Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

Allowance for Credit Losses

Allowance for Credit Losses

Note 4 — Allowance for Credit Losses

The ACL is based on a loss-rate methodology that measures lifetime losses on loan pools that have similar risk characteristics. Loans that do not have similar risk characteristics are evaluated on an individual basis. The segmentation of the loan portfolio into pools requires a balancing process between capturing similar risk characteristics and containing sufficient loss history to provide meaningful results. Our segmentation starts at the general loan category with further sub-segmentation based on collateral types that may be of meaningful size and/or may contain sufficient differences in risk characteristics based on management’s judgement that would warrant further segmentation. Risk management begins with a strong and conservative lending policy that specifies lending limits that are well below allowable regulatory limits, provides highly restrictive lending authority to lending officers, and promotes judicious lending terms and diversification. The general loan categories along with primary risk characteristics used in our calculation are as follows:

Commercial and industrial loans. This category includes loans extended to a diverse array of businesses for working capital or equipment purchases. These loans are mostly secured by the collateral pledged by a borrower that is directly related to the business activities of the borrower’s company such as equipment, accounts receivable and inventory. The borrower’s abilities to generate revenues from equipment purchases, collect accounts receivable, and turn inventory into sales are risk factors in the repayment of the loan. A small portion of this loan category is related to loans secured by oil and gas production and loans secured by aircraft.

Construction and land development loans. This category includes loans for the development of unimproved land to lot development for both residential and commercial use and vertical construction across residential and commercial real estate classes. These loans carry the risk of repayment when projects incur cost overruns, have an increase in the price of construction materials, encounter zoning, entitlement or environmental issues, or encounter other factors that may affect the completion of a project on time and on budget. Additionally, repayment risk may be negatively impacted when the market experiences a deterioration in the value of real estate. Risks specifically related to 1-4 family development loans also include mortgage rate risk and the practice by the mortgage industry of imposing more restrictive underwriting standards, which inhibits the buyer from obtaining long term financing, creating excessive housing and lot inventory in the market.

Commercial real estate loans. This category includes loans secured by farmland, multifamily properties, owner-occupied commercial properties, and non-owner-occupied commercial properties. Owner-occupied commercial properties include warehouses often along the U.S. border for import/export operations, office space where the

borrower is the primary tenant, restaurants and other single-tenant retail spaces. Non-owner-occupied commercial properties include hotels, retail centers, office and professional buildings, and leased warehouses. These loans carry the risk of repayment when market values deteriorate, the business experiences turnover in key management, the business is unable to attract or maintain stable occupancy levels, or the market experiences an exit of a specific business type that is significant to the local economy, such as a manufacturing plant. Our primary risk management tool is internal monitoring measured against internal concentration limits significantly lower than regulatory thresholds that are segmented by low-risk and high-risk characteristics, such as the borrower’s equity, cash flow coverage, and non-amortizing versus amortizing status, further disaggregated by the length of time to pay in full. This monitoring is regularly reported to senior management and the board of directors. Risk management practices also extend to the management of the borrower’s relationship and are designed to recognize degradation in the borrower’s ability to repay under established terms well before the borrower may default. Loan and deposit activity by the borrower is monitored on a frequent basis, which may prompt a change in risk classification. Once a loan is moved to a more severe risk classification, the loan performance, and when applicable, a plan by the borrower to rectify issues are monitored and reviewed at least quarterly. Additionally, our credit administration team, who is independent from the lending team, reviews a substantial portion of the commercial lending portfolio annually, which includes a significant portion of the commercial real estate loan portfolio given the current mix of loans in our portfolio.

1-4 family mortgages. This category includes both first and second lien mortgages for the purposes of home purchases or refinancing existing mortgage loans. A small portion of this loan category is related to home equity lines of credits, lots purchases, and home construction. Loan repayments may be affected by unemployment or underemployment and deteriorating market values of real estate.

Consumer loans. This category includes deposit secured, vehicle secured, and unsecured loans, including overdrafts, made to individuals. Repayment is primarily affected by unemployment or underemployment.

The loan pools are further broken down using a risk-based segmentation based on internal classifications for commercial loans and past due status for consumer mortgage loans. Non-mortgage consumer loans are evaluated as one segment. On a weekly basis, commercial loan past due reports are reviewed by our credit quality committee to determine if a loan has any potential problems and should be placed on our internal Watch List report. Additionally, our credit department reviews the majority of our loans for proper internal classification purposes regardless of whether they are past due and segregates any loans with potential problems for further review. The credit department will discuss the potential problem loans with the servicing loan officers to determine any relevant issues that were not discovered in the evaluation. Also, an analysis of loans that is provided through examinations by regulatory authorities is considered in the review process. After the above analysis is completed, we determine if a loan should be placed on our internal Watch List report because of issues related to the analysis of the credit, credit documents, collateral and/or payment history.

Our internal Watch List report is segregated into the following categories: (i) Pass, (ii) Economic Monitoring, (iii) Special Review, (iv) Watch List—Pass, (v) Watch List—Substandard, and (vi) Watch List—Doubtful. Loans placed in the Economic Monitoring or Special Review categories reflect our opinion that the loans have potential weaknesses that require monitoring on a more frequent basis. Credits in those categories are reviewed and discussed on a regular basis with the credit department and the lending staff to determine if a change in category is warranted. Loans placed in the Watch List—Pass category and lower rated credits reflect our opinion that the credits contain weaknesses that represent a greater degree of risk, which warrants “extra attention.” Credits placed in those categories are reviewed and discussed on a regular basis, with the credit department and the lending staff to determine if a change in category is warranted. Loans placed in the Watch List—Substandard category are considered to be potentially inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. Those credit obligations, even if apparently protected by collateral value, have shown defined weaknesses related to adverse financial, managerial, economic, market or political conditions that we believe may jeopardize repayment of principal and interest. Furthermore, there is a possibility that we may sustain some future loss if such weaknesses are not corrected. Loans placed in the Watch List—Doubtful category have shown defined weaknesses and reflect our belief that it is likely, based on current information and events, that we will be unable to collect all principal and/or interest amounts contractually due. Loans placed in the Watch List—Doubtful category are placed on non-accrual when they are moved to that category.

For the purposes of the ACL, in order to maintain segments with sufficient history for meaningful results, the credits in the Pass and Economic Monitoring categories are aggregated, the credits in the Special Review and Watch List—Pass credits are aggregated, and the credits in the Watch List—Substandard category remain in their own segment. For loans classified as Watch List—Doubtful, management evaluates these loans in accordance with FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” and, if deemed necessary, a specific reserve is allocated to the loan. The analysis of the amount of the specific reserve to be allocated is based on a variety of factors, including the borrower’s ability to pay, the economic conditions impacting the borrower’s industry and any collateral deficiency. If it is a collateral-dependent loan, the net realizable fair value of collateral will be evaluated for any deficiencies. Substantially all of our loans evaluated as Watch List—Doubtful are measured using the fair value of collateral method. In rare cases, we may use other methods to determine the specific reserve of a loan if such loan is not collateral-dependent.

Within each collectively evaluated pool, the robustness of the lifetime historical loss rate is evaluated and, if needed, is supplemented with peer loss-rates through a model risk adjustment. Certain qualitative loss factors are then evaluated to incorporate management’s two-year reasonable and supportable forecast period followed by a reversion to the pool’s average lifetime loss-rate. Those qualitative loss factors are: (i) trends in portfolio volume and composition, (ii) volume and trends in classified loans, delinquencies and non-accruals, (iii) concentration risk, (iv) trends in underlying collateral value, (v) changes in policies, procedures, and strategies, and (vi) economic conditions. Qualitative factors also include potential losses stemming from operational risk factors arising from fraud, natural disasters, pandemics, geopolitical events, and large loans. The large loan operational risk factor was added to our ACL calculation beginning in the second quarter of 2023. Because of the magnitude of large loans, they pose a higher risk of default. Recognizing this risk, and establishing an operational risk factor to capture that risk, is prudent action in the current economic environment. Large loans are usually part of a larger relationship with collateral that is pledged across the relationship. Defaulting on a larger loan may therefore jeopardize an entire relationship. The current economic environment has created challenges for borrowers to service their debt. Increasing capitalization rates, elevated office vacancies, an upward trend in apartment vacancies and significant increases in interest rates are all contributing to the elevated risk in large loans. Should any of the factors considered by management in evaluating the adequacy of the ACL change, our estimate could also change, which could affect the level of our future credit loss expense.

We have elected to not measure an ACL for accrued interest receivable given our timely approach in identifying and writing off uncollectible accrued interest. An ACL for off-balance sheet exposure is derived from a projected usage rate of any unfunded commitment multiplied by the historical loss-rate, plus model risk adjustment, if any, of the on-balance sheet loan pools.

Our management continually reviews the ACL of the Subsidiary Banks using the amounts determined from the estimates established on specific doubtful loans, the estimate established on quantitative historical loss percentages, and the estimate based on qualitative current conditions and reasonable and supportable two-year forecasted data. Our methodology reverts to the average lifetime loss-rate beyond the forecast period when we can no longer develop reasonable and supportable forecasts. Should any of the factors considered by management in evaluating the adequacy of the estimate for current expected credit losses change, our estimate of current expected credit losses could also change, which could affect the level of future credit loss expense. While the calculation of our ACL utilizes management’s best judgment and all information reasonably available, the adequacy of the ACL is dependent on a variety of factors beyond our control, including, among other things, the performance of the entire loan portfolio, the economy, government actions, changes in interest rates and the view of regulatory authorities towards loan classifications.

A summary of the transactions in the allowance for credit loan losses by loan class is as follows:

	Three Months Ended September 30, 2024
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2024	$	27,255	$	54,840	$	44,888	$	3,528	$	5,806	$	10,639	$	314	$	1,339	$	148,609
Losses charged to allowance		(2,329)		—		—		—		—		—		(42)		—		(2,371)
Recoveries credited to allowance		1,231		—		6		—		2		13		6		1		1,259
Net (losses) recoveries charged to allowance		(1,098)		—		6		—		2		13		(36)		1		(1,112)
Credit loss expense		3,723		5,182		(510)		4		214		(70)		14		45		8,602
Balance at September 30, 2024	$	29,880	$	60,022	$	44,384	$	3,532	$	6,022	$	10,582	$	292	$	1,385	$	156,099

	Three Months Ended September 30, 2023
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at June 30, 2023	$	27,645	$	53,064	$	38,688	$	4,106	$	5,092	$	10,442	$	286	$	1,180	$	140,503
Losses charged to allowance		(2,373)		—		—		—		(43)		(118)		(35)		—		(2,569)
Recoveries credited to allowance		518		—		6		—		7		63		2		—		596
Net (losses) recoveries charged to allowance		(1,855)		—		6		—		(36)		(55)		(33)		—		(1,973)
Credit loss expense		8,063		(1,967)		3,190		422		481		206		45		36		10,476
Balance at September 30, 2023	$	33,853	$	51,097	$	41,884	$	4,528	$	5,537	$	10,593	$	298	$	1,216	$	149,006

	Nine Months Ended September 30, 2024
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2023	$	35,550	$	55,291	$	42,703	$	5,088	$	5,812	$	11,024	$	318	$	1,283	$	157,069
Losses charged to allowance		(32,049)		(2,228)		—		—		(46)		—		(132)		—		(34,455)
Recoveries credited to allowance		3,020		—		16		—		38		48		11		1		3,134
Net (losses) recoveries charged to allowance		(29,029)		(2,228)		16		—		(8)		48		(121)		1		(31,321)
Credit loss expense		23,359		6,959		1,665		(1,556)		218		(490)		95		101		30,351
Balance at September 30, 2024	$	29,880	$	60,022	$	44,384	$	3,532	$	6,022	$	10,582	$	292	$	1,385	$	156,099

	Nine Months Ended September 30, 2023
	Domestic														Foreign
			Commercial
			Real Estate:
			Other		Commercial
			Construction &		Real Estate:		Commercial
			Land		Farmland &		Real Estate:		Residential:		Residential:
	Commercial		Development		Commercial		Multifamily		First Lien		Junior Lien		Consumer		Foreign		Total
	(Dollars in Thousands)
Balance at December 31, 2022	$	26,728	$	44,684	$	36,474	$	3,794	$	4,759	$	8,284	$	281	$	968	$	125,972
Losses charged to allowance		(7,136)		—		—		—		(43)		(283)		(122)		—		(7,584)
Recoveries credited to allowance		1,699		837		17		—		15		155		16		—		2,739
Net (losses) recoveries charged to allowance		(5,437)		837		17		—		(28)		(128)		(106)		—		(4,845)
Credit loss expense		12,562		5,576		5,393		734		806		2,437		123		248		27,879
Balance at September 30, 2023	$	33,853	$	51,097	$	41,884	$	4,528	$	5,537	$	10,593	$	298	$	1,216	$	149,006

The increase in losses charged to the ACL for the nine months ended September 30, 2024 in the Commercial category can be attributed to a charge-down on one loan secured primarily by equipment and pipeline infrastructure used in the oil and gas industry. The credit has been classified as Watch List—Doubtful since the end of 2022 at which time, and going forward, we have evaluated our loss exposure and adjusted reserves accordingly. We also continued to attempt to work with our customer during that period; however, those negotiations came to a halt late in the third quarter of 2023 when the customer declared bankruptcy. In March 2024, the bankruptcy court awarded the winning bid at foreclosure for the assets collateralizing the loan to a principal owner of the business. The bid was not for the full carrying value of the loan and resulted in a charge-down of approximately $25.6 million. The charge-down also impacted our provision for credit loss expense resulting in an increase of approximately $4.3 million, before taxes, when compared to the same period of 2023. We expect to recover a portion of the charge-down by pursuing repayment from the guarantor of the credit through a binding arbitration process. We reduced the severity of some of the qualitative loss factors in certain pools of the portfolio for the March 31, 2024 ACL to encompass a slight improvement in economic uncertainty, resulting in a decrease in the required ACL. Upon further evaluation, no further changes to the qualitative loss factors were made for the September 30, 2024 ACL.

The tables below provide additional information on the balance of loans individually or collectively evaluated for impairment and their related allowance, by loan class, as of September 30, 2024 and December 31, 2023:

	September 30, 2024
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	1,282	$	400	$	1,691,180	$	29,480
Commercial real estate: other construction & land development		10,027		5,500		2,447,117		54,522
Commercial real estate: farmland & commercial		50,831		4,825		2,860,756		39,559
Commercial real estate: multifamily		38,246		660		280,685		2,872
Residential: first lien		48		—		514,179		6,022
Residential: junior lien		141		—		468,843		10,582
Consumer		—		—		48,329		292
Foreign		—		—		175,361		1,385
Total	$	100,575	$	11,385	$	8,486,450	$	144,714

	December 31, 2023
	Loans Individually				Loans Collectively
	Evaluated For				Evaluated For
	Impairment				Impairment
	Recorded				Recorded
	Investment		Allowance		Investment		Allowance
	(Dollars in Thousands)
Domestic
Commercial	$	30,872	$	7,971	$	1,597,358	$	27,579
Commercial real estate: other construction & land development		15,701		4,320		2,075,921		50,971
Commercial real estate: farmland & commercial		299		—		2,793,254		42,703
Commercial real estate: multifamily		96		—		380,743		5,088
Residential: first lien		93		—		477,940		5,812
Residential: junior lien		—		—		460,868		11,024
Consumer		—		—		45,121		318
Foreign		—		—		180,695		1,283
Total	$	47,061	$	12,291	$	8,011,900	$	144,778

The increase in Commercial real estate: farmland & commercial loans individually evaluated for impairment at September 30, 2024 from December 31, 2023 can be attributed to one relationship secured by commercial buildings in which childcare centers are operated. The increase in Commercial real estate: multifamily loans individually evaluated for impairment at September 30, 2024 from December 31, 2023 can be attributed to two loans secured by apartments that

were downgraded to Watch List – Doubtful and put on non-accrual. The decrease in Commercial loans individually evaluated for impairment at September 30, 2024 can be attributed to the charge-down discussed above.

The table below provides additional information on loans accounted for on a non-accrual basis by loan class at September 30, 2024 and December 31, 2023:

	September 30, 2024				December 31, 2023
	(Dollars in Thousands)
		Total Non-Accrual Loans		Non-Accrual Loans with No Credit Allowance		Total Non-Accrual Loans		Non-Accrual Loans with No Credit Allowance
Domestic
Commercial	$	1,282	$	398	$	30,872	$	122
Commercial real estate: other construction & land development		10,027		75		15,701		244
Commercial real estate: farmland & commercial		50,831		18,486		299		299
Commercial real estate: multifamily		38,246		25,142		96		96
Residential: first lien		133		133		202		202
Total non-accrual loans	$	100,519	$	44,234	$	47,170	$	963

We adopted the provisions of FASB ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) on January 1, 2023. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings in existing guidance and enhances disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, ASU 2022-02 requires entities to disclose current period gross write offs by year of origination for financing receivables and net investments in leases. The adoption of ASU 2022-22 did not have a significant impact on our consolidated financial statements.

We occasionally provide modifications to borrowers experiencing financial difficulties. Modifications may include certain concessions that we must evaluate under ASU 2022-02 to determine the need for disclosure. Concessions to borrowers experiencing financial difficulties that would require disclosure include principal forgiveness, a term extension, an other-than-insignificant payment delay, an interest rate reduction or a combination of these concessions. For the nine months ended September 30, 2024, we did not provide any modifications under these circumstances to any borrower experiencing financial difficulty.

The Subsidiary Banks charge-off that portion of any loan that management considers to represent a loss or that is classified as a “loss” by bank examiners. Management generally considers commercial and industrial or real estate loans to represent a loss, in whole or part, when an exposure beyond any collateral coverage is apparent and when no further collection of the loss portion is anticipated based on the borrower’s financial condition and general economic conditions in the borrower’s industry. Generally, unsecured consumer loans are charged-off when 90 days past due.

While our management believes that it is generally able to identify borrowers with financial problems reasonably early and to monitor credit extended to such borrowers carefully, there is no precise method of predicting loan losses. The determination that a loan is likely to be uncollectible and that it should be wholly or partially charged-off as a loss is an exercise of judgment. Similarly, the determination of the adequacy of the ACL can be made only on a subjective basis. It is the judgment of our management that the ACL at September 30, 2024 was adequate to absorb probable losses from loans in the portfolio at that date.

The following tables present information regarding the aging of past due loans by loan class at September 30, 2024 and December 31, 2023:

	September 30, 2024
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
	(Dollars in Thousands)
Domestic
Commercial	$	3,723	$	1,319	$	3,419	$	3,131	$	8,461	$	1,684,001	$	1,692,462
Commercial real estate: other construction & land development		4,147		—		9,952		—		14,099		2,443,045		2,457,144
Commercial real estate: farmland & commercial		1,780		7,199		65,993		15,682		74,972		2,836,615		2,911,587
Commercial real estate: multifamily		115		—		25,236		172		25,351		293,580		318,931
Residential: first lien		3,785		2,116		3,104		3,019		9,005		505,222		514,227
Residential: junior lien		959		1,686		1,458		1,458		4,103		464,881		468,984
Consumer		293		46		26		26		365		47,964		48,329
Foreign		2,740		—		339		339		3,079		172,282		175,361
Total past due loans	$	17,542	$	12,366	$	109,527	$	23,827	$	139,435	$	8,447,590	$	8,587,025

	December 31, 2023
							90 Days or		Total
	30 - 59		60 - 89		90 Days or		greater &		Past				Total
	Days		Days		Greater		still accruing		Due		Current		Portfolio
		(Dollars in Thousands)
Domestic
Commercial	$	2,387	$	1,583	$	30,238	$	539	$	34,208	$	1,594,022	$	1,628,230
Commercial real estate: other construction & land development		3,460		—		10,245		—		13,705		2,077,917		2,091,622
Commercial real estate: farmland & commercial		1,424		371		93		4		1,888		2,791,665		2,793,553
Commercial real estate: multifamily		369		330		—		—		699		380,140		380,839
Residential: first lien		1,812		1,439		2,545		2,437		5,796		472,236		478,032
Residential: junior lien		1,273		613		1,701		1,701		3,587		457,282		460,869
Consumer		263		11		27		27		301		44,820		45,121
Foreign		1,884		848		889		889		3,621		177,074		180,695
Total past due loans	$	12,872	$	5,195	$	45,738	$	5,597	$	63,805	$	7,995,156	$	8,058,961

The increase in Commercial real estate: farmland & commercial loans past due 90 days or greater at September 30, 2024 can be attributed to one relationship secured by commercial buildings in which childcare centers are operated that is on non-accrual and one loan secured by a hotel. The increase in Commercial real estate: multifamily loans past due 90 days or greater at September 30, 2024 compared to December 31, 2023 can be primarily attributed to two loans secured by apartments that were placed on non-accrual. The decrease in Commercial loans past due 90 days or greater at September 30, 2024 can be primarily attributed to a loan secured by equipment and pipeline infrastructure used in the oil and gas industry as well as oil and gas production that was charged-down in the first quarter, as previously discussed.

A summary of the loan portfolio by credit quality indicator by loan class and by year of origination at September 30, 2024 and December 31, 2023 is presented below:

		2024	2023		2022		2021		2020		Prior		Total
	(Dollars in Thousands)
Balance at September 30, 2024
Domestic
Commercial
Pass	$	713,573	$	453,452	$	135,745	$	244,823	$	40,567	$	89,944	$	1,678,104
Watch List - Pass		—		11,435		—		—		—		—		11,435
Watch List - Substandard		1,094		411		—		136		—		—		1,641
Watch List - Doubtful		962		257		63		—		—		—		1,282
Total Commercial	$	715,629	$	465,555	$	135,808	$	244,959	$	40,567	$	89,944	$	1,692,462
Commercial
Current-period gross writeoffs	$	3,874	$	2,476	$	25,651	$	31	$	14	$	3	$	32,049
Commercial real estate: other construction & land development
Pass	$	753,258	$	991,510	$	392,286	$	232,492	$	45,005	$	5,707	$	2,420,258
Special Review		—		17,350		—		—		—		—		17,350
Watch List - Substandard		9,408		101		—		—		—		—		9,509
Watch List - Doubtful		75		—		9,952		—		—		—		10,027
Total Commercial real estate: other construction & land development	$	762,741	$	1,008,961	$	402,238	$	232,492	$	45,005	$	5,707	$	2,457,144
Commercial real estate: other construction & land development
Current-period gross writeoffs	$	—	$	1,146	$	1,082	$	—	$	—	$	—	$	2,228
Commercial real estate: farmland & commercial
Pass	$	607,706	$	717,522	$	541,116	$	347,115	$	246,369	$	285,503	$	2,745,331
Special Review		644		67,870		—		—		—		—		68,514
Watch List - Pass		16,633		—		—		—		—		—		16,633
Watch List - Substandard		12,561		—		15,424		—		2,278		15		30,278
Watch List - Doubtful		50,831		—		—		—		—		—		50,831
Total Commercial real estate: farmland & commercial	$	688,375	$	785,392	$	556,540	$	347,115	$	248,647	$	285,518	$	2,911,587
Commercial real estate: multifamily
Pass	$	59,183	$	16,737	$	90,421	$	22,426	$	59,934	$	31,984	$	280,685
Watch List - Doubtful		13,104		25,064		78		—		—		—		38,246
Total Commercial real estate: multifamily	$	72,287	$	41,801	$	90,499	$	22,426	$	59,934	$	31,984	$	318,931
Residential: first lien
Pass	$	152,250	$	109,558	$	84,328	$	59,635	$	30,316	$	77,696	$	513,783
Watch List - Substandard		95		—		—		300		—		1		396
Watch List - Doubtful		—		—		48		—		—		—		48
Total Residential: first lien	$	152,345	$	109,558	$	84,376	$	59,935	$	30,316	$	77,697	$	514,227
Residential: first lien
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	46	$	46
Residential: junior lien
Pass	$	61,473	$	77,821	$	66,765	$	88,127	$	68,182	$	106,475	$	468,843
Special Review														—
Watch List- Doubtful		141		—		—		—		—		—		141
Total Residential: junior lien	$	61,614	$	77,821	$	66,765	$	88,127	$	68,182	$	106,475	$	468,984
Consumer
Pass	$	32,306	$	12,701	$	1,344	$	512	$	71	$	1,395	$	48,329
Total Consumer	$	32,306	$	12,701	$	1,344	$	512	$	71	$	1,395	$	48,329
Consumer
Current-period gross writeoffs	$	19	$	92	$	20	$	—	$	—	$	1	$	132
Foreign
Pass	$	101,540	$	41,947	$	17,871	$	7,545	$	1,680	$	4,778	$	175,361
Total Foreign	$	101,540	$	41,947	$	17,871	$	7,545	$	1,680	$	4,778	$	175,361
Foreign
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Loans	$	2,586,837	$	2,543,736	$	1,355,441	$	1,003,111	$	494,402	$	603,498	$	8,587,025

		2023	2022		2021		2020		2019		Prior		Total
	(Dollars in Thousands)
Balance at December 31, 2023
Domestic
Commercial
Pass	$	791,233	$	272,919	$	364,271	$	50,602	$	21,468	$	74,119	$	1,574,612
Special Review		7,613		1,800		164		—		—		—		9,577
Watch List - Pass		11,865		—		—		—		—		—		11,865
Watch List - Substandard		1,180		92		28		—		—		4		1,304
Watch List - Doubtful		27		30,810		35		—		—		—		30,872
Total Commercial	$	811,918	$	305,621	$	364,498	$	50,602	$	21,468	$	74,123	$	1,628,230
Commercial
Current-period gross writeoffs	$	7,053	$	2,187	$	155	$	264	$	2	$	3	$	9,664
Commercial real estate: other construction & land development
Pass	$	938,739	$	674,037	$	324,238	$	96,400	$	14,058	$	3,219	$	2,050,691
Watch List - Substandard		25,230		—		—		—		—		—		25,230
Watch List - Doubtful		2,726		12,975		—		—		—		—		15,701
Total Commercial real estate: other construction & land development	$	966,695	$	687,012	$	324,238	$	96,400	$	14,058	$	3,219	$	2,091,622
Commercial real estate: farmland & commercial
Pass	$	888,878	$	628,653	$	415,458	$	267,705	$	184,164	$	248,626	$	2,633,484
Special Review		5,205		—		3,357		—		—		—		8,562
Watch List - Pass		16,654		87		233		—		—		—		16,974
Watch List - Substandard		129,644		2,201		—		2,304		84		1		134,234
Watch List - Doubtful		211		88		—		—		—		—		299
Total Commercial real estate: farmland & commercial	$	1,040,592	$	631,029	$	419,048	$	270,009	$	184,248	$	248,627	$	2,793,553
Commercial real estate: multifamily
Pass	$	123,523	$	94,551	$	42,081	$	73,652	$	10,743	$	36,193	$	380,743
Watch List - Doubtful		—		96		—		—		—		—		96
Total Commercial real estate: multifamily	$	123,523	$	94,647	$	42,081	$	73,652	$	10,743	$	36,193	$	380,839
Residential: first lien
Pass	$	180,127	$	83,568	$	68,082	$	39,935	$	27,499	$	78,306	$	477,517
Watch List - Substandard		—		—		327		—		—		95		422
Watch List - Doubtful		—		93		—		—		—		—		93
Total Residential: first lien	$	180,127	$	83,661	$	68,409	$	39,935	$	27,499	$	78,401	$	478,032
Residential: first lien
Current-period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	43	$	43
Residential: junior lien
Pass	$	88,628	$	76,845	$	96,411	$	76,490	$	34,870	$	87,625	$	460,869
Total Residential: junior lien	$	88,628	$	76,845	$	96,411	$	76,490	$	34,870	$	87,625	$	460,869
Residential: junior lien
Current-period gross writeoffs	$		$		$		$		$		$	298	$	298
Consumer
Pass	$	36,639	$	5,366	$	1,043	$	237	$	157	$	1,679	$	45,121
Total Consumer	$	36,639	$	5,366	$	1,043	$	237	$	157	$	1,679	$	45,121
Consumer
Current-period gross writeoffs	$	54	$	115	$	9	$	—	$	1	$	—	$	179
Foreign
Pass	$	116,104	$	43,842	$	12,317	$	2,016	$	2,797	$	3,619	$	180,695
Total Foreign	$	116,104	$	43,842	$	12,317	$	2,016	$	2,797	$	3,619	$	180,695
Total Loans	$	3,364,226	$	1,928,023	$	1,328,045	$	609,341	$	295,840	$	533,486	$	8,058,961

The decrease in Watch List – Doubtful Commercial loans at September 30, 2024 can be primarily attributed to the charge-down previously discussed. The decrease in Watch List – Substandard Commercial real estate:  construction & land development loans at September 30, 2024 can be primarily attributed to a relationship secured by land being developed for single family homes being upgraded to Special Review. The decrease in Watch List – Substandard Commercial real estate: farmland & commercial loans at September 30, 2024 can be primarily attributed to a change in classification on two relationships. One relationship, which is secured by a retail center, was upgraded to Special Review.  The other relationship which is secured by a commercial building in which childcare centers are operated, was downgraded to Watch List – Doubtful. The increase in Watch List—Doubtful Commercial real estate:  multifamily loans  at September 30, 2024 compared to December 31, 2023 can be primarily attributed to two loans secured by apartments that were downgraded from Pass.