10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

Commission file number: 000-33063

SIERRA BANCORP

(Exact name of Registrant as specified in its charter)

California	33-0937517
(State of Incorporation)	(IRS Employer Identification No)

86 North Main Street, Porterville, California 93257

(Address of principal executive offices)                  (Zip Code)

(559) 782-4900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	BSRR	The NASDAQ Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 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 Section7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November 1, 2022, the registrant had 15,089,475 shares of common stock outstanding, including 126,171 shares of unvested restricted stock.

FORM 10-Q

Table of Contents

					Page
Part I - Financial Information					1
	Item 1. Financial Statements (Unaudited)				1
		Consolidated Balance Sheets			1
		Consolidated Statements of Income			2
		Consolidated Statements of Comprehensive Income (Loss)			3
		Consolidated Statements of Changes In Shareholders’ Equity			4
		Consolidated Statements of Cash Flows			6
		Notes to Consolidated Financial Statements (Unaudited)			7
	Item 2. Management’s Discussion & Analysis of Financial Condition & Results of Operations				38
		Forward-Looking Statements			38
		Critical Accounting Policies			39
		Overview of the Results of Operations and Financial Condition			39
		Earnings Performance			41
			Net Interest Income and Net Interest Margin		41
			Provision for Credit Losses on Loans and Leases		47
			Noninterest Income and Noninterest Expense		48
			Provision for Income Taxes		50
		Balance Sheet Analysis			51
			Earning Assets		51
				Investments	51
				Loan and Lease Portfolio	52
				Nonperforming Assets	54
				Allowance for Credit Losses on Loans and Leases	55
				Off-Balance Sheet Arrangements	57
			Other Assets		57
			Deposits and Interest Bearing Liabilities		58
				Deposits	58
				Other Interest Bearing Liabilities	58
			Noninterest Bearing Liabilities		59
		Liquidity and Market Risk Management			59
		Capital Resources			62
	Item 3. Qualitative & Quantitative Disclosures about Market Risk				64
	Item 4. Controls and Procedures				64
Part II - Other Information					65
	Item 1. - Legal Proceedings				65
	Item 1A. - Risk Factors				65
	Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds				65
	Item 3. - Defaults upon Senior Securities				65
	Item 4. - Mine Safety Disclosures				65
	Item 5. - Other Information				65
	Item 6. - Exhibits				66
Signatures					67

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

SIERRA BANCORP

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

	September 30, 2022		December 31, 2021
ASSETS	(unaudited)		(audited)
Cash and due from banks	$	82,285	$	63,147
Interest bearing deposits in banks		4,398		194,381
Total cash & cash equivalents		86,683		257,528
Investment securities
Available-for-sale, net of allowance for credit losses of $0 at September 30, 2022 and December 31, 2021		1,069,434		973,314
Held-to-maturity, (fair value of $138,684 at September 30, 2022 and $0 at December 31, 2021)		156,229		—
Allowance for credit losses on held-to-maturity securities		(18)		—
Net, investment securities held-to-maturity		156,211		—
Loans and leases:
Gross loans and leases		2,020,364		1,989,726
Deferred loan and lease fees, net		(348)		(1,865)
Allowance for credit losses on loans and leases		(23,790)		(14,256)
Net loans and leases		1,996,226		1,973,605
Foreclosed assets		—		93
Premises and equipment, net		22,688		23,571
Goodwill		27,357		27,357
Other intangible assets, net		2,517		3,275
Bank-owned life insurance		52,140		54,242
Other assets		119,033		58,029
Total assets	$	3,532,289	$	3,371,014
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing	$	1,118,245	$	1,084,544
Interest bearing		1,767,223		1,697,028
Total deposits		2,885,468		2,781,572
Repurchase agreements		112,012		106,937
Short-term borrowings		103,100		—
Long-term debt		49,196		49,141
Subordinated debentures		35,436		35,302
Allowance for credit losses on unfunded loan commitments		940		203
Other liabilities		51,065		35,365
Total liabilities		3,237,217		3,008,520
Commitments and contingent liabilities (Note 7)
Shareholders' equity
Common stock, no par value; 24,000,000 shares authorized; 15,085,675 and 15,270,010 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		112,111		113,007
Additional paid-in capital		4,470		3,910
Retained earnings		239,496		234,410
Accumulated other comprehensive (loss) income, net		(61,005)		11,167
Total shareholders' equity		295,072		362,494
Total liabilities and shareholders' equity	$	3,532,289	$	3,371,014

The accompanying notes are an integral part of these consolidated financial statements

1

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(dollars in thousands, except per share data, unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Interest and dividend income
Loans and leases, including fees	$	21,833	$	24,226	$	64,211	$	75,555
Taxable securities		7,646		1,679		15,613		4,835
Tax-exempt securities		2,346		1,578		5,926		4,539
Federal funds sold and other		103		146		466		250
Total interest income		31,928		27,629		86,216		85,179
Interest expense
Deposits		1,761		591		3,106		1,818
Short-term borrowings		390		41		549		127
Subordinated debentures		866		281		2,308		774
Total interest expense		3,017		913		5,963		2,719
Net interest income		28,911		26,716		80,253		82,460
Provision (benefit) for credit losses on loans and leases		1,212		(600)		4,360		(2,450)
Provision (benefit) for credit losses on unfunded loan commitments		47		—		(194)		—
Provision for credit losses on held-to-maturity securities		—		—		18		—
Net interest income after provision for credit losses		27,652		27,316		76,069		84,910
Noninterest income
Service charges on deposits		3,216		3,186		9,460		8,677
Other income		3,396		4,349		13,654		12,300
Total noninterest income		6,612		7,535		23,114		20,977
Noninterest expense
Salaries and employee benefits		11,521		10,618		35,070		32,194
Occupancy		2,470		2,359		7,170		7,472
Other		7,005		7,898		21,042		21,715
Total noninterest expense		20,996		20,875		63,282		61,381
Income before taxes		13,268		13,976		35,901		44,506
Provision for income taxes		3,333		3,371		9,355		11,115
Net income	$	9,935	$	10,605	$	26,546	$	33,391
PER SHARE DATA
Book value	$	19.56	$	23.70	$	19.56	$	23.70
Cash dividends	$	0.23	$	0.22	$	0.69	$	0.65
Earnings per share basic	$	0.66	$	0.70	$	1.77	$	2.19
Earnings per share diluted	$	0.66	$	0.69	$	1.76	$	2.17
Average shares outstanding, basic		14,954,503		15,257,367		14,968,242		15,247,477
Average shares outstanding, diluted		15,014,048		15,343,543		15,046,883		15,369,249
Total shareholders' equity (in thousands)	$	295,072	$	364,507	$	295,072	$	364,507
Shares outstanding		15,085,675		15,382,518		15,085,675		15,382,518
Dividends paid (in thousands)	$	3,471	$	3,374	$	10,449	$	9,842

The accompanying notes are an integral part of these consolidated financial statements.

2

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(dollars in thousands, unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net income	$	9,935	$	10,605	$	26,546	$	33,391
Other comprehensive loss, before tax:
Unrealized loss on securities:
Unrealized holding loss arising during period		(14,994)		(576)		(101,432)		(4,846)
Less: reclassification adjustment for gains included in net income (1)		—		(11)		(1,032)		(11)
Other comprehensive loss, before tax		(14,994)		(587)		(102,464)		(4,857)
Income tax benefit related to items of other comprehensive loss, net of tax		4,433		174		30,292		1,436
Other comprehensive loss, net of tax:		(10,561)		(413)		(72,172)		(3,421)
Comprehensive (loss) income	$	(626)	$	10,192	$	(45,626)	$	29,970

(1) Amounts are included in net gains on investment securities available-for-sale on the Consolidated Statements of Income in noninterest income. Income tax expense associated with the reclassification adjustment for the three months ended September 30, 2022 and 2021 were $0 and $3 thousand, respectively. Income tax expense associated with the reclassification adjustment for the nine months ended September 30, 2022 and 2021 were $305 thousand and $3 thousand, respectively.

The accompanying notes are an integral part of these consolidated financial statements.

3

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(dollars in thousands, except per share data, unaudited)

								Accumulated
				Additional				Other
	Common Stock			Paid In		Retained		Comprehensive		Shareholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance, June 30, 2021	15,410,763	$	113,453	$	4,190	$	224,689	$	15,397	$	357,729
Net income	—		—		—		10,605		—		10,605
Other comprehensive loss, net of tax	—		—		—		—		(413)		(413)
Stock options exercised, net of shares surrendered for cashless exercises	3,320		732		(692)		—		—		40
Restricted stock granted	(19,443)		—		212		—		—		212
Stock compensation costs	(12,122)		(89)		—		(203)		—		(292)
Cash dividends - $0.22 per share	—		—		—		(3,374)		—		(3,374)
Balance, September 30, 2021	15,382,518	$	114,096	$	3,710	$	231,717	$	14,984	$	364,507
Balance, June 30, 2022	15,090,792	$	111,727	$	4,585	$	233,179	$	(50,444)	$	299,047
Net income	—		—		—		9,935		—		9,935
Other comprehensive loss, net of tax	—		—		—		—		(10,561)		(10,561)
Stock options exercised, net of shares surrendered for cashless exercises	5,400		458		(397)		—		—		61
Restricted stock surrendered due to employee tax liability	(9,965)		(74)		—		(147)		—		(221)
Restricted stock forfeited / cancelled	(552)		—		—		—		—		—
Stock based compensation - stock options	—		—		18		—		—		18
Stock based compensation - restricted stock	—		—		264		—		—		264
Cash dividends - $0.23 per share	—		—		—		(3,471)		—		(3,471)
Balance, September 30, 2022	15,085,675	$	112,111	$	4,470	$	239,496	$	(61,005)	$	295,072

The accompanying notes are an integral part of these consolidated financial statements.

4

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(dollars in thousands, except per share data, unaudited)

								Accumulated
				Additional				Other
	Common Stock			Paid In		Retained		Comprehensive		Shareholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Equity
Balance, December 31, 2020	15,388,423	$	113,384	$	3,736	$	208,371	$	18,405	$	343,896
Net income	—		—		—		33,391		—		33,391
Other comprehensive loss, net of tax	—		—		—		—		(3,421)		(3,421)
Exercise of stock options	7,480		801		(707)		—		—		94
Stock based compensation expense	(1,263)		—		681		—		—		681
Stock repurchase	(12,122)		(89)		—		(203)		—		(292)
Cash dividends - $0.65 per share	—		—		—		(9,842)		—		(9,842)
Balance, September 30, 2021	15,382,518	$	114,096	$	3,710	$	231,717	$	14,984	$	364,507
Balance, December 31, 2021	15,270,010	$	113,007	$	3,910	$	234,410	$	11,167	$	362,494
Cumulative change in accounting principle	—		—		—		(7,315)		—		(7,315)
Net income	—		—		—		26,546		—		26,546
Other comprehensive loss, net of tax	—		—		—		—		(72,172)		(72,172)
Stock options exercised, net of shares surrendered for cashless exercises	10,600		512		(398)		—		—		114
Restricted stock surrendered due to employee tax liability	(11,161)		(83)		—		(170)		—		(253)
Restricted stock forfeited / cancelled	(1,212)		—		—		—		—		—
Stock based compensation - stock options	—		—		66		—		—		66
Stock based compensation - restricted stock	—		—		892		—		—		892
Stock repurchase	(182,562)		(1,325)		—		(3,526)		—		(4,851)
Cash dividends - $0.69 per share	—		—		—		(10,449)		—		(10,449)
Balance, September 30, 2022	15,085,675	$	112,111	$	4,470	$	239,496	$	(61,005)	$	295,072

The accompanying notes are an integral part of these consolidated financial statements.

5

SIERRA BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(dollars in thousands, unaudited)

		Nine months ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	26,546	$	33,391
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales of securities		(1,032)		(11)
Loss (gain) on disposal of fixed assets		6		(146)
Gain on sale on foreclosed assets		(8)		(141)
Writedowns on foreclosed assets		91		174
Stock based compensation expense		958		681
Provision (benefit) for credit losses on loans and leases		4,360		(2,450)
Provision for credit losses on held-to-maturity securities		18		—
Depreciation and amortization		1,910		2,585
Net amortization on securities premiums and discounts		2,934		3,654
Net accretion of premiums/discounts for loans acquired		(149)		(365)
Decrease (increase) in cash surrender value of life insurance policies		1,251		(2,445)
Amortization of core deposit intangible		758		779
Increase in interest receivable and other assets		(18,017)		(497)
Decrease in other liabilities		15,506		46,587
Deferred income tax benefit		(2,397)		(2,702)
Decrease (increase) in value of restricted bank equity securities		332		(857)
Net amortization of partnership investment		338		503
Net cash provided by operating activities		33,405		78,740
Cash flows from investing activities:
Maturities and calls of securities available for sale		7,663		5,800
Proceeds from sales of securities available for sale		26,408		148
Purchases of securities available for sale		(450,984)		(288,552)
Principal pay downs on securities available for sale		60,198		85,767
Net purchases of FHLB stock		(336)		(1,666)
Loan originations and payments, net		(36,286)		323,351
Purchases of premises and equipment		(899)		(345)
Proceeds from sale premises and equipment		—		1,055
Proceeds from sales of foreclosed assets		10		938
Purchase of bank-owned life insurance		(19)		(39)
Liquidation of bank-owned life insurance		11		—
Proceeds from BOLI death benefit		859		—
Amortization of debt issuance costs		55		—
Increase in partnership investment		(7,562)		—
Net cash (used in) provided by investing activities		(400,882)		126,457
Cash flows from financing activities:
Increase in deposits		103,896		196,040
Increase (decrease) in borrowed funds		103,100		(142,900)
Increase in customer repurchase agreements		5,075		53,415
Cash dividends paid		(10,449)		(9,842)
Repurchases of common stock		(5,108)		(292)
Stock options exercised		118		94
Proceeds from issuance of subordinated debt		—		49,221
Net cash provided by financing activities		196,632		145,736
(Decrease) increase in cash and cash equivalents		(170,845)		350,933
Cash and cash equivalents
Beginning of period		257,528		71,417
End of period	$	86,683	$	422,350
Supplemental disclosure of cash flow information:
Interest paid	$	5,958	$	2,702
Income taxes paid	$	8,946	$	11,769
Supplemental noncash disclosures:
Real estate acquired through foreclosure	$	—	$	93

The accompanying notes are an integral part of these consolidated financial statements.

6

SIERRA BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Note 1 – The Business of Sierra Bancorp

Sierra Bancorp (the “Company”) is a California corporation headquartered in Porterville, California, and is a registered bank holding company under federal banking laws. The Company was formed to serve as the holding company for Bank of the Sierra (the “Bank”), and has been the Bank’s sole shareholder since August 2001. The Company exists primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it may acquire or establish. As of September 30, 2022, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TRUPS”). Pursuant to the Financial Accounting Standards Board (“FASB”) standard on the consolidation of variable interest entities, these trusts are not reflected on a consolidated basis in the Company’s financial statements. References herein to the “Company” include Sierra Bancorp and its consolidated subsidiary, the Bank, unless the context indicates otherwise.

Bank of the Sierra, a California state-chartered bank headquartered in Porterville, California, offers a wide range of retail and commercial banking services via branch offices located throughout California’s South San Joaquin Valley, the Central Coast, Ventura County, the Sacramento area, and neighboring communities. The Bank was incorporated in September 1977, and opened for business in January 1978 as a one-branch bank with $1.5 million in capital. Our growth in the ensuing years has largely been organic in nature, but includes four whole-bank acquisitions: Sierra National Bank in 2000, Santa Clara Valley Bank in 2014, Coast National Bank in 2016, and Ojai Community Bank in October 2017. As of the filing date of this report the Bank operates 35 full-service branches and an online branch, and maintains ATMs at all but one of our branch locations as well as at seven non-branch locations. Moreover, the Bank has specialized lending units which focus on agricultural borrowers, commercial real estate, and mortgage warehouse lending. In addition, in February 2020 the bank opened a loan production office which is currently located in Roseville, CA. To support organic growth in the agricultural lending sector the bank also opened a loan production office in Templeton, CA in April 2022. The Company had total assets of $3.5 billion at September 30, 2022, and for a number of years we have claimed the distinction of being the largest bank headquartered in the South San Joaquin Valley. The Bank’s deposit accounts, which totaled $2.9 billion at September 30, 2022, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum insurable amounts.

Note 2 – Basis of Presentation

The accompanying interim unaudited consolidated financial statements have been prepared in a condensed format as allowed under U.S. generally accepted accounting principles (“GAAP”). Therefore these financial statements do not include all of the information and footnotes required for complete, audited financial statements as presented in the Company’s Annual Report on Form 10-K. The information furnished in these interim statements reflects all adjustments that are, in the opinion of Management, necessary for a fair statement of the results for such periods. Such adjustments can generally be considered as normal and recurring unless otherwise disclosed in this Form 10-Q. In preparing the accompanying financial statements, Management has taken subsequent events into consideration and recognized them where appropriate. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter, or for the full year. Certain amounts reported for 2021 have been reclassified to be consistent with the reporting for 2022. The interim financial information should be read in conjunction with 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 “SEC”).

Note 3 – Current Accounting Developments

In September 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record an estimate of expected credit losses over the

7

contractual term for financial assets carried at amortized cost (generally loans and held-to-maturity investment securities) in addition to certain off balance-sheet credit exposure. Under the current expected credit losses (“CECL”) methodology expected credit losses for financial assets are estimated over the contractual life of the financial asset, adjusted for expected prepayments, considering historical experience, current conditions, and reasonable and supportable forecasts. Additionally, under CECL the accounting for credit losses on available-for-sale debt securities is addressed through an allowance for credit losses which is a change from legacy GAAP which previously required the direct write-down of securities through the other-than-temporary impairment approach. The Company implemented CECL on January 1, 2022, using the modified retrospective approach to estimate lifetime expected losses on financial assets measured at amortized cost in addition to certain off balance sheet credit exposures. The January 1, 2022, increase in the Company’s allowance for credit losses, of $9.5 million on loans and leases and $0.9 million in off balance sheet credit exposures, net of the impact of deferred taxes, was reflected in a transition adjustment of $7.3 million to retained earnings. There was no cumulative effect adjustment related to our available-for-sale investment portfolio upon adoption and the company had no securities designated as held-to-maturity as of January 1, 2022. Results for reporting periods beginning after December 31, 2021, are presented under CECL whereas prior comparative periods are presented under legacy GAAP. The majority of the Bank’s loan and lease portfolio consists of loans, so hereafter within this document references to the loan and lease portfolio in general will reference loans as opposed to loans and leases.

The following table illustrates the impact of the adoption of CECL, and the transition away from the incurred loss method, on January 1, 2022. The impact to the Allowance for Credit losses (“ACL”) on the Loan Portfolio is broken out at the class level (dollars in thousands, unaudited):

Transition Impact on Allowance for Credit Losses
(dollars in thousands, unaudited)
	January 1, 2022
	Reserves Under Incurred Loss		Reserves Under CECL		Transition Impact Gross		Impact of Deferred Taxes		Impact to Retained Earnings
Real estate:
1-4 family residential construction	$	135	$	28	$	(107)	$	32	$	(75)
Other construction/land		228		254		26		(8)		18
1-4 family - closed-end		1,618		2,310		692		(205)		487
Equity lines		290		210		(80)		24		(56)
Multi-family residential		274		574		300		(89)		211
Commercial real estate - owner occupied		2,217		3,444		1,227		(363)		864
Commercial real estate - non-owner occupied		6,199		14,380		8,181		(2,418)		5,763
Farmland		737		340		(397)		117		(280)
Total real estate		11,698		21,540		9,842		(2,910)		6,932
Agricultural		465		382		(83)		25		(58)
Commercial and industrial		1,060		1,418		358		(106)		252
Mortgage warehouse lines		512		91		(421)		124		(297)
Consumer loans		521		279		(242)		72		(170)
Total allowance for credit losses - loans	$	14,256	$	23,710	$	9,454	$	(2,795)	$	6,659
Allowance for credit losses - unfunded loan commitments	$	203		1,134		931		(275)		656

The Company currently categorizes all of its loans as held-for-investment and following CECL implementation, reports loans on the amortized cost basis. The Company’s amortized cost basis is comprised of the principal balance outstanding, net of remaining purchase discount or premium and any deferred fees or costs. Notably, the Company elected the practical expedient available under CECL to exclude accrued interest receivable from the amortized cost basis of all categorizations of loans and investment securities, and resultingly did not estimate reserves on accrued interest receivable balances, as any past due interest income is reversed on a timely basis. Accrued interest receivable continues to be included in other assets on the Company’s balance sheet and as of September 30, 2022, measured at $8.3

8

million, $0.5 million and $4.7 million for available-for-sale securities, held-to-maturity securities and loans, respectively. Due to loans being placed on nonaccrual status, during the third quarter of 2022 an immaterial amount of interest receivable on loans was reversed against interest income and $0.1 million of reversed interest for the nine months ended September 30, 2022. For the same time periods no interest receivable on held-to-maturity or available for sale investment securities was reversed against interest income.

Similar to practice under legacy GAAP, the Company continues to place loans on nonaccrual status when management has determined that the full repayment of principal and collection of contractually agreed upon interest is unlikely or when the loan in question has become delinquent more than 90 days. The Company may decide that it is appropriate to continue to accrue interest on certain loans more than 90 days delinquent if they are well-secured by collateral and collection is in process. When a loan is placed on nonaccrual status, any accrued but uncollected interest for the loan and lease is reversed out of interest income in the period in which the loan’s status changed. For loans with an interest reserve, i.e., where loan and lease proceeds are advanced to the borrower to make interest payments, all interest recognized from the inception of the loan and lease is reversed when the loan and lease is placed on non-accrual. Once a loan and lease is on non-accrual status subsequent payments received from the customer are applied to principal, and no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Generally, loans are not restored to accrual status until the obligation is brought current and has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Similar to practice under legacy GAAP, the ACL on the loan portfolio is a valuation allowance deducted from the recorded balance in loans. However, under CECL the ACL represents principal which is not expected to be collected over the contractual life of the loans, adjusted for expected prepayment, whereas under legacy GAAP the allowance represented only losses already incurred as of the balance sheet date. The ACL is increased by a provision for credit losses charged to expense, and by principal recovered on charged-off balances. It is reduced by principal charge-offs. The amount of the allowance is based on management’s evaluation of the collectability of the loan and lease portfolio, using information from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Adjustments are also made for changes in risk profile, credit concentrations, historical trends, and other economic conditions.

The ACL for loans and leases is separated between a collective reserve evaluation, for loans where similar risk characteristics exist and an individual reserve evaluation for loans without similar risk characteristics. The collective evaluation of loans is performed at the portfolio segment level, using call code as the primary segmentation key but also considering similarity in quantitative reserve methodology. The Company’s ACL is categorized according to the following portfolio segments: 1-4 Family Real Estate, Commercial Real Estate, Farmland & Agricultural Production, Commercial & Industrial, Mortgage Warehouse, and Consumer. Management utilizes a discounted cash flow methodology to estimate the quantitative portion of collectively evaluated reserves for the 1-4 Family Real Estate, Commercial Real Estate, Commercial & Industrial and Mortgage Warehouse portfolio segments. Management utilizes a Remaining Life Quantitative Reserve Methodology for the Farmland & Agricultural Production, and Consumer portfolio segments. Within the portfolio segments utilizing the DCF quantitative reserve methodology, management has made the election to adjust the effective interest rate to consider the impact of expected prepayments.

Loans where similar risk characteristics exist are evaluated for the ACL in the collective reserve evaluation. The Company’s policy is that loans designated as nonaccrual no longer share risk characteristics similar to other loans evaluated collectively and as such, all nonaccrual loans are individually evaluated for reserves. As of September 30, 2022 the Bank’s nonaccrual loans comprised the entire population of loans individually evaluated. The Company’s policy is that nonaccrual loans also represent the subset of loans where borrowers are experiencing financial difficulty where an evaluation of the source of repayment is required to determine if the nonaccrual loan should be categorized as collateral dependent. It is the Company’s policy that the only loans and leases where the credit quality has deteriorated to the point where foreclosure is probable are the Company’s nonaccrual loans.

The implementation of CECL also impacted the Company’s ACL on unfunded loan commitments, as this ACL now represents expected credit losses over the contractual life of commitments not identified as unconditionally cancellable by the Company. The Reserve for Unfunded Commitments is estimated using the same reserve or coverage rates

9

calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment. The funding rate represents management’s estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data. Under CECL the ACL on unfunded loan commitments remains in Other Liabilities while any related provision expense has been moved to provision for credit loss expense from its prior presentation in noninterest expense. Prior period expense has been reclassified for comparative purposes.

For available-for-sale debt securities in an unrealized loss position for which management has an intent to sell the security or considers it more likely-than-not that the security in question will be sold prior to a recovery of its amortized cost basis, the security will be written down to fair value through a direct charge to income. For the remainder of available sale debt securities in an unrealized loss position, which don’t meet the previously outlined criteria, management evaluates whether the decline in fair value is a reflection of credit deterioration or other factors. In performing this evaluation, management considers the extent which fair value has fallen below amortized cost, changes in ratings by rating agencies, and other information indicating a deterioration in repayment capacity of either the underlying issuer or the borrowers providing repayment capacity in a securitization. If management’s evaluation indicates that a credit loss exists then a present value of the expected cash flows is calculated and compared to the amortized cost basis of the security in question and to the degree that the amortized cost basis exceeds the present value an allowance for credit loss (“ACL”) is established, with the caveat that the maximum amount of the reserve on any individual security is the difference between the fair value and amortized cost balance of the security in question. Any unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income.

On April 1, 2022 the Company transferred $162.1 million of Agency, Mortgaged-Backed and Municipal securities from available-for-sale to held-to maturity.  Because of the implicit and explicit guarantees of the Federal Government on the Agency and Mortgage-Backed securities there is no expectation of future losses on any of these securities.  The Bank’s municipal bonds moved to the held-to-maturity designation all have credit ratings considered investment grade or equivalent.  A discounted-cash-flow reserve calculation was performed upon the transfer of these securities into the held-to-maturity designation and a reserve of $0.02 million was calculated and charged to provision expense.

Note 4 – Share Based Compensation

On March 16, 2017, the Company’s Board of Directors approved and adopted the 2017 Stock Incentive Plan (the “2017 Plan”), which became effective May 24, 2017, the date approved by the Company’s shareholders. The 2017 Plan replaced the Company’s 2007 Stock Incentive Plan (the “2007 Plan”), which expired by its own terms on March 15, 2017. Options to purchase 161,089 shares that were granted under the 2007 Plan were still outstanding as of September 30, 2022 and remain unaffected by that plan’s expiration. The 2017 Plan provides for the issuance of both “incentive” and “nonqualified” stock options to officers and employees, and of “nonqualified” stock options to non-employee directors and consultants of the Company. The 2017 Plan also provides for the issuance of restricted stock awards to these same classes of eligible participants. The total number of shares of the Company’s authorized but unissued stock reserved for issuance pursuant to awards under the 2017 Plan was initially 850,000 shares, and the number remaining available for grant as of September 30, 2022 was 451,577. Options to purchase 339,057 shares granted under the 2017 Plan were outstanding as of September 30, 2022. The potential dilutive impact of unexercised stock options is discussed below in Note 5, Earnings per Share.

Pursuant to FASB’s standards on stock compensation, the value of each stock option and restricted stock award is reflected in our income state­ment as employee compensation or directors’ expense by amortizing its grant date fair value over the vesting period of the option or award. The Company utilizes a Black-Scholes model to determine grant date fair values for options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Forfeitures are reflected in compensation costs as they occur for both types of awards. A pre-tax charge of $0.3 million was reflected in the Company’s income statement during the third quarter of 2022 and $0.2 million was charged during the third quarter of 2021, as expense related to stock options and restricted stock awards. For the first nine months, the charges totaled $1.0 million in 2022 and $0.7 million in 2021.

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Restricted Stock Grants

The Company’s Restricted Stock Awards are awards of either time-vested or performance-based shares. The Restricted Stock Awards are non-transferrable shares of common stock and are available to be granted to the Company’s employees and directors. The vesting period of Restricted Stock Awards is determined at the time the awards are issued, and different awards may have different vesting terms or performance measures; provided, however, that no installment of any Restricted Stock Award shall become vested less than one year from the grant date. Restricted Stock Awards are valued utilizing the fair value of the Company’s stock at the grant date. These awards are expensed on a straight-line basis over the vesting period and consider the probability of meeting the performance criteria. There were no shares granted to employees and directors of the Company during the first nine months of 2022. As of September 30, 2022, there was $2.0 million of unamortized compensation cost related to unvested Restricted Stock Awards granted under the 2017 plan. That cost is expected to be amortized over a weighted average period of 2.7 years.

The Company’s restricted stock award activity for the nine months ended September 30, 2022 and 2021 is summarized below (unaudited):

	Nine months ended September 30,
	2022			2021
	Shares		Weighted Average Grant-Date Fair Value	Shares		Weighted Average Grant-Date Fair Value
Unvested shares, January 1,	165,131	$	21.72	148,885	$	18.00
Granted	—		—	18,180		25.30
Vested	(37,748)		19.20	(39,449)		18.00
Forfeited	(1,212)		27.16	(17,777)		18.00
Unvested shares, September 30,	126,171	$	22.45	109,839	$	19.21

Stock Option Grants

The Company has issued equity instruments in the form of Incentive Stock Options and Nonqualified Stock Options to certain officers and directors and may continue to do so under the 2017 Plan. The exercise price of each stock option is determined at the time of the grant and may be no less than 100% of the fair market value of such stock at the time the option is granted.

The Company’s stock option activity during the nine months ended September 30, 2022 and 2021 are summarized below (dollars in thousands, except per share data, unaudited):

	Nine months ended September 30,
	2022						2021
	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
Outstanding at January 1,	415,870	$	24.15		$	1,338	495,489	$	23.67		$	1,340
Granted	—	$	—		$	—	—	$	—		$	—
Exercised	(5,600)	$	11.22		$	56	(7,480)	$	12.59		$	91
Forfeited/Expired	(32,381)	$	27.32		$	—	(39,719)	$	26.93		$	1
Outstanding at September 30,	377,889	$	24.07	5.13	$	470	448,290	$	23.57	5.92	$	1,302
Exercisable at September 30,	336,489	$	23.69	4.88	$	470	384,690	$	22.97	5.58	$	1,302

(1) The aggregate intrinsic value of stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2022. This amount changes based on changes in the market value of the Company's stock.

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Note 5 – Earnings per Share

The computation of earnings per share, as presented in the Consolidated Statements of Income, is based on the weighted average number of shares outstanding during each period, excluding unvested restricted stock awards. There were 14,954,503 weighted average shares outstanding during the third quarter of 2022 and 15,257,367 during the third quarter of 2021, while there were 14,968,242 weighted average shares outstanding during the first nine months of 2022 and 15,247,477 during the first nine months of 2021.

Diluted earnings per share calculations include the effect of the potential issuance of common shares, which for the Company is limited to shares that would be issued on the exercise of “in-the-money” stock options, and unvested restricted stock awards. For the third quarter of 2022, calculations under the treasury stock method resulted in the equivalent of 59,545 shares being added to basic weighted average shares outstanding for purposes of determining diluted earnings per share, while a weighted average of 303,387 stock options were excluded from the calculation because they were underwater and thus anti-dilutive. For the third quarter of 2021 the equivalent of 86,176 shares were added in calculating diluted earnings per share, while 327,346 anti-dilutive stock options were not factored into the computation. Likewise, for the first nine months of 2022 the equivalent of 78,641 shares were added to basic weighted average shares outstanding in calculating diluted earnings per share and a weighted average of 299,404 options that were anti-dilutive for the period were not included, compared to the addition of the equivalent of 121,772 shares and non-inclusion of 339,546 anti-dilutive options in calculating diluted earnings per share for first half of 2021.

Note 6 – Comprehensive Income (Loss)

As presented in the Consolidated Statements of Comprehensive Income (Loss), comprehensive income (loss) includes net income and other comprehensive income (loss). The Company’s only source of other comprehensive income (loss) is unrealized gains and losses on available-for-sale investment securities. Investment gains or losses that were realized and reflected in net income of the current period, which had previously been included in other comprehensive income (loss) as unrealized holding gains or losses in the period in which they arose, are considered to be reclassification adjustments that are excluded from other comprehensive income (loss) in the current period.

Note 7 – Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business. Those financial instruments currently consist of unused commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by counterparties for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as it does for originating loans included on the balance sheet. The following financial instruments represent off-balance-sheet credit risk (dollars in thousands):

	September 30, 2022		December 31, 2021
Commitments to extend credit	$	792,728	$	554,028
Standby letters of credit	$	6,057	$	6,651

Commitments to extend credit consist primarily of the unused or unfunded portions of the following: home equity lines of credit; commercial real estate construction loans, where disbursements are made over the course of construction; commercial revolving lines of credit; mortgage warehouse lines of credit; unsecured personal lines of credit; and formalized (disclosed) deposit account overdraft lines. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments are expected to expire without being drawn upon, the unused portions of committed amounts do not necessarily represent future cash requirements. Standby letters of credit are issued by the Company to guarantee the performance of a customer to a third party, and the credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers. Included in unused commitments are mortgage warehouse lines which are mostly in the form of repo lines and are unconditionally cancellable. Unused commitments on mortgage warehouse lines were $488.4 million at September 30, 2022 and $272.8 million at December 31, 2021.

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At September 30, 2022, the Company was also utilizing a letter of credit in the amount of $127.9 million issued by the Federal Home Loan Bank on the Company’s behalf as security for certain deposits and to facilitate certain credit arrangements with the Company’s customers. That letter of credit is backed by loans which are pledged to the FHLB by the Company.

The Company is subject to loss contingencies, including claims and legal actions arising in the ordinary course of business, which are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

As noted under footnote 3 the adoption of CECL on January 1, 2022 impacted the Company’s ACL on unfunded loan commitments. Additional information is included in footnote 3.

Note 8 – Fair Value Disclosures and Reporting and Fair Value Measurements

FASB’s standards on financial instruments, and on fair value measurements and disclosures, require public business entities to disclose in their financial statement footnotes the estimated fair values of financial instruments. In addition to disclosure requirements, FASB’s standard on investments requires that our debt securities that are classified as available for sale and any equity securities which have readily determinable fair values be measured and reported at fair value in our statement of financial position. Certain individually identified loans are also reported at fair value, as explained in greater detail below, and foreclosed assets are carried at the lower of cost or fair value. FASB’s standard on financial instruments permits companies to report certain other financial assets and liabilities at fair value, but the Company has not elected the fair value option for any of those financial instruments.

Fair value measurement and disclosure standards also establish a framework for measuring fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Further, the standards establish a fair value hierarchy that encourages an entity to maximize the use of observable inputs and limit the use of unobservable inputs when measuring fair values. The standards describe three levels of inputs that may be used to measure fair values:

● Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

● Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

● Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the factors that market participants would likely consider in pricing an asset or liability.

Fair value estimates are made at a specific point in time based on relevant market data and information about the financial instruments. Fair value disclosures for deposits include demand deposits, which are, by definition, equal to the amount payable on demand at the reporting date. Fair value calculations for loans reflect exit pricing, and incorporate our assumptions with regard to the impact of prepayments on future cash flows and credit quality adjustments based on risk characteristics of various financial instruments, among other things. Since the estimates are subjective and involve uncertainties and matters of significant judgment they cannot be determined with precision, and changes in assumptions could significantly alter the fair values presented.

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Estimated fair values for the Company’s financial instruments are as follows, as of the dates noted:

Fair Value of Financial Instruments

(dollars in thousands, unaudited)

		September 30, 2022
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	86,683	$	86,683	$	—	$	—	$	86,683
Investment securities available-for-sale		1,069,434		—		1,015,098		54,336		1,069,434
Investment securities held-to-maturity		156,211		—		138,684		—		138,684
Loans and leases, net held for investment		1,972,649		—		—		1,958,479		1,958,479
Collateral dependent loans		23,577		—		23,577		—		23,577
Financial liabilities:
Deposits		2,885,468		1,118,245		1,764,225		—		2,882,470
Repurchase agreements		112,012		—		112,012		—		112,012
Short term borrowings		103,100		—		103,100		—		103,100
Long-term debt		49,196		—		43,247		—		43,247
Subordinated debentures		35,436		—		35,251		—		35,251

		December 31, 2021
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	257,528	$	257,528	$	—	$	—	$	257,528
Investment securities available for sale		973,314		—		750,077		223,237		973,314
Loans and leases, net held for investment		1,973,207		—		—		1,960,966		1,960,966
Collateral dependent loans		398		—		221		177		398
Financial liabilities:
Deposits		2,781,572		1,084,544		1,696,124		—		2,780,668
Repurchase agreements		106,937		—		106,937		—		106,937
Short term borrowings		49,141		—		49,118		—		49,118
Subordinated debentures		35,302		—		33,281		—		33,281

For financial asset categories that were carried on our balance sheet at fair value as of September 30, 2022 and December 31, 2021, the Company used the following methods and significant assumptions:

● Investment securities: Fair values are determined by obtaining quoted prices on nationally recognized securities exchanges or by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities by relying on their relationship to other benchmark quoted securities.

● Collateral-dependent loans: Collateral-dependent loans are carried at fair value when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected disposition costs where applicable.

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● Foreclosed assets: Repossessed real estate (known as other real estate owned, or “OREO”) and other foreclosed assets are carried at the lower of cost or fair value. Fair value is the appraised value less expected disposition costs for OREO; fair values for any other foreclosed assets are represented by estimated sales proceeds as determined using reasonably available sources. Foreclosed assets for which appraisals can be feasibly obtained are periodically measured for impairment using updated appraisals. Fair values for other foreclosed assets are adjusted as necessary, subsequent to a periodic reevaluation of expected cash flows and the timing of resolution. If impairment is determined to exist, the book value of a foreclosed asset is immediately written down to its estimated impaired value through the income statement, thus the carrying amount is equal to the fair value and there is no valuation allowance.

Assets reported at fair value on a recurring basis are summarized below:

Fair Value Measurements – Recurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	3,955	$	—	$	3,955	$	—
Mortgage-backed securities		—		191,022		—		191,022		—
State and political subdivisions		—		320,729		—		320,729		—
Corporate bonds		—		—		54,336		54,336		—
Collateralized loan obligations		—		499,392		—		499,392		—
Total available-for-sale securities	$	—	$	1,015,098	$	54,336	$	1,069,434	$	—

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	1,574	$	—	$	1,574	$	—
Mortgage-backed securities		—		306,727		—		306,727		—
State and political subdivisions		—		304,268		—		304,268		—
Corporate bonds		—		999		27,530		28,529		—
Collateralized loan obligations		—		136,509		195,707		332,216		—
Total available-for-sale securities	$	—	$	750,077	$	223,237	$	973,314	$	—

Fair Value Measurements - Level 3 Recurring
(dollars in thousands, unaudited)
	Collateralized Loan Obligations				Corporate Bonds
	2022		2021		2022		2021
Balance of recurring Level 3 assets at January 1,	$	195,707	$	—	$	27,530	$	—
Purchases		—		—		26,806		—
Transfers out of Level 3		(195,707)		—		—		—
Balance of recurring Level 3 assets at September 30,	$	—	$	—	$	54,336	$	—

15

All of the Company’s collateralized loan obligations with a fair value of $195.7 million as of January 1, 2022 were transferred from Level 3 to Level 2 during the first quarter of 2022 because observable market data became available due to a significant increase in trading volume for these securities during that time.

Assets reported at fair value on a nonrecurring basis are summarized below:

Fair Value Measurements – Nonrecurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		—		—		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		17,655		—		17,655
Total real estate		—		17,655		—		17,655
Agricultural		—		5,922		—		5,922
Commercial and industrial		—		—		—		—
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	23,577	$	—	$	23,577
Foreclosed assets	$	—	$	—	$	—	$	—
Total assets measured on a nonrecurring basis	$	—	$	23,577	$	—	$	23,577

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		161		—		161
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		60		—		60
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		—		—		—
Total real estate		—		221		—		221
Agricultural		—		—		—		—
Commercial and industrial		—		—		177		177
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	221	$	177	$	398
Foreclosed assets	$	—	$	93	$	—	$	93
Total assets measured on a nonrecurring basis	$	—	$	314	$	177	$	491

16

The table above includes collateral-dependent loan balances for which a specific reserve has been established or on which a write-down has been taken. Information on the Company’s total collateral dependent loan balances and specific loss reserves associated with those balances is included in Note 10 below.

The unobservable inputs are based on Management’s best estimates of appropriate discounts in arriving at fair market value. Adjusting any of those inputs could result in a significantly lower or higher fair value measurement. For example, an increase or decrease in actual loss rates would create a directionally opposite change in the fair value of unsecured individually identified loans.

Note 9 – Investments

Investment Securities

Pursuant to FASB’s guidance on accounting for debt securities, available for sale securities are carried on the Company’s financial statements at their estimated fair market values, with monthly tax-effected “mark-to-market” adjustments made vis-à-vis accumulated other comprehensive income in shareholders’ equity. Held-to-maturity securities are carried on the Company’s financial statements at their amortized cost, net of the allowance for credit losses.

The amortized cost, estimated fair value, and allowance for credit losses of available-for-sale and held-to-maturity investment securities are as follows:

Amortized Cost And Estimated Fair Value

(dollars in thousands, unaudited)

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	4,000	$	—	$	(45)	$	—	$	3,955
Mortgage-backed securities		202,882		—		(11,860)		—		191,022
State and political subdivisions		363,790		53		(43,114)		—		320,729
Corporate bonds		59,768		—		(5,432)		—		54,336
Collateralized loan obligations		514,701		119		(15,428)		—		499,392
Total available-for-sale securities	$	1,145,141	$	172	$	(75,879)	$	—	$	1,069,434
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Held-to-maturity
U.S. government agencies	$	6,113	$	—	$	(669)	$	5,444	$	—
Mortgage-backed securities		100,792		—		(9,941)		90,851		—
State and political subdivisions		49,324		11		(6,946)		42,389		(18)
Total held-to-maturity securities	$	156,229	$	11	$	(17,556)	$	138,684	$	(18)

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	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	1,546	$	28	$	—	$	—	$	1,574
Mortgage-backed securities		303,912		4,772		(1,957)		—		306,727
State and political subdivisions		290,729		13,807		(268)		—		304,268
Corporate bonds		28,436		94		(1)		—		28,529
Collateralized loan obligations		332,836		68		(688)		—		332,216
Total securities	$	957,459	$	18,769	$	(2,914)	$	—	$	973,314

The Company reassessed classification of certain investments and effective April 1, 2022 the Company transferred $162.1 million of Agency, Mortgaged-Backed and Municipal securities from the available-for-sale designation to the held-to-maturity designation. The securities were transferred at their amortized cost basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income. The related unrealized loss of $11.5 million included in other comprehensive income remained in other comprehensive income, to be amortized out of other comprehensive income with an offsetting entry to interest income as a yield adjustment through earnings over the remaining term of the securities. Upon transfer, a discounted-cash-flow reserve calculation was prepared for the securities transferred into the held-to-maturity designation and an allowance for credit losses of $0.02 million was recorded and charged to provision for credit loss expense. The Company did not have any securities classified as held-to-maturity as of December 31, 2021.

The Company did not record an ACL on the AFS portfolio at September 30, 2022 or upon the implementation of CECL on January 1, 2022.  As of both dates the Company considers the unrealized loss across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value. The Company maintains that it has intent and ability to hold these securities until the amortized cost basis of each security is recovered and likewise concluded as of both January 1, 2022 and September 30, 2022 that it was not more likely than not that any of the securities in an unrealized loss position would be required to be sold. The following bullets outline additional support for management’s conclusion that no amount of the unrealized loss of the securities in an unrealized loss position as of January 1, 2022 and September 30, 2022 was attributable to credit deterioration and a risk of loss, requiring an allowance for credit losses.

● US Government Agencies are supported by the full faith and credit-worthiness of the U.S. Federal Government and the management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or September 30, 2022. 

● Mortgage-backed securities issued by government sponsored entities (“GSEs”) carry an implicit guarantee by the U.S. Federal Government, as the GSEs can draw funds from the U.S. Federal Government up to a limit, with an implied ability to draw funds beyond the limit.  Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or September 30, 2022. 

● Management routinely monitors third party credit grades of the municipal issuers in the Company’s state and political subdivisions portfolio and as of both January 1, 2022 and September 30, 2022 noted that all municipal securities in an unrealized loss position were either investment grade rated or guaranteed.  On a quarterly basis management receives financial information from a third-party service in order to monitor the underlying issuer’s financial stability. In addition, management performs annual reviews of the underlying municipal issuers financial statements in order to evaluate stability and repayment capacity and has noted no concerns with any of the bonds in the Company’s State and Local portfolio.  As of both January 1, 2022 and September 30, 2022 management concluded that no allowance for credit losses was warranted on any of the Company’s municipal securities and the unrealized loss position of each of the securities reflected fluctuations in market conditions, primarily interest rates, since the time of purchase.

● The Company has invested in corporate debt issuances of other financial institutions.  Various financial metrics of each of the issuing financial institutions are reviewed by management quarterly, these metrics include credit quality, reserve adequacy, profitability and capital.  Following review of the financial metrics available for each

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of the underlying institutions as of January 1, 2022 and September 30, 2022 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rates, from the date of purchase, and were not reflective of any credit concerns with the issuing financial institution. These bonds were subject to a credit review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews.

● The Company has invested exclusively in AA and AAA tranches of various collateralized loan obligations, which are securitizations of commercial loans. Each purchase is subject to a credit, concentration, and structure review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews. Management monitors the credit rating of these investments on a quarterly basis in addition to various performance metrics available through a third-party informational service. Following review of financial metrics as of both January 1, 2022 and September 30, 2022 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rate spreads, from the date of purchase, and were not reflective of any credit concerns with the tranches comprising the Company’s investments.

The following table summarizes available-for-sale debt securities that were in an unrealized loss position for which an ACL has not been recorded, based on the length of time the individual securities have been in an unrealized loss position, including the number of available-for-sale debt securities in an unrealized loss position, as of the dates indicated below.

Investment Portfolio - Unrealized Losses

(dollars in thousands, unaudited)

		September 30, 2022
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	2	$	(45)	$	3,955	$	—	$	—	$	(45)	$	3,955
Mortgage-backed securities	371		(11,696)		189,031		(164)		1,924		(11,860)		190,955
State and political subdivisions	399		(38,127)		286,459		(4,987)		13,878		(43,114)		300,337
Corporate bonds	51		(5,432)		54,336		—		—		(5,432)		54,336
Collateralized loan obligations	58		(15,200)		447,465		(228)		8,071		(15,428)		455,536
Total available-for-sale	881	$	(70,500)	$	981,246	$	(5,379)	$	23,873	$	(75,879)	$	1,005,119

		December 31, 2021
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	—	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	46		(1,797)		107,026		(160)		2,808		(1,957)		109,834
State and political subdivisions	29		(268)		30,170		—		—		(268)		30,170
Corporate bonds	1		(1)		499		—		—		(1)		499
Collateralized loan obligations	22		(688)		175,581		—		—		(688)		175,581
Total available-for-sale	98	$	(2,754)	$	313,276	$	(160)	$	2,808	$	(2,914)	$	316,084

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The table below summarizes the Company’s gross realized gains and losses as well as gross proceeds from the sales of securities, for the periods indicated:

Investment Portfolio - Realized Gains/(Losses)

(dollars in thousands, unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2022		2021		2022		2021
Proceeds from sales, calls and maturities of securities available for sale	$	3,540	$	1,948	$	34,071	$	5,948
Gross gains on sales, calls and maturities of securities available for sale		—		11		1,032		11
Gross losses on sales, calls and maturities of securities available for sale		—		—		—		—
Net gains on sale of securities available for sale	$	—	$	11	$	1,032	$	11

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2022 and December 31, 2021 are shown below, grouped by the remaining time to contractual maturity dates. The expected life of investment securities may not be consistent with contractual maturity dates since the issuers of the securities might have the right to call or prepay obligations with or without penalties.

Estimated Fair Value of Contractual Maturities

(dollars in thousands, unaudited)

	September 30, 2022
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	908	$	908	$	675	$	667
Maturing after one year through five years		14,313		14,132		2,133		2,091
Maturing after five years through ten years		81,497		75,441		18,729		16,869
Maturing after ten years		330,840		288,539		33,900		28,207
Securities not due at a single maturity date:
Mortgage-backed securities		202,882		191,022		100,792		90,850
Collateralized loan obligations		514,701		499,392		—		—
	$	1,145,141	$	1,069,434	$	156,229	$	138,684

	December 31, 2021
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	3,513	$	3,547	$	—	$	—
Maturing after one year through five years		26,422		26,718		—		—
Maturing after five years through ten years		36,840		38,314		—		—
Maturing after ten years		253,936		265,792		—		—
Securities not due at a single maturity date:						—		—
Mortgage-backed securities		303,912		306,727		—		—
Collateralized loan obligations		332,836		332,216		—		—
	$	957,459	$	973,314	$	—	$	—

At September 30, 2022, the Company’s investment portfolio included 503 “muni” bonds issued by 415 different government municipalities and agencies located within 37 different states, with an aggregate fair value of $363.1 million. The largest exposure to any single municipality or agency was a combined $5.0 million (fair value) in general obligation bonds issued by the City of New York (NY). In addition, the Company owned 46 subordinated debentures issued by bank holding companies totaling $54.3 million (fair value).

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At December 31, 2021, the Company’s investment portfolio included 403 “muni” bonds issued by 335 different government municipalities and agencies located within 33 states, with an aggregate fair value of $304.3 million. The largest exposure to any single municipality or agency was $4.0 million (fair value) in three bonds issued by the Charter Township of Washington. In addition, the company owned 23 subordinated debentures issued by bank holding companies totaling $28.5 million (fair value).

The Company’s investments in bonds issued by corporations, states, municipalities and political subdivisions are evaluated in accordance with Financial Institution Letter 48-2012, issued by the FDIC, “Revised Standards of Creditworthiness for Investment Securities,” and other regulatory guidance. Credit ratings are considered in our analysis only as a guide to the historical default rate associated with similarly rated bonds. There have been no significant differences in our internal analyses compared with the ratings assigned by the third-party credit rating agencies.

The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company’s investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for our largest geographic concentrations:

Revenue and General Obligation Bonds by Location

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
General obligation bonds	Cost		Value		Cost		Value
State of issuance
Texas	$	159,391	$	139,498	$	85,045	$	89,225
California		67,310		58,161		64,092		67,066
Washington		22,417		20,670		23,858		24,812
Other (29 & 26 states, respectively)		107,784		95,355		75,037		78,579
Total general obligation bonds		356,902		313,684		248,032		259,682
Revenue bonds
State of issuance
Texas		9,496		8,460		7,038		7,377
California		3,994		3,613		1,349		1,392
Washington		4,093		3,387		4,334		4,602
Other (20 & 15 states, respectively)		38,629		33,974		29,976		31,215
Total revenue bonds		56,212		49,434		42,697		44,586
Total obligations of states and political subdivisions	$	413,114	$	363,118	$	290,729	$	304,268

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The revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements. The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates.

Revenue Bonds by Type

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
Revenue bonds	Cost		Value		Cost		Value
Revenue source:
Water	$	22,741	$	20,064	$	15,534	$	16,220
Lease		7,511		6,907		6,556		6,718
Sewer		7,091		6,144		3,932		4,165
Sales tax revenue		4,329		3,803		—		—
Intergovernmental agreement		2,836		2,600		—		—
Other (10 and 9 sources, respectively)		11,704		9,916		16,675		17,483
Total revenue bonds	$	56,212	$	49,434	$	42,697	$	44,586

Low-Income Housing Tax Credit (“LIHTC”) Fund Investments

The Company has the ability to invest in limited partnerships which own housing projects that qualify for federal and/or California state tax credits, by mandating a specified percentage of low-income tenants for each project. The primary investment return comes from tax credits that flow through to investors. Because rent levels are lower than standard market rents and the projects are generally highly leveraged, each project also typically generates tax-deductible operating losses that are allocated to the limited partners for tax purposes.

The Company currently has investments in four different LIHTC fund limited partnerships made in 2014, 2015, and two in 2022, all of which were California-focused funds that help the Company meet its obligations under the Community Reinvestment Act. We utilize the cost method of accounting for our LIHTC fund investments, under which we initially record on our balance sheet an asset that represents the total cash expected to be invested over the life of the partnership. Any commitments or contingent commitments for future investment are reflected as a liability. The income statement reflects tax credits and any other tax benefits from these investments “below the line” within our income tax provision, while the initial book value of the investment is amortized on a straight-line basis as an offset to noninterest income, over the time period in which the tax credits and tax benefits are expected to be received.

As of September 30, 2022, our total LIHTC investment book balance was $10.2 million, which includes $7.5 million in remaining commitments for additional capital contributions. There were $0.4 million in tax credits derived from our LIHTC investments that were recognized during the nine months ended September 30, 2022, and amortization expense of $0.3 million associated with those investments was netted against pre-tax noninterest income for the same time period. Our LIHTC investments are evaluated annually for potential impairment, and we have concluded that the carrying value of the investments is stated fairly and is not impaired.

As of December 31, 2021, our total LIHTC investment book balance was $2.9 million, which includes $0.1 million in remaining commitments for additional capital contributions. There were $0.5 million in tax credits derived from our LIHTC investments that were recognized during the year ended December 31, 2022, and amortization expense of $0.5 million associated with those investments was netted against pre-tax noninterest income for the same time period.

Note 10 – Loans and Leases and Allowance for Credit Losses

We adopted the new current expected credit loss accounting guidance, CECL, and all related amendments as of January 1, 2022. Certain prior period credit quality disclosures related to impaired loans and individually and collectively evaluated loans were superseded with the current guidance and have not been included below as of September 30, 2022.

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Under CECL, disclosures are required on the amortized cost basis, whereas legacy GAAP required presentation on the recorded investment basis, with the primary difference being net deferred fees and costs. Unless specifically noted otherwise, September 30, 2022 disclosures are prepared on the amortized cost basis and December 31, 2021 disclosures present information according to the recorded investment basis.

The following table presents loans by class as of September 30, 2022 and December 31, 2021. Accrued interest receivable on loans of $4.7 million and $6.8 million at September 30, 2022 and December 31, 2021 respectively is not included in the loans included in the table below but is included in other assets on the Company’s balance sheet. The September 30, 2022 balance in 1-4 family closed end loans reflects year-to-date 2022 loan purchases of $173.1 million. 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 final table in this section separates a roll forward of the Allowance for Credit Losses at the portfolio segment level.

Loan And Lease Distribution
(dollars in thousands, unaudited)
	September 30, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	—	$	21,369
Other construction/land		18,315		25,299
1-4 family - closed-end		420,136		289,457
Equity lines		21,126		26,588
Multi-family residential		69,665		53,458
Commercial real estate - owner occupied		324,696		334,446
Commercial real estate - non-owner occupied		896,954		882,888
Farmland		117,385		106,706
Total real estate		1,868,277		1,740,211
Agricultural		31,290		33,990
Commercial and industrial		70,147		109,791
Mortgage warehouse lines		46,553		101,184
Consumer loans		4,097		4,550
Subtotal		2,020,364		1,989,726
Net deferred loan fees and costs		(348)		(1,865)
Loans and leases, amortized cost basis		2,020,016		1,987,861
Allowance for credit losses		(23,790)		(14,256)
Net loans and leases	$	1,996,226	$	1,973,605

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The following table presents the amortized cost basis of nonaccrual loans, according to loan class, with and without individually evaluated reserves as of September 30, 2022:

Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	Nonaccrual Loans
	With no allowance for credit loss		With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		485		—		485		—
Equity lines		61		—		61		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		9,677		8,593		18,270		—
Total real estate		10,223		8,593		18,816		—
Agricultural		82		7,649		7,731		—
Commercial and industrial		87		138		225		7
Mortgage warehouse lines		—		—		—		—
Consumer loans		—		—		—		—
Total	$	10,392	$	16,380	$	26,772	$	7

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The following table presents the impaired loans as of December 31, 2021, according to loan class, with and without an individually evaluated reserve according to the recorded investment basis. Impaired loans as of December 31, 2021 included both nonaccrual loans and performing TDRs. A separate breakout of nonaccrual loans by class as of December 31, 2021 is included in the past due loans table as of December 31, 2021, later in this footnote.

	December 31, 2021
	Unpaid Principal		Recorded				Average Recorded		Interest Income
	Balance(1)		Investment(2)		Related Allowance		Investment		Recognized(3)
With an Allowance Recorded
Real estate:
Other construction/land	$	341	$	341	$	64	$	352	$	55
1-4 family - closed-end		1,048		1,048		37		1,096		104
Equity lines		2,005		1,993		182		2,056		138
Commercial real estate - owner occupied		1,249		1,248		19		1,278		144
Commercial real estate - non-owner occupied		367		367		126		393		32
Total real estate		5,010		4,997		428		5,175		473
Agricultural		244		244		244		246		—
Commercial and industrial		757		757		127		873		41
Consumer loans		164		164		19		180		28
		6,175		6,162		818		6,474		542
With no Related Allowance Recorded
Real estate:
1-4 family - closed-end		788		788		—		869		—
Equity lines		648		648		—		690		6
Commercial real estate - owner occupied		1,353		1,234		—		1,282		—
Total real estate		2,789		2,670		—		2,841		6
Agricultural		134		134		—		186		—
Commercial and industrial		466		466		—		550		—
		3,389		3,270		—		3,577		6
Total	$	9,564	$	9,432	$	818	$	10,051	$	548

(1) Contractual principal balance due from customer.

(2) Principal balance on Company’s books, less any direct charge offs.

(3) Interest income is recognized on performing balances on a regular accrual basis.

The Company did not recognize any interest on nonaccrual loans during 2022 and would have recognized an additional $0.6 million in interest income on nonaccrual loans had those loans not been designated as nonaccrual.

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The following table presents the amortized cost basis of collateral-dependent loans by class as of September 30, 2022:

Collateral Dependent Loans
(dollars in thousands, unaudited)
	September 30, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		40		—
Equity lines		506		—
Multi-family residential		—		—
Commercial real estate - owner occupied		—		—
Commercial real estate - non-owner occupied		—		—
Farmland		18,271		195
Total real estate		18,817		195
Agricultural		7,702		967
Commercial and industrial		224		40
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	26,743	$	1,202

During the third quarter the amortized cost balance of collateral-dependent loans declined by $1.7 million due to declines resulting from upgrades and payoffs. The weighted average loan-to-value ratio of collateral dependent loans was 93% at September 30, 2022.  There were no collateral dependent loans in the process of foreclosure as of September 30, 2022.

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The following table presents the aging of the amortized cost basis in past-due loans, according to class, as of September 30, 2022:

Past Due Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	30-59 Days Past Due		60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—		18,255		18,255
1-4 family - closed-end		—		32		8		40		421,096		421,136
Equity lines		—		—		—		—		21,441		21,441
Multi-family residential		—		—		—		—		69,569		69,569
Commercial real estate - owner occupied		351		—		—		351		324,364		324,715
Commercial real estate - non-owner occupied		—		—		—		—		894,213		894,213
Farmland		99		—		18,271		18,370		99,189		117,559
Total real estate		450		32		18,279		18,761		1,848,127		1,866,888
Agricultural		—		—		7,649		7,649		23,879		31,528
Commercial and industrial		775		—		—		775		70,069		70,844
Mortgage warehouse lines		—		—		—		—		46,554		46,554
Consumer loans		—		—		—		—		4,202		4,202
Total loans and leases	$	1,225	$	32	$	25,928	$	27,185	$	1,992,831	$	2,020,016

The following table presents the aging of the recorded investment in past-due and nonaccrual loans, according to class, as of December 31, 2021:

December 31, 2021	30-59 Days		60-89 Days		90 Days Or  More Past						Total Financing		Non-Accrual
	Past Due		Past Due		Due(2)		Total Past Due		Current		Receivables		Loans(1)
Real Estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	21,369	$	21,369	$	—
Other construction/land		—		—		—		—		25,299		25,299		—
1-4 family - closed-end		1,532		132		—		1,664		287,793		289,457		1,023
Equity lines		30		—		—		30		26,558		26,588		892
Multi-family residential		—		—		—		—		53,458		53,458		—
Commercial real estate owner occupied		124		—		698		822		333,624		334,446		1,234
Commercial real estate non-owner occupied		—		—		—		—		882,888		882,888		—
Farmland		—		—		—		—		106,706		106,706		—
Total real estate loans		1,686		132		698		2,516		1,737,695		1,740,211		3,149
Agricultural		—		—		284		284		33,706		33,990		378
Commercial and industrial		473		—		283		756		109,035		109,791		973
Mortgage warehouse lines		—		—		—		—		101,184		101,184		—
Consumer loans		6		3		—		9		4,541		4,550		22
Total gross loans and leases	$	2,165	$	135	$	1,265	$	3,565	$	1,986,161	$	1,989,726	$	4,522

(1) Included in Total Financing Receivables

(2) As of December 31, 2021 there were no loans over 90 days past due and still accruing.

Troubled Debt Restructurings

A loan that is modified for a borrower who is experiencing financial difficulty is classified as a troubled debt restructuring (TDR) if the modification constitutes a concession. At September 30, 2022, the Company had a total of $4.9 million in TDRs, including $0.3 million in TDRs that were on non-accrual status. Generally, a non-accrual loan that has been modified as a TDR remains on non-accrual status for a period of at least six months to demonstrate the borrower’s ability to comply with the modified terms. However, performance prior to the modification, or significant events that coincide with the modification, could result in a loan’s return to accrual status after a shorter performance

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period or even at the time of loan modification. Regardless of the period of time that has elapsed, if the borrower’s ability to meet the revised payment schedule is uncertain, then the loan will be kept on non-accrual status.

The Company may agree to different types of concessions when modifying a loan or lease. The tables below summarize TDRs which were modified during the three and nine months ended September 30, 2021, by type of concession. For the three and nine months ended September 30, 2022, there were no new TDRs and no modifications of existing TDRs

Troubled Debt Restructurings, by Type of Loan Modification

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		—		—		1,000
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,000		—		—		—		1,000
Agricultural		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total	$	—	$	1,000	$	—	$	—	$	—	$	1,000

		Nine months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		83		—		1,083
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,136		—		83		—		1,219
Agricultural		—		118		—		—				118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	1,480	$	—	$	83	$	—	$	1,563

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Troubled Debt Restructurings

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	1		1,000		1,000		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			1,000		1,000		—		—
Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	1,000	$	1,000	$	—	$	—

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

	Nine months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	2		1,083		1,083		—		1
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			1,220		1,219		(1)		1
Agricultural	1		118		118		116		—
Commercial and industrial	1		185		185		(1)		47
Consumer loans	1		41		41		—		—
Total		$	1,564	$	1,563	$	114	$	48

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

The Company had no finance receivables modified as TDRs within the previous twelve months that defaulted or were charged off during the three or nine-month periods ending September 30, 2022 and 2021.

The Company monitors the credit quality of loans on a continuous basis using the regulatory and accounting classifications of pass, special mention and substandard to characterize and qualify the associated credit risk. Loans classified as “loss” are immediately charged-off. The Company uses the following definitions of risk classifications:

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Pass – Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions below and smaller, homogeneous loans not assessed on an individual basis.

Special Mention – Loans classified as special mention have the potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard – Loans classified as substandard are those loans with clear and well-defined weaknesses such as a highly leveraged position, unfavorable financial operating results and/or trends, or uncertain repayment sources or poor financial condition, which may jeopardize ultimate recoverability of the debt.

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The following tables present the amortized cost of loans and leases by credit quality classification in addition to loan and lease vintage as of September 30, 2022:

Loan and Lease Credit Quality by Vintage

(dollars in thousands, unaudited)

	Term Loans and Leases Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Total Loans
Other construction/land
Pass	$	—	$	—	$	4,295	$	756	$	974	$	1,063	$	11,095	$	18,183
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		72		—		—		—		—		72
Subtotal		—		—		4,367		756		974		1,063		11,095		18,255
1-4 family - closed-end
Pass		108,169		240,043		8,011		2,077		11,061		50,121		—		419,482
Special Mention		—		—		—		—		—		744		—		744
Substandard		—		—		—		—		32		878		—		910
Subtotal		108,169		240,043		8,011		2,077		11,093		51,743		—		421,136
Equity lines
Pass		—		158		527		352		78		—		18,982		20,097
Special Mention		—		—		20		—		—		—		777		797
Substandard		—		116		—		—		—		—		431		547
Subtotal		—		274		547		352		78		—		20,190		21,441
Multi-family residential
Pass		23,928		519		9,439		664		13,018		11,778		4,628		63,974
Special Mention		—		—		2,228		—		—		3,367		—		5,595
Substandard		—		—		—		—		—		—		—		—
Subtotal		23,928		519		11,667		664		13,018		15,145		4,628		69,569
Commercial real estate - OO
Pass		32,522		26,144		64,833		36,390		37,353		111,721		7,243		316,206
Special Mention		304		—		—		2,393		—		1,696		—		4,393
Substandard		—		—		—		—		79		3,280		757		4,116
Subtotal		32,826		26,144		64,833		38,783		37,432		116,697		8,000		324,715
Commercial real estate - NOO
Pass		75,716		19,627		401,978		26,624		57,534		161,763		60,457		803,699
Special Mention		—		—		64,607		—		8,965		3,098		9,924		86,594
Substandard		—		—		—		—		852		3,068		—		3,920
Subtotal		75,716		19,627		466,585		26,624		67,351		167,929		70,381		894,213
Farmland
Pass		15,958		1,368		4,971		1,904		8,098		24,658		28,976		85,933
Special Mention		—		—		—		—		7,081		4,671		1,504		13,256
Substandard		—		—		—		—		4,689		13,681		—		18,370
Subtotal		15,958		1,368		4,971		1,904		19,868		43,010		30,480		117,559
Agricultural
Pass		7,253		458		458		26		1,027		1,809		12,045		23,076
Special Mention		—		—		—		—		—		—		721		721
Substandard		—		7,702		—		—		—		—		29		7,731
Subtotal		7,253		8,160		458		26		1,027		1,809		12,795		31,528
Commercial and industrial
Pass		2,448		6,988		7,700		6,519		5,113		8,288		24,569		61,625
Special Mention		245		145		3,127		47		—		1,562		3,772		8,898
Substandard		—		—		—		97		87		137		—		321
Subtotal		2,693		7,133		10,827		6,663		5,200		9,987		28,341		70,844
Mortgage warehouse lines
Pass		—		—		—		—		—		—		46,554		46,554
Subtotal		—		—		—		—		—		—		46,554		46,554
Consumer loans
Pass		945		229		156		243		6		375		2,187		4,141
Special Mention		—		—		37		19		—		—		4		60
Substandard		1		—		—		—		—		—		—		1
Subtotal		946		229		193		262		6		375		2,191		4,202
Total	$	267,489	$	303,497	$	572,459	$	78,111	$	156,047	$	407,758	$	234,655	$	2,020,016

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The following table presents the Company’s loan portfolio on the recorded investment basis, according to loan class and credit grade as of December 31, 2021:

	Pass		Special Mention		Substandard		Impaired		Total
Real estate:
1-4 family residential construction	$	19,669	$	1,700	$	—	$	—	$	21,369
Other construction/land		24,958		—		—		341		25,299
1-4 family - closed-end		282,717		4,703		201		1,836		289,457
Equity lines		23,277		615		55		2,641		26,588
Multi-family residential		49,986		3,472		—		—		53,458
Commercial real estate owner occupied		321,996		6,108		3,860		2,482		334,446
Commercial real estate non-owner occupied		841,728		26,364		14,429		367		882,888
Farmland		92,479		10,266		3,961		—		106,706
Total real estate		1,656,810		53,228		22,506		7,667		1,740,211
Agricultural		32,513		—		1,099		378		33,990
Commercial and industrial		98,367		9,989		212		1,223		109,791
Mortgage warehouse lines		101,184		—		—		—		101,184
Consumer loans		4,349		31		6		164		4,550
Total gross loans and leases	$	1,893,223	$	63,248	$	23,823	$	9,432	$	1,989,726

CECL replaces the legacy accounting for loans designated as purchased credit impaired (“PCI”) with loans designated as purchased credit deteriorated (“PCD”). PCD loans are loans acquired or purchased, which as of acquisition, had evidence of more than insignificant credit deterioration since origination. Due to the immaterial balance in the Company’s PCI loans as of December 31, 2021 management elected not to transition these loans into the PCD designation. As of September 30, 2022 the Company had no loans categorized as PCD.

As noted in footnote 3, on January 1, 2022 the Company implemented CECL and increased our ACL, previously the allowance for loan and lease losses, with a $9.5 million cumulative adjustment. The Company’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL trued-up through an entry to the provision for credit losses. Management calculates the quantitative portion of collectively evaluated reserves for all loan categories, with the exception of Farmland, Agricultural Production and Consumer loans, using a discounted cash flow (“DCF”) methodology. For purposes of calculating the quantitative portion of collectively evaluated reserves on Farmland, Agricultural Production, and Consumer categories a Remaining Life methodology is utilized. For purposes of estimating the Company’s ACL, Management generally evaluates collectively evaluated loans by Federal Call code in order to group loans with similar risk characteristics together, however management has grouped loans in selected call codes together in determining portfolio segments, due to similar risk characteristics and reserve methodologies used for certain call code classifications.

The DCF quantitative reserve methodology incorporates the consideration of probability of default (“PD”) and loss given default (“LGD”) estimates to estimate periodic losses. The PD estimates are derived through the application of reasonable and supportable economic forecasts to call code specific regression models, derived from the consideration of historical bank-specific and peer loss-rate data. The loss rate data has been regressed against benchmark economic indicators, for which reasonable and supportable forecasts exist, in the development of the call-code specific regression models. Regression models are generally refreshed on an annual basis, in order to pull in more recent loss rate data. Reasonable and supportable forecasts of the selected economic metric are then input into the regression model to calculate an expected default rate. The expected default rates are then applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The Company utilizes a four-quarter forecast period, after which the expected default rates revert to the historical average for each call code, over a four-quarter reversion period, on a straight-line basis. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical, bank-specific experience, peer data and the

32

consideration of current and expected conditions and circumstances including the level of interest rates.  The prepayment assumptions may be updated by Management in the event that changing conditions impact Management’s estimate or additional historical data gathered has resulted in the need for a reevaluation. LGD utilized in the DCF is derived from the application of the Frye-Jacobs theory which relates LGD to PD based on historical peer data, as calculated by a third-party. Economic forecasts are considered over a four-quarter forecast period, with reversion to mean occurring on a straight-line basis over four quarters. The call code regression models utilized upon implementation of CECL on January 1, 2022, and as of September 30, 2022, were identical, and relied upon reasonable and supportable forecasts of the National Unemployment Rate. Management selected the National Unemployment Rate as the driver of quantitative portion of collectively reserves on loan classes reliant upon the DCF methodology, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts including the quarterly FOMC forecast, and given the widespread familiarity of stakeholders with this economic metric.

The quantitative reserves for Farmland, Agricultural Production and Consumer loans are calculated using a Remaining Life methodology where average historical bank specific and peer loss rates are applied to expected loan balances over an estimated remaining life of loans in calculation of the quantitative portion of collectively evaluated loans in these classes. The estimated remaining life is calculated using historical bank-specific loan attrition data. For the Farmland, Agricultural Production and Consumer classes of loans, reasonable and supportable forecasts of the National Unemployment rate, real GDP and the housing price index are considered through estimation of qualitative reserves.

Management recognizes that there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of reserves on collectively evaluated loans. As current and expected conditions, may vary compared with conditions over the historical lookback period, which is utilized in the calculation of quantitative reserves, management considers whether additional or reduced reserve levels on collectively evaluated loans may be warranted given the consideration of a variety of qualitative factors. Several of the following qualitative factors (“Q-factors”) considered by management reflect the legacy regulatory guidance on Q-factors, whereas several others represent factors unique to the Company or unique to the current time period.

● Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices

● Changes in international, regional and local economic and business conditions, and developments that affect the collectability of the portfolio, as reflected in forecasts of the Housing Price Index, Real GDP and the National Unemployment Rate (Farmland & Agricultural Production and Consumer segments only)

● Changes in the nature and volume of the loan portfolio

● Changes in the experience, ability, and depth of lending management and other relevant staff

● Changes in the volume and severity of past due, non-accruals loans, and adversely classified loans, as reflected in changes of the relative level of loans classified as substandard and special mention

● Changes in the quality of the Bank’s loan review processes

● Changes in the value of underlying collateral for loans not identified as collateral dependent

● Changes in loan categorization concentrations  

● Other external factors, which include, the influence of peer data on estimated quantitative reserves, residual COVID-19 related risk, expected impact of current and expected inflationary environment, reliance on the National Unemployment rate as opposed to the California unemployment rate in the calculation of quantitative reserves, the expected impact of current and expected geo-political conditions

The qualitative portion of the Company’s reserves on collectively evaluated loans are calculated using a combination of numeric frameworks and management judgement, to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative reserves is also contingent upon the historical peer, life-of-loan-equivalent, loss rate ranges and the relative weighting of Q-factors according to management’s judgement.

Although collectively evaluated reserves are generally calculated separately at the call code or loan class level, management has grouped loan classes with similar risk characteristics into the following portfolio segments: 1-4 Family Real Estate, Commercial Real Estate, Farmland & Agricultural Production, Commercial & Industrial, Mortgage Warehouse and Consumer loans. Loans secured by 1-4 family residences have a different profile from loans secured by

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Commercial Real Estate. Generally, the borrowers for 1-4 Family loans are consumers whereas borrowers for Commercial Real Estate are often businesses. The COVID-19 pandemic illustrated how these different categories of real estate loans were subject to different risks, which was exacerbated by the widespread work-from-home model adopted by many companies during and since the pandemic. Farmland and Agricultural Production loans are included in a single segment as these loans are often times to the same borrowers, facing the same risks relating to commodity prices, water supply and drought conditions in addition to other environmental concerns. Commercial & Industrial loans are separated into a unique segment given the uniqueness of these loans, which are often revolving and secured by other business assets as opposed to real estate. Mortgage warehouse loans are also unique in the Company’s portfolio and warrant separate presentation as an individual portfolio segment, given the specific nature of these constantly revolving lines to mortgage originators and also attributable to a very limited loss history, even after consideration of peer data. Finally, the Company splits out Consumer loans as a separate segment as a result of the small balance, homogeneous terms that characterize these loans.

Management individually evaluates loans that do not share risk characteristics with other loans when estimating reserves. As of September 30, 2022, the only loans that Management considered to have different risk characteristics from other loans sharing the same Federal Call Report code were loans designated nonaccrual.

The following table presents the activity in the allowance for credit losses by portfolio segment for the quarter ended September 30, 2022:

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, June 30, 2022	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802
Charge-offs		—		—		—		(85)		—		(371)		(456)
Recoveries		—		—		—		36		—		196		232
Provision for credit losses		(262)		249		1,034		67		6		118		1,212
Ending allowance balance:	$	3,331	$	17,568	$	1,410	$	1,151	$	47	$	283	$	23,790

The $1.0 million increase in the Company’s loan portfolio ACL in the third quarter of 2022 from $22.8 million at June 30, 2022 to $23.8 million at September 30, 2022, is primarily attributable to an increase in reserves on a single collateral-dependent loan relationship as a result of a decline in management’s estimate of net realizable value on the related collateral.

The following table presents the activity in the allowance for credit losses by portfolio segment for the nine months ended September 30, 2022:

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, December 31, 2021	$	1,909	$	9,052	$	1,202	$	1,060	$	512	$	521	$	14,256
Impact of adopting ASC 326		611		9,628		(480)		358		(421)		(242)		9,454
Charge-offs		—		(1,911)		(2,170)		(244)		—		(984)		(5,309)
Recoveries		99		259		—		118		—		553		1,029
Provision for credit losses		712		539		2,858		(141)		(44)		436		4,360
Ending allowance balance:	$	3,331	$	17,567	$	1,410	$	1,151	$	47	$	284	$	23,790

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The $2.2 million in charge-offs recognized in the Farmland and Agricultural Production portfolio segment is primarily the result of a reduction in the expected valuation of collateral on a single loan relationship, recorded in the first quarter 2022. The $1.9 million charge-off in Commercial Real Estate was recognized during the second quarter, when Management became aware of a borrower’s reduced ability to service their loan primarily as a result of increased vacancy rates related to the remote work which has increased following the pandemic.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2021:

		Three months ended September 30, 2021
		Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Charge-offs		—		—		(52)		(274)		—		(326)
Recoveries		(59)		—		11		170		—		122
(Benefit) provision		261		1		(930)		(1)		69		(600)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
	Nine months ended September 30, 2021
	Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	11,766	$	482	$	4,721	$	720	$	49	$	17,738
Charge-offs		(245)		(50)		(129)		(606)		—		(1,030)
Recoveries		590		—		203		566		—		1,359
(Benefit) provision		166		93		(2,694)		(95)		80		(2,450)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Reserves:
Specific	$	419	$	244	$	382	$	16	$	—	$	1,061
General		11,858		281		1,719		569		129		14,556
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Loans evaluated for impairment:
Individually	$	10,150	$	471	$	1,512	$	163	$	—	$	12,296
Collectively		1,822,774		42,825		257,266		4,665		—		2,127,530
Ending balance	$	1,832,924	$	43,296	$	258,778	$	4,828	$	—	$	2,139,826

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Note 11 – Borrowings and Other Arrangements

Federal Funds Purchased – The Company had unsecured available lines of credit with correspondent banks for short-term borrowings totaling $305.0 million at September 30, 2022 and December 31, 2021. In general, interest rates on these lines approximate the federal funds target rate. We had no borrowings under these credit facilities at September 30, 2022 or December 31, 2021.

Federal Home Loan Bank Borrowings – As of September 30, 2022 and December 31, 2021, the Company had available lines of credit with the FHLB totaling $724.0 million and $787.5 million, respectively, based on eligible collateral of certain loans. At September 30, 2022 and December 31, 2021 the Company had $103.1 million and $0 in FHLB overnight borrowings, respectively.

Federal Reserve Line of Credit – The Company has an available line of credit with the Federal Reserve Bank of San Francisco secured by certain loans. At September 30, 2022 and December 31, 2021 the Company had borrowing capacity under this line totaling $34.2 million and $50.6 million, respectively. We had no outstanding borrowings on this line of credit as of September 30, 2022 and December 31, 2021.

Long-Term Debt – The Company has long-term debt in the form of fixed to floating rate subordinated debentures with a fixed rate of 3.25% until September 30, 2026, then floating rate at 253.5 basis points over 3-month term SOFR until maturity on October 1, 2031. The balance of the Company’s long-term debt, net of unamortized issuance costs, at September 30, 2022 and December 31, 2021 was $49.2 million and $49.1 million, respectively.

Subordinated Debentures - Sierra Statutory Trust II (“Trust II”), Sierra Capital Trust III (“Trust III”), and Coast Bancorp Statutory Trust II (“Trust IV”), (collectively, the “Trusts”) exist solely for the purpose of issuing trust preferred securities fully and unconditionally guaranteed by the Company. For financial reporting purposes, the Trusts are not consolidated, and the Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) held by the Trusts and issued and guaranteed by the Company are reflected in the Company’s consolidated balance sheet in accordance with provisions of ASC Topic 810. At September 30, 2022 and December 31, 2021 the Company’s trust preferred securities totaled $35.4 million and $35.3 million, respectively.

Note 12 – Revenue Recognition

The Company utilizes the guidance found in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), when accounting for certain noninterest income. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Sufficient information should be provided to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company’s revenue streams that are within the scope of and accounted for under Topic 606 include service charges on deposit accounts, debit card interchange fees, and fees levied for other services the Company provides its customers. The guidance does not apply to revenue associated with financial instruments such as loans and investments, and other noninterest income such as loan servicing fees and earnings on bank-owned life insurance, which are accounted for on an accrual basis under other provisions of GAAP.

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All of the Company’s revenue from contracts within the scope of ASC 606 is recognized as noninterest income, except for gains on the sale of OREO which is classified as noninterest expense. The following table presents the Company’s sources of noninterest income for the three and nine-month periods ended September 30, 2022 and 2021. Items outside the scope of ASC 606 are noted as such (dollars in thousands, unaudited).

	For the three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Noninterest income
Service charges on deposits
Returned item and overdraft fees	$	1,273	$	1,307	$	3,973	$	3,561
Other service charges on deposits		1,943		1,879		5,487		5,116
Debit card interchange income		2,241		2,192		6,458		6,321
Gain (loss) on limited partnerships(1)		64		(144)		(162)		(391)
Dividends on equity investments(1)		189		187		619		543
Unrealized (losses) gains recognized on equity investments(1)		—		—		(332)		857
Net gains on sale of securities(1)		—		11		1,032		11
Other(1)		902		2,103		6,039		4,959
Total noninterest income	$	6,612	$	7,535	$	23,114	$	20,977
Noninterest expense
Salaries and employee benefits (1)	$	11,521	$	10,618	$	35,070	$	32,194
Occupancy expense (1)		2,470		2,359		7,170		7,472
Gain on sale of OREO		(3)		(26)		(8)		(141)
Other (1)		7,008		7,924		21,050		21,856
Total noninterest expense	$	20,996	$	20,875	$	63,282	$	61,381
Percentage of noninterest income not within scope of ASC 606.		17.47%		28.63%		31.13%		28.50%

(1) Not within scope of ASC 606. Revenue streams are not related to contract with customers and are accounted for on an accrual basis under other provisions of GAAP.

With regard to noninterest income associated with customer contracts, the Company has determined that transaction prices are fixed, and performance obligations are satisfied as services are rendered, thus there is little or no judgment involved in the timing of revenue recognition under contracts that are within the scope of ASC 606.

Note 13 – Subsequent Events

Effective October 1, 2022, the Company transferred $198.3 million of “available-for-sale” investments to “held-to-maturity”. Those securities were transferred at fair market value on the date of the transfer. The transfer was initiated to reduce the effect of potential future rate increases on the available-for-sale portfolio, mark-to-market, other comprehensive income and equity.

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PART I - FINANCIAL INFORMATION

ITEM 2

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Form 10-Q includes forward-looking statements that involve inherent risks and uncertainties. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933 (“1933 Act”), as amended and Section 21E of the Securities Exchange Act of 1934 (“1934 Act”), as amended. Those sections of the 1933 Act and 1934 Act provide a “safe harbor” for forward-looking statements in order to encourage companies to provide prospective information about their financial performance as long as important factors that could cause actual results to differ significantly from projected results are identified with meaningful cautionary statements. Words such as “expects”, “anticipates”, “believes”, “projects”, “intends”, and “estimates” or variations of such words and similar expressions, as well as future or conditional verbs preceded by “will”, “would”, “should”, “could” or “may” are intended to identify forward-looking statements. These forward-looking statements are based on certain underlying assumptions and are not guarantees of future performance, as they could be impacted by several potential risks and developments that cannot be predicted with any degree of certainty.

These statements are based on management’s current expectations regarding economic, legislative, regulatory and other environmental issues that may affect our earnings in future periods. Therefore, actual outcomes and results may differ materially from what is expressed, forecast in, or implied by such forward-looking statements.

A variety of factors could have a material adverse impact on the Company’s financial condition or results of operations, and should be considered when evaluating the Company’s potential future financial performance. They include, but are not limited to:

● risks associated with fluctuations in interest rates, including the impact on other comprehensive income (loss), the ability for customers to repay on floating or adjustable rates loans, and the impact on costs of funding and interest income on earning assets;

● risks associated with inflation (including efforts by the Board of Governors of the Federal Reserve to control the same);

● the risk of unfavorable economic conditions in the Company’s market areas, or the impact on the Company’s market areas of national or international economic conditions;

● liquidity risks, including the ability to effectively manage the additional liquidity from the significant increase in deposits during the COVID-19 pandemic including managing the potential loss of a portion of such deposits;

● increases in nonperforming assets and credit losses that could occur, particularly in times of weak economic conditions or rising interest rates;

● reductions in the market value of available-for-sale securities that could result if interest rates increase substantially or an issuer has real or perceived financial difficulties;

● the Company’s ability to diversify and grow its loan portfolio;

● the Company’s ability to attract and retain skilled employees;

● the Company’s ability to successfully deploy new technology;

● the Company’s ability to maintain a satisfactory rating under the Community Reinvestment Act;

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● the outcome of any existing or future legal action for which the Company or Bank is a defendant;

● risks associated with the current national emergency with respect to COVID-19 and its variants, including the impact that national, state, and local responses, including limitations on business and personal activity as well as any stimulus or relief efforts have on customers’ continued ability to repay loans;

● the success of acquisitions or branch expansions, closures or consolidations; and

● risks associated with the multitude of or changes to current and prospective laws and regulations, and related interpretations, to which the Company is and will be subject.

Risk factors that could cause actual results to differ materially from results that might be implied by forward-looking statements include the risk factors detailed in the Company’s Form 10-K for the fiscal year ended December 31, 2021 and in Item 1A, herein. We do not update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.

CRITICAL ACCOUNTING POLICIES

The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States. The financial information and disclosures contained within those statements are significantly impacted by Management’s estimates and judgments, which are based on historical experience and incorporate various assumptions that are believed to be reasonable under current circumstances. Actual results may differ from those estimates under divergent conditions.

Critical accounting policies are those that involve the most complex and subjective decisions and assessments, and have the greatest potential impact on the Company’s stated results of operations. In Management’s opinion, the Company’s critical accounting policies deal with the following areas:

● the establishment of the allowance for credit losses, as explained in detail in Note 10 to the consolidated financial statements and in the “Provision for Credit Losses” and “Allowance for Credit Losses” sections of this discussion and analysis;

● the valuation of individually evaluated loans and foreclosed assets, as discussed in Notes 8 and 10 to the consolidated financial statements;

● income taxes and related deferred tax assets and liabilities, especially with regard to the ability of the Company to recover deferred tax assets as discussed in the “Provision for Income Taxes” and “Other Assets” sections of this discussion and analysis; and

● goodwill and other intangible assets, which are evaluated annually for impairment and for which we have determined that no impairment exists, as discussed in the “Other Assets” section of this discussion and analysis.

Critical accounting areas are evaluated on an ongoing basis to ensure that the Company’s financial statements incorporate our most recent expectations regarding those areas.

OVERVIEW OF THE RESULTS OF OPERATIONS

AND FINANCIAL CONDITION

RESULTS OF OPERATIONS SUMMARY

Third Quarter 2022 compared to Third Quarter 2021

Third quarter 2022 net income was $9.9 million, or $0.66 per diluted share, compared to $10.6 million, or $0.69 per diluted share in the third quarter of 2021. The Company’s annualized return on average equity was 12.84% and annualized return on average assets was 1.13% for the quarter ended September 30, 2022, compared to 11.62% and

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1.26%, respectively, for the same quarter in 2021. The primary drivers behind the variance in third quarter net income are as follows:

● Net interest income increased $2.2 million. We had a 17 basis point increase in net interest margin coupled with a $119.1 million increase in average earning assets.

● Noninterest income decreased $0.9 million or 12% primarily due to a $1.1 million decrease in bank-owned life insurance linked to deferred compensation plans.

● The provision for credit losses on loans and leases was $1.2 million under the new current expected credit losses (“CECL”) methodology, as compared to a benefit of $0.6 million under the incurred loss model in the same quarter of 2021.

● Total noninterest expense increased $0.1 million, or 1%, in the third quarter of 2022 as compared to the third quarter of 2021. Although salaries and benefits costs increased $0.9 million as we added new lending teams, other noninterest expense decreased $0.9 million mostly due to a reduction in legal expenses, telecommunications costs and a favorable variance in directors deferred compensation expense, linked to the unfavorable changes in BOLI income described above.

First Nine Months of 2022 compared to First Nine Months of 2021

Net income for the first nine months of 2022 was $26.5 million, or $1.76 per diluted share, compared to $33.4 million, or $2.17 per diluted share for the same period in 2021. The Company’s annualized return on average equity was 10.98% and annualized return on average assets was 1.03% for the nine months ended September 30, 2022, compared to a return on equity of 12.60% and return on assets of 1.36% for the nine months ended September 30, 2021. The primary drivers behind the variance in year-to-date net income are as follows:

● Net income decreased $6.8 million, or 20%. The most significant line-item changes was a $6.6 million increase in the provision for credit losses, under the “CECL” methodology. There was also a decrease of $2.2 million or 3% in net interest income, due mostly to an overall 25 basis point decline in net interest margin. The decline in margin was due primarily to lower yields and balances on loans, as well as higher overall funding costs partially offset by higher investment yields and balances.

● Noninterest income increased by $2.1 million, or 10%, due to a $1.0 million recovery of prior year legal expenses, a $1.0 million gain on the sale of investment securities, a $3.2 million gain on the sale of other assets, partially offset by negative variances in BOLI income, and the fair market value adjustment of equity securities.

● Noninterest expense increased $1.9 million, or 3% due mostly to the increases in salary expense for new loan production teams and restitution payments to customers charged nonsufficient fund fees on representments in the past five years, partially offset by lower legal costs and a positive variance in director’s deferred compensation expense which is linked to the unfavorable changes in bank-owned life insurance income described above.

FINANCIAL CONDITION SUMMARY

September 30, 2022 relative to December 31, 2021

The Company’s assets totaled $3.5 billion at September 30, 2022, an increase of $161.3 million, or 5%from December 31, 2021. The following provides a summary of key balance sheet changes during the first nine months of 2022:

● Cash and due from banks decreased $170.8 million, to $86.7 million during the first nine months of the year due mostly to increases in other earning assets.

● Investment securities increased by $252.3 million, or 26%, to $1.2 billion primarily due to strategic purchases of $181 million of collateralized loan obligations, as well as other investment securities.

● Gross loans increased $30.6 million, or 2% due predominantly to the purchase of $173.1 million in high quality jumbo single family mortgage loan pools earlier in the year. These mortgage loan pool purchases were offset by $267.7 million in loan maturities, charge-offs and payoffs. Organic loan production for the first nine months of 2022 was $225.1 million, as compared to $93.0 million for the comparative period in 2021. Negatively

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impacting loan growth was a $45.2 million decline in credit line utilization and a $54.6 million decline in mortgage warehouse line utilization. PPP loan forgiveness during the first nine months was $27.6 million.

● Deposits totaled $2.9 billion at September 30, 2022, representing a year-to-date increase of $103.9 million, or 4%. The growth in deposits came from a $45.5 million increase in core transaction and savings accounts, coupled with a $58.4 million increase in time and wholesale brokered deposits.

● Short-term debt totaled $215.1 million due to increases of $103.1 million in overnight FHLB borrowings and $5.1 million in customer repurchase agreements.

Total capital of $295.1 million at September 30, 2022 reflects a decrease of $67.4 million, or 19%, relative to year-end 2021. The decrease in equity during the first nine months of 2022 was due to the addition of $26.5 million in net income, offset by a $72.2 million unfavorable swing in accumulated other comprehensive income/loss, due principally to changes in investment securities’ fair value, a one-time adjustment from the implementation of CECL on January 1, 2022 for $7.3 million, $4.9 million in share repurchases, net of $10.4 million in dividends paid. The remaining difference is related to stock options exercised and restricted stock granted during the first nine months.

EARNINGS PERFORMANCE

The Company earns income from two primary sources. The first is net interest income, which is interest income generated by earning assets less interest expense on deposits and other borrowed money. The second is noninterest income, which primarily consists of customer service charges and fees but also comes from non-customer sources such as BOLI and investment gains. The majority of the Company’s noninterest expense is comprised of operating costs that facilitate offering a full range of banking services to our customers.

.

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income was $28.9 million, for the third quarter of 2022, a $2.2 million increase, or 8% over the third quarter of 2021, but decreased $2.2 million, or 3% to $80.3 million for the first nine months of 2022 relative to the same period in 2021.

For the third quarter of 2022, growth in average interest-earning assets totaled $119.1 million, or 4%, as compared to the third quarter of 2021. The yield on these balances was 42 basis points higher for the same period due mostly to a shift in the mix of earning assets and the result of recent interest rate increases by the Federal Open Market Committee. This increase in yield was offset by a 40 basis point increase in the cost of our interest-bearing liabilities for the same period. Although transaction and savings deposit rates have not changed, higher costs of time deposits and borrowed funds including overnight purchases are the primary reasons for the increase in interest expense.

Net interest income for the comparative year-to-date periods decreased $2.2 million or 3%, due to a change in mix of average interest-earning assets. Investment balances, including overnight funds, with an average yield of 2.61% increased $360.0 million, while gross average loan balances yielding 4.30% decreased $215.4 million. The overall yield on the average balances of earning assets was 11 basis points lower for the comparative periods, exacerbated by a 21 basis point increase in interest paid on liabilities. The net impact was a 25 basis point decrease in our net interest margin for the nine-months ending September 30, 2022 as compared to the same period in 2021.

The increase in investments includes a net increase of $181.9 million of exclusively AAA and AA tranches of collateralized loan obligations, for a total cost basis of $514.7 million at September 30, 2022. The average yield on such CLOs for September 2022 was 4.6% as compared to an average yield in December 2021 of 1.5%.

Interest expense was $3.0 million for the third quarter of 2022, an increase of $2.1 million, relative to the third quarter of 2021. For the first nine months of 2022, compared to the same period in 2021, interest expense increased $3.2 million to $6.0 million. The significant increase in interest expense is attributable to an unfavorable shift in deposit mix and the

41

impact of recent interest rate increased, as the average balance of higher cost time deposits, including variable rate time deposits and borrowed funds increased by $20.4 million and $125.9 million respectively in the third quarter of 2022 as compared to the third quarter of 2021. For the year-to-date comparisons the increase is attributable to a $106.1 million increase in borrowed funds combined with the impact of recent interest rate increases.

The Company had $1.3 billion in adjustable and variable rate loans and $499.4 million in floating rate collateralized loan obligations, as compared to $279.5 million in floating rate CDs and $35.4 million in floating rate trust preferred securities at September 30, 2022. $236.0 million of the Company’s adjustable and variable rate loans have the ability to reprice in the next twelve months.

The Company continues to offer floating rate CDs which are indexed to prime. These floating rate CDs increased $40.6 million or 17%, to $279.5 million at September 30, 2022, as compared to $238.9 million at December 31, 2021. Due to the increase in the prime rate during 2022, interest expense on floating rate CDs has increased $1.1 million for the third quarter of 2022 over the third quarter of 2021, and increased $1.3 million for the first nine months of 2022 as compared to the same period in 2021. These CD’s require a minimum balance and pay a rate that is 325 – 400 basis points below the Wall Street Journal Prime rate, with a 20 basis point minimum rate.

The level of net interest income we recognize in any given period depends on a combination of factors including the average volume and yield for interest earning assets, the average volume and cost of interest-bearing liabilities, and the mix of products which comprise the Company’s earning assets, deposits, and other interest-bearing liabilities.

The following tables show average balances for significant balance sheet categories and the amount of interest income or interest expense associated with each category for the noted periods. The tables also display calculated yields on each major component of the Company’s investment and loan portfolios, average rates paid on each key segment of the Company’s interest-bearing liabilities, and our net interest margin for the noted periods.

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Average Balances and Rates

(dollars in thousands, unaudited)

	For the three months ended					For the three months ended
	September 30, 2022					September 30, 2021
Assets	Average Balance (1)		Income/ Expense		Average Rate/Yield (2)	Average Balance (1)		Income/ Expense		Average Rate/Yield (2)
Investments:
Interest-earning due from banks	$	21,845	$	103	1.87%	$	379,597	$	146	0.15%
Taxable		851,683		7,646	3.56%		389,524		1,679	1.71%
Non-taxable		336,567		2,346	3.50%		259,996		1,578	3.05%
Total investments		1,210,095		10,095	3.51%		1,029,117		3,403	1.47%
Loans and leases:(3)
Real estate		1,862,738		19,808	4.22%		1,775,611		20,805	4.65%
Agricultural		29,724		274	3.66%		43,243		410	3.76%
Commercial		75,482		973	5.11%		140,105		1,796	5.09%
Consumer		4,228		132	12.39%		4,862		205	16.73%
Mortgage warehouse lines		46,969		623	5.26%		118,036		982	3.30%
Other		2,349		23	3.88%		1,463		28	7.59%
Total loans and leases		2,021,490		21,833	4.28%		2,083,320		24,226	4.61%
Total interest earning assets (4)		3,231,585		31,928	4.00%		3,112,437		27,629	3.58%
Other earning assets		15,717					15,713
Non-earning assets		255,529					212,116
Total assets	$	3,502,831				$	3,340,266
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits	$	197,731	$	131	0.26%	$	148,175	$	86	0.23%
NOW		531,205		80	0.06%		605,620		115	0.08%
Savings accounts		485,167		73	0.06%		443,406		63	0.06%
Money market		151,816		25	0.07%		139,433		26	0.07%
Time Deposits		313,764		1,377	1.74%		293,379		248	0.34%
Brokered deposits		63,529		75	0.47%		72,283		53	0.29%
Total interest bearing deposits		1,743,212		1,761	0.40%		1,702,296		591	0.14%
Borrowed funds:
Federal funds purchased		183		1	2.17%		166		—	0.00%
Repurchase agreements		113,933		70	0.24%		78,965		41	0.21%
Short term borrowings		45,414		319	2.79%		1		—	0.00%
Long-term debt		49,182		427	3.44%		3,812		38	3.95%
Subordinated debentures		35,409		439	4.92%		35,229		243	2.74%
Total borrowed funds		244,121		1,256	2.04%		118,173		322	1.08%
Total interest bearing liabilities		1,987,333		3,017	0.60%		1,820,469		913	0.20%
Demand deposits - noninterest bearing		1,140,840					1,104,506
Other liabilities		67,603					53,134
Shareholders' equity		307,055					362,157
Total liabilities and shareholders' equity	$	3,502,831				$	3,340,266
Interest income/interest earning assets					4.00%					3.58%
Interest expense/interest earning assets					0.37%					0.12%
Net interest income and margin(5)			$	28,911	3.63%			$	26,716	3.46%

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.1 million and $1.0 million for the quarters ended September 30, 2022 and 2021, respectively.

(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5) Net interest margin represents net interest income as a percentage of average interest earning assets.

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Average Balances and Rates
(Dollars in Thousands, Unaudited)
	For the nine months ended						For the nine months ended
	September 30, 2022						September 30, 2021
Assets	Average Balance (1)		Income/ Expense		Average Rate/Yield (2)	Average Balance (1)		Income/ Expense		Average Rate/Yield (2)
Investments:
Interest-earning due from banks	$	120,359	$	466	0.52%	$	255,962	$	250	0.13%
Taxable		783,384		15,613	2.66%		351,109		4,835	1.84%
Non-taxable		305,212		5,926	3.29%		241,866		4,539	3.18%
Total investments		1,208,955		22,005	2.61%		848,937		9,624	1.71%
Loans and leases:(3)
Real estate		1,820,568		57,792	4.24%		1,826,476		63,211	4.63%
Agricultural		31,376		809	3.45%		44,441		1,237	3.72%
Commercial		84,301		3,351	5.31%		165,916		6,371	5.13%
Consumer		4,313		545	16.89%		5,085		594	15.62%
Mortgage warehouse lines		52,650		1,626	4.13%		167,293		4,061	3.25%
Other		2,066		88	5.69%		1,503		81	7.21%
Total loans and leases		1,995,274		64,211	4.30%		2,210,714		75,555	4.57%
Total interest earning assets (4)		3,204,229		86,216	3.66%		3,059,651		85,179	3.77%
Other earning assets		15,675					14,817
Non-earning assets		235,516					207,523
Total assets	$	3,455,420				$	3,281,991
Liabilities and shareholders' equity
Interest bearing deposits:
Demand deposits	$	207,319	$	357	0.23%	$	147,000	$	251	0.23%
NOW		540,078		243	0.06%		592,177		332	0.07%
Savings accounts		477,904		210	0.06%		419,861		175	0.06%
Money market		152,912		71	0.06%		138,408		86	0.08%
Time Deposits		301,173		2,053	0.91%		347,253		798	0.31%
Brokered deposits		61,189		172	0.38%		88,132		176	0.27%
Total interest bearing deposits		1,740,575		3,106	0.24%		1,732,831		1,818	0.14%
Borrowed funds:
Federal funds purchased		174		2	1.54%		2,032		1	0.07%
Repurchase agreements		110,505		228	0.28%		61,103		124	0.27%
Short term borrowings		15,306		319	2.79%		4,846		2	0.06%
Long-term debt		49,162		1,284	3.49%		1,285		38	0.040
Subordinated debentures		35,365		1,024	3.87%		35,186		736	2.80%
Total borrowed funds		210,512		2,857	1.81%		104,452		901	1.15%
Total interest bearing liabilities		1,951,087		5,963	0.41%		1,837,283		2,719	0.20%
Demand deposits - noninterest bearing		1,122,556					1,045,179
Other liabilities		58,393					45,191
Shareholders' equity		323,384					354,338
Total liabilities and shareholders' equity	$	3,455,420				$	3,281,991
Interest income/interest earning assets					3.66%					3.77%
Interest expense/interest earning assets					0.25%					0.12%
Net interest income and margin(5)			$	80,253	3.41%			$	82,460	3.66%

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

(2) Yields and net interest margin have been computed on a tax equivalent basis utilizing a 21% effective tax rate.

(3) Loans are gross of the allowance for possible loan losses. Loan fees have been included in the calculation of interest income. Net loan fees and loan acquisition FMV amortization were $0.9 million and $3.4 million for the nine months ended September 30, 2022 and 2021, respectively.

(4) Non-accrual loans have been included in total loans for purposes of computing total earning assets.

(5) Net interest margin represents net interest income as a percentage of average interest-earning assets.

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The Volume and Rate Variances table below sets forth the dollar difference for the comparative periods in interest earned or paid for each major category of interest earning assets and interest-bearing liabilities, and the amount of such change attributable to fluctuations in average balances (volume) or differences in average interest rates. Volume variances are equal to the increase or decrease in average balances multiplied by prior period rates, and rate variances are equal to the change in rates multiplied by prior period average balances. Variances attributable to both rate and volume changes, calculated by multiplying the change in rates by the change in average balances, have been allocated to the rate variance.

Volume & Rate Variances

(dollars in thousands, unaudited)

	Three months ended September 30,								Nine months ended September 30,
	2022 over 2021								2022 over 2021
	Increase (decrease) due to								Increase (decrease) due to
Assets:	Volume		Rate		Mix		Net		Volume		Rate		Mix		Net
Investments:
Federal funds sold/due from time	$	(138)	$	1,644	$	(1,549)	$	(43)	$	(132)	$	741	$	(393)	$	216
Taxable		1,992		1,817		2,157		5,967		5,952		2,163		2,663		10,778
Non-taxable		117		234		417		768		1,199		157		31		1,387
Total investments (1)		1,971		3,695		1,025		6,692		7,019		3,061		2,301		12,381
Loans and leases:
Real estate		1,021		(1,924)		(94)		(997)		(204)		(5,232)		17		(5,419)
Agricultural		(128)		(12)		4		(136)		(364)		(91)		27		(428)
Commercial		(828)		10		(5)		(823)		(3,134)		224		(110)		(3,020)
Consumer		(27)		(53)		7		(73)		(91)		49		(7)		(49)
Mortgage warehouse		(591)		583		(351)		(359)		(2,783)		1,106		(758)		(2,435)
Other		17		(14)		(8)		(5)		30		(17)		(6)		7
Total loans and leases (1)		(536)		(1,410)		(447)		(2,393)		(6,546)		(3,961)		(837)		(11,344)
Total interest earning assets (1)	$	1,435	$	2,285	$	578	$	4,299	$	473	$	(900)	$	1,464	$	1,037
Liabilities
Interest bearing deposits:
Demand deposits	$	29		12		4	$	45	$	103	$	2		1	$	106
NOW		(14)		(24)		3		(35)		(29)		(66)		6		(89)
Savings accounts		6		4		—		10		25		9		1		35
Money market		2		(3)		—		(1)		9		(22)		(2)		(15)
Time Deposits		17		1,040		72		1,129		(106)		1,569		(208)		1,255
Brokered deposits		(6)		32		(4)		22		(54)		72		(22)		(4)
Total interest bearing deposits (1)		34		1,061		75		1,170		(52)		1,564		(224)		1,288
Borrowed funds:
Federal funds purchased		—		1		—		1		(1)		22		(20)		1
Repurchase agreements		18		8		3		29		100		2		2		104
Short term borrowings		—		—		319		319		4		99		214		317
Long-term debt		452		(5)		(58)		389		1,415		(4)		(165)		1,246
Subordinated debt		1		194		1		196		4		283		1		288
Total borrowed funds (1)		471		198		265		934		1,522		402		32		1,956
Total interest bearing liabilities (1)		505		1,259		340		2,104		1,470		1,966		(192)		3,244
Net interest income (1)	$	930	$	1,026	$	238	$	2,195	$	(997)	$	(2,866)	$	1,656	$	(2,207)

(1) Subtotals are a sum of the categories above and are not recalculated on the portfolio totals.

The volume variance calculated for the third quarter of 2022 relative to the third quarter of 2021 was a favorable $0.9 million; this is primarily from a favorable volume variance of $1.4 million in interest earning assets, as the average balance of interest earning assets increased $119.1 million from the comparative quarters.. There was a favorable rate variance of $1.0 million from the comparative quarters since the weighted average yield on investment securities more than offset the unfavorable weighted average yield variance on loan and lease balances. There was also a 40 basis point

45

increase in cost of interest bearing liabilities which negatively impacted the rate increase. There was a favorable mix variance of $0.2 million primarily from the issuance of variable rate investment securities in the form of collateralized loan obligations. The Company’s net interest margin for the third quarter of 2022 was 3.63%, as compared to 3.46% for the third quarter of 2021.

The volume, rate and mix variances calculated for the first nine months of 2022 relative to the first nine months of 2021 reflects an unfavorable volume variance of $1.0 million, an unfavorable rate variance of $2.9 million, and a favorable mix variance of $1.7 million. The unfavorable volume variance was attributed to a decline in loan balances, offset by an increase in investment securities, primarily variable collateralized loan obligations, and an increase in interest bearing liabilities, mostly higher cost borrowed funds. The unfavorable rate variance came from lower yields on interest earning assets exacerbated by an increase in interest bearing liabilities which were negatively impacted from five Federal Reserve fed funds interest rate increases totaling 300 basis points. The Company’s net interest margin for the first nine months of 2022 was 3.41%, as compared to 3.66% in the first nine months of 2021.

At September 30, 2022, approximately 5% of our total portfolio, or $99.7 million, consists of variable rate loans. Of these variable rate loans, approximately $43.1 million have floors, although with the interest rate increases during the first nine months of 2022, most of these loans are no longer at their floors. At September 30, 2022, our outstanding fixed rate loans represented 33% of our loan portfolio. The remaining 62% of our loan portfolio at September 30, 2022 consists of adjustable-rate loans; 70% of these loans (approximately $862.0 million) will not begin adjusting for at least another 3 years, but up to 10 years. These loans are typically adjustable every five years after the initial adjustment. Approximately $60.5 million of these adjustable-rate loans have the ability to reprice next quarter, which will have a positive impact on earnings.

Cash balances for the quarter and year-to-date comparisons have decreased and have less of a negative impact on our net interest margin since cash balances earn considerably lower yields than other earning assets. Average cash and due from banks was $21.8 million, a decrease of $357.8 million, or 94% for the third quarter of 2022, and was $135.6 million lower, or 53% for the first nine months of 2022 as compared to the same period in 2021.

Overall average investment securities increased by $538.7 million for the third quarter of September 30, 2022 as compared to September 30, 2021, and increased by $495.6 million for the first nine months of 2022. For the quarter ending September 30, 2022 over the same period for 2021, average non-taxable securities increased $76.6 million and taxable securities increased $462.2 million. For the first nine months of 2022 over the same period in 2021, average non-taxable securities increased $63.3 million and taxable securities increased $432.3 million. The overall investment portfolio had a tax-equivalent yield of 3.57% at September 30, 2022, with an average life of 7.67 years. Included in investment securities are $499.4 million of collateralized-loan obligations with rates that adjust quarterly.

The increase in interest expense is attributable to the impact of higher rates on floating rate liabilities, including floating rate certificate of deposits. In addition, the shift to being a net purchaser of funds during the third quarter of 2022 caused borrowed funds to increase. Higher cost time deposits and borrowed funds increased by $20.4 million and $125.9 million respectively in the third quarter of 2022 as compared to the third quarter of 2021. For the year-to-date comparisons the increase in interest expense is mostly attributable to a $106.1 million increase in borrowed funds combined with the impact of interest rate increases in 2022.

The average cost of interest-bearing deposits increased by 26 basis points to 40 basis points for the third quarter of 2022 compared to the third quarter of 2021, and by 10 basis points to 24 basis points for the first nine months of 2022 as compared to the same period in 2021. This increase is almost entirely due to the prime-based certificate of deposit account that adjusts with each change in the Wall Street Journal Prime rate. As described above, this certificate of deposit product pays between 325 and 400 basis points below the Wall Street Journal Prime rate. The Wall Street Journal Prime rate has increased by 300 basis points for the first nine months of 2022. The average cost of borrowed funds increased 96 basis points for the third quarter of 2022 as compared to the same period in 2021 and by 66 basis points for the first nine months of 2022 as compared to the first nine months of 2021. Non-interest bearing demand deposits increased $36.3 million or 3% for the third quarter of 2022 as compared to the third quarter of 2021, and increased by $77.4 million or 7% for the first nine months of 2022 as compared to the first nine months of 2021.

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PROVISION FOR CREDIT LOSSES ON LOANS AND LEASES

The Company implemented the Current Expected Credit Loss ("CECL") accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments – Credit Losses (Topic 326) on January 1, 2022. Upon implementation the Company recorded a $10.4 million increase in the allowance for credit losses, which included a $0.9 million reserve for unfunded commitments as an adjustment to equity, net of deferred taxes.

Credit risk is inherent in the business of making loans. The Company sets aside an allowance for credit losses on loans and leases, a contra-asset account, through periodic charges to earnings which are reflected in the income statement as the provision for credit losses on loans and leases. The Company recorded an expense related to a credit loss provision for loans and leases of $1.2 million in the third quarter of 2022 relative to a provision for loan and lease losses benefit of $0.6 million in the third quarter of 2021, and a year-to-date credit loss provision for loans and leases of $4.4 million in 2022 as compared to a $2.5 million loan and lease loss provision benefit in 2021. The Company's $1.8 million increase in the provision for credit losses on loans and leases in the third quarter of 2022 as compared to the third quarter of 2021, and the $6.8 million year to date increase in the provision for credit losses on loans and leases, compared to the same period in 2021 was primarily due to the impact of $4.3 million in net charge-offs in the first nine months of 2022. The increase in the provision for credit losses on loans and leases for the third quarter of 2022 was principally from an $1.2 million increase to the specific reserve on a single dairy relationship while the increase in the provision for credit losses on loans and leases year-to-date also included a charge off on the same loan relationship combined with a single office building loan relationship that was sold at a discount due to an increased risk of default that would have likely led to a prolonged collection period.

Specifically identifiable and quantifiable loan losses are immediately charged off against the allowance, with subsequent recoveries reflected as an increase to the allowance. The Company recorded net charge-offs of $0.2 million in both third quarters of 2022 and 2021. For the first nine months of 2022, net charge-offs were $4.3 million as compared to $0.3 million in net recoveries for the same period of 2021.

The allowance for credit losses on loans and leases is at a level that, in Management’s judgment, is adequate to absorb probable credit losses on loans related to individually identified loans as well as probable credit losses in the remaining loan portfolio.

The Company’s policies for monitoring the adequacy of the allowance, determining loan balances that should be charged off, and other detailed information with regard to changes in the allowance are discussed in Note 10 to the consolidated financial statements, and below, under “Allowance for Credit Losses.” The process utilized to establish an appropriate credit allowance for losses on loans and leases can result in a high degree of variability in the Company’s credit loss provision, and consequently in our net earnings.

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NONINTEREST INCOME AND NONINTEREST EXPENSE

The following table provides details on the Company’s noninterest income and noninterest expense for the three- and nine-month periods ended September 30, 2022 and 2021:

Noninterest Income/Expense

(dollars in thousands, unaudited)

	For the three months ended September 30,				For the nine months ended September 30,
Noninterest income:	2022		2021		2022		2021
Service charges on deposit accounts	$	3,216	$	3,186	$	9,460	$	8,677
Other service charges and fees		2,982		2,900		8,663		8,511
Net gains on sale of securities available-for-sale		—		11		1,032		11
Bank-owned life insurance		(23)		1,048		(1,251)		2,445
Other		437		390		5,210		1,333
Total noninterest income	$	6,612	$	7,535	$	23,114	$	20,977
As a % of average interest earning assets (1)		0.81%		0.96%		0.96%		0.92%
Noninterest expense:
Salaries and employee benefits	$	11,521	$	10,618	$	35,070	$	32,194
Occupancy costs
Furniture & equipment		399		406		1,363		1,312
Premises		2,071		1,953		5,807		6,160
Advertising and marketing costs		466		370		1,322		982
Data processing costs		1,564		1,470		4,574		4,409
Deposit services costs		2,450		2,402		7,112		6,752
Loan services costs
Loan processing		128		109		426		343
Foreclosed assets		(3)		(19)		84		78
Other operating costs
Telephone & data communications		358		534		1,179		1,582
Postage & mail		47		60		326		253
Other		507		470		2,374		1,269
Professional services costs
Legal & accounting services		535		966		1,753		2,091
Director's deferred compensation		(143)		531		(1,192)		1,133
Other professional service		855		789		2,306		2,086
Stationery & supply costs		114		107		315		259
Sundry & tellers		127		109		463		478
Total noninterest expense	$	20,996	$	20,875	$	63,282	$	61,381
As a % of average interest earning assets (1)		2.58%		2.66%		2.64%		2.68%
Efficiency ratio (2)(3)		58.10%		59.75%		61.10%		58.30%

(1) Annualized

(2) Tax equivalent

(3) The efficiency ratio is a non-GAAP measure and is a calculation of noninterest expense as a percentage of the sum of net interest income and noninterest income excluding net gains (losses) from securities and bank owned life insurance income.

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Noninterest Income:

Total noninterest income decreased $0.9 million, or 12%, for the quarter ended September 30, 2022 as compared to the same quarter in 2021, and increased $2.1 million, or 10% for the year-to-date period ended September 30, 2022 as compared to the same period in 2021. Service charges on customer deposit account income were relatively unchanged in the third quarter of 2022 as compared to the third quarter of 2021. This service charge income was $0.8 million higher, or 9% in the first nine months of 2022, as compared to the same period in 2021. These increase in the year-to-date comparisons are primarily a result of increased analysis fees and overdraft income. Overdraft fees and returned check charges were unchanged for the third quarter of 2022 over the like quarter in 2021, and increased $0.4 million to $4.0 million for the first nine months of 2022.

Effective in the third quarter of 2022, the Company made several changes to its NSF fees (i.e. returned item) and overdraft fees for customers.  In particular NSF fees are no longer charged, and overdraft fees are limited to 4 per day and no continuous overdraft fee will be charged.  In addition, the amount of overdraft privilege (i.e. the amount to which the Company will pay overdrafts for customers) was increased by $250. Although the exact impact of these changes is unknown, the combination of eliminating NSF fees and increasing overdraft privilege is not expected to have a material impact on overall overdraft income.

Other service charges and fees increased $0.1 million or 3% for the third quarter of 2022 as compared to the same period in 2021, and increased $0.2 million for the first nine months of 2022 as compared to the same period in 2021.

There were no gains of the sales of securities for the third quarter of 2022 or 2021, but there was a $1.0 million gain on the sale of securities for the first nine months of 2022 with no sales in the comparable year-to-date period of 2021. The sale in the first nine months of 2022 was a strategic effort to rebalance the portfolio by selling longer duration and higher price volatility securities as a hedge against rising interest rates, due to likely persistent inflationary pressures in the near-intermediate term environment.

BOLI income decreased by $1.1 million for the third quarter of 2022 as compared to the third quarter of 2021. At September 30, 2022, there was $43.1 million in traditional BOLI policies and $9.0 million in separate account corporate owned life insurance policies associated with the deferred compensation plans. Investments in the separate account variable life insurance policies are invested in a similar proportionate mix of asset classes that our deferred compensation participants have elected, with the exception of participant elections in a fixed income account. Such election by plan participants in the fixed income account is ignored which creates greater volatility of the corporate owned life insurance asset value as compared to the related liability balance for deferred compensation. More specifically, the specific account life insurance policies are designed to hold similar assets to the deemed investments in the director and employee deferred compensation plans. Directors and officers are allowed to make a deemed investment in a fixed income account designed to mirror the crediting rate on one of the life insurance policies. However, the amount of deferred compensation attributed to the fixed income account significantly exceeds the amount of life insurance invested in a similar fixed income account. As the life insurance funding does not closely match the deferred compensation deemed investments, fluctuations occur in earnings of the life insurance plan as compared to the related expense of the deferred compensation plan. If earnings on the life insurance plan are negative, it creates a scenario where the negative income is not tax deductible and has an unfavorable impact on the Company’s tax rate. This scenario occurred in 2022 as the lower values of funds inside the life insurance policies were only partially offset by lower deferred compensation expense reflected primarily as negative deferred director fees expense. For the first nine months of 2022 as compared to the same period in 2021 life insurance income was $3.7million lower and the related deferred compensation and deferred director’s fees was $2.5 million lower.

In the “other” category of noninterest income the Company there was relatively no change in the third quarter of 2022 as compared to the third quarter of 2021, and a $3.9 million increase in the first nine months of 2022 as compared to the same period in 2021. The year-to-date comparison includes non-recurring gains resulting from the sale of Visa B stock of $2.6 million and a small business investment company fund investment of $0.6 million, as well as $0.4 million in life insurance proceeds, a $1.0 million recovery of prior year legal expenses, $0.2 million reduction in partnership costs, and a $0.2 million gain from a recovery on an acquired loan.

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Noninterest Expense:

Total noninterest expense increased by $0.1 million, or 1%, in the third quarter of 2022 relative to the third quarter of 2021, and by $1.9 million, or 3%, in the first nine months of 2022 as compared to the first nine months of 2021.

The tax-equivalent efficiency ratio was 58.10% in the third quarter of 2022 as compared to 59.75% in the same quarter of 2021, and was 61.10% for the first nine months of 2022 as compared to 58.29% for the first nine months of 2021. The efficiency ratio represents total noninterest expense divided by the sum of fully tax-equivalent net interest and noninterest income; the provision for credit losses on loans and leases and investment gains/losses are excluded from the equation.

Salaries and Benefits were $0.9 million, or 9%, higher in the third quarter of 2022 as compared to the third quarter of 2021 and $2.9 million, or 9%, higher for the first nine months of 2022 compared to the same period in 2021. The reason for this increase is primarily due to increased salary expense due to the strategic hiring of lending and management staff for both the quarterly and year-to-date comparisons. There were 500 full-time equivalent employees at September 30, 2022 as compared to 482 at September 30, 2021.

Occupancy expenses were $0.1 million higher for the third quarter of 2022 as compared to the same quarter in 2021 and $0.3 million lower for the first nine months of 2022 as compared to the same period in 2021. The primary reason for increase in the quarterly comparisons was from increases in utility rate and usage. For the year-to-date comparison the decreases came from the closure of five branch facilities in 2021.

Other noninterest expense decreased $0.9 million, or 11% for the third quarter 2022 as compared to the third quarter in 2021, and decreased $0.7 million, or 3% for the first nine months of 2022 as compared to the same period in 2021. The variances for the third quarter of 2022 compared to the same period in 2021 was primarily driven by a decrease of $0.5 million in legal costs, a $0.7 million favorable variance in directors deferred compensation expense, linked to the changes in BOLI income, and lower telecommunications costs. For the year-over-year comparison the categories of increase were the same as with the quarterly comparison, along with a $0.3 million decrease in consultant expenses partially offset by increases in hiring and recruiting costs, and a $0.7 million restitution payment to customers charged nonsufficient fund fees in the past five years for representments. The restitution payment was made after the FDIC published supervisory guidance addressing certain consumer compliance risks associated with the treatment of non-sufficient fund charges on representments.

Beginning in the third quarter of 2022, the Company no longer charges customers for returned item fees, commonly referred to as nonsufficient fund fees. In addition, the Company increased overdraft privilege for both commercial and consumer customers, but is limiting the number of daily overdraft fees to four per day (previously five per day) and is no longer charging a fee for continuous overdrafts (previously a $35 charge after the 10^th consecutive day an account is in an overdraft position). These changes to our nonsufficient fund fees, overdraft fees and overdraft privilege program are not expected to have a material impact on deposit fee income.

PROVISION FOR INCOME TAXES

The Company sets aside a provision for income taxes on a monthly basis. The amount of that provision is deter­mined by first applying the Company’s statutory income tax rates to estimated taxable income, which is pre-tax book income adjusted for permanent dif­ferences, and then subtracting available tax credits. Permanent differences include but are not limited to tax-exempt interest income, BOLI income, and certain book expenses that are not allowed as tax deductions. Our tax credits consist primarily of those generated by investments in low-income housing tax credit funds. The Company's provision for income taxes was 25.1% of pre-tax income in the third quarter of 2022 relative to 24.1% in the third quarter of 2021, and 26.1% of pre-tax income for the first nine months of 2022 relative to 25.0% for the same period in 2021. The increase in effective tax rate for both the quarterly and year-to-date comparisons is due to the volatility in the Corporate Owned Life Insurance asset value associated with our non-qualified deferred compensation plans. In the third quarter and first nine months of 2022, the investments associated with the non-qualified deferred

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compensation plans declined in value, resulting in a non-deductible expense as compared to an increase in value generating non-taxable income for the third quarter, and first nine months of 2021.

BALANCE SHEET ANALYSIS

EARNING ASSETS

The Company’s interest earning assets are comprised of loans and investments, including overnight investments and surplus balances held in interest earning accounts in our Federal Reserve Bank account. The composition, growth characteristics, and credit quality of both of those components are significant determinants of the Company’s financial condition. Investments are analyzed in the section immediately below, while the loan and lease portfolio and other factors affecting earning assets are discussed in the sections following investments.

INVESTMENTS

The Company’s investments may at any given time consist of debt securities and marketable equity securities (together, the “investment portfolio”), investments in the time deposits of other banks, surplus interest earning balances in our Federal Reserve Bank account, and overnight fed funds sold. The Company’s investments can serve several purposes, including the following: 1) they can provide liquidity for potential funding needs; 2) they provide a source of pledged assets for securing public deposits, bankruptcy deposits and certain borrowed funds which require collateral; 3) they constitute a large base of assets with structural characteristics that can be changed more readily than loan or deposit portfolios, as might be required for interest rate risk management purposes; 4) they are another interest earning option for the placement of surplus funds when loan demand is light; and 5) they can provide partially tax exempt income.

The investment portfolio is reflected on the balance sheet as investment securities and totaled $1.2 billion, or 35% of total assets at September 30, 2022, and $973.3 million, or 29% of total assets at December 31, 2021. The increase was primarily due to purchases of municipal bonds for $65.8 million, corporate securities of $25.8 million, and AAA and AA tranches of collateralized loan obligations of $167.2 million, partially offset by decreases in government and agency securities, including mortgage-backed securities and collateralized mortgage obligations of $6.4 million.

The Company carries “available for sale” investments at their fair market values and “held to maturity” investments at amortized cost. We currently have the intent and ability to hold our investment securities to maturity, but the securities are all marketable. The expected effective duration was 2.7 years for available-for-sale investments and 6.8 years for held-to-maturity investments at September 30, 2022, as compared to 3.2 years for available-for-sale investments at December 31, 2021.

In the second and fourth quarters of 2022 the Company transferred $162.1 million and $198.3 million, respectively of “available for sale” investments to “held to maturity”. Those securities were transferred at fair market value on the date of the transfer. The transfer was initiated to reduce the effect of potential future rate increases on the available-for-sale portfolio, mark-to-market, other comprehensive income and equity. See Note 9, Investment Securities for additional information.

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The following table sets forth the carrying amount for available-for-sale securities, at fair value, and held-to-maturity securities, at amortized cost, net of the allowance for credit losses of the Company’s investment portfolio by investment type as of the dates noted:

Investment Portfolio

(dollars in thousands, unaudited)

	September 30, 2022			December 31, 2021
	Carrying Amount		Percent	Carrying Amount		Percent
Available for sale
U.S. government agencies	$	3,955	0.32%	$	1,574	0.16%
Mortgage-backed securities		191,022	15.59%		306,727	31.52%
State and political subdivisions		320,729	26.17%		304,268	31.26%
Corporate bonds		54,336	4.43%		28,529	2.93%
Collateralized loan obligations		499,392	40.74%		332,216	34.13%
Total available for sale		1,069,434	87.25%		973,314	100.00%
Held to maturity
U.S. government agencies		6,113	0.50%		—	0.00%
Mortgage-backed securities		100,792	8.23%		—	0.00%
State and political subdivisions		49,306	4.02%		—	0.00%
Total held to maturity		156,211	12.75%		—	0.00%
Total securities	$	1,225,645	100.00%	$	973,314	100.00%

Investment securities that were pledged as collateral for borrowings and/or potential borrowings from the Federal Home Loan Bank and the Federal Reserve Bank, customer repurchase agreements, and other purposes as required or permitted by law totaled $175.5 million at September 30, 2022 and $167.2 million at December 31, 2021, leaving $1.05 billion in unpledged debt securities at September 30, 2022 and $806.1 million at December 31, 2021. Securities that were pledged in excess of actual pledging needs and were thus available for liquidity purposes, if needed, totaled $34.6 million at September 30, 2022 and $47.0 million at December 31, 2021.

LOAN AND LEASE PORTFOLIO

A distribution of the Company’s loans showing the balance and percentage of loans by type is presented for the noted periods in the table below. The balances in the table are after deferred or unamortized loan origination, extension, or commitment fees, and deferred origination costs. While not reflected in the loan totals and not currently comprising a material segment of our lending activities, the Company also occasionally originates and sells, or participates out portions of, loans to non-affiliated investors.

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Loan and Lease Distribution

(dollars in thousands, unaudited)

	September 30, 2022			December 31, 2021
	Amount		Percent	Amount		Percent
Real estate:
1-4 family residential construction	$	—	—	$	21,369	1.08%
Other construction/land		18,255	0.91%		25,299	1.28%
1-4 family - closed-end		421,136	21.10%		289,457	14.65%
Equity lines		21,441	1.07%		26,588	1.35%
Multi-family residential		69,569	3.49%		53,458	2.71%
Commercial real estate - owner occupied		324,715	16.27%		334,446	16.93%
Commercial real estate - non-owner occupied		894,213	44.80%		882,888	44.69%
Farmland		117,559	5.89%		106,706	5.40%
Total real estate		1,866,888	93.52%		1,740,211	88.09%
Agricultural		31,528	1.58%		33,990	1.72%
Commercial and industrial		70,844	3.55%		109,791	5.56%
Mortgage warehouse lines		46,554	2.33%		101,184	5.12%
Consumer loans		4,202	0.21%		4,550	0.23%
Total loans and leases		2,020,016	101.19%		1,989,726	100.72%
Allowance for credit losses on loans		(23,790)	(1.19)%		(14,256)	(0.72)%
Total loans and leases, net	$	1,996,226	100.00%	$	1,975,470	100.00%

Net loans and leases at $2.0 billion, increased $22.6 million during the first nine months of 2022 with an overall 1% change. The increase was primarily a result of an increase in 1-4 family residential real estate loans, mostly from the purchase of $173.1 million in high quality fixed-rate jumbo mortgage loans. Other positive variances from organic growth included a $10.8 million increase in ag real estate, a $16.2 million increase in multi-family real estate, and an increase of $4.1 million in commercial real estate. Negatively impacting these positive variances were loan paydowns and maturities resulting in net declines in many categories even with solid loan production. In particular there was a $28.3 million net decrease in construction loans, a $38.4 million decrease in commercial and industrial loans, and a $54.6 million unfavorable variance in mortgage warehouse loans. Further, SBA PPP loan forgiveness resulted in a $27.6 million decline in loan balances, included in the commercial and industrial variance noted above.

The following table presents a roll forward of the Company’s gross loan balances for each of the periods noted:

LOAN ROLLFORWARD
(Dollars in Thousands, Unaudited)
	For the three months ended:						For the nine months ended:
		September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Gross loans beginning balance	$	2,022,662	$	1,983,331	$	2,144,796	$	1,989,726	$	2,463,111
New credit extended		82,958		119,553		4,656		225,054		92,950
Loan purchases		—		46,364		122,291		173,082		122,291
Changes in line of credit utilization		(7,811)		(17,837)		(15,852)		(45,201)		(55,509)
Change in mortgage warehouse		(11,581)		956		(23,865)		(54,630)		(181,192)
Pay-downs, maturities, charge-offs and amortization (1)		(65,864)		(109,705)		(92,200)		(267,667)		(301,825)
Gross loans ending balance		2,020,364		2,022,662		2,139,826		2,020,364		2,139,826
Deferred costs and (fees), net		(348)		(1,081)		(2,612)		(348)		(2,612)
Loans, net of deferred costs and (fees)	$	2,020,016	$	2,021,581	$	2,137,214	$	2,020,016	$	2,137,214

The Company’s regulatory commercial real estate concentration ratio decreased to 235% at September 30, 2022 as compared to 248% at December 31, 2021.

Unused commitments, excluding mortgage warehouse and overdraft lines, were $228.4 million at September 30, 2022, compared to $219.6 million at December 31, 2021. Total line utilization, excluding mortgage warehouse and consumer

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overdraft lines, was 57.9% at September 30, 2022 and 61.4% at December 31, 2021. Mortgage warehouse utilization declined significantly to 9% at September 30, 2022, as compared to 28% at December 31, 2021. It should be noted that the majority of the mortgage warehouse lines were moved to repurchase agreement lines that provide stronger credit protection to the Company, as well as more favorable regulatory capital treatment as these repurchase lines are not considered off-balance sheet commitments.

As expected, PPP loans continue to decline as borrowers receive forgiveness on these loans. There were 43 loans for $3.6 million outstanding at September 30, 2022, compared to 438 loans for $31.8 million at December 31, 2021.

NONPERFORMING ASSETS

Nonperforming assets are comprised of loans for which the Company is no longer accruing interest, in addition to foreclosed assets which is primarily OREO, but can include other foreclosed assets.

If the Company grants a concession to a borrower in financial difficulty, the loan falls into the category of a TDR, unless the modification was granted under section 4013 of the CARES Act or the April 7, 2020 Interagency Statement. TDRs may be classified as either nonperforming or performing loans depending on their underlying characteristics and circumstances. The following table presents comparative data for the Company’s nonperforming assets and performing TDRs as of the dates noted:

Nonperforming assets and performing troubled debt restructurings

(dollars in thousands, unaudited)

	September 30, 2022		December 31, 2021		September 30, 2021
NON-ACCRUAL LOANS:
Real estate:
1-4 family - closed-end	$	485	$	1,023	$	1,418
Equity lines		61		892		1,962
Commercial real estate - owner occupied		—		1,234		1,251
Farmland		18,270		—		419
TOTAL REAL ESTATE		18,816		3,149		5,050
Agriculture		7,731		378		471
Commercial and industrial		225		973		1,245
Consumer loans		—		22		22
TOTAL NONPERFORMING LOANS		26,772		4,522		6,788
Foreclosed assets		—		93		93
Total nonperforming assets	$	26,772	$	4,615	$	6,881
Performing TDRs (1)	$	4,639	$	4,910	$	5,509
Nonperforming loans as a % of total gross loans and leases		1.33%		0.23%		0.32%
Nonperforming assets as a % of total gross loans and leases and foreclosed assets		1.33%		0.23%		0.32%

(1) Performing TDRs are not included in nonperforming loans above, nor are they included in the numerators used to calculate the ratios disclosed in this table.

Total nonperforming assets increased by $22.2 million, to $26.8 million during the first nine months of 2022, primarily as a result of an increase in non-accrual loan balances and the downgrade in the first quarter of 2022, consisting of one relationship in the dairy industry comprising four separate loans. These loans were written down by $1.96 million with a corresponding charge-off in the first quarter of 2022. A $1.2 million allowance for credit losses was recorded in the third quarter of 2022 based on management’s most recent estimate of net realizable value on the related collateral. The Company's ratio of nonperforming loans to gross loans increased to 1.33% at September 30, 2022 from 0.23% at December 31, 2021. All of the Company's nonperforming assets are periodically reviewed and are either well-reserved

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based on current loss expectations or are carried at the fair value of the underlying collateral, net of expected disposition costs and management believes the established allowance for credit loss on such loans is appropriate based primarily on recent independent appraisals.

As shown in the table, we also had $4.6 million in loans classified as performing TDRs on which we were still accruing interest as of September 30, 2022, a decrease of $0.3 million, or 6%, relative to December 31, 2021.

There were no foreclosed assets at September 30, 2022 and $0.1 million at December 31, 2021, comprised of one property classified as OREO. The property was written down to fair value less disposition costs in the second quarter of 2022 and subsequently sold in the third quarter of 2022. All foreclosed assets are periodically evaluated and written down to their fair value less expected disposition costs, if lower than the then-current carrying value.

An action plan is in place for each of our non-accruing loans and foreclosed assets and they are all being actively managed. Collection efforts are continuously pursued for all nonperforming loans, but we cannot provide assurance that they will be resolved in a timely manner or that nonperforming balances will not increase.

The Company had $1.2 million in loans past due 30-59 days at September 30, 2022. This is a decrease of $1.0 million over the balance at December 31, 2021. All of these past due loans are under management supervision and every effort is being taken to assist the borrowers and manage credit risk in this regard.

ALLOWANCE FOR CREDIT LOSSES – LOANS AND LEASES RECEIVABLE

The allowance for credit losses on loans and leases, a contra-asset, is established through periodic provisions for credit losses on loans and leases. It is maintained at a level that is considered adequate to measure expected losses on individually identified loans, as well as expected losses inherent in the remaining loan portfolio. Specifically identifiable and quantifiable losses are immediately charged off against the allowance; recoveries are generally recorded only when sufficient cash payments are received subsequent to the charge off.

Due to the uncertainty of national and local economic conditions, the Company deferred implementation of the CECL accounting method under Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-03 and related amendments, Financial Instruments – Credit Losses (Topic 326) under section 4014 of the CARES Act. The Company implemented CECL on January 1, 2022, and recorded a $10.4 million increase in the allowance for credit losses, which included a $0.9 million reserve for unfunded commitments as an adjustment to equity, net of deferred taxes.

The Company's allowance for credit losses on loans and leases was $23.8 million at September 30, 2022, as compared to $14.3 million at December 31, 2021, and $15.6 million at September 30, 2021. The $9.5 million increase in the allowance for credit losses on loans and leases during the first nine months of 2022 is due to a $9.5 million one-time adjustment from the implementation of CECL on January 1, 2022, a $4.4 million provision for credit losses on loans and leases, and net loan charge-offs of $4.3 million.

The allowance for credit losses on loans and leases was 1.18% of gross loans at September 30, 2022, and 0.72% of gross loans at December 31, 2021. Management's detailed analysis indicates that the Company's allowance for credit losses on loans and leases should be sufficient to cover credit losses for the life of the loans and leases outstanding as of September 30, 2022, but no assurance can be given that the Company will not experience substantial future losses relative to the size of the loan and lease loss allowance.

A separate allowance of $0.9 million for potential credit losses inherent in unused commitments is included in other liabilities at September 30, 2022, as compared to $0.2 million at December 31, 2021. As mentioned previously a $0.9 million one-time adjustment was recorded to the reserve for unfunded commitments on January 1, 2022 upon the implementation of CECL.

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The following table summarizes activity in the credit allowance for losses on loans and leases for the noted periods:

Allowance for Credit Losses on Loans and Leases

(dollars in thousands, unaudited)

	For the three months ended		For the three months ended		For the nine months ended		For the nine months ended		For the year ended
	September 30,		September 30,		September 30,		September 30,		December 31,
Balances:	2022		2021		2022		2021		2021
Average gross loans and leases outstanding during period (1)	$	2,021,490	$	2,083,320	$	1,995,274	$	2,210,714	$	2,169,582
Gross loans and leases outstanding at end of period	$	2,020,364	$	2,139,826	$	2,020,364	$	2,139,826	$	1,989,726
Allowance for credit losses on loans and leases:
Balance at beginning of period	$	22,802	$	16,421	$	14,256	$	17,738	$	17,738
Adoption of ASC 326		—		—		9,454		—		—
Provision charged to expense		1,212		(600)		4,360		(2,450)		(3,650)
Charge-offs
Real estate
1-4 family residential construction		—		—		—		—		—
Other construction/land		—		—		—		—		—
1-4 family - closed-end		—		—		—		—		—
Equity lines		—		—		—		12		12
Multi-family residential		—		—		—		—		—
Commercial real estate- owner occupied		—		—		—		233		233
Commercial real estate- non-owner occupied		—		—		1,911		—		—
Farmland		—		—		1,958		—		—
Total real estate		—		—		3,869		245		245
Agricultural		—		—		212		50		50
Commercial and industrial		84		52		244		129		159
Consumer loans		372		274		984		606		946
Total	$	456	$	326	$	5,309	$	1,030	$	1,400
Recoveries
Real estate
1-4 family residential construction		—		—		—		—		—
Other construction/land		—		—		259		328		328
1-4 family - closed-end		—		(84)		87		(78)		(67)
Equity lines		—		25		12		25		25
Multi-family residential		—		—		—		—		—
Commercial real estate- owner occupied		—		—		—		233		233
Commercial real estate- non-owner occupied		—		—		—		82		82
Farmland		—		—		—		—		—
Total real estate		—		(59)		358		590		601
Agricultural		—		—		—		—		—
Commercial and industrial		36		11		118		203		223
Consumer loans		196		170		553		566		744
Total	$	232	$	122	$	1,029	$	1,359	$	1,568
Net loan charge offs (recoveries)	$	224	$	204	$	4,280	$	(329)	$	(168)
Balance at end of period	$	23,790	$	15,617	$	23,790	$	15,617	$	14,256
RATIOS
Net charge-offs (recoveries) to average loans and leases (annualized)		0.04%		0.04%		0.29%		(0.02)%		(0.01)%
Allowance for credit losses on loans and leases to gross loans and leases at end of period		1.18%		0.73%		1.18%		0.73%		0.72%
Allowance for credit losses on loans and leases to nonperforming loans		88.86%		230.07%		88.86%		230.07%		315.26%
Net loan charge-offs (recoveries) to allowance for credit losses on loans and leases at end of period		0.94%		1.31%		17.99%		(2.11)%		(1.18)%
Net loan charge-offs (recoveries) to provision for credit losses on loans and leases		18.48%		(34.00)%		98.17%		13.43%		4.60%

(1) Average balances are obtained from the best available daily or monthly data and are net of deferred fees and related direct costs.

The Company’s credit allowance for losses on loans and leases at September 30, 2022 represents Management’s best estimate of expected losses in the loan portfolio as of that date, but no assurance can be given that the Company will not experience substantial losses relative to the size of the allowance. Furthermore, fluctuations in credit quality, changes in economic conditions, updated accounting or regulatory requirements, and/or other factors could induce us to augment or reduce the allowance.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company maintains commitments to extend credit in the normal course of business, as long as there are no violations of conditions established in the outstanding contractual arrangements. It is unlikely that all unused commitments will ultimately be drawn down. Unused commitments to extend credit, which included standby letters of credit, totaled $798.8 million at September 30, 2022 and $560.7 million at December 31, 2021, representing approximately 40% of gross loans outstanding at September 30, 2022 and 28% at December 31, 2021. Included in unused commitments are mortgage warehouse lines which are mostly in the form of repo lines and are unconditionally cancellable. Unused commitments on mortgage warehouse lines were $488.4 million at September 30, 2022 and $272.8 million at December 31, 2021. The increase in unused commitments on mortgage warehouse lines is due in large part to the decrease in funded commitments due to the impact of recent interest rate increases. Unused commitments exclusive of mortgage warehouse lines have increased $8.8 million or 4% for the first nine months of 2022 and are due to an increase in new lines of credit. The Company also had undrawn letters of credit issued to customers totaling $2.9 million at September 30, 2022 and December 31, 2021. The effect on the Company’s revenues, expenses, cash flows and liquidity from the unused portion of commitments to provide credit cannot be reasonably predicted because there is no guarantee that the lines of credit will ever be used. However, the “Liquidity” section in this Form 10-Q outlines resources available to draw upon should we be required to fund a significant portion of unused commitments.

In addition to unused commitments to provide credit, the Company is utilizing a $125 million letter of credit issued by the Federal Home Loan Bank on the Company’s behalf as security for certain local agency deposits which totaled $51.6 million at September 30, 2022. That letter of credit is backed by loans that are pledged to the FHLB by the Company. For more information on the Company’s off-balance sheet arrangements, see Note 7 to the consolidated financial statements located elsewhere herein.

OTHER ASSETS

Interest earning cash balances were discussed above in the “Investments” section, but the Company also maintains a certain level of cash on hand in the normal course of business as well as non-earning deposits at other financial institutions. Our balance of cash and due from banks depends on the timing of collection of outstanding cash items (checks), the amount of cash held at our branches, and our reserve requirement among other things, and it is subject to significant fluctuations in the normal course of business. While cash flows are normally predictable within limits, those limits are fairly broad and the Company manages its short-term cash position through the utilization of overnight loans to, and borrowings from, correspondent banks, including the Federal Reserve Bank and the Federal Home Loan Bank. Should a large “short” overnight position persist for any length of time, the Company typically raises money through focused retail deposit gathering efforts or by adding brokered time deposits. If a “long” position is prevalent, we could let brokered deposits or other wholesale borrowings roll off as they mature, or we might invest excess liquidity into investments or loans, subject to the bank’s risk tolerances. The Company’s balance of non-earning cash and due from banks was $82.3 million at September 30, 2022 relative to $63.1 million at December 31, 2021.

Foreclosed assets are discussed above in the section titled “Nonperforming Assets.”

Net premises and equipment decreased by $0.9 million during the first nine months of 2022, to $22.7 million. This decline was primarily a result of normal depreciation, the disposal of obsolete equipment, net of new purchases.

Goodwill was $27.4 million at September 30, 2022, unchanged during the first nine months of 2022. Goodwill is tested for impairment annually, unless events and circumstances exist which indicate that an impairment test should be performed. A Goodwill impairment test was last performed during the fourth quarter 2021 and determined that no impairment existed. There have been no triggering events in the first nine months of 2022 that would require the Company to perform a Goodwill impairment test, however the Company will continue to monitor its Goodwill for potential impairment.

Bank-owned life insurance, with a balance of $52.1 million at September 30, 2022, is discussed in detail above in the “Noninterest Income and Noninterest Expense” section.

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DEPOSITS AND INTEREST BEARING LIABILITIES

DEPOSITS

Deposits represent another key balance sheet category impacting the Company’s net interest income and profitability metrics. Deposits provide liquidity to fund growth in earning assets, and the Company’s net interest margin is improved to the extent that growth in deposits is concentrated in less volatile and typically less costly non-maturity accounts such as demand deposit accounts, NOW accounts, savings accounts, and money market demand accounts. Information concerning average balances and rates paid by deposit type is included in the Average Balances and Rates tables appearing above, in the section titled “Net Interest Income and Net Interest Margin.” A distribution of the Company’s deposits by type, showing the period-end balance and percentage of total deposits, is presented as of the dates indicated in the following table.

Deposit Distribution

(dollars in thousands, unaudited)

	September 30, 2022			December 31, 2021
	Amount		Percent	Amount		Percent
Noninterest bearing demand deposits	$	1,118,245	38.76%	$	1,084,544	38.98%
Interest bearing demand deposits		187,467	6.50%		129,783	4.67%
NOW		545,001	18.89%		614,770	22.10%
Savings		481,882	16.70%		450,785	16.21%
Money market		140,620	4.87%		147,793	5.31%
Time		332,253	11.51%		293,897	10.57%
Brokered deposits		80,000	2.77%		60,000	2.16%
Total deposits	$	2,885,468	100.00%	$	2,781,572	100.00%

Deposit balances reflect net growth of $103.9 million, or 4%, during the first nine months of 2022. Time deposits were $332.3million at September 30, 2022 as compared to $293.9 million at December 31, 2021. Most of the increase in time deposits was for the Prime Index Certificate of Deposit account that is floating rate and pays the current Wall Street Journal Prime rate minus a spread of 325 to 400 basis points, with a minimum rate of 20 basis points. Brokered deposits increased $20.0 million or 33% to $80.0 million at September 30, 2022 as compared to $60.0 million at December 31, 2021. Non-maturity deposit growth of $45.5 million for the first nine months of 2022 was primarily the result of increases in balances of existing customers as the total number of customers was relatively unchanged.

Management is of the opinion that a relatively high level of core customer deposits is one of the Company’s key strengths, and we continue to strive for core deposit retention and growth. In particular, the Company’s ratio of noninterest-bearing deposits to total deposits was 38.8% at September 30, 2022 as compared to 39.0% at December 31, 2021.

OTHER INTEREST-BEARING LIABILITIES

The Company’s non-deposit borrowings may, at any given time, include fed funds purchased from correspondent banks, borrowings from the Federal Home Loan Bank, advances from the Federal Reserve Bank, securities sold under agreements to repurchase, subordinated notes and/or junior subordinated debentures. The Company uses short-term FHLB advances and fed funds purchased on uncommitted lines to support liquidity needs created by seasonal deposit flows, to temporarily satisfy funding needs from increased loan demand, and for other short-term purposes. The FHLB line is committed, but the amount of available credit depends on the level of pledged collateral.

Total non-deposit interest-bearing liabilities increased by $108.4 million, during the first nine months of 2022 primarily due to an increase in customer repurchase agreements and overnight borrowings. Repurchase agreements totaled $112.0 million at September 30, 2022 relative to a balance of $106.9 million at year-end 2021. Repurchase agreements represent “sweep accounts”, where certain customers have elected to have their commercial deposit balances above a specified threshold transferred at the close of each business day into non-deposit investments accounts. The balance in the

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investment account is used to have the customer purchase securities or a perfected interest in specifically identified pledged securities from the bank, which are then repurchased by the bank from the customer the next business day. FHLB advances comprised all of the $103.1 million in overnight borrowings at September 30, 2022 relative to no like borrowings at year-end 2021.

The Company had Long term debt totaling $49.2 million and $49.1 million at September 30, 2022 and December 31, 2021, respectively, in the form of 3.25% fixed – floating subordinated debt with a ten-year maturity and junior subordinated debentures totaling $35.4 million at September 30, 2022 and $35.3 million at December 31, 2021, in the form of long-term borrowings from trust subsidiaries formed specifically to issue trust preferred securities.

OTHER NONINTEREST BEARING LIABILITIES

Other liabilities are principally comprised of operating lease right-of-use liabilities, accrued interest payable, other accrued but unpaid expenses, and certain clearing amounts. The Company’s balance of other liabilities was $51.1 million at September 30, 2022 as compared to $35.4 million at December 31, 2021, an increase of $15.7 million or 44%. The increase was primarily driven by the Company’s investment commitment in a $2.6 million low-income housing tax credit fund, a $5.0 million investment commitment in a FinTech Fund and $6.8 million in unsettled investment security transactions.

LIQUIDITY AND MARKET RISK MANAGEMENT

LIQUIDITY

Liquidity management refers to the Company’s ability to maintain cash flows that are adequate to fund operations and meet other obligations and commitments in a timely and cost-effective manner. Detailed cash flow projections are reviewed by Management on a monthly basis, with various stress scenarios applied to assess our ability to meet liquidity needs under unusual or adverse conditions. Liquidity ratios are also calculated and reviewed on a regular basis. While those ratios are merely indicators and are not measures of actual liquidity, they are closely monitored, and we are committed to maintaining adequate liquidity resources to draw upon should unexpected needs arise.

The Company, on occasion, experiences cash needs as the result of loan growth, deposit outflows, asset purchases or liability repayments. To meet these short-term needs, we can borrow overnight funds from other financial institutions, draw advances via Federal Home Loan Bank lines of credit, or solicit brokered deposits if customer deposits are not immediately obtainable from local sources.

At September 30, 2022 and December 31, 2021, the Company had the following sources of primary and secondary liquidity (dollars in thousands):

Primary and secondary liquidity sources		September 30, 2022		December 31, 2021
Cash and cash equivalents	$	86,683	$	257,528
Unpledged investment securities		1,041,115		806,132
Excess pledged securities		34,606		47,024
FHLB borrowing availability		724,047		787,519
Unsecured lines of credit		305,000		305,000
Funds available through fed discount window		34,235		50,608
Totals	$	2,225,686	$	2,253,811

In addition to the above sources, the Company could obtain brokered deposits, obtain deposits via deposit listing services, or offer higher rate time deposits within our market.

Cash and cash equivalents during the first nine months of 2022, declined $170.8 million due to increases in investment securities, mostly in the form of collateralized loan obligations.

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The Company performs regular stress tests on its liquidity and at this time, believes that we have sufficient primary and secondary liquidity sources for operations.

The Company has a higher level of actual balance sheet liquidity than might otherwise be the case, since we utilize a letter of credit from the FHLB rather than investment securities for certain pledging requirements. That letter of credit, which is backed by loans pledged to the FHLB by the Company, totaled $125 million at September 30, 2022 and December 31, 2021. Other sources of liquidity include the brokered deposit market, deposit listing services, and the ability to offer local time-deposit campaigns. Management is of the opinion that available investments and other potentially liquid assets, along with standby funding sources it has arranged, are more than sufficient to meet the Company’s current and anticipated short-term liquidity needs and that its liquidity has not been adversely impacted by COVID-19.

The Company’s primary liquidity ratio and net loans to deposits were 39.12% and 70.01%, respectively, at September 30, 2022, as compared to internal policy guidelines of “greater than 15%” and “less than 95%.” Ratios and sub-limits for the various components comprising wholesale funding, which were all well within policy guidelines at September 30, 2022, are also periodically reviewed by Management and the Board. The Company has been able to maintain a robust liquidity position in recent periods, but no assurance can be provided that our liquidity position will continue at current strong levels.

The holding company’s primary uses of funds include operating expenses incurred in the normal course of business, interest on trust preferred securities and subordinated debt, shareholder dividends, and share repurchases. Its primary source of funds is dividends from the Bank since the holding company does not conduct regular banking operations. As of September 30, 2022, the holding company maintained a cash balance of $12.4 million. Management anticipates that the holding company has sufficient liquidity to meet its funding requirements for the foreseeable future. Both the holding company and the Bank are subject to legal and regulatory limitations on dividend payments, as outlined in Item 5(c) Dividends in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 which was filed with the SEC.

INTEREST RATE RISK MANAGEMENT

Market risk arises from changes in interest rates, exchange rates, commodity prices and equity prices. The Company does not engage in the trading of financial instruments, nor does it have exposure to currency exchange rates. Our market risk exposure is primarily that of interest rate risk, and we have established policies and procedures to monitor and limit our earnings and balance sheet exposure to changes in interest rates. The principal objective of interest rate risk management is to manage the financial components of the Company’s balance sheet in a manner that will optimize the risk/reward equation for earnings and capital under a variety of interest rate scenarios.

In the second quarter of 2022, the Company reclassified $162.1 million of securities that have the highest level of volatility to changes in interest rates from available-for-sale to held-to-maturity to mitigate the impact on tangible capital.

To identify areas of potential exposure to interest rate changes, we utilize commercially available modeling software to perform monthly earnings simulations and calculate the Company’s market value of portfolio equity under varying interest rate scenarios. The model imports relevant information for the Company’s financial instruments and incorporates Management’s assumptions on pricing, duration, and optionality for anticipated new volumes. Various rate scenarios consisting of key rate and yield curve projections are then applied in order to calculate the expected effect of a given interest rate change on interest income, interest expense, and the value of the Company’s financial instruments. The rate projections can be shocked (an immediate and parallel change in all base rates, up or down), ramped (an incremental increase or decrease in rates over a specified time period), economic (based on current trends and econometric models) or stable (unchanged from current actual levels).

In addition to a stable rate scenario, which presumes that there are no changes in interest rates, we typically use at least eight other interest rate scenarios in conducting our rolling 12-month net interest income simulations: upward shocks of 100, 200, 300, and 400 basis points, and downward shocks of 100, 200, and 300 basis points. Those scenarios may be

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supplemented, reduced in number, or otherwise adjusted as determined by Management to provide the most meaningful simulations considering economic conditions and expectations at the time. Pursuant to policy guidelines, we generally attempt to limit the projected decline in net interest income relative to the stable rate scenario to no more than 5% for a 100 basis point (bp) interest rate shock, 10% for a 200 bp shock, 15% for a 300 bp shock, and 20% for a 400 bp shock.

The Company had the following estimated net interest income sensitivity profiles over one-year, without factoring in any potential negative impact on spreads resulting from competitive pressures or credit quality deterioration:

	September 30, 2022				September 30, 2021
Immediate change in Interest Rates (basis points)	% Change in Net Interest Income		$ Change in Net Interest Income		% Change in Net Interest Income		$ Change in Net Interest Income
+400		6.4%	$	8,374		16.1%	$	17,379
+300		5.0%	$	6,497		13.2%	$	14,317
+200		3.6%	$	4,729		9.8%	$	10,592
+100		2.2%	$	2,917		5.7%	$	6,188
Base
-100		(5.6)%	$	(7,353)		(11.0)%	$	(11,936)
-200		(11.9)%	$	(15,551)		N/A		N/A

For the periods ending September 30, 2022 and September 30, 2021, management believes that the Company was asset sensitive, with net income increasing in a rising rate environment in all scenarios but declining in the down shocks. There is a change in the magnitude of the Company’s asset sensitivity based on its interest rate risk model at September 30, 2022 as compared to September 30, 2021, due to the level of overnight cash held with the Federal Reserve Bank. The Company had $3.2 million in overnight cash at September 30, 2022 as compared to $355.0 million at September 30, 2021; this reduction in excess funds tempered the degree in which net interest income would increase in the up shocks over the two quarterly comparisons presented. In the up 400 basis point shock scenario, expected net interest income over the next twelve months increases $8.4 million, or 6%, to $140.0 million at September 30, 2022 compared to an 16.1% increase or $17.4 million for the same period in 2021.

The change in net interest income is similar for the up 100, 200, 300, and 400 basis point scenarios. If there were an immediate and sustained upward adjustment of 100 basis points in interest rates, all else being equal, net interest income over the next 12 months is projected to improve by $2.9 million, or 2%, relative to a stable interest rate scenario, with the favorable variance increasing marginally as interest rates rise higher.

If there was an immediate downward adjustment of 100 basis points in interest rates, net interest income would drop $7.4 million or a negative variance of 6%. The change in net interest income in the down 200 basis point scenario is a decrease of $15.6 million or 12%. All interest rate shock scenarios are within our internal policy guidelines, and we will continue to monitor our interest rate risk profile and implement remedial changes if deemed appropriate.

If there was an immediate downward adjustment of 100 basis points in interest rates, net interest income would drop $8.3 million or a negative variance of 8%. The reason for the drop in net interest income is, most deposit products are at their floors of 0.10% and cannot be re-priced lower, while non-floored interest earning assets  such as loans and securities can theoretically still be re-priced lower in a falling rate environment. Due to the historically low current rate environment, we view any material interest rate reductions as unlikely in the near term. However, the potential percentage drop in net interest income in the “down 100 basis points” interest rate scenario exceeds our internal policy guidelines and we will continue to monitor our interest rate risk profile and implement remedial changes if deemed appropriate.

In addition to the net interest income simulations shown above, we run stress scenarios for the unconsolidated Bank where we model the possibility of no balance sheet growth, the potential runoff of “surge” core deposits which flowed into the Bank in the most recent economic cycle, and unfavorable movement in deposit rates relative to yields on earning assets (i.e., higher deposit betas). When a static balance sheet and a stable interest rate environ­ment are assumed, projected annual net interest income is $6.9 million lower than in our standard simulation.

The modeled economic value (or “fair value”) of financial instruments on the Company’s balance sheet will also vary under the interest rate scenarios previously discussed. The difference between the projected fair value of the Company’s financial assets and the fair value of its financial liabilities is referred to as the economic value of equity (“EVE”), and changes in EVE under different interest rate scenarios are effectively a gauge of the Company’s longer-term exposure to interest rate fluctuations. Fair values for financial instruments are estimated by discounting projected cash flows (principal and interest) at anticipated replacement interest rates for each account type, while the fair value of non-financial accounts is assumed to equal their book value for all rate scenarios. An economic value simulation is a static measure utilizing balance sheet accounts at a given point in time, and the measurement can change sub­stantially over time, as is evident in the tables below for the periods ending September 30, 2022 and 2021, respectively, as the Company’s balance sheet evolves and interest rate and yield curve assumptions are updated.

61

The change in economic value under different interest rate scenarios depends on the characteristics of each class of financial instrument, including stated interest rates or spreads relative to current or projected market-level interest rates or spreads, the likelihood of principal prepayments, whether contractual interest rates are fixed or floating, and the average remaining time to maturity. As a general rule, fixed-rate financial assets become more valuable in declining rate scenarios and less valuable in rising rate scenarios, while fixed-rate financial liabilities gain in value as interest rates rise and lose value as interest rates decline. The longer the duration of the financial instrument, the greater the impact a rate change will have on its value. In our economic value simulations, estimated prepayments are factored in for financial instruments with stated maturity dates, and decay rates for non-maturity deposits are projected based on historical patterns and Management’s best estimates.

Our EVE increased in the past twelve months primarily driven by an increase in deposits and an increase in deposit values. The tables below show estimated changes in the Company’s EVE as modeled under different interest rate scenarios relative to the base case:

	September 30, 2022				September 30, 2021
Immediate change in Interest Rates (basis points)	% Change in Fair Value of Equity		$ Change in Fair Value of Equity		% Change in Fair Value of Equity		$ Change in Fair Value of Equity
+400		9.3%	$	68,762		38.1%	$	218,354
+300		7.7%	$	56,711		35.7%	$	204,153
+200		5.4%	$	39,603		29.9%	$	171,390
+100		2.4%	$	17,782		17.6%	$	100,607
Base
-100		(14.4)%	$	(106,169)		(23.1)%	$	(132,270)
-200		(31.1)%	$	(229,698)		N/A		N/A

The table shows that our EVE is modeled to deteriorate in declining rate scenarios but should benefit from a paral­lel shift upward in the yield curve. The rate of increase in EVE accelerates the higher interest rates rise. This increase in sensitivity is caused by the increase in gross deposits, namely, an increase in noninterest bearing deposits which become more valuable as interest rates rise. We also run stress scenarios for the unconsolidated Bank’s EVE to simulate the possibility of adverse movement in loan prepay­ment rates, unfavorable changes in deposit rates, and higher deposit decay rates. Model results are highly sensitive to changes in assumed decay rates for non-maturity deposits, in particular, with material unfavorable variances occurring relative to the standard simulations shown above as decay rates are increased. Furthermore, while not as extreme as the variances produced by increasing non-maturity deposit decay rates, EVE also displays a relatively high level of sensitivity to unfavorable changes in deposit rate betas in rising interest rate scenarios.

The potential percentage drop in EVE in the “down 100 and 200 basis points” interest rate scenario exceeds our internal policy guidelines, and we will continue to monitor our interest rate risk profile and implement remedial changes if deemed appropriate. The percentage drop in EVE exceeding internal policy guidelines will most likely continue until interest rates and deposit rates return to historically higher levels.

CAPITAL RESOURCES

The Company had total shareholders’ equity of $295.1 million at September 30, 2022, comprised of $112.1 million in common stock, $4.5 million in additional paid-in capital, $239.5 million in retained earnings, and accumulated other comprehensive loss of $61.0 million. At the end of 2021, total shareholders’ equity was $362.5 million. The decrease in equity during the first nine months of 2022 is due to net income of $26.5 million, offset by a $10.4 million dividend paid to shareholders, $4.9 million in share repurchases, a $72.2 million unfavorable swing in other comprehensive income/(loss) due principally to changes in investment securities' fair value and a $7.3 million decrease in retained earnings due to the cumulative effect of a change in accounting principal from the implementation of CECL, topic 326. The remaining difference is related to stock options exercised and restricted stock compensation recognized during the quarter.

62

The Company’s strong liquidity position enabled the transfer of $162.1 million of “available-for-sale” investment securities to “held-to-maturity” classification effective April 1, 2022. The transfer was initiated to reduce the effect of future rate increases on the available-for-sale portfolio, mark-to-market adjustments, comprehensive income and equity.

The Company approved a new share repurchase program on October 20, 2022 (the 2022 Share Repurchase Plan) that is effective upon the expiration of the prior 2021 Share Repurchase Plan on October 31, 2022. The 2022 Share Repurchase Plan authorizes 630,000 shares to be repurchased and expires on October 31, 2023. Under the 2021 Share Repurchase Program, there were 182,562 shares repurchased in the first nine months of 2022.

The Company uses a variety of measures to evaluate its capital adequacy, including the leverage ratio which is calculated separately for the Company and the Bank. Management reviews these capital measurements on a quarterly basis and takes appropriate action to help ensure that they meet or surpass established internal and external guidelines. As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital. The following table sets forth the Bank’s regulatory capital ratios as of the dates indicated.

Regulatory Capital Ratios

					Minimum		Minimum
					Requirement		Required
	September 30,		December 31,		to be		Community Bank
	2022		2021		Well Capitalized (1)		Leverage Ratio (2)
Bank of the Sierra
Tier 1 Capital to Adjusted Average Assets ("Leverage Ratio") (3)	11.54	%	11.31	%	8.50	%	9.00	%
Sierra Bancorp
Tier 1 Capital to Adjusted Average Assets ("Leverage Ratio") (3)	10.45	%	10.43	%	8.50	%	N/A

(1) The Company was subject to these minimum requirements under the regulatory framework for Prompt Corrective Action at December 31, 2019.

(2) If the subsidiary bank’s Leverage Ratio exceeds the minimum ratio under the Community Bank Leverage Ratio Framework, it is deemed to be “well capitalized” under all other regulatory capital requirements. The Company may revert back to the regulatory framework for Prompt Corrective Action if the subsidiary bank’s Leverage Ratio falls below the minimum under the Community Bank Leverage Ratio Framework.

(3) The Company has elected to phase in the impact of implementing CECL on regulatory capital over a three-year period.

The federal banking agencies published a final rule on November 13, 2019, that provided a simplified measure of capital adequacy for qualifying community banking organizations. A qualifying community banking organization that opts into the community bank leverage ratio framework and maintains a leverage ratio greater than 9 percent will be considered to have met the minimum capital requirements, the capital ratio requirements for the well capitalized category under the Prompt Corrective Action framework, and any other capital or leverage requirements to which the qualifying banking organization is subject. A qualifying community banking organization with a leverage ratio of greater than 9 percent may opt into the community bank leverage ratio framework if has average consolidated total assets of less than $10 billion, has off-balance-sheet exposures of 25% or less of total consolidated assets, and has total trading assets and trading liabilities of 5 percent or less of total consolidated assets. Further, the bank must not be an advance approaches banking organization.

The final rule became effective January 1, 2020 and banks that meet the qualifying criteria can elect to use the community bank leverage framework starting with the quarter ended March 31, 2020. The CARES Act reduced the required community bank leverage ratio to 8% until the earlier of December 31, 2020, or the national emergency is declared over. Beginning in 2021 the CBLR was increased to 8.5% for the calendar year with the CBLR increasing to 9% on January 1, 2022. The federal bank regulatory agencies adopted an interim final rule to implement this change from the CARES Act. At September 30, 2021, the Company and the Bank met the criteria outlined in the final rule and the interim final rule and elected to measure capital adequacy under the CBLR framework.

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PART I – FINANCIAL INFORMATION

ITEM 3

QUALITATIVE & QUANTITATIVE DISCLOSURES

ABOUT MARKET RISK

The information concerning quantitative and qualitative disclosures about market risk is included in Part I, Item 2 above. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Market Risk Management.”

PART I – FINANCIAL INFORMATION

Item 4

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report (the “Evaluation Date”) have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities, particularly during the period in which this quarterly report was being prepared.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our Management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized, and reported within the time periods specified by the SEC.

Changes in Internal Controls

There were no significant changes in the Company’s internal controls over financial reporting that occurred in the first nine months of 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The Company and the Bank are defendants, from time to time, in legal proceedings in various points of the legal process arising from transactions conducted in the ordinary course of business. In the opinion of Management, in consultation with legal counsel, it is not probable that current legal actions will result in an unfavorable outcome that has a material adverse effect on the Company’s consolidated financial condition, results of operations, comprehensive income, or cash flows. In the event that such legal action results in an unfavorable outcome, the resulting liability could have a material adverse effect on the Company’s consolidated financial position, results of operations, comprehensive income/(loss), or cash flows.

ITEM 1A: RISK FACTORS

There were no material changes from the risk factors disclosed in the Company’s Form 10-K for the fiscal year ended December 31, 2021.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)   Stock Repurchases

In October 2022 the Board approved the 2022 Share Repurchase Plan by authorizing 630,000 shares of common stock for repurchase and expires on October 31, 2023. There were 370,000 shares purchased under the 2021 Share Repurchase Plan which had authorized 1,000,000 shares of common stock for repurchase and expired on October 31, 2022.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4: MINE SAFETY DISCLOSURES

Not applicable

ITEM 5: OTHER INFORMATION

Not applicable

65

ITEM 6: EXHIBITS

Exhibit #	Description
3.1	Restated Articles of Incorporation of Sierra Bancorp (1)
3.2	Amended and Restated By-laws of Sierra Bancorp (2)
4.1	Description of Securities (3)
4.2	3.25% Fixed to Floating Subordinated Debt issued September 24, 2021 (4)
10.1	Salary Continuation Agreement for James C. Holly (5)*
10.2	Split Dollar Agreement and Amendment thereto for James C. Holly (6)*
10.3	Director Retirement and Split dollar Agreements Effective October 1, 2002, for Albert Berra, Morris Tharp, and Gordon Woods (6)*
10.4	401 Plus Non-Qualified Deferred Compensation Plan (6)*
10.5	Indenture dated as of March 17, 2004 between U.S. Bank N.A., as Trustee, and Sierra Bancorp, as Issuer (7)
10.6	Amended and Restated Declaration of Trust of Sierra Statutory Trust II, dated as of March 17, 2004 (7)
10.7	Indenture dated as of June 15, 2006 between Wilmington Trust Co., as Trustee, and Sierra Bancorp, as Issuer (8)
10.8	Amended and Restated Declaration of Trust of Sierra Capital Trust III, dated as of June 15, 2006 (8)
10.9	2007 Stock Incentive Plan (9)
10.10	Sample Retirement Agreement Entered into with Each Non-Employee Director Effective January 1, 2007 (10)*
10.11	Salary Continuation Agreement for Kevin J. McPhaill (10)*
10.14	First Amendment to the Salary Continuation Agreement for Kevin J. McPhaill (11)*
10.15	Indenture dated as of September 20, 2007 between Wilmington Trust Co., as Trustee, and Coast Bancorp, as Issuer (12)
10.16	Amended and Restated Declaration of Trust of Coast Bancorp Statutory Trust II, dated as of September 20, 2007 (12)
10.17	First Supplemental Indenture dated as of July 8, 2016, between Wilmington Trust Co. as Trustee, Sierra Bancorp as the “Successor Company”, and Coast Bancorp (12)
10.18	2017 Stock Incentive Plan (13)*
10.19	Employment agreements dated as of December 27, 2018 for Kevin McPhaill, CEO and Michael Olague, Chief Banking Officer (14)*
10.21	Employment agreement dated as of November 15, 2019 for Christopher Treece, Chief Financial Officer (15)*
10.22	Employment agreement dated as of January 17, 2020 for Jennifer Johnson, Chief Administrative Officer (16)*
10.23	Employment agreement dated as of December 14, 2020 for Hugh Boyle, Chief Credit Officer (17)*
10.24	Form Indemnification Agreement dated as of January 28, 2021 for Directors and Executive Officers (18)*
10.25	Split Dollar Master Agreement and Election Form Effective October 1, 2002, for Kevin McPhaill*
31.1	Certification of Chief Executive Officer (Section 302 Certification)
31.2	Certification of Chief Financial Officer (Section 302 Certification)
32	Certification of Periodic Financial Report (Section 906 Certification)
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

(1) Filed as Exhibit 3.1 to the Form 10-Q filed with the SEC on August 7, 2009 and incorporated herein by reference.

(2) Filed as an Exhibit to the Form 8-K filed with the SEC on May 25, 2022 and incorporated herein by reference.

(3) Filed as an Exhibit to the Form 10-K filed with the SEC on March 12, 2020 and incorporated herein by reference.

(4) Filed as an Exhibit to the Form 8-K filed with the SEC on September 24, 2021 and incorporated herein by reference.

(5) Filed as Exhibit 10.7 to the Form 10-Q filed with the SEC on May 15, 2003 and incorporated herein by reference.

(6) Filed as Exhibits 10.12, 10.18 through 10.20, and 10.22 to the Form 10-K filed with the SEC on March 15, 2006 and incorporated herein by reference.

(7) Filed as Exhibits 10.9 and 10.10 to the Form 10-Q filed with the SEC on May 14, 2004 and incorporated herein by reference.

(8) Filed as Exhibits 10.26 and 10.27 to the Form 10-Q filed with the SEC on August 9, 2006 and incorporated herein by reference.

(9) Filed as Exhibit 10.20 to the Form 10-K filed with the SEC on March 15, 2007 and incorporated herein by reference.

(10) Filed as Exhibits 10.1 through 10.2 to the Form 8-K filed with the SEC on January 8, 2007 and incorporated herein by reference.

(11) Filed as Exhibit 10.24 to the Form 10-Q filed with the SEC on May 7, 2015 and incorporated herein by reference.

(12) Filed as Exhibits 10.1 through 10.3 to the Form 8-K filed with the SEC on July 11, 2016 and incorporated herein by reference.

(13) Filed as Exhibit 10.1 to the Form 8-K filed with the SEC on March 17, 2017 and incorporated herein by reference.

(14) Filed as Exhibits 99.1 and 99.4 to the Form 8-K filed with the SEC on December 28, 2018 and incorporated by reference.

(15) Filed as Exhibit 99.1 to the Form 8-K filed with the SEC on November 11, 2019 and incorporated by reference.

(16) Filed as Exhibit 99.1 to the Form 8-K filed with the SEC on January 21, 2020 and incorporated by reference.

(17) Filed as Exhibit 10.1 to the Form 8-K filed with the SEC on December 09, 2020 and incorporated herein by reference.

(18) Filed as Exhibit 10.1 to the Form 8-K filed with the SEC on January 29, 2021 and incorporated herein by reference.

*Indicates management contract or compensatory plan or arrangement.

66

SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

November 3, 2022	/s/ Kevin J. McPhaill
Date	SIERRA BANCORP
	Kevin J. McPhaill
	President & Chief Executive Officer
	(Principal Executive Officer)
November 3, 2022	/s/ Christopher G. Treece
Date	SIERRA BANCORP
	Christopher G. Treece
	Chief Financial Officer
November 3, 2022	/s/ Cindy L. Dabney
Date	SIERRA BANCORP
	Cindy L. Dabney
	Principal Accounting Officer

67

EX-10.25

BANK OF THE SIERRA

SPLIT DOLLAR INSURANCE PLAN

THIS PLAN is adopted this 1st day of October 2002, by BANK OF THE SIERRA a state-chartered commercial bank located in Porterville, California (the “Company").

INTRODUCTION

Upon election to participate in this Plan, the Company shall divide the death proceeds of certain life insurance policies that are owned by the Company on the lives of the participating officers with the designated beneficiary of each insured participating officer. The Company will pay the life insurance premiums from its general assets.

Article 1

Definitions

Whenever used in this Plan, the following terms shall have the meanings specified:

1.1 "Compensation Committee" means either the Compensation Committee designated from time to time by the Company's Board of Directors or a majority of the Company's Board of Directors, either of which shall hereinafter be referred to as the Compensation Committee

1.2 "Disability" means the Participant suffering a sickness, accident or injury which has been determined by the carrier of any individual or group disability insurance policy covering the Participant, or by the Social Security Administration, to be a disability rendering the Participant totally and permanently disabled. The Participant must submit proof to the Company of the carrier's or Social Security Administration's determination upon the request of the Company.

1.3 ''Insured" means the individual Participant whose life is insured.

1.4 “Insurer" means the insurance company(s) issuing the life insurance policy(s) on the life of the Participant.

1.5 ''Normal Retirement Age" means the Participant attaining age 65.

1.6 "Participant'' means the employee who is designated by the Compensation Committee as eligible to participate in this Plan, elects in writing to participate in the Plan using the form attached hereto as Exhibit A, and signs a Split Dollar Endorsement for the Policy in which the Participant is the Insured.

1.7 "Policy" or "Policies" means the individual insurance policy or policies adopted by the Compensation Committee for purposes of insuring a Participant's life under this Plan.

1.8 "Plan" means this instrument, including all amendments hereto.

1.9 "Termination of Employment" means a Participant ceasing to be employed by the Company for any reason other than by reason of a leave of absence approved by the Company.

Article 2

Participation

2.1 Eligibility to Participate. The Compensation Committee in its sole discretion shall designate from time to time Participants that are eligible to participate in this Plan.

2.2 Participation. The eligible officer may participate in this Plan by executing an Election to Participate and a Split Dollar Endorsement. The Split Dollar Endorsement shall bind the Participant and his or her beneficiaries, assigns and transferees, to the terms and conditions of this Plan. An officer's participation is limited to the Policy where he or she is the insured.

2.3 Termination of Participation. A Participant's rights under this Plan shall automatically cease and his or her participation in this Plan shall terminate upon the Participant's Termination of Employment prior to Normal) Retirement Age for reasons other than Disability.

2.4 Normal Retirement Age or Disability. After a Participant's Normal Retirement Age while in the employment of the Company or Termination of Employment due to Disability, the Company, or its successor, shall maintain the Participant’s Policy in full force and effect and in no event shall the Company amend, terminate or otherwise abrogate the Participant's interest in the Policy. The Company may, however, replace the Policy with a comparable insurance policy to cover the benefit under this Plan provided that the Company and the Participant execute a new Split Dollar Policy Endorsement(s). The Policy or any comparable policy shall be subject to the claims of the Company's creditors.

Article 3

Policy Ownership/Interests

3.1 Participant's Interest. The Participant, or the Participant's assignee, shall have the right to designate the beneficiary of death proceeds in the amount of $100,000 (One Hundred Thousand Dollars) unless otherwise specifically stated on the Participant's Election to Participate, subject to Section 2.3. The Participant shall also have the right to elect and change settlement options with the consent of the Company and the Insurer.

3.2 Company's Interest. The Company shall own the Policies and shall have the right to exercise all incidents of ownership. With respect to each Policy, the Company shall be the beneficiary of the remaining death proceeds of the Policy after the Participant's interest is determined according to Section 3.I.

3.3 Option to Purchase. The Company shall not sell, surrender or transfer ownership of a Policy without first giving a Participant or the Participant's transferee the option to purchase the Policy for a period of 60 days from written notice of such intention. The purchase price shall be an amount equal to the cash surrender value of the Policy. This provision shall not impair the right of the Company to terminate this Agreement.

Article 4

Premiums

4.1 Premium Payment. The Company shall pay all premiums due on all Policies.

4.2 Economic Benefit. The Company shall determine the economic benefit attributable to the Participant based on the amount of the current term rate for the Participant's age multiplied by the aggregate death benefit payable to the Participant's beneficiary. The "current term rate" is the minimum amount required to be imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable authority.

4.3 Imputed Income. The Company shall impute the economic benefit to the Participant on an annual basis.

Article 5

Assignment

Any Participant may assign without consideration all interests in his or her Policy and in this Plan to any person, entity or trust. In the event a Participant shall transfer all of his or her interest in the Policy, then all of that Participant's interest in his or her Policy and in the Plan shall be vested in his or her transferee, who shall be substituted as a party hereunder, and that Participant shall have no further interest in his or her Policy or in this Plan.

Article 6

Insurer

The Insurer shall be bound only by the terms of a given Policy. Any payments the Insurer makes or actions it takes in accordance with a Policy shall fully discharge it from all claims, suits and demands of all persons relating to that Policy. The Insurer shall not be bound by the provisions of this Plan. The Insurer shall have the right to rely on the Company's representations with regard to any definitions, interpretations, or Policy interests as specified under this Plan.

Article 7

Claims and Review Procedure

7.1 Claims Procedure. An Participant or beneficiary ("claimant") who has not received benefits under this Plan that he or she believes should be paid shall make a claim for such benefits as follows:

7.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Company a written claim for the benefits.

7 .1.2 Timing of Company Response. The Company shall respond to such claimant within 90 days after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

7.1.3 Notice of Decision. If the Company denies part or all of the claim, the Company shall notify the claimant in writing of such denial. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is based,

(c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

(d) An explanation of the Plan's review procedures and the time limits applicable to such procedures, and

a statement of the claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2 Review Procedure. If the Company denies part or all of the claim, the claimant shall have the opportunity for a ful1 and fair review by the Company of the denial, as follows:

7.2.1 Initiation - Written Request. To initiate the review, the claimant, within 60 days after receiving the Company's notice of denial, must file with the Company a written request for review.

7.2.2 Additional Submissions - Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Company shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits.

7.2.3 Considerations on Review. In considering the review, the Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

7 .2.4 Timing of Company Response. The Company shall respond in writing to such claimant within 60 days after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

7.2.5 Notice of Decision. The Company shall notify the claimant in writing of its decision on review. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a) The specific reasons for the denial,

(b) A reference to the specific provisions of the Plan on which the denial is based,

(c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits, and_

(d) A statement of the claimant's right to bring a civil action under ERISA Section 502(a).

Article 8

Amendments and Termination

8.1 Amendment or Termination of Plan. This Agreement may be amended or terminated only by a written agreement signed by the Company and the Participant, subject to Section 2.3.

8.2 Waiver of Participation. A Participant may, in the Participant's sole and absolute discretion, waive his or her rights under this Plan at any time. Any waiver permitted under this section shall be in writing and delivered to the Board of Directors of the Company.

8.3 Policy Retention. In the event that the Company decides to maintain a Policy after the Participant or Participant's transferee no longer has an interest in the Policy, the Company shall be the direct beneficiary of the entire death proceeds of the Policy.

Article 9

Miscellaneous

9.1 Binding Effect. This Plan in conjunction with their corresponding Split Dollar Endorsement shall bind each Participant and the Company, their beneficiaries, survivors, executors, administrators and transferees and any Policy beneficiary.

9.2 No Guarantee of Employment. This Plan is not an employment policy or contract. It does not give a Participant the right to remain an employee of the Company, nor does it interfere with the Company's right to discharge a Participant. It also does not require a Participant to remain an employee nor interfere with a Participant's right to terminate employment at any time.

9.3 Applicable Law. The Plan and all rights hereunder shall be governed by and construed according to the laws of the State of California, except to the extent preempted by the laws of the United States of America.

9.4 Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the same to such other party personally, or by mailing the same, by United States certified mail,

postage prepaid, to such party, addressed to his/her last known address as shown on the records of the Company. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.

9.5 Entire Agreement. This Plan constitutes the entire agreement between the Company and the Participant as to the subject matter hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.

9.6 Administration. The Company shall have powers which are necessary to administer this Plan, including but not limited to:

(a) Interpreting the provisions of the Plan;

(b) Establishing and revising the method of accounting for the Plan;

(c) Maintaining a record of benefit payments; and

(d) Establishing rules and prescribing any forms necessary or desirable to administer the Plan.

9.7 Designated Fiduciary. The Company shall be the named fiduciary and plan administrator under this Plan. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

IN WITNESS WHEREOF, the Company executes this Plan as of the date indicated above.

COMPANY:

BANK OF THE SIERRA

By___________________________________

Title__________________________________

EXHIBIT A

BANK OF THE SIERRA SPLIT DOLLAR INSURANCE PLAN ELECTION TO PARTICIPATE

I, Kevin McPhaill, an eligibleemployeeas determined in section 2.1 of the BANK OF THE SIERRA SPLITDOLLAR INSURANCEPLAN(the"Plan")dated October 1, 2002,herebyelect to become a Participant of this Plan according to Section 2.2 of the Plan. Additionally, I acknowledge that I have received a copy of the Plan document, read the Plan document and agree to be bound by its terms.

Executed this 1^st day of October, 2002.

WitnessKevin McPhaill

________________________/s/ Kevin McPhaill__   _

EX-31.1

Exhibit 31.1 – Certification of Chief Executive Officer (Section 302 Certification)

I, Kevin J. McPhaill, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Sierra Bancorp (“Registrant”);

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4.  The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.  The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves Management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:  November 3, 2022

/s/  Kevin J. McPhaill

Kevin J. McPhaill

President &

Chief Executive Officer

EX-31.2

Exhibit 31.2 – Certification of Chief Financial Officer (Section 302 Certification)

I, Christopher G. Treece, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Sierra Bancorp (“Registrant”);

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4.  The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.  The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves Management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:  November 3, 2022

/s/  Christopher G. Treece

Christopher G. Treece

Chief Financial Officer

EX-32

Exhibit 32 – Certification of Periodic Financial Report

Kevin J. McPhaill and Christopher G. Treece hereby certify as follows:

1.  They are the Chief Executive Officer and Chief Financial Officer, respectively, of Sierra Bancorp.  

2.  The Form 10-Q of Sierra Bancorp for the Quarter ended September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained in the report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Sierra Bancorp.

November 3, 2022	/s/	Kevin J. McPhaill
Date		Kevin J. McPhaill
		President &
		Chief Executive Officer
November 3, 2022	/s/	Christopher G. Treece
Date		Christopher G. Treece
		Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2022	Nov. 01, 2022
Cover [Abstract]
Entity Central Index Key	0001130144
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	000-33063
Entity Registrant Name	SIERRA BANCORP
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	33-0937517
Entity Address, Address Line One	86 North Main Street
Entity Address, City or Town	Porterville
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	93257
City Area Code	559
Local Phone Number	782-4900
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	BSRR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		15,089,475
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 82,285	$ 63,147
Interest bearing deposits in banks	4,398	194,381
Total cash & cash equivalents	86,683	257,528
Available-for-sale, net of allowance for credit losses of $0 at September 30, 2022 and December 31, 2021	1,069,434
Available-for-sale, at fair value (net of zero allowance for credit losses at June 30, 2022 and December 31, 2021) (before ASU 2016-13)		973,314
Held-to-maturity, (fair value of $138,684 at September 30, 2022 and $0 at December 31, 2021)	156,229
Allowance for credit losses on held-to-maturity securities	(18)
Net, investment securities held-to-maturity	156,211
Loans and leases:
Gross loans and leases	2,020,364
Gross loans and leases (before ASU 2016-13)		1,989,726
Deferred loan and lease fees, net	(348)
Deferred loan and lease fees, net (before ASU 2016-13)		(1,865)
Allowance for credit losses on loans and leases	(23,790)
Allowance for credit losses on loans and leases (before ASU 2016-13)		(14,256)
Net loans and leases	1,996,226
Net loans and leases (before ASU 2016-13)		1,973,605
Foreclosed assets		93
Premises and equipment, net	22,688	23,571
Goodwill	27,357	27,357
Other intangible assets, net	2,517	3,275
Bank-owned life insurance	52,140	54,242
Other assets	119,033	58,029
Total assets	3,532,289	3,371,014
Deposits:
Noninterest bearing	1,118,245	1,084,544
Interest bearing	1,767,223	1,697,028
Total deposits	2,885,468	2,781,572
Repurchase agreements	112,012	106,937
Short-term borrowings	103,100
Long-term debt	49,196	49,141
Subordinated debentures	35,436	35,302
Allowance for credit losses on unfunded loan commitments	940	203
Other liabilities	51,065	35,365
Total liabilities	3,237,217	3,008,520
Commitments and contingent liabilities (Note 7)
Shareholders' equity
Common stock, no par value; 24,000,000 shares authorized; 15,085,675 and 15,270,010 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	112,111	113,007
Additional paid-in capital	4,470	3,910
Retained earnings	239,496	234,410
Accumulated other comprehensive (loss) income, net	(61,005)	11,167
Total shareholders' equity	295,072	362,494
Total liabilities and shareholders' equity	$ 3,532,289	$ 3,371,014

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Available-for-sale securities, allowance for credit losses	$ 0
Available-for-sale securities, allowance for credit losses (before ASU 2016-13)		$ 0
Held-to-maturity, at amortized cost, fair value	$ 138,684	$ 0
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	24,000,000	24,000,000
Common Stock, Shares, Issued	15,085,675	15,270,010
Common Stock, Shares, Outstanding	15,085,675	15,270,010

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Interest and dividend income
Loans and leases, including fees	$ 21,833	$ 24,226	$ 64,211	$ 75,555
Taxable securities	7,646	1,679	15,613	4,835
Tax-exempt securities	2,346	1,578	5,926	4,539
Federal funds sold and other	103	146	466	250
Total interest income	31,928	27,629	86,216	85,179
Interest expense
Deposits	1,761	591	3,106	1,818
Short-term borrowings	390	41	549	127
Subordinated debentures	866	281	2,308	774
Total interest expense	3,017	913	5,963	2,719
Net interest income	28,911	26,716	80,253	82,460
Provision (benefit) for credit losses on loans and leases	1,212	(600)	4,360	(2,450)
Provision (benefit) for credit losses on unfunded loan commitments	47		(194)
Provision for credit losses on held-to-maturity securities			18
Net interest income after provision for credit losses	27,652	27,316	76,069	84,910
Noninterest income
Other income	3,396	4,349	13,654	12,300
Total noninterest income	6,612	7,535	23,114	20,977
Noninterest expense
Salaries and employee benefits	11,521	10,618	35,070	32,194
Occupancy	2,470	2,359	7,170	7,472
Other	7,005	7,898	21,042	21,715
Total noninterest expense	20,996	20,875	63,282	61,381
Income before taxes	13,268	13,976	35,901	44,506
Provision for income taxes	3,333	3,371	9,355	11,115
Net income	$ 9,935	$ 10,605	$ 26,546	$ 33,391
PER SHARE DATA
Book value	$ 19.56	$ 23.70	$ 19.56	$ 23.70
Cash dividends	0.23	0.22	0.69	0.65
Earnings per share basic	0.66	0.70	1.77	2.19
Earnings per share diluted	$ 0.66	$ 0.69	$ 1.76	$ 2.17
Average shares outstanding, basic	14,954,503	15,257,367	14,968,242	15,247,477
Average shares outstanding, diluted	15,014,048	15,343,543	15,046,883	15,369,249
Deposit Account [Member]
Noninterest income
Revenue from Contract with Customer, Excluding Assessed Tax	$ 3,216	$ 3,186	$ 9,460	$ 8,677

XML

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Income Statement [Abstract]
Total shareholders' equity (in thousands)	$ 295,072	$ 364,507	$ 295,072	$ 364,507	$ 299,047	$ 362,494	$ 357,729	$ 343,896
Shares outstanding	15,085,675	15,382,518	15,085,675	15,382,518		15,270,010
Dividends paid (in thousands)	$ 3,471	$ 3,374	$ 10,449	$ 9,842

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Comprehensive Income [Abstract]
Net income	$ 9,935	$ 10,605	$ 26,546	$ 33,391
Unrealized loss on securities:
Unrealized holding loss arising during period	(14,994)	(576)	(101,432)	(4,846)
Less: reclassification adjustment for gains included in net income (1)		(11)	(1,032)	(11)
Other comprehensive loss, before tax	(14,994)	(587)	(102,464)	(4,857)
Income tax benefit related to items of other comprehensive loss, net of tax	4,433	174	30,292	1,436
Other comprehensive loss, net of tax:	(10,561)	(413)	(72,172)	(3,421)
Comprehensive (loss) income	$ (626)	$ 10,192	$ (45,626)	$ 29,970

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reclassification adjustment for (losses) gains on securities available-for-sale included in net income, tax	$ 0	$ 3	$ 305	$ 3

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Total
Balance at Dec. 31, 2020	$ 113,384	$ 3,736		$ 208,371	$ 18,405		$ 343,896
Balance (in shares) at Dec. 31, 2020	15,388,423
Increase (Decrease) in Shareholders' Equity
Net income				33,391			33,391
Other comprehensive loss, net of tax					(3,421)		(3,421)
Exercise of stock options	$ 801	(707)					94
Exercise of stock options (in shares)	7,480
Stock based compensation expense		681					681
Stock based compensation expense (in shares)	(1,263)
Stock repurchase	$ (89)			(203)			(292)
Stock repurchase (in shares)	(12,122)
Cash dividends				(9,842)			(9,842)
Balance at Sep. 30, 2021	$ 114,096	3,710		231,717	14,984		364,507
Balance (in shares) at Sep. 30, 2021	15,382,518
Balance at Jun. 30, 2021	$ 113,453	4,190		224,689	15,397		357,729
Balance (in shares) at Jun. 30, 2021	15,410,763
Increase (Decrease) in Shareholders' Equity
Net income				10,605			10,605
Other comprehensive loss, net of tax					(413)		(413)
Stock options exercised; net of shares surrendered for cashless exercises	$ 732	(692)					40
Stock options exercised; net of shares surrendered for cashless exercises (in shares)	3,320
Restricted stock granted		212					212
Restricted stock granted (in shares)	(19,443)
Stock based compensation expense (in shares)	(12,122)
Stock based compensation - stock options	$ (89)			(203)			(292)
Cash dividends				(3,374)			(3,374)
Balance at Sep. 30, 2021	$ 114,096	3,710		231,717	14,984		364,507
Balance (in shares) at Sep. 30, 2021	15,382,518
Balance at Dec. 31, 2021	$ 113,007	3,910	$ (7,315)	234,410	11,167	$ (7,315)	362,494
Balance (in shares) at Dec. 31, 2021	15,270,010
Increase (Decrease) in Shareholders' Equity
Net income				26,546			26,546
Other comprehensive loss, net of tax					(72,172)		(72,172)
Stock options exercised; net of shares surrendered for cashless exercises	$ 512	(398)					114
Stock options exercised; net of shares surrendered for cashless exercises (in shares)	10,600
Restricted stock surrendered due to employee tax liability	$ (83)			(170)			(253)
Restricted stock surrendered due to employee tax liability (in shares)	(11,161)
Restricted stock forfeited / cancelled (in shares)	(1,212)
Stock based compensation - stock options		66					66
Stock based compensation - restricted stock		892					892
Stock repurchase	$ (1,325)			(3,526)			(4,851)
Stock repurchase (in shares)	(182,562)
Cash dividends				(10,449)			(10,449)
Balance at Sep. 30, 2022	$ 112,111	4,470		239,496	(61,005)		295,072
Balance (in shares) at Sep. 30, 2022	15,085,675
Balance at Jun. 30, 2022	$ 111,727	4,585		233,179	(50,444)		299,047
Balance (in shares) at Jun. 30, 2022	15,090,792
Increase (Decrease) in Shareholders' Equity
Net income				9,935			9,935
Other comprehensive loss, net of tax					(10,561)		(10,561)
Stock options exercised; net of shares surrendered for cashless exercises	$ 458	(397)					61
Stock options exercised; net of shares surrendered for cashless exercises (in shares)	5,400
Restricted stock surrendered due to employee tax liability	$ (74)			(147)			(221)
Restricted stock surrendered due to employee tax liability (in shares)	(9,965)
Restricted stock forfeited / cancelled (in shares)	(552)
Stock based compensation - stock options		18					18
Stock based compensation - restricted stock		264					264
Cash dividends				(3,471)			(3,471)
Balance at Sep. 30, 2022	$ 112,111	$ 4,470		$ 239,496	$ (61,005)		$ 295,072
Balance (in shares) at Sep. 30, 2022	15,085,675

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock, Dividends, Per Share, Declared	$ 0.23	$ 0.22	$ 0.69	$ 0.65

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income	$ 26,546	$ 33,391
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sales of securities	(1,032)	(11)
Loss (gain) on disposal of fixed assets	6	(146)
Gain on sale on foreclosed assets	(8)	(141)
Writedowns on foreclosed assets	91	174
Stock based compensation expense	958	681
Provision (benefit) for credit losses on loans and leases	4,360	(2,450)
Provision for credit losses on held-to-maturity securities	18
Depreciation and amortization	1,910	2,585
Net amortization on securities premiums and discounts	2,934	3,654
Net accretion of premiums/discounts for loans acquired	(149)	(365)
Decrease (increase) in cash surrender value of life insurance policies	1,251	(2,445)
Amortization of core deposit intangible	758	779
Increase in interest receivable and other assets	(18,017)	(497)
Decrease in other liabilities	15,506	46,587
Deferred income tax benefit	(2,397)	(2,702)
Decrease (increase) in value of restricted bank equity securities	332	(857)
Net amortization of partnership investment	338	503
Net cash provided by operating activities	33,405	78,740
Cash flows from investing activities:
Maturities and calls of securities available for sale	7,663	5,800
Proceeds from sales of securities available for sale	26,408	148
Purchases of securities available for sale	(450,984)	(288,552)
Principal pay downs on securities available for sale	60,198	85,767
Net purchases of FHLB stock	(336)	(1,666)
Loan originations and payments, net	(36,286)	323,351
Purchases of premises and equipment	(899)	(345)
Proceeds from sale premises and equipment		1,055
Proceeds from sales of foreclosed assets	10	938
Purchase of bank-owned life insurance	(19)	(39)
Liquidation of bank-owned life insurance	11
Proceeds from BOLI death benefit	859
Amortization of debt issuance costs	55
Net increase in partnership investment	(7,562)
Net cash (used in) provided by investing activities	(400,882)	126,457
Cash flows from financing activities:
Increase in deposits	103,896	196,040
Increase (decrease) in borrowed funds	103,100	(142,900)
Increase in customer repurchase agreements	5,075	53,415
Cash dividends paid	(10,449)	(9,842)
Repurchases of common stock	(5,108)	(292)
Stock options exercised	118	94
Proceeds from issuance of subordinated debt		49,221
Net cash provided by financing activities	196,632	145,736
(Decrease) increase in cash and cash equivalents	(170,845)	350,933
Cash and cash equivalents, Beginning of period	257,528	71,417
Cash and cash equivalents, End of period	86,683	422,350
Cash paid during the year for:
Interest paid	5,958	2,702
Income taxes paid	$ 8,946	11,769
Supplemental noncash disclosures:
Real estate acquired through foreclosure		$ 93

XML

The Business of Sierra Bancorp

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The Business of Sierra Bancorp

Note 1 – The Business of Sierra Bancorp

Sierra Bancorp (the “Company”) is a California corporation headquartered in Porterville, California, and is a registered bank holding company under federal banking laws. The Company was formed to serve as the holding company for Bank of the Sierra (the “Bank”), and has been the Bank’s sole shareholder since August 2001. The Company exists primarily for the purpose of holding the stock of the Bank and of such other subsidiaries it may acquire or establish. As of September 30, 2022, the Company’s only other subsidiaries were Sierra Statutory Trust II, Sierra Capital Trust III, and Coast Bancorp Statutory Trust II, which were formed solely to facilitate the issuance of capital trust pass-through securities (“TRUPS”). Pursuant to the Financial Accounting Standards Board (“FASB”) standard on the consolidation of variable interest entities, these trusts are not reflected on a consolidated basis in the Company’s financial statements. References herein to the “Company” include Sierra Bancorp and its consolidated subsidiary, the Bank, unless the context indicates otherwise.

Bank of the Sierra, a California state-chartered bank headquartered in Porterville, California, offers a wide range of retail and commercial banking services via branch offices located throughout California’s South San Joaquin Valley, the Central Coast, Ventura County, the Sacramento area, and neighboring communities. The Bank was incorporated in September 1977, and opened for business in January 1978 as a one-branch bank with $1.5 million in capital. Our growth in the ensuing years has largely been organic in nature, but includes four whole-bank acquisitions: Sierra National Bank in 2000, Santa Clara Valley Bank in 2014, Coast National Bank in 2016, and Ojai Community Bank in October 2017. As of the filing date of this report the Bank operates 35 full-service branches and an online branch, and maintains ATMs at all but one of our branch locations as well as at seven non-branch locations. Moreover, the Bank has specialized lending units which focus on agricultural borrowers, commercial real estate, and mortgage warehouse lending. In addition, in February 2020 the bank opened a loan production office which is currently located in Roseville, CA. To support organic growth in the agricultural lending sector the bank also opened a loan production office in Templeton, CA in April 2022. The Company had total assets of $3.5 billion at September 30, 2022, and for a number of years we have claimed the distinction of being the largest bank headquartered in the South San Joaquin Valley. The Bank’s deposit accounts, which totaled $2.9 billion at September 30, 2022, are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to maximum insurable amounts.

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Basis of Presentation

9 Months Ended

Sep. 30, 2022

Basis of Presentation [Abstract]

Basis of Presentation

Note 2 – Basis of Presentation

The accompanying interim unaudited consolidated financial statements have been prepared in a condensed format as allowed under U.S. generally accepted accounting principles (“GAAP”). Therefore these financial statements do not include all of the information and footnotes required for complete, audited financial statements as presented in the Company’s Annual Report on Form 10-K. The information furnished in these interim statements reflects all adjustments that are, in the opinion of Management, necessary for a fair statement of the results for such periods. Such adjustments can generally be considered as normal and recurring unless otherwise disclosed in this Form 10-Q. In preparing the accompanying financial statements, Management has taken subsequent events into consideration and recognized them where appropriate. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter, or for the full year. Certain amounts reported for 2021 have been reclassified to be consistent with the reporting for 2022. The interim financial information should be read in conjunction with 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 “SEC”).

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Current Accounting Developments

9 Months Ended

Sep. 30, 2022

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Current Accounting Developments

Note 3 – Current Accounting Developments

In September 2016 the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses in current U.S. GAAP, and instead requires an organization to record an estimate of expected credit losses over the

contractual term for financial assets carried at amortized cost (generally loans and held-to-maturity investment securities) in addition to certain off balance-sheet credit exposure. Under the current expected credit losses (“CECL”) methodology expected credit losses for financial assets are estimated over the contractual life of the financial asset, adjusted for expected prepayments, considering historical experience, current conditions, and reasonable and supportable forecasts. Additionally, under CECL the accounting for credit losses on available-for-sale debt securities is addressed through an allowance for credit losses which is a change from legacy GAAP which previously required the direct write-down of securities through the other-than-temporary impairment approach. The Company implemented CECL on January 1, 2022, using the modified retrospective approach to estimate lifetime expected losses on financial assets measured at amortized cost in addition to certain off balance sheet credit exposures. The January 1, 2022, increase in the Company’s allowance for credit losses, of $9.5 million on loans and leases and $0.9 million in off balance sheet credit exposures, net of the impact of deferred taxes, was reflected in a transition adjustment of $7.3 million to retained earnings. There was no cumulative effect adjustment related to our available-for-sale investment portfolio upon adoption and the company had no securities designated as held-to-maturity as of January 1, 2022. Results for reporting periods beginning after December 31, 2021, are presented under CECL whereas prior comparative periods are presented under legacy GAAP. The majority of the Bank’s loan and lease portfolio consists of loans, so hereafter within this document references to the loan and lease portfolio in general will reference loans as opposed to loans and leases.

The following table illustrates the impact of the adoption of CECL, and the transition away from the incurred loss method, on January 1, 2022. The impact to the Allowance for Credit losses (“ACL”) on the Loan Portfolio is broken out at the class level (dollars in thousands, unaudited):

Transition Impact on Allowance for Credit Losses
(dollars in thousands, unaudited)
	January 1, 2022
	Reserves Under Incurred Loss		Reserves Under CECL		Transition Impact Gross		Impact of Deferred Taxes		Impact to Retained Earnings
Real estate:
1-4 family residential construction	$	135	$	28	$	(107)	$	32	$	(75)
Other construction/land		228		254		26		(8)		18
1-4 family - closed-end		1,618		2,310		692		(205)		487
Equity lines		290		210		(80)		24		(56)
Multi-family residential		274		574		300		(89)		211
Commercial real estate - owner occupied		2,217		3,444		1,227		(363)		864
Commercial real estate - non-owner occupied		6,199		14,380		8,181		(2,418)		5,763
Farmland		737		340		(397)		117		(280)
Total real estate		11,698		21,540		9,842		(2,910)		6,932
Agricultural		465		382		(83)		25		(58)
Commercial and industrial		1,060		1,418		358		(106)		252
Mortgage warehouse lines		512		91		(421)		124		(297)
Consumer loans		521		279		(242)		72		(170)
Total allowance for credit losses - loans	$	14,256	$	23,710	$	9,454	$	(2,795)	$	6,659
Allowance for credit losses - unfunded loan commitments	$	203		1,134		931		(275)		656

The Company currently categorizes all of its loans as held-for-investment and following CECL implementation, reports loans on the amortized cost basis. The Company’s amortized cost basis is comprised of the principal balance outstanding, net of remaining purchase discount or premium and any deferred fees or costs. Notably, the Company elected the practical expedient available under CECL to exclude accrued interest receivable from the amortized cost basis of all categorizations of loans and investment securities, and resultingly did not estimate reserves on accrued interest receivable balances, as any past due interest income is reversed on a timely basis. Accrued interest receivable continues to be included in other assets on the Company’s balance sheet and as of September 30, 2022, measured at $8.3

million, $0.5 million and $4.7 million for available-for-sale securities, held-to-maturity securities and loans, respectively. Due to loans being placed on nonaccrual status, during the third quarter of 2022 an immaterial amount of interest receivable on loans was reversed against interest income and $0.1 million of reversed interest for the nine months ended September 30, 2022. For the same time periods no interest receivable on held-to-maturity or available for sale investment securities was reversed against interest income.

Similar to practice under legacy GAAP, the Company continues to place loans on nonaccrual status when management has determined that the full repayment of principal and collection of contractually agreed upon interest is unlikely or when the loan in question has become delinquent more than 90 days. The Company may decide that it is appropriate to continue to accrue interest on certain loans more than 90 days delinquent if they are well-secured by collateral and collection is in process. When a loan is placed on nonaccrual status, any accrued but uncollected interest for the loan and lease is reversed out of interest income in the period in which the loan’s status changed. For loans with an interest reserve, i.e., where loan and lease proceeds are advanced to the borrower to make interest payments, all interest recognized from the inception of the loan and lease is reversed when the loan and lease is placed on non-accrual. Once a loan and lease is on non-accrual status subsequent payments received from the customer are applied to principal, and no further interest income is recognized until the principal has been paid in full or until circumstances have changed such that payments are again consistently received as contractually required. Generally, loans are not restored to accrual status until the obligation is brought current and has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Similar to practice under legacy GAAP, the ACL on the loan portfolio is a valuation allowance deducted from the recorded balance in loans. However, under CECL the ACL represents principal which is not expected to be collected over the contractual life of the loans, adjusted for expected prepayment, whereas under legacy GAAP the allowance represented only losses already incurred as of the balance sheet date. The ACL is increased by a provision for credit losses charged to expense, and by principal recovered on charged-off balances. It is reduced by principal charge-offs. The amount of the allowance is based on management’s evaluation of the collectability of the loan and lease portfolio, using information from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. Adjustments are also made for changes in risk profile, credit concentrations, historical trends, and other economic conditions.

The ACL for loans and leases is separated between a collective reserve evaluation, for loans where similar risk characteristics exist and an individual reserve evaluation for loans without similar risk characteristics. The collective evaluation of loans is performed at the portfolio segment level, using call code as the primary segmentation key but also considering similarity in quantitative reserve methodology. The Company’s ACL is categorized according to the following portfolio segments: 1-4 Family Real Estate, Commercial Real Estate, Farmland & Agricultural Production, Commercial & Industrial, Mortgage Warehouse, and Consumer. Management utilizes a discounted cash flow methodology to estimate the quantitative portion of collectively evaluated reserves for the 1-4 Family Real Estate, Commercial Real Estate, Commercial & Industrial and Mortgage Warehouse portfolio segments. Management utilizes a Remaining Life Quantitative Reserve Methodology for the Farmland & Agricultural Production, and Consumer portfolio segments. Within the portfolio segments utilizing the DCF quantitative reserve methodology, management has made the election to adjust the effective interest rate to consider the impact of expected prepayments.

Loans where similar risk characteristics exist are evaluated for the ACL in the collective reserve evaluation. The Company’s policy is that loans designated as nonaccrual no longer share risk characteristics similar to other loans evaluated collectively and as such, all nonaccrual loans are individually evaluated for reserves. As of September 30, 2022 the Bank’s nonaccrual loans comprised the entire population of loans individually evaluated. The Company’s policy is that nonaccrual loans also represent the subset of loans where borrowers are experiencing financial difficulty where an evaluation of the source of repayment is required to determine if the nonaccrual loan should be categorized as collateral dependent. It is the Company’s policy that the only loans and leases where the credit quality has deteriorated to the point where foreclosure is probable are the Company’s nonaccrual loans.

The implementation of CECL also impacted the Company’s ACL on unfunded loan commitments, as this ACL now represents expected credit losses over the contractual life of commitments not identified as unconditionally cancellable by the Company. The Reserve for Unfunded Commitments is estimated using the same reserve or coverage rates

calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment. The funding rate represents management’s estimate of the amount of the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical data. Under CECL the ACL on unfunded loan commitments remains in Other Liabilities while any related provision expense has been moved to provision for credit loss expense from its prior presentation in noninterest expense. Prior period expense has been reclassified for comparative purposes.

For available-for-sale debt securities in an unrealized loss position for which management has an intent to sell the security or considers it more likely-than-not that the security in question will be sold prior to a recovery of its amortized cost basis, the security will be written down to fair value through a direct charge to income. For the remainder of available sale debt securities in an unrealized loss position, which don’t meet the previously outlined criteria, management evaluates whether the decline in fair value is a reflection of credit deterioration or other factors. In performing this evaluation, management considers the extent which fair value has fallen below amortized cost, changes in ratings by rating agencies, and other information indicating a deterioration in repayment capacity of either the underlying issuer or the borrowers providing repayment capacity in a securitization. If management’s evaluation indicates that a credit loss exists then a present value of the expected cash flows is calculated and compared to the amortized cost basis of the security in question and to the degree that the amortized cost basis exceeds the present value an allowance for credit loss (“ACL”) is established, with the caveat that the maximum amount of the reserve on any individual security is the difference between the fair value and amortized cost balance of the security in question. Any unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income.

On April 1, 2022 the Company transferred $162.1 million of Agency, Mortgaged-Backed and Municipal securities from available-for-sale to held-to maturity.  Because of the implicit and explicit guarantees of the Federal Government on the Agency and Mortgage-Backed securities there is no expectation of future losses on any of these securities.  The Bank’s municipal bonds moved to the held-to-maturity designation all have credit ratings considered investment grade or equivalent.  A discounted-cash-flow reserve calculation was performed upon the transfer of these securities into the held-to-maturity designation and a reserve of $0.02 million was calculated and charged to provision expense.

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Share Based Compensation

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

Share Based Compensation

Note 4 – Share Based Compensation

On March 16, 2017, the Company’s Board of Directors approved and adopted the 2017 Stock Incentive Plan (the “2017 Plan”), which became effective May 24, 2017, the date approved by the Company’s shareholders. The 2017 Plan replaced the Company’s 2007 Stock Incentive Plan (the “2007 Plan”), which expired by its own terms on March 15, 2017. Options to purchase 161,089 shares that were granted under the 2007 Plan were still outstanding as of September 30, 2022 and remain unaffected by that plan’s expiration. The 2017 Plan provides for the issuance of both “incentive” and “nonqualified” stock options to officers and employees, and of “nonqualified” stock options to non-employee directors and consultants of the Company. The 2017 Plan also provides for the issuance of restricted stock awards to these same classes of eligible participants. The total number of shares of the Company’s authorized but unissued stock reserved for issuance pursuant to awards under the 2017 Plan was initially 850,000 shares, and the number remaining available for grant as of September 30, 2022 was 451,577. Options to purchase 339,057 shares granted under the 2017 Plan were outstanding as of September 30, 2022. The potential dilutive impact of unexercised stock options is discussed below in Note 5, Earnings per Share.

Pursuant to FASB’s standards on stock compensation, the value of each stock option and restricted stock award is reflected in our income state­ment as employee compensation or directors’ expense by amortizing its grant date fair value over the vesting period of the option or award. The Company utilizes a Black-Scholes model to determine grant date fair values for options, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. Forfeitures are reflected in compensation costs as they occur for both types of awards. A pre-tax charge of $0.3 million was reflected in the Company’s income statement during the third quarter of 2022 and $0.2 million was charged during the third quarter of 2021, as expense related to stock options and restricted stock awards. For the first nine months, the charges totaled $1.0 million in 2022 and $0.7 million in 2021.

Restricted Stock Grants

The Company’s Restricted Stock Awards are awards of either time-vested or performance-based shares. The Restricted Stock Awards are non-transferrable shares of common stock and are available to be granted to the Company’s employees and directors. The vesting period of Restricted Stock Awards is determined at the time the awards are issued, and different awards may have different vesting terms or performance measures; provided, however, that no installment of any Restricted Stock Award shall become vested less than one year from the grant date. Restricted Stock Awards are valued utilizing the fair value of the Company’s stock at the grant date. These awards are expensed on a straight-line basis over the vesting period and consider the probability of meeting the performance criteria. There were no shares granted to employees and directors of the Company during the first nine months of 2022. As of September 30, 2022, there was $2.0 million of unamortized compensation cost related to unvested Restricted Stock Awards granted under the 2017 plan. That cost is expected to be amortized over a weighted average period of 2.7 years.

The Company’s restricted stock award activity for the nine months ended September 30, 2022 and 2021 is summarized below (unaudited):

	Nine months ended September 30,
	2022			2021
	Shares		Weighted Average Grant-Date Fair Value	Shares		Weighted Average Grant-Date Fair Value
Unvested shares, January 1,	165,131	$	21.72	148,885	$	18.00
Granted	—		—	18,180		25.30
Vested	(37,748)		19.20	(39,449)		18.00
Forfeited	(1,212)		27.16	(17,777)		18.00
Unvested shares, September 30,	126,171	$	22.45	109,839	$	19.21

Stock Option Grants

The Company has issued equity instruments in the form of Incentive Stock Options and Nonqualified Stock Options to certain officers and directors and may continue to do so under the 2017 Plan. The exercise price of each stock option is determined at the time of the grant and may be no less than 100% of the fair market value of such stock at the time the option is granted.

The Company’s stock option activity during the nine months ended September 30, 2022 and 2021 are summarized below (dollars in thousands, except per share data, unaudited):

	Nine months ended September 30,
	2022						2021
	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
Outstanding at January 1,	415,870	$	24.15		$	1,338	495,489	$	23.67		$	1,340
Granted	—	$	—		$	—	—	$	—		$	—
Exercised	(5,600)	$	11.22		$	56	(7,480)	$	12.59		$	91
Forfeited/Expired	(32,381)	$	27.32		$	—	(39,719)	$	26.93		$	1
Outstanding at September 30,	377,889	$	24.07	5.13	$	470	448,290	$	23.57	5.92	$	1,302
Exercisable at September 30,	336,489	$	23.69	4.88	$	470	384,690	$	22.97	5.58	$	1,302

(1) The aggregate intrinsic value of stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2022. This amount changes based on changes in the market value of the Company's stock.

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Earnings per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings per Share

Note 5 – Earnings per Share

The computation of earnings per share, as presented in the Consolidated Statements of Income, is based on the weighted average number of shares outstanding during each period, excluding unvested restricted stock awards. There were 14,954,503 weighted average shares outstanding during the third quarter of 2022 and 15,257,367 during the third quarter of 2021, while there were 14,968,242 weighted average shares outstanding during the first nine months of 2022 and 15,247,477 during the first nine months of 2021.

Diluted earnings per share calculations include the effect of the potential issuance of common shares, which for the Company is limited to shares that would be issued on the exercise of “in-the-money” stock options, and unvested restricted stock awards. For the third quarter of 2022, calculations under the treasury stock method resulted in the equivalent of 59,545 shares being added to basic weighted average shares outstanding for purposes of determining diluted earnings per share, while a weighted average of 303,387 stock options were excluded from the calculation because they were underwater and thus anti-dilutive. For the third quarter of 2021 the equivalent of 86,176 shares were added in calculating diluted earnings per share, while 327,346 anti-dilutive stock options were not factored into the computation. Likewise, for the first nine months of 2022 the equivalent of 78,641 shares were added to basic weighted average shares outstanding in calculating diluted earnings per share and a weighted average of 299,404 options that were anti-dilutive for the period were not included, compared to the addition of the equivalent of 121,772 shares and non-inclusion of 339,546 anti-dilutive options in calculating diluted earnings per share for first half of 2021.

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Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2022

Comprehensive Income [Abstract]

Comprehensive Income (Loss)

Note 6 – Comprehensive Income (Loss)

As presented in the Consolidated Statements of Comprehensive Income (Loss), comprehensive income (loss) includes net income and other comprehensive income (loss). The Company’s only source of other comprehensive income (loss) is unrealized gains and losses on available-for-sale investment securities. Investment gains or losses that were realized and reflected in net income of the current period, which had previously been included in other comprehensive income (loss) as unrealized holding gains or losses in the period in which they arose, are considered to be reclassification adjustments that are excluded from other comprehensive income (loss) in the current period.

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Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

Note 7 – Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business. Those financial instruments currently consist of unused commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by counterparties for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as it does for originating loans included on the balance sheet. The following financial instruments represent off-balance-sheet credit risk (dollars in thousands):

	September 30, 2022		December 31, 2021
Commitments to extend credit	$	792,728	$	554,028
Standby letters of credit	$	6,057	$	6,651

Commitments to extend credit consist primarily of the unused or unfunded portions of the following: home equity lines of credit; commercial real estate construction loans, where disbursements are made over the course of construction; commercial revolving lines of credit; mortgage warehouse lines of credit; unsecured personal lines of credit; and formalized (disclosed) deposit account overdraft lines. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments are expected to expire without being drawn upon, the unused portions of committed amounts do not necessarily represent future cash requirements. Standby letters of credit are issued by the Company to guarantee the performance of a customer to a third party, and the credit risk involved in issuing letters of credit is essentially the same as the risk involved in extending loans to customers. Included in unused commitments are mortgage warehouse lines which are mostly in the form of repo lines and are unconditionally cancellable. Unused commitments on mortgage warehouse lines were $488.4 million at September 30, 2022 and $272.8 million at December 31, 2021.

At September 30, 2022, the Company was also utilizing a letter of credit in the amount of $127.9 million issued by the Federal Home Loan Bank on the Company’s behalf as security for certain deposits and to facilitate certain credit arrangements with the Company’s customers. That letter of credit is backed by loans which are pledged to the FHLB by the Company.

The Company is subject to loss contingencies, including claims and legal actions arising in the ordinary course of business, which are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

As noted under footnote 3 the adoption of CECL on January 1, 2022 impacted the Company’s ACL on unfunded loan commitments. Additional information is included in footnote 3.

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Fair Value Disclosures and Reporting and Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Disclosures and Reporting and Fair Value Measurements

Note 8 – Fair Value Disclosures and Reporting and Fair Value Measurements

FASB’s standards on financial instruments, and on fair value measurements and disclosures, require public business entities to disclose in their financial statement footnotes the estimated fair values of financial instruments. In addition to disclosure requirements, FASB’s standard on investments requires that our debt securities that are classified as available for sale and any equity securities which have readily determinable fair values be measured and reported at fair value in our statement of financial position. Certain individually identified loans are also reported at fair value, as explained in greater detail below, and foreclosed assets are carried at the lower of cost or fair value. FASB’s standard on financial instruments permits companies to report certain other financial assets and liabilities at fair value, but the Company has not elected the fair value option for any of those financial instruments.

Fair value measurement and disclosure standards also establish a framework for measuring fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Further, the standards establish a fair value hierarchy that encourages an entity to maximize the use of observable inputs and limit the use of unobservable inputs when measuring fair values. The standards describe three levels of inputs that may be used to measure fair values:

● Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

● Level 2: Significant observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

● Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the factors that market participants would likely consider in pricing an asset or liability.

Fair value estimates are made at a specific point in time based on relevant market data and information about the financial instruments. Fair value disclosures for deposits include demand deposits, which are, by definition, equal to the amount payable on demand at the reporting date. Fair value calculations for loans reflect exit pricing, and incorporate our assumptions with regard to the impact of prepayments on future cash flows and credit quality adjustments based on risk characteristics of various financial instruments, among other things. Since the estimates are subjective and involve uncertainties and matters of significant judgment they cannot be determined with precision, and changes in assumptions could significantly alter the fair values presented.

Estimated fair values for the Company’s financial instruments are as follows, as of the dates noted:

Fair Value of Financial Instruments

(dollars in thousands, unaudited)

		September 30, 2022
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	86,683	$	86,683	$	—	$	—	$	86,683
Investment securities available-for-sale		1,069,434		—		1,015,098		54,336		1,069,434
Investment securities held-to-maturity		156,211		—		138,684		—		138,684
Loans and leases, net held for investment		1,972,649		—		—		1,958,479		1,958,479
Collateral dependent loans		23,577		—		23,577		—		23,577
Financial liabilities:
Deposits		2,885,468		1,118,245		1,764,225		—		2,882,470
Repurchase agreements		112,012		—		112,012		—		112,012
Short term borrowings		103,100		—		103,100		—		103,100
Long-term debt		49,196		—		43,247		—		43,247
Subordinated debentures		35,436		—		35,251		—		35,251

		December 31, 2021
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	257,528	$	257,528	$	—	$	—	$	257,528
Investment securities available for sale		973,314		—		750,077		223,237		973,314
Loans and leases, net held for investment		1,973,207		—		—		1,960,966		1,960,966
Collateral dependent loans		398		—		221		177		398
Financial liabilities:
Deposits		2,781,572		1,084,544		1,696,124		—		2,780,668
Repurchase agreements		106,937		—		106,937		—		106,937
Short term borrowings		49,141		—		49,118		—		49,118
Subordinated debentures		35,302		—		33,281		—		33,281

For financial asset categories that were carried on our balance sheet at fair value as of September 30, 2022 and December 31, 2021, the Company used the following methods and significant assumptions:

● Investment securities: Fair values are determined by obtaining quoted prices on nationally recognized securities exchanges or by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities by relying on their relationship to other benchmark quoted securities.

● Collateral-dependent loans: Collateral-dependent loans are carried at fair value when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected disposition costs where applicable.

● Foreclosed assets: Repossessed real estate (known as other real estate owned, or “OREO”) and other foreclosed assets are carried at the lower of cost or fair value. Fair value is the appraised value less expected disposition costs for OREO; fair values for any other foreclosed assets are represented by estimated sales proceeds as determined using reasonably available sources. Foreclosed assets for which appraisals can be feasibly obtained are periodically measured for impairment using updated appraisals. Fair values for other foreclosed assets are adjusted as necessary, subsequent to a periodic reevaluation of expected cash flows and the timing of resolution. If impairment is determined to exist, the book value of a foreclosed asset is immediately written down to its estimated impaired value through the income statement, thus the carrying amount is equal to the fair value and there is no valuation allowance.

Assets reported at fair value on a recurring basis are summarized below:

Fair Value Measurements – Recurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	3,955	$	—	$	3,955	$	—
Mortgage-backed securities		—		191,022		—		191,022		—
State and political subdivisions		—		320,729		—		320,729		—
Corporate bonds		—		—		54,336		54,336		—
Collateralized loan obligations		—		499,392		—		499,392		—
Total available-for-sale securities	$	—	$	1,015,098	$	54,336	$	1,069,434	$	—

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	1,574	$	—	$	1,574	$	—
Mortgage-backed securities		—		306,727		—		306,727		—
State and political subdivisions		—		304,268		—		304,268		—
Corporate bonds		—		999		27,530		28,529		—
Collateralized loan obligations		—		136,509		195,707		332,216		—
Total available-for-sale securities	$	—	$	750,077	$	223,237	$	973,314	$	—

Fair Value Measurements - Level 3 Recurring
(dollars in thousands, unaudited)
	Collateralized Loan Obligations				Corporate Bonds
	2022		2021		2022		2021
Balance of recurring Level 3 assets at January 1,	$	195,707	$	—	$	27,530	$	—
Purchases		—		—		26,806		—
Transfers out of Level 3		(195,707)		—		—		—
Balance of recurring Level 3 assets at September 30,	$	—	$	—	$	54,336	$	—

All of the Company’s collateralized loan obligations with a fair value of $195.7 million as of January 1, 2022 were transferred from Level 3 to Level 2 during the first quarter of 2022 because observable market data became available due to a significant increase in trading volume for these securities during that time.

Assets reported at fair value on a nonrecurring basis are summarized below:

Fair Value Measurements – Nonrecurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		—		—		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		17,655		—		17,655
Total real estate		—		17,655		—		17,655
Agricultural		—		5,922		—		5,922
Commercial and industrial		—		—		—		—
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	23,577	$	—	$	23,577
Foreclosed assets	$	—	$	—	$	—	$	—
Total assets measured on a nonrecurring basis	$	—	$	23,577	$	—	$	23,577

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		161		—		161
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		60		—		60
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		—		—		—
Total real estate		—		221		—		221
Agricultural		—		—		—		—
Commercial and industrial		—		—		177		177
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	221	$	177	$	398
Foreclosed assets	$	—	$	93	$	—	$	93
Total assets measured on a nonrecurring basis	$	—	$	314	$	177	$	491

The table above includes collateral-dependent loan balances for which a specific reserve has been established or on which a write-down has been taken. Information on the Company’s total collateral dependent loan balances and specific loss reserves associated with those balances is included in Note 10 below.

The unobservable inputs are based on Management’s best estimates of appropriate discounts in arriving at fair market value. Adjusting any of those inputs could result in a significantly lower or higher fair value measurement. For example, an increase or decrease in actual loss rates would create a directionally opposite change in the fair value of unsecured individually identified loans.

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Investments

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments

Note 9 – Investments

Investment Securities

Pursuant to FASB’s guidance on accounting for debt securities, available for sale securities are carried on the Company’s financial statements at their estimated fair market values, with monthly tax-effected “mark-to-market” adjustments made vis-à-vis accumulated other comprehensive income in shareholders’ equity. Held-to-maturity securities are carried on the Company’s financial statements at their amortized cost, net of the allowance for credit losses.

The amortized cost, estimated fair value, and allowance for credit losses of available-for-sale and held-to-maturity investment securities are as follows:

Amortized Cost And Estimated Fair Value

(dollars in thousands, unaudited)

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	4,000	$	—	$	(45)	$	—	$	3,955
Mortgage-backed securities		202,882		—		(11,860)		—		191,022
State and political subdivisions		363,790		53		(43,114)		—		320,729
Corporate bonds		59,768		—		(5,432)		—		54,336
Collateralized loan obligations		514,701		119		(15,428)		—		499,392
Total available-for-sale securities	$	1,145,141	$	172	$	(75,879)	$	—	$	1,069,434
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Held-to-maturity
U.S. government agencies	$	6,113	$	—	$	(669)	$	5,444	$	—
Mortgage-backed securities		100,792		—		(9,941)		90,851		—
State and political subdivisions		49,324		11		(6,946)		42,389		(18)
Total held-to-maturity securities	$	156,229	$	11	$	(17,556)	$	138,684	$	(18)

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	1,546	$	28	$	—	$	—	$	1,574
Mortgage-backed securities		303,912		4,772		(1,957)		—		306,727
State and political subdivisions		290,729		13,807		(268)		—		304,268
Corporate bonds		28,436		94		(1)		—		28,529
Collateralized loan obligations		332,836		68		(688)		—		332,216
Total securities	$	957,459	$	18,769	$	(2,914)	$	—	$	973,314

The Company reassessed classification of certain investments and effective April 1, 2022 the Company transferred $162.1 million of Agency, Mortgaged-Backed and Municipal securities from the available-for-sale designation to the held-to-maturity designation. The securities were transferred at their amortized cost basis, net of any remaining unrealized gain or loss reported in accumulated other comprehensive income. The related unrealized loss of $11.5 million included in other comprehensive income remained in other comprehensive income, to be amortized out of other comprehensive income with an offsetting entry to interest income as a yield adjustment through earnings over the remaining term of the securities. Upon transfer, a discounted-cash-flow reserve calculation was prepared for the securities transferred into the held-to-maturity designation and an allowance for credit losses of $0.02 million was recorded and charged to provision for credit loss expense. The Company did not have any securities classified as held-to-maturity as of December 31, 2021.

The Company did not record an ACL on the AFS portfolio at September 30, 2022 or upon the implementation of CECL on January 1, 2022.  As of both dates the Company considers the unrealized loss across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value. The Company maintains that it has intent and ability to hold these securities until the amortized cost basis of each security is recovered and likewise concluded as of both January 1, 2022 and September 30, 2022 that it was not more likely than not that any of the securities in an unrealized loss position would be required to be sold. The following bullets outline additional support for management’s conclusion that no amount of the unrealized loss of the securities in an unrealized loss position as of January 1, 2022 and September 30, 2022 was attributable to credit deterioration and a risk of loss, requiring an allowance for credit losses.

● US Government Agencies are supported by the full faith and credit-worthiness of the U.S. Federal Government and the management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or September 30, 2022. 

● Mortgage-backed securities issued by government sponsored entities (“GSEs”) carry an implicit guarantee by the U.S. Federal Government, as the GSEs can draw funds from the U.S. Federal Government up to a limit, with an implied ability to draw funds beyond the limit.  Management did not consider a default, much less a loss on these securities to be a reasonable possibility as of either January 1, 2022 or September 30, 2022. 

● Management routinely monitors third party credit grades of the municipal issuers in the Company’s state and political subdivisions portfolio and as of both January 1, 2022 and September 30, 2022 noted that all municipal securities in an unrealized loss position were either investment grade rated or guaranteed.  On a quarterly basis management receives financial information from a third-party service in order to monitor the underlying issuer’s financial stability. In addition, management performs annual reviews of the underlying municipal issuers financial statements in order to evaluate stability and repayment capacity and has noted no concerns with any of the bonds in the Company’s State and Local portfolio.  As of both January 1, 2022 and September 30, 2022 management concluded that no allowance for credit losses was warranted on any of the Company’s municipal securities and the unrealized loss position of each of the securities reflected fluctuations in market conditions, primarily interest rates, since the time of purchase.

● The Company has invested in corporate debt issuances of other financial institutions.  Various financial metrics of each of the issuing financial institutions are reviewed by management quarterly, these metrics include credit quality, reserve adequacy, profitability and capital.  Following review of the financial metrics available for each

of the underlying institutions as of January 1, 2022 and September 30, 2022 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rates, from the date of purchase, and were not reflective of any credit concerns with the issuing financial institution. These bonds were subject to a credit review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews.

● The Company has invested exclusively in AA and AAA tranches of various collateralized loan obligations, which are securitizations of commercial loans. Each purchase is subject to a credit, concentration, and structure review by the credit administration department prior to their purchase and are subject to ongoing quarterly reviews. Management monitors the credit rating of these investments on a quarterly basis in addition to various performance metrics available through a third-party informational service. Following review of financial metrics as of both January 1, 2022 and September 30, 2022 management concluded that the unrealized loss position of these securities related exclusively to the fluctuation in market conditions, primarily interest rate spreads, from the date of purchase, and were not reflective of any credit concerns with the tranches comprising the Company’s investments.

The following table summarizes available-for-sale debt securities that were in an unrealized loss position for which an ACL has not been recorded, based on the length of time the individual securities have been in an unrealized loss position, including the number of available-for-sale debt securities in an unrealized loss position, as of the dates indicated below.

Investment Portfolio - Unrealized Losses

(dollars in thousands, unaudited)

		September 30, 2022
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	2	$	(45)	$	3,955	$	—	$	—	$	(45)	$	3,955
Mortgage-backed securities	371		(11,696)		189,031		(164)		1,924		(11,860)		190,955
State and political subdivisions	399		(38,127)		286,459		(4,987)		13,878		(43,114)		300,337
Corporate bonds	51		(5,432)		54,336		—		—		(5,432)		54,336
Collateralized loan obligations	58		(15,200)		447,465		(228)		8,071		(15,428)		455,536
Total available-for-sale	881	$	(70,500)	$	981,246	$	(5,379)	$	23,873	$	(75,879)	$	1,005,119

		December 31, 2021
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	—	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	46		(1,797)		107,026		(160)		2,808		(1,957)		109,834
State and political subdivisions	29		(268)		30,170		—		—		(268)		30,170
Corporate bonds	1		(1)		499		—		—		(1)		499
Collateralized loan obligations	22		(688)		175,581		—		—		(688)		175,581
Total available-for-sale	98	$	(2,754)	$	313,276	$	(160)	$	2,808	$	(2,914)	$	316,084

The table below summarizes the Company’s gross realized gains and losses as well as gross proceeds from the sales of securities, for the periods indicated:

Investment Portfolio - Realized Gains/(Losses)

(dollars in thousands, unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2022		2021		2022		2021
Proceeds from sales, calls and maturities of securities available for sale	$	3,540	$	1,948	$	34,071	$	5,948
Gross gains on sales, calls and maturities of securities available for sale		—		11		1,032		11
Gross losses on sales, calls and maturities of securities available for sale		—		—		—		—
Net gains on sale of securities available for sale	$	—	$	11	$	1,032	$	11

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at September 30, 2022 and December 31, 2021 are shown below, grouped by the remaining time to contractual maturity dates. The expected life of investment securities may not be consistent with contractual maturity dates since the issuers of the securities might have the right to call or prepay obligations with or without penalties.

Estimated Fair Value of Contractual Maturities

(dollars in thousands, unaudited)

	September 30, 2022
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	908	$	908	$	675	$	667
Maturing after one year through five years		14,313		14,132		2,133		2,091
Maturing after five years through ten years		81,497		75,441		18,729		16,869
Maturing after ten years		330,840		288,539		33,900		28,207
Securities not due at a single maturity date:
Mortgage-backed securities		202,882		191,022		100,792		90,850
Collateralized loan obligations		514,701		499,392		—		—
	$	1,145,141	$	1,069,434	$	156,229	$	138,684

	December 31, 2021
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	3,513	$	3,547	$	—	$	—
Maturing after one year through five years		26,422		26,718		—		—
Maturing after five years through ten years		36,840		38,314		—		—
Maturing after ten years		253,936		265,792		—		—
Securities not due at a single maturity date:						—		—
Mortgage-backed securities		303,912		306,727		—		—
Collateralized loan obligations		332,836		332,216		—		—
	$	957,459	$	973,314	$	—	$	—

At September 30, 2022, the Company’s investment portfolio included 503 “muni” bonds issued by 415 different government municipalities and agencies located within 37 different states, with an aggregate fair value of $363.1 million. The largest exposure to any single municipality or agency was a combined $5.0 million (fair value) in general obligation bonds issued by the City of New York (NY). In addition, the Company owned 46 subordinated debentures issued by bank holding companies totaling $54.3 million (fair value).

At December 31, 2021, the Company’s investment portfolio included 403 “muni” bonds issued by 335 different government municipalities and agencies located within 33 states, with an aggregate fair value of $304.3 million. The largest exposure to any single municipality or agency was $4.0 million (fair value) in three bonds issued by the Charter Township of Washington. In addition, the company owned 23 subordinated debentures issued by bank holding companies totaling $28.5 million (fair value).

The Company’s investments in bonds issued by corporations, states, municipalities and political subdivisions are evaluated in accordance with Financial Institution Letter 48-2012, issued by the FDIC, “Revised Standards of Creditworthiness for Investment Securities,” and other regulatory guidance. Credit ratings are considered in our analysis only as a guide to the historical default rate associated with similarly rated bonds. There have been no significant differences in our internal analyses compared with the ratings assigned by the third-party credit rating agencies.

The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company’s investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for our largest geographic concentrations:

Revenue and General Obligation Bonds by Location

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
General obligation bonds	Cost		Value		Cost		Value
State of issuance
Texas	$	159,391	$	139,498	$	85,045	$	89,225
California		67,310		58,161		64,092		67,066
Washington		22,417		20,670		23,858		24,812
Other (29 & 26 states, respectively)		107,784		95,355		75,037		78,579
Total general obligation bonds		356,902		313,684		248,032		259,682
Revenue bonds
State of issuance
Texas		9,496		8,460		7,038		7,377
California		3,994		3,613		1,349		1,392
Washington		4,093		3,387		4,334		4,602
Other (20 & 15 states, respectively)		38,629		33,974		29,976		31,215
Total revenue bonds		56,212		49,434		42,697		44,586
Total obligations of states and political subdivisions	$	413,114	$	363,118	$	290,729	$	304,268

The revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements. The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates.

Revenue Bonds by Type

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
Revenue bonds	Cost		Value		Cost		Value
Revenue source:
Water	$	22,741	$	20,064	$	15,534	$	16,220
Lease		7,511		6,907		6,556		6,718
Sewer		7,091		6,144		3,932		4,165
Sales tax revenue		4,329		3,803		—		—
Intergovernmental agreement		2,836		2,600		—		—
Other (10 and 9 sources, respectively)		11,704		9,916		16,675		17,483
Total revenue bonds	$	56,212	$	49,434	$	42,697	$	44,586

Low-Income Housing Tax Credit (“LIHTC”) Fund Investments

The Company has the ability to invest in limited partnerships which own housing projects that qualify for federal and/or California state tax credits, by mandating a specified percentage of low-income tenants for each project. The primary investment return comes from tax credits that flow through to investors. Because rent levels are lower than standard market rents and the projects are generally highly leveraged, each project also typically generates tax-deductible operating losses that are allocated to the limited partners for tax purposes.

The Company currently has investments in four different LIHTC fund limited partnerships made in 2014, 2015, and two in 2022, all of which were California-focused funds that help the Company meet its obligations under the Community Reinvestment Act. We utilize the cost method of accounting for our LIHTC fund investments, under which we initially record on our balance sheet an asset that represents the total cash expected to be invested over the life of the partnership. Any commitments or contingent commitments for future investment are reflected as a liability. The income statement reflects tax credits and any other tax benefits from these investments “below the line” within our income tax provision, while the initial book value of the investment is amortized on a straight-line basis as an offset to noninterest income, over the time period in which the tax credits and tax benefits are expected to be received.

As of September 30, 2022, our total LIHTC investment book balance was $10.2 million, which includes $7.5 million in remaining commitments for additional capital contributions. There were $0.4 million in tax credits derived from our LIHTC investments that were recognized during the nine months ended September 30, 2022, and amortization expense of $0.3 million associated with those investments was netted against pre-tax noninterest income for the same time period. Our LIHTC investments are evaluated annually for potential impairment, and we have concluded that the carrying value of the investments is stated fairly and is not impaired.

As of December 31, 2021, our total LIHTC investment book balance was $2.9 million, which includes $0.1 million in remaining commitments for additional capital contributions. There were $0.5 million in tax credits derived from our LIHTC investments that were recognized during the year ended December 31, 2022, and amortization expense of $0.5 million associated with those investments was netted against pre-tax noninterest income for the same time period.

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Loans and Leases and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2022

Credit Quality and Nonperforming Assets [Abstract]

Loans and Leases and Allowance for Credit Losses

Note 10 – Loans and Leases and Allowance for Credit Losses

We adopted the new current expected credit loss accounting guidance, CECL, and all related amendments as of January 1, 2022. Certain prior period credit quality disclosures related to impaired loans and individually and collectively evaluated loans were superseded with the current guidance and have not been included below as of September 30, 2022.

Under CECL, disclosures are required on the amortized cost basis, whereas legacy GAAP required presentation on the recorded investment basis, with the primary difference being net deferred fees and costs. Unless specifically noted otherwise, September 30, 2022 disclosures are prepared on the amortized cost basis and December 31, 2021 disclosures present information according to the recorded investment basis.

The following table presents loans by class as of September 30, 2022 and December 31, 2021. Accrued interest receivable on loans of $4.7 million and $6.8 million at September 30, 2022 and December 31, 2021 respectively is not included in the loans included in the table below but is included in other assets on the Company’s balance sheet. The September 30, 2022 balance in 1-4 family closed end loans reflects year-to-date 2022 loan purchases of $173.1 million. 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 final table in this section separates a roll forward of the Allowance for Credit Losses at the portfolio segment level.

Loan And Lease Distribution
(dollars in thousands, unaudited)
	September 30, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	—	$	21,369
Other construction/land		18,315		25,299
1-4 family - closed-end		420,136		289,457
Equity lines		21,126		26,588
Multi-family residential		69,665		53,458
Commercial real estate - owner occupied		324,696		334,446
Commercial real estate - non-owner occupied		896,954		882,888
Farmland		117,385		106,706
Total real estate		1,868,277		1,740,211
Agricultural		31,290		33,990
Commercial and industrial		70,147		109,791
Mortgage warehouse lines		46,553		101,184
Consumer loans		4,097		4,550
Subtotal		2,020,364		1,989,726
Net deferred loan fees and costs		(348)		(1,865)
Loans and leases, amortized cost basis		2,020,016		1,987,861
Allowance for credit losses		(23,790)		(14,256)
Net loans and leases	$	1,996,226	$	1,973,605

The following table presents the amortized cost basis of nonaccrual loans, according to loan class, with and without individually evaluated reserves as of September 30, 2022:

Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	Nonaccrual Loans
	With no allowance for credit loss		With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		485		—		485		—
Equity lines		61		—		61		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		9,677		8,593		18,270		—
Total real estate		10,223		8,593		18,816		—
Agricultural		82		7,649		7,731		—
Commercial and industrial		87		138		225		7
Mortgage warehouse lines		—		—		—		—
Consumer loans		—		—		—		—
Total	$	10,392	$	16,380	$	26,772	$	7

The following table presents the impaired loans as of December 31, 2021, according to loan class, with and without an individually evaluated reserve according to the recorded investment basis. Impaired loans as of December 31, 2021 included both nonaccrual loans and performing TDRs. A separate breakout of nonaccrual loans by class as of December 31, 2021 is included in the past due loans table as of December 31, 2021, later in this footnote.

	December 31, 2021
	Unpaid Principal		Recorded				Average Recorded		Interest Income
	Balance(1)		Investment(2)		Related Allowance		Investment		Recognized(3)
With an Allowance Recorded
Real estate:
Other construction/land	$	341	$	341	$	64	$	352	$	55
1-4 family - closed-end		1,048		1,048		37		1,096		104
Equity lines		2,005		1,993		182		2,056		138
Commercial real estate - owner occupied		1,249		1,248		19		1,278		144
Commercial real estate - non-owner occupied		367		367		126		393		32
Total real estate		5,010		4,997		428		5,175		473
Agricultural		244		244		244		246		—
Commercial and industrial		757		757		127		873		41
Consumer loans		164		164		19		180		28
		6,175		6,162		818		6,474		542
With no Related Allowance Recorded
Real estate:
1-4 family - closed-end		788		788		—		869		—
Equity lines		648		648		—		690		6
Commercial real estate - owner occupied		1,353		1,234		—		1,282		—
Total real estate		2,789		2,670		—		2,841		6
Agricultural		134		134		—		186		—
Commercial and industrial		466		466		—		550		—
		3,389		3,270		—		3,577		6
Total	$	9,564	$	9,432	$	818	$	10,051	$	548

(1) Contractual principal balance due from customer.

(2) Principal balance on Company’s books, less any direct charge offs.

(3) Interest income is recognized on performing balances on a regular accrual basis.

The Company did not recognize any interest on nonaccrual loans during 2022 and would have recognized an additional $0.6 million in interest income on nonaccrual loans had those loans not been designated as nonaccrual.

The following table presents the amortized cost basis of collateral-dependent loans by class as of September 30, 2022:

Collateral Dependent Loans
(dollars in thousands, unaudited)
	September 30, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		40		—
Equity lines		506		—
Multi-family residential		—		—
Commercial real estate - owner occupied		—		—
Commercial real estate - non-owner occupied		—		—
Farmland		18,271		195
Total real estate		18,817		195
Agricultural		7,702		967
Commercial and industrial		224		40
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	26,743	$	1,202

During the third quarter the amortized cost balance of collateral-dependent loans declined by $1.7 million due to declines resulting from upgrades and payoffs. The weighted average loan-to-value ratio of collateral dependent loans was 93% at September 30, 2022.  There were no collateral dependent loans in the process of foreclosure as of September 30, 2022.

The following table presents the aging of the amortized cost basis in past-due loans, according to class, as of September 30, 2022:

Past Due Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	30-59 Days Past Due		60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—		18,255		18,255
1-4 family - closed-end		—		32		8		40		421,096		421,136
Equity lines		—		—		—		—		21,441		21,441
Multi-family residential		—		—		—		—		69,569		69,569
Commercial real estate - owner occupied		351		—		—		351		324,364		324,715
Commercial real estate - non-owner occupied		—		—		—		—		894,213		894,213
Farmland		99		—		18,271		18,370		99,189		117,559
Total real estate		450		32		18,279		18,761		1,848,127		1,866,888
Agricultural		—		—		7,649		7,649		23,879		31,528
Commercial and industrial		775		—		—		775		70,069		70,844
Mortgage warehouse lines		—		—		—		—		46,554		46,554
Consumer loans		—		—		—		—		4,202		4,202
Total loans and leases	$	1,225	$	32	$	25,928	$	27,185	$	1,992,831	$	2,020,016

The following table presents the aging of the recorded investment in past-due and nonaccrual loans, according to class, as of December 31, 2021:

December 31, 2021	30-59 Days		60-89 Days		90 Days Or  More Past						Total Financing		Non-Accrual
	Past Due		Past Due		Due(2)		Total Past Due		Current		Receivables		Loans(1)
Real Estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	21,369	$	21,369	$	—
Other construction/land		—		—		—		—		25,299		25,299		—
1-4 family - closed-end		1,532		132		—		1,664		287,793		289,457		1,023
Equity lines		30		—		—		30		26,558		26,588		892
Multi-family residential		—		—		—		—		53,458		53,458		—
Commercial real estate owner occupied		124		—		698		822		333,624		334,446		1,234
Commercial real estate non-owner occupied		—		—		—		—		882,888		882,888		—
Farmland		—		—		—		—		106,706		106,706		—
Total real estate loans		1,686		132		698		2,516		1,737,695		1,740,211		3,149
Agricultural		—		—		284		284		33,706		33,990		378
Commercial and industrial		473		—		283		756		109,035		109,791		973
Mortgage warehouse lines		—		—		—		—		101,184		101,184		—
Consumer loans		6		3		—		9		4,541		4,550		22
Total gross loans and leases	$	2,165	$	135	$	1,265	$	3,565	$	1,986,161	$	1,989,726	$	4,522

(1) Included in Total Financing Receivables

(2) As of December 31, 2021 there were no loans over 90 days past due and still accruing.

Troubled Debt Restructurings

A loan that is modified for a borrower who is experiencing financial difficulty is classified as a troubled debt restructuring (TDR) if the modification constitutes a concession. At September 30, 2022, the Company had a total of $4.9 million in TDRs, including $0.3 million in TDRs that were on non-accrual status. Generally, a non-accrual loan that has been modified as a TDR remains on non-accrual status for a period of at least six months to demonstrate the borrower’s ability to comply with the modified terms. However, performance prior to the modification, or significant events that coincide with the modification, could result in a loan’s return to accrual status after a shorter performance

period or even at the time of loan modification. Regardless of the period of time that has elapsed, if the borrower’s ability to meet the revised payment schedule is uncertain, then the loan will be kept on non-accrual status.

The Company may agree to different types of concessions when modifying a loan or lease. The tables below summarize TDRs which were modified during the three and nine months ended September 30, 2021, by type of concession. For the three and nine months ended September 30, 2022, there were no new TDRs and no modifications of existing TDRs

Troubled Debt Restructurings, by Type of Loan Modification

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		—		—		1,000
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,000		—		—		—		1,000
Agricultural		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total	$	—	$	1,000	$	—	$	—	$	—	$	1,000

		Nine months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		83		—		1,083
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,136		—		83		—		1,219
Agricultural		—		118		—		—				118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	1,480	$	—	$	83	$	—	$	1,563

Troubled Debt Restructurings

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	1		1,000		1,000		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			1,000		1,000		—		—
Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	1,000	$	1,000	$	—	$	—

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

	Nine months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	2		1,083		1,083		—		1
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			1,220		1,219		(1)		1
Agricultural	1		118		118		116		—
Commercial and industrial	1		185		185		(1)		47
Consumer loans	1		41		41		—		—
Total		$	1,564	$	1,563	$	114	$	48

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

The Company had no finance receivables modified as TDRs within the previous twelve months that defaulted or were charged off during the three or nine-month periods ending September 30, 2022 and 2021.

The Company monitors the credit quality of loans on a continuous basis using the regulatory and accounting classifications of pass, special mention and substandard to characterize and qualify the associated credit risk. Loans classified as “loss” are immediately charged-off. The Company uses the following definitions of risk classifications:

Pass – Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions below and smaller, homogeneous loans not assessed on an individual basis.

Special Mention – Loans classified as special mention have the potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard – Loans classified as substandard are those loans with clear and well-defined weaknesses such as a highly leveraged position, unfavorable financial operating results and/or trends, or uncertain repayment sources or poor financial condition, which may jeopardize ultimate recoverability of the debt.

The following tables present the amortized cost of loans and leases by credit quality classification in addition to loan and lease vintage as of September 30, 2022:

Loan and Lease Credit Quality by Vintage

(dollars in thousands, unaudited)

	Term Loans and Leases Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Total Loans
Other construction/land
Pass	$	—	$	—	$	4,295	$	756	$	974	$	1,063	$	11,095	$	18,183
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		72		—		—		—		—		72
Subtotal		—		—		4,367		756		974		1,063		11,095		18,255
1-4 family - closed-end
Pass		108,169		240,043		8,011		2,077		11,061		50,121		—		419,482
Special Mention		—		—		—		—		—		744		—		744
Substandard		—		—		—		—		32		878		—		910
Subtotal		108,169		240,043		8,011		2,077		11,093		51,743		—		421,136
Equity lines
Pass		—		158		527		352		78		—		18,982		20,097
Special Mention		—		—		20		—		—		—		777		797
Substandard		—		116		—		—		—		—		431		547
Subtotal		—		274		547		352		78		—		20,190		21,441
Multi-family residential
Pass		23,928		519		9,439		664		13,018		11,778		4,628		63,974
Special Mention		—		—		2,228		—		—		3,367		—		5,595
Substandard		—		—		—		—		—		—		—		—
Subtotal		23,928		519		11,667		664		13,018		15,145		4,628		69,569
Commercial real estate - OO
Pass		32,522		26,144		64,833		36,390		37,353		111,721		7,243		316,206
Special Mention		304		—		—		2,393		—		1,696		—		4,393
Substandard		—		—		—		—		79		3,280		757		4,116
Subtotal		32,826		26,144		64,833		38,783		37,432		116,697		8,000		324,715
Commercial real estate - NOO
Pass		75,716		19,627		401,978		26,624		57,534		161,763		60,457		803,699
Special Mention		—		—		64,607		—		8,965		3,098		9,924		86,594
Substandard		—		—		—		—		852		3,068		—		3,920
Subtotal		75,716		19,627		466,585		26,624		67,351		167,929		70,381		894,213
Farmland
Pass		15,958		1,368		4,971		1,904		8,098		24,658		28,976		85,933
Special Mention		—		—		—		—		7,081		4,671		1,504		13,256
Substandard		—		—		—		—		4,689		13,681		—		18,370
Subtotal		15,958		1,368		4,971		1,904		19,868		43,010		30,480		117,559
Agricultural
Pass		7,253		458		458		26		1,027		1,809		12,045		23,076
Special Mention		—		—		—		—		—		—		721		721
Substandard		—		7,702		—		—		—		—		29		7,731
Subtotal		7,253		8,160		458		26		1,027		1,809		12,795		31,528
Commercial and industrial
Pass		2,448		6,988		7,700		6,519		5,113		8,288		24,569		61,625
Special Mention		245		145		3,127		47		—		1,562		3,772		8,898
Substandard		—		—		—		97		87		137		—		321
Subtotal		2,693		7,133		10,827		6,663		5,200		9,987		28,341		70,844
Mortgage warehouse lines
Pass		—		—		—		—		—		—		46,554		46,554
Subtotal		—		—		—		—		—		—		46,554		46,554
Consumer loans
Pass		945		229		156		243		6		375		2,187		4,141
Special Mention		—		—		37		19		—		—		4		60
Substandard		1		—		—		—		—		—		—		1
Subtotal		946		229		193		262		6		375		2,191		4,202
Total	$	267,489	$	303,497	$	572,459	$	78,111	$	156,047	$	407,758	$	234,655	$	2,020,016

The following table presents the Company’s loan portfolio on the recorded investment basis, according to loan class and credit grade as of December 31, 2021:

	Pass		Special Mention		Substandard		Impaired		Total
Real estate:
1-4 family residential construction	$	19,669	$	1,700	$	—	$	—	$	21,369
Other construction/land		24,958		—		—		341		25,299
1-4 family - closed-end		282,717		4,703		201		1,836		289,457
Equity lines		23,277		615		55		2,641		26,588
Multi-family residential		49,986		3,472		—		—		53,458
Commercial real estate owner occupied		321,996		6,108		3,860		2,482		334,446
Commercial real estate non-owner occupied		841,728		26,364		14,429		367		882,888
Farmland		92,479		10,266		3,961		—		106,706
Total real estate		1,656,810		53,228		22,506		7,667		1,740,211
Agricultural		32,513		—		1,099		378		33,990
Commercial and industrial		98,367		9,989		212		1,223		109,791
Mortgage warehouse lines		101,184		—		—		—		101,184
Consumer loans		4,349		31		6		164		4,550
Total gross loans and leases	$	1,893,223	$	63,248	$	23,823	$	9,432	$	1,989,726

CECL replaces the legacy accounting for loans designated as purchased credit impaired (“PCI”) with loans designated as purchased credit deteriorated (“PCD”). PCD loans are loans acquired or purchased, which as of acquisition, had evidence of more than insignificant credit deterioration since origination. Due to the immaterial balance in the Company’s PCI loans as of December 31, 2021 management elected not to transition these loans into the PCD designation. As of September 30, 2022 the Company had no loans categorized as PCD.

As noted in footnote 3, on January 1, 2022 the Company implemented CECL and increased our ACL, previously the allowance for loan and lease losses, with a $9.5 million cumulative adjustment. The Company’s ACL is calculated quarterly, with any difference in the calculated ACL and the recorded ACL trued-up through an entry to the provision for credit losses. Management calculates the quantitative portion of collectively evaluated reserves for all loan categories, with the exception of Farmland, Agricultural Production and Consumer loans, using a discounted cash flow (“DCF”) methodology. For purposes of calculating the quantitative portion of collectively evaluated reserves on Farmland, Agricultural Production, and Consumer categories a Remaining Life methodology is utilized. For purposes of estimating the Company’s ACL, Management generally evaluates collectively evaluated loans by Federal Call code in order to group loans with similar risk characteristics together, however management has grouped loans in selected call codes together in determining portfolio segments, due to similar risk characteristics and reserve methodologies used for certain call code classifications.

The DCF quantitative reserve methodology incorporates the consideration of probability of default (“PD”) and loss given default (“LGD”) estimates to estimate periodic losses. The PD estimates are derived through the application of reasonable and supportable economic forecasts to call code specific regression models, derived from the consideration of historical bank-specific and peer loss-rate data. The loss rate data has been regressed against benchmark economic indicators, for which reasonable and supportable forecasts exist, in the development of the call-code specific regression models. Regression models are generally refreshed on an annual basis, in order to pull in more recent loss rate data. Reasonable and supportable forecasts of the selected economic metric are then input into the regression model to calculate an expected default rate. The expected default rates are then applied to expected monthly loan balances estimated through the consideration of contractual repayment terms and expected prepayments. The Company utilizes a four-quarter forecast period, after which the expected default rates revert to the historical average for each call code, over a four-quarter reversion period, on a straight-line basis. The prepayment assumptions applied to expected cash flow over the contractual life of the loans are estimated based on historical, bank-specific experience, peer data and the

consideration of current and expected conditions and circumstances including the level of interest rates.  The prepayment assumptions may be updated by Management in the event that changing conditions impact Management’s estimate or additional historical data gathered has resulted in the need for a reevaluation. LGD utilized in the DCF is derived from the application of the Frye-Jacobs theory which relates LGD to PD based on historical peer data, as calculated by a third-party. Economic forecasts are considered over a four-quarter forecast period, with reversion to mean occurring on a straight-line basis over four quarters. The call code regression models utilized upon implementation of CECL on January 1, 2022, and as of September 30, 2022, were identical, and relied upon reasonable and supportable forecasts of the National Unemployment Rate. Management selected the National Unemployment Rate as the driver of quantitative portion of collectively reserves on loan classes reliant upon the DCF methodology, primarily as a result of high correlation coefficients identified in regression modeling, the availability of forecasts including the quarterly FOMC forecast, and given the widespread familiarity of stakeholders with this economic metric.

The quantitative reserves for Farmland, Agricultural Production and Consumer loans are calculated using a Remaining Life methodology where average historical bank specific and peer loss rates are applied to expected loan balances over an estimated remaining life of loans in calculation of the quantitative portion of collectively evaluated loans in these classes. The estimated remaining life is calculated using historical bank-specific loan attrition data. For the Farmland, Agricultural Production and Consumer classes of loans, reasonable and supportable forecasts of the National Unemployment rate, real GDP and the housing price index are considered through estimation of qualitative reserves.

Management recognizes that there are additional factors impacting risk of loss in the loan portfolio beyond what is captured in the quantitative portion of reserves on collectively evaluated loans. As current and expected conditions, may vary compared with conditions over the historical lookback period, which is utilized in the calculation of quantitative reserves, management considers whether additional or reduced reserve levels on collectively evaluated loans may be warranted given the consideration of a variety of qualitative factors. Several of the following qualitative factors (“Q-factors”) considered by management reflect the legacy regulatory guidance on Q-factors, whereas several others represent factors unique to the Company or unique to the current time period.

● Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices

● Changes in international, regional and local economic and business conditions, and developments that affect the collectability of the portfolio, as reflected in forecasts of the Housing Price Index, Real GDP and the National Unemployment Rate (Farmland & Agricultural Production and Consumer segments only)

● Changes in the nature and volume of the loan portfolio

● Changes in the experience, ability, and depth of lending management and other relevant staff

● Changes in the volume and severity of past due, non-accruals loans, and adversely classified loans, as reflected in changes of the relative level of loans classified as substandard and special mention

● Changes in the quality of the Bank’s loan review processes

● Changes in the value of underlying collateral for loans not identified as collateral dependent

● Changes in loan categorization concentrations  

● Other external factors, which include, the influence of peer data on estimated quantitative reserves, residual COVID-19 related risk, expected impact of current and expected inflationary environment, reliance on the National Unemployment rate as opposed to the California unemployment rate in the calculation of quantitative reserves, the expected impact of current and expected geo-political conditions

The qualitative portion of the Company’s reserves on collectively evaluated loans are calculated using a combination of numeric frameworks and management judgement, to determine risk categorizations in each of the Q-factors presented above. The amount of qualitative reserves is also contingent upon the historical peer, life-of-loan-equivalent, loss rate ranges and the relative weighting of Q-factors according to management’s judgement.

Although collectively evaluated reserves are generally calculated separately at the call code or loan class level, management has grouped loan classes with similar risk characteristics into the following portfolio segments: 1-4 Family Real Estate, Commercial Real Estate, Farmland & Agricultural Production, Commercial & Industrial, Mortgage Warehouse and Consumer loans. Loans secured by 1-4 family residences have a different profile from loans secured by

Commercial Real Estate. Generally, the borrowers for 1-4 Family loans are consumers whereas borrowers for Commercial Real Estate are often businesses. The COVID-19 pandemic illustrated how these different categories of real estate loans were subject to different risks, which was exacerbated by the widespread work-from-home model adopted by many companies during and since the pandemic. Farmland and Agricultural Production loans are included in a single segment as these loans are often times to the same borrowers, facing the same risks relating to commodity prices, water supply and drought conditions in addition to other environmental concerns. Commercial & Industrial loans are separated into a unique segment given the uniqueness of these loans, which are often revolving and secured by other business assets as opposed to real estate. Mortgage warehouse loans are also unique in the Company’s portfolio and warrant separate presentation as an individual portfolio segment, given the specific nature of these constantly revolving lines to mortgage originators and also attributable to a very limited loss history, even after consideration of peer data. Finally, the Company splits out Consumer loans as a separate segment as a result of the small balance, homogeneous terms that characterize these loans.

Management individually evaluates loans that do not share risk characteristics with other loans when estimating reserves. As of September 30, 2022, the only loans that Management considered to have different risk characteristics from other loans sharing the same Federal Call Report code were loans designated nonaccrual.

The following table presents the activity in the allowance for credit losses by portfolio segment for the quarter ended September 30, 2022:

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, June 30, 2022	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802
Charge-offs		—		—		—		(85)		—		(371)		(456)
Recoveries		—		—		—		36		—		196		232
Provision for credit losses		(262)		249		1,034		67		6		118		1,212
Ending allowance balance:	$	3,331	$	17,568	$	1,410	$	1,151	$	47	$	283	$	23,790

The $1.0 million increase in the Company’s loan portfolio ACL in the third quarter of 2022 from $22.8 million at June 30, 2022 to $23.8 million at September 30, 2022, is primarily attributable to an increase in reserves on a single collateral-dependent loan relationship as a result of a decline in management’s estimate of net realizable value on the related collateral.

The following table presents the activity in the allowance for credit losses by portfolio segment for the nine months ended September 30, 2022:

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, December 31, 2021	$	1,909	$	9,052	$	1,202	$	1,060	$	512	$	521	$	14,256
Impact of adopting ASC 326		611		9,628		(480)		358		(421)		(242)		9,454
Charge-offs		—		(1,911)		(2,170)		(244)		—		(984)		(5,309)
Recoveries		99		259		—		118		—		553		1,029
Provision for credit losses		712		539		2,858		(141)		(44)		436		4,360
Ending allowance balance:	$	3,331	$	17,567	$	1,410	$	1,151	$	47	$	284	$	23,790

The $2.2 million in charge-offs recognized in the Farmland and Agricultural Production portfolio segment is primarily the result of a reduction in the expected valuation of collateral on a single loan relationship, recorded in the first quarter 2022. The $1.9 million charge-off in Commercial Real Estate was recognized during the second quarter, when Management became aware of a borrower’s reduced ability to service their loan primarily as a result of increased vacancy rates related to the remote work which has increased following the pandemic.

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2021:

		Three months ended September 30, 2021
		Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Charge-offs		—		—		(52)		(274)		—		(326)
Recoveries		(59)		—		11		170		—		122
(Benefit) provision		261		1		(930)		(1)		69		(600)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
	Nine months ended September 30, 2021
	Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	11,766	$	482	$	4,721	$	720	$	49	$	17,738
Charge-offs		(245)		(50)		(129)		(606)		—		(1,030)
Recoveries		590		—		203		566		—		1,359
(Benefit) provision		166		93		(2,694)		(95)		80		(2,450)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Reserves:
Specific	$	419	$	244	$	382	$	16	$	—	$	1,061
General		11,858		281		1,719		569		129		14,556
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Loans evaluated for impairment:
Individually	$	10,150	$	471	$	1,512	$	163	$	—	$	12,296
Collectively		1,822,774		42,825		257,266		4,665		—		2,127,530
Ending balance	$	1,832,924	$	43,296	$	258,778	$	4,828	$	—	$	2,139,826

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Borrowings and Other Arrangements

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Borrowings and Other Arrangements

Note 11 – Borrowings and Other Arrangements

Federal Funds Purchased – The Company had unsecured available lines of credit with correspondent banks for short-term borrowings totaling $305.0 million at September 30, 2022 and December 31, 2021. In general, interest rates on these lines approximate the federal funds target rate. We had no borrowings under these credit facilities at September 30, 2022 or December 31, 2021.

Federal Home Loan Bank Borrowings – As of September 30, 2022 and December 31, 2021, the Company had available lines of credit with the FHLB totaling $724.0 million and $787.5 million, respectively, based on eligible collateral of certain loans. At September 30, 2022 and December 31, 2021 the Company had $103.1 million and $0 in FHLB overnight borrowings, respectively.

Federal Reserve Line of Credit – The Company has an available line of credit with the Federal Reserve Bank of San Francisco secured by certain loans. At September 30, 2022 and December 31, 2021 the Company had borrowing capacity under this line totaling $34.2 million and $50.6 million, respectively. We had no outstanding borrowings on this line of credit as of September 30, 2022 and December 31, 2021.

Long-Term Debt – The Company has long-term debt in the form of fixed to floating rate subordinated debentures with a fixed rate of 3.25% until September 30, 2026, then floating rate at 253.5 basis points over 3-month term SOFR until maturity on October 1, 2031. The balance of the Company’s long-term debt, net of unamortized issuance costs, at September 30, 2022 and December 31, 2021 was $49.2 million and $49.1 million, respectively.

Subordinated Debentures - Sierra Statutory Trust II (“Trust II”), Sierra Capital Trust III (“Trust III”), and Coast Bancorp Statutory Trust II (“Trust IV”), (collectively, the “Trusts”) exist solely for the purpose of issuing trust preferred securities fully and unconditionally guaranteed by the Company. For financial reporting purposes, the Trusts are not consolidated, and the Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) held by the Trusts and issued and guaranteed by the Company are reflected in the Company’s consolidated balance sheet in accordance with provisions of ASC Topic 810. At September 30, 2022 and December 31, 2021 the Company’s trust preferred securities totaled $35.4 million and $35.3 million, respectively.

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Revenue Recognition

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 12 – Revenue Recognition

The Company utilizes the guidance found in ASU 2014-09, Revenue from Contracts with Customers (ASC 606), when accounting for certain noninterest income. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Sufficient information should be provided to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company’s revenue streams that are within the scope of and accounted for under Topic 606 include service charges on deposit accounts, debit card interchange fees, and fees levied for other services the Company provides its customers. The guidance does not apply to revenue associated with financial instruments such as loans and investments, and other noninterest income such as loan servicing fees and earnings on bank-owned life insurance, which are accounted for on an accrual basis under other provisions of GAAP.

All of the Company’s revenue from contracts within the scope of ASC 606 is recognized as noninterest income, except for gains on the sale of OREO which is classified as noninterest expense. The following table presents the Company’s sources of noninterest income for the three and nine-month periods ended September 30, 2022 and 2021. Items outside the scope of ASC 606 are noted as such (dollars in thousands, unaudited).

	For the three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Noninterest income
Service charges on deposits
Returned item and overdraft fees	$	1,273	$	1,307	$	3,973	$	3,561
Other service charges on deposits		1,943		1,879		5,487		5,116
Debit card interchange income		2,241		2,192		6,458		6,321
Gain (loss) on limited partnerships(1)		64		(144)		(162)		(391)
Dividends on equity investments(1)		189		187		619		543
Unrealized (losses) gains recognized on equity investments(1)		—		—		(332)		857
Net gains on sale of securities(1)		—		11		1,032		11
Other(1)		902		2,103		6,039		4,959
Total noninterest income	$	6,612	$	7,535	$	23,114	$	20,977
Noninterest expense
Salaries and employee benefits (1)	$	11,521	$	10,618	$	35,070	$	32,194
Occupancy expense (1)		2,470		2,359		7,170		7,472
Gain on sale of OREO		(3)		(26)		(8)		(141)
Other (1)		7,008		7,924		21,050		21,856
Total noninterest expense	$	20,996	$	20,875	$	63,282	$	61,381
Percentage of noninterest income not within scope of ASC 606.		17.47%		28.63%		31.13%		28.50%

(1) Not within scope of ASC 606. Revenue streams are not related to contract with customers and are accounted for on an accrual basis under other provisions of GAAP.

With regard to noninterest income associated with customer contracts, the Company has determined that transaction prices are fixed, and performance obligations are satisfied as services are rendered, thus there is little or no judgment involved in the timing of revenue recognition under contracts that are within the scope of ASC 606.

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Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Note 13 – Subsequent Events

Effective October 1, 2022, the Company transferred $198.3 million of “available-for-sale” investments to “held-to-maturity”. Those securities were transferred at fair market value on the date of the transfer. The transfer was initiated to reduce the effect of potential future rate increases on the available-for-sale portfolio, mark-to-market, other comprehensive income and equity.

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Current Accounting Developments (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Standards Update 2016-13 [Member]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Schedule of Transition Impact on Allowance for Credit Losses

The following table illustrates the impact of the adoption of CECL, and the transition away from the incurred loss method, on January 1, 2022. The impact to the Allowance for Credit losses (“ACL”) on the Loan Portfolio is broken out at the class level (dollars in thousands, unaudited):

Transition Impact on Allowance for Credit Losses
(dollars in thousands, unaudited)
	January 1, 2022
	Reserves Under Incurred Loss		Reserves Under CECL		Transition Impact Gross		Impact of Deferred Taxes		Impact to Retained Earnings
Real estate:
1-4 family residential construction	$	135	$	28	$	(107)	$	32	$	(75)
Other construction/land		228		254		26		(8)		18
1-4 family - closed-end		1,618		2,310		692		(205)		487
Equity lines		290		210		(80)		24		(56)
Multi-family residential		274		574		300		(89)		211
Commercial real estate - owner occupied		2,217		3,444		1,227		(363)		864
Commercial real estate - non-owner occupied		6,199		14,380		8,181		(2,418)		5,763
Farmland		737		340		(397)		117		(280)
Total real estate		11,698		21,540		9,842		(2,910)		6,932
Agricultural		465		382		(83)		25		(58)
Commercial and industrial		1,060		1,418		358		(106)		252
Mortgage warehouse lines		512		91		(421)		124		(297)
Consumer loans		521		279		(242)		72		(170)
Total allowance for credit losses - loans	$	14,256	$	23,710	$	9,454	$	(2,795)	$	6,659
Allowance for credit losses - unfunded loan commitments	$	203		1,134		931		(275)		656

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Share Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Restricted Stock, Activity

	Nine months ended September 30,
	2022			2021
	Shares		Weighted Average Grant-Date Fair Value	Shares		Weighted Average Grant-Date Fair Value
Unvested shares, January 1,	165,131	$	21.72	148,885	$	18.00
Granted	—		—	18,180		25.30
Vested	(37,748)		19.20	(39,449)		18.00
Forfeited	(1,212)		27.16	(17,777)		18.00
Unvested shares, September 30,	126,171	$	22.45	109,839	$	19.21

Schedule of Share-based Compensation, Stock Options, Activity

The Company’s stock option activity during the nine months ended September 30, 2022 and 2021 are summarized below (dollars in thousands, except per share data, unaudited):

	Nine months ended September 30,
	2022						2021
	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
Outstanding at January 1,	415,870	$	24.15		$	1,338	495,489	$	23.67		$	1,340
Granted	—	$	—		$	—	—	$	—		$	—
Exercised	(5,600)	$	11.22		$	56	(7,480)	$	12.59		$	91
Forfeited/Expired	(32,381)	$	27.32		$	—	(39,719)	$	26.93		$	1
Outstanding at September 30,	377,889	$	24.07	5.13	$	470	448,290	$	23.57	5.92	$	1,302
Exercisable at September 30,	336,489	$	23.69	4.88	$	470	384,690	$	22.97	5.58	$	1,302

(1) The aggregate intrinsic value of stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2022. This amount changes based on changes in the market value of the Company's stock.

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Commitments and Contingent Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Financial Instruments Representing Off-Balance-Sheet Credit Risk

The following financial instruments represent off-balance-sheet credit risk (dollars in thousands):

	September 30, 2022		December 31, 2021
Commitments to extend credit	$	792,728	$	554,028
Standby letters of credit	$	6,057	$	6,651

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Fair Value Disclosures and Reporting and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of carrying amount and estimated fair values of financial instruments

Estimated fair values for the Company’s financial instruments are as follows, as of the dates noted:

Fair Value of Financial Instruments

(dollars in thousands, unaudited)

		September 30, 2022
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	86,683	$	86,683	$	—	$	—	$	86,683
Investment securities available-for-sale		1,069,434		—		1,015,098		54,336		1,069,434
Investment securities held-to-maturity		156,211		—		138,684		—		138,684
Loans and leases, net held for investment		1,972,649		—		—		1,958,479		1,958,479
Collateral dependent loans		23,577		—		23,577		—		23,577
Financial liabilities:
Deposits		2,885,468		1,118,245		1,764,225		—		2,882,470
Repurchase agreements		112,012		—		112,012		—		112,012
Short term borrowings		103,100		—		103,100		—		103,100
Long-term debt		49,196		—		43,247		—		43,247
Subordinated debentures		35,436		—		35,251		—		35,251

		December 31, 2021
			Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets:
Cash and cash equivalents	$	257,528	$	257,528	$	—	$	—	$	257,528
Investment securities available for sale		973,314		—		750,077		223,237		973,314
Loans and leases, net held for investment		1,973,207		—		—		1,960,966		1,960,966
Collateral dependent loans		398		—		221		177		398
Financial liabilities:
Deposits		2,781,572		1,084,544		1,696,124		—		2,780,668
Repurchase agreements		106,937		—		106,937		—		106,937
Short term borrowings		49,141		—		49,118		—		49,118
Subordinated debentures		35,302		—		33,281		—		33,281

Schedule of assets reported at fair value on a recurring basis

Assets reported at fair value on a recurring basis are summarized below:

Fair Value Measurements – Recurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	3,955	$	—	$	3,955	$	—
Mortgage-backed securities		—		191,022		—		191,022		—
State and political subdivisions		—		320,729		—		320,729		—
Corporate bonds		—		—		54,336		54,336		—
Collateralized loan obligations		—		499,392		—		499,392		—
Total available-for-sale securities	$	—	$	1,015,098	$	54,336	$	1,069,434	$	—

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Realized Gain/(Loss) (Level 3)
Securities:
U.S. government agencies	$	—	$	1,574	$	—	$	1,574	$	—
Mortgage-backed securities		—		306,727		—		306,727		—
State and political subdivisions		—		304,268		—		304,268		—
Corporate bonds		—		999		27,530		28,529		—
Collateralized loan obligations		—		136,509		195,707		332,216		—
Total available-for-sale securities	$	—	$	750,077	$	223,237	$	973,314	$	—

Reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

Fair Value Measurements - Level 3 Recurring
(dollars in thousands, unaudited)
	Collateralized Loan Obligations				Corporate Bonds
	2022		2021		2022		2021
Balance of recurring Level 3 assets at January 1,	$	195,707	$	—	$	27,530	$	—
Purchases		—		—		26,806		—
Transfers out of Level 3		(195,707)		—		—		—
Balance of recurring Level 3 assets at September 30,	$	—	$	—	$	54,336	$	—

Schedule of assets reported at fair value on a nonrecurring basis

Assets reported at fair value on a nonrecurring basis are summarized below:

Fair Value Measurements – Nonrecurring

(dollars in thousands, unaudited)

	Fair Value Measurements at September 30, 2022, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		—		—		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		17,655		—		17,655
Total real estate		—		17,655		—		17,655
Agricultural		—		5,922		—		5,922
Commercial and industrial		—		—		—		—
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	23,577	$	—	$	23,577
Foreclosed assets	$	—	$	—	$	—	$	—
Total assets measured on a nonrecurring basis	$	—	$	23,577	$	—	$	23,577

	Fair Value Measurements at December 31, 2021, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Collateral dependent loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		—		—		—		—
Equity lines		—		161		—		161
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		60		—		60
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		—		—		—		—
Total real estate		—		221		—		221
Agricultural		—		—		—		—
Commercial and industrial		—		—		177		177
Consumer loans		—		—		—		—
Total collateral dependent loans	$	—	$	221	$	177	$	398
Foreclosed assets	$	—	$	93	$	—	$	93
Total assets measured on a nonrecurring basis	$	—	$	314	$	177	$	491

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Investments (Tables)

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Amortized Cost And Estimated Fair Value

The amortized cost, estimated fair value, and allowance for credit losses of available-for-sale and held-to-maturity investment securities are as follows:

Amortized Cost And Estimated Fair Value

(dollars in thousands, unaudited)

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	4,000	$	—	$	(45)	$	—	$	3,955
Mortgage-backed securities		202,882		—		(11,860)		—		191,022
State and political subdivisions		363,790		53		(43,114)		—		320,729
Corporate bonds		59,768		—		(5,432)		—		54,336
Collateralized loan obligations		514,701		119		(15,428)		—		499,392
Total available-for-sale securities	$	1,145,141	$	172	$	(75,879)	$	—	$	1,069,434
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value		Allowance for Credit Losses
Held-to-maturity
U.S. government agencies	$	6,113	$	—	$	(669)	$	5,444	$	—
Mortgage-backed securities		100,792		—		(9,941)		90,851		—
State and political subdivisions		49,324		11		(6,946)		42,389		(18)
Total held-to-maturity securities	$	156,229	$	11	$	(17,556)	$	138,684	$	(18)

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Estimated Fair Value
Available-for-sale
U.S. government agencies	$	1,546	$	28	$	—	$	—	$	1,574
Mortgage-backed securities		303,912		4,772		(1,957)		—		306,727
State and political subdivisions		290,729		13,807		(268)		—		304,268
Corporate bonds		28,436		94		(1)		—		28,529
Collateralized loan obligations		332,836		68		(688)		—		332,216
Total securities	$	957,459	$	18,769	$	(2,914)	$	—	$	973,314

Information Pertaining to Investment Securities Aggregated by Investment Category and Length of Time that Individual Securities in a Continuous Loss Position

The following table summarizes available-for-sale debt securities that were in an unrealized loss position for which an ACL has not been recorded, based on the length of time the individual securities have been in an unrealized loss position, including the number of available-for-sale debt securities in an unrealized loss position, as of the dates indicated below.

Investment Portfolio - Unrealized Losses

(dollars in thousands, unaudited)

		September 30, 2022
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	2	$	(45)	$	3,955	$	—	$	—	$	(45)	$	3,955
Mortgage-backed securities	371		(11,696)		189,031		(164)		1,924		(11,860)		190,955
State and political subdivisions	399		(38,127)		286,459		(4,987)		13,878		(43,114)		300,337
Corporate bonds	51		(5,432)		54,336		—		—		(5,432)		54,336
Collateralized loan obligations	58		(15,200)		447,465		(228)		8,071		(15,428)		455,536
Total available-for-sale	881	$	(70,500)	$	981,246	$	(5,379)	$	23,873	$	(75,879)	$	1,005,119

		December 31, 2021
		Less than twelve months				Twelve months or more				Total
	Number of Securities	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Available-for-sale
U.S. government agencies	—	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities	46		(1,797)		107,026		(160)		2,808		(1,957)		109,834
State and political subdivisions	29		(268)		30,170		—		—		(268)		30,170
Corporate bonds	1		(1)		499		—		—		(1)		499
Collateralized loan obligations	22		(688)		175,581		—		—		(688)		175,581
Total available-for-sale	98	$	(2,754)	$	313,276	$	(160)	$	2,808	$	(2,914)	$	316,084

Realized Gain (Loss) on Investments

The table below summarizes the Company’s gross realized gains and losses as well as gross proceeds from the sales of securities, for the periods indicated:

Investment Portfolio - Realized Gains/(Losses)

(dollars in thousands, unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2022		2021		2022		2021
Proceeds from sales, calls and maturities of securities available for sale	$	3,540	$	1,948	$	34,071	$	5,948
Gross gains on sales, calls and maturities of securities available for sale		—		11		1,032		11
Gross losses on sales, calls and maturities of securities available for sale		—		—		—		—
Net gains on sale of securities available for sale	$	—	$	11	$	1,032	$	11

Investments Classified by Contractual Maturity Date

Estimated Fair Value of Contractual Maturities

(dollars in thousands, unaudited)

	September 30, 2022
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	908	$	908	$	675	$	667
Maturing after one year through five years		14,313		14,132		2,133		2,091
Maturing after five years through ten years		81,497		75,441		18,729		16,869
Maturing after ten years		330,840		288,539		33,900		28,207
Securities not due at a single maturity date:
Mortgage-backed securities		202,882		191,022		100,792		90,850
Collateralized loan obligations		514,701		499,392		—		—
	$	1,145,141	$	1,069,434	$	156,229	$	138,684

	December 31, 2021
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year	$	3,513	$	3,547	$	—	$	—
Maturing after one year through five years		26,422		26,718		—		—
Maturing after five years through ten years		36,840		38,314		—		—
Maturing after ten years		253,936		265,792		—		—
Securities not due at a single maturity date:						—		—
Mortgage-backed securities		303,912		306,727		—		—
Collateralized loan obligations		332,836		332,216		—		—
	$	957,459	$	973,314	$	—	$	—

Summary of Amortized Cost and Fair Values of General Obligation and Revenue Bonds

The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company’s investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for our largest geographic concentrations:

Revenue and General Obligation Bonds by Location

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
General obligation bonds	Cost		Value		Cost		Value
State of issuance
Texas	$	159,391	$	139,498	$	85,045	$	89,225
California		67,310		58,161		64,092		67,066
Washington		22,417		20,670		23,858		24,812
Other (29 & 26 states, respectively)		107,784		95,355		75,037		78,579
Total general obligation bonds		356,902		313,684		248,032		259,682
Revenue bonds
State of issuance
Texas		9,496		8,460		7,038		7,377
California		3,994		3,613		1,349		1,392
Washington		4,093		3,387		4,334		4,602
Other (20 & 15 states, respectively)		38,629		33,974		29,976		31,215
Total revenue bonds		56,212		49,434		42,697		44,586
Total obligations of states and political subdivisions	$	413,114	$	363,118	$	290,729	$	304,268

The revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements. The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates.

Revenue Bonds by Type

(dollars in thousands, unaudited)

	September 30, 2022				December 31, 2021
	Amortized		Fair Market		Amortized		Fair Market
Revenue bonds	Cost		Value		Cost		Value
Revenue source:
Water	$	22,741	$	20,064	$	15,534	$	16,220
Lease		7,511		6,907		6,556		6,718
Sewer		7,091		6,144		3,932		4,165
Sales tax revenue		4,329		3,803		—		—
Intergovernmental agreement		2,836		2,600		—		—
Other (10 and 9 sources, respectively)		11,704		9,916		16,675		17,483
Total revenue bonds	$	56,212	$	49,434	$	42,697	$	44,586

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Loans and Leases and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2022

Credit Quality and Nonperforming Assets [Abstract]

Schedule of Loan and Lease Distribution

Loan And Lease Distribution
(dollars in thousands, unaudited)
	September 30, 2022		December 31, 2021
Real estate:
1-4 family residential construction	$	—	$	21,369
Other construction/land		18,315		25,299
1-4 family - closed-end		420,136		289,457
Equity lines		21,126		26,588
Multi-family residential		69,665		53,458
Commercial real estate - owner occupied		324,696		334,446
Commercial real estate - non-owner occupied		896,954		882,888
Farmland		117,385		106,706
Total real estate		1,868,277		1,740,211
Agricultural		31,290		33,990
Commercial and industrial		70,147		109,791
Mortgage warehouse lines		46,553		101,184
Consumer loans		4,097		4,550
Subtotal		2,020,364		1,989,726
Net deferred loan fees and costs		(348)		(1,865)
Loans and leases, amortized cost basis		2,020,016		1,987,861
Allowance for credit losses		(23,790)		(14,256)
Net loans and leases	$	1,996,226	$	1,973,605

Schedule of Nonaccrual Loans and Leases

Nonaccrual Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	Nonaccrual Loans
	With no allowance for credit loss		With an allowance for credit loss		Total		Loans Past Due 90+ Accruing
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—
1-4 family - closed-end		485		—		485		—
Equity lines		61		—		61		—
Multi-family residential		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—
Farmland		9,677		8,593		18,270		—
Total real estate		10,223		8,593		18,816		—
Agricultural		82		7,649		7,731		—
Commercial and industrial		87		138		225		7
Mortgage warehouse lines		—		—		—		—
Consumer loans		—		—		—		—
Total	$	10,392	$	16,380	$	26,772	$	7

Impaired Financing Receivables

	December 31, 2021
	Unpaid Principal		Recorded				Average Recorded		Interest Income
	Balance(1)		Investment(2)		Related Allowance		Investment		Recognized(3)
With an Allowance Recorded
Real estate:
Other construction/land	$	341	$	341	$	64	$	352	$	55
1-4 family - closed-end		1,048		1,048		37		1,096		104
Equity lines		2,005		1,993		182		2,056		138
Commercial real estate - owner occupied		1,249		1,248		19		1,278		144
Commercial real estate - non-owner occupied		367		367		126		393		32
Total real estate		5,010		4,997		428		5,175		473
Agricultural		244		244		244		246		—
Commercial and industrial		757		757		127		873		41
Consumer loans		164		164		19		180		28
		6,175		6,162		818		6,474		542
With no Related Allowance Recorded
Real estate:
1-4 family - closed-end		788		788		—		869		—
Equity lines		648		648		—		690		6
Commercial real estate - owner occupied		1,353		1,234		—		1,282		—
Total real estate		2,789		2,670		—		2,841		6
Agricultural		134		134		—		186		—
Commercial and industrial		466		466		—		550		—
		3,389		3,270		—		3,577		6
Total	$	9,564	$	9,432	$	818	$	10,051	$	548

(1) Contractual principal balance due from customer.

(2) Principal balance on Company’s books, less any direct charge offs.

(3) Interest income is recognized on performing balances on a regular accrual basis.

Schedule of collateral dependent loans

Collateral Dependent Loans
(dollars in thousands, unaudited)
	September 30, 2022
	Amortized Cost		Individual Reserves
Real estate:
1-4 family residential construction	$	—	$	—
Other construction/land		—		—
1-4 family - closed-end		40		—
Equity lines		506		—
Multi-family residential		—		—
Commercial real estate - owner occupied		—		—
Commercial real estate - non-owner occupied		—		—
Farmland		18,271		195
Total real estate		18,817		195
Agricultural		7,702		967
Commercial and industrial		224		40
Mortgage warehouse lines		—		—
Consumer loans		—		—
Total loans and leases	$	26,743	$	1,202

Aging of Loan Balances by Number of Days Past Due

The following table presents the aging of the amortized cost basis in past-due loans, according to class, as of September 30, 2022:

Past Due Loans and Leases
(dollars in thousands, unaudited)
	September 30, 2022
	30-59 Days Past Due		60-89 Days Past Due		Loans Past Due 90+ Days		Total Past Due		Loans not Past Due		Total Loans
Real estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	—	$	—
Other construction/land		—		—		—		—		18,255		18,255
1-4 family - closed-end		—		32		8		40		421,096		421,136
Equity lines		—		—		—		—		21,441		21,441
Multi-family residential		—		—		—		—		69,569		69,569
Commercial real estate - owner occupied		351		—		—		351		324,364		324,715
Commercial real estate - non-owner occupied		—		—		—		—		894,213		894,213
Farmland		99		—		18,271		18,370		99,189		117,559
Total real estate		450		32		18,279		18,761		1,848,127		1,866,888
Agricultural		—		—		7,649		7,649		23,879		31,528
Commercial and industrial		775		—		—		775		70,069		70,844
Mortgage warehouse lines		—		—		—		—		46,554		46,554
Consumer loans		—		—		—		—		4,202		4,202
Total loans and leases	$	1,225	$	32	$	25,928	$	27,185	$	1,992,831	$	2,020,016

The following table presents the aging of the recorded investment in past-due and nonaccrual loans, according to class, as of December 31, 2021:

December 31, 2021	30-59 Days		60-89 Days		90 Days Or  More Past						Total Financing		Non-Accrual
	Past Due		Past Due		Due(2)		Total Past Due		Current		Receivables		Loans(1)
Real Estate:
1-4 family residential construction	$	—	$	—	$	—	$	—	$	21,369	$	21,369	$	—
Other construction/land		—		—		—		—		25,299		25,299		—
1-4 family - closed-end		1,532		132		—		1,664		287,793		289,457		1,023
Equity lines		30		—		—		30		26,558		26,588		892
Multi-family residential		—		—		—		—		53,458		53,458		—
Commercial real estate owner occupied		124		—		698		822		333,624		334,446		1,234
Commercial real estate non-owner occupied		—		—		—		—		882,888		882,888		—
Farmland		—		—		—		—		106,706		106,706		—
Total real estate loans		1,686		132		698		2,516		1,737,695		1,740,211		3,149
Agricultural		—		—		284		284		33,706		33,990		378
Commercial and industrial		473		—		283		756		109,035		109,791		973
Mortgage warehouse lines		—		—		—		—		101,184		101,184		—
Consumer loans		6		3		—		9		4,541		4,550		22
Total gross loans and leases	$	2,165	$	135	$	1,265	$	3,565	$	1,986,161	$	1,989,726	$	4,522

(1) Included in Total Financing Receivables

(2) As of December 31, 2021 there were no loans over 90 days past due and still accruing.

Troubled Debt Restructurings, by Type of Loan Modification

Troubled Debt Restructurings, by Type of Loan Modification

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		—		—		1,000
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,000		—		—		—		1,000
Agricultural		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Total	$	—	$	1,000	$	—	$	—	$	—	$	1,000

		Nine months ended September 30, 2021
	Rate Modification		Term Modification		Interest Only Modification		Rate & Term Modification		Term & Interest Modification		Total
Real estate:
Other construction/land	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family - closed-end		—		—		—		—		—		—
Equity lines		—		1,000		—		83		—		1,083
Multi-family residential		—		—		—		—		—		—
Commercial real estate - owner occupied		—		136		—		—		—		136
Farmland		—		—		—		—		—		—
Total real estate loans		—		1,136		—		83		—		1,219
Agricultural		—		118		—		—				118
Commercial and industrial		—		185		—		—		—		185
Consumer loans		—		41		—		—		—		41
Total	$	—	$	1,480	$	—	$	83	$	—	$	1,563

Troubled Debt Restructurings

(dollars in thousands, unaudited)

	Three months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	1		1,000		1,000		—		—
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	0		—		—		—		—
Farmland	0		—		—		—		—
Total real estate loans			1,000		1,000		—		—
Agricultural	0		—		—		—		—
Commercial and industrial	0		—		—		—		—
Consumer loans	0		—		—		—		—
Total		$	1,000	$	1,000	$	—	$	—

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

	Nine months ended September 30, 2021
		Pre- Modification		Post- Modification
	Number of Loans	Outstanding Recorded Investment		Outstanding Recorded Investment		Reserve Difference⁽¹⁾		Reserve
Real estate:
Other construction/land	0	$	—	$	—	$	—	$	—
1-4 family - closed-end	0		—		—		—		—
Equity lines	2		1,083		1,083		—		1
Multi-family residential	0		—		—		—		—
Commercial real estate - owner occupied	1		137		136		(1)		—
Farmland	0		—		—		—		—
Total real estate loans			1,220		1,219		(1)		1
Agricultural	1		118		118		116		—
Commercial and industrial	1		185		185		(1)		47
Consumer loans	1		41		41		—		—
Total		$	1,564	$	1,563	$	114	$	48

(1) This represents the change in the ACL reserve for these credits measured as the difference between the specific post-modification impairment reserve and the pre-modification reserve calculated under our general allowance for loan loss methodology.

Credit Quality Classifications for Loan Balances

	Term Loans and Leases Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Total Loans
Other construction/land
Pass	$	—	$	—	$	4,295	$	756	$	974	$	1,063	$	11,095	$	18,183
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		72		—		—		—		—		72
Subtotal		—		—		4,367		756		974		1,063		11,095		18,255
1-4 family - closed-end
Pass		108,169		240,043		8,011		2,077		11,061		50,121		—		419,482
Special Mention		—		—		—		—		—		744		—		744
Substandard		—		—		—		—		32		878		—		910
Subtotal		108,169		240,043		8,011		2,077		11,093		51,743		—		421,136
Equity lines
Pass		—		158		527		352		78		—		18,982		20,097
Special Mention		—		—		20		—		—		—		777		797
Substandard		—		116		—		—		—		—		431		547
Subtotal		—		274		547		352		78		—		20,190		21,441
Multi-family residential
Pass		23,928		519		9,439		664		13,018		11,778		4,628		63,974
Special Mention		—		—		2,228		—		—		3,367		—		5,595
Substandard		—		—		—		—		—		—		—		—
Subtotal		23,928		519		11,667		664		13,018		15,145		4,628		69,569
Commercial real estate - OO
Pass		32,522		26,144		64,833		36,390		37,353		111,721		7,243		316,206
Special Mention		304		—		—		2,393		—		1,696		—		4,393
Substandard		—		—		—		—		79		3,280		757		4,116
Subtotal		32,826		26,144		64,833		38,783		37,432		116,697		8,000		324,715
Commercial real estate - NOO
Pass		75,716		19,627		401,978		26,624		57,534		161,763		60,457		803,699
Special Mention		—		—		64,607		—		8,965		3,098		9,924		86,594
Substandard		—		—		—		—		852		3,068		—		3,920
Subtotal		75,716		19,627		466,585		26,624		67,351		167,929		70,381		894,213
Farmland
Pass		15,958		1,368		4,971		1,904		8,098		24,658		28,976		85,933
Special Mention		—		—		—		—		7,081		4,671		1,504		13,256
Substandard		—		—		—		—		4,689		13,681		—		18,370
Subtotal		15,958		1,368		4,971		1,904		19,868		43,010		30,480		117,559
Agricultural
Pass		7,253		458		458		26		1,027		1,809		12,045		23,076
Special Mention		—		—		—		—		—		—		721		721
Substandard		—		7,702		—		—		—		—		29		7,731
Subtotal		7,253		8,160		458		26		1,027		1,809		12,795		31,528
Commercial and industrial
Pass		2,448		6,988		7,700		6,519		5,113		8,288		24,569		61,625
Special Mention		245		145		3,127		47		—		1,562		3,772		8,898
Substandard		—		—		—		97		87		137		—		321
Subtotal		2,693		7,133		10,827		6,663		5,200		9,987		28,341		70,844
Mortgage warehouse lines
Pass		—		—		—		—		—		—		46,554		46,554
Subtotal		—		—		—		—		—		—		46,554		46,554
Consumer loans
Pass		945		229		156		243		6		375		2,187		4,141
Special Mention		—		—		37		19		—		—		4		60
Substandard		1		—		—		—		—		—		—		1
Subtotal		946		229		193		262		6		375		2,191		4,202
Total	$	267,489	$	303,497	$	572,459	$	78,111	$	156,047	$	407,758	$	234,655	$	2,020,016

The following table presents the Company’s loan portfolio on the recorded investment basis, according to loan class and credit grade as of December 31, 2021:

	Pass		Special Mention		Substandard		Impaired		Total
Real estate:
1-4 family residential construction	$	19,669	$	1,700	$	—	$	—	$	21,369
Other construction/land		24,958		—		—		341		25,299
1-4 family - closed-end		282,717		4,703		201		1,836		289,457
Equity lines		23,277		615		55		2,641		26,588
Multi-family residential		49,986		3,472		—		—		53,458
Commercial real estate owner occupied		321,996		6,108		3,860		2,482		334,446
Commercial real estate non-owner occupied		841,728		26,364		14,429		367		882,888
Farmland		92,479		10,266		3,961		—		106,706
Total real estate		1,656,810		53,228		22,506		7,667		1,740,211
Agricultural		32,513		—		1,099		378		33,990
Commercial and industrial		98,367		9,989		212		1,223		109,791
Mortgage warehouse lines		101,184		—		—		—		101,184
Consumer loans		4,349		31		6		164		4,550
Total gross loans and leases	$	1,893,223	$	63,248	$	23,823	$	9,432	$	1,989,726

Allowance for Credit Losses on Financing Receivables

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, June 30, 2022	$	3,593	$	17,319	$	376	$	1,133	$	41	$	340	$	22,802
Charge-offs		—		—		—		(85)		—		(371)		(456)
Recoveries		—		—		—		36		—		196		232
Provision for credit losses		(262)		249		1,034		67		6		118		1,212
Ending allowance balance:	$	3,331	$	17,568	$	1,410	$	1,151	$	47	$	283	$	23,790

Allowance for Credit Losses and Recorded Investment in Financing Receivables
(dollars in thousands, unaudited)
	1-4 Family Real Estate		Commercial Real Estate		Farmland & Agricultural Production		Commercial & Industrial		Mortgage Warehouse		Consumer		Total
Allowance for credit losses:
Balance, December 31, 2021	$	1,909	$	9,052	$	1,202	$	1,060	$	512	$	521	$	14,256
Impact of adopting ASC 326		611		9,628		(480)		358		(421)		(242)		9,454
Charge-offs		—		(1,911)		(2,170)		(244)		—		(984)		(5,309)
Recoveries		99		259		—		118		—		553		1,029
Provision for credit losses		712		539		2,858		(141)		(44)		436		4,360
Ending allowance balance:	$	3,331	$	17,567	$	1,410	$	1,151	$	47	$	284	$	23,790

The following table presents the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2021:

		Three months ended September 30, 2021
		Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	12,075	$	524	$	3,072	$	690	$	60	$	16,421
Charge-offs		—		—		(52)		(274)		—		(326)
Recoveries		(59)		—		11		170		—		122
(Benefit) provision		261		1		(930)		(1)		69		(600)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
	Nine months ended September 30, 2021
	Real Estate		Agricultural Products		Commercial and Industrial (1)		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	11,766	$	482	$	4,721	$	720	$	49	$	17,738
Charge-offs		(245)		(50)		(129)		(606)		—		(1,030)
Recoveries		590		—		203		566		—		1,359
(Benefit) provision		166		93		(2,694)		(95)		80		(2,450)
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Reserves:
Specific	$	419	$	244	$	382	$	16	$	—	$	1,061
General		11,858		281		1,719		569		129		14,556
Ending balance	$	12,277	$	525	$	2,101	$	585	$	129	$	15,617
Loans evaluated for impairment:
Individually	$	10,150	$	471	$	1,512	$	163	$	—	$	12,296
Collectively		1,822,774		42,825		257,266		4,665		—		2,127,530
Ending balance	$	1,832,924	$	43,296	$	258,778	$	4,828	$	—	$	2,139,826

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Sources of Non-interest Income

	For the three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Noninterest income
Service charges on deposits
Returned item and overdraft fees	$	1,273	$	1,307	$	3,973	$	3,561
Other service charges on deposits		1,943		1,879		5,487		5,116
Debit card interchange income		2,241		2,192		6,458		6,321
Gain (loss) on limited partnerships(1)		64		(144)		(162)		(391)
Dividends on equity investments(1)		189		187		619		543
Unrealized (losses) gains recognized on equity investments(1)		—		—		(332)		857
Net gains on sale of securities(1)		—		11		1,032		11
Other(1)		902		2,103		6,039		4,959
Total noninterest income	$	6,612	$	7,535	$	23,114	$	20,977
Noninterest expense
Salaries and employee benefits (1)	$	11,521	$	10,618	$	35,070	$	32,194
Occupancy expense (1)		2,470		2,359		7,170		7,472
Gain on sale of OREO		(3)		(26)		(8)		(141)
Other (1)		7,008		7,924		21,050		21,856
Total noninterest expense	$	20,996	$	20,875	$	63,282	$	61,381
Percentage of noninterest income not within scope of ASC 606.		17.47%		28.63%		31.13%		28.50%

(1) Not within scope of ASC 606. Revenue streams are not related to contract with customers and are accounted for on an accrual basis under other provisions of GAAP.

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The Business of Sierra Bancorp - Branches (Details) - store	9 Months Ended
	Sep. 30, 2022	Jan. 31, 1978
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of branches		1
Number of acquired banks	4
Number of full service branch offices	35

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The Business of Sierra Bancorp - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Jan. 31, 1978
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Capital			$ 1,500
Assets	$ 3,532,289	$ 3,371,014
Cash, FDIC Insured Amount	$ 2,900,000

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Current Accounting Developments - New Accounting Pronouncements (Details) - Accounting Standards Update 2016-13 [Member]	Sep. 30, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2022

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Current Accounting Developments - Transition Impact on Allowance for Credit Losses - General Information (Details) - USD ($) $ in Thousands		9 Months Ended
	Apr. 01, 2022	Sep. 30, 2022	Jun. 30, 2022	Jan. 01, 2022	Dec. 31, 2021	Sep. 30, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans and leases		$ 23,790	$ 22,802			$ 23,790
Retained earnings		239,496			$ 234,410
Investment securities available for sale		1,069,434
Available for Sale Security, Reclassification to Held for Sale	$ 162,100
Debt Securities, Held-to-Maturity, Allowance for Credit Loss, Writeoff	$ 20
Amount of interest reversed		100
Other Assets [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accrued interest receivable		4,700
Cumulative Effect, Period of Adoption, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans and leases					$ 9,454
Available-for-Sale Securities [Member] | Other Assets [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accrued interest receivable		8,300
Held-to-Maturity Securities [Member] | Other Assets [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accrued interest receivable		$ 500
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans and leases				$ 9,500
Off balance sheet credit loss				900
Retained earnings				7,300
Investment securities available for sale				$ 0

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Current Accounting Developments - Transition Impact on Allowance for Credit Losses - Tabular Disclosure (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact to Retained Earnings	$ 239,496		$ 234,410
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Impact to Retained Earnings		$ 7,300
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Consumer Portfolio Segment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		521
Reserves Under CECL		279
Transition Impact Gross		(242)
Impact of Deferred Taxes		72
Impact to Retained Earnings		(170)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Mortgage Warehouse Lines [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		512
Reserves Under CECL		91
Transition Impact Gross		(421)
Impact of Deferred Taxes		124
Impact to Retained Earnings		(297)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Loans Receivable [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		14,256
Reserves Under CECL		23,710
Transition Impact Gross		9,454
Impact of Deferred Taxes		(2,795)
Impact to Retained Earnings		6,659
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Unfunded Loan Commitment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		203
Reserves Under CECL		1,134
Transition Impact Gross		931
Impact of Deferred Taxes		(275)
Impact to Retained Earnings		656
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		11,698
Reserves Under CECL		21,540
Transition Impact Gross		9,842
Impact of Deferred Taxes		(2,910)
Impact to Retained Earnings		6,932
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		135
Reserves Under CECL		28
Transition Impact Gross		(107)
Impact of Deferred Taxes		32
Impact to Retained Earnings		(75)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		228
Reserves Under CECL		254
Transition Impact Gross		26
Impact of Deferred Taxes		(8)
Impact to Retained Earnings		18
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		1,618
Reserves Under CECL		2,310
Transition Impact Gross		692
Impact of Deferred Taxes		(205)
Impact to Retained Earnings		487
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		290
Reserves Under CECL		210
Transition Impact Gross		(80)
Impact of Deferred Taxes		24
Impact to Retained Earnings		(56)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		274
Reserves Under CECL		574
Transition Impact Gross		300
Impact of Deferred Taxes		(89)
Impact to Retained Earnings		211
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		2,217
Reserves Under CECL		3,444
Transition Impact Gross		1,227
Impact of Deferred Taxes		(363)
Impact to Retained Earnings		864
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		6,199
Reserves Under CECL		14,380
Transition Impact Gross		8,181
Impact of Deferred Taxes		(2,418)
Impact to Retained Earnings		5,763
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Real Estate Sector [Member] | Farmland [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		737
Reserves Under CECL		340
Transition Impact Gross		(397)
Impact of Deferred Taxes		117
Impact to Retained Earnings		(280)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Agricultural Sector [Member] | Agricultural Portfolio Segment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		465
Reserves Under CECL		382
Transition Impact Gross		(83)
Impact of Deferred Taxes		25
Impact to Retained Earnings		(58)
Accounting Standards Update 2016-13 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Commercial and Industrial Sector [Member] | Commercial Portfolio Segment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reserves Under Incurred Loss		1,060
Reserves Under CECL		1,418
Transition Impact Gross		358
Impact of Deferred Taxes		(106)
Impact to Retained Earnings		$ 252

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Share Based Compensation - General Information (Details) - shares	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	377,889	415,870	448,290	495,489
2007 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	161,089
2017 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	339,057
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	850,000
Number of shares remained available for grant	451,577

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Share Based Compensation - Share-based Compensation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Payment Arrangement, Additional Disclosure [Abstract]
Pre-tax charge	$ 0.3	$ 0.2	$ 1.0	$ 0.7

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Share Based Compensation - Restricted Stock - General Information (Details) - shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
2017 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of Share Based Compensation Arrangement by Share Based Payment Award Options Exercise Price to Fair Market Value	100.00%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	0	18,180

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Share Based Compensation - Restricted Stock - Unamortized Compensation Cost (Details) - Restricted Stock [Member] $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized [Abstract]
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	$ 2.0
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition	2 years 8 months 12 days

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Share Based Compensation - Restricted Stock - Activity (Details) - Restricted Stock [Member] - $ / shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Unvested shares (in shares)	165,131	148,885
Granted (in shares)	0	18,180
Vested (in shares)	(37,748)	(39,449)
Forfeited (in shares)	(1,212)	(17,777)
Unvested shares (in shares)	126,171	109,839
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Unvested shares (in dollars per share)	$ 21.72	$ 18.00
Granted (in dollars per share)		25.30
Vested (in dollars per share)	19.20	18.00
Forfeited (in dollars per share)	27.16	18.00
Unvested shares (in dollars per share)	$ 22.45	$ 19.21

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Share Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding (in shares)	415,870	495,489
Exercised (in shares)	(5,600)	(7,480)
Forfeited/Expired (in shares)	(32,381)	(39,719)
Outstanding (in shares)	377,889	448,290
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding (in dollars per share)	$ 24.15	$ 23.67
Exercised (in dollars per share)	11.22	12.59
Forfeited/Expired (in dollars per share)	27.32	26.93
Outstanding (in dollars per share)	$ 24.07	$ 23.57
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average remaining contractual term	5 years 1 month 17 days	5 years 11 months 1 day
Aggregate intrinsic value	$ 470	$ 1,302	$ 1,338	$ 1,340
Aggregate intrinsic value, exercised	$ 56	91
Aggregate intrinsic value, Forfeited/Expired		$ 1
Exercisable, shares (in shares)	336,489	384,690
Exercisable, weighted average exercise price (in dollars per share)	$ 23.69	$ 22.97
Exercisable, weighted average remaining contractual term	4 years 10 months 17 days	5 years 6 months 29 days
Exercisable, aggregate intrinsic value	$ 470	$ 1,302

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Earnings per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Weighted Average Number of Shares Outstanding, Basic [Abstract]
Weighted average shares outstanding	14,954,503	15,257,367	14,968,242	15,247,477
Incremental Weighted Average Shares Attributable to Dilutive Effect [Abstract]
Weighted Average Number Diluted Shares Outstanding Adjustment	59,545	86,176	78,641	121,772
Earnings Per Share, Diluted, Other Disclosures [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	303,387	327,346	299,404	339,546

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Commitments and Contingent Liabilities - Off-Balance-Sheet Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure Off-balance Sheet Risks Amount Asset	$ 792,728	$ 554,028
Standby Letters of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Fair Value Disclosure Off-balance Sheet Risks Amount Asset	$ 6,057	$ 6,651

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Commitments and Contingent Liabilities - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Letters of Credit Outstanding, Amount	$ 127.9
Unused commitments on mortgage warehouse lines	$ 488.4	$ 272.8

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Fair Value Disclosures and Reporting and Fair Value Measurements - Carrying Amount and Estimated Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Financial Assets:
Investment securities available for sale	$ 1,069,434
Investment securities available for sale (before ASU 2016-13)		$ 973,314
Investment securities held-to-maturity	138,684	0
Financial liabilities:
Repurchase agreements	112,012	106,937
Carrying Amount [Member]
Financial Assets:
Cash and cash equivalents	86,683	257,528
Investment securities available for sale	1,069,434
Investment securities available for sale (before ASU 2016-13)		973,314
Investment securities held-to-maturity	156,211
Loans and leases, net held for investment	1,972,649	1,973,207
Collateral dependent loans	23,577	398
Financial liabilities:
Deposits	2,885,468	2,781,572
Repurchase agreements	112,012	106,937
Long-term debt	49,196
Short term borrowings	103,100	49,141
Subordinated debentures	35,436	35,302
Fair Value [Member]
Financial Assets:
Cash and cash equivalents	86,683	257,528
Investment securities available for sale	1,069,434
Investment securities available for sale (before ASU 2016-13)		973,314
Investment securities held-to-maturity	138,684
Loans and leases, net held for investment	1,958,479	1,960,966
Collateral dependent loans	23,577	398
Financial liabilities:
Deposits	2,882,470	2,780,668
Repurchase agreements	112,012	106,937
Long-term debt	43,247
Short term borrowings	103,100	49,118
Subordinated debentures	35,251	33,281
Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and cash equivalents	86,683	257,528
Investment securities available for sale	0
Investment securities available for sale (before ASU 2016-13)		0
Investment securities held-to-maturity	0
Loans and leases, net held for investment	0	0
Collateral dependent loans	0	0
Financial liabilities:
Deposits	1,118,245	1,084,544
Repurchase agreements	0	0
Long-term debt	0
Short term borrowings	0	0
Subordinated debentures	0	0
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	1,015,098
Investment securities available for sale (before ASU 2016-13)		750,077
Investment securities held-to-maturity	138,684
Loans and leases, net held for investment	0	0
Collateral dependent loans	23,577	221
Financial liabilities:
Deposits	1,764,225	1,696,124
Repurchase agreements	112,012	106,937
Long-term debt	43,247
Short term borrowings	103,100	49,118
Subordinated debentures	35,251	33,281
Fair Value [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and cash equivalents	0	0
Investment securities available for sale	54,336
Investment securities available for sale (before ASU 2016-13)		223,237
Investment securities held-to-maturity	0
Loans and leases, net held for investment	1,958,479	1,960,966
Collateral dependent loans	0	177
Financial liabilities:
Deposits	0	0
Repurchase agreements	0	0
Long-term debt	0
Short term borrowings	0	0
Subordinated debentures	$ 0	$ 0

XML

Fair Value Disclosures and Reporting and Fair Value Measurements - Assets Measured on Recurring Basis, Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	$ 1,069,434
Investment securities available for sale (before ASU 2016-13)		$ 973,314
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	3,955
Investment securities available for sale (before ASU 2016-13)		1,574
Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	191,022
Investment securities available for sale (before ASU 2016-13)		306,727
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	320,729
Investment securities available for sale (before ASU 2016-13)		304,268
Corporate Bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	54,336
Investment securities available for sale (before ASU 2016-13)		28,529
Collateralized Loan Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	499,392
Investment securities available for sale (before ASU 2016-13)		332,216
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	1,069,434	973,314
Fair Value, Measurements, Recurring [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	3,955	1,574
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	191,022	306,727
Fair Value, Measurements, Recurring [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	320,729	304,268
Fair Value, Measurements, Recurring [Member] | Corporate Bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	54,336	28,529
Fair Value, Measurements, Recurring [Member] | Collateralized Loan Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	499,392	332,216
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	1,015,098	750,077
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	3,955	1,574
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	191,022	306,727
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	320,729	304,268
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale		999
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Collateralized Loan Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	499,392	136,509
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	54,336	223,237
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate Bond [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale	$ 54,336	27,530
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Collateralized Loan Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities available for sale		$ 195,707

XML

Fair Value Disclosures and Reporting and Fair Value Measurements - Assets Measured on Nonrecurring Basis, Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Assets, Fair Value Disclosure [Abstract]
Foreclosed assets		$ 93
Fair Value, Measurements, Nonrecurring [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	$ 23,577	398
Foreclosed assets	0	93
Total assets measured on a nonrecurring basis	23,577	491
Fair Value, Measurements, Nonrecurring [Member] | Consumer Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	17,655	221
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family Residential Construction [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Other construction/land [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family - Closed-End [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Equity Lines [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	161
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Multi-Family Residential [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	60
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Non Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Farmland [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	17,655	0
Fair Value, Measurements, Nonrecurring [Member] | Agricultural Sector [Member] | Agricultural Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	5,922	0
Fair Value, Measurements, Nonrecurring [Member] | Commercial and Industrial Sector [Member] | Commercial Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	177
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Foreclosed assets	0	0
Total assets measured on a nonrecurring basis	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Consumer Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family Residential Construction [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Other construction/land [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family - Closed-End [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Equity Lines [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Multi-Family Residential [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Non Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Farmland [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Agricultural Sector [Member] | Agricultural Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member] | Commercial and Industrial Sector [Member] | Commercial Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	23,577	221
Foreclosed assets	0	93
Total assets measured on a nonrecurring basis	23,577	314
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Consumer Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	17,655	221
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family Residential Construction [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Other construction/land [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family - Closed-End [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Equity Lines [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	161
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Multi-Family Residential [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	60
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Non Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Farmland [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	17,655	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Agricultural Sector [Member] | Agricultural Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	5,922	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member] | Commercial and Industrial Sector [Member] | Commercial Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	177
Foreclosed assets	0	0
Total assets measured on a nonrecurring basis	0	177
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Consumer Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family Residential Construction [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Other construction/land [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | 1-4 Family - Closed-End [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Equity Lines [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Multi-Family Residential [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Commercial Real Estate Non Owner Occupied [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Real Estate Sector [Member] | Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Farmland [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Agricultural Sector [Member] | Agricultural Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Commercial and Industrial Sector [Member] | Commercial Portfolio Segment [Member]
Assets, Fair Value Disclosure [Abstract]
Collateral dependent loans	$ 0	$ 177

XML

Fair Value Disclosures and Reporting and Fair Value Measurements - Assets Measured on Recurring Basis, Unobservable Input Reconciliation (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Collateralized Loan Obligations [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance of recurring Level 3 assets	$ 195,707
Transfers out of Level 3	(195,707)
Ending balance of recurring Level 3 assets	195,700
Corporate Bond [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance of recurring Level 3 assets	27,530
Purchases	26,806
Ending balance of recurring Level 3 assets	$ 54,336

XML

Investments - Amortized Cost and Estimated Fair Value - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	$ 1,145,141
Amortized Cost (before ASU 2016-13)		$ 957,459
Gross Unrealized Gains	172	18,769
Gross Unrealized Losses	(75,879)	(2,914)
Allowance for Credit Losses	0
Allowance for Credit Losses (before ASU 2016-13)		0
Investment securities available for sale	1,069,434
Investment securities available for sale (before ASU 2016-13)		973,314
U.S. Government Agencies [Member]
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	4,000
Amortized Cost (before ASU 2016-13)		1,546
Gross Unrealized Gains		28
Gross Unrealized Losses	(45)
Investment securities available for sale	3,955
Investment securities available for sale (before ASU 2016-13)		1,574
Mortgage-Backed Securities [Member]
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	202,882
Amortized Cost (before ASU 2016-13)		303,912
Gross Unrealized Gains		4,772
Gross Unrealized Losses	(11,860)	(1,957)
Investment securities available for sale	191,022
Investment securities available for sale (before ASU 2016-13)		306,727
States and Political Subdivisions [Member]
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	363,790
Amortized Cost (before ASU 2016-13)		290,729
Gross Unrealized Gains	53	13,807
Gross Unrealized Losses	(43,114)	(268)
Investment securities available for sale	320,729
Investment securities available for sale (before ASU 2016-13)		304,268
Corporate Bond [Member]
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	59,768
Amortized Cost (before ASU 2016-13)		28,436
Gross Unrealized Gains		94
Gross Unrealized Losses	(5,432)	(1)
Investment securities available for sale	54,336
Investment securities available for sale (before ASU 2016-13)		28,529
Collateralized Loan Obligations [Member]
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract]
Amortized Cost	514,701
Amortized Cost (before ASU 2016-13)		332,836
Gross Unrealized Gains	119	68
Gross Unrealized Losses	(15,428)	(688)
Investment securities available for sale	$ 499,392
Investment securities available for sale (before ASU 2016-13)		$ 332,216

XML

Investments - Amortized Cost and Estimated Fair Value - Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Securities, Held-to-Maturity, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	$ 156,229
Gross Unrecognized Gains	11
Gross Unrecognized Losses	(17,556)
Investment securities held-to-maturity	138,684	$ 0
Allowance for credit losses on held-to-maturity securities	(18)
U.S. Government Agencies [Member]
Debt Securities, Held-to-Maturity, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	6,113
Gross Unrecognized Losses	(669)
Investment securities held-to-maturity	5,444
Mortgage-Backed Securities [Member]
Debt Securities, Held-to-Maturity, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	100,792
Gross Unrecognized Losses	(9,941)
Investment securities held-to-maturity	90,851
States and Political Subdivisions [Member]
Debt Securities, Held-to-Maturity, Fair Value to Amortized Cost, after Allowance for Credit Loss [Abstract]
Amortized Cost	49,324
Gross Unrecognized Gains	11
Gross Unrecognized Losses	(6,946)
Investment securities held-to-maturity	42,389
Allowance for credit losses on held-to-maturity securities	$ (18)

XML

Investments - Gross Unrealized Losses - General Information (Details) - USD ($) $ in Thousands	Apr. 01, 2022	Sep. 30, 2022
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Number of Positions [Abstract]
Available-for-sale securities, allowance for credit losses		$ 0
Reassessed classification of investments	$ 162,100
Unrealized loss	11,500
Allowance for credit losses	$ 20

XML

Investments - Gross Unrealized Losses - Tabular Disclosure (Details) $ in Thousands	Sep. 30, 2022 USD ($) security	Dec. 31, 2021 USD ($) security
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	881	98
Gross Unrealized Losses, Less than twelve months	$ (70,500)	$ (2,754)
Fair Value, Less than twelve months	981,246	313,276
Gross Unrealized Losses, Twelve months or more	(5,379)	(160)
Fair Value, Twelve months or more	23,873	2,808
Total, Gross Unrealized Losses	(75,879)	(2,914)
Total, Fair Value	$ 1,005,119	$ 316,084
U.S. Government Agencies [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	2
Gross Unrealized Losses, Less than twelve months	$ (45)
Fair Value, Less than twelve months	3,955
Total, Gross Unrealized Losses	(45)
Total, Fair Value	$ 3,955
Mortgage-Backed Securities [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	371	46
Gross Unrealized Losses, Less than twelve months	$ (11,696)	$ (1,797)
Fair Value, Less than twelve months	189,031	107,026
Gross Unrealized Losses, Twelve months or more	(164)	(160)
Fair Value, Twelve months or more	1,924	2,808
Total, Gross Unrealized Losses	(11,860)	(1,957)
Total, Fair Value	$ 190,955	$ 109,834
States and Political Subdivisions [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	399	29
Gross Unrealized Losses, Less than twelve months	$ (38,127)	$ (268)
Fair Value, Less than twelve months	286,459	30,170
Gross Unrealized Losses, Twelve months or more	(4,987)
Fair Value, Twelve months or more	13,878
Total, Gross Unrealized Losses	(43,114)	(268)
Total, Fair Value	$ 300,337	$ 30,170
Corporate Bond [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	51	1
Gross Unrealized Losses, Less than twelve months	$ (5,432)	$ (1)
Fair Value, Less than twelve months	54,336	499
Total, Gross Unrealized Losses	(5,432)	(1)
Total, Fair Value	$ 54,336	$ 499
Collateralized Loan Obligations [Member]
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss [Abstract]
Available-for-sale, securities in unrealized loss positions, qualitative disclosure, number of positions, total | security	58	22
Gross Unrealized Losses, Less than twelve months	$ (15,200)	$ (688)
Fair Value, Less than twelve months	447,465	175,581
Gross Unrealized Losses, Twelve months or more	(228)
Fair Value, Twelve months or more	8,071
Total, Gross Unrealized Losses	(15,428)	(688)
Total, Fair Value	$ 455,536	$ 175,581

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Investments - Realized Gains (Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale [Abstract]
Proceeds from sales, calls and maturities of securities available for sale	$ 3,540	$ 1,948	$ 34,071	$ 5,948
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract]
Gross gains on sales, calls and maturities of securities available for sale		11	1,032	11
Gross losses on sales, calls and maturities of securities available for sale		0
Net gains on sale of securities available for sale		$ 11	$ 1,032	$ 11

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Investments - Estimated Fair Value of Contractual Maturities - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Amortized Cost [Abstract]
Maturing within one year, Amortized Cost	$ 908
Maturing within one year, Amortized Cost	0	$ 3,513
Maturing after one year through five years, Amortized Cost	14,313	26,422
Maturing after five years through ten years, Amortized Cost	81,497	36,840
Maturing after ten years, Amortized Cost	330,840	253,936
Amortized Cost	1,145,141
Amortized Cost (before ASU 2016-13)		957,459
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Fair Value [Abstract]
Maturing within one year, Fair Value	908
Maturing within one year, Fair Value	0	3,547
Maturing after one year through five years, Fair Value	14,132	26,718
Maturing after five years through ten years, Fair Value	75,441	38,314
Maturing after ten years, Fair Value	288,539	265,792
Fair Value	1,069,434
Investment securities available for sale (before ASU 2016-13)		973,314
Mortgage-Backed Securities [Member]
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Amortized Cost [Abstract]
Securities not due at a single maturity date, Amortized Cost	202,882	303,912
Amortized Cost	202,882
Amortized Cost (before ASU 2016-13)		303,912
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Fair Value [Abstract]
Securities not due at a single maturity date, Fair Value	191,022	306,727
Fair Value	191,022
Investment securities available for sale (before ASU 2016-13)		306,727
Collateralized Loan Obligations [Member]
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Amortized Cost [Abstract]
Securities not due at a single maturity date, Amortized Cost	514,701	332,836
Amortized Cost	514,701
Amortized Cost (before ASU 2016-13)		332,836
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, Fair Value [Abstract]
Securities not due at a single maturity date, Fair Value	499,392	332,216
Fair Value	$ 499,392
Investment securities available for sale (before ASU 2016-13)		$ 332,216

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Investments - Estimated Fair Value of Contractual Maturities - Held-to-Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Securities, Held-to-Maturity, Amortized Cost, before Allowance for Credit Loss, Maturity, Allocated and Single Maturity Date [Abstract]
Maturing within one year (remainder of year), Amortized Cost	$ 675
Maturing within one year	0
Maturing after one year through five years	2,133
Maturing after five years through ten years	18,729
Maturing after ten years	33,900
Securities not due at a single maturity date, Amortized Cost	100,792
Amortized Cost	156,229
Debt Securities, Held-to-Maturity, Maturity, Allocated and Single Maturity Date, Fair Value [Abstract]
Maturing within one year, Fair Value	667
Maturing within one year, Fair Value	0
Maturing after one year through five years, Fair Value	2,091
Maturing after five years through ten years, Fair Value	16,869
Maturing after ten years, Fair Value	28,207
Securities not due at a single maturity date, Fair Value	90,850
Estimated Fair Value	$ 138,684	$ 0

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Investments - Revenue and General Obligation Bonds (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022 USD ($) item state	Dec. 31, 2021 USD ($) item state
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale (before ASU 2016-13)		$ 973,314
Investment securities available for sale	$ 1,069,434
Number of municipal bond | item	503	403
Various Township Facilities, Charter Township of Washington [Member]
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale (before ASU 2016-13)		$ 4,000
Number of municipal bond | item		3
States and Political Subdivisions [Member]
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale (before ASU 2016-13)		$ 304,268
Investment securities available for sale	$ 320,729
Fair market value (available-for-sale securities and held-to-maturity securities)	$ 363,118
Investment Portfolio, Securities Issued, Municipalities and Agencies, Number | item	415	335
Investment Portfolio, Securities Issued, States, Number | state	37	33
General Obligation Bonds [Member]
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale (before ASU 2016-13)		$ 259,682
Fair market value (available-for-sale securities and held-to-maturity securities)	$ 313,684
General Obligation Bonds [Member] | City of New York [Member]
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale	5,000
Subordinate Debenture [Member]
Debt Securities, Available-for-sale [Line Items]
Investment securities available for sale (before ASU 2016-13)		$ 28,500
Investment securities available for sale	$ 54,300
Number of subordinated debentures owned | item	46	23

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Investments - Revenue and General Obligation Bonds by Location (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Marketable Securities [Line Items]
Amortized Cost	$ 1,145,141
Investment securities available for sale	1,069,434
Amortized Cost (before ASU 2016-13)		$ 957,459
Investment securities available for sale (before ASU 2016-13)		973,314
States and Political Subdivisions [Member]
Marketable Securities [Line Items]
Amortized Cost	363,790
Investment securities available for sale	320,729
Amortized cost (available-for-sale securities and held-to-maturity securities)	413,114
Fair market value (available-for-sale securities and held-to-maturity securities)	363,118
Amortized Cost (before ASU 2016-13)		290,729
Investment securities available for sale (before ASU 2016-13)		304,268
General Obligation Bonds [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	356,902
Fair market value (available-for-sale securities and held-to-maturity securities)	313,684
Amortized Cost (before ASU 2016-13)		248,032
Investment securities available for sale (before ASU 2016-13)		259,682
General Obligation Bonds [Member] | TEXAS
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	159,391
Fair market value (available-for-sale securities and held-to-maturity securities)	139,498
Amortized Cost (before ASU 2016-13)		85,045
Investment securities available for sale (before ASU 2016-13)		89,225
General Obligation Bonds [Member] | CALIFORNIA
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	67,310
Fair market value (available-for-sale securities and held-to-maturity securities)	58,161
Amortized Cost (before ASU 2016-13)		64,092
Investment securities available for sale (before ASU 2016-13)		67,066
General Obligation Bonds [Member] | WASHINGTON
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	22,417
Fair market value (available-for-sale securities and held-to-maturity securities)	20,670
Amortized Cost (before ASU 2016-13)		23,858
Investment securities available for sale (before ASU 2016-13)		24,812
General Obligation Bonds [Member] | Other [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	107,784
Fair market value (available-for-sale securities and held-to-maturity securities)	95,355
Amortized Cost (before ASU 2016-13)		75,037
Investment securities available for sale (before ASU 2016-13)		78,579
Revenue Bonds [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	56,212
Fair market value (available-for-sale securities and held-to-maturity securities)	49,434
Amortized Cost (before ASU 2016-13)		42,697
Investment securities available for sale (before ASU 2016-13)		44,586
Revenue Bonds [Member] | TEXAS
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	9,496
Fair market value (available-for-sale securities and held-to-maturity securities)	8,460
Amortized Cost (before ASU 2016-13)		7,038
Investment securities available for sale (before ASU 2016-13)		7,377
Revenue Bonds [Member] | CALIFORNIA
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	3,994
Fair market value (available-for-sale securities and held-to-maturity securities)	3,613
Amortized Cost (before ASU 2016-13)		1,349
Investment securities available for sale (before ASU 2016-13)		1,392
Revenue Bonds [Member] | WASHINGTON
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	4,093
Fair market value (available-for-sale securities and held-to-maturity securities)	3,387
Amortized Cost (before ASU 2016-13)		4,334
Investment securities available for sale (before ASU 2016-13)		4,602
Revenue Bonds [Member] | Other [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	38,629
Fair market value (available-for-sale securities and held-to-maturity securities)	$ 33,974
Amortized Cost (before ASU 2016-13)		29,976
Investment securities available for sale (before ASU 2016-13)		$ 31,215

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Investments - Revenue Bonds by Type (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Marketable Securities [Line Items]
Amortized Cost	$ 1,145,141
Investment securities available for sale	1,069,434
Amortized Cost (before ASU 2016-13)		$ 957,459
Investment securities available for sale (before ASU 2016-13)		973,314
States and Political Subdivisions [Member]
Marketable Securities [Line Items]
Amortized Cost	363,790
Investment securities available for sale	320,729
Amortized cost (available-for-sale securities and held-to-maturity securities)	413,114
Fair market value (available-for-sale securities and held-to-maturity securities)	363,118
Amortized Cost (before ASU 2016-13)		290,729
Investment securities available for sale (before ASU 2016-13)		304,268
Revenue Bonds [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	56,212
Fair market value (available-for-sale securities and held-to-maturity securities)	49,434
Amortized Cost (before ASU 2016-13)		42,697
Investment securities available for sale (before ASU 2016-13)		44,586
Revenue Bonds [Member] | Water [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	22,741
Fair market value (available-for-sale securities and held-to-maturity securities)	20,064
Amortized Cost (before ASU 2016-13)		15,534
Investment securities available for sale (before ASU 2016-13)		16,220
Revenue Bonds [Member] | Sewer [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	7,091
Fair market value (available-for-sale securities and held-to-maturity securities)	6,144
Amortized Cost (before ASU 2016-13)		3,932
Investment securities available for sale (before ASU 2016-13)		4,165
Revenue Bonds [Member] | Lease [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	7,511
Fair market value (available-for-sale securities and held-to-maturity securities)	6,907
Amortized Cost (before ASU 2016-13)		6,556
Investment securities available for sale (before ASU 2016-13)		6,718
Revenue Bonds [Member] | Sales Tax [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	4,329
Fair market value (available-for-sale securities and held-to-maturity securities)	3,803
Revenue Bonds [Member] | Intergovernmental Agreement [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	2,836
Fair market value (available-for-sale securities and held-to-maturity securities)	2,600
Revenue Bonds [Member] | Other Revenue Source [Member]
Marketable Securities [Line Items]
Amortized cost (available-for-sale securities and held-to-maturity securities)	11,704
Fair market value (available-for-sale securities and held-to-maturity securities)	$ 9,916
Amortized Cost (before ASU 2016-13)		16,675
Investment securities available for sale (before ASU 2016-13)		$ 17,483

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Investments - Low-Income Housing Tax Credit Fund Investments (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Investment, book balance	$ 10.2	$ 2.9
Investment, remaining commitments for additional capital contributions	7.5	0.1
Investment, amortization expense	0.3	0.5
Investment, tax credit	$ 0.4	$ 0.5

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Loans and Leases and Allowance for Credit Losses - General Information (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Accrued interest receivable, loans	$ 4.7	$ 4.7	$ 6.8
Additional interest income		$ 0.6
Amortized cost of collateral-dependent loans, increase (decrease) during the period	$ (1.7)
Weighted average loan-to-value ratio of collateral dependent loans (as a percent)	93.00%	93.00%
Collateral dependent loans in process of foreclosure	$ 0.0	$ 0.0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Past Due [Line Items]
Loan and lease receivable		$ 173.1

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Loans and Leases and Allowance for Credit Losses - Loan and Lease Distribution (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	$ 2,020,364
Less net deferred loan fees and costs	(348)
Loans and leases, amortized cost basis	2,020,016
Allowance for credit losses on loans and leases	(23,790)	$ (22,802)		$ (23,790)
Net loans and leases	1,996,226
Subtotal, before ASU 2016-13 adoption			$ 1,989,726
Less net deferred loan fees and costs, before ASU 2016-13 adoption			(1,865)
Total Financing Receivables, before ASU 2016-13 adoption			1,987,861	2,139,826
Allowance for credit losses, before ASU 2016-13 adoption			(14,256)
Net loans and leases (before ASU 2016-13)			1,973,605
Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Loans and leases, amortized cost basis	46,554
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	1,868,277
Loans and leases, amortized cost basis	1,866,888
Subtotal, before ASU 2016-13 adoption			1,740,211
Total Financing Receivables, before ASU 2016-13 adoption				1,832,924
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Allowance for credit losses on loans and leases	(3,331)	(3,593)		(3,331)
Subtotal, before ASU 2016-13 adoption			21,369
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	18,315
Loans and leases, amortized cost basis	18,255
Subtotal, before ASU 2016-13 adoption			25,299
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	420,136
Loans and leases, amortized cost basis	421,136
Subtotal, before ASU 2016-13 adoption			289,457
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	21,126
Loans and leases, amortized cost basis	21,441
Subtotal, before ASU 2016-13 adoption			26,588
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	69,665
Loans and leases, amortized cost basis	69,569
Subtotal, before ASU 2016-13 adoption			53,458
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	324,696
Loans and leases, amortized cost basis	324,715
Subtotal, before ASU 2016-13 adoption			334,446
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	896,954
Loans and leases, amortized cost basis	894,213
Subtotal, before ASU 2016-13 adoption			882,888
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	117,385
Loans and leases, amortized cost basis	117,559
Allowance for credit losses on loans and leases	(1,410)	(376)		(1,410)
Subtotal, before ASU 2016-13 adoption			106,706
Commercial Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Allowance for credit losses on loans and leases	(17,568)	(17,319)		(17,567)
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	31,290
Loans and leases, amortized cost basis	31,528
Subtotal, before ASU 2016-13 adoption			33,990
Total Financing Receivables, before ASU 2016-13 adoption				43,296
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Total Financing Receivables, before ASU 2016-13 adoption				258,778
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	70,147
Loans and leases, amortized cost basis	70,844
Allowance for credit losses on loans and leases	(1,151)	(1,133)		(1,151)
Subtotal, before ASU 2016-13 adoption			109,791
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	46,553
Loans and leases, amortized cost basis	46,554
Allowance for credit losses on loans and leases	(47)	(41)		(47)
Subtotal, before ASU 2016-13 adoption			101,184
Consumer Portfolio Segment [Member]
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Abstract]
Subtotal	4,097
Loans and leases, amortized cost basis	4,202
Allowance for credit losses on loans and leases	$ (283)	$ (340)		(284)
Subtotal, before ASU 2016-13 adoption			$ 4,550
Total Financing Receivables, before ASU 2016-13 adoption				$ 4,828

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Loans and Leases and Allowance for Credit Losses - Nonaccrual Loans and Leases (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	$ 10,392
Nonaccrual loans, with an allowance for credit loss	16,380
Nonaccrual loans, total	26,772
Loans past due 90+ accruing	7
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	10,223
Nonaccrual loans, with an allowance for credit loss	8,593
Nonaccrual loans, total	18,816
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	485
Nonaccrual loans, total	485
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	61
Nonaccrual loans, total	61
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	9,677
Nonaccrual loans, with an allowance for credit loss	8,593
Nonaccrual loans, total	18,270
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	82
Nonaccrual loans, with an allowance for credit loss	7,649
Nonaccrual loans, total	7,731
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, Excluding Accrued Interest, Nonaccrual [Abstract]
Nonaccrual loans, with no allowance for credit loss	87
Nonaccrual loans, with an allowance for credit loss	138
Nonaccrual loans, total	225
Loans past due 90+ accruing	$ 7

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Loans and Leases and Allowance for Credit Losses - Individually Impaired Loans, before ASU 2016-13 Adoption (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	$ 6,175
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	6,162
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	818
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	6,474
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	542
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	3,389
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	3,270
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	3,577
With no Related Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	6
Individually impaired loans, Unpaid Principal Balance, before ASU 2016-13 adoption	9,564
Individually impaired loans, Recorded Investment, before ASU 2016-13 adoption	9,432
Individually impaired loans, Average Recorded Investment, before ASU 2016-13 adoption	10,051
Individually impaired loans, Interest Income Recognized, before ASU 2016-13 adoption	548
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	5,010
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	4,997
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	428
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	5,175
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	473
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	2,789
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	2,670
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	2,841
With no Related Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	6
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	341
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	341
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	64
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	352
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	55
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	1,048
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	1,048
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	37
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	1,096
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	104
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	788
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	788
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	869
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	2,005
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	1,993
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	182
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	2,056
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	138
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	648
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	648
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	690
With no Related Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	6
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	1,249
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	1,248
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	19
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	1,278
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	144
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	1,353
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	1,234
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	1,282
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	367
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	367
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	126
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	393
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	32
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	244
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	244
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	244
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	246
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	134
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	134
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	186
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	757
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	757
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	127
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	873
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	41
With no Related Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	466
With no Related Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	466
With no Related Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	550
Consumer Portfolio Segment [Member]
Financing Receivable, Impaired [Line Items]
With an Allowance, Recorded Unpaid Principal Balance, before ASU 2016-13 adoption	164
With an Allowance, Recorded Recorded Investment, before ASU 2016-13 adoption	164
With an Allowance, Recorded Related Allowance, before ASU 2016-13 adoption	19
With an Allowance, Recorded Average Recorded Investment, before ASU 2016-13 adoption	180
With an Allowance, Recorded Interest Income Recognized, before ASU 2016-13 adoption	$ 28

XML

Loans and Leases and Allowance for Credit Losses - Collateral Dependent Loans (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Financing Receivable Recorded Investment [Line Items]
Amortized cost	$ 26,743
Individual reserves	1,202
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	18,817
Individual reserves	195
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	40
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	506
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	18,271
Individual reserves	195
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	7,702
Individual reserves	967
Commercial Portfolio Segment [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Amortized cost	224
Individual reserves	$ 40

XML

Loans and Leases and Allowance for Credit Losses - Past Due and Nonaccrual Loans - Tabular Disclosure (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Financing Receivable, Past Due [Line Items]
Loans and leases	$ 2,020,016
Gross loans and leases (before ASU 2016-13)		$ 1,989,726
Non-Accrual Loans (before ASU 2016-13)		4,522
Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	27,185
Gross loans and leases (before ASU 2016-13)		3,565
30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	1,225
Gross loans and leases (before ASU 2016-13)		2,165
60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	32
Gross loans and leases (before ASU 2016-13)		135
90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	25,928
Gross loans and leases (before ASU 2016-13)		1,265
Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	1,992,831
Gross loans and leases (before ASU 2016-13)		1,986,161
Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	46,554
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	1,866,888
Gross loans and leases (before ASU 2016-13)		1,740,211
Non-Accrual Loans (before ASU 2016-13)		3,149
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,761
Gross loans and leases (before ASU 2016-13)		2,516
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	450
Gross loans and leases (before ASU 2016-13)		1,686
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	32
Gross loans and leases (before ASU 2016-13)		132
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,279
Gross loans and leases (before ASU 2016-13)		698
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	1,848,127
Gross loans and leases (before ASU 2016-13)		1,737,695
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		21,369
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		21,369
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,255
Gross loans and leases (before ASU 2016-13)		25,299
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,255
Gross loans and leases (before ASU 2016-13)		25,299
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	421,136
Gross loans and leases (before ASU 2016-13)		289,457
Non-Accrual Loans (before ASU 2016-13)		1,023
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	40
Gross loans and leases (before ASU 2016-13)		1,664
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		1,532
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	32
Gross loans and leases (before ASU 2016-13)		132
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	8
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	421,096
Gross loans and leases (before ASU 2016-13)		287,793
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	21,441
Gross loans and leases (before ASU 2016-13)		26,588
Non-Accrual Loans (before ASU 2016-13)		892
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		30
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		30
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	21,441
Gross loans and leases (before ASU 2016-13)		26,558
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	69,569
Gross loans and leases (before ASU 2016-13)		53,458
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	69,569
Gross loans and leases (before ASU 2016-13)		53,458
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	324,715
Gross loans and leases (before ASU 2016-13)		334,446
Non-Accrual Loans (before ASU 2016-13)		1,234
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	351
Gross loans and leases (before ASU 2016-13)		822
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	351
Gross loans and leases (before ASU 2016-13)		124
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		698
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	324,364
Gross loans and leases (before ASU 2016-13)		333,624
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	894,213
Gross loans and leases (before ASU 2016-13)		882,888
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	894,213
Gross loans and leases (before ASU 2016-13)		882,888
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	117,559
Gross loans and leases (before ASU 2016-13)		106,706
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,370
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	99
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	18,271
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	99,189
Gross loans and leases (before ASU 2016-13)		106,706
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	31,528
Gross loans and leases (before ASU 2016-13)		33,990
Non-Accrual Loans (before ASU 2016-13)		378
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	7,649
Gross loans and leases (before ASU 2016-13)		284
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	7,649
Gross loans and leases (before ASU 2016-13)		284
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	23,879
Gross loans and leases (before ASU 2016-13)		33,706
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	70,844
Gross loans and leases (before ASU 2016-13)		109,791
Non-Accrual Loans (before ASU 2016-13)		973
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	775
Gross loans and leases (before ASU 2016-13)		756
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	775
Gross loans and leases (before ASU 2016-13)		473
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | 90 Days Or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		283
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	70,069
Gross loans and leases (before ASU 2016-13)		109,035
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	46,554
Gross loans and leases (before ASU 2016-13)		101,184
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	46,554
Gross loans and leases (before ASU 2016-13)		101,184
Consumer Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	4,202
Gross loans and leases (before ASU 2016-13)		4,550
Non-Accrual Loans (before ASU 2016-13)		22
Consumer Portfolio Segment [Member] | Financial Asset, Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		9
Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		6
Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Gross loans and leases (before ASU 2016-13)		3
Consumer Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loans and leases	$ 4,202
Gross loans and leases (before ASU 2016-13)		$ 4,541

XML

Loans and Leases and Allowance for Credit Losses - Additional Information (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)
Financing Receivable, Past Due [Line Items]
Financing Receivable, 90 Days or More Past Due, Still Accruing (before ASU 2016-13)						$ 0
Allowance for credit losses on loans and leases	$ 23,790	$ 23,790	$ 23,790	$ 22,802
Reduction in loan	1,000
Charge-offs	456		5,309
Financing Receivable Modifications Post Modification Recorded Investment During Period	$ 4,900	$ 4,900
Modifications of existing TDRs	0	0
Purchased credit deteriorated loans	$ 0	$ 0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Charge-offs		1,900
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Past Due [Line Items]
Charge-offs		2,200
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Past Due [Line Items]
Allowance for credit losses on loans and leases	1,410	1,410	1,410	$ 376
Charge-offs			$ 2,170
Restatement Adjustment [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	$ 0	$ 0
Accounting Standards Update 2016-13 [Member] | Restatement Adjustment [Member]
Financing Receivable, Past Due [Line Items]
Allowance for credit losses on loans and leases					$ 9,500

XML

Loans and Leases and Allowance for Credit Losses - Troubled Debt Restructurings - General Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)
Credit Quality and Nonperforming Assets [Abstract]
Troubled debt restructurings, total amount	$ 4.9
Troubled debt restructurings on non-accrual status	$ 0.3

XML

Loans and Leases and Allowance for Credit Losses - Troubled Debt Restructurings, by Type of Loan Modification (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	$ 1,000	$ 1,563
Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	1,000	1,480
Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	83
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	1,000	1,219
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	1,000	1,136
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	83
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	1,000	1,083
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	1,000	1,000
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	83
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	136
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	136
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	118
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	118
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	185
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	185
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Consumer Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	41
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings Rate Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0	$ 41
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings Interest Only Modification [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	0
Consumer Portfolio Segment [Member] | Troubled Debt Restructurings Rate And Term Modifications [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Post Modification Recorded Investment During Period	$ 0

XML

Loans and Leases and Allowance for Credit Losses - Troubled Debt Restructurings - Tabular Disclosure (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($) item	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($) item
Financing Receivable, Modifications [Line Items]
Pre-Modification Outstanding Recorded Investment		$ 1,000		$ 1,564
Post-Modification Outstanding Recorded Investment		1,000		1,563
Reserve Difference		0		114
Reserve		0		48
Finance receivables modified as TDRs within the previous twelve months	$ 0	0	$ 0	0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Modifications [Line Items]
Pre-Modification Outstanding Recorded Investment		1,000		1,220
Post-Modification Outstanding Recorded Investment		1,000		1,219
Reserve Difference		0		(1)
Reserve		$ 0		$ 1
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		0
Pre-Modification Outstanding Recorded Investment		$ 0
Post-Modification Outstanding Recorded Investment		0
Reserve Difference		0
Reserve		$ 0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		0
Pre-Modification Outstanding Recorded Investment		$ 0
Post-Modification Outstanding Recorded Investment		0
Reserve Difference		0
Reserve		$ 0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		1		2
Pre-Modification Outstanding Recorded Investment		$ 1,000		$ 1,083
Post-Modification Outstanding Recorded Investment		1,000		1,083
Reserve Difference		0
Reserve		$ 0		$ 1
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		0
Pre-Modification Outstanding Recorded Investment		$ 0
Post-Modification Outstanding Recorded Investment		0
Reserve Difference		0
Reserve		$ 0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		1
Pre-Modification Outstanding Recorded Investment		$ 0		$ 137
Post-Modification Outstanding Recorded Investment		0		136
Reserve Difference		0		$ (1)
Reserve		$ 0
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		0
Pre-Modification Outstanding Recorded Investment		$ 0
Post-Modification Outstanding Recorded Investment		0
Reserve Difference		0
Reserve		$ 0
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		1
Pre-Modification Outstanding Recorded Investment		$ 0		$ 118
Post-Modification Outstanding Recorded Investment		0		118
Reserve Difference		0		$ 116
Reserve		$ 0
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		1
Pre-Modification Outstanding Recorded Investment		$ 0		$ 185
Post-Modification Outstanding Recorded Investment		0		185
Reserve Difference		0		(1)
Reserve		$ 0		$ 47
Consumer Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | item		0		1
Pre-Modification Outstanding Recorded Investment		$ 0		$ 41
Post-Modification Outstanding Recorded Investment		0		$ 41
Reserve Difference		0
Reserve		$ 0

XML

Loans and Leases and Allowance for Credit Losses - Amortized Cost of Loans and Leases by Credit Quality Classification, before ASU 2016-13 Adoption (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	$ 1,989,726
Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,893,223
Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	63,248
Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	23,823
Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	9,432
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,740,211
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,656,810
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	53,228
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	22,506
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	7,667
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	21,369
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	19,669
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,700
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	25,299
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	24,958
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	341
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	289,457
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	282,717
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	4,703
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	201
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,836
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	26,588
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	23,277
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	615
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	55
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	2,641
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	53,458
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	49,986
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	3,472
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	334,446
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	321,996
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	6,108
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	3,860
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	2,482
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	882,888
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	841,728
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	26,364
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	14,429
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	367
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	106,706
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	92,479
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	10,266
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	3,961
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	33,990
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	32,513
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,099
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	378
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	109,791
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	98,367
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	9,989
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	212
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	1,223
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	101,184
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	101,184
Consumer Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	4,550
Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	4,349
Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	31
Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	6
Consumer Portfolio Segment [Member] | Impaired [Member]
Financing Receivable Recorded Investment [Line Items]
Gross loans and leases (before ASU 2016-13)	$ 164

XML

Loans and Leases and Allowance for Credit Losses - Credit Quality Classifications (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	$ 267,489
2021	303,497
2020	572,459
2019	78,111
2018	156,047
Prior	407,758
Revolving loans, amortized cost	234,655
Loans and leases, amortized cost basis	2,020,016
Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Revolving loans, amortized cost	46,554
Loans and leases, amortized cost basis	46,554
Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Revolving loans, amortized cost	46,554
Loans and leases, amortized cost basis	46,554
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Loans and leases, amortized cost basis	1,866,888
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	4,367
2019	756
2018	974
Prior	1,063
Revolving loans, amortized cost	11,095
Loans and leases, amortized cost basis	18,255
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	4,295
2019	756
2018	974
Prior	1,063
Revolving loans, amortized cost	11,095
Loans and leases, amortized cost basis	18,183
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Other construction/land [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	72
Loans and leases, amortized cost basis	72
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	108,169
2021	240,043
2020	8,011
2019	2,077
2018	11,093
Prior	51,743
Loans and leases, amortized cost basis	421,136
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	108,169
2021	240,043
2020	8,011
2019	2,077
2018	11,061
Prior	50,121
Loans and leases, amortized cost basis	419,482
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Prior	744
Loans and leases, amortized cost basis	744
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family - Closed-End [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2018	32
Prior	878
Loans and leases, amortized cost basis	910
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2021	274
2020	547
2019	352
2018	78
Revolving loans, amortized cost	20,190
Loans and leases, amortized cost basis	21,441
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2021	158
2020	527
2019	352
2018	78
Revolving loans, amortized cost	18,982
Loans and leases, amortized cost basis	20,097
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	20
Revolving loans, amortized cost	777
Loans and leases, amortized cost basis	797
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Equity Lines [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2021	116
Revolving loans, amortized cost	431
Loans and leases, amortized cost basis	547
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	23,928
2021	519
2020	11,667
2019	664
2018	13,018
Prior	15,145
Revolving loans, amortized cost	4,628
Loans and leases, amortized cost basis	69,569
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	23,928
2021	519
2020	9,439
2019	664
2018	13,018
Prior	11,778
Revolving loans, amortized cost	4,628
Loans and leases, amortized cost basis	63,974
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Multi-Family Residential [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	2,228
Prior	3,367
Loans and leases, amortized cost basis	5,595
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	32,826
2021	26,144
2020	64,833
2019	38,783
2018	37,432
Prior	116,697
Revolving loans, amortized cost	8,000
Loans and leases, amortized cost basis	324,715
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	32,522
2021	26,144
2020	64,833
2019	36,390
2018	37,353
Prior	111,721
Revolving loans, amortized cost	7,243
Loans and leases, amortized cost basis	316,206
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	304
2019	2,393
Prior	1,696
Loans and leases, amortized cost basis	4,393
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Owner Occupied [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2018	79
Prior	3,280
Revolving loans, amortized cost	757
Loans and leases, amortized cost basis	4,116
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	75,716
2021	19,627
2020	466,585
2019	26,624
2018	67,351
Prior	167,929
Revolving loans, amortized cost	70,381
Loans and leases, amortized cost basis	894,213
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	75,716
2021	19,627
2020	401,978
2019	26,624
2018	57,534
Prior	161,763
Revolving loans, amortized cost	60,457
Loans and leases, amortized cost basis	803,699
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	64,607
2018	8,965
Prior	3,098
Revolving loans, amortized cost	9,924
Loans and leases, amortized cost basis	86,594
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Commercial Real Estate Non Owner Occupied [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2018	852
Prior	3,068
Loans and leases, amortized cost basis	3,920
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	15,958
2021	1,368
2020	4,971
2019	1,904
2018	19,868
Prior	43,010
Revolving loans, amortized cost	30,480
Loans and leases, amortized cost basis	117,559
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	15,958
2021	1,368
2020	4,971
2019	1,904
2018	8,098
Prior	24,658
Revolving loans, amortized cost	28,976
Loans and leases, amortized cost basis	85,933
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2018	7,081
Prior	4,671
Revolving loans, amortized cost	1,504
Loans and leases, amortized cost basis	13,256
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2018	4,689
Prior	13,681
Loans and leases, amortized cost basis	18,370
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	7,253
2021	8,160
2020	458
2019	26
2018	1,027
Prior	1,809
Revolving loans, amortized cost	12,795
Loans and leases, amortized cost basis	31,528
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	7,253
2021	458
2020	458
2019	26
2018	1,027
Prior	1,809
Revolving loans, amortized cost	12,045
Loans and leases, amortized cost basis	23,076
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Revolving loans, amortized cost	721
Loans and leases, amortized cost basis	721
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2021	7,702
Revolving loans, amortized cost	29
Loans and leases, amortized cost basis	7,731
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	2,693
2021	7,133
2020	10,827
2019	6,663
2018	5,200
Prior	9,987
Revolving loans, amortized cost	28,341
Loans and leases, amortized cost basis	70,844
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	2,448
2021	6,988
2020	7,700
2019	6,519
2018	5,113
Prior	8,288
Revolving loans, amortized cost	24,569
Loans and leases, amortized cost basis	61,625
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	245
2021	145
2020	3,127
2019	47
Prior	1,562
Revolving loans, amortized cost	3,772
Loans and leases, amortized cost basis	8,898
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2019	97
2018	87
Prior	137
Loans and leases, amortized cost basis	321
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Loans and leases, amortized cost basis	46,554
Consumer Portfolio Segment [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	946
2021	229
2020	193
2019	262
2018	6
Prior	375
Revolving loans, amortized cost	2,191
Loans and leases, amortized cost basis	4,202
Consumer Portfolio Segment [Member] | Pass [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	945
2021	229
2020	156
2019	243
2018	6
Prior	375
Revolving loans, amortized cost	2,187
Loans and leases, amortized cost basis	4,141
Consumer Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2020	37
2019	19
Revolving loans, amortized cost	4
Loans and leases, amortized cost basis	60
Consumer Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
2022	1
Loans and leases, amortized cost basis	$ 1

XML

Loans and Leases and Allowance for Credit Losses - Allowance for Credit Losses - Roll Forward (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		$ 16,421	$ 14,256	$ 17,738
Beginning balance	$ 22,802
Charge-offs, before ASU 2016-13 adoption		(326)		(1,030)
Charge-offs	(456)			(5,309)
Recoveries, before ASU 2016-13 adoption		122		1,359
Recoveries	232			1,029
(Benefit) provision, before ASU 2016-13 adoption		(600)		(2,450)
Provision for credit losses	1,212			4,360
Ending balance, before ASU 2016-13 adoption		15,617		15,617
Ending balance	23,790	23,790	23,790	23,790
Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			9,454
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Charge-offs			(1,900)
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		12,075		11,766
Charge-offs, before ASU 2016-13 adoption				(245)
Charge-offs			(2,200)
Recoveries, before ASU 2016-13 adoption		(59)
Recoveries, before ASU 2016-13 adoption				590
(Benefit) provision, before ASU 2016-13 adoption		261		166
Ending balance, before ASU 2016-13 adoption		12,277		12,277
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption			1,909
Beginning balance	3,593
Recoveries				99
Provision for credit losses	(262)			712
Ending balance	3,331	3,331	3,331	3,331
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | 1-4 Family Residential Construction [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			611
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption			1,202
Beginning balance	376
Charge-offs				(2,170)
Provision for credit losses	1,034			2,858
Ending balance	1,410	1,410	1,410	1,410
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Farmland [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			(480)
Commercial Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption			9,052
Beginning balance	17,319
Charge-offs				(1,911)
Recoveries				259
Provision for credit losses	249			539
Ending balance	17,568	17,567	17,568	17,567
Commercial Real Estate Portfolio Segment [Member] | Real Estate Sector [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			9,628
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		524		482
Charge-offs, before ASU 2016-13 adoption				(50)
(Benefit) provision, before ASU 2016-13 adoption		1		93
Ending balance, before ASU 2016-13 adoption		525		525
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		3,072		4,721
Charge-offs, before ASU 2016-13 adoption		(52)		(129)
Recoveries, before ASU 2016-13 adoption		11		203
(Benefit) provision, before ASU 2016-13 adoption		(930)		(2,694)
Ending balance, before ASU 2016-13 adoption		2,101		2,101
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption			1,060
Beginning balance	1,133
Charge-offs	(85)			(244)
Recoveries	36			118
Provision for credit losses	67			(141)
Ending balance	1,151	1,151	1,151	1,151
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Commercial and Industrial Loans and Leases [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			358
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption			512
Beginning balance	41
Provision for credit losses	6			(44)
Ending balance	47	47	47	47
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member] | Mortgage Warehouse Lines [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			(421)
Consumer Portfolio Segment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		690	521	720
Beginning balance	340
Charge-offs, before ASU 2016-13 adoption		(274)		(606)
Charge-offs	(371)			(984)
Recoveries, before ASU 2016-13 adoption		170		566
Recoveries	196			553
(Benefit) provision, before ASU 2016-13 adoption		(1)		(95)
Provision for credit losses	118			436
Ending balance, before ASU 2016-13 adoption		585		585
Ending balance	$ 283	284	283	284
Consumer Portfolio Segment [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance			$ (242)
Unallocated [Member]
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Beginning balance, before ASU 2016-13 adoption		60		49
(Benefit) provision, before ASU 2016-13 adoption		69		80
Ending balance, before ASU 2016-13 adoption		$ 129		$ 129

XML

Loans and Leases and Allowance for Credit Losses - Allowance for Credit Losses - Reserves, before ASU 2016-13 Adoption (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable, Allowance for Credit Loss [Line Items]
Specific, before ASU 2016-13 adoption		$ 1,061
General, before ASU 2016-13 adoption		14,556
Ending balance, before ASU 2016-13 adoption	$ 14,256	15,617	$ 16,421	$ 17,738
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Specific, before ASU 2016-13 adoption		419
General, before ASU 2016-13 adoption		11,858
Ending balance, before ASU 2016-13 adoption		12,277	12,075	11,766
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Specific, before ASU 2016-13 adoption		244
General, before ASU 2016-13 adoption		281
Ending balance, before ASU 2016-13 adoption		525	524	482
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Specific, before ASU 2016-13 adoption		382
General, before ASU 2016-13 adoption		1,719
Ending balance, before ASU 2016-13 adoption		2,101	3,072	4,721
Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Specific, before ASU 2016-13 adoption		16
General, before ASU 2016-13 adoption		569
Ending balance, before ASU 2016-13 adoption	$ 521	585	690	720
Unallocated [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
General, before ASU 2016-13 adoption		129
Ending balance, before ASU 2016-13 adoption		$ 129	$ 60	$ 49

XML

Loans and Leases and Allowance for Credit Losses - Activity in Allowance for Loan and Lease Losses, before ASU 2016-13 Adoption (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Individually, before ASU 2016-13 adoption		$ 12,296
Collectively, before ASU 2016-13 adoption		2,127,530
Total Financing Receivables, before ASU 2016-13 adoption	$ 1,987,861	2,139,826
Commercial, Residential, and Farm Land Real Estate Portfolio Segment [Member] | Real Estate Sector [Member]
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Individually, before ASU 2016-13 adoption		10,150
Collectively, before ASU 2016-13 adoption		1,822,774
Total Financing Receivables, before ASU 2016-13 adoption		1,832,924
Agricultural Portfolio Segment [Member] | Agricultural Sector [Member]
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Individually, before ASU 2016-13 adoption		471
Collectively, before ASU 2016-13 adoption		42,825
Total Financing Receivables, before ASU 2016-13 adoption		43,296
Commercial Portfolio Segment [Member] | Commercial and Industrial Sector [Member]
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Individually, before ASU 2016-13 adoption		1,512
Collectively, before ASU 2016-13 adoption		257,266
Total Financing Receivables, before ASU 2016-13 adoption		258,778
Consumer Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Individually, before ASU 2016-13 adoption		163
Collectively, before ASU 2016-13 adoption		4,665
Total Financing Receivables, before ASU 2016-13 adoption		$ 4,828

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Borrowings and Other Arrangements (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Unsecured available lines of credit with correspondent banks
Short-term Debt [Line Items]
Available lines of credit	$ 305.0	$ 305.0
Borrowings amount	0.0	0.0
Federal Home Loan Bank Borrowings
Short-term Debt [Line Items]
Available lines of credit	724.0	787.5
Borrowings amount	103.1	0.0
Federal Reserve Line of Credit
Short-term Debt [Line Items]
Maximum borrowing capacity	34.2	$ 50.6
Borrowings amount	$ 0.0

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Borrowings and Other Arrangements - Long-Term Debt (Details) - Subordinated Debt [Member] - Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Fixed Interest Rate	3.25%
Debt Instrument, Basis Spread on Variable Rate	2.535%
Long-term debt, net	$ 49.2	$ 49.1

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Borrowings and Other Arrangements - Subordinated Debentures (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Junior Subordinated Debt [Member]
Debt Instrument [Line Items]
Long-term debt, net	$ 35.4	$ 35.3

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Revenue Recognition - General Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenue from Contract with Customer [Abstract]
Percentage of income outside of scope of ASC 606 (as a percent)	17.47%	28.63%	31.13%	28.50%

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Revenue Recognition - Noninterest Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Noninterest income
Gain (loss) on limited partnerships	$ 64	$ (144)	$ (162)	$ (391)
Dividends on equity investments	189	187	619	543
Unrealized (losses) gains recognized on equity investments			(332)	857
Net gains on sale of securities		11	1,032	11
Other	902	2,103	6,039	4,959
Total noninterest income	6,612	7,535	23,114	20,977
Deposit Account [Member]
Noninterest income
Revenue from Contract with Customer, Excluding Assessed Tax	3,216	3,186	9,460	8,677
Returned Item and Overdraft Fees [Member]
Noninterest income
Revenue from Contract with Customer, Excluding Assessed Tax	1,273	1,307	3,973	3,561
Other Service Charges on Deposits [Member]
Noninterest income
Revenue from Contract with Customer, Excluding Assessed Tax	1,943	1,879	5,487	5,116
Debit Card [Member]
Noninterest income
Revenue from Contract with Customer, Excluding Assessed Tax	$ 2,241	$ 2,192	$ 6,458	$ 6,321

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Revenue Recognition - Noninterest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Noninterest expense
Salaries and employee benefits	$ 11,521	$ 10,618	$ 35,070	$ 32,194
Occupancy expense	2,470	2,359	7,170	7,472
Gain on sale of OREO	(3)	(26)	(8)	(141)
Other	7,008	7,924	21,050	21,856
Total noninterest expense	$ 20,996	$ 20,875	$ 63,282	$ 61,381

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Subsequent Events (Details) $ in Millions	Oct. 01, 2022 USD ($)
Subsequent Event [Member]
Subsequent Event [Line Items]
Subsequent Event, Available-for-sale investments transferred to held-to-maturity	$ 198.3