ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (Tables)

12 Months Ended

Dec. 31, 2022

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Schedule of Allowance For Loan Losses and Recorded Investment In Loans By Portfolio Segment

The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2022 and 2021:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2022
Beginning balance	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	8,646		1,179		(605)		(229)		125		155		104		9,375
Loans charged-off	(4,022)		(597)		0		0		(42)		(473)		0		(5,134)
Recoveries	71		277		0		0		52		192		0		592
Net loans (charged-off) recovered	(3,951)		(320)		0		0		10		(281)		0		(4,542)
Ending balance	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2021
Beginning balance	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408
Impact of adopting ASC 326	4,312		4,316		1,060		941		953		349		(2,881)		9,050
Provision for credit losses	1,966		(632)		611		(211)		(777)		(72)		192		1,077
Loans charged-off	(5,575)		(70)		0		0		(51)		(287)		0		(5,983)
Recoveries	1,559		14		320		0		122		206		0		2,221
Net loans (charged-off) recovered	(4,016)		(56)		320		0		71		(81)		0		(3,762)
Ending balance	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773

The following tables present the activity and balance in the allowance for loan losses by portfolio segment for the year ended December 31, 2020. PPP loans are fully guaranteed by the SBA and have not been allocated for within the allowance for loan losses.

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Beginning balance	$	25,789	$	15,796	$	3,869	$	447	$	2,086	$	345	$	2,320	$	50,652
Provision for loan losses	6,640		6,868		(826)		(31)		341		959		819		14,770
Loans charged-off	(4,524)		(72)		0		0		(141)		(516)		0		(5,253)
Recoveries	428		315		0		0		333		163		0		1,239
Net loans (charged-off) recovered	(4,096)		243		0		0		192		(353)		0		(4,014)
Ending balance	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408

Risk Category of Loans By Loan Segment and Origination

The following tables summarize the risk category of loans by loan segment and origination date as of December 31, 2022 and 2021. Balances presented are at the amortized cost basis by origination year.

(dollars in thousands)	2022		2021		2020		2019		2018		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	2,207	$	2,718	$	1,601	$	0	$	0	$	0	$	6,526	$	597,108	$	603,634
Special Mention	0		0		0		0		0		0		0		36,410		36,410
Substandard	200		0		0		300		0		0		500		10,495		10,995
Total	2,407		2,718		1,601		300		0		0		7,026		644,013		651,039
Non-working capital loans:
Pass	272,273		124,600		91,850		47,711		9,981		13,670		560,085		240,490		800,575
Special Mention	448		1,620		0		109		159		2,961		5,297		2,153		7,450
Substandard	11,831		872		5,021		194		1,351		3,979		23,248		4,171		27,419
Not Rated	2,891		1,550		1,254		413		120		23		6,251		0		6,251
Total	287,443		128,642		98,125		48,427		11,611		20,633		594,881		246,814		841,695
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	26,889		19,944		14,026		356		0		0		61,215		453,953		515,168
Total	26,889		19,944		14,026		356		0		0		61,215		453,953		515,168
Owner occupied loans:
Pass	113,656		179,014		139,880		97,353		65,519		97,335		692,757		40,533		733,290
Special Mention	2,960		7,608		0		446		1,491		8,054		20,559		0		20,559
Substandard	308		105		1,491		373		1,161		229		3,667		0		3,667
Total	116,924		186,727		141,371		98,172		68,171		105,618		716,983		40,533		757,516
Nonowner occupied loans:
Pass	194,294		125,190		134,661		91,907		15,109		64,874		626,035		68,603		694,638
Special Mention	0		11,024		0		0		0		0		11,024		0		11,024
Total	194,294		136,214		134,661		91,907		15,109		64,874		637,059		68,603		705,662
Multi-family loans:
Pass	38,460		25,741		36,929		35,695		2,046		28,866		167,737		7,349		175,086
Special Mention	21,855		0		0		0		0		0		21,855		0		21,855
Total	60,315		25,741		36,929		35,695		2,046		28,866		189,592		7,349		196,941
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	38,344		28,684		29,741		9,656		8,145		19,638		134,208		63,094		197,302
Special Mention	260		0		1,676		1,780		0		15		3,731		0		3,731
Substandard	0		0		0		0		0		145		145		0		145
Total	38,604		28,684		31,417		11,436		8,145		19,798		138,084		63,094		201,178
Loans for agricultural production:
Pass	6,040		30,262		22,167		3,625		9,248		4,539		75,881		143,599		219,480
Special Mention	947		243		7,262		928		0		0		9,380		2,129		11,509
Total	6,987		30,505		29,429		4,553		9,248		4,539		85,261		145,728		230,989
Other commercial loans:
Pass	27,097		4,815		17,911		147		931		10,985		61,886		48,295		110,181
Special Mention	0		0		0		0		0		3,160		3,160		0		3,160
Total	27,097		4,815		17,911		147		931		14,145		65,046		48,295		113,341
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	8,768		12,809		12,289		4,805		4,045		3,860		46,576		5,634		52,210
Special Mention	0		0		552		0		0		0		552		0		552
Substandard	0		0		0		0		83		1,944		2,027		0		2,027
Not Rated	57,404		44,331		20,023		5,936		2,970		27,004		157,668		0		157,668
Total	66,172		57,140		32,864		10,741		7,098		32,808		206,823		5,634		212,457
Open end and junior lien loans
Pass	137		541		357		63		75		0		1,173		5,841		7,014
Substandard	0		0		0		31		49		0		80		111		191
Not Rated	44,472		13,597		3,014		3,616		1,476		2,252		68,427		101,750		170,177
Total	44,609		14,138		3,371		3,710		1,600		2,252		69,680		107,702		177,382
Residential construction loans
Not Rated	14,463		2,167		897		291		129		1,223		19,170		0		19,170
Total	14,463		2,167		897		291		129		1,223		19,170		0		19,170
Other consumer loans
Pass	1,344		1,841		432		600		0		948		5,165		16,152		21,317
Substandard	0		0		0		210		0		0		210		0		210
Not Rated	24,395		14,563		9,168		3,606		2,755		1,352		55,839		10,492		66,331
Total	25,739		16,404		9,600		4,416		2,755		2,300		61,214		26,644		87,858
TOTAL	$	911,943	$	653,839	$	552,202	$	310,151	$	126,843	$	297,056	$	2,852,034	$	1,858,362	$	4,710,396

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)

(dollars in thousands)	2021		2020		2019		2018		2017		Prior		Term Total		Revolving		Total
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 Mention	0		0		0		0		0		0		0		60,441		60,441
Substandard	0		0		35		0		0		0		35		25,928		25,963
Total	3,699		830		3,395		0		0		0		7,924		645,003		652,927
Non-working capital loans:
Pass	185,374		139,157		79,477		38,899		19,415		18,489		480,811		203,794		684,605
Special Mention	17,728		0		225		979		2,350		1,426		22,708		0		22,708
Substandard	2,996		6,948		1,091		2,534		5,465		426		19,460		3,321		22,781
Not Rated	2,265		1,758		837		563		128		14		5,565		0		5,565
Total	208,363		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:
Pass	35,136		30,224		1,276		998		0		0		67,634		310,396		378,030
Total	35,136		30,224		1,276		998		0		0		67,634		310,396		378,030
Owner occupied loans:
Pass	135,861		169,404		124,117		85,070		78,155		93,925		686,532		29,611		716,143
Special Mention	6,555		0		880		933		7,387		1,235		16,990		0		16,990
Substandard	489		1,570		909		1,758		694		238		5,658		0		5,658
Total	142,905		170,974		125,906		87,761		86,236		95,398		709,180		29,611		738,791
Nonowner occupied loans:
Pass	146,342		154,433		107,262		19,054		31,023		59,154		517,268		44,362		561,630
Special Mention	11,825		331		0		0		0		14,253		26,409		0		26,409
Total	158,167		154,764		107,262		19,054		31,023		73,407		543,677		44,362		588,039
Multi-family loans:
Pass	84,678		53,195		36,575		12,286		14,574		9,793		211,101		13,434		224,535
Special Mention	0		0		0		0		22,252		0		22,252		0		22,252
Total	84,678		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:
Pass	47,532		37,035		16,249		10,469		10,454		17,021		138,760		61,774		200,534
Special Mention	0		1,985		2,303		0		180		30		4,498		918		5,416
Substandard	207		0		0		0		0		145		352		0		352
Total	47,739		39,020		18,552		10,469		10,634		17,196		143,610		62,692		206,302
Loans for agricultural production:
Pass	36,238		25,855		4,224		11,072		1,331		4,178		82,898		138,142		221,040
Special Mention	448		8,642		1,171		0		0		0		10,261		8,272		18,533
Total	36,686		34,497		5,395		11,072		1,331		4,178		93,159		146,414		239,573
Other commercial loans:
Pass	6,556		21,111		3,243		1,273		8,592		7,460		48,235		21,145		69,380
Special Mention	0		0		0		0		0		3,798		3,798		0		3,798
Total	6,556		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
Pass	14,635		16,173		5,312		5,903		3,049		3,221		48,293		5,005		53,298
Substandard	0		0		0		0		0		1,274		1,274		0		1,274
Not Rated	45,089		27,738		9,248		5,217		7,628		26,321		121,241		482		121,723
Total	59,724		43,911		14,560		11,120		10,677		30,816		170,808		5,487		176,295
Open end and junior lien loans
Pass	679		379		159		313		0		0		1,530		5,074		6,604
Substandard	0		0		0		0		0		0		0		98		98
Not Rated	21,945		5,624		5,987		3,899		1,653		1,526		40,634		110,523		151,157
Total	22,624		6,003		6,146		4,212		1,653		1,526		42,164		115,695		157,859
Residential construction loans
Not Rated	7,926		1,537		960		138		171		1,125		11,857		0		11,857
Total	7,926		1,537		960		138		171		1,125		11,857		0		11,857
Other consumer loans
Pass	3,401		957		1,523		0		1,155		0		7,036		12,998		20,034
Substandard	36		23		230		0		0		0		289		0		289
Not Rated	21,652		14,931		7,474		5,844		1,890		1,203		52,994		9,227		62,221
Total	25,089		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

Aging of the Recorded Investment in Past Due Loans

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2022 and 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 Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2022
Commercial and industrial loans:
Working capital lines of credit loans	$	649,529	$	68	$	0	$	649,597	$	1,442	$	0	$	651,039
Non-working capital loans	830,033		39		1		830,073		11,622		727		841,695
Commercial real estate and multi-family residential loans:
Construction and land development loans	515,168		0		0		515,168		0		0		515,168
Owner occupied loans	754,451		0		0		754,451		3,065		1,469		757,516
Nonowner occupied loans	705,662		0		0		705,662		0		0		705,662
Multi-family loans	196,941		0		0		196,941		0		0		196,941
Agri-business and agricultural loans:
Loans secured by farmland	201,033		0		0		201,033		145		0		201,178
Loans for agricultural production	230,989		0		0		230,989		0		0		230,989
Other commercial loans	113,341		0		0		113,341		0		0		113,341
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	211,736		306		122		212,164		293		225		212,457
Open end and junior lien loans	176,758		436		0		177,194		188		188		177,382
Residential construction loans	19,170		0		0		19,170		0		0		19,170
Other consumer loans	87,333		316		0		87,649		209		6		87,858
Total	$	4,692,144	$	1,165	$	123	$	4,693,432	$	16,964	$	2,615	$	4,710,396

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2021
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 loans	735,658		1		0		731,063		4,596		229		735,659
Commercial real estate and multi-family residential loans:
Construction and land development loans	378,030		0		0		378,030		0		0		378,030
Owner occupied loans	738,791		0		0		735,157		3,634		2,129		738,791
Nonowner occupied loans	588,039		0		0		588,039		0		0		588,039
Multi-family loans	246,787		0		0		246,787		0		0		246,787
Agri-business and agricultural loans:
Loans secured by farmland	206,302		0		0		205,967		335		0		206,302
Loans for agricultural production	239,573		0		0		239,573		0		0		239,573
Other commercial loans	73,178		0		0		73,178		0		0		73,178
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	175,678		500		117		176,240		55		55		176,295
Open end and junior lien loans	157,729		130		0		157,761		98		98		157,859
Residential construction loans	11,857		0		0		11,857		0		0		11,857
Other consumer loans	82,472		72		0		82,255		289		0		82,544
Total	$	4,286,997	$	727	$	117	$	4,272,868	$	14,973	$	7,711	$	4,287,841

Amortized Cost Basis of Collateral Dependent Loans

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2022 and 2021:

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2022
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	5,402	$	0	$	5,452
Non-working capital loans	544		18,109		229		18,882
Commercial real estate and multi-family residential loans:
Owner occupied loans	413		1,491		1,161		3,065
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	0		145		0		145
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,030		0		0		2,030
Open end and junior lien loans	188		0		0		188
Other consumer loans	0		0		7		7
Total	$	3,225	$	25,147	$	1,397	$	29,769

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2021
Commercial and industrial loans:
Working capital lines of credit loans	$	0	$	5,966	$	0	$	5,966
Non-working capital loans	1,606		9,475		229		11,310
Commercial real estate and multi-family residential loans:
Owner occupied loans	1,435		1,505		1,161		4,101
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	190		145		0		335
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	3,081		0		0		3,081
Open end and junior lien loans	98		0		0		98
Other consumer loans	0		0		59		59
Total	$	6,410	$	17,091	$	1,449	$	24,950

Troubled Debt Restructuring

(dollars in thousands)	December 31, 2021
Accruing troubled debt restructured loans	$	5,121
Nonaccrual troubled debt restructured loans	6,218
Total troubled debt restructured loans	$	11,339

Loans by Class Modified as Troubled Debt Restructurings

The following table presents loans by class modified as new troubled debt restructurings that occurred during the year ending December 31, 2021:

						Modified Repayment Terms
(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Extension Period or Range (in months)
Troubled Debt Restructurings
Consumer 1-4 family loans:
Closed end first mortgage loans	2	$	217	$	217	2	172-204
Total	2	$	217	$	217	2	172-204

The following table presents loans by class modified as new troubled debt restructurings that occurred during the year ending December 31, 2020:

						Modified Repayment Terms
(dollars in thousands)	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Extension Period or Range (in months)
Troubled Debt Restructurings
Commercial and industrial loans:
Working capital lines of credit loans	1	$	250	$	315	1	0
Non-working capital lines of credit loans	2	4,288		3,691		2	0
Commercial real estate and multi-family residential loans:
Owner occupied loans	1	1,528		1,527		1	0
Total	4	$	6,066	$	5,533	4	0

Loans Individually Evaluated for Impairment

The following table presents loans individually evaluated for impairment by class of loans for the year ended December 31, 2020:

(dollars in thousands)	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Income Recognized
With no related allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	$	375	$	0	$	0
Non-working capital loans	816		21		21
Commercial real estate and multi-family residential loans:
Owner occupied loans	2,156		13		12
Agri-business and agricultural loans:
Loans secured by farmland	283		0		0
Loans for agricultural production	4		0		0
Consumer 1-4 family loans:
Closed end first mortgage loans	291		3		2
Open end and junior lien loans	49		0		0
With an allowance recorded:
Commercial and industrial loans:
Working capital lines of credit loans	2,433		0		0
Non-working capital loans	11,579		287		287
Commercial real estate and multi-family residential loans:
Construction and land development loans
Owner occupied loans	3,156		30		30
Agri-business and agricultural loans:
Loans secured by farmland	147		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	1,557		36		33
Open end and junior lien loans	481		0		0
Residential construction loans	35		0		0
Other consumer loans	0		0		0
Total	$	23,362	$	390	$	385