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ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
 6 Months Ended
Jun. 30, 2022
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY  
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY
The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.
The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances
of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.
The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, material modification status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.
Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.
Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.
Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations, including factors such as the level of classified credits, economic uncertainties, industry trends impacting specific portfolio segments, broad portfolio quality trends, and trends in the composition of the Company’s large commercial loan portfolio and related large dollar exposures to individual borrowers. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.
For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.
The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:
(dollars in thousands)Commercial and IndustrialCommercial Real Estate and Multifamily ResidentialAgri-business and AgriculturalOther CommercialConsumer 1-4 Family MortgageOther ConsumerUnallocatedTotal
Three Months Ended June 30, 2022                
Beginning balance, April 1$31,322 $26,257 $4,761 $1,058 $2,606 $1,040 $482 $67,526 
Provision for credit losses(139)191 (8)(345)34 102 165 0 
Loans charged-off(13)0 0 0 0 (85)0 (98)
Recoveries25 0 0 0 34 36 0 95 
Net loans (charged-off) recovered12 0 0 0 34 (49)0 (3)
Ending balance$31,195 $26,448 $4,753 $713 $2,674 $1,093 $647 $67,523 
(dollars in thousands)Commercial and IndustrialCommercial Real Estate and Multifamily ResidentialAgri-business and AgriculturalOther CommercialConsumer 1-4 Family MortgageOther ConsumerUnallocatedTotal
Three Months Ended June 30, 2021                
Beginning balance, April 1$32,052 $29,445 $3,901 $1,172 $3,384 $1,293 $597 $71,844 
Provision for credit losses(187)(1,160)(291)126 (221)124 (91)(1,700)
Loans charged-off(162)0 0 0 (32)(73)0 (267)
Recoveries1,427 6 320 0 34 49 0 1,836 
Net loans (charged-off) recovered1,265 6 320 0 2 (24)0 1,569 
Ending balance$33,130 $28,291 $3,930 $1,298 $3,165 $1,393 $506 $71,713 
(dollars in thousands)Commercial and IndustrialCommercial Real Estate and Multifamily ResidentialAgri-business and AgriculturalOther CommercialConsumer 1-4 Family MortgageOther ConsumerUnallocatedTotal
Six Months Ended June 30, 2022                
Beginning balance, January 1$30,595 $26,535 $5,034 $1,146 $2,866 $1,147 $450 $67,773 
Provision for credit losses591 510 (281)(433)(214)47 197 417 
Loans charged-off(32)(597)0 0 (22)(187)0 (838)
Recoveries41 0 0 0 44 86 0 171 
Net loans (charged-off) recovered9 (597)0 0 22 (101)0 (667)
Ending balance$31,195 $26,448 $4,753 $713 $2,674 $1,093 $647 $67,523 
(dollars in thousands)Commercial and IndustrialCommercial Real Estate and Multifamily ResidentialAgri-business and AgriculturalOther CommercialConsumer 1-4 Family MortgageOther ConsumerUnallocatedTotal
Six Months Ended June 30, 2021                
Beginning balance, January 1$28,333 $22,907 $3,043 $416 $2,619 $951 $3,139 $61,408 
Impact of adopting ASC 3264,312 4,316 1,060 941 953 349 (2,881)9,050 
Provision for credit losses(727)1,125 (493)(59)(454)137 248 (223)
Loans charged-off(249)(71)0 0 (38)(145)0 (503)
Recoveries1,461 14 320 0 85 101 0 1,981 
Net loans (charged-off) recovered1,212 (57)320 0 47 (44)0 1,478 
Ending balance$33,130 $28,291 $3,930 $1,298 $3,165 $1,393 $506 $71,713 
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 commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000.
The Company uses the following definitions for risk ratings:
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 institution’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 Company 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 characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status.
The following table summarizes the risk category of loans by loan segment and origination date as of June 30, 2022:
(dollars in thousands)20222021202020192018PriorTerm TotalRevolvingTotal
Commercial and industrial loans:                  
Working capital lines of credit loans:                  
Pass$0 $2,962 $1,922 $2,730 $0 $0 $7,614 $646,517 $654,131 
Special Mention0 0 0 0 0 0 0 57,015 57,015 
Substandard0 0 0 0 0 0 0 15,732 15,732 
Total0 2,962 1,922 2,730 0 0 7,614 719,264 726,878 
Non-working capital loans:
Pass138,644 149,019 111,258 62,632 20,117 24,563 506,233 249,976 756,209 
Special Mention121 16,041 0 188 602 3,510 20,462 146 20,608 
Substandard681 2,501 6,291 744 2,103 4,823 17,143 2,932 20,075 
Not Rated1,478 1,906 1,474 581 292 56 5,787 0 5,787 
Total140,924 169,467 119,023 64,145 23,114 32,952 549,625 253,054 802,679 
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass16,284 34,046 20,426 489 554 0 71,799 344,051 415,850 
Special Mention360 0 0 0 0 0 360 0 360 
Total16,644 34,046 20,426 489 554 0 72,159 344,051 416,210 
Owner occupied loans:
Pass50,037 161,126 170,041 103,797 74,503 116,093 675,597 30,153 705,750 
Special Mention117 6,221 0 850 89 8,927 16,204 0 16,204 
Substandard0 455 1,496 629 1,161 234 3,975 0 3,975 
Total50,154 167,802 171,537 105,276 75,753 125,254 695,776 30,153 725,929 
Nonowner occupied loans:
Pass81,440 136,381 142,092 107,374 20,484 79,173 566,944 56,731 623,675 
Special Mention0 11,436 0 0 0 0 11,436 0 11,436 
Total81,440 147,817 142,092 107,374 20,484 79,173 578,380 56,731 635,111 
Multifamily loans:
Pass1,915 25,916 37,559 36,109 17,105 11,805 16,742 130,046 21,528 151,574 
Special Mention22,077 0 0 0 0 0 22,077 0 22,077 
Total23,992 25,916 37,559 36,109 11,805 16,742 152,123 21,528 173,651 
Agri-business and agricultural loans:
Loans secured by farmland:
Pass22,371 45,319 31,514 11,720 8,832 21,224 140,980 48,216 189,196 
Special Mention260 0 1,676 1,868 0 200 4,004 882 4,886 
Substandard0 0 0 0 0 144 144 0 144 
Total22,631 45,319 33,190 13,588 8,832 21,568 145,128 49,098 194,226 
Loans for agricultural production:
Pass1,599 30,747 23,772 4,025 9,790 4,998 74,931 105,093 180,024 
Special Mention0 415 7,266 996 0 0 8,677 5,042 13,719 
Total1,599 31,162 31,038 5,021 9,790 4,998 83,608 110,135 193,743 
Other commercial loans:
Pass14,457 6,016 19,786 702 1,136 13,741 55,838 33,533 89,371 
Special Mention0 0 0 0 0 3,500 3,500 0 3,500 
Total14,457 6,016 19,786 702 1,136 17,241 59,338 33,533 92,871 
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass5,661 13,358 13,878 5,111 5,344 4,204 47,556 3,964 51,520 
Substandard0 0 0 0 87 1,893 1,980 0 1,980 
Not Rated28,136 46,425 21,645 6,921 3,023 31,073 137,223 0 137,223 
Total33,797 59,783 35,523 12,032 8,454 37,170 186,759 3,964 190,723 
Open end and junior lien loans
Pass0 646 368 80 102 0 1,196 4,767 5,963 
Substandard0 0 0 0 48 2 50 61 111 
Not Rated34,616 16,577 3,968 4,501 2,285 2,787 64,734 103,371 168,105 
Total34,616 17,223 4,336 4,581 2,435 2,789 65,980 108,199 174,179 
Residential construction loans
Not Rated3,332 3,972 1,018 307 134 1,255 10,018 0 10,018 
Total3,332 3,972 1,018 307 134 1,255 10,018 0 10,018 
Other consumer loans
Pass616 2,192 513 1,111 0 1,036 5,468 20,011 25,479 
Substandard0 0 0 215 0 0 215 41 256 
Not Rated12,364 17,487 11,424 5,280 4,087 1,991 52,633 10,113 62,746 
Total12,980 19,679 11,937 6,606 4,087 3,027 58,316 30,165 88,481 
TOTAL$436,566 $731,164 $629,387 $358,960 $166,578 $342,169 $2,664,824 $1,759,875 $4,424,699 
As of June 30, 2022, $5.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.
















































The following table summarizes the risk category of loans by loan segment and origination date as of December 31, 2021:
(dollars in thousands)20212020201920182017PriorTerm TotalRevolvingTotal
Commercial and industrial loans:                  
Working capital lines of credit loans:                  
Pass$3,699 $830 $3,360 $0 $0 $0 $7,889 $558,634 $566,523 
Special Mention0 0 0 0 0 0 0 60,441 60,441 
Substandard0 0 35 0 0 0 35 25,928 25,963 
Total3,699 830 3,395 0 0 0 7,924 645,003 652,927 
Non-working capital loans:
Pass185,374 139,157 79,477 38,899 19,415 18,489 480,811 203,794 684,605 
Special Mention17,728 0 225 979 2,350 1,426 22,708 0 22,708 
Substandard2,996 6,948 1,091 2,534 5,465 426 19,460 3,321 22,781 
Not Rated2,265 1,758 837 563 128 14 5,565 0 5,565 
Total208,363 147,863 81,630 42,975 27,358 20,355 528,544 207,115 735,659 
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass35,136 30,224 1,276 998 0 0 67,634 310,396 378,030 
Total35,136 30,224 1,276 998 0 0 67,634 310,396 378,030 
Owner occupied loans:
Pass135,861 169,404 124,117 85,070 78,155 93,925 686,532 29,611 716,143 
Special Mention6,555 0 880 933 7,387 1,235 16,990 0 16,990 
Substandard489 1,570 909 1,758 694 238 5,658 0 5,658 
Total142,905 170,974 125,906 87,761 86,236 95,398 709,180 29,611 738,791 
Nonowner occupied loans:
Pass146,342 154,433 107,262 19,054 31,023 59,154 517,268 44,362 561,630 
Special Mention11,825 331 0 0 0 14,253 26,409 0 26,409 
Total158,167 154,764 107,262 19,054 31,023 73,407 543,677 44,362 588,039 
Multifamily loans:
Pass84,678 53,195 36,575 12,286 17,105 14,574 9,793 211,101 13,434 224,535 
Special Mention0 0 0 0 22,252 0 22,252 0 22,252 
Total84,678 53,195 36,575 12,286 36,826 9,793 233,353 13,434 246,787 
Agri-business and agricultural loans:
Loans secured by farmland:
Pass47,532 37,035 16,249 10,469 10,454 17,021 138,760 61,774 200,534 
Special Mention0 1,985 2,303 0 180 30 4,498 918 5,416 
Substandard207 0 0 0 0 145 352 0 352 
Total47,739 39,020 18,552 10,469 10,634 17,196 143,610 62,692 206,302 
Loans for agricultural production:
Pass36,238 25,855 4,224 11,072 1,331 4,178 82,898 138,142 221,040 
Special Mention448 8,642 1,171 0 0 0 10,261 8,272 18,533 
Total36,686 34,497 5,395 11,072 1,331 4,178 93,159 146,414 239,573 
Other commercial loans:
Pass6,556 21,111 3,243 1,273 8,592 7,460 48,235 21,145 69,380 
Special Mention0 0 0 0 0 3,798 3,798 0 3,798 
Total6,556 21,111 3,243 1,273 8,592 11,258 52,033 21,145 73,178 
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass14,635 16,173 5,312 5,903 3,049 3,221 48,293 5,005 53,298 
Special Mention0 0 0 0 0 1,274 1,274 0 1,274 
Not Rated45,089 27,738 9,248 5,217 7,628 26,321 121,241 482 121,723 
Total59,724 43,911 14,560 11,120 10,677 30,816 170,808 5,487 176,295 
Open end and junior lien loans
Pass679 379 159 313 0 0 1,530 5,074 6,604 
Substandard0 0 0 0 0 0 0 98 98 
Not Rated21,945 5,624 5,987 3,899 1,653 1,526 40,634 110,523 151,157 
Total22,624 6,003 6,146 4,212 1,653 1,526 42,164 115,695 157,859 
Residential construction loans
Not Rated7,926 1,537 960 138 171 1,125 11,857 0 11,857 
Total7,926 1,537 960 138 171 1,125 11,857 0 11,857 
Other consumer loans
Pass3,401 957 1,523 0 1,155 0 7,036 12,998 20,034 
Substandard36 23 230 0 0 0 289 0 289 
Not Rated21,652 14,931 7,474 5,844 1,890 1,203 52,994 9,227 62,221 
Total25,089 15,911 9,227 5,844 3,045 1,203 60,319 22,225 82,544 
TOTAL$839,292 $719,840 $414,127 $207,202 $217,546 $266,255 $2,664,262 $1,623,579 $4,287,841 
As of December 31, 2021, $26.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.
Nonaccrual and Past Due Loans:
The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.
The following table presents the aging of the amortized cost basis in past due loans as of June 30, 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:
(dollars in thousands)Loans Not Past Due30-89 Days Past DueGreater than 89 Days Past Due and AccruingTotal AccruingTotal NonaccrualNonaccrual With No Allowance For Credit LossTotal
Commercial and industrial loans:            
Working capital lines of credit loans$726,862 $16 $0 $722,396 $4,482 $3,511 $726,878 
Non-working capital loans802,679 0 0 798,382 4,297 234 802,679 
Commercial real estate and multi-family residential loans:
Construction and land development loans416,210 0 0 416,210 0 0 416,210 
Owner occupied loans725,929 0 0 722,936 2,993 1,498 725,929 
Nonowner occupied loans635,111 0 0 635,111 0 0 635,111 
Multifamily loans173,651 0 0 173,651 0 0 173,651 
Agri-business and agricultural loans:
Loans secured by farmland194,226 0 0 194,081 145 0 194,226 
Loans for agricultural production193,743 0 0 193,743 0 0 193,743 
Other commercial loans92,545 326 0 92,871 0 0 92,871 
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans190,408 248 67 190,513 210 140 190,723 
Open end and junior lien loans174,036 106 37 174,069 110 110 174,179 
Residential construction loans10,018 0 0 10,018 0 0 10,018 
Other consumer loans88,395 86 0 88,225 256 0 88,481 
Total$4,423,813 $782 $104 $4,412,206 $12,493 $5,493 $4,424,699 
As of June 30, 2022 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the six month period ended June 30, 2022.
The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2021 by class of loans and loans past due 90 days or more and still accruing by class of loan:
(dollars in thousands)Loans Not Past Due30-89 Days Past DueGreater than 89 Days Past Due and AccruingTotal AccruingTotal NonaccrualNonaccrual With No Allowance For Credit LossTotal
Commercial and industrial loans:            
Working capital lines of credit loans$652,903 $24 $0 $646,961 $5,966 $5,200 $652,927 
Non-working capital loans735,658 1 0 731,063 4,596 229 735,659 
Commercial real estate and multi-family residential loans:
Construction and land development loans378,030 0 0 378,030 0 0 378,030 
Owner occupied loans738,791 0 0 735,157 3,634 2,129 738,791 
Nonowner occupied loans588,039 0 0 588,039 0 0 588,039 
Multifamily loans246,787 0 0 246,787 0 0 246,787 
Agri-business and agricultural loans:
Loans secured by farmland206,302 0 0 205,967 335 0 206,302 
Loans for agricultural production239,573 0 0 239,573 0 0 239,573 
Other commercial loans73,178 0 0 73,178 0 0 73,178 
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans175,678 500 117 176,240 55 55 176,295 
Open end and junior lien loans157,729 130 0 157,761 98 98 157,859 
Residential construction loans11,857 0 0 11,857 0 0 11,857 
Other consumer loans82,472 72 0 82,255 289 0 82,544 
Total$4,286,997 $727 $117 $4,272,868 $14,973 $7,711 $4,287,841 
As of December 31, 2021 there were an insignificant number of loans 30-89 days past due or greater than 89 days past due on nonaccrual. Additionally, interest income recognized on nonaccrual loans was insignificant during the year ended December 31, 2021.
When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.
The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:
June 30, 2022
(dollars in thousands)Real EstateGeneral
Business
 Assets		OtherTotal
Commercial and industrial loans:      
Working capital lines of credit loans$0 $4,693 $0 $4,693 
Non-working capital loans478 8,865 229 9,572 
Commercial real estate and multi-family residential loans:
Owner occupied loans336 1,495 1,161 2,992 
Agri-business and agricultural loans:
Loans secured by farmland0 145 0 145 
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans1,981 0 0 1,981 
Open end and junior lien loans111 0 0 111 
Other consumer loans0 0 41 41 
Total$2,906 $15,198 $1,431 $19,535 
December 31, 2021
(dollars in thousands)Real EstateGeneral
Business
 Assets		OtherTotal
Commercial and industrial loans:      
Working capital lines of credit loans$0 $5,966 $0 $5,966 
Non-working capital loans1,606 9,475 229 11,310 
Commercial real estate and multi-family residential loans:
Owner occupied loans1,435 1,505 1,161 4,101 
Agri-business and agricultural loans:
Loans secured by farmland190 145 0 335 
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans3,081 0 0 3,081 
Open end and junior lien loans98 0 0 98 
Other consumer loans0 0 59 59 
Total$6,312 $17,091 $1,449 $24,950 
Modifications:
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes loses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made at the time of a modification.
Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness that is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. Additionally, the Company may allow a loan to go interest only for a specified period of time.
During the three and six months ended June 30, 2022, no loans received a material modification based on borrower financial difficulty.
Troubled Debt Restructurings (Prior to January 1, 2022):
Prior to the partial adoption of ASU 2022-02 on January 1, 2022, which had an immaterial impact on the Company's allowance for credit losses, troubled debt restructured loans were included in the totals for individually analyzed loans. The following are disclosures related to troubled debt restructured loans in prior periods.
Troubled debt restructured loans are included in the totals for individually analyzed loans. The Company has allocated $5.8 million of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2021. The Company is not committed to lend additional funds to debtors whose loans have been modified in a trouble debt restructuring.
(dollars in thousands)December 31,
2021
Accruing troubled debt restructured loans$5,121 
Nonaccrual troubled debt restructured loans6,218 
Total troubled debt restructured loans$11,339 
During the three and six months ended June 30, 2021, no loans were modified as troubled debt restructurings.