XML 21 R10.htm IDEA: XBRL DOCUMENT v3.23.1
Loans and Leases
 3 Months Ended
Mar. 31, 2023
Loans and Leases [Abstract]  
Loans and Leases
Note 3—Loans and Leases

Loans and leases as of the dates indicated consisted of the following:
(Dollars in thousands)
  
March 31,
2023
    
December 31,
2022
  
Loans and leases held-for-investment, net
            
Real estate:
            
Commercial
  
$
1,312,745
    
$
1,328,691
  
Agricultural
    
707,412
      
726,938
  
Residential and home equity
    
387,370
      
387,753
  
Construction
    
153,394
      
166,538
  
Total real estate
    
2,560,921
      
2,609,920
  
Commercial & industrial
    
472,189
      
478,758
  
Agricultural
    
275,785
      
314,525
  
Commercial leases
    
123,314
      
112,629
  
Consumer and other
    
5,382
      
5,886
  
Total gross loans and leases
    
3,437,591
      
3,521,718
  
Unearned income
    
(10,458
)
    
(9,357
)
Total net loans and leases
    
3,427,133
      
3,512,361
  
Allowance for credit losses
    
(68,573
)
    
(66,885
)
Total loans and leases held-for-investment, net
  
$
3,358,560
    
$
3,445,476
  

At March 31, 2023, the portion of loans that were approved for pledging as collateral on borrowing lines with the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank (“FRB”) were $1.2 billion and $881.5 million, respectively. The borrowing capacity on these loans was $770.7 million from FHLB and $656.5 million from the FRB.

 

The following tables show an aging analysis of the loan and lease portfolio, including unearned income, by the time past due for the periods indicated:
   
March 31, 2023
  
(Dollars in thousands)
  
Current
    
30-89 Days
Past Due
    
90+ Days
Past Due
    
Non-accrual
    
Total Past
Due
    
Total
  
Loans and leases held-for-investment, net
                                   
Real estate:
                                    
Commercial
  
$
1,304,052
    
$
-
    
$
-
    
$
387
    
$
387
    
$
1,304,439
  
Agricultural
    
707,412
      
-
      
-
      
-
      
-
      
707,412
  
Residential and home equity
    
387,370
      
-
      
-
      
-
      
-
      
387,370
  
Construction
    
153,394
      
-
      
-
      
-
      
-
      
153,394
  
Total real estate
    
2,552,228
      
-
      
-
      
387
      
387
      
2,552,615
  
Commercial & industrial
    
472,189
      
-
      
-
      
-
      
-
      
472,189
  
Agricultural
    
275,785
      
-
      
-
      
-
      
-
      
275,785
  
Commercial leases
    
121,162
      
-
      
-
      
-
      
-
      
121,162
  
Consumer and other
    
5,357
      
25
      
-
      
-
      
25
      
5,382
  
Total loans and leases, net
  
$
3,426,721
    
$
25
    
$
-
    
$
387
    
$
412
    
$
3,427,133
  


   
December 31, 2022
  
(Dollars in thousands)
  
Current
    
30-89 Days
Past Due
    
90+ Days
Past Due
    
Non-accrual
    
Total Past
Due
    
Total
  
Loans and leases held-for-investment, net
                                   
Real estate:
                                    
Commercial
  
$
1,319,911
    
$
-
    
$
-
    
$
403
    
$
403
    
$
1,320,314
  
Agricultural
    
726,938
      
-
      
-
      
-
      
-
      
726,938
  
Residential and home equity
    
387,753
      
-
      
-
      
-
      
-
      
387,753
  
Construction
    
166,370
      
-
      
-
      
168
      
168
      
166,538
  
Total real estate
    
2,600,972
      
-
      
-
      
571
      
571
      
2,601,543
  
Commercial & industrial
    
478,758
      
-
      
-
      
-
      
-
      
478,758
  
Agricultural
    
314,525
      
-
      
-
      
-
      
-
      
314,525
  
Commercial leases
    
111,649
      
-
      
-
      
-
      
-
      
111,649
  
Consumer and other
    
5,789
      
97
      
-
      
-
      
97
      
5,886
  
Total loans and leases, net
  
$
3,511,693
    
$
97
    
$
-
    
$
571
    
$
668
    
$
3,512,361
  

 

Non-accrual loans are summarized as follows:
(Dollars in thousands)
  
March 31,
2023
    
December 31,
2022
 
Non-accrual loans and leases:
            
Non-accrual loans and leases
            
Real estate:
            
Commercial
  
$
387
    
$
403
  
Agricultural
    
-
      
-
  
Residential and home equity
    
-
      
-
  
Construction
    
-
      
168
  
Total real estate
    
387
      
571
  
Commercial & Industrial
    
-
      
-
  
Agricultural
    
-
      
-
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
-
  
Total non-accrual loans and leases
  
$
387
    
$
571
  

The Company did not enter into any loan modifications with borrowers experiencing financial difficulty during the three months ended March 31, 2023.

 

The following table presents the credit risk rating categories for loans and leases held-for-investment (accruing and non-accruing) net of deferred fees by loan portfolio segment and class as of the dates indicated.
   
March 31, 2023
  
(Dollars in thousands)
  
Pass
    
Special
Mention
    
Sub-
standard
    
Doubtful
    
Total Loans
& Leases
    
Total
Allowance
for Credit
Losses
  
Loans and leases held-for-investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,301,094
    
$
2,958
    
$
387
    
$
-
    
$
1,304,439
    
$
24,253
  
Agricultural
    
688,406
      
12,875
      
6,131
      
-
      
707,412
      
8,441
  
Residential and home equity
    
387,006
      
-
      
364
      
-
      
387,370
      
7,334
  
Construction
    
153,394
      
-
      
-
      
-
      
153,394
      
2,785
  
Total real estate
    
2,529,900
      
15,833
      
6,882
      
-
      
2,552,615
      
42,813
  
Commercial & industrial
    
471,348
      
594
      
247
      
-
      
472,189
      
11,346
  
Agricultural
    
271,307
      
4,467
      
11
      
-
      
275,785
      
12,542
  
Commercial leases
    
121,099
      
63
      
-
      
-
      
121,162
      
1,720
  
Consumer and other
    
5,251
      
-
      
131
      
-
      
5,382
      
152
  
Total loans and leases, net
  
$
3,398,905
    
$
20,957
    
$
7,271
    
$
-
    
$
3,427,133
    
$
68,573
  


   
December 31, 2022
  
(Dollars in thousands)
  
Pass
    
Special Mention
    
Sub-
standard
    
Doubtful
    
Total Loans
& Leases
    
Total
Allowance
for Credit
Losses
  
Loans and leases held-for-investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,314,377
    
$
5,535
    
$
402
    
$
-
    
$
1,320,314
    
$
18,055
  
Agricultural
    
709,927
      
10,891
      
6,120
      
-
      
726,938
      
14,496
  
Residential and home equity
    
387,371
      
-
      
382
      
-
      
387,753
      
7,508
  
Construction
    
166,370
      
-
      
168
      
-
      
166,538
      
3,026
  
Total real estate
    
2,578,045
      
16,426
      
7,072
      
-
      
2,601,543
      
43,085
  
Commercial & industrial
    
478,437
      
63
      
258
      
-
      
478,758
      
11,503
  
Agricultural
    
308,830
      
5,682
      
13
      
-
      
314,525
      
10,202
  
Commercial leases
    
111,568
      
81
      
-
      
-
      
111,649
      
1,924
  
Consumer and other
    
5,650
      
-
      
236
      
-
      
5,886
      
171
  
Total loans and leases, net
  
$
3,482,530
    
$
22,252
    
$
7,579
    
$
-
    
$
3,512,361
    
$
66,885
  

 
The following table presents outstanding loan and lease balances held-for-investment by segment and class, credit quality indicators, vintage year by class of financing receivable, and current period gross charge-offs by year of origination as of March 31, 2023:


   
March 31, 2023
  
   
Term Loans Amortized Cost Basis by Origination Year
              
(Dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Total
  
Net loans and leases held-for-investment
                                                
Real estate:
                                                
Commercial
                                                
Pass
  
$
51,123
    
$
176,639
    
$
227,251
    
$
149,007
    
$
69,798
    
$
301,459
    
$
325,817
    
$
1,301,094
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
2,358
      
600
      
2,958
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
387
      
-
      
387
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial
  
$
51,123
    
$
176,639
    
$
227,251
    
$
149,007
    
$
69,798
    
$
304,204
    
$
326,417
    
$
1,304,439
  
Commercial
                                                               
Current-period gross charge-offs
  $
 		-     $
-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Agricultural
                                                               
Pass
  
$
14,274
    
$
75,313
    
$
41,782
    
$
53,027
    
$
14,264
    
$
176,639
    
$
313,107
    
$
688,406
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
12,875
      
12,875
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
6,131
      
-
      
6,131
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
 
$
14,274
    
$
75,313
    
$
41,782
    
$
53,027
    
$
14,264
    
$
182,770
    
$
325,982
    
$
707,412
  
Agricultural
                                                                
Current-period gross charge-offs
   $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Residential and home equity
                                                                
Pass
  
$
7,062
    
$
65,050
    
$
94,458
    
$
85,239
    
$
14,222
    
$
79,905
    
$
41,070
    
$
387,006
  
Special mention
     -       -       -       -       -       -       -       -  
Substandard
    
-
      
-
      
-
      
-
      
-
      
284
      
80
      
364
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Residential and home equity
  
$
7,062
    
$
65,050
    
$
94,458
    
$
85,239
    
$
14,222
    
$
80,189
    
$
41,150
    
$
387,370
  
Residential and home equity
                                                                
Current-period gross charge-offs
   $
-     $
 		-     $
 		-     $
-     $
-     $
 		14     $
 		-     $
 		14  
                                                                 
Construction
                                                                
Pass
  
$
-
    
$
2,003
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
149,816
    
$
153,394
  
Special mention
     -       -       -       -       -       -       -       -  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total construction
  
$
-
    
$
2,003
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
149,816
    
$
153,394
  
Construction
    




























 
Current-period gross charge-offs
   $
 		-     $
 		-     $
 		-     $
-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Total Real estate
  
$
72,459
    
$
319,005
    
$
363,491
    
$
287,273
    
$
99,859
    
$
567,163
    
$
843,365
    
$
2,552,615
  
                                                                 
Commercial & industrial
                                                                
Pass
  
$
11,960
    
$
30,234
    
$
35,318
    
$
11,131
    
$
7,195
    
$
10,318
    
$
365,192
    
$
471,348
  
Special mention
    
-
      
-
      
55
      
-
      
-
      
539
      
-
      
594
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
6
      
241
      
247
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial & industrial
  
$
11,960
    
$
30,234
    
$
35,373
    
$
11,131
    
$
7,195
    
$
10,863
    
$
365,433
    
$
472,189
  
Commercial & industrial
                                                                
Current-period gross charge-offs
   $
 		-     $ -     $
 		-     $
 		-     $
 		-     $
 		-     $
-     $
 		-  
 
    March 31, 2023  
    Term Loans Amortized Cost Basis by Origination Year                
(Dollars in thousands)   2023     2022     2021     2020     2019     Prior    
Revolving
Loans
Amortized
Cost
     Total  
Agricultural
                                                        
Pass
  
$
170
    
$
5,179
    
$
2,755
    
$
918
    
$
1,135
    
$
2,448
    
$
258,702
    
$
271,307
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
4,467
      
4,467
  
Substandard
    
-
      
-
      
-
      
-
      
10
      
1
      
-
      
11
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
 
$
170
    
$
5,179
    
$
2,755
    
$
918
    
$
1,145
    
$
2,449
    
$
263,169
    
$
275,785
  
Agricultural
                                                                
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Commercial leases
                                                                
Pass
  
$
33,959
    
$
15,132
    
$
12,359
    
$
5,537
    
$
33,433
    
$
20,679
    
$
-
    
$
121,099
  
Special mention
    
-
      
-
      
-
      
-
      
63
      
-
      
-
      
63
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial leases
  
$
33,959
    
$
15,132
    
$
12,359
    
$
5,537
    
$
33,496
    
$
20,679
    
$
-
    
$
121,162
  
Commercial leases
                                                                
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Consumer and other
                                                                
Pass
  
$
318
    
$
1,476
    
$
575
    
$
213
    
$
121
    
$
1,922
    
$
626
    
$
5,251
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
131
      
-
      
-
      
-
      
-
      
-
      
-
      
131
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Consumer and other
  
$
449
    
$
1,476
    
$
575
    
$
213
    
$
121
    
$
1,922
    
$
626
    
$
5,382
  
Consumer and other
                                                                
Current-period gross charge-offs
   $ 8     $ 1     $ -     $ -     $ -     $ 1     $ -     $ 10  
                                                                 
Total net loans and leases
  
$
118,997
    
$
371,026
    
$
414,553
    
$
305,072
    
$
141,816
    
$
603,076
    
$
1,472,593
    
$
3,427,133
  

Certain directors and executive officers of the Company are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during the three months ended March 31, 2023 and year ended December 31, 2022. Such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with borrowers not related to the Company. These loans did not involve more than the normal risk of collection or have other unfavorable features. A summary of the changes in those loans is as follows:

   
March 31,
    
December 31,
  
(Dollars in thousands)
  
2023
    
2022
  
             
Balance at beginning of the period
  
$
17,521
    
$
18,128
  
New loans or advances during year
    
130
      
523
  
Repayments
    
(372
)
    
(1,130
)
Balance at end of period
  
$
17,279
    
$
17,521
  
 

A loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. When management determines that foreclosure is probable, expected credit losses for collateral dependent loans or leases are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The collateral on the loans and leases is a significant portion of what secures the collateral dependent loans or leases and significant changes to the fair value of the collateral can impact the ACL. During the three months ended March 31, 2023, there were no significant changes to the collateral that secures the collateral dependent loans, whether due to general deterioration or with credit quality indicators like appraisal value. The following tables present the amortized cost basis for collateral dependent loans and leases by type as of March 31, 2023 and December 31, 2022, respectively:
   
March 31, 2023
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
1,492
    
$
-
    
$
1,492
  
Agricultural
    
10,751
      
-
      
10,751
  
Residential and home equity
    
1,658
      
-
      
1,658
  
Construction
    
-
      
-
      
-
  
Total real estate
    
13,901
      
-
      
13,901
  
Commercial & industrial
    
-
      
-
      
-
  
Agricultural
    
-
      
11
      
11
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
153
      
153
  
Total gross loans and leases
  
$
13,901
    
$
164
    
$
14,065
  


   
December 31, 2022
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
1,114
    
$
-
    
$
1,114
  
Agricultural
    
11,035
      
-
      
11,035
  
Residential and home equity
    
2,153
      
-
      
2,153
  
Construction
    
-
      
-
      
-
  
Total real estate
    
14,302
      
-
      
14,302
  
Commercial & industrial
    
-
      
-
      
-
  
Agricultural
    
-
      
13
      
13
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
158
      
158
  
Total gross loans and leases
  
$
14,302
    
$
171
    
$
14,473
  

 

Changes in the allowance for credit losses are as follows:
   
For the Three Months Ended March 31, 2023
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning of period
   $ 32,551     $ 3,026     $ 7,508     $ 21,705     $ 1,924     $ 171     $ 66,885  
Provision / (recapture) for credit losses
     (27 )     (241 )     (170 )     2,163       (204 )     (21 )     1,500  
Charge-offs
     -       -       (14 )     -       -       (10 )     (24 )
Recoveries
     170       -       10       20       -       12       212  
Net (charge-offs) / recoveries
     170       -       (4 )     20       -       2       188  
Balance at end of period
   $ 32,694     $ 2,785     $ 7,334     $ 23,888     $ 1,720     $ 152     $ 68,573  

   
For the Three Months Ended March 31, 2022
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning of period, prior to adoption of ASC 326
   $ 38,149     $ 1,456     $ 2,847     $ 16,954     $ 938     $ 663     $ 61,007  
Impact of adopting ASC 326
    (6,190 )     1,855       3,032       826       629       (152 )     -  
Provision / (recapture) for credit losses
     552       466       866       (1,700 )     (101 )     (83 )     -  
Charge-offs
     -       -       -       -       -       (9 )     (9 )
Recoveries
     -       -       14       18       -       2       34  
Net (charge-offs) / recoveries
     -       -       14       18       -       (7 )     25  
Balance at end of period
   $ 32,511     $ 3,777     $ 6,759     $ 16,098     $ 1,466     $ 421     $ 61,032