Loans and Allowance for Credit Losses

3 Months Ended

Mar. 31, 2024

Loans and Leases Receivable Disclosure [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure

Loans and Leases and Allowance for Credit Losses

Loans and leases are presented in the Consolidated Statements of Financial Condition net of deferred fees and costs, and discounts related to purchased loans. Net deferred fees were $9.7 million and $8.2 million as of March 31, 2024 and December 31, 2023, respectively, and discounts on purchased loans from acquisitions were $23.9 million and $25.7 million as of March 31, 2024 and December 31, 2023, respectively. The following table provides outstanding balances related to each of our loan types:

 

	March 31, 2024		December 31, 2023
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,593,836	$	1,543,349
Time and demand	1,191,136		1,187,300
Commercial credit cards	12,995		12,906
Equipment finance	279,938		232,944
Time and demand other	109,767		110,199
Real estate construction	559,367		597,735
Construction other	520,320		541,633
Construction residential	39,047		56,102
Residential real estate	2,402,272		2,416,876
Residential first lien	1,727,590		1,739,107
Residential junior lien/home equity	674,682		677,769
Commercial real estate	3,090,950		3,053,152
Multifamily	575,827		551,142
Non-owner occupied	1,789,521		1,772,785
Owner occupied	725,602		729,225
Loans to individuals	1,353,445		1,357,649
Automobile and recreational vehicles	1,277,212		1,277,969
Consumer credit cards	9,464		10,291
Consumer other	66,769		69,389
Total loans and leases	$	8,999,870	$	8,968,761

First Commonwealth’s loan portfolio includes five primary loan categories. When calculating the allowance for credit losses these categories are classified into fourteen portfolio segments. The composition of loans by portfolio segment includes:

Commercial, financial, agricultural and other

Time & Demand - Consists primarily of commercial and industrial loans. This category consists of loans that are typically cash flow dependent and therefore have different risk and loss characteristics than other commercial loans. Loans in this category include revolving and term structures with fixed and variable interest rates. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Commercial Credit Cards - Consists of unsecured credit cards for commercial customers. These commercial credit cards have separate characteristics outside of normal commercial non-real estate loans, as they tend to have shorter overall duration. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Equipment Finance - Consists of loans and leases to finance the purchase of equipment for commercial customers. The risk and loss characteristics are unique for this group due to the type of collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Time & Demand Other - Consists primarily of loans to state and political subdivisions and other commercial loans that have different characteristics than loans in the Time and Demand category. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of household debt to income and economic conditions measured by GDP.

Real estate construction

Construction Other - Consists of construction loans to commercial builders and developers and are secured by the properties under development.

Construction Residential - Consists of loans to finance the construction of residential properties during the construction period. Borrowers are typically individuals who will occupy the completed single family property.

The risk and loss characteristics of these two construction categories are different than other real estate secured categories due to the collateral being at various stages of completion. The nature of the project and type of borrower of the two construction categories provides for unique risk and loss characteristics for each category. The primary macroeconomic drivers for estimating credit losses for construction loans include forecasts of national unemployment and measures of completed construction projects.

Residential real estate

Residential first lien - Consists of loans with collateral of 1-4 family residencies with a senior lien position. The risk and loss characteristics are unique for this group because the collateral for these loans are the borrower’s primary residence. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Residential Junior Lien/Home Equity - Consists of loans with collateral of 1-4 family residencies with an open end line of credit or junior lien position. The junior lien position for the majority of these loans provides a higher risk of loss than other residential real estate loans. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Commercial real estate

Multifamily - Consists of loans secured by commercial multifamily properties. Real estate related to rentals to consumers provide unique risk and loss characteristics. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of commercial real estate values and national unemployment.

Non-owner Occupied - Consists of loans secured by non-owner occupied commercial real estate and provides different loss characteristics than other real estate categories. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Owner Occupied - Consists of loans secured by owner occupied commercial real estate properties. The risk and loss characteristics of this category were considered different than other real estate categories because it is owner occupied and would impact the ability to conduct business. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Loans to individuals

Automobile and Recreational Vehicles - Consists of both direct and indirect loans with automobiles and recreational vehicles held as collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and automobile retention value.

Consumer Credit Cards – Consists of unsecured consumer credit cards. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and economic conditions measured by GDP.

Other Consumer - Consists of lines of credit, student loans and other consumer loans, not secured by real estate or autos. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and retail sales.

The allowance for credit losses is calculated by pooling loans of similar credit risk characteristics and applying a discounted cash flow methodology after incorporating probability of default and loss given default estimates. Probability of default represents an estimate of the likelihood of default, and loss given default measures the expected loss upon default. Inputs impacting the expected losses include a forecast of macroeconomic factors, using a weighted forecast from a nationally recognized firm. Our model incorporates a one-year forecast of macroeconomic factors, after which the factors revert back to the historical mean over a one-year period. The most significant macroeconomic factor used in estimating credit losses is the national unemployment rate. The forecasted value for national unemployment at the beginning of the forecast period was 3.79% and during the one-year forecast period it was projected to average 4.61%, with a peak of 4.87%.

Credit Quality Information

As part of the on-going monitoring of credit quality within the loan portfolio, the following credit worthiness categories are used in grading our loans:

Pass	Acceptable levels of risk exist in the relationship. Includes all loans not classified as OAEM, substandard or doubtful.
Other Assets Especially Mentioned (OAEM)	Potential weaknesses that deserve management’s close attention. The potential weaknesses may result in deterioration of the repayment prospects or weaken the Company’s credit position at some future date. The credit risk may be relatively minor, yet constitute an undesirable risk in light of the circumstances surrounding the specific credit. No loss of principal or interest is expected.
Substandard	Well-defined weakness or a weakness that jeopardizes the repayment of the debt. A loan may be classified as substandard as a result of deterioration of the borrower’s financial condition and repayment capacity. Loans for which repayment plans have not been met or collateral equity margins do not protect the Company may also be classified as substandard.
Doubtful	Loans with the characteristics of substandard loans with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable.

The Company’s internal creditworthiness grading system provides a measurement of credit risk based primarily on an evaluation of the borrower’s cash flow and collateral. Category ratings are reviewed each quarter, at which time management analyzes the results, as well as other external statistics and factors related to loan performance.

The following tables represent our credit risk profile by creditworthiness:

	March 31, 2024
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,495,882	$	67,634	$	30,320	$	—	$	—	$	97,954	$	1,593,836
Time and demand	1,094,746		67,044		29,346		—		—		96,390		1,191,136
Commercial credit cards	12,995		—		—		—		—		—		12,995
Equipment finance	278,374		590		974		—		—		1,564		279,938
Time and demand other	109,767		—		—		—		—		—		109,767
Real estate construction	547,230		—		12,137		—		—		12,137		559,367
Construction other	508,183		—		12,137		—		—		12,137		520,320
Construction residential	39,047		—		—		—		—		—		39,047
Residential real estate	2,391,848		1,121		9,303		—		—		10,424		2,402,272
Residential first lien	1,722,002		776		4,812		—		—		5,588		1,727,590
Residential junior lien/home equity	669,846		345		4,491		—		—		4,836		674,682
Commercial real estate	2,999,754		53,818		37,378		—		—		91,196		3,090,950
Multifamily	563,640		12,110		77		—		—		12,187		575,827
Non-owner occupied	1,746,310		23,915		19,296		—		—		43,211		1,789,521
Owner occupied	689,804		17,793		18,005		—		—		35,798		725,602
Loans to individuals	1,353,299		—		146		—		—		146		1,353,445
Automobile and recreational vehicles	1,277,068		—		144		—		—		144		1,277,212
Consumer credit cards	9,464		—		—		—		—		—		9,464
Consumer other	66,767		—		2		—		—		2		66,769
Total loans and leases	$	8,788,013	$	122,573	$	89,284	$	—	$	—	$	211,857	$	8,999,870

 

	December 31, 2023
			Non-Pass
	Pass		OAEM		Substandard		Doubtful		Loss		Total Non-Pass		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,453,970	$	58,325	$	31,054	$	—	$	—	$	89,379	$	1,543,349
Time and demand	1,098,763		58,325		30,212		—		—		88,537		1,187,300
Commercial credit cards	12,906		—		—		—		—		—		12,906
Equipment finance	232,102		—		842		—		—		842		232,944
Time and demand other	110,199		—		—		—		—		—		110,199
Real estate construction	585,543		—		12,192		—		—		12,192		597,735
Construction other	529,441		—		12,192		—		—		12,192		541,633
Construction residential	56,102		—		—		—		—		—		56,102
Residential real estate	2,405,240		2,768		8,868		—		—		11,636		2,416,876
Residential first lien	1,732,006		2,415		4,686		—		—		7,101		1,739,107
Residential junior lien/home equity	673,234		353		4,182		—		—		4,535		677,769
Commercial real estate	2,956,338		62,038		34,776		—		—		96,814		3,053,152
Multifamily	538,939		12,117		86		—		—		12,203		551,142
Non-owner occupied	1,722,315		31,652		18,818		—		—		50,470		1,772,785
Owner occupied	695,084		18,269		15,872		—		—		34,141		729,225
Loans to individuals	1,357,483		—		166		—		—		166		1,357,649
Automobile and recreational vehicles	1,277,805		—		164		—		—		164		1,277,969
Consumer credit cards	10,291		—		—		—		—		—		10,291
Consumer other	69,387		—		2		—		—		2		69,389
Total loans and leases	$	8,758,574	$	123,131	$	87,056	$	—	$	—	$	210,187	$	8,968,761

The following table summarizes the loan risk rating category by loan type including term loans on an amortized cost basis by origination year:

	March 31, 2024
	Term Loans												Revolving Loans
	2024		2023		2022		2021		2020		Prior				Total
	(dollars in thousands)
Time and demand	$	46,154	$	168,486	$	163,622	$	101,412	$	69,364	$	93,319	$	548,779	$	1,191,136
Pass	46,154		164,991		159,608		80,503		66,737		76,744		500,009		1,094,746
OAEM	—		1,628		3,273		13,338		1,382		11,554		35,869		67,044
Substandard	—		1,867		741		7,571		1,245		5,021		12,901		29,346
Gross charge-offs	—		—		—		—		(49)		(1,414)		(302)		(1,765)
Gross recoveries	—		—		—		—		174		155		18		347
Commercial credit cards	—		—		—		—		—		—		12,995		12,995
Pass	—		—		—		—		—		—		12,995		12,995
Gross charge-offs	—		—		—		—		—		—		(44)		(44)
Gross recoveries	—		—		—		—		—		—		—		—

	March 31, 2024
	Term Loans						Revolving Loans
	2024	2023	2022	2021	2020	Prior		Total
	(dollars in thousands)
Equipment finance	61,316	161,360	57,262	—	—	—	—	279,938
Pass	61,316	160,422	56,636	—	—	—	—	278,374
OAEM	—	344	246	—	—	—	—	590
Substandard	—	594	380	—	—	—	—	974
Gross charge-offs	—	(198)	(153)	—	—	—	—	(351)
Gross recoveries	—	—	15	—	—	—	—	15
Time and demand other	2,070	10,294	5,752	17,536	19,335	48,548	6,232	109,767
Pass	2,070	10,294	5,752	17,536	19,335	48,548	6,232	109,767
Gross charge-offs	—	—	—	—	—	—	(502)	(502)
Gross recoveries	—	—	—	—	—	—	58	58
Construction other	762	117,687	215,866	117,447	37,916	29,943	699	520,320
Pass	762	117,687	212,578	115,936	37,916	22,605	699	508,183
Substandard	—	—	3,288	1,511	—	7,338	—	12,137
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	6	—	6
Construction residential	—	25,982	10,930	1,628	—	29	478	39,047
Pass	—	25,982	10,930	1,628	—	29	478	39,047
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	—	—	—
Residential first lien	12,388	123,144	387,725	515,732	316,062	370,776	1,763	1,727,590
Pass	12,388	122,863	387,095	514,947	315,719	367,304	1,686	1,722,002
OAEM	—	—	—	—	—	699	77	776
Substandard	—	281	630	785	343	2,773	—	4,812
Gross charge-offs	—	(3)	(1)	(20)	—	(4)	—	(28)
Gross recoveries	—	—	—	—	—	43	—	43
Residential junior lien/home equity	5,413	60,252	69,654	42,613	2,528	6,814	487,408	674,682
Pass	5,413	60,241	69,502	42,613	2,528	6,550	482,999	669,846
OAEM	—	—	—	—	—	199	146	345
Substandard	—	11	152	—	—	65	4,263	4,491
Gross charge-offs	—	—	(1)	—	—	—	(51)	(52)
Gross recoveries	—	—	—	—	—	9	7	16
Multifamily	7,562	6,986	164,545	152,469	104,345	139,071	849	575,827
Pass	7,562	6,986	152,877	152,469	104,345	138,552	849	563,640
OAEM	—	—	11,668	—	—	442	—	12,110
Substandard	—	—	—	—	—	77	—	77
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	—	—	—
Non-owner occupied	3,115	190,694	449,134	164,799	153,824	815,050	12,905	1,789,521
Pass	3,115	187,694	448,754	164,799	150,882	778,227	12,839	1,746,310
OAEM	—	—	209	—	2,942	20,764	—	23,915
Substandard	—	3,000	171	—	—	16,059	66	19,296
Gross charge-offs	—	—	(50)	—	—	(233)	—	(283)
Gross recoveries	—	—	—	—	—	44	—	44

	March 31, 2024
	Term Loans												Revolving Loans
	2024		2023		2022		2021		2020		Prior				Total
	(dollars in thousands)
Owner occupied	17,026		106,022		160,114		154,021		71,247		204,337		12,835		725,602
Pass	17,026		105,773		156,340		149,483		65,978		182,547		12,657		689,804
OAEM	—		113		687		4,268		3,629		9,024		72		17,793
Substandard	—		136		3,087		270		1,640		12,766		106		18,005
Gross charge-offs	—		—		—		—		—		—		—		—
Gross recoveries	—		—		—		—		—		29		41		70
Automobile and recreational vehicles	101,789		403,027		424,098		212,541		103,467		32,290		—		1,277,212
Pass	101,789		403,027		424,098		212,484		103,459		32,211		—		1,277,068
Substandard	—		—		—		57		8		79		—		144
Gross charge-offs	—		(303)		(965)		(290)		(167)		(217)		—		(1,942)
Gross recoveries	—		104		132		169		43		105		—		553
Consumer credit cards	—		—		—		—		—		—		9,464		9,464
Pass	—		—		—		—		—		—		9,464		9,464
Gross charge-offs	—		—		—		—		—		—		(150)		(150)
Gross recoveries	—		—		—		—		—		—		18		18
Consumer other	2,050		6,281		3,796		12,543		1,192		3,645		37,262		66,769
Pass	2,050		6,281		3,796		12,543		1,192		3,645		37,260		66,767
Substandard	—		—		—		—		—		—		2		2
Gross charge-offs	—		—		(36)		(45)		(11)		(21)		(333)		(446)
Gross recoveries	—		—		9		1		1		35		45		91
Total loans and leases	$	259,645	$	1,380,215	$	2,112,498	$	1,492,741	$	879,280	$	1,743,822	$	1,131,669	$	8,999,870
Total charge-offs	$	—	$	(504)	$	(1,206)	$	(355)	$	(227)	$	(1,889)	$	(1,382)	$	(5,563)
Total recoveries	$	—	$	104	$	156	$	170	$	218	$	426	$	187	$	1,261

	December 31, 2023
	Term Loans												Revolving Loans
	2023		2022		2021		2020		2019		Prior				Total
	(dollars in thousands)
Time and demand	$	170,285	$	178,568	$	111,288	$	73,487	$	42,502	$	65,419	$	545,751	$	1,187,300
Pass	166,716		174,699		100,779		71,125		29,812		57,660		497,972		1,098,763
OAEM	1,707		3,129		2,948		1,530		10,873		2,553		35,585		58,325
Substandard	1,862		740		7,561		832		1,817		5,206		12,194		30,212
Gross charge-offs	(582)		(4,572)		(18)		(2,195)		(2,364)		(1,283)		(5,133)		(16,147)
Gross recoveries	—		—		—		119		4		128		9		260
Commercial credit cards	—		—		—		—		—		—		12,906		12,906
Pass	—		—		—		—		—		—		12,906		12,906
Gross charge-offs	—		—		—		—		—		—		(105)		(105)
Gross recoveries	—		—		—		—		—		—		13		13
Equipment finance	170,630		62,314		—		—		—		—		—		232,944
Pass	170,302		61,800		—		—		—		—		—		232,102
Substandard	328		514		—		—		—		—		—		842
Gross charge-offs	(104)		(433)		—		—		—		—		—		(537)
Gross recoveries	—		—		—		—		—		—		—		—
Time and demand other	9,965		6,022		17,860		19,352		3,025		46,466		7,509		110,199
Pass	9,965		6,022		17,860		19,352		3,025		46,466		7,509		110,199
Gross charge-offs	—		—		—		—		—		—		(2,410)		(2,410)
Gross recoveries	—		—		—		—		—		—		225		225

	December 31, 2023
	Term Loans						Revolving Loans
	2023	2022	2021	2020	2019	Prior		Total
	(dollars in thousands)
Construction other	94,150	217,565	154,873	44,428	5,379	24,541	697	541,633
Pass	94,150	214,277	153,195	44,428	5,379	17,315	697	529,441
Substandard	—	3,288	1,678	—	—	7,226	—	12,192
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	—	—	—
Construction residential	27,487	19,322	2,284	3,194	3,337	—	478	56,102
Pass	27,487	19,322	2,284	3,194	3,337	—	478	56,102
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	—	—	—
Residential first lien	120,053	385,917	527,057	320,107	97,529	286,503	1,941	1,739,107
Pass	119,903	385,269	524,841	319,762	96,702	283,665	1,864	1,732,006
OAEM	—	80	1,527	—	—	731	77	2,415
Substandard	150	568	689	345	827	2,107	—	4,686
Gross charge-offs	—	(98)	—	(31)	(1)	(116)	—	(246)
Gross recoveries	—	—	—	—	—	177	—	177
Residential junior lien/home equity	62,098	70,171	44,359	2,487	2,305	4,949	491,400	677,769
Pass	62,098	70,171	44,359	2,487	2,305	4,672	487,142	673,234
OAEM	—	—	—	—	—	208	145	353
Substandard	—	—	—	—	—	69	4,113	4,182
Gross charge-offs	—	—	—	—	—	—	(315)	(315)
Gross recoveries	—	—	—	—	—	—	70	70
Multifamily	6,839	156,393	155,067	94,284	44,121	92,585	1,853	551,142
Pass	6,839	144,728	155,067	94,284	44,121	92,047	1,853	538,939
OAEM	—	11,665	—	—	—	452	—	12,117
Substandard	—	—	—	—	—	86	—	86
Gross charge-offs	—	—	—	—	—	—	—	—
Gross recoveries	—	—	—	—	—	—	—	—
Non-owner occupied	184,562	423,543	159,593	148,716	221,551	621,678	13,142	1,772,785
Pass	181,578	415,577	159,593	148,716	211,019	592,755	13,077	1,722,315
OAEM	—	7,546	—	—	7,313	16,793	—	31,652
Substandard	2,984	420	—	—	3,219	12,130	65	18,818
Gross charge-offs	—	(232)	—	—	—	(4,473)	—	(4,705)
Gross recoveries	—	—	—	—	—	127	—	127
Owner occupied	106,831	163,830	153,996	80,522	59,357	152,728	11,961	729,225
Pass	106,583	161,071	149,788	75,267	42,745	147,809	11,821	695,084
OAEM	112	785	3,950	4,000	5,363	4,026	33	18,269
Substandard	136	1,974	258	1,255	11,249	893	107	15,872
Gross charge-offs	—	—	(32)	—	—	(1,540)	—	(1,572)
Gross recoveries	—	—	—	—	—	24	—	24
Automobile and recreational vehicles	427,112	459,836	234,144	115,364	35,402	6,111	—	1,277,969
Pass	427,112	459,835	234,085	115,354	35,345	6,074	—	1,277,805
Substandard	—	1	59	10	57	37	—	164
Gross charge-offs	(487)	(2,232)	(1,258)	(972)	(527)	(111)	—	(5,587)
Gross recoveries	71	479	419	367	347	149	—	1,832
Consumer credit cards	—	—	—	—	—	—	10,291	10,291
Pass	—	—	—	—	—	—	10,291	10,291
Gross charge-offs	—	—	—	—	—	—	(290)	(290)
Gross recoveries	—	—	—	—	—	—	87	87

	December 31, 2023
	Term Loans												Revolving Loans
	2023		2022		2021		2020		2019		Prior				Total
	(dollars in thousands)
Consumer other	6,893		4,224		13,277		1,411		1,090		3,440		39,054		69,389
Pass	6,893		4,224		13,277		1,411		1,090		3,440		39,052		69,387
Substandard	—		—		—		—		—		—		2		2
Gross charge-offs	(21)		(50)		(130)		(31)		(157)		(23)		(941)		(1,353)
Gross recoveries	—		1		4		9		35		66		185		300
Total loans and leases	$	1,386,905	$	2,147,705	$	1,573,798	$	903,352	$	515,598	$	1,304,420	$	1,136,983	$	8,968,761
Total charge-offs	$	(1,194)	$	(7,617)	$	(1,438)	$	(3,229)	$	(3,049)	$	(7,546)	$	(9,194)	$	(33,267)
Total recoveries	$	71	$	480	$	423	$	495	$	386	$	671	$	589	$	3,115

Portfolio Risks

The credit quality of our loan portfolio can potentially represent significant risk to our earnings, capital and liquidity. First Commonwealth devotes substantial resources to managing this risk primarily through our credit administration department that develops and administers policies and procedures for underwriting, maintaining, monitoring and collecting loans. Credit administration is independent of lending departments and oversight is provided by the Credit Committee of the First Commonwealth Board of Directors.

Total net charge-offs for the three months ended March 31, 2024 and 2023 were $4.3 million and $1.2 million, respectively.

Age Analysis of Past Due Loans by Segment

The following tables delineate the aging analysis of the recorded investments in past due loans as of March 31, 2024 and December 31, 2023. Also included in these tables are loans that are 90 days or more past due and still accruing because they are well-secured and in the process of collection.

	March 31, 2024
	30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	8,516	$	379	$	175	$	9,757	$	18,827	$	1,575,009	$	1,593,836
Time and demand	8,013		225		142		9,023		17,403		1,173,733		1,191,136
Commercial credit cards	42		7		—		—		49		12,946		12,995
Equipment finance	460		147		—		734		1,341		278,597		279,938
Time and demand other	1		—		33		—		34		109,733		109,767
Real estate construction	1,070		—		—		3,288		4,358		555,009		559,367
Construction other	1,070		—		—		3,288		4,358		515,962		520,320
Construction residential	—		—		—		—		—		39,047		39,047
Residential real estate	5,795		1,762		779		9,019		17,355		2,384,917		2,402,272
Residential first lien	3,080		1,311		276		4,579		9,246		1,718,344		1,727,590
Residential junior lien/home equity	2,715		451		503		4,440		8,109		666,573		674,682
Commercial real estate	9,310		—		—		20,236		29,546		3,061,404		3,090,950
Multifamily	—		—		—		51		51		575,776		575,827
Non-owner occupied	8,584		—		—		15,131		23,715		1,765,806		1,789,521
Owner occupied	726		—		—		5,054		5,780		719,822		725,602
Loans to individuals	4,275		920		745		146		6,086		1,347,359		1,353,445
Automobile and recreational vehicles	3,862		568		22		144		4,596		1,272,616		1,277,212
Consumer credit cards	15		44		—		—		59		9,405		9,464
Consumer other	398		308		723		2		1,431		65,338		66,769
Total loans and leases	$	28,966	$	3,061	$	1,699	$	42,446	$	76,172	$	8,923,698	$	8,999,870

 

	December 31, 2023
	30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Nonaccrual		Total past due and nonaccrual		Current		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,206	$	745	$	4,187	$	10,060	$	16,198	$	1,527,151	$	1,543,349
Time and demand	565		691		4,187		9,218		14,661		1,172,639		1,187,300
Commercial credit cards	7		54		—		—		61		12,845		12,906
Equipment finance	600		—		—		842		1,442		231,502		232,944
Time and demand other	34		—		—		—		34		110,165		110,199
Real estate construction	—		—		—		3,288		3,288		594,447		597,735
Construction other	—		—		—		3,288		3,288		538,345		541,633
Construction residential	—		—		—		—		—		56,102		56,102
Residential real estate	6,982		1,535		1,062		8,573		18,152		2,398,724		2,416,876
Residential first lien	4,130		940		171		4,443		9,684		1,729,423		1,739,107
Residential junior lien/home equity	2,852		595		891		4,130		8,468		669,301		677,769
Commercial real estate	4,157		—		3,509		17,385		25,051		3,028,101		3,053,152
Multifamily	—		—		—		55		55		551,087		551,142
Non-owner occupied	2,303		—		3,509		14,282		20,094		1,752,691		1,772,785
Owner occupied	1,854		—		—		3,048		4,902		724,323		729,225
Loans to individuals	4,613		878		678		166		6,335		1,351,314		1,357,649
Automobile and recreational vehicles	4,115		612		151		164		5,042		1,272,927		1,277,969
Consumer credit cards	39		71		—		—		110		10,181		10,291
Consumer other	459		195		527		2		1,183		68,206		69,389
Total loans and leases	$	16,958	$	3,158	$	9,436	$	39,472	$	69,024	$	8,899,737	$	8,968,761

Nonaccrual Loans

The previous tables summarize nonaccrual loans by loan segment. The Company generally places loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain, when part of the principal balance has been charged off and no restructuring has occurred, or the loans reach a certain number of days past due. Generally, loans 90 days or more past due are placed on nonaccrual status, except for most consumer loans, which are placed on nonaccrual status at 150 days past due. Consumer loans related to automobile and recreational vehicles are either charged off or repossessed at no later than 90 days past due.

When a loan is placed on nonaccrual, the accrued unpaid interest receivable is reversed against interest income and all future payments received are applied as a reduction to the loan principal. Generally, the loan is returned to accrual status when (a) all delinquent interest and principal becomes current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer in doubt.

Nonperforming Loans

Management considers loans to be nonperforming when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When management identifies a loan as nonperforming, the credit loss is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole source for repayment of the loan is the operation or liquidation of collateral. When the loan is collateral dependent, the appraised value less estimated cost to sell is utilized. If management determines that the value of the loan is less than the recorded investment in the loan, a credit loss is recognized through an allowance estimate or a charge-off to the allowance for credit losses.

When the ultimate collectability of the total principal of a nonperforming loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of a nonperforming loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

At March 31, 2024 and December 31, 2023, there were no nonperforming loans held for sale. During both the three months ended March 31, 2024 and 2023, there were no gains recognized on the sale of nonperforming loans.

The following tables include the recorded investment and unpaid principal balance for nonperforming loans with the associated allowance amount, if applicable, as of March 31, 2024 and December 31, 2023. Also presented are the average recorded investment in nonperforming loans and the related amount of interest recognized while the loan was considered nonperforming. Average balances are calculated using month-end balances of the loans for the period reported and are included in the table below based on their period-end allowance position.

	March 31, 2024						December 31, 2023
	Recorded investment		Unpaid principal balance		Related specific allowance		Recorded investment		Unpaid principal balance		Related specific allowance
	(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other	$	3,314	$	16,606			$	4,369	$	18,014
Time and demand	2,580		15,872				3,527		17,172
Equipment finance	734		734				842		842
Time and demand other	—		—				—		—
Real estate construction	3,288		3,288				3,288		3,288
Construction other	3,288		3,288				3,288		3,288
Construction residential	—		—				—		—
Residential real estate	7,488		9,231				7,042		8,763
Residential first lien	4,296		5,309				4,161		5,151
Residential junior lien/home equity	3,192		3,922				2,881		3,612
Commercial real estate	4,649		4,538				12,402		18,219
Multifamily	51		55				55		58
Non-owner occupied	2,080		2,296				10,971		17,092
Owner occupied	2,518		2,187				1,376		1,069
Loans to individuals	146		188				166		259
Automobile and recreational vehicles	144		185				164		257
Consumer other	2		3				2		2
Subtotal	18,885		33,851				27,267		48,543
With a specific allowance recorded:
Commercial, financial, agricultural and other	6,443		7,467		$	3,252	5,691		6,787		$	4,044
Time and demand	6,443		7,467		3,252		5,691		6,787		4,044
Equipment finance	—		—		—		—		—		—
Time and demand other	—		—		—		—		—		—
Real estate construction	—		—		—		—		—		—
Construction other	—		—		—		—		—		—
Construction residential	—		—		—		—		—		—
Residential real estate	1,531		1,697		166		1,531		1,697		118
Residential first lien	283		279		61		282		279		39
Residential junior lien/home equity	1,248		1,418		105		1,249		1,418		79
Commercial real estate	15,587		16,545		1,956		4,983		5,294		387
Multifamily	—		—		—		—		—		—
Non-owner occupied	13,051		13,862		1,537		3,311		3,550		174
Owner occupied	2,536		2,683		419		1,672		1,744		213
Loans to individuals	—		—		—		—		—		—
Automobile and recreational vehicles	—		—		—		—		—		—
Consumer other	—		—		—		—		—		—
Subtotal	23,561		25,709		5,374		12,205		13,778		4,549
Total	$	42,446	$	59,560	$	5,374	$	39,472	$	62,321	$	4,549

	For the Three Months Ended March 31,
	2024				2023
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
	(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other	$	3,499	$	—	$	1,693	$	—
Time and demand	2,731		—		1,455		—
Equipment finance	768		—		238		—
Time and demand other	—		—		—		—
Real estate construction	3,288		—		—		—
Construction other	3,288		—		—		—
Construction residential	—		—		—		—
Residential real estate	7,436		7		6,069		20
Residential first lien	4,279		7		3,437		20
Residential junior lien/home equity	3,157		—		2,632		—
Commercial real estate	6,252		34		21,974		—
Multifamily	52		—		—		—
Non-owner occupied	4,061		1		20,487		—
Owner occupied	2,139		33		1,487		—
Loans to individuals	153		1		432		—
Automobile and recreational vehicles	151		1		356		—
Consumer other	2		—		76		—
Subtotal	20,628		42		30,168		20
With a specific allowance recorded:
Commercial, financial, agricultural and other	5,200		—		7,445		—
Time and demand	5,200		—		7,445		—
Equipment finance	—		—		—		—
Time and demand other	—		—		—		—
Real estate construction	—		—		—		—
Construction other	—		—		—		—
Construction residential	—		—		—		—
Residential real estate	1,531		—		824		—
Residential first lien	282		—		—		—
Residential junior lien/home equity	1,249		—		824		—
Commercial real estate	9,528		—		711		—
Multifamily	—		—		—		—
Non-owner occupied	7,734		—		115		—
Owner occupied	1,794		—		596		—
Loans to individuals	—		—		—		—
Automobile and recreational vehicles	—		—		—		—
Consumer other	—		—		—		—
Subtotal	16,259		—		8,980		—
Total	$	36,887	$	42	$	39,148	$	20

Unfunded commitments related to nonperforming loans were $0.2 million and $0.1 million at March 31, 2024 and December 31, 2023, respectively. After consideration of the requirements to draw and available collateral related to these

commitments, it was determined that no reserve was required for these commitments at March 31, 2024 and December 31, 2023.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

In accordance with ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal forgiveness, other-than-insignificant payment delay, term extensions or any combination thereof. When calculating the allowance for credit losses, these modifications are included in their respective loan segment and an allowance is determined by a loss given default and probability of default methodology.

The following tables present the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty:

	For the Three Months Ended March 31, 2024
	Rate Reduction		Term Extension		Principal Forgiveness		Term Extension and Payment Deferral		Rate Reduction, Term Extension and Payment Deferral		Rate Reduction and Payment Deferral		Total		Percentage of Total Loans and Leases
	(dollars in thousands)
Commercial, financial, agricultural and other	$	199	$	869	$	—	$	68	$	—	$	103	$	1,239	0.08	%
Time and demand	199		869		—		—		—		—		1,068		0.09
Equipment finance	—		—		—		68		—		103		171		0.06
Residential real estate	—		90		—		197		—		—		287		0.01
Residential first lien	—		90		—		167		—		—		257		0.01
Residential junior lien/home equity	—		—		—		30		—		—		30		—
Commercial real estate	—		—		—		152		—		—		152		—
Owner occupied	—		—		—		152		—		—		152		0.02
Loans to individuals	—		12		—		10		15		—		37		—
Automobile and recreational vehicles	—		12		—		10		15		—		37		—
Total	$	199	$	971	$	—	$	427	$	15	$	103	$	1,715	0.02	%

	For the Three Months Ended March 31, 2023
	Rate Reduction		Term Extension		Principal Forgiveness		Term Extension and Payment Deferral		Total		Percentage of Total Loans and Leases
	(dollars in thousands)
Residential real estate	$	25	$	—	$	—	$	—	$	25	—	%
Residential first lien	25		—		—		—		25		—
Total	$	25	$	—	$	—	$	—	$	25	—	%

A modification is considered to be in default when the loan is 90 days or more past due. For the three months ended March 31, 2024, there were no modified loans that were considered to be in default. The following table shows the payment status of loans that have been modified on or after January 1, 2023, the date we adopted ASU 2022-02:

	March 31, 2024
	Current		30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	1,288	$	—	$	—	$	—	$	1,288
Time and demand	1,117		—		—		—		1,117
Equipment finance	171		—		—		—		171
Residential real estate	1,017		—		—		—		1,017
Residential first lien	987		—		—		—		987
Residential junior lien/home equity	30		—		—		—		30
Commercial real estate	9,823		—		—		—		9,823
Owner occupied	9,823		—		—		—		9,823
Loans to individuals	37		—		—		—		37
Automobile and recreational vehicles	37		—		—		—		37
Total loans and leases	$	12,165	$	—	$	—	$	—	$	12,165

	December 31, 2023
	Current		30 - 59 days past due		60 - 89 days past due		90 days or greater and still accruing		Total
	(dollars in thousands)
Commercial, financial, agricultural and other	$	50	$	—	$	—	$	—	$	50
Time and demand	50		—		—		—		50
Residential real estate	758		—		—		—		758
Residential first lien	758		—		—		—		758
Commercial real estate	9,663		—		—		—		9,663
Owner occupied	9,663		—		—		—		9,663
Total loans and leases	$	10,471	$	—	$	—	$	—	$	10,471

The following tables provide detail related to the allowance for credit losses:

	For the Three Months Ended March 31, 2024
	Beginning balance		Charge-offs		Recoveries		Provision (credit)a		Ending balance
	(dollars in thousands)
Commercial, financial, agricultural and other	$	27,996	$	(2,662)	$	420	$	1,292	$	27,046
Time and demand	22,819		(1,765)		347		(565)		20,836
Commercial credit cards	278		(44)		—		71		305
Equipment finance	3,399		(351)		15		1,263		4,326
Time and demand other	1,500		(502)		58		523		1,579
Real estate construction	7,418		—		6		(875)		6,549
Construction other	6,448		—		6		(653)		5,801
Construction residential	970		—		—		(222)		748
Residential real estate	23,901		(80)		59		13		23,893
Residential first lien	16,975		(28)		43		(107)		16,883
Residential junior lien/home equity	6,926		(52)		16		120		7,010
Commercial real estate	37,071		(283)		114		2,201		39,103
Multifamily	5,233		—		—		(8)		5,225
Non-owner occupied	19,995		(283)		44		2,308		22,064
Owner occupied	11,843		—		70		(99)		11,814
Loans to individuals	21,332		(2,538)		662		3,051		22,507
Automobile and recreational vehicles	19,142		(1,942)		553		2,490		20,243
Consumer credit cards	372		(150)		18		107		347
Consumer other	1,818		(446)		91		454		1,917
Total loans and leases	$	117,718	$	(5,563)	$	1,261	$	5,682	$	119,098

a) The provision expense (credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

	For the Three Months Ended March 31, 2023
	Beginning balance		Allowance for credit loss on PCD acquired loans		Charge-offs		Recoveries		Provision (credit)a		Ending balance
	(dollars in thousands)
Commercial, financial, agricultural and other	$	22,650	$	15,949	$	(663)	$	159	$	4,473	$	42,568
Time and demand	20,040		15,949		(255)		116		3,615		39,465
Commercial credit cards	335		—		(26)		2		20		331
Equipment finance	1,086		—		(45)		—		420		1,461
Time and demand other	1,189		—		(337)		41		418		1,311
Real estate construction	8,822		287		—		—		(1,160)		7,949
Construction other	6,360		227		—		—		(696)		5,891
Construction residential	2,462		60		—		—		(464)		2,058
Residential real estate	21,412		527		(79)		38		875		22,773
Residential first lien	14,822		197		(16)		26		795		15,824
Residential junior lien/home equity	6,590		330		(63)		12		80		6,949
Commercial real estate	28,804		5,313		—		42		5,218		39,377
Multifamily	4,726		234		—		—		581		5,541
Non-owner occupied	16,426		2,739		—		38		2,349		21,552
Owner occupied	7,652		2,340		—		4		2,288		12,284
Loans to individuals	21,218		3		(1,141)		471		667		21,218
Automobile and recreational vehicles	18,819		3		(802)		390		603		19,013
Consumer credit cards	412		—		(66)		17		5		368
Consumer other	1,987		—		(273)		64		59		1,837
Total loans and leases	$	102,906	$	22,079	$	(1,883)	$	710	$	10,073	$	133,885

a) The provision expense (credit) shown here includes the day 1 provision on non-PCD loans acquired from Centric and excludes the provision for off-balance sheet credit exposure included in the income statement.

Recorded Investment and Unpaid Principal Balance for Impaired Loans with Associated Allowance

The following tables include the recorded investment and unpaid principal balance for nonperforming loans with the associated allowance amount, if applicable, as of March 31, 2024 and December 31, 2023. Also presented are the average recorded investment in nonperforming loans and the related amount of interest recognized while the loan was considered nonperforming. Average balances are calculated using month-end balances of the loans for the period reported and are included in the table below based on their period-end allowance position.

	March 31, 2024						December 31, 2023
	Recorded investment		Unpaid principal balance		Related specific allowance		Recorded investment		Unpaid principal balance		Related specific allowance
	(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other	$	3,314	$	16,606			$	4,369	$	18,014
Time and demand	2,580		15,872				3,527		17,172
Equipment finance	734		734				842		842
Time and demand other	—		—				—		—
Real estate construction	3,288		3,288				3,288		3,288
Construction other	3,288		3,288				3,288		3,288
Construction residential	—		—				—		—
Residential real estate	7,488		9,231				7,042		8,763
Residential first lien	4,296		5,309				4,161		5,151
Residential junior lien/home equity	3,192		3,922				2,881		3,612
Commercial real estate	4,649		4,538				12,402		18,219
Multifamily	51		55				55		58
Non-owner occupied	2,080		2,296				10,971		17,092
Owner occupied	2,518		2,187				1,376		1,069
Loans to individuals	146		188				166		259
Automobile and recreational vehicles	144		185				164		257
Consumer other	2		3				2		2
Subtotal	18,885		33,851				27,267		48,543
With a specific allowance recorded:
Commercial, financial, agricultural and other	6,443		7,467		$	3,252	5,691		6,787		$	4,044
Time and demand	6,443		7,467		3,252		5,691		6,787		4,044
Equipment finance	—		—		—		—		—		—
Time and demand other	—		—		—		—		—		—
Real estate construction	—		—		—		—		—		—
Construction other	—		—		—		—		—		—
Construction residential	—		—		—		—		—		—
Residential real estate	1,531		1,697		166		1,531		1,697		118
Residential first lien	283		279		61		282		279		39
Residential junior lien/home equity	1,248		1,418		105		1,249		1,418		79
Commercial real estate	15,587		16,545		1,956		4,983		5,294		387
Multifamily	—		—		—		—		—		—
Non-owner occupied	13,051		13,862		1,537		3,311		3,550		174
Owner occupied	2,536		2,683		419		1,672		1,744		213
Loans to individuals	—		—		—		—		—		—
Automobile and recreational vehicles	—		—		—		—		—		—
Consumer other	—		—		—		—		—		—
Subtotal	23,561		25,709		5,374		12,205		13,778		4,549
Total	$	42,446	$	59,560	$	5,374	$	39,472	$	62,321	$	4,549

	For the Three Months Ended March 31,
	2024				2023
	Average recorded investment		Interest income recognized		Average recorded investment		Interest income recognized
	(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other	$	3,499	$	—	$	1,693	$	—
Time and demand	2,731		—		1,455		—
Equipment finance	768		—		238		—
Time and demand other	—		—		—		—
Real estate construction	3,288		—		—		—
Construction other	3,288		—		—		—
Construction residential	—		—		—		—
Residential real estate	7,436		7		6,069		20
Residential first lien	4,279		7		3,437		20
Residential junior lien/home equity	3,157		—		2,632		—
Commercial real estate	6,252		34		21,974		—
Multifamily	52		—		—		—
Non-owner occupied	4,061		1		20,487		—
Owner occupied	2,139		33		1,487		—
Loans to individuals	153		1		432		—
Automobile and recreational vehicles	151		1		356		—
Consumer other	2		—		76		—
Subtotal	20,628		42		30,168		20
With a specific allowance recorded:
Commercial, financial, agricultural and other	5,200		—		7,445		—
Time and demand	5,200		—		7,445		—
Equipment finance	—		—		—		—
Time and demand other	—		—		—		—
Real estate construction	—		—		—		—
Construction other	—		—		—		—
Construction residential	—		—		—		—
Residential real estate	1,531		—		824		—
Residential first lien	282		—		—		—
Residential junior lien/home equity	1,249		—		824		—
Commercial real estate	9,528		—		711		—
Multifamily	—		—		—		—
Non-owner occupied	7,734		—		115		—
Owner occupied	1,794		—		596		—
Loans to individuals	—		—		—		—
Automobile and recreational vehicles	—		—		—		—
Consumer other	—		—		—		—
Subtotal	16,259		—		8,980		—
Total	$	36,887	$	42	$	39,148	$	20