LOANS AND ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2024

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Types of loans and normal collateral securing those loans are listed below.

Commercial real estate: Commercial real estate loans include all loans secured by non-farm, nonresidential properties and by multifamily residential properties, as well as 1-4 family investment-purpose real estate loans.

Commercial and industrial: Commercial and industrial loans include loans used to purchase fixed assets, provide working capital or meet other financing needs of the business. Loans are normally secured by the assets being purchased or already owned by the borrower, inventory or accounts receivable. These may include SBA and other guaranteed or partially guaranteed types of loans.

Residential real estate: Residential real estate loans include loans secured by primary or secondary personal residences.

Agricultural real estate: Agricultural real estate loans are loans typically secured by farmland.

Agricultural: Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. These loans may be secured by growing crops, stored crops, livestock, equipment, and miscellaneous receivables.

Consumer: Consumer loans may include installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit. These loans are generally secured by consumer assets but may be unsecured.

The following table lists categories of loans at June 30, 2024, and December 31, 2023.


	June 30, 2024			December 31, 2023
Commercial real estate	$	1,793,544		$	1,759,855
Commercial and industrial		663,718			598,327
Residential real estate		572,523			556,328
Agricultural real estate		219,226			196,114
Agricultural		104,342			118,587
Consumer		101,054			103,690
Total loans		3,454,407			3,332,901
Allowance for credit losses		(43,487	)		(43,520	)
Net loans	$	3,410,920		$	3,289,381

From time to time, the Company has purchased pools of residential real estate loans originated by other financial institutions to hold for investment with the intent to diversify the residential real estate portfolio. During the three and six months ended June 30, 2024, and 2023, the Company did not purchase any pools of residential loans. As of June 30, 2024, and December 31, 2023, residential real estate loans include $287,972 and $299,448 of purchased residential real estate loans.

The Company occasionally purchases the government guaranteed portion of loans originated by other financial institutions to hold for investment. During the three and six months ended June 30, 2024, the Company purchased $2,727 and $6,907 in loans guaranteed by governmental agencies. During the three and six months ended June 30, 2023, the Company purchased $433 and $1,235 in loans guaranteed by governmental agencies.

The unamortized purchase accounting discounts related to non-purchase credit deteriorated loans included in the loan totals above are $4,644 with related loans of $281,273 at June 30, 2024, and $2,424 with related loans of $209,662 at December 31, 2023.

Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled $425 at June 30, 2024, and $387 at December 31, 2023.

The following tables present the activity in the allowance for credit losses by class for the three month periods ended June 30, 2024, and 2023.


June 30, 2024	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	13,582		$	17,651		$	8,319		$	1,688		$	1,612		$	1,597		$	44,449
Provision for credit losses		888			(87	)		(256	)		566			(1,090	)		244			265
Initial PCD on Acquired loans		—			—			—			—			—			—			—
Loans charged-off		(2	)		(1,211	)		(6	)		(1	)		(1	)		(159	)		(1,380	)
Recoveries		24			54			9			1			1			64			153
Total ending allowance balance	$	14,492		$	16,407		$	8,066		$	2,254		$	522		$	1,746		$	43,487


June 30, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	16,611		$	15,620		$	8,751		$	586		$	1,547		$	1,988		$	45,103
Provision for credit losses		(20	)		167			114			(6	)		(150	)		193			298
Loans charged-off		(9	)		(640	)		(52	)		—			(108	)		(259	)		(1,068	)
Recoveries		70			47			42			3			—			49			211
Total ending allowance balance	$	16,652		$	15,194		$	8,855		$	583		$	1,289		$	1,971		$	44,544

The following tables present the activity in the allowance for credit losses by class for the six month periods ended June 30, 2024, and 2023.


June 30, 2024	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	13,476		$	17,954		$	7,784		$	1,718		$	995		$	1,593		$	43,520
Provision for credit losses		1,004			(20	)		112			535			(731	)		365			1,265
Initial PCD on Acquired loans		—			119			184			—			284			9			596
Loans charged-off		(19	)		(1,842	)		(33	)		(1	)		(27	)		(340	)		(2,262	)
Recoveries		31			196			19			2			1			119			368
Total ending allowance balance	$	14,492		$	16,407		$	8,066		$	2,254		$	522		$	1,746		$	43,487


June 30, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	16,731		$	14,951		$	8,608		$	819		$	2,457		$	2,281		$	45,847
Provision for credit losses		(146	)		1,267			246			(239	)		(1,215	)		19			(68	)
Loans charged-off		(10	)		(1,075	)		(57	)		—			(108	)		(456	)		(1,706	)
Recoveries		77			51			58			3			155			127			471
Total ending allowance balance	$	16,652		$	15,194		$	8,855		$	583		$	1,289		$	1,971		$	44,544

The following tables present the recorded investment in loans and the balance in the allowance for credit losses by portfolio and class based on the method to determine allowance for credit loss as of June 30, 2024, and December 31, 2023.


June 30, 2024	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
Allowance for credit losses:
Individually evaluated for credit losses	$	853	$	2,153	$	1,205	$	652	$	250	$	202	$	5,315
Collectively evaluated for credit losses		13,639		14,254		6,861		1,602		272		1,544		38,172
Total	$	14,492	$	16,407	$	8,066	$	2,254	$	522	$	1,746	$	43,487
Loan Balance:
Individually evaluated for credit losses	$	7,158	$	7,143	$	5,127	$	7,058	$	2,611	$	915	$	30,012
Collectively evaluated for credit losses		1,786,386		656,575		567,396		212,168		101,731		100,139		3,424,395
Total	$	1,793,544	$	663,718	$	572,523	$	219,226	$	104,342	$	101,054	$	3,454,407


December 31, 2023	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
Allowance for credit losses:
Individually evaluated for credit losses	$	582	$	1,644	$	1,113	$	674	$	598	$	154	$	4,765
Collectively evaluated for credit losses		12,894		16,310		6,671		1,044		397		1,439		38,755
Total	$	13,476	$	17,954	$	7,784	$	1,718	$	995	$	1,593	$	43,520
Loan Balance:
Individually evaluated for credit losses	$	6,031	$	5,498	$	7,495	$	4,672	$	3,598	$	669	$	27,963
Collectively evaluated for credit losses		1,753,824		592,829		548,833		191,442		114,989		103,021		3,304,938
Total	$	1,759,855	$	598,327	$	556,328	$	196,114	$	118,587	$	103,690	$	3,332,901

The following tables present information related to nonaccrual loans at June 30, 2024, and December 31, 2023.


	June 30, 2024
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	3,927	$	3,363	$	—
Commercial and industrial		2,928		—		—
Residential real estate		18		—		—
Agricultural real estate		3,511		3,108		—
Agricultural		545		545		—
Consumer		37		—		—
Subtotal		10,966		7,016		—
With an allowance recorded:
Commercial real estate		3,788		3,536		770
Commercial and industrial		10,461		6,436		1,817
Residential real estate		5,249		4,772		1,161
Agricultural real estate		4,678		3,322		619
Agricultural		1,042		672		69
Consumer		877		798		197
Subtotal		26,095		19,536		4,633
Total	$	37,061	$	26,552	$	4,633


	December 31, 2023
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	3,948	$	3,376	$	—
Commercial and industrial		2,925		—		—
Residential real estate		21		—		—
Agricultural real estate		1,342		948		—
Agricultural		2,303		—		—
Consumer		23		—		—
Subtotal		10,562		4,324		—
With an allowance recorded:
Commercial real estate		2,297		2,071		455
Commercial and industrial		8,452		5,041		1,335
Residential real estate		7,605		7,251		1,086
Agricultural real estate		4,753		3,266		660
Agricultural		2,946		2,470		481
Consumer		689		603		150
Subtotal		26,742		20,702		4,167
Total	$	37,304	$	25,026	$	4,167

The tables below present average recorded investment and interest income related to nonaccrual loans for the three and six months ended June 30, 2024, and 2023. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality.


	As of and for the three months ended
	June 30, 2024				June 30, 2023
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	3,365	$	—	$	1,833	$	—
Commercial and industrial		996		—		—		2
Residential real estate		—		1		—		1
Agricultural real estate		2,027		—		1,068		—
Agricultural		272		5		—		—
Consumer		—		3		—		—
Subtotal		6,660		9		2,901		3
With an allowance recorded:
Commercial real estate		3,101		7		882		—
Commercial and industrial		5,594		6		5,027		2
Residential real estate		4,270		10		3,002		4
Agricultural real estate		3,302		1		842		—
Agricultural		1,676		1		2,717		—
Consumer		785		2		388		—
Subtotal		18,728		27		12,858		6
Total	$	25,388	$	36	$	15,759	$	9


	As of and for the six months ended
	June 30, 2024				June 30, 2023
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	3,369	$	—	$	1,845	$	—
Commercial and industrial		664		—		—		2
Residential real estate		—		1		8		1
Agricultural real estate		1,667		—		906		—
Agricultural		182		5		—		—
Consumer		—		3		—		—
Subtotal		5,882		9		2,759		3
With an allowance recorded:
Commercial real estate		2,758		9		862		—
Commercial and industrial		5,410		6		5,297		2
Residential real estate		5,264		10		3,062		4
Agricultural real estate		3,290		1		1,051		1
Agricultural		1,940		1		2,967		—
Consumer		724		2		375		—
Subtotal		19,386		29		13,614		7
Total	$	25,268	$	38	$	16,373	$	10

The following tables present the aging of the recorded investment in past due loans as of June 30, 2024, and December 31, 2023, by portfolio and class of loans.


June 30, 2024	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
Commercial real estate	$	2,789	$	1,386	$	74	$	6,899	$	1,782,396	$	1,793,544
Commercial and industrial		1,225		987		—		6,436		655,070		663,718
Residential real estate		1,426		669		—		4,772		565,656		572,523
Agricultural real estate		1,716		721		—		6,430		210,359		219,226
Agricultural		1,024		296		—		1,217		101,805		104,342
Consumer		537		212		—		798		99,507		101,054
Total	$	8,717	$	4,271	$	74	$	26,552	$	3,414,793	$	3,454,407


December 31, 2023	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
Commercial real estate	$	2,397	$	198	$	189	$	5,447	$	1,751,624	$	1,759,855
Commercial and industrial		1,853		2,713		71		5,041		588,649		598,327
Residential real estate		1,444		676		—		7,251		546,957		556,328
Agricultural real estate		949		—		—		4,214		190,951		196,114
Agricultural		559		65		19		2,470		115,474		118,587
Consumer		443		118		—		603		102,526		103,690
Total	$	7,645	$	3,770	$	279	$	25,026	$	3,296,181	$	3,332,901

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. The Company uses the following definitions for risk ratings.

Pass: Loans classified as pass include all loans that do not fall under one of the three following categories.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Based on the analysis performed at June 30, 2024, the risk category of loans by type and year of origination is as follows.


June 30, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	92,952	$	217,209	$	357,362	$	216,129	$	170,417	$	235,221	$	491,548	$	896	$	1,781,734
Special mention		—		—		—		116		—		380		143		—		639
Substandard		—		83		2,191		3,800		235		4,342		483		37		11,171
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	92,952	$	217,292	$	359,553	$	220,045	$	170,652	$	239,943	$	492,174	$	933	$	1,793,544
Commercial and industrial
Risk rating
Pass	$	50,622	$	95,651	$	90,877	$	43,813	$	67,128	$	32,781	$	261,926	$	1,792	$	644,590
Special mention		—		—		136		—		807		1,041		1,202		—		3,186
Substandard		1,548		1,350		485		352		2,680		2,175		7,273		—		15,863
Doubtful		—		—		—		—		—		79		—		—		79
Total commercial and industrial	$	52,170	$	97,001	$	91,498	$	44,165	$	70,615	$	36,076	$	270,401	$	1,792	$	663,718
Residential real estate
Risk rating
Pass	$	12,433	$	35,081	$	36,426	$	271,236	$	8,170	$	143,137	$	59,664	$	726	$	566,873
Special mention		—		—		—		—		—		346		72		—		418
Substandard		—		154		291		331		20		3,595		780		61		5,232
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	12,433	$	35,235	$	36,717	$	271,567	$	8,190	$	147,078	$	60,516	$	787	$	572,523
Agricultural real estate
Risk rating
Pass	$	11,476	$	20,602	$	29,089	$	17,708	$	20,063	$	39,164	$	72,318	$	287	$	210,707
Special mention		1,695		—		150		—		—		—		711		—		2,556
Substandard		43		2,229		16		40		—		3,555		80		—		5,963
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	13,214	$	22,831	$	29,255	$	17,748	$	20,063	$	42,719	$	73,109	$	287	$	219,226
Agricultural
Risk rating
Pass	$	10,325	$	5,530	$	6,180	$	3,620	$	7,483	$	2,996	$	66,187	$	74	$	102,395
Special mention		—		—		1		—		—		33		—		—		34
Substandard		34		128		134		445		407		37		728		—		1,913
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	10,359	$	5,658	$	6,315	$	4,065	$	7,890	$	3,066	$	66,915	$	74	$	104,342
Consumer
Risk rating
Pass	$	31,145	$	22,235	$	18,835	$	7,862	$	3,619	$	3,237	$	13,318	$	—	$	100,251
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		92		326		266		64		54		1		—		803
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	31,145	$	22,327	$	19,161	$	8,128	$	3,683	$	3,291	$	13,319	$	—	$	101,054
Total loans
Risk rating
Pass	$	208,953	$	396,308	$	538,769	$	560,368	$	276,880	$	456,536	$	964,961	$	3,775	$	3,406,550
Special mention		1,695		—		287		116		807		1,800		2,128		—		6,833
Substandard		1,625		4,036		3,443		5,234		3,406		13,758		9,345		98		40,945
Doubtful		—		—		—		—		—		79		—		—		79
Total loans	$	212,273	$	400,344	$	542,499	$	565,718	$	281,093	$	472,173	$	976,434	$	3,873	$	3,454,407

Based on the analysis performed at December 31, 2023, the risk category of loans by type and year of origination is as follows.


December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	212,229	$	379,233	$	253,837	$	179,935	$	75,472	$	186,073	$	461,346	$	753	$	1,748,878
Special mention		257		—		119		—		—		399		—		—		775
Substandard		84		2,501		3,481		256		1,463		2,336		81		—		10,202
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	212,570	$	381,734	$	257,437	$	180,191	$	76,935	$	188,808	$	461,427	$	753	$	1,759,855
Commercial and industrial
Risk rating
Pass	$	128,598	$	110,817	$	54,416	$	49,557	$	29,931	$	7,293	$	204,237	$	1,780	$	586,629
Special mention		—		—		15		—		—		992		—		—		1,007
Substandard		1,317		468		230		2,922		237		2,171		3,346		—		10,691
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	129,915	$	111,285	$	54,661	$	52,479	$	30,168	$	10,456	$	207,583	$	1,780	$	598,327
Residential real estate
Risk rating
Pass	$	35,040	$	29,766	$	277,611	$	5,183	$	12,506	$	130,144	$	57,699	$	1,065	$	549,014
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		213		187		22		156		1,960		4,710		66		7,314
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	35,040	$	29,979	$	277,798	$	5,205	$	12,662	$	132,104	$	62,409	$	1,131	$	556,328
Agricultural real estate
Risk rating
Pass	$	22,368	$	26,762	$	17,987	$	18,551	$	10,653	$	20,039	$	74,010	$	289	$	190,659
Special mention		903		158		—		—		—		164		605		—		1,830
Substandard		40		—		24		—		101		3,423		37		—		3,625
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	23,311	$	26,920	$	18,011	$	18,551	$	10,754	$	23,626	$	74,652	$	289	$	196,114
Agricultural
Risk rating
Pass	$	12,424	$	7,363	$	4,815	$	7,148	$	1,385	$	3,809	$	78,285	$	55	$	115,284
Special mention		—		—		—		—		—		33		9		—		42
Substandard		39		10		464		629		1,861		52		206		—		3,261
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	12,463	$	7,373	$	5,279	$	7,777	$	3,246	$	3,894	$	78,500	$	55	$	118,587
Consumer
Risk rating
Pass	$	47,019	$	24,620	$	10,384	$	4,841	$	1,281	$	2,885	$	12,035	$	1	$	103,066
Special mention		—		—		—		—		—		—		—		—		—
Substandard		50		241		163		98		49		23		—		—		624
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	47,069	$	24,861	$	10,547	$	4,939	$	1,330	$	2,908	$	12,035	$	1	$	103,690
Total loans
Risk rating
Pass	$	457,678	$	578,561	$	619,050	$	265,215	$	131,228	$	350,243	$	887,612	$	3,943	$	3,293,530
Special mention		1,160		158		134		—		—		1,588		614		—		3,654
Substandard		1,530		3,433		4,549		3,927		3,867		9,965		8,380		66		35,717
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	460,368	$	582,152	$	623,733	$	269,142	$	135,095	$	361,796	$	896,606	$	4,009	$	3,332,901

The following table discloses the charge-off and recovery activity by loan type and year of origination for the six month period ending June 30, 2024.


June 30, 2024	2024			2023			2022			2021			2020			Prior			Revolving Loans Amortized Cost			Revolving Loans Converted to Term		Total
Commercial real estate
Gross charge-offs	$	—		$	—		$	(17	)	$	—		$	—		$	—		$	(2	)	$	—	$	(19	)
Gross recoveries		—			—			8			—			1			21			1			—		31
Net charge-offs	$	—		$	—		$	(9	)	$	—		$	1		$	21		$	(1	)	$	—	$	12
Commercial and industrial
Gross charge-offs	$	—		$	(1	)	$	(186	)	$	(106	)	$	(40	)	$	(390	)	$	(1,119	)	$	—	$	(1,842	)
Gross recoveries		—			—			125			1			20			42			7			1		196
Net charge-offs	$	—		$	(1	)	$	(61	)	$	(105	)	$	(20	)	$	(348	)	$	(1,112	)	$	1	$	(1,646	)
Residential real estate
Gross charge-offs	$	—		$	—		$	—		$	(2	)	$	—		$	(21	)	$	(10	)	$	—	$	(33	)
Gross recoveries		—			—			—			1			—			19			—			—		20
Net charge-offs	$	—		$	—		$	—		$	(1	)	$	—		$	(2	)	$	(10	)	$	—	$	(13	)
Agricultural real estate
Gross charge-offs	$	—		$	—		$	—		$	(1	)	$	—		$	—		$	—		$	—	$	(1	)
Gross recoveries		—			—			—			—			—			2			—			—		2
Net charge-offs	$	—		$	—		$	—		$	(1	)	$	—		$	2		$	—		$	—	$	1
Agricultural
Gross charge-offs	$	—		$	—		$	(25	)	$	(2	)	$	—		$	—		$	—		$	—	$	(27	)
Gross recoveries		—			—			—			1			—			—			—			—		1
Net charge-offs	$	—		$	—		$	(25	)	$	(1	)	$	—		$	—		$	—		$	—	$	(26	)
Consumer
Gross charge-offs	$	(69	)	$	(61	)	$	(42	)	$	(53	)	$	(15	)	$	(73	)	$	(27	)	$	—	$	(340	)
Gross recoveries		3			4			9			21			8			67			6			—		118
Net charge-offs	$	(66	)	$	(57	)	$	(33	)	$	(32	)	$	(7	)	$	(6	)	$	(21	)	$	—	$	(222	)
Total loans
Gross charge-offs	$	(69	)	$	(62	)	$	(270	)	$	(164	)	$	(55	)	$	(484	)	$	(1,158	)	$	—	$	(2,262	)
Gross recoveries		3			4			142			24			29			151			14			1		368
Net charge-offs	$	(66	)	$	(58	)	$	(128	)	$	(140	)	$	(26	)	$	(333	)	$	(1,144	)	$	1	$	(1,894	)

The following table discloses the charge-off and recovery activity by loan type and year of origination for the six month period ending June 30, 2023.


June 30, 2023	2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost			Revolving Loans Converted to Term		Total
Commercial real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	(9	)	$	(1	)	$	—		$	—	$	(10	)
Gross recoveries		—			64			—			—			—			13			—			—		77
Net charge-offs	$	—		$	64		$	—		$	—		$	(9	)	$	12		$	—		$	—	$	67
Commercial and industrial
Gross charge-offs	$	—		$	(5	)	$	(10	)	$	(19	)	$	(2	)	$	—		$	(1,039	)	$	—	$	(1,075	)
Gross recoveries		—			29			—			15			—			7			—			—		51
Net charge-offs	$	—		$	24		$	(10	)	$	(4	)	$	(2	)	$	7		$	(1,039	)	$	—	$	(1,024	)
Residential real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	(53	)	$	(4	)	$	—	$	(57	)
Gross recoveries		—			—			—			—			—			58			—			—		58
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	5		$	(4	)	$	—	$	1
Agricultural real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Gross recoveries		—			—			—			—			—			3			—			—		3
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	3		$	—		$	—	$	3
Agricultural
Gross charge-offs	$	—		$	—		$	(107	)	$	—		$	—		$	(1	)	$	—		$	—	$	(108	)
Gross recoveries		—			—			—			—			—			155			—			—		155
Net charge-offs	$	—		$	—		$	(107	)	$	—		$	—		$	154		$	—		$	—	$	47
Consumer
Gross charge-offs	$	(61	)	$	(108	)	$	(71	)	$	(28	)	$	(39	)	$	(118	)	$	(31	)	$	—	$	(456	)
Gross recoveries		—			9			37			8			5			60			8			—		127
Net charge-offs	$	(61	)	$	(99	)	$	(34	)	$	(20	)	$	(34	)	$	(58	)	$	(23	)	$	—	$	(329	)
Total loans
Gross charge-offs	$	(61	)	$	(113	)	$	(188	)	$	(47	)	$	(50	)	$	(173	)	$	(1,074	)	$	—	$	(1,706	)
Gross recoveries		—			102			37			23			5			296			8			—		471
Net charge-offs	$	(61	)	$	(11	)	$	(151	)	$	(24	)	$	(45	)	$	123		$	(1,066	)	$	—	$	(1,235	)

Modifications to Debtors Experiencing Financial Difficulty

The following table presents the amortized cost basis of loans at June 30, 2024, and 2023, that were both experiencing financial difficulty and modified during the three months ended June 30, 2024, and 2023, by class and by type of modification. 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 receivable is also presented below.


June 30, 2024	Payment Delay		Term Extension		Combination Rate Change and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	200	$	—	$	—	$	200		0.01	%
Commercial and industrial		3,601		—		—		—		3,601		0.54	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		—		109		—		109		0.05	%
Agricultural		—		—		—		—		—		0.00	%
Consumer		—		—		—		—		—		0.00	%
Total	$	3,601	$	200	$	109	$	—	$	3,910		0.11	%

June 30, 2023	Payment Delay		Term Extension		Combination Rate Change and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	—	$	—	$	443	$	443		0.03	%
Commercial and industrial		—		1,324		—		3,098		4,422		0.76	%
Residential real estate		—		—		—		12		12		0.00	%
Agricultural real estate		—		—		—		—		—		0.00	%
Agricultural		—		—		—		—		—		0.00	%
Consumer		—		—		—		—		—		0.00	%
Total	$	—	$	1,324	$	—	$	3,553	$	4,877		0.15	%

The following table presents the amortized cost basis of loans at June 30, 2024, and 2023, that were both experiencing financial difficulty and modified during the six months ended June 30, 2024, and 2023, by class and by type of modification.


June 30, 2024	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	237	$	—	$	—	$	237		0.01	%
Commercial and industrial		3,601		—		—		—		3,601		0.54	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		354		109		—		463		0.21	%
Agricultural		—		—		—		—		—		0.00	%
Consumer		—		—		—		—		—		0.00	%
Total	$	3,601	$	591	$	109	$	—	$	4,301		0.12	%

June 30, 2023	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	—	$	—	$	443	$	443		0.03	%
Commercial and industrial		—		1,566		—		9,079		10,645		1.82	%
Residential real estate		—		—		—		12		12		0.00	%
Agricultural real estate		—		400		—		171		571		0.28	%
Agricultural		122		—		—		475		597		0.57	%
Consumer		—		—		25		—		25		0.02	%
Total	$	122	$	1,966	$	25	$	10,180	$	12,293		0.37	%

At June 30, 2024, and 2023, there were $90 and $410 in commitments to lend additional amounts on these loans.

The Company considers loans modified to borrowers in financial distress as loans that do not share similar risk characteristics with collectively evaluated loans at modification date for the purposes of calculating the allowance for credit losses. These loans will be evaluated for credit losses based on either discounted cash flows or the fair value of collateral at modification date; however, subsequent to the modification date these loans will be evaluated for credit losses as part of the collectively evaluated pools after a period of ongoing performance under the terms of the modified loan.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified during the twelve months ended June 30, 2024, and 2023.


June 30, 2024	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 89 days Past Due		Total Past Due
Commercial real estate	$	—	$	—	$	—	$	—
Commercial and industrial		—		—		211		211
Residential real estate		—		—		—		—
Agricultural real estate		—		—		—		—
Agricultural		—		—		—		—
Consumer		—		—		—		—
Total	$	—	$	—	$	211	$	211

June 30, 2023	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 89 days Past Due		Total Past Due
Commercial real estate	$	—	$	—	$	—	$	—
Commercial and industrial		—		—		—		—
Residential real estate		—		—		12		12
Agricultural real estate		—		—		—		—
Agricultural		—		—		—		—
Consumer		—		25		—		25
Total	$	—	$	25	$	12	$	37

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended June 30, 2024, and 2023.



June 30, 2024	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension in Years
Commercial real estate	$	—		—	%		0.15
Commercial and industrial		—		—	%		—
Residential real estate		—		—	%		—
Agricultural real estate		—		0.32	%		1.00
Agricultural		—		—	%		—
Consumer		—		—	%		—
Total loans	$	—		0.32	%		0.45


June 30, 2023	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension
Commercial real estate	$	—		—	%		0.49
Commercial and industrial		—		—	%		3.11
Residential real estate		—		—	%		3.42
Agricultural real estate		—		—	%		—
Agricultural		—		—	%		—
Consumer		—		—	%		—
Total loans	$	—		—	%		2.88

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the six months ended June 30, 2024, and 2023.



June 30, 2024	Principal Forgiveness		Weighted Average Interest Rate Reduction				Weighted Average Term Extension in Years
Commercial real estate	$	—		—		%		0.23
Commercial and industrial		—		—		%		—
Residential real estate		—		—		%		—
Agricultural real estate		—		0.32		%		0.85
Agricultural		—		—		%		—
Consumer		—		—		%		—
Total loans	$	—		0.32		%		0.64


June 30, 2023	Principal Forgiveness		Weighted Average Interest Rate Reduction				Weighted Average Term Extension
Commercial real estate	$	—		—		%		0.49
Commercial and industrial		—		—		%		1.36
Residential real estate		—		—		%		3.42
Agricultural real estate		—		—		%		1.00
Agricultural		—		—		%		0.58
Consumer		—		(0.24	)	%		2.16
Total loans	$	—		(0.24	)	%		1.28

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit loss expense recognized within other non-interest expense on the consolidated statements of income and included in other liabilities on the consolidated balance sheets. The estimated credit loss includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate of expected credit loss is based on the historical loss rate for the class of loan the commitments would be classified as if funded.

The following table lists allowance for credit losses on off-balance-sheet credit exposures as of June 30, 2024, and December 31, 2023.


	Allowance for Credit Losses
	June 30, 2024		December 31, 2023
Commercial real estate	$	322	$	285
Commercial and industrial		1,071		1,053
Agricultural real estate		6		2
Residential real estate		36		35
Agricultural		—		3
Consumer		11		247
Total allowance for credit losses	$	1,446	$	1,625