ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (Tables)

12 Months Ended

Dec. 31, 2023

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Schedule of Allowance For Loan Losses and Recorded Investment In Loans By Portfolio Segment

The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023, 2022 and 2021:

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2023
Beginning balance	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606
Provision for credit losses	1,209		3,619		(279)		212		598		673		(182)		5,850
Loans charged-off	(6,341)		0		0		0		(163)		(828)		0		(7,332)
Recoveries	180		322		0		0		38		308		0		848
Net loans (charged-off) recovered	(6,161)		322		0		0		(125)		(520)		0		(6,484)
Ending balance	$	30,338	$	31,335	$	4,150	$	1,129	$	3,474	$	1,174	$	372	$	71,972

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2022
Beginning balance	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773
Provision for credit losses	8,646		1,179		(605)		(229)		125		155		104		9,375
Loans charged-off	(4,022)		(597)		0		0		(42)		(473)		0		(5,134)
Recoveries	71		277		0		0		52		192		0		592
Net loans (charged-off) recovered	(3,951)		(320)		0		0		10		(281)		0		(4,542)
Ending balance	$	35,290	$	27,394	$	4,429	$	917	$	3,001	$	1,021	$	554	$	72,606

(dollars in thousands)	Commercial and Industrial		Commercial Real Estate and Multi-family  Residential		Agri-business and Agricultural		Other Commercial		Consumer 1-4 Family Mortgage		Other Consumer		Unallocated		Total
2021
Beginning balance	$	28,333	$	22,907	$	3,043	$	416	$	2,619	$	951	$	3,139	$	61,408
Impact of adopting ASC 326	4,312		4,316		1,060		941		953		349		(2,881)		9,050
Provision for credit losses	1,966		(632)		611		(211)		(777)		(72)		192		1,077
Loans charged-off	(5,575)		(70)		0		0		(51)		(287)		0		(5,983)
Recoveries	1,559		14		320		0		122		206		0		2,221
Net loans (charged-off) recovered	(4,016)		(56)		320		0		71		(81)		0		(3,762)
Ending balance	$	30,595	$	26,535	$	5,034	$	1,146	$	2,866	$	1,147	$	450	$	67,773

Risk Category of Loans By Loan Segment and Origination

The following tables summarize the risk category of loans by loan segment and origination date as of December 31, 2023 and 2022. Balances presented are at the amortized cost basis by origination year.

(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Term Total		Revolving		Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass	$	193	$	1,876	$	2,214	$	1,132	$	0	$	50	$	5,465	$	532,086	$	537,551
Special Mention	0		0		0		0		0		0		0		46,498		46,498
Substandard	0		200		0		0		125		0		325		20,516		20,841
Total	193		2,076		2,214		1,132		125		50		5,790		599,100		604,890
Working capital lines of credit loans:
Current period gross write offs	0		0		75		0		139		0		214		327		541
Non-working capital loans:
Pass	199,071		224,333		85,273		49,999		28,773		10,501		597,950		171,264		769,214
Special Mention	4,038		9,577		1,051		2,498		2,306		4,298		23,768		5,477		29,245
Substandard	3,754		1,612		683		3,892		51		218		10,210		397		10,607
Not Rated	2,585		1,999		881		707		162		18		6,352		0		6,352
Total	209,448		237,521		87,888		57,096		31,292		15,035		638,280		177,138		815,418
Non-working capital loans:
Current period gross write offs	0		5,445		0		178		129		0		5,752		48		5,800
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass	50,693		15,558		17,655		0		177		0		84,083		547,570		631,653
Total	50,693		15,558		17,655		0		177		0		84,083		547,570		631,653
Construction and land development loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Owner occupied loans:
Pass	144,411		132,850		156,680		132,407		61,415		118,406		746,169		40,288		786,457
Special Mention	7,597		686		4,913		0		1,394		2,245		16,835		14,739		31,574
Substandard	362		250		3,325		1,474		345		1,161		6,917		0		6,917
Total	152,370		133,786		164,918		133,881		63,154		121,812		769,921		55,027		824,948
Owner occupied loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Nonowner occupied loans:
Pass	123,633		158,415		112,582		134,050		87,288		66,755		682,723		27,860		710,583
Special Mention	4,503		0		6,257		0		0		2,246		13,006		0		13,006
Total	128,136		158,415		118,839		134,050		87,288		69,001		695,729		27,860		723,589
Nonowner occupied loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Multi-family loans:
Pass	90,954		23,315		9,042		35,648		13,971		14,609		187,539		45,987		233,526
Special Mention	19,671		0		0		0		0		0		19,671		0		19,671
Total	110,625		23,315		9,042		35,648		13,971		14,609		207,210		45,987		253,197
Multi-family loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland:
Pass	24,503		32,060		25,308		27,924		9,104		19,160		138,059		24,724		162,783
Substandard	0		0		0		0		0		100		100		0		100
Total	24,503		32,060		25,308		27,924		9,104		19,260		138,159		24,724		162,883
Loans secured by farmland:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Loans for agricultural production:
Pass	28,657		13,589		27,175		25,504		3,533		10,429		108,887		116,406		225,293
Special Mention	0		0		187		0		0		0		187		500		687
Total	28,657		13,589		27,362		25,504		3,533		10,429		109,074		116,906		225,980
Loans for agricultural production:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Other commercial loans:
Pass	7,058		26,918		33,247		13,684		90		7,332		88,329		29,819		118,148
Special Mention	0		0		0		0		0		2,419		2,419		0		2,419
Total	7,058		26,918		33,247		13,684		90		9,751		90,748		29,819		120,567
Other commercial loans:
Current period gross write offs	0		0		0		0		0		0		0		0		0
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans
Pass	9,910		10,541		12,486		8,614		3,924		4,625		50,100		8,330		58,430
Special Mention	0		0		0		519		0		0		519		0		519
Substandard	87		0		96		123		0		253		559		0		559
Not Rated	64,233		51,018		38,014		17,432		4,314		23,225		198,236		0		198,236
Total	74,230		61,559		50,596		26,688		8,238		28,103		249,414		8,330		257,744
Closed end first mortgage loans
Current period gross write offs	0		0		0		0		0		0		0		0		0

NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
Open end and junior lien loans
Pass	557		137		491		335		0		6		1,526		8,689		10,215
Substandard	108		0		23		0		26		48		205		68		273
Not Rated	24,792		29,648		8,471		1,554		2,286		1,962		68,713		112,371		181,084
Total	25,457		29,785		8,985		1,889		2,312		2,016		70,444		121,128		191,572
Open end and junior lien loans
Current period gross write offs	0		50		14		0		0		0		64		99		163
Residential construction loans
Not Rated	1,525		2,982		1,515		839		263		1,220		8,344		0		8,344
Total	1,525		2,982		1,515		839		263		1,220		8,344		0		8,344
Residential construction loans
Current period gross write offs	0		0		0		0		0		0		0		0		0
Other consumer loans
Pass	1,082		789		1,391		301		0		0		3,563		11,894		15,457
Substandard	40		34		35		0		2		0		111		0		111
Not Rated	32,481		17,585		9,994		6,008		1,611		1,957		69,636		10,545		80,181
Total	33,603		18,408		11,420		6,309		1,613		1,957		73,310		22,439		95,749
Other consumer loans
Current period gross write offs	16		258		90		8		212		1		585		243		828
Total Loans	$	846,498	$	755,972	$	558,989	$	464,644	$	221,160	$	293,243	$	3,140,506	$	1,776,028	$	4,916,534
Total current period gross write offs	$	16	$	5,753	$	179	$	186	$	480	$	1	$	6,615	$	717	$	7,332

Aging of the Recorded Investment in Past Due Loans

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2023 and 2022 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2023
Commercial and industrial loans:
Working capital lines of credit loans	$	602,236	$	0	$	0	$	602,236	$	2,654	$	0	$	604,890
Non-working capital loans	805,305		1,372		0		806,677		8,741		244		815,418
Commercial real estate and multi-family residential loans:
Construction and land development loans	631,653		0		0		631,653		0		0		631,653
Owner occupied loans	821,701		0		0		821,701		3,247		1,161		824,948
Nonowner occupied loans	723,589		0		0		723,589		0		0		723,589
Multi-family loans	253,197		0		0		253,197		0		0		253,197
Agri-business and agricultural loans:
Loans secured by farmland	162,783		0		0		162,783		100		0		162,883
Loans for agricultural production	225,980		0		0		225,980		0		0		225,980
Other commercial loans	120,567		0		0		120,567		0		0		120,567
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	256,016		1,142		27		257,185		559		329		257,744
Open end and junior lien loans	190,956		344		0		191,300		272		164		191,572
Residential construction loans	8,344		0		0		8,344		0		0		8,344
Other consumer loans	95,135		502		0		95,637		112		3		95,749
Total	$	4,897,462	$	3,360	$	27	$	4,900,849	$	15,685	$	1,901	$	4,916,534

(dollars in thousands)	Loans Not Past Due		30-89 Days Past Due		Greater than 89 Days Past Due and Accruing		Total Accruing		Total Nonaccrual		Nonaccrual With No Allowance For Credit Loss		Total
2022
Commercial and industrial loans:
Working capital lines of credit loans	$	649,529	$	68	$	0	$	649,597	$	1,442	$	0	$	651,039
Non-working capital loans	830,033		39		1		830,073		11,622		727		841,695
Commercial real estate and multi-family residential loans:
Construction and land development loans	515,168		0		0		515,168		0		0		515,168
Owner occupied loans	754,451		0		0		754,451		3,065		1,469		757,516
Nonowner occupied loans	705,662		0		0		705,662		0		0		705,662
Multi-family loans	196,941		0		0		196,941		0		0		196,941
Agri-business and agricultural loans:
Loans secured by farmland	201,033		0		0		201,033		145		0		201,178
Loans for agricultural production	230,989		0		0		230,989		0		0		230,989
Other commercial loans	113,341		0		0		113,341		0		0		113,341
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans	211,736		306		122		212,164		293		225		212,457
Open end and junior lien loans	176,758		436		0		177,194		188		188		177,382
Residential construction loans	19,170		0		0		19,170		0		0		19,170
Other consumer loans	87,333		316		0		87,649		209		6		87,858
Total	$	4,692,144	$	1,165	$	123	$	4,693,432	$	16,964	$	2,615	$	4,710,396

Amortized Cost Basis of Collateral Dependent Loans

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2023 and 2022:

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2023
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	2,454	$	0	$	2,504
Non-working capital loans	40		8,202		400		8,642
Commercial real estate and multi-family residential loans:
Owner occupied loans	595		1,474		1,161		3,230
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	0		100		0		100
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	559		0		0		559
Open end and junior lien loans	164		0		0		164
Other consumer loans	0		0		112		112
Total	$	1,408	$	12,230	$	1,673	$	15,311

(dollars in thousands)	Real Estate		General Business  Assets		Other		Total
2022
Commercial and industrial loans:
Working capital lines of credit loans	$	50	$	5,402	$	0	$	5,452
Non-working capital loans	544		18,109		229		18,882
Commercial real estate and multi-family residential loans:
Owner occupied loans	413		1,491		1,161		3,065
Nonowner occupied loans	0		0		0		0
Agri-business and agricultural loans:
Loans secured by farmland	0		145		0		145
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans	2,030		0		0		2,030
Open end and junior lien loans	188		0		0		188
Other consumer loans	0		0		7		7
Total	$	3,225	$	25,147	$	1,397	$	29,769

Schedule of Financing Receivable, Troubled Debt Restructuring

(dollars in thousands)	Interest Rate Reduction		Combination Interest Rate Reduction and Term Extension		Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay		Total Modifications		Total Class of Financing Receivable
Twelve Months Ended December 31, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	1,912	$	944	$	0	$	2,856	0.47	%
Non-working capital loans	0		0		1,572		1,572		0.19
Total commercial and industrial loans	1,912		944		1,572		4,428		0.31
Total loan modifications made to borrowers experiencing financial difficulty	$	1,912	$	944	$	1,572	$	4,428	0.09	%

The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the twelve months ended December 31, 2023:

(dollars in thousands)	Principal Forgiveness		Interest Rate Reduction	Term Extension	Payment Delay	Total Class of Financing Receivable
Twelve Months Ended December 31, 2023
Commercial and industrial loans:
Working capital lines of credit loans	$	0	Reduction of two variable Prime Rate lines of credit to 1.00% Fixed Reduction of one variable line of credit from Prime plus 1.00% to 1.00% Fixed	Term extension for one variable rate line of credit from 12 months to 120 months	None	0.47	%
Non-working capital loans (1)	9,380		Reduction of one term loan from Prime plus 0.75% to 1.00% Fixed	Term extension from 40 months to 60 months	Extension of amortization period from 40 months to 480 months with excess cash flow recapture provisions for earlier repayment	0.19

(1) Represents one $11.0 million non-working capital loan that received principal forgiveness of $9.4 million, of which $3.7 million and $5.6 million was charged off during the twelve months ended December 31, 2023 and 2022, respectively.