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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses on Loans
 
The majority of the disclosures in this footnote are prepared at the class level, which is equivalent to the call report or call code classification. The roll forward of the allowance for credit losses is presented at the portfolio segment level. Accrued interest receivable on loans of $4,752,000 and $4,512,000 at March 31, 2024 and December 31, 2023 respectively is not included in the loan tables below and is included in other assets on the Company’s balance sheets. Outstanding loans are summarized by class as follows:
Loan Type (Dollars in thousands)March 31, 2024December 31, 2023
Commercial:  
Commercial and industrial$86,918 $105,466 
Agricultural production24,982 33,556 
Total commercial111,900 139,022 
Real estate:  
Construction & other land loans28,350 33,472 
Commercial real estate - owner occupied209,777 215,146 
Commercial real estate - non-owner occupied560,492 539,522 
Farmland117,015 120,674 
Multi-family residential61,993 61,307 
1-4 family - close-ended95,575 96,558 
1-4 family - revolving29,442 27,648 
Total real estate1,102,644 1,094,327 
Consumer69,886 55,606 
Total gross loans1,284,430 1,288,955 
Net deferred origination costs 2,179 1,842 
Loans, net of deferred origination costs1,286,609 1,290,797 
Allowance for credit losses(14,658)(14,653)
Total loans, net$1,271,951 $1,276,144 

At March 31, 2024 and December 31, 2023, loans originated under Small Business Administration (SBA) programs totaling $17,435,000 and $18,246,000, respectively, were included in the real estate and commercial categories, of which, $13,343,000 or 77% and $13,955,000 or 76%, respectively, are secured by government guarantees.

Allowance for Credit Losses on Loans

The measurement of the allowance for credit losses on collectively evaluated loans is based on modeled expectations of lifetime expected credit losses utilizing national and local peer group historical losses, weighting of economic scenarios, and other relevant factors. The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of credit losses within the portfolio. The Company uses a probability-weighted, multiple scenario forecast approach. These scenarios may consist of a base forecast representing the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions.

When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for credit losses on an individual loan basis. There were no loans on nonaccrual or individually evaluated as of March 31, 2024 or December 31, 2023.
The following table shows the summary of activities for the allowance for credit losses for the three months ended March 31, 2024 and 2023 by portfolio segment (in thousands):
 CommercialCommercial Real Estate1-4 Family Real EstateConsumerTotal
Allowance for credit losses:    
Beginning balance, January 1, 2024$1,475 $9,792 $2,435 $951 $14,653 
Provision (credit) for credit losses (1)
9 474 (246)293 530 
Charge-offs(507)— — (68)(575)
Recoveries— 24 — 26 50 
Ending balance, March 31, 2024$977 $10,290 $2,189 $1,202 $14,658 
(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $575 includes a $(157) credit for held-to-maturity securities and a $202 provision for unfunded loan commitments.
 CommercialCommercial Real Estate1-4 Family Real EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2023 prior to adoption of ASU 2016-13 (CECL)$1,814 $7,803 $607 $284 $340 $10,848 
Impact of adoption of ASU 2016-13454 1,693 1,614 489 (340)3,910 
(Credit) provision for credit losses (1)
(240)569 64 125 — 518 
Charge-offs(322)0— — (32)— (354)
Recoveries322 — — 13 — 335 
Ending balance, March 31, 2023$2,028 $10,065 $2,285 $879 $— $15,257 
(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $633 includes a $(92) credit for held-to-maturity securities and a $207 provision for unfunded loan commitments.

During the three month period ended March 31, 2024, the provision for credit losses was primarily driven by loan growth and net charge-off activity. Management believes that the allowance for credit losses at March 31, 2024 appropriately reflected expected credit losses in the loan portfolio at that date.

The following table shows the loan portfolio by class, net of deferred costs, allocated by management’s internal risk ratings for the period indicated (in thousands):
Term Loans Amortized Cost Basis by Origination Year As of March 31, 2024
20242023202220212020PriorRevolving LoansRevolving Converted to TermTotal
Commercial and industrial
Pass/Watch$6,847 $13,049 $16,576 $15,760 $4,591 $7,701 $20,931 $— $85,455 
Special mention— — 260 — — 267 1,150 — 1,677 
Substandard— — — — — 121 — — 121 
Total$6,847 $13,049 $16,836 $15,760 $4,591 $8,089 $22,081 $— $87,253 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Agricultural production
Pass/Watch$— $202 $21 $12 $— $241 $24,224 $— $24,700 
Special mention— — — — — — — — — 
Substandard— — — — — — 300 — 300 
Total$— $202 $21 $12 $— $241 $24,524 $— $25,000 
Current period gross write-offs$— $— $507 $— $— $— $— $— $507 
Construction & other land loans
Pass/Watch$122 $8,421 $12,658 $1,636 $701 $3,186 $1,432 $— $28,156 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$122 $8,421 $12,658 $1,636 $701 $3,186 $1,432 $— $28,156 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - owner occupied
Pass/Watch$9,976 $18,594 $24,851 $20,602 $27,074 $99,863 $2,884 $— $203,844 
Special mention— — — — — 3,008 — — 3,008 
Substandard— — — — — 2,812 — — 2,812 
Total$9,976 $18,594 $24,851 $20,602 $27,074 $105,683 $2,884 $— $209,664 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - non-owner occupied
Pass/Watch$20,796 $83,043 $117,220 $76,818 $49,885 $178,888 $18,467 $125 $545,242 
Special mention— — 597 — — 313 — — 910 
Substandard— — — — — 13,617 — — 13,617 
Total$20,796 $83,043 $117,817 $76,818 $49,885 $192,818 $18,467 $125 $559,769 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Farmland
Pass/Watch$700 $8,428 $24,321 $12,520 $29,067 $32,358 $4,596 $2,962 $114,952 
Special mention— — — — — — — — — 
Substandard— — — — 2,029 — — — 2,029 
Total$700 $8,428 $24,321 $12,520 $31,096 $32,358 $4,596 $2,962 $116,981 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Multi-family residential
Pass/Watch$819 $2,983 $1,836 $38,580 $2,347 $14,829 $621 $— $62,015 
Special mention— — — — — — — — — 
Substandard— — — — — — — — 
Total$819 $2,983 $1,836 $38,580 $2,347 $14,829 $621 $— $62,015 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - close-ended
Pass/Watch$350 $1,678 $63,038 $7,346 $2,209 $20,226 $10 $809 $95,666 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$350 $1,678 $63,038 $7,346 $2,209 $20,226 $10 $809 $95,666 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - revolving
Pass/Watch$— $— $— $— $— $— $23,616 $6,059 $29,675 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$— $— $— $— $— $— $23,616 $6,059 $29,675 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Consumer
Pass/Watch$18,178 $31,241 $7,763 $5,999 $2,090 $6,463 $603 $4 $72,341 
Special mention— — — — — — — — — 
Substandard— — — 89 — — — — 89 
Total$18,178 $31,241 $7,763 $6,088 $2,090 $6,463 $603 $4 $72,430 
Current period gross write-offs$7 $— $60 $— $— $— $1 $— $68 
Total loans outstanding (risk rating):
Pass/Watch$57,788 $167,639 $268,284 $179,273 $117,964 $363,755 $97,384 $9,959 $1,262,046 
Special mention— — 857 — — 3,588 1,150 — 5,595 
Substandard— — — 89 2,029 16,550 300 — 18,968 
Grand Total$57,788 $167,639 $269,141 $179,362 $119,993 $383,893 $98,834 $9,959 $1,286,609 
Current period total gross write-offs$7 $— $567 $— $— $— $1 $— $575 

The following table shows the loan portfolio by class, net of deferred costs, allocated by management’s internal risk ratings for the period indicated (in thousands):
Term Loans Amortized Cost Basis by Origination Year As of December 31, 2023
20232022202120202019PriorRevolving LoansRevolving Converted to TermTotal
Commercial and industrial
Pass/Watch$19,886 $17,129 $21,050 $4,643 $1,561 $6,980 $29,391 $215 $100,855 
Special mention— 277 139 183 107 272 3,750 — 4,728 
Substandard— — — 156 — 66 — — 222 
Total$19,886 $17,406 $21,189 $4,982 $1,668 $7,318 $33,141 $215 $105,805 
Current period gross write-offs$241 $— $323 $— $— $— $— $— $564 
Agricultural production
Pass/Watch$153 $830 $14 $— $251 $112 $30,241 $999 $32,600 
Special mention— — — — — — — — — 
Substandard— 676 — — — — 300 — 976 
Total$153 $1,506 $14 $— $251 $112 $30,541 $999 $33,576 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Construction & other land loans
Pass/Watch$6,953 $15,593 $1,305 $701 $1,538 $3,039 $4,167 $— $33,296 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$6,953 $15,593 $1,305 $701 $1,538 $3,039 $4,167 $— $33,296 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - owner occupied
Pass/Watch$20,648 $25,132 $20,783 $39,356 $21,831 $80,384 $3,207 $— $211,341 
Special mention— — — — — 3,026 272 — 3,298 
Substandard— — — — — 497 — — 497 
Total$20,648 $25,132 $20,783 $39,356 $21,831 $83,907 $3,479 $— $215,136 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - non-owner occupied
Pass/Watch$81,153 $115,031 $77,375 $38,307 $12,181 $175,419 $19,218 $3,216 $521,900 
Special mention— 600 — — — 374 — — 974 
Substandard— — — — 13,625 2,344 — — 15,969 
Total$81,153 $115,631 $77,375 $38,307 $25,806 $178,137 $19,218 $3,216 $538,843 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Farmland
Pass/Watch$8,382 $24,063 $10,873 $29,770 $11,155 $23,324 $8,695 $1,955 $118,217 
Special mention— — — — — — — — — 
Substandard— — — 2,213 — 200 — — 2,413 
Total$8,382 $24,063 $10,873 $31,983 $11,155 $23,524 $8,695 $1,955 $120,630 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Multi-family residential
Pass/Watch$2,988 $1,847 $38,644 $2,364 $4,538 $10,417 $532 $— $61,330 
Special mention— — — — — — — — — 
Substandard— — — — — — — — 
Total$2,988 $1,847 $38,644 $2,364 $4,538 $10,417 $532 $— $61,330 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - close-ended
Pass/Watch$1,689 $64,056 $7,898 $2,259 $1,703 $18,237 $— $809 $96,651 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$1,689 $64,056 $7,898 $2,259 $1,703 $18,237 $— $809 $96,651 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - revolving
Pass/Watch$— $— $— $— $— $— $21,662 $6,213 $27,875 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$— $— $— $— $— $— $21,662 $6,213 $27,875 
Current period gross write-offs$75 $— $— $— $— $— $— $— $75 
Consumer
Pass/Watch$34,866 $8,745 $6,503 $2,265 $2,007 $2,398 $643 $4 $57,431 
Special mention— — — — — — — — — 
Substandard182 — 42 — — — — — 224 
Total$35,048 $8,745 $6,545 $2,265 $2,007 $2,398 $643 $4 $57,655 
Current period gross write-offs$23 $— $— $— $27 $— $— $— $50 
Total loans outstanding (risk rating):
Pass/Watch$176,718 $272,426 $184,445 $119,665 $56,765 $320,310 $117,756 $13,411 $1,261,496 
Special mention— 877 139 183 107 3,672 4,022 — 9,000 
Substandard182 676 42 2,369 13,625 3,107 300 — 20,301 
Grand Total$176,900 $273,979 $184,626 $122,217 $70,497 $327,089 $122,078 $13,411 $1,290,797 
Current period total gross write-offs$339 $— $323 $— $27 $— $— $— $689 

The following table shows an aging analysis of the loan portfolio by class at March 31, 2024 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 89 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Loans Past Due > 89 Days, Still AccruingNon-accrual
Commercial:        
Commercial and industrial$425 $— $— $425 $86,493 $86,918 $— $— 
Agricultural production300 — — 300 24,682 24,982 — — 
Real estate:—    
Construction & other land loans— — — — 28,350 28,350 — — 
Commercial real estate - owner occupied— — — — 209,777 209,777 — — 
Commercial real estate - non-owner occupied— — — — 560,492 560,492 — — 
Farmland— — — — 117,015 117,015 — — 
Multi-family residential— — — — 61,993 61,993 — — 
1-4 family - close-ended1,945 — — 1,945 93,630 95,575 — — 
1-4 family - revolving16 — — 16 29,426 29,442 — — 
Consumer68 — — 68 69,818 69,886 — — 
Deferred fees— — — — $2,179 2,179 — — 
Total$2,754 $— $— $2,754 $1,283,855 $1,286,609 $— $— 
The following table shows an aging analysis of the loan portfolio by class at December 31, 2023 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due		Greater
Than
 89 Days
Past Due		Total Past
Due		CurrentTotal
Loans		Loans Past Due > 89 Days, Still AccruingNon-
accrual
Commercial:        
Commercial and industrial$25 $— $— $25 $105,441 $105,466 $— $— 
Agricultural production507 — — 507 33,049 33,556 — — 
Real estate:—       
Construction & other land loans— — — — 33,472 33,472 — — 
Commercial real estate - owner occupied— — — — 215,146 215,146 — — 
Commercial real estate - non-owner occupied— — — — 539,522 539,522 — — 
Farmland— — — — 120,674 120,674 — — 
Multi-family residential— — — — 61,307 61,307 — — 
1-4 family - close-ended2,973 — — 2,973 93,585 96,558 — — 
1-4 family - revolving— — — — 27,648 27,648 — — 
Consumer169 68 — 237 55,369 55,606 — — 
Deferred fees— — — — 1,842 1,842 — — 
Total$3,674 $68 $— $3,742 $1,287,055 $1,290,797 $— $— 

As of March 31, 2024 and December 31, 2023 there were no collateral dependent loans.

There was no foregone interest on nonaccrual loans for the three month periods ended March 31, 2024 and 2023.

Occasionally, the Company modifies loans to borrowers in financial distress by providing reductions of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. There were no loan modifications granted to borrowers experiencing financial difficulty during the three month period ended March 31, 2024 or during 2023.