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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

12 Months Ended

Dec. 31, 2023

6. LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

The Company grants commercial, industrial, agricultural, residential, and consumer loans primarily to customers throughout north central, central and south-central Pennsylvania, southern New York and Wilmington and Dover, Delaware. The recently completed HVBC acquisition has expanded our lending market further into southeast Pennsylvania, including Montgomery, Bucks and Philadelphia Counties as well as Burlington County, New Jersey. Although the Company had a diversified loan portfolio at December 31, 2023 and 2022, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio, as well as how those segments are analyzed within the allowance for credit losses as of December 31, 2023 and 2022 (in thousands):

	December 31,
	2023		2022
Real estate loans:
Residential	$	359,990	$	210,213
Commercial		1,092,887		876,569
Agricultural		314,802		313,614
Construction		195,826		80,691
Consumer		61,316		86,650
Other commercial loans		136,168		63,222
Other agricultural loans		30,673		34,832
State and political subdivision loans		57,174		59,208
Total		2,248,836		1,724,999
Allowance for credit losses - loans		21,153		18,552
Net loans	$	2,227,683	$	1,706,447

As of December 31, 2023, and 2022, net unamortized loan fees and costs of $2,843,000 and $2,573,000, respectively, were included in the carrying value of loans. Purchased loans acquired in connection with the FNB acquisition, the State College branch acquisition, the MidCoast acquisition and the HVBC were recorded at fair value on their acquisition date without a carryover of the related allowance for loan losses.

Real estate loans serviced for Freddie Mac, Fannie Mae and the FHLB, which are not included in the Consolidated Balance Sheet, totaled $203,709,000 and $187,754,000 at December 31, 2023 and 2022, respectively. Loans sold to Freddie Mac and Fannie Mae were sold without recourse and total $193,548,000 and $177,575,000 at December 31, 2023 and 2022, respectively. Additionally, the Bank acquired a portfolio of loans sold to the FHLB during the acquisitions of FNB and HVBC, which were sold under the Mortgage Partnership Finance Program (“MPF”). The Bank was not an active participant in the MPF program in 2023 or 2022. The MPF portfolio balance was $10,161,000 and $10,179,000 at December 31, 2023 and 2022, respectively. The FHLB maintains a first-loss position for the MPF portfolio that totals $165,000. Should the FHLB exhaust its first-loss position, recourse to the Bank’s credit enhancement would be up to the next $229,000 of losses. The Bank did not experience any losses for the MPF portfolio during 2023, 2022 or 2021.

The segments of the Bank’s loan portfolio are disaggregated into classes to a level that allows management to monitor risk and performance. Residential real estate mortgages consist of 15 to 30 year first mortgages on residential real estate, while residential real estate home equities are consumer purpose installment loans or lines of credit secured by a mortgage which is often a second lien on residential real estate with terms of 15 years or less. Commercial real estate are business purpose loans secured by a mortgage on commercial real estate. Agricultural real estate are loans secured by a mortgage on real estate used in agriculture production. Construction real estate are loans secured by residential or commercial real estate used during the construction phase of residential and commercial projects. Consumer loans are typically unsecured or primarily secured by collateral other than real estate and overdraft lines of credit connected with customer deposit accounts. Other commercial loans are loans for commercial purposes primarily secured by non-real estate collateral. Other agricultural loans are loans for agricultural purposes primarily secured by non-real estate collateral. State and political subdivisions are loans for state and local municipalities for capital and operating expenses or tax-free loans used to finance commercial development.

Allowance for Credit Losses, in accordance with ASC 326

As discussed in Note 1 “Basis of Presentation”, the Company adopted CECL effective January 1, 2023. CECL requires estimated credit losses on loans to be determined based on an expected life of loan model, as compared to an incurred loss model (in effect for periods prior to 2023). Accordingly, allowance for credit loss disclosures subsequent to January 1, 2023 are not always comparable to prior dates. In addition, certain new disclosures required under CECL are not applicable to prior periods. As a result, the following tables present disclosures separately for each period, where appropriate. New disclosures required under CECL are only shown for the current period and are noted. See Note 1, “Basis of Presentation”, for a summary of the impact of adopting CECL on January 1, 2023.

Under CECL, loans individually evaluated consist of collaterally dependent loans and recently modified loans that were experiencing financial difficulty at the time of the modification. Under the incurred loss model in effect prior to the adoption of CECL, loans evaluated individually for impairment were referred to as impaired loans.

The allowance for credit losses related to loans consists of loans evaluated collectively and individually for expected credit losses. It represents an estimate of credit losses over the expected life of the loans as of the balance sheet date and is recorded as a reduction to net loans. The allowance for credit losses for off-balance sheet credit exposures includes estimated losses on unfunded loan commitments, letters of credit and other off-balance sheet credit exposures. The total allowance for credit losses is increased by charges to expense, through the provision for credit losses, and decreased by charge-offs, net of recoveries.

The following table presents the components of the allowance for credit losses as of December 31, 2023 (in thousands):

	2023
Allowance for Credit Losses - Loans	$	21,153
Allowance for Credit Losses - Off-Balance Sheet credit Exposure		1,265
Total allowance for credit losses	$	22,418

The following table presents the activity in the allowance for credit losses for 2023 (in thousands):

	Allowance for Credit Losses -Loans			Allowance for Credit Losses - Off- Balance Sheet credit Exposure		Total
Balance at December 31, 2022	$	18,552		$	165	$	18,717
Impact of adopting CECL		(3,300	)		1,064		(2,236	)
Allowance for credit loss on PCD acquired loans		1,689			-		1,689
Loans charge-off		(1,329	)		-		(1,329	)
Recoveries of loans previously charged-off		49			-		49
Net loans charged-off		(1,280	)		-		(1,280	)
Provision for credit losses - acquisition day 1 non-PCD		4,591			-		4,591
Provision for credit losses		901			36		937
Balance at December 31, 2023	$	21,153		$	1,265	$	22,418

The following tables presents the activity in the allowance for credit losses – loans, by portfolio segment, for 2023 (in thousands).

	Balance at December 31, 2022		Impact of adopting CECL			Allowance for credit loss on PCD acquired loans		Charge- offs			Recoveries		Provision			Balance at December 31, 2023
Real estate loans:
Residential	$	1,056	$	79		$	108	$	(1	)	$	-	$	1,112		$	2,354
Commercial		10,120		(3,070	)		39		-			-		2,089			9,178
Agricultural		4,589		(1,145	)		-		-			-		(180	)		3,264
Construction		801		(103	)		37		-			-		1,215			1,950
Consumer		135		1,040			677		(365	)		40		(31	)		1,496
Other commercial loans		1,040		(328	)		828		(963	)		9		1,643			2,229
Other agricultural loans		489		(219	)		-		-			-		-			270
State and political subdivision loans		322		(280	)		-		-			-		3			45
Unallocated		-		726			-		-			-		(359	)		367
Total	$	18,552	$	(3,300	)	$	1,689	$	(1,329	)	$	49	$	5,492		$	21,153

The following table presents loans and the allowance for credit losses by portfolio segment, under CECL methodology as of December 31, 2023 (in thousands):

	Allowance for Credit Losses - Loans						Loans
2023	Collectively evaluated		Individually evaluated		Total Allowance for Credit Losses - Loans		Collectively evaluated		Individually evaluated		Total Loans
Real estate loans:
Residential	$	2,285	$	69	$	2,354	$	358,358	$	1,632	$	359,990
Commercial		9,033		145		9,178		1,090,217		2,670		1,092,887
Agricultural		3,247		17		3,264		311,500		3,302		314,802
Construction		1,664		286		1,950		193,469		2,357		195,826
Consumer		557		939		1,496		60,377		939		61,316
Other commercial loans		1,713		516		2,229		134,472		1,696		136,168
Other agricultural loans		270		-		270		30,388		285		30,673
State and political subdivision loans		45		-		45		57,174		-		57,174
Unallocated		367		-		367		-		-		-
Total	$	19,181	$	1,972	$	21,153	$	2,236,955	$	12,881	$	2,248,836

Allowance for Credit Losses, prior to January 1, 2023

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of incurred losses in the loan portfolio as of the balance sheet date and is recorded as a reduction to net loans. The reserve for unfunded lending commitments represents management’s estimate of incurred losses in unfunded commitments and letters of credit, and is recorded in other liabilities on the consolidated balance sheet. The allowance for credit losses is increased by charges to expense, through the provision for credit losses and decreased by charge-offs, net of recoveries. The following table presents the components of the allowance for credit losses as of December 31, 2022 (in thousands):

	December 31, 2022
Allowance for loan Losses	$	18,552
Reserve for unfunded commitments		165
Total allowance for credit losses	$	18,717

The following table presents the activity in the allowance for credit losses for 2022 (in thousands):

	Allowance for Credit Losses - Loans			Reserve for unfunded commitments		Total
Balance at December 31, 2021	$	17,304		$	165	$	17,469
Loans charge-off		(472	)		-		(472	)
Recoveries of loans previously charged-off		37			-		37
Net loans charged-off		(435	)		-		(435	)
Provision for credit losses		1,683			-		1,683
Balance at December 31, 2022	$	18,552		$	165	$	18,717

The following table presents the activity in the allowance for loan losses, by portfolio segment, for 2022 and 2021 (in thousands).

	Balance at December 31, 2021		Charge-offs			Recoveries		Provision			Balance at December 31, 2022
Real estate loans:
Residential	$	1,147	$	-		$	-	$	(91	)	$	1,056
Commercial		8,099		-			3		2,018			10,120
Agricultural		4,729		-			-		(140	)		4,589
Construction		434		-			-		367			801
Consumer		262		(37	)		21		(111	)		135
Other commercial loans		1,023		(435	)		13		439			1,040
Other agricultural loans		558		-			-		(69	)		489
State and political subdivision loans		281		-			-		41			322
Unallocated		771		-			-		(771	)		-
Total	$	17,304	$	(472	)	$	37	$	1,683		$	18,552

2022	Balance at December 31, 2020		Charge-offs			Recoveries		Provision			Balance at December 31, 2021
Real estate loans:
Residential	$	1,174	$	-		$	-	$	(27	)	$	1,147
Commercial		6,216		(54	)		89		1,848			8,099
Agricultural		4,953		-			-		(224	)		4,729
Construction		122		-			-		312			434
Consumer		321		(27	)		21		(53	)		262
Other commercial loans		1,226		(133	)		43		(113	)		1,023
Other agricultural loans		864		-			-		(306	)		558
State and political subdivision loans		479		-			-		(198	)		281
Unallocated		460		-			-		311			771
Total	$	15,815	$	(214	)	$	153	$	1,550		$	17,304

The following table presents loans and their related allowance for loan losses, by portfolio segment, as of December 31, 2022 (in thousands):

	Allowance for loan losses						Loans
2022	Collectively evaluated for impairment		Individually evaluated for impairment		Total allowance for loan losses		Collectively evaluated for impairment		Individually evaluated for impairment		Loans acquired with deteriorated credit quality		Total Loans
Real estate loans:
Residential	$	1,052	$	4	$	1,056	$	209,869	$	335	$	9	$	210,213
Commercial		10,063		57		10,120		869,038		5,675		1,856		876,569
Agricultural		4,565		24		4,589		306,793		5,380		1,441		313,614
Construction		801		-		801		80,691		-		-		80,691
Consumer		131		4		135		86,646		4		-		86,650
Other commercial loans		1,027		13		1,040		63,120		102		-		63,222
Other agricultural loans		489		-		489		34,359		473		-		34,832
State and political subdivision loans		322		-		322		59,208		-		-		59,208
Total	$	18,450	$	102	$	18,552	$	1,709,724	$	11,969	$	3,306	$	1,724,999

Information presented in the following tables is not required for periods after the adoption of CECL. The following table includes the recorded investment and unpaid principal balances for impaired loans by class, with the associated allowance amount as of December 31, 2022, if applicable (in thousands):

				Recorded			Recorded
	Unpaid			Investment			Investment			Total
	Principal			With No			With			Recorded			Related
2022	Balance			Allowance			Allowance			Investment			Allowance
Real estate loans:
Mortgages		$	395		$	242		$	39		$	281		$	4
Home Equity			71			39			15			54			-
Commercial			6,655			5,314			361			5,675			57
Agricultural			6,062			5,192			188			5,380			24
Consumer			4			-			4			4			4
Other commercial loans			797			32			70			102			13
Other agricultural loans			669			473			-			473			-
Total		$	14,653		$	11,292		$	677		$	11,969		$	102

The following table includes the average investment in impaired loans and the income recognized on impaired loans for 2022 and 2021 (in thousands):

					Interest
	Average		Interest		Income
	Recorded		Income		Recognized
2022	Investment		Recognized		Cash Basis
Real estate loans:
Mortgages	$	421	$	12	$	-
Home Equity		64		4		-
Commercial		6,216		207		10
Agricultural		5,540		126		-
Consumer		1		-		-
Other commercial loans		260		3		-
Other agricultural loans		538		4		-
Total	$	13,040	$	356	$	10

2021
Real estate loans:
Mortgages	$	682	$	16	$	-
Home Equity		99		4		-
Commercial		8,789		288		31
Agricultural		4,562		82		-
Other commercial loans		704		2		-
Other agricultural loans		1,044		3		-
Total	$	15,880	$	395	$	31

Non-performing Loans

Non-performing loans include those loans that are considered nonaccrual, described in more detail below and all loans past due 90 or more days. Loans are considered for non-accrual status upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans, or if full payment of principal and interest is not expected. Additionally, if management is made aware of other information including bankruptcy, repossession, death, or legal proceedings, the loan may be placed on non-accrual status. If a loan is 90 days or more past due and is well secured and in the process of collection, it may still be considered accruing.

The following table reflects the non-performing loan receivables, as well as those on non-accrual status as of December 31, 2023 and 2022, respectively. The balances are presented by class of loan receivable (in thousands):

	December 31, 2023								December 31, 2022
	Nonaccrual With a related allowance		Nonaccrual Without a related allowance		90 days or greater past due and accruing		Total non- performing loans		Nonaccrual		90 days or greater past due and accruing		Total non- performing loans
Real estate loans:
Mortgages	$	315	$	2,646	$	-	$	2,961	$	562	$	-	$	562
Home Equity		-		121		18		139		29		-		29
Commercial		256		879		404		1,539		2,778		-		2,778
Agricultural		181		2,489		75		2,745		3,222		-		3,222
Construction		2,357		-		-		2,357		-		-		-
Consumer		701		-		13		714		-		7		7
Other commercial loans		588		1,162		6		1,756		62		-		62
Other agricultural loans		-		492		-		492		285		-		285
	$	4,398	$	7,789	$	516	$	12,703	$	6,938	$	7	$	6,945

As of December 31, 2023, there were $7.8 million of non-accrual loans that did not have a related allowance for credit losses. The estimated fair values of the collateral securing these loans exceeded their carrying amount, or the loans were previously charge down to the realizable collateral values. Accordingly, no specific valuation allowance was considered to be necessary.

The following table presents, by class of loans and leases, the amortized cost basis of collateral-dependent nonaccrual loans and leases and type of collateral as of December 31, 2023 and 2022 (in thousands):

	December 31, 2023								December 31, 2022
	Real Estate		Business Assets		None		Total		Real Estate		Business Assets		None		Total
Real estate loans:
Mortgages	$	2,961	$	-	$	-	$	2,961	$	562	$	-	$	-	$	562
Home Equity		121		-		-		121		29		-		-		29
Commercial		1,135		-		-		1,135		2,778		-		-		2,778
Agricultural		2,670		-		-		2,670		3,222		-		-		3,222
Construction		2,357		-		-		2,357		-		-		-		-
Consumer		-		-		701		701		-		-		-		-
Other commercial loans		-		1,750		-		1,750		-		62		-		62
Other agricultural loans		-		492		-		492		-		285		-		285
	$	9,244	$	2,242	$	701	$	12,187	$	6,591	$	347	$	-	$	6,938

Credit Quality Information

For commercial real estate, agricultural real estate, construction, other commercial, other agricultural, and state and political subdivision loans, management uses an internal risk rating system to monitor and assess credit quality. During the third quarter of 2023, this rating system was expanded from a nine grade rating system to a ten grade rating system. The first six categories under the revised system are considered not criticized and are aggregated as “Pass” rated. Under the prior system, the first five categories were considered not criticized and aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The definitions of each rating are defined below:

•

Pass (Grades 1-6) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

•

Special Mention (Grade 7) – This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

•

Substandard (Grade 8) – This loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

•

Doubtful (Grade 9) – This loan grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

•

Loss (Grade 10) – This loan grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that continuance as an asset is not warranted.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay the loan as agreed, the Company’s loan rating process includes several layers of internal and external oversight. The Company’s loan officers are responsible for the timely and accurate risk rating of the loans in each of their portfolios at origination and on an ongoing basis under the supervision of management. All commercial, agricultural and state and political relationships over $500,000 are reviewed annually to ensure the appropriateness of the loan grade. In addition, the Company engages an external consultant on at least an annual basis to: 1) review a minimum of 50% of the dollar volume of the commercial loan portfolio on an annual basis, 2) a large sample of relationships in aggregate over $1,000,000, 3) selected loan relationships over $750,000 which are over 30 days past due, or classified Special Mention, Substandard, Doubtful, or Loss, and 4) such other loans which management or the consultant deems appropriate. As part of this review, our underwriting process and loan grading system is evaluated.

The following tables represent credit exposures by internally assigned grades, by origination year, as of December 31, 2023 (in thousands):

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Commercial real estate
Risk Rating
Pass	$	90,068	$	333,710	$	224,873	$	122,560	$	81,557	$	180,799	$	28,360	$	1,140	$	1,063,067
Special Mention		672		7,963		227		1,552		7,442		8,159		96		60		26,171
Substandard		-		1,302		6		-		158		1,444		317		422		3,649
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	90,740	$	342,975	$	225,106	$	124,112	$	89,157	$	190,402	$	28,773	$	1,622	$	1,092,887
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Agricultural real estate
Risk Rating
Pass	$	22,632	$	47,479	$	28,990	$	32,058	$	25,406	$	118,700	$	10,495	$	460	$	286,220
Special Mention		574		9,165		1,499		-		962		7,038		3,535		-		22,773
Substandard		-		-		-		-		102		5,394		75		238		5,809
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	23,206	$	56,644	$	30,489	$	32,058	$	26,470	$	131,132	$	14,105	$	698	$	314,802
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Construction										-
Risk Rating
Pass	$	54,973	$	102,562	$	22,508	$	-	$	-	$	-	$	839	$	1,166	$	182,048
Special Mention		1,574		5,432		4,415		-		-		-		-		-		11,421
Substandard		-		-		2,357		-		-		-		-		-		2,357
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	56,547	$	107,994	$	29,280	$	-	$	-	$	-	$	839	$	1,166	$	195,826
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Other commercial loans										-
Risk Rating
Pass	$	31,493	$	11,407	$	9,016	$	4,793	$	4,758	$	3,530	$	63,285	$	93	$	128,375
Special Mention		51		52		1,510		184		223		629		1,652		36		4,337
Substandard		52		97		-		-		149		967		502		1,667		3,434
Doubtful		-		-		-		-		-		-		-		22		22
Total	$	31,596	$	11,556	$	10,526	$	4,977	$	5,130	$	5,126	$	65,439	$	1,818	$	136,168
Current period gross charge-offs	$	200	$	-	$	-	$	763	$	-	$	-	$	-	$	-	$	963

Other agricultural loans										-
Risk Rating
Pass	$	3,902	$	1,520	$	6,448	$	1,046	$	532	$	305	$	15,331	$	-	$	29,084
Special Mention		-		473		16		42		-		-		488		29		1,048
Substandard		-		-		207		-		4		255		44		31		541
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	3,902	$	1,993	$	6,671	$	1,088	$	536	$	560	$	15,863	$	60	$	30,673
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

State and political subdivision loans										-
Risk Rating
Pass	$	1,623	$	14,171	$	10,841	$	5,235	$	-	$	25,294	$	10	$	-	$	57,174
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,623	$	14,171	$	10,841	$	5,235	$	-	$	25,294	$	10	$	-	$	57,174
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Total										-
Risk Rating
Pass	$	204,691	$	510,849	$	302,676	$	165,692	$	112,253	$	328,628	$	118,320	$	2,859	$	1,745,968
Special Mention		2,871		23,085		7,667		1,778		8,627		15,826		5,771		125		65,750
Substandard		52		1,399		2,570		-		413		8,060		938		2,358		15,790
Doubtful		-		-		-		-		-		-		-		22		22
Total	$	207,614	$	535,333	$	312,913	$	167,470	$	121,293	$	352,514	$	125,029	$	5,364	$	1,827,530

Information presented in the table above is not required for periods prior to adoption of CECL. The following table presents the most comparable information for the prior period, internal credit risk ratings for the indicated loan class segments as of December 31, 2022 (in thousands).

December 31, 2022	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	842,912	$	28,047	$	5,610	$	-	$	-	$	876,569
Agricultural		295,443		11,960		6,211		-		-		313,614
Construction		75,703		2,642		2,346		-		-		80,691
Other commercial loans		59,902		2,953		337		30		-		63,222
Other agricultural loans		32,708		1,307		817		-		-		34,832
State and political subdivision loans		59,208		-		-		-		-		59,208
Total	$	1,365,876	$	46,909	$	15,321	$	30	$	-	$	1,428,136

For residential real estate mortgage loans, home equity loans, and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail above, and all loans past due 90 or more days and still accruing. The following table presents the recorded investment in those loan classes based on payment activity, by origination year, as of December 31, 2023 (in thousands):

													Revolving		Revolving
													Loans		Loans
													Amortized		Converted
December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Residential real estate
Payment Performance
Performing	$	19,082	$	93,706	$	47,774	$	29,940	$	18,923	$	97,813	$	-	$	-	$	307,238
Nonperforming		-		399		766		396		-		1,400		-		-		2,961
Total	$	19,082	$	94,105	$	48,540	$	30,336	$	18,923	$	99,213	$	-	$	-	$	310,199
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	-	$	1

Home equity										-
Payment Performance
Performing	$	3,877	$	3,008	$	1,886	$	1,954	$	2,462	$	7,883	$	28,219	$	363	$	49,652
Nonperforming		-		-		-		-		-		72		67		-		139
Total	$	3,877	$	3,008	$	1,886	$	1,954	$	2,462	$	7,955	$	28,286	$	363	$	49,791
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Consumer										-
Payment Performance
Performing	$	1,803	$	979	$	539	$	477	$	557	$	2,988	$	53,254	$	5	$	60,602
Nonperforming		-		21		-		-		-		693		-		-		714
Total	$	1,803	$	1,000	$	539	$	477	$	557	$	3,681	$	53,254	$	5	$	61,316
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	1	$	341	$	23	$	-	$	365

Total										-
Payment Performance
Performing	$	24,762	$	97,693	$	50,199	$	32,371	$	21,942	$	108,684	$	81,473	$	368	$	417,492
Nonperforming		-		420		766		396		-		2,165		67		-		3,814
Total	$	24,762	$	98,113	$	50,965	$	32,767	$	21,942	$	110,849	$	81,540	$	368	$	421,306

December 31, 2022	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	161,998	$	562	$	9	$	162,569
Home Equity		47,615		29		-		47,644
Consumer		86,643		7		-		86,650
Total	$	296,256	$	598	$	9	$	296,863

Aging Analysis of Past Due Loan Receivables

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due loan receivables as of December 31, 2023 and 2022 (in thousands):

	30-59 Days		60-89 Days		90 Days Or		Total Past				Total Loans		90 Days or Greater and
December 31, 2023	Past Due		Past Due		Greater		Due		Current		Receivables		Accruing
Real estate loans:
Mortgages	$	2,682	$	360	$	2,240	$	5,282		304,917	$	310,199	$	-
Home Equity		145		67		71		283		49,508		49,791		18
Commercial		1,151		245		1,380		2,776		1,090,111		1,092,887		404
Agricultural		72		-		1,440		1,512		313,290		314,802		75
Construction		4,407		388		2,357		7,152		188,674		195,826		-
Consumer		16		282		23		321		60,995		61,316		13
Other commercial loans		670		366		319		1,355		134,813		136,168		6
Other agricultural loans		108		362		-		470		30,203		30,673		-
State and political subdivision loans		-		-		-		-		57,174		57,174		-
Total	$	9,251	$	2,070	$	7,830	$	19,151	$	2,229,685	$	2,248,836	$	516

Loans considered non-accrual	$	199	$	666	$	7,314	$	8,179	$	4,008	$	12,187
Loans still accruing		9,052		1,404		516		10,972		2,225,677		2,236,649
Total	$	9,251	$	2,070	$	7,830	$	19,151	$	2,229,685	$	2,248,836

	30-59 Days		60-89 Days		90 Days		Total Past						Total Loans		90 Days or Greater and
December 31, 2022	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	356	$	132	$	229	$	717	$	161,843	$	9	$	162,569	$	-
Home Equity		48		9		29		86		47,558		-		47,644		-
Commercial		1,065		115		1,788		2,968		871,745		1,856		876,569		-
Agricultural		-		-		1,368		1,368		310,805		1,441		313,614		-
Construction		-		-		-		-		80,691		-		80,691		-
Consumer		147		-		7		154		86,496		-		86,650		7
Other commercial loans		1,660		35		32		1,727		61,495		-		63,222		-
Other agricultural loans		-		-		-		-		34,832		-		34,832		-
State and political subdivision loans		-		-		-		-		59,208		-		59,208		-
Total	$	3,276	$	291	$	3,453	$	7,020	$	1,714,673	$	3,306	$	1,724,999	$	7

Loans considered non-accrual	$	46	$	76	$	3,446	$	3,568	$	3,370	$	-	$	6,938
Loans still accruing		3,230		215		7		3,452		1,711,303		3,306		1,718,061
Total	$	3,276	$	291	$	3,453	$	7,020	$	1,714,673	$	3,306	$	1,724,999

Modifications to Borrowers Experiencing Financial Difficulty

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

The following table shows, the amortized cost basis by class of loans receivable, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during 2023 (dollars in thousands):

	For the year ended December 31, 2023
	Number of loans		Amortized Cost Basis		% of Total Class of Financing Receivable
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
Real estate loans:
Mortgages		1	$	126		0.04	%
Commercial		4		1,142		0.10	%
Agricultural		3		688		0.22	%
Other commercial loans		1		610		0.45	%
Total		9	$	2,566

Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
Real estate loans:
Mortgages		1	$	315		0.10	%
Commercial		3		261		0.02	%
Other commercial loans		5		1,108		0.81	%
Total		9	$	1,684

The following table shows, by class of loans receivable, information regarding the financial effect on accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during 2023:

Term Extension
Loan Type	Number of loans		Financial Effect
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
Real estate loans:
Mortgages		1	Extended the loan maturity 4 months
Commercial		4	Extended the weighted average loan maturity 4 months
Agricultural		3	Extended the weighted average loan maturity 5 months
Other commercial loans		1	Extended the loan maturity 60 months
Total		9

Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
Real estate loans:
Mortgages		1	Extended the loan maturing 10 months
Commercial		3	Extended the weighted average loan maturity 5 months
Other commercial loans		5	Extended the weighted average loan maturity 13 months
Total		9

There were no accruing or nonaccrual modified loans to borrowers experiencing financial difficulty for which there were payment defaults after the modification date for 2023.

The following presents, by class of loans, the amortized cost and payment status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty at December 31, 2023 (in thousands):

			30-89 Days		90 Days
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty	Current		Past Due		Or Greater		Total
Real estate loans:
Mortgages	$	126	$	-	$	-	$	126
Commercial		1,142		-		-		1,142
Agricultural		688		-		-		688
Other commercial loans		610		-		-		610
Total	$	2,566	$	-	$	-	$	2,566

				30-89 Days		90 Days
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty		Current		Past Due		Or Greater		Total
Real estate loans:
Mortgages	$	315	$	-	$	-	$	315
Commercial		261		-		-		261
Other commercial loans		1,108		-		-		1,108
Total	$	1,684	$	-	$	-	$	1,684

Information presented in the table above is not required for periods prior to adoption of CECL. The following table presents the most comparable information for the prior period for troubled debt restructurings as of December 31, 2022 and 2021 (in thousands).

	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
2022	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification

Real estate loans:
Home Equity		-		1	$	-	$	8	$	-	$	8
Commercial		-		4		-		2,301		-		2,301
Agricultural		-		2		-		1,137		-		1,137
Total		-		7	$	-	$	3,446	$	-	$	3,446

2021
Real estate loans:
Commercial		-		4	$	-	$	1,469	$	-	$	1,469
Agricultural		-		4		-		2,090		-		2,090
Total		-		8	$	-	$	3,559	$	-	$	3,559

Recidivism, or the borrower defaulting on its obligation pursuant to a modified loan, results in the loan once again becoming a non-accrual loan. Recidivism occurs at a notably higher rate than do defaults on new origination loans, so modified loans present a higher risk of loss than do new origination loans. There was no recidivism or other defaults during the reporting periods for loans that were modified as TDRs during each 12-month period prior to the current reporting periods, which begin January 1, 2022 and 2021, respectively.

Foreclosed Assets Held For Sale

Foreclosed assets acquired in settlement of loans are carried at fair value, less estimated costs to sell, and are included in other assets on the Consolidated Balance Sheet. As of December 31, 2023, and 2022 included with other assets are $474,000 and $543,000, respectively, of foreclosed assets. As of December 31, 2023, included within the foreclosed assets is $176,000 of consumer residential mortgages that were foreclosed on or received via a deed in lieu transaction prior to the period end. As of December 31, 2023, the Company has initiated formal foreclosure proceedings on $392,000 of consumer residential mortgages, which have not yet been transferred into foreclosed assets.