XML 20 R11.htm IDEA: XBRL DOCUMENT v3.23.3
Loans and Leases
 9 Months Ended
Sep. 30, 2023
Loans and Leases [Abstract]  
Loans and Leases
Note 3—Loans and Leases

Loans and leases as of the dates indicated consisted of the following:
(Dollars in thousands)
  
September 30,
2023
    
December 31,
2022
  
Loans and leases held-for-investment, net
            
Real estate:
            
Commercial
  
$
1,297,380
    
$
1,328,691
  
Agricultural
    
753,353
      
726,938
  
Residential and home equity
    
398,990
      
387,753
  
Construction
    
192,745
      
166,538
  
Total real estate
    
2,642,468
      
2,609,920
  
Commercial & industrial
    
489,772
      
478,758
  
Agricultural
    
301,951
      
314,525
  
Commercial leases
    
128,063
      
112,629
  
Consumer and other
    
5,553
      
5,886
  
Total gross loans and leases
    
3,567,807
      
3,521,718
  
Unearned income
    
(10,604
)
    
(9,357
)
Total net loans and leases
    
3,557,203
      
3,512,361
  
Allowance for credit losses
    
(74,159
)
    
(66,885
)
Total loans and leases held-for-investment, net
  
$
3,483,044
    
$
3,445,476
  

At September 30, 2023, 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 $1.3 billion and $1.5 billion, respectively. The borrowing capacity on these loans was $794.9 million from FHLB and $1.2 billion from the FRB.

The following tables show an aging analysis of the loan and lease portfolio, net of unearned income, by the time past due for the periods indicated:
   
September 30, 2023
  
(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
  
$
1,287,872
    
$
954
    
$
-
    
$
363
    
$
1,317
    
$
1,289,189
  
Agricultural
    
749,259
      
-
      
-
      
4,094
      
4,094
      
753,353
  
Residential and home equity
    
398,769
      
221
      
-
      
-
      
221
      
398,990
  
Construction
    
192,745
      
-
      
-
      
-
      
-
      
192,745
  
Total real estate
    
2,628,645
      
1,175
      
-
      
4,457
      
5,632
      
2,634,277
  
Commercial & industrial
    
489,653
      
80
      
-
      
39
      
119
      
489,772
  
Agricultural
    
301,951
      
-
      
-
      
-
      
-
      
301,951
  
Commercial leases
    
124,508
      
1,142
      
-
      
-
      
1,142
      
125,650
  
Consumer and other
    
5,541
      
12
      
-
      
-
      
12
      
5,553
  
Total loans and leases, net
  
$
3,550,298
    
$
2,409
    
$
-
    
$
4,496
    
$
6,905
    
$
3,557,203
  



   
December 31, 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
  
$
1,319,911
    
$
-
    
$
-
    
$
403
    
$
403
    
$
1,320,314
  
Agricultural
    
726,938
      
-
      
-
      
-
      
-
      
726,938
  
Residential and home equity
    
387,753
      
-
      
-
      
-
      
-
      
387,753
  
Construction
    
166,370
      
-
      
-
      
168
      
168
      
166,538
  
Total real estate
    
2,600,972
      
-
      
-
      
571
      
571
      
2,601,543
  
Commercial & industrial
    
478,758
      
-
      
-
      
-
      
-
      
478,758
  
Agricultural
    
314,525
      
-
      
-
      
-
      
-
      
314,525
  
Commercial leases
    
111,649
      
-
      
-
      
-
      
-
      
111,649
  
Consumer and other
    
5,789
      
97
      
-
      
-
      
97
      
5,886
  
Total loans and leases, net
  
$
3,511,693
    
$
97
    
$
-
    
$
571
    
$
668
    
$
3,512,361
  



Non-accrual loans are summarized as follows:
(Dollars in thousands)
  
September 30,
2023
    
December 31,
2022
 
Non-accrual loans and leases:
            
Real estate:
            
Commercial
  
$
363
    
$
403
  
Agricultural
    
4,094
      
-
  
Residential and home equity
    
-
      
-
  
Construction
    
-
      
168
  
Total real estate
    
4,457
      
571
  
Commercial & industrial
    
39
      
-
  
Agricultural
    
-
      
-
  
Commercial leases
    
-
      
-
  
Consumer and other
    
-
      
-
  
Total non-accrual loans and leases
  
$
4,496
    
$
571
  

During the nine months ended September 30, 2023, we had one residential real estate loan modified in the amount of $127,000.  The contractual interest rate of the modified loan decreased from 3.18% to 2.18% and the contractual term was extended from 15 years to 25 years.  There were no loans modified on or after January 1, 2023, when the Company adopted ASU 2022-02, through September 30, 2023 that subsequently defaulted during the period presented.

The following table presents the credit risk rating categories for loans and leases held-for-investment (accruing and non-accruing) net of unearned income by loan portfolio segment and class as of the dates indicated.
   
September 30, 2023
  
(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
  
$
1,271,547
    
$
17,279
    
$
363
    
$
-
    
$
1,289,189
    
$
26,724
  
Agricultural
    
736,338
      
6,793
      
10,222
      
-
      
753,353
      
7,241
  
Residential and home equity
    
398,216
      
-
      
774
      
-
      
398,990
      
7,458
  
Construction
    
192,745
      
-
      
-
      
-
      
192,745
      
3,612
  
Total real estate
    
2,598,846
      
24,072
      
11,359
      
-
      
2,634,277
      
45,035
  
Commercial & industrial
    
477,474
      
11,710
      
588
      
-
      
489,772
      
17,903
  
Agricultural
    
297,946
      
3,998
      
7
      
-
      
301,951
      
9,082
  
Commercial leases
    
125,625
      
25
      
-
      
-
      
125,650
      
1,967
  
Consumer and other
    
5,337
      
-
      
216
      
-
      
5,553
      
172
  
Total loans and leases, net
  
$
3,505,228
    
$
39,805
    
$
12,170
    
$
-
    
$
3,557,203
    
$
74,159
  


   
December 31, 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
  
$
1,314,377
    
$
5,535
    
$
402
    
$
-
    
$
1,320,314
    
$
18,055
  
Agricultural
    
709,927
      
10,891
      
6,120
      
-
      
726,938
      
14,496
  
Residential and home equity
    
387,371
      
-
      
382
      
-
      
387,753
      
7,508
  
Construction
    
166,370
      
-
      
168
      
-
      
166,538
      
3,026
  
Total real estate
    
2,578,045
      
16,426
      
7,072
      
-
      
2,601,543
      
43,085
  
Commercial & industrial
    
478,437
      
63
      
258
      
-
      
478,758
      
11,503
  
Agricultural
    
308,830
      
5,682
      
13
      
-
      
314,525
      
10,202
  
Commercial leases
    
111,568
      
81
      
-
      
-
      
111,649
      
1,924
  
Consumer and other
    
5,650
      
-
      
236
      
-
      
5,886
      
171
  
Total loans and leases, net
  
$
3,482,530
    
$
22,252
    
$
7,579
    
$
-
    
$
3,512,361
    
$
66,885
  

 
The following table presents outstanding loan and lease balances held-for-investment by segment and class, credit quality indicators, vintage year by class of financing receivable, and current period gross charge-offs by year of origination as of September 30, 2023:


   
September 30, 2023
  
   
Term Loans Amortized Cost Basis by Origination Year
              
(Dollars in thousands)
  
2023
    
2022
    
2021
    
2020
    
2019
    
Prior
    
Revolving
Loans
Amortized
Cost
    
Total
  
Net loans and leases held-for-investment
                                                
Real estate:
                                                
Commercial
                                                
Pass
  
$
94,553
    
$
171,741
    
$
209,733
    
$
144,704
    
$
68,258
    
$
270,620
    
$
311,938
    
$
1,271,547
  
Special mention
    
-
      
-
      
14,527
      
-
      
-
      
1,797
      
955
      
17,279
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
363
      
-
      
363
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial
  
$
94,553
    
$
171,741
    
$
224,260
    
$
144,704
    
$
68,258
    
$
272,780
    
$
312,893
    
$
1,289,189
  
Commercial
                                                               
Current-period gross charge-offs
  $
 		-     $
-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Agricultural
                                                               
Pass
  
$
40,919
    
$
74,346
    
$
41,434
    
$
50,996
    
$
12,164
    
$
168,019
    
$
348,460
    
$
736,338
  
Special mention
    
-
      
-
      
-
      
594
      
2,020
      
4,179
      
-
      
6,793
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
6,128
      
4,094
      
10,222
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
 
$
40,919
    
$
74,346
    
$
41,434
    
$
51,590
    
$
14,184
    
$
178,326
    
$
352,554
    
$
753,353
  
Agricultural
                                                                
Current-period gross charge-offs
   $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Residential and home equity
                                                                
Pass
  
$
33,656
    
$
63,154
    
$
90,089
    
$
80,757
    
$
13,514
    
$
72,734
    
$
44,312
    
$
398,216
  
Special mention
     -       -       -       -       -       -       -       -  
Substandard
    
-
      
-
      
-
      
-
      
-
      
774
      
-
      
774
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Residential and home equity
  
$
33,656
    
$
63,154
    
$
90,089
    
$
80,757
    
$
13,514
    
$
73,508
    
$
44,312
    
$
398,990
  
Residential and home equity
                                                                
Current-period gross charge-offs
   $
-     $
 		-     $
 		-     $
-     $
-     $
 		14     $
 		-     $
 		14  
                                                                 
Construction
                                                                
Pass
  
$
-
    
$
3,000
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
188,170
    
$
192,745
  
Special mention
     -       -       -       -       -       -       -       -  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total construction
  
$
-
    
$
3,000
    
$
-
    
$
-
    
$
1,575
    
$
-
    
$
188,170
    
$
192,745
  
Construction
    




























 
Current-period gross charge-offs
   $
 		-     $
 		-     $
 		-     $
-     $
 		-     $
 		-     $
 		-     $
 		-  
                                                                 
Total Real estate
  
$
169,128
    
$
312,241
    
$
355,783
    
$
277,051
    
$
97,531
    
$
524,614
    
$
897,929
    
$
2,634,277
  
                                                                 
Commercial & industrial
                                                                
Pass
  
$
47,471
    
$
27,835
    
$
23,821
    
$
8,612
    
$
5,357
    
$
7,741
    
$
356,637
    
$
477,474
  
Special mention
    
-
      
-
      
4,878
      
-
      
-
      
-
      
6,832
      
11,710
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
499
      
89
      
588
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial & industrial
  
$
47,471
    
$
27,835
    
$
28,699
    
$
8,612
    
$
5,357
    
$
8,240
    
$
363,558
    
$
489,772
  
Commercial & industrial
                                                                
Current-period gross charge-offs
   $
 		-     $ -     $
 		-     $
 		-     $
 		-     $
 		-     $
-     $
 		-  
 

    September 30, 2023  
    Term Loans Amortized Cost Basis by Origination Year                
(Dollars in thousands)   2023     2022     2021     2020     2019     Prior    
Revolving
Loans
Amortized
Cost
     Total  
Agricultural
                                                        
Pass
  
$
3,311
    
$
4,770
    
$
2,279
    
$
709
    
$
1,100
    
$
2,158
    
$
283,619
    
$
297,946
  
Special mention
    
-
      
-
      
75
      
-
      
-
      
-
      
3,923
      
3,998
  
Substandard
    
-
      
-
      
-
      
-
      
7
      
-
      
-
      
7
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Agricultural
 
$
3,311
    
$
4,770
    
$
2,354
    
$
709
    
$
1,107
    
$
2,158
    
$
287,542
    
$
301,951
  
Agricultural
                                                                
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Commercial leases
                                                                
Pass
  
$
35,681
    
$
33,040
    
$
11,381
    
$
9,943
    
$
4,994
    
$
30,586
    
$
-
    
$
125,625
  
Special mention
    
-
      
-
      
-
      
-
      
25
      
-
      
-
      
25
  
Substandard
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Commercial leases
  
$
35,681
    
$
33,040
    
$
11,381
    
$
9,943
    
$
5,019
    
$
30,586
    
$
-
    
$
125,650
  
Commercial leases
                                                                
Current-period gross charge-offs
   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
                                                                 
Consumer and other
                                                                
Pass
  
$
1,470
    
$
1,078
    
$
466
    
$
105
    
$
67
    
$
1,552
    
$
599
    
$
5,337
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
191
      
-
      
-
      
-
      
-
      
25
      
-
      
216
  
Doubtful
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Total Consumer and other
  
$
1,661
    
$
1,078
    
$
466
    
$
105
    
$
67
    
$
1,577
    
$
599
    
$
5,553
  
Consumer and other
                                                                
Current-period gross charge-offs
   $ 30     $ 3     $ -     $ -     $ -     $ -     $ -     $ 33  
Total net loans and leases
                                                                
Pass
   $
 257,061     $
 378,964     $
 379,203     $
 295,826     $
 107,029     $
 553,410     $
 1,533,735     $
 3,505,228  
Special mention
     -       -       19,480       594       2,045       5,976       11,710       39,805  
Substandard
     191       -       -       -       7       7,789       4,183       12,170  
Doubtful
     -       -       -       -       -       -       -       -  
Total net loans and leases
  
$
257,252
    
$
378,964
    
$
398,683
    
$
296,420
    
$
109,081
    
$
567,175
    
$
1,549,628
    
$
3,557,203
  
Total current-period gross charge-offs
   $ 30     $ 3     $ -     $ -     $ -     $ 14     $ -     $ 47  

Certain directors and executive officers of the Company are defined as related parties. These related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during the nine months ended September 30, 2023 and year ended December 31, 2022. Such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with borrowers not related to the Company. These loans did not involve more than the normal risk of collection or have other unfavorable features. A summary of the changes in those loans is as follows:

   
September 30,
    
December 31,
  
(Dollars in thousands)
  
2023
    
2022
  

           
Balance at beginning of the period
  
$
17,521
    
$
18,128
  
New loans or advances during year
    
1,706
      
523
  
Repayments
    
(1,655
)
    
(1,130
)
Balance at end of period
  
$
17,572
    
$
17,521
  



A loan or lease is considered collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. When management determines that foreclosure is probable, expected credit losses for collateral dependent loans or leases are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The collateral on the loans and leases is a significant portion of what secures the collateral dependent loans or leases and significant changes to the fair value of the collateral can impact the ACL. During the nine months ended September 30, 2023, there were no significant changes to the collateral that secures the collateral dependent loans, whether due to general deterioration or with credit quality indicators like appraisal value. The following tables present the amortized cost basis for collateral dependent loans and leases by type as of September 30, 2023 and December 31, 2022, respectively:
   
September 30, 2023
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
1,450
    
$
-
    
$
1,450
  
Agricultural
    
10,222
      
-
      
10,222
  
Residential and home equity
    
1,630
      
-
      
1,630
  
Construction
    
-
      
-
      
-
  
Total real estate
    
13,302
      
-
      
13,302
  
Commercial & industrial
    
89
      
495
      
584
  
Agricultural
    
-
      
7
      
7
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
171
      
171
  
Total collateral dependent, gross loans and leases
  
$
13,391
    
$
673
    
$
14,064
  


   
December 31, 2022
  
(Dollars in thousands)
  
Real Estate
    
Vehicles and
Equipment
    
Total
  
Collateral dependent loans and leases
                  
Real estate:
                  
Commercial
  
$
1,114
    
$
-
    
$
1,114
  
Agricultural
    
11,035
      
-
      
11,035
  
Residential and home equity
    
2,153
      
-
      
2,153
  
Construction
    
-
      
-
      
-
  
Total real estate
    
14,302
      
-
      
14,302
  
Commercial & industrial
    
-
      
-
      
-
  
Agricultural
    
-
      
13
      
13
  
Commercial leases
    
-
      
-
      
-
  
Consumer and other
    
-
      
158
      
158
  
Total collateral dependent, gross loans and leases
  
$
14,302
    
$
171
    
$
14,473
  



Changes in the allowance for credit losses are as follows:

   
For the Three Months Ended September 30, 2023
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning of period
   $ 34,695     $ 3,195     $ 7,179     $ 24,194     $ 1,657     $ 192     $ 71,112  
Provision / (recapture) for credit losses
     (730 )     417       268       2,748       310       (13 )     3,000  
Charge-offs
     -       -       -       -       -       (15 )     (15 )
Recoveries
     -       -       11       43       -       8       62  
Net (charge-offs) / recoveries
     -       -       11       43       -       (7 )     47  
Balance at end of period
   $ 33,965     $ 3,612     $ 7,458     $ 26,985     $ 1,967     $ 172     $ 74,159  

   
For the Three Months Ended September 30, 2022
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning
   $ 34,716     $ 2,876     $ 6,874     $ 15,808     $ 1,645     $ 161     $ 62,080  
Provision / (recapture) for credit losses
     (1,616 )     119       (15 )     3,063       (57 )     5       1,499  
Charge-offs
     -       -       -       (48 )     -       (20 )     (68 )
Recoveries
     -       -       6       92       -       8       106  
Net (charge-offs) / recoveries
     -       -       6       44       -       (12 )     38  
Balance at end of period
   $ 33,100     $ 2,995     $ 6,865     $ 18,915     $ 1,588     $ 154     $ 63,617  

   
For the Nine Months Ended September 30, 2023
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning of period
   $ 32,551     $ 3,026     $ 7,508     $ 21,705     $ 1,924     $ 171     $ 66,885  
Provision / (recapture) for credit losses
     1,244       586       (78 )     5,196       43     9       7,000  
Charge-offs
     -       -       (14 )     -       -       (33 )     (47 )
Recoveries
     170       -       42       84       -       25       321  
Net (charge-offs) / recoveries
     170       -       28       84       -       (8 )     274  
Balance at end of period
   $ 33,965     $ 3,612     $ 7,458     $ 26,985     $ 1,967     $ 172     $ 74,159  

   
For the Nine Months Ended September 30, 2022
  
(Dollars in thousands)
  
Commercial &
Agricultural
R/E
    
Construction
    
Residential &
Home Equity
    
Commercial
&
Agricultural
    
Commercial
Leases
    
Consumer
& Other
    
Total
  
Allowance for credit losses:
                                          
Balance at beginning of period
   $ 38,149     $ 1,456     $ 2,847     $ 16,954     $ 938     $ 663     $ 61,007  
Impact of Adopting ASC 326
    -       -       -       -       -       -       -  
Provision / (recapture) for credit losses
     (5,049 )     1,539       3,893       2,058       650       (485 )     2,606  
Charge-offs
     -       -       -       (324 )     -       (38 )     (362 )
Recoveries
     -       -       125       227       -       14       366  
Net (charge-offs) / recoveries
     -       -       125       (97 )     -       (24 )     4  
Balance at end of period
   $ 33,100     $ 2,995     $ 6,865     $ 18,915     $ 1,588     $ 154     $ 63,617