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Loans and Leases
 6 Months Ended
Jun. 30, 2022
Loans and Leases [Abstract]  
Loans and Leases
Note 4—Loans and Leases
Loans and leases as of the dates indicated consisted of the following:
(Dollars in thousands)
  
June 30,
2022
    
December 31,
2021
  
Loans and leases held for investment, net
            
Real estate:
            
Commercial
  
$
1,210,195
    
$
1,167,516
  
Agricultural
    
709,624
      
672,830
  
Residential and home equity
    
371,874
      
350,581
  
Construction
    
162,713
      
177,163
  
Total real estate
    
2,454,406
      
2,368,090
  
Commercial & industrial
    
439,455
      
427,799
  
Agricultural
    
261,856
      
276,684
  
Commercial leases
    
89,095
      
96,971
  
Consumer and other(1)
    
13,588
      
78,367
  
Total gross loans and leases
    
3,258,400
      
3,247,911
  
Unearned income
    
(8,514
)
    
(10,734
)
Total net loans and leases
    
3,249,886
      
3,237,177
  
Allowance for credit losses
    
(62,080
)
    
(61,007
)
Total loans and leases held for investment, net
  
$
3,187,806
    
$
3,176,170
  

(1)
Includes SBA PPP loans.

Paycheck Protection Program (“PPP”)—Under the CARES Act and H.R. 133 (see “Note 2 – Risks and Uncertainties”) the Small Business Administration (“SBA”) was directed by Congress to provide loans to small businesses with less than 500 employees to assist these businesses in meeting their payroll and other financial obligations during the COVID-19 pandemic. These government guaranteed loans are made with an interest rate of 1%, a risk weight of 0% under risk-based capital rules, have a term of 2 to 5 years, and under certain conditions the SBA will forgive them. The Bank actively participated in the PPP, and since April 2020, the Bank has funded $494.39 million of loans for 2,680 small business customers. PPP loans outstanding were $6.8 million and $70.8 million at June 30, 2022 and December 31, 2021, respectively.
At June 30, 2022, the portion of loans that were approved for pledging as collateral on borrowing lines with the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank (“FRB”) were $1.2 billion and $870 million, respectively. The borrowing capacity on these loans was $794 million from FHLB and $657 million from the FRB.

 

The following tables show an aging analysis of the loan & lease portfolio, including unearned income, by the time past due for the periods indicated:
   
June 30, 2022
  
(Dollars in thousands)
  
Current
    
30-89 Days
Past Due
    
90+ Days
Past Due
    
Non-
accrual
    
Total Past
Due
    
Total
  
Loans and leases held for investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,200,516
    
$
-
    
$
-
    
$
1,674
    
$
1,674
    
$
1,202,190
  
Agricultural
    
709,149
      
-
      
-
      
475
      
475
      
709,624
  
Residential and home equity
    
371,847
      
27
      
-
      
-
      
27
      
371,874
  
Construction
    
162,713
      
-
      
-
      
-
      
-
      
162,713
  
Total real estate
    
2,444,225
      
27
      
-
      
2,149
      
2,176
      
2,446,401
  
Commercial & industrial
    
439,258
      
197
      
-
      
-
      
197
      
439,455
  
Agricultural
    
260,977
      
-
      
-
      
879
      
879
      
261,856
  
Commercial leases
    
88,586
      
-
      
-
      
-
      
-
      
88,586
  
Consumer and other
    
13,578
      
10
      
-
      
-
      
10
      
13,588
  
Total loans and leases, net
  
$
3,246,624
    
$
234
    
$
-
    
$
3,028
    
$
3,262
    
$
3,249,886
  


   
December 31, 2021
  
(Dollars in thousands)
  
Current
    
30-89 Days
Past Due
    
90+ Days
Past Due
    
Non-
accrual
    
Total Past
Due
    
Total
  
Loans and leases held for investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,156,879
    
$
459
    
$
-
    
$
-
    
$
459
    
$
1,157,338
  
Agricultural
    
672,812
      
-
      
-
      
18
      
18
      
672,830
  
Residential and home equity
    
350,492
      
89
      
-
      
-
      
89
      
350,581
  
Construction
    
177,163
      
-
      
-
      
-
      
-
      
177,163
  
Total real estate
    
2,357,346
      
548
      
-
      
18
      
566
      
2,357,912
  
Commercial & industrial
    
427,799
      
-
      
-
      
-
      
-
      
427,799
  
Agricultural
    
276,186
      
-
      
-
      
498
      
498
      
276,684
  
Commercial leases
    
96,415
      
-
      
-
      
-
      
-
      
96,415
  
Consumer and other
    
78,363
      
4
      
-
      
-
      
4
      
78,367
  
Total loans and leases, net
  
$
3,236,109
    
$
552
    
$
-
    
$
516
    
$
1,068
    
$
3,237,177
  

 

Non-accrual loans are summarized as follows:
(Dollars in thousands)
  
June 30,
2022
    
December 31,
2021
 
Non-accrual loans and leases:
            
Non-accrual loans and leases, not TDRs
            
Real estate:
            
Commercial
  
$
1,674
    
$
-
  
Agricultural
    
475
      
18
  
Residential and home equity
    
-
      
-
  
Construction
    
-
      
-
  
Total real estate
    
2,149
      
18
  
Commercial & industrial
    
-
      
-
  
Agricultural
    
879
      
-
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
-
  
Subtotal
    
3,028
      
18
  
Non-accrual loans and leases, are TDRs
                
Real estate:
                
Commercial
  
$
-
    
$
-
  
Agricultural
    
-
      
-
  
Residential and home equity
    
-
      
-
  
Construction
    
-
      
-
  
Total real estate
    
-
      
-
  
Commercial & industrial
    
-
      
-
  
Agricultural
    
-
      
498
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
-
  
Subtotal
    
-
      
498
  
Total non-accrual loans and leases
  
$
3,028
    
$
516
  
 

The following table lists total troubled debt restructured loans that the Company is either accruing or not accruing interest by loan category:
(Dollars in thousands)
  
June 30,
2022
   
December 31,
2021
 
Troubled debt restructured loans and leases:
            
Accruing TDR loans and leases
            
Real estate:
            
Commercial
  
$
-
    
$
41
  
Agricultural
    
-
      
-
  
Residential and home equity
    
1,334
      
1,522
  
Construction
    
-
      
-
  
Total real estate
    
1,334
      
1,563
  
Commercial & industrial
    
55
      
260
  
Agricultural
    
-
      
-
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
1
  
Subtotal
    
1,389
      
1,824
  
Non-accruing TDR loans and leases
                
Real estate:
                
Commercial
   $
-
     $
-
  
Agricultural
    
-
      
-
  
Residential and home equity
    
-
      
-
  
Construction
    
-
      
-
  
Total real estate
    
-
      
-
  
Commercial & industrial
    
-
      
-
  
Agricultural
    
-
      
498
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
-
  
Subtotal
    
-
      
498
  
Total TDR loans and leases
  
$
1,389
    
$
2,322
  



The below table summarize TDRs outstanding as of June 30, 2022, by year of occurrence:


   
June 30, 2022
  
(Dollars in thousands)
  
# of Accruing
TDR
    
$ of Accruing
TDR
    
# of Non-
Accruing TDR
    
$ of Non-
Accruing TDR
    
# of Total TDR
    
$ of Total TDR
  
Loan and lease TDRs
                                    
2022
    
-
    
$
-
      
-
    
$
-
      
-
    
$
-
  
2021
    
1
      
48
      
-
      
-
      
1
      
48
  
2020
    
4
      
266
      
-
      
-
      
4
      
266
  
2019
    
-
      
-
      
-
      
-
      
-
      
-
  
Thereafter
    
8
      
1,075
      
-
      
-
      
8
      
1,075
  
Total
    
13
    
$
1,389
      
-
    
$
-
      
13
    
$
1,389
  



The Company did not enter into any troubled debt restructuring with borrowers during the six months ended June 30, 2022 and 2021, respectively.

 

Outstanding loan balances (accruing and non-accruing) categorized by these credit quality indicators are summarized as follows:
   
June 30, 2022
  
(Dollars in thousands)
  
Pass
    
Special
Mention
    
Sub-
standard
    
Doubtful
    
Total Loans
& Leases
    
Total
Allowance
for Credit
Losses
  
Loans and leases held for investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,187,461
    
$
8,629
    
$
6,100
    
$
-
    
$
1,202,190
    
$
17,879
  
Agricultural
    
697,994
      
5,003
      
6,627
      
-
      
709,624
      
16,837
  
Residential and home equity
    
371,494
      
-
      
380
      
-
      
371,874
      
6,874
  
Construction
    
160,787
      
1,926
      
-
      
-
      
162,713
      
2,876
  
Total real estate
    
2,417,736
      
15,558
      
13,107
      
-
      
2,446,401
      
44,466
  
Commercial & industrial
    
431,441
      
7,459
      
555
      
-
      
439,455
      
10,139
  
Agricultural
    
260,079
      
880
      
897
      
-
      
261,856
      
5,669
  
Commercial leases
    
88,468
      
118
      
-
      
-
      
88,586
      
1,645
  
Consumer and other
    
13,391
      
-
      
197
      
-
      
13,588
      
161
  
Total loans and leases, net
  
$
3,211,115
    
$
24,015
    
$
14,756
    
$
-
    
$
3,249,886
    
$
62,080
  


   
December 31, 2021
  
(Dollars in thousands)
  
Pass
    
Special
Mention
    
Sub-
standard
    
Doubtful
    
Total Loans
& Leases
    
Total
Allowance
for Credit
Losses
  
Loans and leases held for investment, net
                                    
Real estate:
                                    
Commercial
  
$
1,142,175
    
$
6,903
    
$
8,260
    
$
-
    
$
1,157,338
    
$
28,536
  
Agricultural
    
663,157
      
3,292
      
6,381
      
-
      
672,830
      
9,613
  
Residential and home equity
    
350,148
      
-
      
433
      
-
      
350,581
      
2,847
  
Construction
    
177,163
      
-
      
-
      
-
      
177,163
      
1,456
  
Total real estate
    
2,332,643
      
10,195
      
15,074
      
-
      
2,357,912
      
42,452
  
Commercial & industrial
    
417,806
      
9,321
      
672
      
-
      
427,799
      
11,489
  
Agricultural
    
275,206
      
958
      
520
      
-
      
276,684
      
5,465
  
Commercial leases
    
96,415
      
-
      
-
      
-
      
96,415
      
938
  
Consumer and other
    
78,181
      
-
      
186
      
-
      
78,367
      
663
  
Total loans and leases, net
  
$
3,200,251
    
$
20,474
    
$
16,452
    
$
-
    
$
3,237,177
    
$
61,007
  

 

The following table represents outstanding loan balances by credit quality indicators and vintage year by class of financing receivable as of June 30, 2022:
   
June 30, 2022
  
   
Term Loans Amortized Cost Basis by Origination Year
              
(Dollars in thousands)
  
2022
    
2021
    
2020
    
2019
    
2018
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Total
  
Net loans and leases held for investment
                                                
Real estate:
                                                
Commercial
                                                
Pass
  
$
64,720
    
$
239,840
    
$
161,165
    
$
73,041
    
$
87,035
    
$
237,333
    
$
324,326
    
$
1,187,461
  
Special mention
    
-
      
-
      
-
      
-
      
3,866
      
834
      
3,929
      
8,629
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
4,203
      
1,897
      
6,100
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial
  
$
64,720
    
$
239,840
    
$
161,165
    
$
73,041
    
$
90,901
    
$
242,370
    
$
330,152
    
$
1,202,190
  
                                                                 
Agricultural
                                                                
Pass
  
$
34,325
    
$
43,251
    
$
58,263
    
$
15,341
    
$
53,916
    
$
157,648
    
$
335,250
    
$
697,994
  
Special mention
    
-
      
-
      
2,367
      
2,636
      
-
      
-
      
-
      
5,003
  
Substandard
    
-
      
-
      
-
      
-
      
118
      
6,034
      
475
      
6,627
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
  
$
34,325
    
$
43,251
    
$
60,630
    
$
17,977
    
$
54,034
    
$
163,682
    
$
335,725
    
$
709,624
  
                                                                 
Residential and home equity
                                                                
Pass
  
$
40,868
    
$
100,298
    
$
90,939
    
$
15,957
    
$
7,140
    
$
82,590
    
$
33,702
    
$
371,494
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
235
      
145
      
380
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Residential and home equity
  
$
40,868
    
$
100,298
    
$
90,939
    
$
15,957
    
$
7,140
    
$
82,825
    
$
33,847
    
$
371,874
  
                                                                 
Construction
                                                                
Pass
  
$
-
    
$
-
    
$
-
    
$
2,272
    
$
-
    
$
92
    
$
158,423
    
$
160,787
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
1,926
      
1,926
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total construction
  
$
-
    
$
-
    
$
-
    
$
2,272
    
$
-
    
$
92
    
$
160,349
    
$
162,713
  
                                                                 
Total Real estate
  
$
139,913
    
$
383,389
    
$
312,734
    
$
109,247
    
$
152,075
    
$
488,969
    
$
860,073
    
$
2,446,401
  
                                                                 
Commercial & industrial
                                                                
Pass
  
$
8,395
    
$
44,225
    
$
15,482
    
$
12,734
    
$
10,126
    
$
9,183
    
$
331,296
    
$
431,441
  
Special mention
    
-
      
76
      
-
      
-
      
-
      
3
      
7,380
      
7,459
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
30
      
525
      
555
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial & industrial
  
$
8,395
    
$
44,301
    
$
15,482
    
$
12,734
    
$
10,126
    
$
9,216
    
$
339,201
    
$
439,455
  
                                                                 
Agricultural
                                                                
Pass
  
$
3,547
    
$
4,532
    
$
1,194
    
$
1,626
    
$
776
    
$
2,273
    
$
246,131
    
$
260,079
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
12
      
868
      
880
  
Substandard
    
-
      
-
      
-
      
14
      
4
      
79
      
800
      
897
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
 
$
3,547
    
$
4,532
    
$
1,194
    
$
1,640
    
$
780
    
$
2,364
    
$
247,799
    
$
261,856
  
                                                                 
Commercial leases
                                                                
Pass
  
$
1,566
    
$
17,129
    
$
14,293
    
$
8,473
    
$
21,686
    
$
25,320
    
$
-
    
$
88,468
  
Special mention
    
-
      
-
      
-
      
118
      
-
      
-
      
-
      
118
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial leases
  
$
1,566
    
$
17,129
    
$
14,293
    
$
8,591
    
$
21,686
    
$
25,320
    
$
-
    
$
88,586
  
                                                                 
Consumer and other
                                                                
Pass
  
$
901
    
$
7,589
    
$
475
    
$
350
    
$
531
    
$
2,713
    
$
832
    
$
13,391
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
197
      
-
      
-
      
-
      
-
      
-
      
-
      
197
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Consumer and other
  
$
1,098
    
$
7,589
    
$
475
    
$
350
    
$
531
    
$
2,713
    
$
832
    
$
13,588
  
                                                                 
Total net loans and leases
  
$
154,519
    
$
456,941
    
$
344,178
    
$
132,563
    
$
185,198
    
$
528,583
    
$
1,447,905
    
$
3,249,886
  

 

The following tables provide amortized cost basis for collateral dependent loans as of June 30, 2022 and December 31, 2021, respectively:
   
June 30, 2022
  
(Dollars in thousands)
  
Real Estate
    
Vehicles
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
-
    
$
-
    
$
-
  
Agricultural
    
5,533
      
-
      
5,533
  
Residential and home equity
    
216
      
-
      
216
  
Construction
    
-
      
-
      
-
  
Total Real estate
    
5,749
      
-
      
5,749
  
Commercial & industrial
    
-
      
-
      
-
  
Agricultural
    
-
      
-
      
-
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
165
      
165
  
Total gross loans and leases
  
$
5,749
    
$
165
    
$
5,914
  


   
December 31, 2021
  
(Dollars in thousands)
  
Real Estate
    
Vehicles
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
5
    
$
-
    
$
5
  
Agricultural
    
5,587
      
-
      
5,587
  
Residential and home equity
    
330
      
-
      
330
  
Construction
    
-
      
-
      
-
  
Total Real estate
    
5,922
      
-
      
5,922
  
Commercial & industrial
    
-
      
-
      
-
  
Agricultural
    
-
      
-
      
-
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
173
      
173
  
Total gross loans and leases
  
$
5,922
    
$
173
    
$
6,095
  

 

Changes in the allowance for credit losses are as follows:
   
For the Three Months Ended June 30, 2022
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Beginning balance
   $ 32,511     $ 3,777     $ 6,759     $ 16,098     $ 1,466     $ 421     $ 61,032  
Provision / (recapture) for credit losses
     2,205       (901 )     10       (131 )     179       (255 )     1,107  
Charge-offs
     -       -       -       (276 )     -       (9 )     (285 )
Recoveries
     -       -       105       117       -       4       226  
Net (charge-offs) / recoveries
     -       -       105       (159 )     -       (5 )     (59 )
Ending balance
   $ 34,716     $ 2,876     $ 6,874     $ 15,808     $ 1,645     $ 161     $ 62,080  



   
For the Six Months Ended June 30, 2022
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Beginning balance
   $ 38,149     $ 1,456     $ 2,847     $ 16,954     $ 938    
$
663
    
$
61,007
  
Impact of Adopting ASC 326
    (6,190 )     1,855       3,032       826       629       (152 )     -  
Provision / (recapture) for credit losses
     2,757       (435 )     876       (1,831 )     78       (338 )    
1,107
  
Charge-offs
     -       -       -       (276 )     -       (18 )    
(294
)
Recoveries
     -       -       119       135       -       6      
260
  
Net (charge-offs) / recoveries
     -       -       119       (141 )     -       (12 )    
(34
)
Ending balance
   $ 34,716     $ 2,876     $ 6,874     $ 15,808     $ 1,645     $ 161     $ 62,080