XML 22 R11.htm IDEA: XBRL DOCUMENT v3.22.2.2
LOANS AND ALLOWANCE FOR CREDIT LOSSES
9 Months Ended
Sep. 30, 2022
Receivables [Abstract]  
Loans and Allowance for Credit Losses

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

 

Types of loans and normal collateral securing those loans are listed below.

Commercial real estate: Commercial real estate loans include all loans secured by nonfarm, nonresidential properties and by multifamily residential properties, as well as 1-4 family investment-purpose real estate loans.

Commercial and industrial: Commercial and industrial loans include loans used to purchase fixed assets, provide working capital or meet other financing needs of the business. Loans are normally secured by the assets being purchased or already owned by the borrower, inventory or accounts receivable. These may include SBA and other guaranteed or partially guaranteed types of loans.

Residential real estate: Residential real estate loans include loans secured by primary or secondary personal residences.

Agricultural real estate: Agricultural real estate loans are loans typically secured by farmland.

Agricultural: Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. These loans may be secured by growing crops, stored crops, livestock, equipment, and miscellaneous receivables.

Consumer: Consumer loans may include installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit. These loans are generally secured by consumer assets but may be unsecured.

The following table lists categories of loans at September 30, 2022, and December 31, 2021.

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Commercial real estate

 

$

1,655,646

 

 

$

1,486,148

 

Commercial and industrial

 

 

607,722

 

 

 

567,497

 

Residential real estate

 

 

573,431

 

 

 

638,087

 

Agricultural real estate

 

 

200,415

 

 

 

198,330

 

Agricultural

 

 

115,048

 

 

 

166,975

 

Consumer

 

 

102,761

 

 

 

98,590

 

Total loans

 

 

3,255,023

 

 

 

3,155,627

 

Allowance for credit losses

 

 

(46,499

)

 

 

(48,365

)

Net loans

 

$

3,208,524

 

 

$

3,107,262

 

 

Included in the commercial and industrial loan balances at September 30, 2022, and December 31, 2021, are $7,152 and $44,783 of loans that were originated under the SBA PPP program. At September 30, 2022, and December 31, 2021, unamortized loan fees on these loans were $114 and $1,252.

From time to time, the Company has purchased pools of residential real estate loans originated by other financial institutions to hold for investment with the intent to diversify the residential real estate portfolio. During the nine months ended September 30, 2022, the Company purchased one pool of residential mortgage loans totaling $795. During the first nine months of 2021, the Company purchased five pools of residential real estate loans totaling $214,181. As of September 30, 2022, and December 31, 2021, residential real estate loans include $334,241 and $372,069 of purchased residential real estate loans.

The Company occasionally purchases the government guaranteed portion of loans originated by other financial institutions to hold for investment. During the nine months ended September 30, 2022, the Company purchased $2,293 in loans guaranteed by governmental agencies. Government guaranteed loans totaling $10,958 were purchased in the nine months ended September 30, 2021.

The unamortized discount of merger purchase accounting adjustments related to non-purchase credit deteriorated loans included in the loan totals above are $3,947 with related loans of $312,707 at September 30, 2022, and $6,649 with related loans of $527,422 at December 31, 2021.

Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled $642 at September 30, 2022, and $886 at December 31, 2021.

The following tables present the activity in the allowance for credit losses by class for the three month periods ended September 30, 2022 and 2021.

 

September 30, 2022

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

22,665

 

 

$

13,209

 

 

$

6,818

 

 

$

1,007

 

 

$

2,289

 

 

$

2,250

 

 

$

48,238

 

Provision for credit losses

 

 

(1,712

)

 

 

911

 

 

 

486

 

 

 

40

 

 

 

(202

)

 

 

341

 

 

 

(136

)

Loans charged-off

 

 

(612

)

 

 

(706

)

 

 

(51

)

 

 

 

 

 

(44

)

 

 

(266

)

 

 

(1,679

)

Recoveries

 

 

7

 

 

 

1

 

 

 

7

 

 

 

1

 

 

 

 

 

 

60

 

 

 

76

 

Total ending allowance balance

 

$

20,348

 

 

$

13,415

 

 

$

7,260

 

 

$

1,048

 

 

$

2,043

 

 

$

2,385

 

 

$

46,499

 

 

September 30, 2021

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

15,225

 

 

$

18,690

 

 

$

9,808

 

 

$

847

 

 

$

4,695

 

 

$

2,569

 

 

$

51,834

 

Provision for credit losses

 

 

(2,723

)

 

 

5,473

 

 

 

(1,473

)

 

 

145

 

 

 

(366

)

 

 

2

 

 

 

1,058

 

Loans charged-off

 

 

(116

)

 

 

(37

)

 

 

 

 

 

(3

)

 

 

 

 

 

(200

)

 

 

(356

)

Recoveries

 

 

96

 

 

 

1

 

 

 

4

 

 

 

15

 

 

 

 

 

 

111

 

 

 

227

 

Total ending allowance balance

 

$

12,482

 

 

$

24,127

 

 

$

8,339

 

 

$

1,004

 

 

$

4,329

 

 

$

2,482

 

 

$

52,763

 

The following tables present the activity in the allowance for credit losses by class for the nine month periods ended September 30, 2022 and 2021.

 

September 30, 2022

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

22,478

 

 

$

12,248

 

 

$

5,560

 

 

$

2,235

 

 

$

3,756

 

 

$

2,088

 

 

$

48,365

 

Provision for credit losses

 

 

(1,293

)

 

 

1,833

 

 

 

1,758

 

 

 

(1,195

)

 

 

(1,668

)

 

 

841

 

 

 

276

 

Loans charged-off

 

 

(906

)

 

 

(785

)

 

 

(99

)

 

 

 

 

 

(45

)

 

 

(760

)

 

 

(2,595

)

Recoveries

 

 

69

 

 

 

119

 

 

 

41

 

 

 

8

 

 

 

 

 

 

216

 

 

 

453

 

Total ending allowance balance

 

$

20,348

 

 

$

13,415

 

 

$

7,260

 

 

$

1,048

 

 

$

2,043

 

 

$

2,385

 

 

$

46,499

 

 

September 30, 2021

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance, prior to adoption
   of ASC 326

 

$

9,012

 

 

$

12,456

 

 

$

4,559

 

 

$

904

 

 

$

758

 

 

$

6,020

 

 

$

33,709

 

Cumulative effect adjustment of adopting
   ASC 326

 

 

5,612

 

 

 

4,167

 

 

 

8,870

 

 

 

167

 

 

 

(207

)

 

 

(2,877

)

 

 

15,732

 

Impact of adopting ASC 326 - PCD loans

 

 

4,571

 

 

 

(218

)

 

 

220

 

 

 

960

 

 

 

4,905

 

 

 

 

 

 

10,438

 

Provision for credit losses

 

 

(6,767

)

 

 

7,749

 

 

 

(5,307

)

 

 

(555

)

 

 

(1,130

)

 

 

(345

)

 

 

(6,355

)

Loans charged-off

 

 

(169

)

 

 

(98

)

 

 

(12

)

 

 

(505

)

 

 

(1

)

 

 

(575

)

 

 

(1,360

)

Recoveries

 

 

223

 

 

 

71

 

 

 

9

 

 

 

33

 

 

 

4

 

 

 

259

 

 

 

599

 

Total ending allowance balance

 

$

12,482

 

 

$

24,127

 

 

$

8,339

 

 

$

1,004

 

 

$

4,329

 

 

$

2,482

 

 

$

52,763

 

 

 

The following tables present the recorded investment in loans and the balance in the allowance for credit losses by portfolio and class based on method to determine allowance for credit loss as of September 30, 2022, and December 31, 2021.

 

September 30, 2022

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit losses

 

$

856

 

 

$

1,606

 

 

$

816

 

 

$

253

 

 

$

1,745

 

 

$

67

 

 

$

5,343

 

Collectively evaluated for credit losses

 

 

19,492

 

 

 

11,809

 

 

 

6,444

 

 

 

795

 

 

 

298

 

 

 

2,318

 

 

 

41,156

 

Total

 

$

20,348

 

 

$

13,415

 

 

$

7,260

 

 

$

1,048

 

 

$

2,043

 

 

$

2,385

 

 

$

46,499

 

Loan Balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit losses

 

$

5,528

 

 

$

8,345

 

 

$

3,407

 

 

$

3,882

 

 

$

4,558

 

 

$

289

 

 

$

26,009

 

Collectively evaluated for credit losses

 

 

1,650,118

 

 

 

599,377

 

 

 

570,024

 

 

 

196,533

 

 

 

110,490

 

 

 

102,472

 

 

 

3,229,014

 

Total

 

$

1,655,646

 

 

$

607,722

 

 

$

573,431

 

 

$

200,415

 

 

$

115,048

 

 

$

102,761

 

 

$

3,255,023

 

 

 

December 31, 2021

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Residential
Real
Estate

 

 

Agricultural
Real
Estate

 

 

Agricultural

 

 

Consumer

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit losses

 

$

4,381

 

 

$

3,650

 

 

$

892

 

 

$

1,488

 

 

$

3,546

 

 

$

75

 

 

$

14,032

 

Collectively evaluated for credit losses

 

 

18,097

 

 

 

8,598

 

 

 

4,668

 

 

 

747

 

 

 

210

 

 

 

2,013

 

 

 

34,333

 

Total

 

$

22,478

 

 

$

12,248

 

 

$

5,560

 

 

$

2,235

 

 

$

3,756

 

 

$

2,088

 

 

$

48,365

 

Loan Balance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit losses

 

$

45,421

 

 

$

13,786

 

 

$

5,362

 

 

$

14,959

 

 

$

13,049

 

 

$

357

 

 

$

92,934

 

Collectively evaluated for credit losses

 

 

1,440,727

 

 

 

553,711

 

 

 

632,725

 

 

 

183,371

 

 

 

153,926

 

 

 

98,233

 

 

 

3,062,693

 

Total

 

$

1,486,148

 

 

$

567,497

 

 

$

638,087

 

 

$

198,330

 

 

$

166,975

 

 

$

98,590

 

 

$

3,155,627

 

 

The following table presents information related to nonaccrual loans at September 30, 2022, and December 31, 2021.

 

 

September 30, 2022

 

 

 

Unpaid
Principal
Balance

 

 

Recorded
Investment

 

 

Allowance for
Credit Losses
Allocated

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

4,590

 

 

$

2,965

 

 

$

 

Commercial and industrial

 

 

2,745

 

 

 

1,995

 

 

 

 

Residential real estate

 

 

30

 

 

 

 

 

 

 

Agricultural real estate

 

 

2,812

 

 

 

1,758

 

 

 

 

Agricultural

 

 

9

 

 

 

9

 

 

 

 

Consumer

 

 

17

 

 

 

10

 

 

 

 

Subtotal

 

 

10,203

 

 

 

6,737

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

2,574

 

 

 

2,376

 

 

 

775

 

Commercial and industrial

 

 

9,903

 

 

 

5,541

 

 

 

1,246

 

Residential real estate

 

 

3,534

 

 

 

3,269

 

 

 

807

 

Agricultural real estate

 

 

1,965

 

 

 

1,510

 

 

 

237

 

Agricultural

 

 

6,231

 

 

 

3,432

 

 

 

1,478

 

Consumer

 

 

324

 

 

 

264

 

 

 

66

 

Subtotal

 

 

24,531

 

 

 

16,392

 

 

 

4,609

 

Total

 

$

34,734

 

 

$

23,129

 

 

$

4,609

 

 

 

 

December 31, 2021

 

 

 

Unpaid
Principal
Balance

 

 

Recorded
Investment

 

 

Allowance for
Credit Losses
Allocated

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

 

 

$

 

 

$

 

Commercial and industrial

 

 

6,060

 

 

 

1,964

 

 

 

 

Residential real estate

 

 

609

 

 

 

429

 

 

 

 

Agricultural real estate

 

 

1,795

 

 

 

1,660

 

 

 

 

Agricultural

 

 

 

 

 

 

 

 

 

Consumer

 

 

49

 

 

 

49

 

 

 

 

Subtotal

 

 

8,513

 

 

 

4,102

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

7,690

 

 

 

6,833

 

 

 

1,632

 

Commercial and industrial

 

 

4,976

 

 

 

4,593

 

 

 

1,800

 

Residential real estate

 

 

5,170

 

 

 

4,646

 

 

 

888

 

Agricultural real estate

 

 

3,726

 

 

 

2,738

 

 

 

637

 

Agricultural

 

 

8,836

 

 

 

6,175

 

 

 

2,307

 

Consumer

 

 

314

 

 

 

274

 

 

 

74

 

Subtotal

 

 

30,712

 

 

 

25,259

 

 

 

7,338

 

Total

 

$

39,225

 

 

$

29,361

 

 

$

7,338

 

 

 

The table below presents average recorded investment and interest income related to nonaccrual loans for the three and nine months ended September 30, 2022, and 2021. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality.

 

 

As of and for the three months ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

2,646

 

 

$

 

 

$

 

 

$

 

Commercial and industrial

 

 

1,979

 

 

 

157

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural real estate

 

 

1,449

 

 

 

 

 

 

3,022

 

 

 

 

Agricultural

 

 

5

 

 

 

 

 

 

884

 

 

 

 

Consumer

 

 

5

 

 

 

1

 

 

 

 

 

 

 

Subtotal

 

 

6,084

 

 

 

158

 

 

 

3,906

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

2,577

 

 

 

20

 

 

 

7,107

 

 

 

1

 

Commercial and industrial

 

 

3,464

 

 

 

97

 

 

 

36,720

 

 

 

 

Residential real estate

 

 

3,086

 

 

 

18

 

 

 

2,870

 

 

 

24

 

Agricultural real estate

 

 

1,924

 

 

 

2

 

 

 

2,501

 

 

 

 

Agricultural

 

 

3,594

 

 

 

 

 

 

7,576

 

 

 

69

 

Consumer

 

 

266

 

 

 

2

 

 

 

215

 

 

 

1

 

Subtotal

 

 

14,911

 

 

 

139

 

 

 

56,989

 

 

 

95

 

Total

 

$

20,995

 

 

$

297

 

 

$

60,895

 

 

$

95

 

 

 

 

 

As of and for the nine months ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

 

Average Recorded Investment

 

 

Interest Income Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,528

 

 

$

 

 

$

421

 

 

$

3

 

Commercial and industrial

 

 

1,480

 

 

 

157

 

 

 

161

 

 

 

35

 

Residential real estate

 

 

384

 

 

 

1

 

 

 

51

 

 

 

2

 

Agricultural real estate

 

 

1,554

 

 

 

 

 

 

2,307

 

 

 

82

 

Agricultural

 

 

2

 

 

 

 

 

 

2,156

 

 

 

 

Consumer

 

 

15

 

 

 

1

 

 

 

 

 

 

 

Subtotal

 

 

4,963

 

 

 

159

 

 

 

5,096

 

 

 

122

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

 

3,702

 

 

 

20

 

 

 

7,022

 

 

 

19

 

Commercial and industrial

 

 

3,808

 

 

 

97

 

 

 

31,203

 

 

 

119

 

Residential real estate

 

 

3,559

 

 

 

19

 

 

 

2,843

 

 

 

26

 

Agricultural real estate

 

 

2,251

 

 

 

5

 

 

 

3,346

 

 

 

54

 

Agricultural

 

 

4,437

 

 

 

 

 

 

5,991

 

 

 

113

 

Consumer

 

 

291

 

 

 

2

 

 

 

245

 

 

 

2

 

Subtotal

 

 

18,048

 

 

 

143

 

 

 

50,650

 

 

 

333

 

Total

 

$

23,011

 

 

$

302

 

 

$

55,746

 

 

$

455

 

 

The following tables present the aging of the recorded investment in past due loans as of September 30, 2022, and December 31, 2021, by portfolio and class of loans.

September 30, 2022

 

30 - 59
Days
Past Due

 

 

60 - 89
Days
Past Due

 

 

Greater
Than
90 Days
Past
Due Still On
Accrual

 

 

Nonaccrual

 

 

Loans Not
Past Due

 

 

Total

 

Commercial real estate

 

$

787

 

 

$

940

 

 

$

 

 

$

5,341

 

 

$

1,648,578

 

 

$

1,655,646

 

Commercial and industrial

 

 

1,545

 

 

 

201

 

 

 

 

 

 

7,536

 

 

 

598,440

 

 

 

607,722

 

Residential real estate

 

 

626

 

 

 

2,525

 

 

 

 

 

 

3,269

 

 

 

567,011

 

 

 

573,431

 

Agricultural real estate

 

 

26

 

 

 

2

 

 

 

 

 

 

3,268

 

 

 

197,119

 

 

 

200,415

 

Agricultural

 

 

200

 

 

 

117

 

 

 

 

 

 

3,441

 

 

 

111,290

 

 

 

115,048

 

Consumer

 

 

490

 

 

 

77

 

 

 

 

 

 

274

 

 

 

101,920

 

 

 

102,761

 

Total

 

$

3,674

 

 

$

3,862

 

 

$

 

 

$

23,129

 

 

$

3,224,358

 

 

$

3,255,023

 

 

 

December 31, 2021

 

30 - 59
Days
Past Due

 

 

60 - 89
Days
Past Due

 

 

Greater
Than
90 Days
Past
Due Still On
Accrual

 

 

Nonaccrual

 

 

Loans Not
Past Due

 

 

Total

 

Commercial real estate

 

$

4,633

 

 

$

408

 

 

$

256

 

 

$

6,833

 

 

$

1,474,018

 

 

$

1,486,148

 

Commercial and industrial

 

 

424

 

 

 

88

 

 

 

 

 

 

6,557

 

 

 

560,428

 

 

 

567,497

 

Residential real estate

 

 

620

 

 

 

1,126

 

 

 

 

 

 

5,075

 

 

 

631,266

 

 

 

638,087

 

Agricultural real estate

 

 

28

 

 

 

57

 

 

 

 

 

 

4,398

 

 

 

193,847

 

 

 

198,330

 

Agricultural

 

 

5

 

 

 

 

 

 

 

 

 

6,175

 

 

 

160,795

 

 

 

166,975

 

Consumer

 

 

316

 

 

 

61

 

 

 

 

 

 

323

 

 

 

97,890

 

 

 

98,590

 

Total

 

$

6,026

 

 

$

1,740

 

 

$

256

 

 

$

29,361

 

 

$

3,118,244

 

 

$

3,155,627

 

 

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. Loans that participated in the short-term deferral program are not automatically considered classified solely due to a deferral, are subject to ongoing monitoring and will be downgraded or placed on nonaccrual if a noted weakness exists. The Company uses the following definitions for risk ratings.

Pass: Loans classified as pass include all loans that do not fall under one of the three following categories.

Special Mention: Loans classified as special mention have a 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 Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

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

Based on the most recent analysis performed, the risk category of loans, by type and year of origination, at September 30, 2022, is as follows.

September 30, 2022

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

Prior

 

 

Revolving Loans
Amortized Cost

 

 

Revolving Loans
Converted to Term

 

 

Total

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

301,156

 

 

$

266,358

 

 

$

204,570

 

 

$

101,138

 

 

$

122,674

 

 

$

183,136

 

 

$

466,019

 

 

$

762

 

 

$

1,645,813

 

Special mention

 

 

294

 

 

 

220

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

 

 

 

 

 

 

1,086

 

Substandard

 

 

79

 

 

 

4,346

 

 

 

364

 

 

 

119

 

 

 

 

 

 

3,506

 

 

 

333

 

 

 

 

 

 

8,747

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial real estate

 

$

301,529

 

 

$

270,924

 

 

$

204,934

 

 

$

101,257

 

 

$

122,674

 

 

$

187,214

 

 

$

466,352

 

 

$

762

 

 

$

1,655,646

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

154,208

 

 

$

93,861

 

 

$

73,112

 

 

$

43,101

 

 

$

7,352

 

 

$

12,248

 

 

$

187,129

 

 

$

6,857

 

 

$

577,868

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

683

 

 

 

3,857

 

 

 

 

 

 

 

 

 

4,540

 

Substandard

 

 

314

 

 

 

4,227

 

 

 

2,208

 

 

 

10,144

 

 

 

1,470

 

 

 

811

 

 

 

6,140

 

 

 

 

 

 

25,314

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial and industrial

 

$

154,522

 

 

$

98,088

 

 

$

75,320

 

 

$

53,245

 

 

$

9,505

 

 

$

16,916

 

 

$

193,269

 

 

$

6,857

 

 

$

607,722

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

24,760

 

 

$

304,919

 

 

$

6,340

 

 

$

14,632

 

 

$

49,317

 

 

$

109,027

 

 

$

60,725

 

 

$

277

 

 

$

569,997

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

 

 

 

50

 

 

 

188

 

 

 

313

 

 

 

2,800

 

 

 

83

 

 

 

 

 

 

3,434

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total residential real estate

 

$

24,760

 

 

$

304,919

 

 

$

6,390

 

 

$

14,820

 

 

$

49,630

 

 

$

111,827

 

 

$

60,808

 

 

$

277

 

 

$

573,431

 

Agricultural real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

26,733

 

 

$

21,192

 

 

$

29,551

 

 

$

13,296

 

 

$

7,995

 

 

$

20,043

 

 

$

75,339

 

 

$

300

 

 

$

194,449

 

Special mention

 

 

874

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

612

 

 

 

750

 

 

 

 

 

 

2,236

 

Substandard

 

 

31

 

 

 

1,353

 

 

 

 

 

 

116

 

 

 

491

 

 

 

1,702

 

 

 

37

 

 

 

 

 

 

3,730

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural real estate

 

$

27,638

 

 

$

22,545

 

 

$

29,551

 

 

$

13,412

 

 

$

8,486

 

 

$

22,357

 

 

$

76,126

 

 

$

300

 

 

$

200,415

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

17,159

 

 

$

9,796

 

 

$

10,165

 

 

$

3,363

 

 

$

2,484

 

 

$

2,353

 

 

$

62,356

 

 

$

150

 

 

$

107,826

 

Special mention

 

 

 

 

 

 

 

 

1

 

 

 

92

 

 

 

22

 

 

 

375

 

 

 

665

 

 

 

 

 

 

1,155

 

Substandard

 

 

 

 

 

1,017

 

 

 

1,838

 

 

 

2,003

 

 

 

397

 

 

 

230

 

 

 

582

 

 

 

 

 

 

6,067

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural

 

$

17,159

 

 

$

10,813

 

 

$

12,004

 

 

$

5,458

 

 

$

2,903

 

 

$

2,958

 

 

$

63,603

 

 

$

150

 

 

$

115,048

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

48,732

 

 

$

19,701

 

 

$

9,513

 

 

$

4,002

 

 

$

1,752

 

 

$

3,820

 

 

$

14,976

 

 

$

1

 

 

$

102,497

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

 

 

 

102

 

 

 

25

 

 

 

86

 

 

 

16

 

 

 

35

 

 

 

 

 

 

 

 

 

264

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total consumer

 

$

48,732

 

 

$

19,803

 

 

$

9,538

 

 

$

4,088

 

 

$

1,768

 

 

$

3,855

 

 

$

14,976

 

 

$

1

 

 

$

102,761

 

Total loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

572,748

 

 

$

715,827

 

 

$

333,251

 

 

$

179,532

 

 

$

191,574

 

 

$

330,627

 

 

$

866,544

 

 

$

8,347

 

 

$

3,198,450

 

Special mention

 

 

1,168

 

 

 

220

 

 

 

1

 

 

 

92

 

 

 

705

 

 

 

5,416

 

 

 

1,415

 

 

 

 

 

 

9,017

 

Substandard

 

 

424

 

 

 

11,045

 

 

 

4,485

 

 

 

12,656

 

 

 

2,687

 

 

 

9,084

 

 

 

7,175

 

 

 

 

 

 

47,556

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

$

574,340

 

 

$

727,092

 

 

$

337,737

 

 

$

192,280

 

 

$

194,966

 

 

$

345,127

 

 

$

875,134

 

 

$

8,347

 

 

$

3,255,023

 

 

Based on the analysis performed at December 31, 2021, the risk category of loans, by type and year of origination is as follows.

December 31, 2021

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

Revolving Loans
Amortized Cost

 

 

Revolving Loans
Converted to Term

 

 

Total

 

Commercial real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

301,947

 

 

$

212,444

 

 

$

159,374

 

 

$

134,465

 

 

$

72,249

 

 

$

164,363

 

 

$

409,109

 

 

$

594

 

 

$

1,454,545

 

Special mention

 

 

126

 

 

 

885

 

 

 

 

 

 

11,817

 

 

 

1,168

 

 

 

8,705

 

 

 

 

 

 

 

 

 

22,701

 

Substandard

 

 

1,687

 

 

 

401

 

 

 

145

 

 

 

77

 

 

 

828

 

 

 

5,764

 

 

 

 

 

 

 

 

 

8,902

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial real estate

 

$

303,760

 

 

$

213,730

 

 

$

159,519

 

 

$

146,359

 

 

$

74,245

 

 

$

178,832

 

 

$

409,109

 

 

$

594

 

 

$

1,486,148

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

170,263

 

 

$

100,457

 

 

$

57,955

 

 

$

11,019

 

 

$

17,327

 

 

$

8,855

 

 

$

155,181

 

 

$

9,726

 

 

$

530,783

 

Special mention

 

 

19

 

 

 

 

 

 

1,958

 

 

 

1,482

 

 

 

284

 

 

 

5,750

 

 

 

 

 

 

 

 

 

9,493

 

Substandard

 

 

4,200

 

 

 

5,410

 

 

 

10,238

 

 

 

1,417

 

 

 

444

 

 

 

43

 

 

 

5,469

 

 

 

 

 

 

27,221

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial and industrial

 

$

174,482

 

 

$

105,867

 

 

$

70,151

 

 

$

13,918

 

 

$

18,055

 

 

$

14,648

 

 

$

160,650

 

 

$

9,726

 

 

$

567,497

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

336,775

 

 

$

24,633

 

 

$

22,520

 

 

$

60,461

 

 

$

34,453

 

 

$

102,363

 

 

$

51,584

 

 

$

184

 

 

$

632,973

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Substandard

 

 

 

 

 

79

 

 

 

48

 

 

 

159

 

 

 

1,909

 

 

 

2,740

 

 

 

154

 

 

 

 

 

 

5,089

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total residential real estate

 

$

336,775

 

 

$

24,712

 

 

$

22,568

 

 

$

60,620

 

 

$

36,362

 

 

$

105,128

 

 

$

51,738

 

 

$

184

 

 

$

638,087

 

Agricultural real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

38,412

 

 

$

36,667

 

 

$

18,442

 

 

$

12,142

 

 

$

14,432

 

 

$

21,792

 

 

$

42,541

 

 

$

 

 

$

184,428

 

Special mention

 

 

682

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

456

 

 

 

32

 

 

 

 

 

 

1,210

 

Substandard

 

 

1,705

 

 

 

206

 

 

 

6,020

 

 

 

592

 

 

 

2,530

 

 

 

554

 

 

 

1,085

 

 

 

 

 

 

12,692

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural real estate

 

$

40,799

 

 

$

36,873

 

 

$

24,462

 

 

$

12,734

 

 

$

17,002

 

 

$

22,802

 

 

$

43,658

 

 

$

 

 

$

198,330

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

27,637

 

 

$

17,393

 

 

$

6,391

 

 

$

2,399

 

 

$

2,930

 

 

$

1,593

 

 

$

93,982

 

 

$

172

 

 

$

152,497

 

Special mention

 

 

 

 

 

 

 

 

90

 

 

 

1,299

 

 

 

 

 

 

645

 

 

 

 

 

 

 

 

 

2,034

 

Substandard

 

 

3,456

 

 

 

2,112

 

 

 

1,414

 

 

 

1,651

 

 

 

137

 

 

 

1,164

 

 

 

2,510

 

 

 

 

 

 

12,444

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural

 

$

31,093

 

 

$

19,505

 

 

$

7,895

 

 

$

5,349

 

 

$

3,067

 

 

$

3,402

 

 

$

96,492

 

 

$

172

 

 

$

166,975

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

40,692

 

 

$

15,171

 

 

$

7,186

 

 

$

3,640

 

 

$

2,228

 

 

$

3,551

 

 

$

25,799

 

 

$

1

 

 

$

98,268

 

Special mention

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Substandard

 

 

6

 

 

 

154

 

 

 

94

 

 

 

15

 

 

 

24

 

 

 

29

 

 

 

 

 

 

 

 

 

322

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total consumer

 

$

40,698

 

 

$

15,325

 

 

$

7,280

 

 

$

3,655

 

 

$

2,252

 

 

$

3,580

 

 

$

25,799

 

 

$

1

 

 

$

98,590

 

Total loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk rating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

915,726

 

 

$

406,765

 

 

$

271,868

 

 

$

224,126

 

 

$

143,619

 

 

$

302,517

 

 

$

778,196

 

 

$

10,677

 

 

$

3,053,494

 

Special mention

 

 

827

 

 

 

885

 

 

 

2,048

 

 

 

14,598

 

 

 

1,492

 

 

 

15,581

 

 

 

32

 

 

 

 

 

 

35,463

 

Substandard

 

 

11,054

 

 

 

8,362

 

 

 

17,959

 

 

 

3,911

 

 

 

5,872

 

 

 

10,294

 

 

 

9,218

 

 

 

 

 

 

66,670

 

Doubtful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans

 

$

927,607

 

 

$

416,012

 

 

$

291,875

 

 

$

242,635

 

 

$

150,983

 

 

$

328,392

 

 

$

787,446

 

 

$

10,677

 

 

$

3,155,627

 

Troubled Debt Restructurings (“TDR”)

Consistent with accounting and regulatory guidance, the Company recognizes a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that would not normally be considered. Regardless of the form of concession granted, the Company’s objective in offering a TDR is to increase the probability of repayment of a borrower’s loans. Qualified modifications under the CARES Act or Consolidated Appropriations Act ("CAA") are not considered TDRs and have been separately disclosed following the TDR discussion.

The following table summarizes the Company’s TDRs by accrual status at September 30, 2022, and December 31, 2021. The allowance for credit losses on nonaccrual loans represents specific loan reserves, while the allowance on accrual loans represents collectively evaluated estimated losses.

September 30, 2022

 

Nonaccrual Loan Balance

 

 

Nonaccural Related
Allowance for
Credit Losses

 

 

Accrual Loan Balance

 

 

Accrual Related
Allowance for
Credit Losses

 

 

Total TDR
Loan Balance

 

 

Total Related
Allowance for
Credit Losses

 

Commercial real estate

 

$

4,653

 

 

$

610

 

 

$

2,937

 

 

$

90

 

 

$

7,590

 

 

$

700

 

Commercial and industrial

 

 

4,103

 

 

 

888

 

 

 

 

 

 

 

 

 

4,103

 

 

 

888

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural real estate

 

 

2,863

 

 

 

126

 

 

 

 

 

 

 

 

 

2,863

 

 

 

126

 

Agricultural

 

 

946

 

 

 

265

 

 

 

1,650

 

 

 

271

 

 

 

2,596

 

 

 

536

 

Total troubled debt restructurings

 

$

12,565

 

 

$

1,889

 

 

$

4,587

 

 

$

361

 

 

$

17,152

 

 

$

2,250

 

 

December 31, 2021

 

Nonaccrual

 

 

Related
Allowance for
Credit Losses

 

Commercial real estate

 

$

5,784

 

 

$

1,370

 

Commercial and industrial

 

 

54

 

 

 

27

 

Residential real estate

 

 

1,547

 

 

 

13

 

Agricultural real estate

 

 

2,122

 

 

 

488

 

Agricultural

 

 

1,292

 

 

 

480

 

Total troubled debt restructurings

 

$

10,799

 

 

$

2,378

 

 

At September 30, 2022, and December 31, 2021, there were no commitments to lend additional amounts on these loans.

There were no loan modifications during the three month period ending September 30, 2022, and $8,328 in loan modifications during the nine month period ending September 30, 2022, that were considered to be troubled debt restructurings. There was a total of $1,460 in loan modifications considered to be troubled debt restructurings that occurred during the three and nine month periods ended September 30, 2021. There was $89 and $104 in interest income recognized on loans modified as TDRs during the three and nine month periods ended September 30, 2022.

The following table shows loans that subsequently defaulted on their modified terms within the twelve months preceding September 30, 2022, and September 30, 2021. Default is determined at 90 or more days past due, charge-off, or foreclosure.

 

 

As of September 30,

 

 

 

2022

 

 

2021

 

Commercial and industrial

 

$

3,778

 

 

$

 

Agricultural

 

 

1,329

 

 

 

 

Total TDR loans subsequently defaulted

 

$

5,107

 

 

$

 

As of September 30, 2022, in connection with the COVID-19 relief provided by the CARES Act, the Company had no loans deferred as compared to December 31, 2021, with 20 deferrals of either the full loan payment or the principal component of the loan payment on outstanding loan balances of $36.3 million. These deferrals were not considered troubled debt restructurings based on the CARES Act or regulatory guidance.

The following table lists loans included in the payment deferral program under the CARES Act by deferment type and category at December 31, 2021. There were no CARES Act deferred loans at September 30, 2022.

 

 

December 31, 2021

 

 

 

Commercial
Real Estate

 

 

Commercial
and
Industrial

 

 

Total

 

3 months principal and interest, then 6 months principal only

 

$

31,884

 

 

$

3,052

 

 

$

34,936

 

6 months principal and interest, then 9 months principal only

 

 

971

 

 

 

398

 

 

 

1,369

 

Total loans

 

$

32,855

 

 

$

3,450

 

 

$

36,305

 

 

 

The classification status of loans participating in the payment deferral program at December 31, 2021, is listed below. There were no such deferrals at September 30, 2022.

 

 

December 31, 2021

 

 

 

Unclassified

 

 

Classified

 

 

Total

 

Commercial real estate

 

$

32,855

 

 

$

 

 

$

32,855

 

Commercial and industrial

 

 

3,450

 

 

 

 

 

 

3,450

 

Total loans

 

$

36,305

 

 

$

 

 

$

36,305

 

 

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit loss expense recognized within other non-interest expense on the consolidated statements of income and included in other liabilities on the consolidated balance sheets. The estimated credit loss includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate of expected credit loss is based on the historical loss rate for the class of loan the commitments would be classified as if funded.

The following table lists allowance for credit losses on off-balance-sheet credit exposures as of September 30, 2022, and December 31, 2021.

 

Allowance for
Credit Losses

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Commercial real estate

 

$

319

 

 

$

484

 

Commercial and industrial

 

 

851

 

 

 

1,323

 

Residential real estate

 

 

46

 

 

 

16

 

Agricultural

 

 

2

 

 

 

3

 

Consumer

 

 

285

 

 

 

397

 

Total allowance for credit losses

 

$

1,503

 

 

$

2,223