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Basis of Presentation and Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2022
Basis of Presentation and Significant Accounting Policies [Abstract]  
Accounting Standards Adoption
On January 1, 2022, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology that delays recognition until it is probable a loss has been incurred with an expected loss methodology that is referred to as CECL.


In adopting ASU 2016-13 (Topic 326) Management determined that the Weighted Average Remaining Maturity (“WARM”) method was most appropriate given the Company’s current size and complexity.



The implementation of the WARM method did not result in any material change in the calculation of the Company’s December 31, 2021 Allowance for Credit Losses, therefore, no adjustment to Shareholders’ Equity was made as of January 1, 2022.
The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU affects loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial asset not excluded from the scope that have the contractual right to receive cash. The ASU replaces the incurred loss impairment methodology in previous GAAP with CECL, a methodology that reflects current expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This ASU broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss, which will be more decision useful to users of the financial statements.
The following table illustrates the pre-tax impact of the adoption of this ASU:
 
  
January-2022
  
 
  
Reported
    
Reported
    
Impact of
  
 
  
under
    
Pre-
    
ASC 326
  
(Dollars in thousands)
  
ASC 326
    
Adoption
    
Adoption
  
Allowance for credit losses:
                  
Real estate:
                  
Commercial
  
$
(17,379
)
  
$
(28,536
)
  
$
11,157
  
Agricultural
    
(14,580
)
    
(9,613
)
    
(4,967
)
Residential and home equity
    
(5,879
)
    
(2,847
)
    
(3,032
)
Construction
    
(3,311
)
    
(1,456
)
    
(1,855
)
Total real estate
    
(41,149
)
    
(42,452
)
    
1,303
  
Commercial & industrial
    
(11,417
)
    
(11,489
)
    
72
  
Agricultural
    
(6,363
)
    
(5,465
)
    
(898
)
Commercial leases
    
(1,567
)
    
(938
)
    
(629
)
Consumer and other
    
(511
)
    
(663
)
    
152
  
Total allowance for credit losses
  
$
(61,007
)
  
$
(61,007
)
  
$
-
  
 
Subsequent events
Subsequent events — The Company has evaluated events occurring subsequent to March 31, 2022 for disclosure in the consolidated financial statements.