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Loans and Leases
 6 Months Ended
Jun. 30, 2024
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)
  
June 30,
2024
    
December 31,
2023
  
Loans and leases held for investment, net
           
Real estate:
            
Commercial
  
$
1,363,198
    
$
1,323,038
  
Agricultural
    
726,128
      
742,009
  
Residential and home equity
    
406,562
      
399,982
  
Construction
    
200,673
      
212,362
  
Total real estate
    
2,696,561
      
2,677,391
  
Commercial & industrial
    
498,844
      
499,373
  
Agricultural
   
312,882
      
313,737
  
Commercial leases
    
178,252
      
169,684
  
Consumer and other
    
5,698
      
5,212
  
Total gross loans and leases
    
3,692,237
      
3,665,397
  
Unearned income
    
(9,867
)
    
(10,708
)
Total net loans and leases
    
3,682,370
      
3,654,689
  
Allowance for credit losses
    
(75,032
)
    
(74,965
)
Total loans and leases held for investment, net
  
$
3,607,338
    
$
3,579,724
  

At June 30, 2024, the portion of loans that were approved for pledging as collateral on borrowing lines with the FHLB and the Federal Reserve Bank (“FRB”) were $1.3 billion and $1.5 billion, respectively. The borrowing capacity on these loans was $810.2 million from FHLB and $1.2 billion from the FRB at June 30, 2024.
Note 3—Loans and Leases


The following tables show an aging analysis of the loan and lease portfolio, net of unearned income, by the time past due for the periods indicated:
   
June 30, 2024
  
(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
  
$
1,355,714
    
$
-
    
$
-
    
$
-
    
$
-
    
$
1,355,714
  
Agricultural
    
726,128
      
-
      
-
       -      
-
      
726,128
  
Residential and home equity
    
405,814
      
748
      
-
      
-
      
748
      
406,562
  
Construction
    
200,673
      
-
      
-
      
-
      
-
      
200,673
  
Total real estate
    
2,688,329
      
748
      
-
      
-
      
748
      
2,689,077
  
Commercial & industrial
    
498,344
      
500
      
-
       -      
500
      
498,844
  
Agricultural
    
312,882
      
-
      
-
      
-
      
-
      
312,882
  
Commercial leases
    
175,695
      
174
      
-
      
-
      
174
      
175,869
  
Consumer and other
    
5,686
      
12
      
-
      
-
      
12
      
5,698
  
Total loans and leases, net
  
$
3,680,936
    
$
1,434
    
$
-
    
$
-
    
$
1,434
    
$
3,682,370
  

 
  
December 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
 
$
1,314,928
    
$
-
    
$
-
    
$
-
    
$
-
    
$
1,314,928
  
Agricultural
    
742,009
      
-
      
-
      
-
      
-
      
742,009
  
Residential and home equity
    
399,946
      
36
      
-
      
-
      
36
      
399,982
  
Construction
    
212,362
      
-
      
-
      
-
      
-
      
212,362
  
Total real estate
    
2,669,245
      
36
      
-
      
-
      
36
      
2,669,281
  
Commercial & industrial
    
499,341
      
32
      
-
      
-
      
32
      
499,373
  
Agricultural
    
313,737
      
-
      
-
      
-
      
-
      
313,737
  
Commercial leases
    
167,086
      
-
      
-
      
-
      
-
      
167,086
  
Consumer and other
    
5,209
      
3
      
-
      
-
      
3
      
5,212
  
Total loans and leases, net
  
$
3,654,618
    
$
71
    
$
-
    
$
-
    
$
71
    
$
3,654,689
  
 
 
Note 3—Loans and Leases

The Company did not enter into any loan modifications with borrowers experiencing financial difficulty during the six months ended June 30, 2024. During the six months ended June 30, 2023, we had one residential real estate loan modified in the amount of $127,000 that had the contractual interest rate decreased by 1.00% and the contractual term extended by 120 months.

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. The Company’s modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended and/or the modified interest rate and payment terms are not commensurate with the current market. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.


There were no loans that were modified within the last 12 months that had a payment default or were past due during the six months ended June 30, 2024.


The Company assigns a risk rating to all loans and leases and periodically performs detailed reviews of all such loans and leases over a certain threshold to identify credit risks and assess overall collectability. Risk ratings can be grouped into five major categories, defined as follows:



Pass and watch — A pass loan or lease is a strong credit with no existing or known potential weaknesses deserving of management’s close attention. This category also includes “Watch” loans, which is a loan with an emerging weakness in either the individual credit or industry that requires additional attention. A credit may also be classified Watch if cash flows have not yet stabilized, such as in the case of a development project.


Special mention — A special mention loan or lease has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or lease or in the Company’s credit position at some future date. Special mention loans and leases are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.



Substandard — A substandard loan or lease is not adequately protected by the current financial condition and paying capacity of the borrower or the value of the collateral pledged, if any. Loans or leases classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Well-defined weaknesses include a project’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time or the project’s failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.



Doubtful — Loans or leases classified doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently known facts, conditions and values, highly questionable or improbable.

Loss — Loans or leases classified as loss are considered uncollectible. Once a loan or lease becomes delinquent and repayment becomes questionable, the Company will address collateral shortfalls with the borrower and attempt to obtain additional collateral. If this is not forthcoming and payment in full is unlikely, the Company will estimate its probable loss and immediately charge-off some or all of the balance.


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.
   
June 30, 2024
  
(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
  
$
1,352,338
    
$
3,376
    
$
-
    
$
-
    
$
1,355,714
    
$
22,608
  
Agricultural
    
698,104
      
27,478
      
546
      
-
      
726,128
      
16,486
  
Residential and home equity
    
405,738
      
114
      
710
      
-
      
406,562
      
7,584
  
Construction
    
200,673
      
-
      
-
      
-
      
200,673
      
2,165
  
Total real estate
    
2,656,853
      
30,968
      
1,256
      
-
      
2,689,077
      
48,843
  
Commercial & industrial
    
493,400
      
4,979
      
465
      
-
      
498,844
      
10,972
  
Agricultural
    
312,126
      
710
      
46
      
-
      
312,882
      
6,908
  
Commercial leases
    
171,099
      
4,770
      
-
      
-
      
175,869
      
7,597
  
Consumer and other
    
5,490
      
-
      
208
      
-
      
5,698
      
712
  
Total loans and leases, net
  
$
3,638,968
    
$
41,427
    
$
1,975
    
$
-
    
$
3,682,370
    
$
75,032
  


   
December 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
  
$
1,308,717
    
$
6,211
    
$
-
    
$
-
    
$
1,314,928
    
$
26,093
  
Agricultural
    
729,135
      
12,329
      
545
      
-
      
742,009
      
7,744
  
Residential and home equity
    
399,217
      
-
      
765
      
-
      
399,982
      
7,770
  
Construction
    
212,362
      
-
      
-
      
-
      
212,362
      
4,432
  
Total real estate
    
2,649,431
      
18,540
      
1,310
      
-
      
2,669,281
      
46,039
  
Commercial & industrial
    
486,439
      
12,458
      
476
      
-
      
499,373
      
13,380
  
Agricultural
    
310,496
      
3,236
      
5
      
-
      
313,737
      
8,872
  
Commercial leases
    
167,080
      
6
      
-
      
-
      
167,086
      
6,537
  
Consumer and other
    
5,036
      
-
      
176
      
-
      
5,212
      
137
  
Total loans and leases, net
  
$
3,618,482
    
$
34,240
    
$
1,967
    
$
-
    
$
3,654,689
    
$
74,965
  

 
The following table presents outstanding loan and lease balances held for investment net of unearned income 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 follows:


   
June 30, 2024
        
   
Term Loans Amortized Cost Basis by Origination Year
                    
(Dollars in thousands)
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Revolving
Loans
Converted to
Term
    
Total
  
Net loans and leases held for investment
                                                      
Real estate:
                                                      
Commercial
                                                      
Pass
  
$
35,410
    
$
119,248
    
$
167,224
    
$
218,406
    
$
140,794
    
$
314,708
    
$
261,582
     $ 94,966    
$
1,352,338
  
Special mention
    
-
      
-
      
1,274
      
-
      
-
      
601
      
1,470
       31      
3,376
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Commercial
  
$
35,410
    
$
119,248
    
$
168,498
    
$
218,406
    
$
140,794
    
$
315,309
    
$
263,052
     $
94,997    
$
1,355,714
  
Commercial
                                                                       
Current-period gross charge-offs
  $ -     $ -     $ -     $ -     $ -     $ -     $ -     $
-     $ -  
                                                                         
Agricultural
                                                                       
Pass
  
$
7,854
    
$
36,895
    
$
70,359
    
$
39,370
    
$
49,397
    
$
163,571
    
$
297,948
     $ 32,710    
$
698,104
  
Special mention
    
-
      
-
      
-
      
-
      
800
      
10,565
      
16,113
       -      
27,478
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
546
      
-
       -      
546
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Agricultural
 
$
7,854
    
$
36,895
    
$
70,359
    
$
39,370
    
$
50,197
    
$
174,682
    
$
314,061
     $ 32,710    
$
726,128
  
Agricultural
                                                                        
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $
-     $ -  
                                                                         
Residential and home equity
                                                                        
Pass
  
$
18,275
    
$
40,366
    
$
60,423
    
$
85,899
    
$
76,417
    
$
78,090
    
$
46,196
     $
72    
$
405,738
  
Special mention
     -       -       -       -       -       114       -       -       114  
Substandard
    
-
      
-
      
-
      
-
      
-
      
710
      
-
       -      
710
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Residential and home equity
  
$
18,275
    
$
40,366
    
$
60,423
    
$
85,899
    
$
76,417
    
$
78,914
    
$
46,196
     $
72    
$
406,562
  
Residential and home equity
                                                                        
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $
-     $ -  
                                                                         
Construction
                                                                        
Pass
  
$
5,799
    
$
-
    
$
1,500
    
$
-
    
$
-
    
$
1,576
    
$
191,798
     $
-    
$
200,673
  
Special mention
     -       -       -       -       -       -       -       -       -  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total construction
  
$
5,799
    
$
-
    
$
1,500
    
$
-
    
$
-
    
$
1,576
    
$
191,798
     $
-    
$
200,673
  
Construction
                                                                        
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $
-     $ -  
                                                                         
Total Real estate
  
$
67,338
    
$
196,509
    
$
300,780
    
$
343,675
    
$
267,408
    
$
570,481
    
$
815,107
     $
127,779    
$
2,689,077
  
                                                                         
Commercial & industrial
                                                                        
Pass
  
$
16,131
    
$
43,309
    
$
23,956
    
$
19,431
    
$
5,506
    
$
8,150
    
$
349,189
     $
27,728    
$
493,400
  
Special mention
    
-
      
2,281
      
24
      
19
      
-
      
-
      
2,623
       32      
4,979
  
Substandard
    
-
      
-
      
-
      
38
      
-
      
427
      
-
       -      
465
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Commercial & industrial
  
$
16,131
    
$
45,590
    
$
23,980
    
$
19,488
    
$
5,506
    
$
8,577
    
$
351,812
     $
27,760    
$
498,844
  
Commercial & industrial
                                                                        
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $
-     $ -  

    June 30, 2024        
    Term Loans Amortized Cost Basis by Origination Year                    
(Dollars in thousands)   2024     2023     2022     2021     2020     Prior    
Revolving
Loans
Amortized
Cost
    
Revolving
Loans
Converted to
Term
     Total  
Net loans and leases held for investment                                                      
Agricultural
                                                      
Pass   $ 1,212     $ 3,668     $ 3,926     $ 1,967     $ 522     $ 2,650     $ 283,272     $ 14,909     $ 312,126  
Special mention     -       -       48       -       -       -       619       43       710  
Substandard     -       -       -       -       -       2       44       -       46  
Total Agricultural   $ 1,212     $ 3,668     $ 3,974     $ 1,967     $ 522     $ 2,652     $ 283,935     $ 14,952     $ 312,882  
Agricultural                                                                        
Current-period gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  

                                                                       
Commercial leases                                                                        
Pass
  
$
19,978
    
$
78,190
    
$
24,534
    
$
9,465
    
$
8,634
    
$
30,298
    
$
-
     $ -    
$
171,099
  
Special mention
    
583
      
-
      
4,187
      
-
      
-
      
-
      
-
       -      
4,770
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Total Commercial leases
  
$
20,561
    
$
78,190
    
$
28,721
    
$
9,465
    
$
8,634
    
$
30,298
    
$
-
     $ -    
$
175,869
  
Commercial leases
                                                                        
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                         
Consumer and other
                                                                        
Pass
  
$
684
    
$
1,483
    
$
728
    
$
181
    
$
27
    
$
1,596
    
$
791
     $ -    
$
5,490
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Substandard
    
188
      
-
      
-
      
-
      
-
      
20
      
-
       -      
208
  
Total Consumer and other
  
$
872
    
$
1,483
    
$
728
    
$
181
    
$
27
    
$
1,616
    
$
791
     $ -    
$
5,698
  
Consumer and other
                                                                        
Current-period gross charge-offs
   $ 26     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ 26  
Total net loans and leases
                                                                       
Pass
  $ 105,343     $ 323,159     $ 352,650     $ 374,719     $ 281,297     $ 600,639     $ 1,430,776     $ 170,385     $ 3,638,968  
Special mention
    583       2,281       5,533       19       800       11,280       20,825       106       41,427  
Substandard
    188       -       -       38       -       1,705       44       -
       1,975  
Total net loans and leases
  
$
106,114
    
$
325,440
    
$
358,183
    
$
374,776
    
$
282,097
    
$
613,624
    
$
1,451,645
     $ 170,491    
$
3,682,370
  
Total current-period gross charge-offs
  $ 26     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ 26  

   
December 31, 2023
        
 
  
Term Loans Amortized Cost Basis by Origination Year
                    
(Dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Revolving
Loans
Converted to
Term
    
Total
  
Net loans and leases held for investment
                                                      
Real estate:
                                                      
Commercial
                                                      
Pass
  
$
121,418
    
$
169,171
    
$
221,708
    
$
143,502
    
$
67,505
    
$
261,344
    
$
249,087
     $ 74,982    
$
1,308,717
  
Special mention
    
-
      
2,395
      
-
      
-
      
-
      
2,216
      
1,600
       -      
6,211
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Commercial
  
$
121,418
    
$
171,566
    
$
221,708
    
$
143,502
    
$
67,505
    
$
263,560
    
$
250,687
     $ 74,982    
$
1,314,928
  
Commercial
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $ -    
$
-
  
 
                                                                        
Agricultural
                                                                        
Pass
  
$
37,849
    
$
71,367
    
$
40,848
    
$
50,445
    
$
12,008
    
$
165,267
    
$
328,105
     $ 23,246    
$
729,135
  
Special mention
    
-
      
-
      
-
      
594
      
2,020
      
9,715
      
-
       -      
12,329
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
545
      
-
       -      
545
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Agricultural
  
$
37,849
    
$
71,367
    
$
40,848
    
$
51,039
    
$
14,028
    
$
175,527
    
$
328,105
     $ 23,246    
$
742,009
  
Agricultural
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $ -    
$
-
  
 
                                                                        
Residential and home equity
                                                                        
Pass
  
$
41,173
    
$
62,505
    
$
88,559
    
$
78,810
    
$
13,299
    
$
70,339
    
$
44,463
     $ 69    
$
399,217
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
765
      
-
       -      
765
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Residential and home equity
  
$
41,173
    
$
62,505
    
$
88,559
    
$
78,810
    
$
13,299
    
$
71,104
    
$
44,463
     $ 69    
$
399,982
  
Residential and home equity
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
14
    
$
-
     $ -    
$
14
  
 
                                                                        
Construction
                                                                        
Pass
  
$
-
    
$
2,500
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
208,287
     $ -    
$
212,362
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total construction
  
$
-
    
$
2,500
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
208,287
     $ -    
$
212,362
  
Construction
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $ -    
$
-
  
 
                                                                        
Total Real estate
  
$
200,440
    
$
307,938
    
$
351,115
    
$
273,351
    
$
96,407
    
$
510,191
    
$
831,542
     $ 98,297    
$
2,669,281
  
 
                                                                        
Commercial & industrial
                                                                        
Pass
  
$
49,162
    
$
25,795
    
$
21,695
    
$
7,193
    
$
4,123
    
$
6,674
    
$
352,502
     $ 19,295    
$
486,439
  
Special mention
    
2,500
      
27
      
4,903
      
466
      
-
      
-
      
4,519
       43      
12,458
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
476
      
-
       -      
476
  
Doubtful
     -       -       -       -       -       -       -       -       -  
Total Commercial & industrial
  
$
51,662
    
$
25,822
    
$
26,598
    
$
7,659
    
$
4,123
    
$
7,150
    
$
357,021
     $ 19,338    
$
499,373
  
Commercial & industrial
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $ -    
$
-
  

 
   December 31, 2023
        
   
Term Loans Amortized Cost Basis by Origination Year
                    
(Dollars in thousands)
  
2023
    
2022
    
2021
     2020    
2019
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Revolving
Loans
Converted to
Term
     Total  
Net loans and leases held for investment
                                                      
Agricultural
                                                      
Pass   $ 3,013     $ 4,585     $ 2,296     $ 688     $ 1,026     $ 2,116     $ 292,391     $ 4,381     $ 310,496  
Special mention     -       52       75       -       -       -       3,109       -       3,236  
Substandard     -       -       -       -       5       -       -       -       5  
Total Agricultural   $ 3,013     $ 4,637     $ 2,371     $ 688     $ 1,031     $ 2,116     $ 295,500     $ 4,381     $ 313,737  
Agricultural                                                                        
Current-period gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  

                                                                       
Commercial leases                                                                        
Pass
  
$
81,287
    
$
31,954
    
$
10,786
    
$
9,514
    
$
4,667
    
$
28,872
    
$
-
     $ -    
$
167,080
  
Special mention
    
-
      
-
      
-
      
-
      
6
      
-
      
-
       -      
6
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Total Commercial leases
  
$
81,287
    
$
31,954
    
$
10,786
    
$
9,514
    
$
4,673
    
$
28,872
    
$
-
     $ -    
$
167,086
  
Commercial leases
                                                                        
Current-period gross charge-offs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $ -    
$
-
  
 
                                                                        
Consumer and other
                                                                        
Pass
  
$
1,650
    
$
930
    
$
375
    
$
48
    
$
45
    
$
1,400
    
$
588
     $ -    
$
5,036
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
       -      
-
  
Substandard
    
152
      
-
      
-
      
-
      
-
      
24
      
-
       -      
176
  
Total Consumer and other
  
$
1,802
    
$
930
    
$
375
    
$
48
    
$
45
    
$
1,424
    
$
588
     $ -    
$
5,212
  
Consumer and other
                                                                        
Current-period gross charge-offs
  
$
41
    
$
3
    
$
-
    
$
-
    
$
-
    
$
2
    
$
-
     $ -    
$
46
  
Total net loans and leases
                                                                        
Pass
  
$
335,552
    
$
368,807
    
$
386,267
    
$
290,200
    
$
104,248
    
$
536,012
    
$
1,475,423
     $ 121,973    
$
3,618,482
  
Special mention
    
2,500
      
2,474
      
4,978
      
1,060
      
2,026
      
11,931
      
9,228
       43      
34,240
  
Substandard
    
152
      
-
      
-
      
-
      
5
      
1,810
      
-
       -      
1,967
  
Total net loans and leases
  
$
338,204
    
$
371,281
    
$
391,245
    
$
291,260
    
$
106,279
    
$
549,753
    
$
1,484,651
     $ 122,016    
$
3,654,689
  
Total current-period gross charge-offs
  
$
41
    
$
3
    
$
-
    
$
-
    
$
-
    
$
16
    
$
-
     $ -    
$
60
  

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 six months ended June 30, 2024 and year ended December 31, 2023. 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 collectibility or have other unfavorable features. A summary of the changes in those loans is as follows:
   
June 30,
    
December 31,
  
(Dollars in thousands)
  
2024
   
2023
 

           
Balance at beginning of the period
  
$
17,035
    
$
17,521
  
New loans or advances during year
    
250
      
1,706
  
Repayments
    
(1,626
)
    
(2,192
)
Balance at end of period
  
$
15,659
    
$
17,035
  



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 allowance for credit losses. During the six months ended June 30, 2024, 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 June 30, 2024 and December 31, 2023, respectively:
   
June 30, 2024
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
   
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
-
    
$
-
    
$
-
  
Agricultural
    
546
      
-
      
546
  
Residential and home equity
    
710
      
-
      
710
  
Construction
    
-
      
-
      
-
  
Total real estate
    
1,256
      
-
      
1,256
  
Commercial & industrial
    
-
      
427
      
427
  
Agricultural
    
-
      
83
      
83
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
21
      
21
  
Total gross loans and leases
  
$
1,256
    
$
531
    
$
1,787
  


   
December 31, 2023
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
1,517
    
$
-
    
$
1,517
  
Agricultural
    
6,118
      
-
      
6,118
  
Residential and home equity
    
1,607
      
-
      
1,607
  
Construction
    
-
      
-
      
-
  
Total real estate
    
9,242
      
-
      
9,242
  
Commercial & industrial
    
-
      
473
      
473
  
Agricultural
    
-
      
5
      
5
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
164
      
164
  
Total gross loans and leases
  
$
9,242
    
$
642
    
$
9,884
  



Allowance for Credit Losses



The allowance for credit losses (“ACL”) is the combination of the allowance for credit losses for loan and lease losses and the allowance for credit losses for unfunded loan commitments. The ACL for unfunded loan commitments is included within “Interest payable and other liabilities” on the consolidated balance sheets.



The following tables present a summary of the activity in the ACL for loan and lease losses and ACL for unfunded loan commitments for the periods indicated:


 
  
For the Three Months Ended June 30,
  
 
  
2024
    
2023
  
(Dollars in thousands)
  
ACL for
Loans and
Leases
    
ACL for Unfunded Commitments
    
Allowance for Credit Losses
    
ACL for Loans and Leases
    
ACL for Unfunded Commitments
    
Allowance for Credit Losses
  
Balance at beginning of period
  
$
75,018
    
$
3,690
    
$
78,708
    
$
68,573
    
$
2,090
    
$
70,663
  
Provision for/(reversal of) credit losses
    
-
   
-
      
-
      
2,500
      
-
      
2,500
  
Charge-offs
    
(16
)
    
-
      
(16
)
    
(9
)
    
-
      
(9
)
Recoveries
    
30
      
-
      
30
      
48
      
-
      
48
  
Net (charge-offs)/recoveries
    
14
      
-
      
14
      
39
      
-
      
39
  
Balance at end of period
  
$
75,032
    
$
3,690
    
$
78,722
    
$
71,112
    
$
2,090
    
$
73,202
  

 
  
For the Six Months Ended June 30,
  
 
  
2024
    
2023
  
(Dollars in thousands)
  
ACL for Loans and Leases
    
ACL for Unfunded Commitments
    
Allowance for Credit Losses
    
ACL for Loans and Leases
    
ACL for Unfunded Commitments
    
Allowance for Credit Losses
  
Balance at beginning of period
  
$
74,965
    
$
3,690
    
$
78,655
    
$
66,885
    
$
2,090
    
$
68,975
  
Provision for/(reversal of) credit losses
    
-
   
-
      
-
      
4,000
      
-
      
4,000
  
Charge-offs
    
(26
)
    
-
      
(26
)
    
(32
)
    
-
      
(32
)
Recoveries
    
93
      
-
      
93
      
259
      
-
      
259
  
Net (charge-offs)/recoveries
    
67
      
-
      
67
      
227
      
-
      
227
  
Balance at end of period
  
$
75,032
    
$
3,690
    
$
78,722
    
$
71,112
    
$
2,090
    
$
73,202
  


Changes in the allowance for credit losses on loans and leases are as follows:

   
For the Three Months Ended June 30, 2024
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
ACL for loans and leases:
                                          
Balance at beginning of period
   $ 33,791     $ 4,616     $ 7,721     $ 21,851     $ 6,923     $ 116     $ 75,018  
Provision for/(reversal of) credit losses
     5,303       (2,451 )     (144 )     (3,991 )     674       609       -
Charge-offs
     -       -       -       -       -       (16 )     (16 )
Recoveries
     -       -       7       20       -       3       30  
Net (charge-offs)/recoveries
     -       -       7       20       -       (13 )     14  
Balance at end of period
   $ 39,094     $ 2,165     $ 7,584     $ 17,880     $ 7,597     $ 712     $ 75,032  

   
For the Three Months Ended June 30, 2023
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
ACL for loans and leases:
                                          
Balance at beginning of period
   $ 32,694     $ 2,785     $ 7,334     $ 23,888     $ 1,720     $ 152     $ 68,573  
Provision for/(reversal of) credit losses
     2,001       410       (176 )     285       (63 )     43       2,500  
Charge-offs
     -       -       -       -       -       (9 )     (9 )
Recoveries
     -       -       21       21       -       6       48  
Net (charge-offs)/recoveries
     -       -       21       21       -       (3 )     39  
Balance at end of period
   $ 34,695     $ 3,195     $ 7,179     $ 24,194     $ 1,657     $ 192     $ 71,112  

   
For the Six Months Ended June 30, 2024
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
ACL for loans and leases:
                                          
Balance at beginning of period
   $ 33,837     $ 4,432     $ 7,770     $ 22,252     $ 6,537     $ 137     $ 74,965  
Provision for/(reversal of) credit losses
     5,257       (2,267 )     (201 )     (4,410 )     1,060       561       -
Charge-offs
     -       -       -       -       -       (26 )     (26 )
Recoveries
     -       -       15       38       -       40       93  
Net (charge-offs)/recoveries
     -       -       15       38       -       14       67  
Balance at end of period
   $ 39,094     $ 2,165     $ 7,584     $ 17,880     $ 7,597     $ 712     $ 75,032  

   
For the Six Months Ended June 30, 2023
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
ACL for loans and leases:
                                          
Balance at beginning of period
   $ 32,551     $ 3,026     $ 7,508     $ 21,705     $ 1,924     $ 171     $ 66,885  
Provision for/(reversal of) credit losses
     1,974       169       (346 )     2,448       (267 )     22       4,000  
Charge-offs
     -       -       (14 )     -       -       (18 )     (32 )
Recoveries
     170       -       31       41       -       17       259  
Net (charge-offs)/recoveries
     170       -       17       41       -       (1 )     227  
Balance at end of period
   $ 34,695     $ 3,195     $ 7,179     $ 24,194     $ 1,657     $ 192     $ 71,112