ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (Tables)

9 Months Ended

Sep. 30, 2023

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:


(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended September 30, 2023
Beginning balance, July 1	$	30,978	$	30,913	$	4,402	$	1,120	$	3,448	$	846	$	351	$	72,058
Provision for credit losses	(167)		230		(139)		(102)		197		283		98		400
Loans charged-off	(193)		0		0		0		(149)		(138)		0		(480)
Recoveries	21		12		0		0		3		91		0		127
Net loans (charged-off) recovered	(172)		12		0		0		(146)		(47)		0		(353)
Ending balance	$	30,639	$	31,155	$	4,263	$	1,018	$	3,499	$	1,082	$	449	$	72,105


(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Three Months Ended September 30, 2022
Beginning balance, July 1	$	31,195	$	26,448	$	4,753	$	713	$	2,674	$	1,093	$	647	$	67,523
Provision for credit losses	1,357		(678)		(547)		16		(197)		71		(22)		0
Loans charged-off	(222)		0		0		0		(20)		(131)		0		(373)
Recoveries	18		25		0		0		3		43		0		89
Net loans (charged-off) recovered	(204)		25		0		0		(17)		(88)		0		(284)
Ending balance	$	32,348	$	25,795	$	4,206	$	729	$	2,460	$	1,076	$	625	$	67,239


(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Nine Months Ended September 30, 2023
Beginning balance, January 1	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606
Provision for credit losses	1,065		3,465		(166)		101		642		548		(105)		5,550
Loans charged-off	(5,844)		0		0		0		(163)		(759)		0		(6,766)
Recoveries	128		296		0		0		19		272		0		715
Net loans (charged-off) recovered	(5,716)		296		0		0		(144)		(487)		0		(6,051)
Ending balance	$	30,639	$	31,155	$	4,263	$	1,018	$	3,499	$	1,082	$	449	$	72,105


(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multifamily Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
Nine Months Ended September 30, 2022
Beginning balance, January 1	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	1,948		(168)		(828)		(417)		(411)		118		175		417
Loans charged-off	(254)		(597)		0		0		(42)		(318)		0		(1,211)
Recoveries	59		25		0		0		47		129		0		260
Net loans (charged-off) recovered	(195)		(572)		0		0		5		(189)		0		(951)
Ending balance	$	32,348	$	25,795	$	4,206	$	729	$	2,460	$	1,076	$	625	$	67,239

Schedule of Risk Category of Loans by Loan Segment and Origination Date and Credit Quality Indicators

The following table summarizes the risk category of loans by loan segment and year of origination as of September 30, 2023:


(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	233	$	1,959	$	2,342	$	1,250	$	0	$	0	$	5,784	$	509,151	$	514,935
Special Mention	0		0		0		0		0		0		0		67,764		67,764
Substandard	0		310		75		0		139		0		524		6,155		6,679


Total	233		2,269		2,417		1,250		139		0		6,308		583,070		589,378
Working capital lines of credit loans:
Current period gross write offs	0		0		0		0		125		0		125		161		286
Non-working capital loans:
Pass	147,472		257,402		91,572		54,567		35,601		15,151		601,765		168,621		770,386
Special Mention	490		8,926		1,051		2,279		2,644		5,643		21,033		5,253		26,286
Substandard	575		2,699		689		4,036		62		632		8,693		564		9,257

Not Rated	2,008		2,308		1,012		964		214		36		6,542		0		6,542
Total	150,545		271,335		94,324		61,846		38,521		21,462		638,033		174,438		812,471
Non-working capital loans:
Current period gross write offs	0		5,400		0		0		118		0		5,518		40		5,558
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	41,662		20,498		10,870		13,078		178		0		86,286		544,725		631,011
Special Mention	0		0		0		0		0		0		0		0		0



Total	41,662		20,498		10,870		13,078		178		0		86,286		544,725		631,011
Construction and land development loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Owner occupied loans:
Pass	114,935		135,960		158,405		132,051		65,426		129,363		736,140		36,067		772,207
Special Mention	6,696		694		8,449		0		1,735		2,758		20,332		14,628		34,960


Substandard	223	265	0	1,476	352	1,160	3,476	0	3,476


Total	121,854	136,919	166,854	133,527	67,513	133,281	759,948	50,695	810,643
Owner occupied loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Nonowner occupied loans:
Pass	85,176	176,453	130,612	130,626	88,244	72,871	683,982	43,097	727,079
Special Mention	4,552	0	6,352	0	0	2,268	13,172	0	13,172



Total	89,728	176,453	136,964	130,626	88,244	75,139	697,154	43,097	740,251
Nonowner occupied loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Multifamily loans:
Pass	78,741	23,445	9,094	35,972	33,621	30,149	211,022	5,518	216,540
Special Mention	19,735	0	0	0	0	0	19,735	0	19,735



Total	98,476	23,445	9,094	35,972	33,621	30,149	230,757	5,518	236,275
Multifamily loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	20,352	32,883	25,842	27,886	9,940	20,114	137,017	46,102	183,119
Special Mention	0	0	0	0	8	0	8	0	8
Substandard	0	0	0	0	0	105	105	0	105


Total	20,352	32,883	25,842	27,886	9,948	20,219	137,130	46,102	183,232
Loans secured by farmland:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Loans for agricultural production:
Pass	27,282	11,290	27,881	26,015	3,981	11,077	107,526	88,811	196,337
Special Mention	0	0	201	351	0	0	552	500	1,052



Total	27,282	11,290	28,082	26,366	3,981	11,077	108,078	89,311	197,389
Loans for agricultural production:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Other commercial loans:
Pass	6,057	28,024	39,057	14,778	102	7,488	95,506	27,640	123,146
Special Mention	0	0	0	0	0	2,607	2,607	0	2,607



Total	6,057	28,024	39,057	14,778	102	10,095	98,113	27,640	125,753
Other commercial loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans:
Pass	8,072	10,663	12,954	9,354	4,476	4,753	50,272	9,674	59,946
Special Mention	0	0	0	527	0	0	527	0	527
Substandard	0	0	96	125	0	258	479	0	479

Not Rated	45,488	52,631	39,206	17,653	4,378	26,466	185,822	0	185,822
Total	53,560	63,294	52,256	27,659	8,854	31,477	237,100	9,674	246,774
Closed end first mortgage loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Open end and junior lien loans:
Pass	565	137	504	339	0	7	1,552	8,722	10,274

Substandard	0	0	0	0	27	48	75	129	204

Not Rated	21,491	32,685	9,517	1,780	2,547	2,196	70,216	110,806	181,022
Total	22,056	32,822	10,021	2,119	2,574	2,251	71,843	119,657	191,500
Open end and junior lien loans:
Current period gross write offs	0	50	14	0	0	0	64	99	163
Residential construction loans:




Not Rated	1,551	7,352	1,546	857	269	1,230	12,805	0	12,805
Total	1,551	7,352	1,546	857	269	1,230	12,805	0	12,805
Residential construction loans:
Current period gross write offs	0	0	0	0	0	0	0	0	0
Other consumer loans:
Pass	1,908	808	1,505	358	0	0	4,579	13,393	17,972

Substandard	0	0	0	0	3	0	3	0	3

Not Rated	23,815	19,098	11,043	6,686	1,952	2,275	64,869	10,639	75,508
Total	25,723	19,906	12,548	7,044	1,955	2,275	69,451	24,032	93,483


Other consumer loans:
Current period gross write offs	1		255		91		6		212		1		566		193		759

Total period gross write offs	1		5,705		105		6		455		1		6,273		493		6,766

Total Loans	$	659,079	$	826,490	$	589,875	$	483,008	$	255,899	$	338,655	$	3,153,006	$	1,717,959	$	4,870,965

The following table summarizes the risk category of loans by loan segment and year of origination as of December 31, 2022:


(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
Multifamily 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

Schedule of Aging of the Amortized Cost Basis In Past Due Loans

The following table presents the aging of the amortized cost basis in past due loans as of September 30, 2023 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
Commercial and industrial loans:
Working capital lines of credit loans	$	583,816	$	190	$	0	$	584,006	$	5,372	$	109	$	589,378
Non-working capital loans	805,042		205		0		805,247		7,224		253		812,471
Commercial real estate and multi-family residential loans:
Construction and land development loans	631,011		0		0		631,011		0		0		631,011
Owner occupied loans	807,741		0		0		807,741		2,902		1,426		810,643
Nonowner occupied loans	740,251		0		0		740,251		0		0		740,251
Multifamily loans	236,275		0		0		236,275		0		0		236,275
Agri-business and agricultural loans:
Loans secured by farmland	183,128		0		0		183,128		104		0		183,232
Loans for agricultural production	197,389		0		0		197,389		0		0		197,389
Other commercial loans	125,753		0		0		125,753		0		0		125,753
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	245,544		729		19		246,292		482		336		246,774
Open end and junior lien loans	191,127		171		0		191,298		202		202		191,500
Residential construction loans	12,805		0		0		12,805		0		0		12,805
Other consumer loans	92,995		484		0		93,479		4		4		93,483
Total	$	4,852,877	$	1,779	$	19	$	4,854,675	$	16,290	$	2,330	$	4,870,965

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 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 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
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
Multifamily 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

Schedule of 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:


	September 30, 2023
(dollars in thousands)	Real Estate		General Business Assets		Other		Total
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	5,063	$	109	$	5,222
Non-working capital loans	44		6,689		394		7,127
Commercial real estate and multi-family residential loans:
Owner occupied loans	617		1,476		1,161		3,254

Agri-business and agricultural loans:
Loans secured by farmland	0		104		0		104
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	482		0		0		482
Open end and junior lien loans	202		0		0		202
Other consumer loans	0		0		4		4
Total	$	1,395	$	13,332	$	1,668	$	16,395


	December 31, 2022
(dollars in thousands)	Real Estate		General Business Assets		Other		Total
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

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

Schedule of Financing Receivable, Troubled Debt Restructuring

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 receivables at the end of the reporting period is also presented below:


(dollars in thousands)	Interest Rate Reduction		Combination Interest Rate Reduction and Term Extension		Combination Principal Forgiveness, Interest Rate Reduction and Term Extension		Total Modifications		Total Class of Financing Receivable
Three Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	2,000	$	931	$	0	$	2,931	0.50	%
Non-working capital loans	0		0		0		0		0.00
Total commercial and industrial loans	2,000		931		0		2,931		0.21























Total loan modifications made to borrowers experiencing financial difficulty	$	2,000	$	931	$	0	$	2,931	0.06	%


(dollars in thousands)	Interest Rate Reduction		Combination Interest Rate Reduction and Term Extension		Combination Principal Forgiveness, Interest Rate Reduction and Term Extension		Total Modifications		Total Class of Financing Receivable
Nine Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	2,000	$	931	$	0	$	2,931	0.50	%
Non-working capital loans	0		0		1,596		1,596		0.20
Total commercial and industrial loans	2,000		931		1,596		4,527		0.32
























Total loan modifications made to borrowers experiencing financial difficulty	$	2,000	$	931	$	1,596	$	4,527	0.09	%

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

(dollars in thousands)

Principal Forgiveness

Interest Rate Reduction
Financial Effect

Term Extension
Financial Effect

Total Class of Financing Receivable

Three Months Ended September 30, 2023

Commercial and industrial loans:

Working capital lines of credit loans

Reduction of two variable Prime Rate lines of credit to 1.00% Fixed

Reduction of one variable line of credit from Prime plus 1.00% to 1.00% Fixed

Extension of terms for one variable rate line of credit from 12 months to 120 months

0.50

Non-working capital loans

No modifications

0.00

(dollars in thousands)

Principal Forgiveness

Interest Rate Reduction
Financial Effect

Term Extension
Financial Effect

Total Class of Financing Receivable

Nine Months Ended September 30, 2023

Commercial and industrial loans:

Working capital lines of credit loans

Reduction of two variable Prime Rate lines of credit to 1.00% Fixed

Reduction of one variable line of credit from Prime plus 1.00% to 1.00% Fixed

Term extension for one variable rate line of credit from 12 months to 120 months

0.50

Non-working capital loans

9,380

Reduction of one term loan from Prime plus 0.75% to 1.00% Fixed

Term extension from 40 months to 300 months

0.20