for agriculture; approximately 9% in principal amount of the Company’s loans were residential mortgage loans; approximately 1% in principal amount of the Company’s loans were residential construction loans; approximately 2% in principal amount of the Company’s loans were consumer loans.

Once a loan becomes delinquent or repayment becomes questionable, a Company collection officer will address collateral shortfalls with the borrower and attempt to obtain additional collateral or a principal payment.  If this is not forthcoming and payment of principal and interest in accordance with the contractual terms of the loan agreement becomes unlikely, the Company will consider the loan to be impaired and will estimate its probable loss, using the present value of future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent.  For collateral dependent loans, the Company will utilize a recent valuation of the underlying collateral less estimated costs of sale, and charge-off the loan down to the estimated net realizable amount.  Depending on the length of time until final collection, the Company may periodically revalue the estimated loss and take additional charge-offs or specific reserves as warranted. Revaluations may occur as often as every 3-12 months depending on the underlying collateral and volatility of values. Final charge-offs or recoveries are taken when the collateral is liquidated and the actual loss is confirmed. Unpaid balances on loans after or during collection and liquidation may also be pursued through legal action and attachment of wages or judgment liens on the borrower's other assets.

At March 31, 2022 and December 31, 2021, all loans were pledged under a blanket collateral lien to secure actual and potential borrowings from the Federal Home Loan Bank (“FHLB”).

13

Non-accrual and Past Due Loans

The Company’s loans by delinquency and non-accrual status, as of March 31, 2022 and December 31, 2021, were as follows:

($ in thousands)
 
Current &
Accruing
   
30-59 Days
Past Due &
Accruing
   
60-89 Days
Past Due &
Accruing
   
90 Days or
more Past
Due &
Accruing
   
Nonaccrual
   
Total Loans
 
March 31, 2022
                                   
Commercial
 
$
122,021
   
$
1,408
   
$
   
$
   
$
33
   
$
123,462
 
Commercial Real Estate
   
562,684
     
     
     
     
     
562,684
 
Agriculture
   
90,802
     
300
     
     
     
8,398
     
99,500
 
Residential Mortgage
   
77,077
     
549
     
     
     
135
     
77,761
 
Residential Construction
   
7,661
     
88
     
     
     
     
7,749
 
Consumer
   
16,771
     
50
     
     
     
717
     
17,538
 
Total
 
$
877,016
   
$
2,395
   
$
   
$
   
$
9,283
   
$
888,694
 
 
                                               
December 31, 2021
                                               
Commercial
 
$
134,890
   
$
394
   
$
477
   
$
   
$
133
   
$
135,894
 
Commercial Real Estate
   
526,337
     
32
     
     
     
555
     
526,924
 
Agriculture
   
98,471
     
     
     
     
8,712
     
107,183
 
Residential Mortgage
   
75,861
     
161
     
     
     
138
     
76,160
 
Residential Construction
   
4,482
     
     
     
     
     
4,482
 
Consumer
   
16,523
     
     
76
     
     
659
     
17,258
 
Total
 
$
856,564
   
$
587
   
$
553
   
$
   
$
10,197
   
$
867,901
 

Non-accrual loans amounted to $9,283,000 at March 31, 2022 and were comprised of one commercial loan totaling $33,000, three agriculture loans totaling $8,398,000, one residential mortgage loan totaling $135,000 and four consumer loans totaling $717,000. Non-accrual loans amounted to $10,197,000 at December 31, 2021 and were comprised of two commercial loans totaling $133,000, one commercial real estate loan totaling $555,000, three agriculture loans totaling $8,712,000, one residential mortgage loan totaling $138,000 and four consumer loans totaling $659,000. There were no commitments to lend additional funds to borrowers whose loans were on non-accrual status at March 31, 2022. Loans with deferrals granted under Section 4013 of the CARES Act are not considered past due and/or reported as nonaccrual if deemed collectible during the deferral period. See Note 2 for discussion on policy election on loan modifications under Section 4013 of the CARES Act.

14

Impaired Loans
 
A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. Loans to be considered for impairment include non-accrual loans, troubled debt restructurings and loans with a risk rating of 5 (special mention) or worse and an aggregate exposure of $500,000 or more. Once identified, impaired loans are measured individually for impairment using one of three methods:  present value of expected cash flows discounted at the loan's effective interest rate; the loan's observable market price; or fair value of collateral if the loan is collateral dependent.  If the measurement of a non-accrual loan is less than the recorded investment in the loan, an impairment is recognized through the establishment of a specific reserve sufficient to cover expected losses and/or a charge-off against the allowance for loan losses.  In general, any portion of the recorded investment in a collateral dependent loan in excess of the fair value of the collateral that can be identified as uncollectible, and is, therefore, deemed a confirmed loss, is promptly charged-off against the allowance for loan losses.

Impaired loans, segregated by loan class, as of March 31, 2022 and December 31, 2021 were as follows:

($ in thousands)
 
Unpaid
Contractual
Principal
Balance
   
Recorded
Investment
with no
Allowance
   
Recorded
Investment
with
Allowance
   
Total
Recorded
Investment
   
Related
Allowance
 
March 31, 2022
                             
Commercial
 
$
33
   
$
33
   
$
   
$
33
   
$
 
Commercial Real Estate
   
     
     
     
     
 
Agriculture
   
8,707
     
8,398
     
     
8,398
     
 
Residential Mortgage
   
678
     
135
     
512
     
647
     
79
 
Residential Construction
   
     
     
     
     
 
Consumer
   
781
     
717
     
64
     
781
     
2
 
Total
 
$
10,199
   
$
9,283
   
$
576
   
$
9,859
   
$
81
 
 
                                       
December 31, 2021
                                       
Commercial
 
$
142
   
$
133
   
$
   
$
133
   
$
 
Commercial Real Estate
   
555
     
555
     
     
555
     
 
Agriculture
   
10,680
     
8,712
     
     
8,712
     
 
Residential Mortgage
   
701
     
138
     
517
     
655
     
81
 
Residential Construction
   
241
     
     
241
     
241
     
10
 
Consumer
   
815
     
659
     
64
     
723
     
2
 
Total
 
$
13,134
   
$
10,197
   
$
822
   
$
11,019
   
$
93
 

 
The average recorded investment in impaired loans and the amount of interest income recognized on impaired loans during the three months ended March 31, 2022 and March 31, 2021 was as follows:
 
($ in thousands)
 
Three Months Ended
March 31, 2022
   
Three Months Ended
March 31, 2021
 
 
 
Average
Recorded
Investment
   
Interest
Income
Recognized
   
Average
Recorded
Investment
   
Interest
Income
Recognized
 
Commercial
 
$
83
   
$
2
   
$
654
   
$
1
 
Commercial Real Estate
   
278
     
13
     
5,839
     
 
Agriculture
   
8,555
     
     
9,130
     
 
Residential Mortgage
   
651
     
5
     
1,030
     
8
 
Residential Construction
   
120
     
     
453
     
4
 
Consumer
   
752
     
2
     
753
     
1
 
Total
 
$
10,439
   
$
22
   
$
17,859
   
$
14
 

15

Troubled Debt Restructurings
 
The Company's loan portfolio includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), which are loans on which concessions in terms have been granted because of the borrowers' financial difficulties and, as a result, the Company receives less than the current market-based compensation for the loan. These concessions may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are placed on non-accrual status at the time of restructure and may be returned to accruing status after considering the borrower's sustained repayment performance for a reasonable period, generally six months.
 
When a loan is modified, it is measured based upon the present value of future cash flows discounted at the contractual interest rate of the original loan agreement, or the fair value of collateral less selling costs if the loan is collateral dependent. If the value of the modified loan is less than the recorded investment in the loan, impairment is recognized through a specific allowance or a charge-off of the loan.
 
The Company had $9,602,000 and $10,103,000 in TDR loans as of March 31, 2022 and December 31, 2021, respectively. Specific reserves for TDR loans totaled $81,000 and $93,000 as of March 31, 2022 and December 31, 2021, respectively.  TDR loans performing in compliance with modified terms totaled $9,431,000 and $10,006,000 as of March 31, 2022 and December 31, 2021, respectively. There were no commitments to advance additional funds on existing TDR loans as of March 31, 2022.

On March 22, 2020, the Federal bank regulatory agencies issued joint guidance advising that the agencies have confirmed with the staff of the Financial Accounting Standards Board that short-term modifications due to COVID-19, made on a good faith basis to borrowers who were current prior to relief, are not TDRs.  The CARES Act also provided relief from TDR classification for certain COVID-19 loan modifications.  In December 2020, the Consolidated Appropriations Act, 2021 was signed into law. Section 541 of this legislation, “Extension of Temporary Relief From Troubled Debt Restructurings and Insurer Clarification,” extends Section 4013 of the CARES Act to the earlier of January 1, 2022 or 60 days after the termination of the national emergency declaration relating to COVID-19.  The Bank elected not to classify modifications that meet the criteria under either the CARES Act or the criteria specified by the regulatory agencies as TDRs.

Loans modified as TDRs during the three months ended March 31, 2022 were as follows:

($ in thousands)
 
Three months ended March 31, 2022
 
   
Number of
Contracts
   
Pre-
modification
outstanding
recorded
investment
   
Post-
modification
outstanding
recorded
investment
 
Consumer
   
1
    $
75
    $
75
 
Total
   
1
   
$
75
   
$
75
 

There were no loans modified as TDRs during the three months ended March 31, 2021.

Loan modifications generally involve reductions in the interest rate, payment extensions, forgiveness of principal, or forbearance. There were no loans modified as a TDR within the previous twelve months and for which there was a payment default during the three-month periods ended March 31, 2022 and March 31, 2021.

16

Credit Quality Indicators
 
All loans are rated using the credit risk ratings and criteria adopted by the Company. Risk ratings are adjusted as future circumstances warrant.  All credits risk rated 1, 2, 3 or 4 equate to a Pass as indicated by Federal and State bank regulatory agencies; a 5 equates to a Special Mention; a 6 equates to Substandard; a 7 equates to Doubtful; and an 8 equates to a Loss.  For the definitions of each risk rating, see Note 4 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.
 
The following table presents the risk ratings by loan class as of March 31, 2022 and December 31, 2021:
 
($ in thousands)
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Loss
   
Total
 
March 31, 2022
                                   
Commercial
 
$
119,903
   
$
2,376
   
$
1,183
   
$
   
$
   
$
123,462
 
Commercial Real Estate
   
553,159
     
6,473
     
3,052
     
     
     
562,684
 
Agriculture
   
91,102
     
     
8,398
     
     
     
99,500
 
Residential Mortgage
   
77,626
     
     
135
     
     
     
77,761
 
Residential Construction
   
7,749
     
     
     
     
     
7,749
 
Consumer
   
16,821
     
     
717
     
     
     
17,538
 
Total
 
$
866,360
   
$
8,849
   
$
13,485
   
$
   
$
   
$
888,694
 
 
                                               
December 31, 2021
                                               
Commercial
 
$
132,425
   
$
2,376
   
$
1,093
   
$
   
$
   
$
135,894
 
Commercial Real Estate
   
516,120
     
6,524
     
4,280
     
     
     
526,924
 
Agriculture
   
98,471
     
     
8,712
     
     
     
107,183
 
Residential Mortgage
   
76,020
     
     
140
     
     
     
76,160
 
Residential Construction
   
4,482
     
     
     
     
     
4,482
 
Consumer
   
16,599
     
     
659
     
     
     
17,258
 
Total
 
$
844,117
   
$
8,900
   
$
14,884
   
$
   
$
   
$
867,901
 

17

Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses and the amount allocated to loans individually and collectively evaluated for impairment by loan class for the three months ended March 31, 2022 and March 31, 2021:

Three months ended March 31, 2022
 
($ in thousands)
 
Commercial
   
Commercial
Real Estate
   
Agriculture
   
Residential
Mortgage
   
Residential
Construction
   
Consumer
   
Unallocated
   
Total
 
Balance as of December 31, 2021
 
$
1,604
   
$
8,808
   
$
1,482
   
$
742
   
$
74
   
$
167
   
$
1,075
   
$
13,952
 
Provision for (reversal of) loan losses
   
136
     
572
     
125
     
12
     
61
     
25
     
(631
)
   
300
 
 
                                                               
Charge-offs
   
     
     
     
     
     
(4
)
   
     
(4
)
Recoveries
   
7
     
     
     
     
     
3
     
     
10
 
Net (charge-offs)/recoveries
   
7
     
     
     
     
     
(1
)
   
     
6
 
Balance as of March 31, 2022
 
$
1,747
   
$
9,380
   
$
1,607
   
$
754
   
$
135
   
$
191
   
$
444
   
$
14,258
 
Period-end amount allocated to:
                                                               
Loans individually evaluated for impairment
   
     
     
     
79
     
     
2
     
     
81
 
Loans collectively evaluated for impairment
   
1,747
     
9,380
     
1,607
     
675
     
135
     
189
     
444
     
14,177
 
Balance as of March 31, 2022
 
$
1,747
   
$
9,380
   
$
1,607
   
$
754
   
$
135
   
$
191
   
$
444
   
$
14,258
 
 
Three months ended March 31, 2021
 
($ in thousands)
 
Commercial
   
Commercial
Real Estate
   
Agriculture
   
Residential
Mortgage
   
Residential
Construction
   
Consumer
   
Unallocated
   
Total
 
Balance as of December 31, 2020
 
$
2,252
   
$
7,915
   
$
3,834
   
$
635
   
$
128
   
$
214
   
$
438
   
$
15,416
 
Provision for (reversal of) loan losses
   
(779
)
   
(354
)
   
1,337
     
45
     
(91
)
   
(30
)
   
172
     
300
 
                                                                 
Charge-offs
   
(13
)
   
     
     
     
     
(3
)
   
     
(16
)
Recoveries
   
8
     
     
     
     
     
5
     
     
13
 
Net (charge-offs)/recoveries
   
(5
)
   
     
     
     
     
2
     
     
(3
)
Balance as of March 31, 2021
 
$
1,468
   
$
7,561
   
$
5,171
   
$
680
   
$
37
   
$
186
   
$
610
   
$
15,713
 
Period-end amount allocated to:
                                                               
Loans individually evaluated for impairment
   
     
     
3,964
     
155
     
4
     
1
     
     
4,124
 
Loans collectively evaluated for impairment
   
1,468
     
7,561
     
1,207
     
525
     
33
     
185
     
610
     
11,589
 
Balance as of March 31, 2021
 
$
1,468
   
$
7,561
   
$
5,171
   
$
680
   
$
37
   
$
186
   
$
610
   
$
15,713
 
 
18

The Company’s investment in loans as of March 31, 2022, March 31, 2021, and December 31, 2021 related to each balance in the allowance for loan losses by loan class and disaggregated on the basis of the Company’s impairment methodology was as follows: