LOANS AND ALLOWANCE (Tables)

6 Months Ended

Jun. 30, 2023

Summary of Composition of Loan Portfolio by Loan Class

The following table illustrates the composition of the Corporation’s loan portfolio by loan class for the periods indicated:


	June 30, 2023		December 31, 2022

Commercial and industrial loans	$	3,531,395	$	3,437,126
Agricultural land, production and other loans to farmers	230,003		241,793
Real estate loans:
Construction	949,918		835,582
Commercial real estate, non-owner occupied	2,379,819		2,407,475
Commercial real estate, owner occupied	1,179,739		1,246,528
Residential	2,248,473		2,096,655
Home equity	614,366		630,632
Individuals' loans for household and other personal expenditures	172,896		175,211
Public finance and other commercial loans	963,624		932,892
Loans	$	12,270,233	$	12,003,894

Summary of Credit Quality of Loan Portfolio by Loan Class

The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.


	June 30, 2023
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2023		2022		2021		2020		2019		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	729,958	$	621,373	$	324,532	$	104,165	$	97,712	$	62,081	$	1,370,356	$	30	$	3,310,207
Special Mention	10,124		5,537		19,973		5,729		4,188		924		54,818		—		101,293
Substandard	1,470		34,900		11,649		10,618		4,347		2,013		52,518		—		117,515
Doubtful	—		—		1,552		—		—		—		828		—		2,380

Total Commercial and industrial loans	741,552		661,810		357,706		120,512		106,247		65,018		1,478,520		30		3,531,395
Current period gross write-offs	196		85		340		109		57		92		—		—		879
Agricultural land, production and other loans to farmers
Pass	19,826		40,472		34,147		32,710		14,360		29,187		57,453		—		228,155
Special Mention	—		266		736		—		—		125		—		—		1,127
Substandard	35		163		—		458		—		65		—		—		721


Total Agricultural land, production and other loans to farmers	19,861		40,901		34,883		33,168		14,360		29,377		57,453		—		230,003
Real estate loans:
Construction
Pass	261,410		287,961		267,572		56,696		3,184		2,586		18,735		—		898,144
Special Mention	42,961		—		—		—		—		—		—		—		42,961
Substandard	15		3,612		5,186		—		—		—		—		—		8,813


Total Construction	304,386		291,573		272,758		56,696		3,184		2,586		18,735		—		949,918
Commercial real estate, non-owner occupied
Pass	186,868		520,251		571,103		473,530		159,184		236,905		28,807		—		2,176,648
Special Mention	35,854		23,713		6,185		20,666		18,544		28,369		49		—		133,380
Substandard	18,795		11,346		191		22,636		—		16,101		722		—		69,791


Total Commercial real estate, non-owner occupied	241,517		555,310		577,479		516,832		177,728		281,375		29,578		—		2,379,819
Current period gross write-offs	—		2		—		—		—		—		—		—		2
Commercial real estate, owner occupied
Pass	78,115		219,693		291,902		285,053		104,801		101,825		26,379		—		1,107,768
Special Mention	7,061		17,962		5,484		3,946		3,767		4,714		4,085		—		47,019
Substandard	9,347		2,446		324		6,147		1,602		4,424		662		—		24,952


Total Commercial real estate, owner occupied	94,523		240,101		297,710		295,146		110,170		110,963		31,126		—		1,179,739
Current period gross write-offs	—		—		—		—		2		—		—		—		2
Residential
Pass	265,212		719,278		464,773		379,390		110,163		279,528		8,262		67		2,226,673
Special Mention	937		5,008		3,064		1,062		941		3,522		—		—		14,534
Substandard	14		1,805		1,505		1,555		434		1,922		31		—		7,266


Total Residential	266,163		726,091		469,342		382,007		111,538		284,972		8,293		67		2,248,473
Current period gross write-offs	—		42		135		3		—		53		—		—		233
Home equity
Pass	8,165		36,789		67,851		11,793		1,159		5,619		471,557		1,952		604,885
Special Mention	—		931		—		1,214		—		43		4,625		200		7,013
Substandard	63		—		599		—		—		176		1,398		232		2,468


Total Home Equity	8,228		37,720		68,450		13,007		1,159		5,838		477,580		2,384		614,366
Current period gross write-offs	—		161		182		67		79		993		—		—		1,482
Individuals' loans for household and other personal expenditures
Pass	23,136		56,812		34,167		9,527		3,468		7,294		36,866		306		171,576
Special Mention	57		189		284		65		20		3		424		278		1,320
Substandard	—		—		—		—		—		—		—		—		—


Total Individuals' loans for household and other personal expenditures	23,193		57,001		34,451		9,592		3,488		7,297		37,290		584		172,896
Current period gross write-offs	3		428		183		48		22		137		—		—		821
Public finance and other commercial loans
Pass	33,068		210,497		209,188		158,400		96,918		238,323		17,230		—		963,624




Total Public finance and other commercial loans	33,068		210,497		209,188		158,400		96,918		238,323		17,230		—		963,624
Loans	$	1,732,491	$	2,821,004	$	2,321,967	$	1,585,360	$	624,792	$	1,025,749	$	2,155,805	$	3,065	$	12,270,233
Total current period gross charge-offs	$	199	$	718	$	840	$	227	$	160	$	1,275	$	—	$	—	$	3,419


	December 31, 2022
	Term Loans (amortized cost basis by origination year)												Revolving loans amortized		Revolving loans converted
	2022		2021		2020		2019		2018		Prior		cost basis		to term		Total
Commercial and industrial loans
Pass	$	1,064,687	$	531,504	$	141,985	$	114,999	$	43,136	$	45,310	$	1,302,562	$	5,048	$	3,249,231
Special Mention	2,164		18,005		11,900		5,727		1,012		2,181		27,702		150		68,841
Substandard	27,512		26,571		5,531		10,606		4,674		567		43,450		143		119,054


Total Commercial and industrial loans	1,094,363		576,080		159,416		131,332		48,822		48,058		1,373,714		5,341		3,437,126
Agricultural land, production and other loans to farmers
Pass	44,446		36,299		35,791		15,296		3,752		28,910		73,402		—		237,896
Special Mention	286		784		—		—		281		632		—		—		1,983
Substandard	178		—		490		—		94		1,152		—		—		1,914


Total Agricultural land, production and other loans to farmers	44,910		37,083		36,281		15,296		4,127		30,694		73,402		—		241,793
Real estate loans:
Construction
Pass	366,414		301,986		117,541		11,428		857		3,224		17,167		—		818,617
Special Mention	16,922		—		—		—		—		—		—		—		16,922
Substandard	31		—		—		—		—		12		—		—		43


Total Construction	383,367		301,986		117,541		11,428		857		3,236		17,167		—		835,582
Commercial real estate, non-owner occupied
Pass	560,146		603,254		550,605		168,701		116,859		190,264		31,196		3,803		2,224,828
Special Mention	49,439		4,026		38,268		18,785		11,546		17,992		—		—		140,056
Substandard	21,123		8,128		8,026		—		4,442		872		—		—		42,591


Total Commercial real estate, non-owner occupied	630,708		615,408		596,899		187,486		132,847		209,128		31,196		3,803		2,407,475
Commercial real estate, owner occupied
Pass	260,725		316,665		330,441		114,015		63,816		81,286		33,123		3,378		1,203,449
Special Mention	7,744		6,125		2,245		3,481		1,210		2,984		1,328		—		25,117
Substandard	3,124		1,214		2,376		1,608		2,920		6,720		—		—		17,962


Total Commercial real estate, owner occupied	271,593		324,004		335,062		119,104		67,946		90,990		34,451		3,378		1,246,528
Residential
Pass	758,161		489,301		401,353		114,420		77,768		229,812		5,365		46		2,076,226
Special Mention	2,839		2,924		1,972		513		396		2,588		34		—		11,266
Substandard	1,399		1,824		1,811		805		1,468		1,741		60		55		9,163


Total Residential	762,399		494,049		405,136		115,738		79,632		234,141		5,459		101		2,096,655
Home equity
Pass	40,768		75,670		14,621		1,572		1,348		3,325		486,924		281		624,509
Special Mention	—		—		—		—		115		8		3,698		—		3,821
Substandard	—		79		—		—		65		60		2,098		—		2,302


Total Home Equity	40,768		75,749		14,621		1,572		1,528		3,393		492,720		281		630,632
Individuals' loans for household and other personal expenditures
Pass	67,883		43,639		13,025		5,389		5,830		3,775		35,091		—		174,632
Special Mention	178		134		77		33		28		17		16		—		483
Substandard	1		—		3		—		84		8		—		—		96


Total Individuals' loans for household and other personal expenditures	68,062		43,773		13,105		5,422		5,942		3,800		35,107		—		175,211
Public finance and other commercial loans
Pass	187,125		212,702		165,019		98,687		43,760		204,719		20,880		—		932,892




Total Public finance and other commercial loans	187,125		212,702		165,019		98,687		43,760		204,719		20,880		—		932,892
Loans	$	3,483,295	$	2,680,834	$	1,843,080	$	686,065	$	385,461	$	828,159	$	2,084,096	$	12,904	$	12,003,894

The tables below present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses. Commercial and industrial collateral dependent loans and related allowance increased $9.6 million and $10.9 million, respectively, for the six months ended June 30, 2023. Commercial real estate, owner occupied collateral dependent loans increased $4.5 million for the six months ended June 30, 2023. The total increase in the collateral dependent balance and related allowance was offset by a decrease in the commercial real estate, non-owner occupied segment of $8.0 million and $1.9 million, respectively, for the six months ended June 30, 2023.


	June 30, 2023
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	51,674	$	51,674	$	19,282

Real estate loans:
Construction	—		9		—		9		1
Commercial real estate, non-owner occupied	18,508		—		—		18,508		160
Commercial real estate, owner occupied	11,448		—		—		11,448		337
Residential	—		1,562		—		1,562		247
Home equity	—		278		—		278		41


Loans	$	29,956	$	1,849	$	51,674	$	83,479	$	20,068


	December 31, 2022
	Commercial Real Estate		Residential Real Estate		Other		Total		Allowance on Collateral Dependent Loans
Commercial and industrial loans	$	—	$	—	$	42,101	$	42,101	$	8,367

Real estate loans:
Construction	—		10		—		10		1
Commercial real estate, non-owner occupied	26,534		—		—		26,534		2,064
Commercial real estate, owner occupied	6,986		—		—		6,986		776
Residential	—		2,382		—		2,382		260
Home equity	—		289		—		289		44


Loans	$	33,520	$	2,681	$	42,101	$	78,302	$	11,512

Summary of Past Due Aging of Loan Portfolio by Loan Class

The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, for the periods indicated:


	June 30, 2023
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,515,917	$	5,165	$	492	$	9,821	$	3,531,395	$	278
Agricultural land, production and other loans to farmers	229,976		—		—		27		230,003		—
Real estate loans:
Construction	947,715		1,898		—		305		949,918		—
Commercial real estate, non-owner occupied	2,362,561		6,475		—		10,783		2,379,819		—
Commercial real estate, owner occupied	1,171,933		7,793		13		—		1,179,739		—
Residential	2,228,923		10,033		3,657		5,860		2,248,473		—
Home equity	607,419		3,618		1,055		2,274		614,366		150
Individuals' loans for household and other personal expenditures	171,575		878		443		—		172,896		—

Public finance and other commercial loans	963,624		—		—		—		963,624		—
Loans	$	12,199,643	$	35,860	$	5,660	$	29,070	$	12,270,233	$	428


	December 31, 2022
	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total		Loans > 90 Days or More Past Due And Accruing
Commercial and industrial loans	$	3,429,314	$	4,904	$	434	$	2,474	$	3,437,126	$	1,147
Agricultural land, production and other loans to farmers	241,739		—		—		54		241,793		—
Real estate loans:
Construction	832,716		2,436		418		12		835,582		—
Commercial real estate, non-owner occupied	2,395,495		5,946		881		5,153		2,407,475		264
Commercial real estate, owner occupied	1,241,714		4,495		—		319		1,246,528		—
Residential	2,079,959		8,607		2,278		5,811		2,096,655		—
Home equity	624,543		2,206		1,782		2,101		630,632		326
Individuals' loans for household and other personal expenditures	174,629		343		142		97		175,211		—

Public finance and other commercial loans	932,778		114		—		—		932,892		—
Loans	$	11,952,887	$	29,051	$	5,935	$	16,021	$	12,003,894	$	1,737

Summary of Non-Accrual Loans by Loan class

The following table summarizes the Corporation’s non-accrual loans by loan class for the periods indicated:


	June 30, 2023				December 31, 2022
	Non-Accrual Loans		Non-Accrual Loans with no Allowance for Credit Losses		Non-Accrual Loans		Non-Accrual Loans with no Allowance for Credit Losses
Commercial and industrial loans	$	34,756	$	974	$	3,292	$	481
Agricultural land, production and other loans to farmers	62		—		54		—
Real estate loans:
Construction	305		—		12		—
Commercial real estate, non-owner occupied	12,136		11,142		19,374		280
Commercial real estate, owner occupied	2,923		2,111		3,550		2,784
Residential	16,360		—		13,685		702
Home equity	2,564		—		2,247		—
Individuals' loans for household and other personal expenditures	134		—		110		—

Loans	$	69,240	$	14,227	$	42,324	$	4,247

Summary of Modified Loans

The following tables present the amortized cost basis of loans at June 30, 2023 that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.


	Three Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	3,917	$	110	$	—		0.11	%

Real estate loans:

Commercial real estate, non-owner occupied	—		1,570		—		—			0.07	%
Commercial real estate, owner occupied	5,664		2,032		—		—			0.65	%
Residential	—		14		—		458			0.02	%



Total	$	5,664	$	7,533	$	110	$	458


	Six Months Ended June 30, 2023
	Loan Modifications Made to Borrowers Experiencing Financial Difficulty
	Payment Delay		Term Extension		Combination Interest Rate Reduction & Term Extension		Combination Payment Delay & Term Extension		% of Total Class of Financing Receivable
Commercial and industrial loans	$	—	$	12,897	$	110	$	—	0.37	%
Agricultural land, production and other loans to farmers	—		35		—		—		0.02	%
Real estate loans:
Construction	—		15		—		—		—	%
Commercial real estate, non-owner occupied	—		12,394		5,954		—		0.77	%
Commercial real estate, owner occupied	5,664		2,843		79		—		0.73	%
Residential	—		14		—		458		0.02	%



Total	$	5,664	$	28,198	$	6,143	$	458

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended June 30, 2023.

Three Months Ended June 30, 2023

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Combination Interest Rate Reduction & Term Extension

Combination Payment Delay & Term Extension

Commercial and industrial loans

Extended loans by a weighted average of 6 months.

Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.

Real estate loans:

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 8 months.

Commercial real estate, owner occupied

Provided payment deferrals with weighted average delayed amounts of $4.5 million.

Extended loans by a weighted average of 6 months.

Residential

Extended loans by a weighted average of 11 months.

Provided payment deferrals with weighted average delayed amounts of $3,400. Extended loans by a weighted average of 3 months.

Six Months Ended June 30, 2023

Financial Effect of Loan Modifications

Payment Delay

Term Extension

Combination Interest Rate Reduction & Term Extension

Combination Payment Delay & Term Extension

Commercial and industrial loans

Extended loans by a weighted average of 7 months.

Reduced the weighted average contractual interest rate from 8.25% to 7.10%. Extended loans by a weighted average of 12 months.

Agricultural land, production and other loans to farmers

Extended loans by a weighted average of 60 months.

Real estate loans:

Construction

Extended loans by a weighted average of 24 months.

Commercial real estate, non-owner occupied

Extended loans by a weighted average of 9 months.

Reduced the weighted average contractual interest rate from 7.81% to 7.40%. Extended loans by a weighted average of 41 months.

Commercial real estate, owner occupied

Provided payment deferrals with weighted average delayed amounts of $4.5 million.

Extended loans by a weighted average of 6 months.

Reduced the weighted average contractual interest rate from 10.25% to 6.61%. Extended loans by a weighted average of 12 months.

Residential

Extended loans by a weighted average of 11 months.

Provided payment deferrals with weighted average delayed amounts $3,400. Extended loans by a weighted average of 3 months.

The following tables present the amortized cost basis and payment status of loans that were modified during the three and six months ended June 30, 2023 due to the borrowers experiencing financial difficulty.


	Three Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	4,027	$	—	$	—

Real estate loans:

Commercial real estate, non-owner occupied	1,570		—		—
Commercial real estate, owner occupied	7,696		—		—
Residential	159		108		205



Total	$	13,452	$	108	$	205


	Six Months Ended June 30, 2023
	Payment Status
	Current		30-89 Days Past Due		90+ Days Past Due
Commercial and industrial loans	$	13,007	$	—	$	—
Agricultural land, production and other loans to farmers	35		—		—
Real estate loans:
Construction	15		—		—
Commercial real estate, non-owner occupied	18,348		—		—
Commercial real estate, owner occupied	8,586		—		—
Residential	159		108		205



Total	$	40,150	$	108	$	205

Schedule of Purchased Credit Deteriorated Loans

The carrying amount of those loans is shown in the table below:



	Level One
Purchase price of loans at acquisition	$	41,347
CECL Day 1 PCD ACL	16,599

Par value of acquired loans at acquisition	$	57,946

Summary of Changes in Allowance for Loan Losses

The following tables summarize changes in the allowance for credit losses by loan segment for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2023	$	101,304	$	46,308	$	28,571	$	46,869	$	223,052



Provision for credit losses	7,639		(7,151)		1,502		(1,990)		—


Recoveries on loans	66		—		—		379		445
Loans charged off	(636)		—		—		(1,714)		(2,350)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147



	Six Months Ended June 30, 2023
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2022	$	102,216	$	46,839	$	28,955	$	45,267	$	223,277
Provision for credit losses	6,440		(7,734)		1,118		176		—


Recoveries on loans	596		56		—		637		1,289
Loans charged off	(879)		(4)		—		(2,536)		(3,419)
Balances, June 30, 2023	$	108,373	$	39,157	$	30,073	$	43,544	$	221,147


	Three Months Ended June 30, 2022
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, March 31, 2022	$	77,637	$	53,000	$	20,760	$	44,587	$	195,984
Provision for credit losses	805		(6,393)		5,122		466		—
CECL Day 1 non-PCD provision for credit losses	2,957		5,539		871		4,588		13,955
CECL Day 1 PCD ACL	12,970		2,981		648		—		16,599
Recoveries on loans	569		201		—		399		1,169
Loans charged off	(710)		—		—		(722)		(1,432)
Balances, June 30, 2022	$	94,228	$	55,328	$	27,401	$	49,318	$	226,275



	Six Months Ended June 30, 2022
	Commercial		Commercial Real Estate		Construction		Consumer & Residential		Total
Allowance for credit losses
Balances, December 31, 2021	$	69,935	$	60,665	$	20,206	$	44,591	$	195,397
Provision for credit losses	8,376		(14,643)		5,676		591		—
CECL Day 1 non-PCD provision for credit losses	2,957		5,539		871		4,588		13,955
CECL Day 1 PCD ACL	12,970		2,981		648		—		16,599
Recoveries on loans	708		908		—		605		2,221
Loans charged off	(718)		(122)		—		(1,057)		(1,897)
Balances, June 30, 2022	$	94,228	$	55,328	$	27,401	$	49,318	$	226,275

Summary of Financial Instruments with Off-balance Sheet Risk

Financial instruments with off-balance sheet risk were as follows:


	June 30, 2023		December 31, 2022
Amounts of commitments:
Loan commitments to extend credit	$	5,036,010	$	4,950,724
Standby letters of credit	$	41,498	$	40,784

Summary of Allowance for Credit Losses, Off-balance Sheet

The table below reflects the total allowance for credit losses for the off-balance sheet commitment for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
Balances, March 31, 2023	$	23,300

Provision for credit losses	—
Balances, June 30, 2023	$	23,300


	Six Months Ended June 30, 2023
Balances, December 31, 2022	$	23,300

Provision for credit losses	—
Balances, June 30, 2023	$	23,300


	Three Months Ended June 30, 2022
Balances, March 31, 2022	$	20,500
CECL Day 1 unfunded commitments provision for credit losses	2,800
Provision for credit losses	—
Balances, June 30, 2022	$	23,300


	Six Months Ended June 30, 2022
Balances, December 31, 2021	$	20,500
CECL Day 1 unfunded commitments provision for credit losses	2,800
Provision for credit losses	—
Balances, June 30, 2022	$	23,300