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Note 5 - Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 5 Loans and Allowance for Credit Losses

The following table presents total loans outstanding, by portfolio segment, as of September 30, 2024 and December 31, 2023:

	*September 30,*		*December 31,*
(dollars in thousands)	*2024*		*2023*
Commercial
Commercial and industrial	$	606,245	$	562,180
Commercial real estate
Construction, land and development		173,629		124,034
Multifamily		275,377		245,103
Non-owner occupied		686,071		569,354
Owner occupied		296,366		271,623
Total commercial real estate		1,431,443		1,210,114
Agricultural
Land		45,821		40,832
Production		39,436		36,141
Total agricultural		85,257		76,973
Total commercial		2,122,945		1,849,267
Consumer
Residential real estate
First lien		690,451		697,900
Construction		11,808		28,979
HELOC		134,301		118,315
Junior lien		36,445		35,819
Total residential real estate		873,005		881,013
Other consumer		36,393		29,303
Total consumer		909,398		910,316
Total loans	$	3,032,343	$	2,759,583

Total loans included net deferred loan fees and costs of $601 thousand and $248 thousand at September 30, 2024 and December 31, 2023, respectively. Unearned discounts associated with the acquisition of Metro Phoenix Bank totaled $3.8 million and $5.1 million as of September 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on loans is recorded within accrued interest receivable, and totaled $13.4 million at September 30, 2024 and $12.2 million at December 31, 2023.

The Company manages its loan portfolio proactively to effectively identify problem credits and assess trends early, implement effective work-out strategies, and take charge-offs as promptly as practical. In addition, the Company continuously reassesses its underwriting standards in response to credit risk posed by changes in economic conditions. The Company monitors and manages credit risk through the following governance structure:

●

The Credit Risk team, Collection and Special Assets team and the Credit Governance Committee, which is an internal management committee comprised of various executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking, oversee the Company’s systems and procedures to monitor the credit quality of its loan portfolio, conduct a loan review program, and maintain the integrity of the loan rating system.

●

The Loan Committee is responsible for reviewing and approving all credit requests that exceed individual limits that have not been countersigned by an individual with sufficient assigned authority. This committee has full authority to commit the Bank to any request that fits within its assigned approval authority.

●

The adequacy of the ACL is overseen by the ACL Governance Committee, which is an internal management committee comprised of various Company executives and senior managers across business lines, including Accounting and Finance, Credit Underwriting, Collections and Special Assets, Risk, and Commercial and Retail Banking. The ACL Governance Committee supports the oversight efforts of the Board of Directors.

●

The Board of Directors has approval authority and responsibility for all matters regarding loan policy, reviews all loans approved or declined by the Loan Committee, approves lending authority and monitors asset quality and concentration levels.

●

The ACL Governance Committee and Bank Board of Directors has approval authority and oversight responsibility for the ACL adequacy and methodology.

Loans with a carrying value of $2.1 billion and $1.6 billion as of September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits, and for other purposes required or permitted by law.

ACL on Loans

The following tables present, by loan portfolio segment, a summary of the changes in the ACL on loans for the three and nine months ended September 30, 2024 and 2023:

	*Three months ended September 30, 2024*
	*Beginning*		*Provision for*			*Loan*			*Loan*		*Ending*
(dollars in thousands)	*Balance*		Credit Losses⁽¹⁾			*Charge-offs*			*Recoveries*		*Balance*
Commercial
Commercial and industrial	$	6,234	$	660		$	(246	)	$	153	$	6,801
Commercial real estate
Construction, land and development		10,820		(447	)		—			—		10,373
Multifamily		2,430		161			—			—		2,591
Non-owner occupied		8,772		(260	)		—			—		8,512
Owner occupied		2,280		233			(98	)		14		2,429
Total commercial real estate		24,302		(313	)		(98	)		14		23,905
Agricultural
Land		259		(2	)		—			20		277
Production		185		(3	)		—			—		182
Total agricultural		444		(5	)		—			20		459
Total commercial		30,980		342			(344	)		187		31,165
Consumer
Residential real estate
First lien		5,366		74			—			—		5,440
Construction		458		(355	)		—			—		103
HELOC		886		68			—			—		954
Junior lien		314		807			—			—		1,121
Total residential real estate		7,024		594			—			—		7,618
Other consumer		328		190			(161	)		2		359
Total consumer		7,352		784			(161	)		2		7,977
Total	$	38,332	$	1,126		$	(505	)	$	189	$	39,142

(1)	The difference in the credit loss expense reported herein compared to the consolidated statements of income is associated with the credit loss expense of $549 thousand related to off-balance sheet credit exposure and ($14) thousand related to HTM investment securities.

	*Nine Months Ended September 30, 2024*
	*Beginning*		*Provision for*			*Loan*			*Loan*		*Ending*
(dollars in thousands)	*Balance*		Credit Losses⁽¹⁾			*Charge-offs*			*Recoveries*		*Balance*
Commercial
Commercial and industrial	$	9,705	$	(159	)	$	(3,140	)	$	395	$	6,801
Commercial real estate
Construction, land and development		6,135		4,238			—			—		10,373
Multifamily		1,776		815			—			—		2,591
Non-owner occupied		7,726		786			—			—		8,512
Owner occupied		2,449		73			(127	)		34		2,429
Total commercial real estate		18,086		5,912			(127	)		34		23,905
Agricultural
Land		96		161			—			20		277
Production		84		98			—			—		182
Total agricultural		180		259			—			20		459
Total commercial		27,971		6,012			(3,267	)		449		31,165
Consumer
Residential real estate
First lien		6,087		(647	)		—			—		5,440
Construction		485		(382	)		—			—		103
HELOC		835		119			—			—		954
Junior lien		264		786			(3	)		74		1,121
Total residential real estate		7,671		(124	)		(3	)		74		7,618
Other consumer		201		307			(174	)		25		359
Total consumer		7,872		183			(177	)		99		7,977
Total	$	35,843	$	6,195		$	(3,444	)	$	548	$	39,142

(1)	The difference in the credit loss expense reported herein compared to the consolidated statements of income is associated with the credit loss expense of $31 thousand related to off-balance sheet credit exposure and ($76) thousand related to HTM investment securities.

	Three months ended September 30, 2023
	Beginning		Provision for			Loan			Loan		Ending
(dollars in thousands)	Balance		Credit Losses			Charge-offs			Recoveries		Balance
Commercial
Commercial and industrial	$	8,170	$	93		$	(134	)	$	456	$	8,585
Commercial real estate
Construction, land and development		3,731		770			—			251		4,752
Multifamily		1,991		(25	)		—			—		1,966
Non-owner occupied		8,555		(198	)		—			—		8,357
Owner occupied		2,894		(148	)		—			11		2,757
Total commercial real estate		17,171		399			—			262		17,832
Agricultural
Land		138		(22	)		—			—		116
Production		103		(5	)		—			—		98
Total agricultural		241		(27	)		—			—		214
Total commercial		25,582		465			(134	)		718		26,631
Consumer
Residential real estate
First lien		7,571		(317	)		(9	)		—		7,245
Construction		785		(22	)		—			—		763
HELOC		1,117		(54	)		—			3		1,066
Junior lien		330		(6	)		—			—		324
Total residential real estate		9,803		(399	)		(9	)		3		9,398
Other consumer		311		(66	)		(8	)		24		261
Total consumer		10,114		(465	)		(17	)		27		9,659
Total	$	35,696	$	—		$	(151	)	$	745	$	36,290

	*Nine Months Ended September 30, 2023*
	*Beginning*		*Adoption*			*Provision for*			*Loan*			*Loan*		*Ending*
(dollars in thousands)	*Balance*		*of ASC 326*			Credit Losses⁽¹⁾			*Charge-offs*			*Recoveries*		*Balance*
Commercial
Commercial and industrial	$	8,690	$	(535	)	$	(126	)	$	(394	)	$	950	$	8,585
Commercial real estate
Construction, land and development		1,458		2,551			492			—			251		4,752
Multifamily		1,062		(162	)		1,066			—			—		1,966
Non-owner occupied		7,543		1,344			(530	)		—			—		8,357
Owner occupied		4,188		(1,324	)		(140	)		—			33		2,757
Total commercial real estate		14,251		2,409			888			—			284		17,832
Agricultural
Land		281		(86	)		(80	)		—			1		116
Production		250		(76	)		(76	)		—			—		98
Total agricultural		531		(162	)		(156	)		—			1		214
Total commercial		23,472		1,712			606			(394	)		1,235		26,631
Consumer
Residential real estate
First lien		5,495		1,800			(43	)		(9	)		2		7,245
Construction		345		468			(50	)		—			—		763
HELOC		951		59			50			—			6		1,066
Junior lien		352		(85	)		85			(77	)		49		324
Total residential real estate		7,143		2,242			42			(86	)		57		9,398
Other consumer		531		(97	)		(188	)		(36	)		51		261
Total consumer		7,674		2,145			(146	)		(122	)		108		9,659
Total	$	31,146	$	3,857		$	460		$	(516	)	$	1,343	$	36,290

(1)	The difference in the credit loss expense reported herein compared to the consolidated statements of income is associated with the credit loss expense of $44 thousand related to off-balance sheet credit exposure and $46 thousand related to HTM investment securities.

The ACL on loans at September 30, 2024 was $39.1 million, an increase of $3.3 million, or 9.2%, from December 31, 2023. The increase was primarily due to an increase of $4.2 million in the provision for credit losses on construction, land and development loans. This increase was primarily due to organic loan growth and an increased reserve related to an individually evaluated construction, land and development loan. This was partially offset by a decreased ACL for commercial and industrial loans and residential real estate (“RRE”) loans. This decrease was primarily driven by a $2.6 million charge-off of one commercial and industrial loan in the second quarter of 2024.

Credit Concentrations

The Company focuses on maintaining a well-balanced and diversified loan portfolio. Despite such efforts, it is recognized that credit concentrations may occasionally emerge as a result of economic conditions, changes in local demand, natural loan growth and runoff. To identify credit concentrations effectively, all commercial and industrial and owner occupied real estate loans are assigned Standard Industrial Classification codes, North American Industry Classification System codes and state and county codes. Property type coding is used for investment real estate. There were no industry concentrations exceeding 10% of the Company’s total loan portfolio as of September 30, 2024.

Credit Quality Indicators

The Company’s consumer loan portfolio is primarily comprised of secured loans that are evaluated at origination on a centralized basis against standardized underwriting criteria. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Credit quality for the consumer loan portfolio is measured by delinquency rates, nonaccrual amounts and actual losses incurred. These loans are rated as either performing or nonperforming.

The Company assigns a risk rating to all commercial loans, except pools of homogeneous loans, and performs detailed internal and external reviews of risk rated loans over a certain threshold to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the estimated fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan.

The Company’s ratings are aligned to pass and criticized categories. The criticized category includes special mention, substandard, and doubtful risk ratings. The risk ratings are defined as follows:

●

Pass: A pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

●

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 the deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

●

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower 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 Company 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 repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

●

Loss: Loans classified as loss are considered uncollectible and charged off immediately.

The following tables set forth the amortized cost basis of loans by credit quality indicator and vintage based on the most recent analysis performed, as of September 30, 2024 and December 31, 2023:

													*Revolving*
(dollars in thousands)	*Term Loans Amortized Cost Basis by Origination Year*												*Loans Amortized*
As of September 30, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Cost Basis*		*Total*
Commercial and industrial
Pass	$	139,653	$	147,857	$	63,749	$	40,651	$	50,753	$	38,881	$	90,695	$	572,239
Special mention		—		515		—		9,368		—		6		192		10,081
Substandard		—		4,448		—		4,027		3,062		2,009		10,379		23,925
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	139,653	$	152,820	$	63,749	$	54,046	$	53,815	$	40,896	$	101,266	$	606,245
Gross charge-offs for the period ended	$	—	$	191	$	—	$	—	$	2,668	$	281	$	—	$	3,140
CRE − Construction, land and development
Pass	$	47,796	$	58,373	$	25,508	$	1,263	$	—	$	1,652	$	14,032	$	148,624
Special mention		—		—		—		—		—		—		—		—
Substandard		1,139		—		23,866		—		—		—		—		25,005
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	48,935	$	58,373	$	49,374	$	1,263	$	—	$	1,652	$	14,032	$	173,629
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Multifamily
Pass	$	24,189	$	57,051	$	110,246	$	18,525	$	31,639	$	20,484	$	134	$	262,268
Special mention		—		—		—		—		12,807		—		—		12,807
Substandard		—		—		—		—		—		302		—		302
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	24,189	$	57,051	$	110,246	$	18,525	$	44,446	$	20,786	$	134	$	275,377
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Non-owner occupied
Pass	$	110,526	$	154,417	$	146,842	$	56,666	$	60,671	$	132,675	$	64	$	661,861
Special mention		—		—		—		7,032		—		1,098		4,578		12,708
Substandard		—		—		—		7,788		—		3,714		—		11,502
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	110,526	$	154,417	$	146,842	$	71,486	$	60,671	$	137,487	$	4,642	$	686,071
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Owner occupied
Pass	$	52,339	$	32,986	$	49,367	$	42,406	$	28,424	$	76,053	$	1,798	$	283,373
Special mention		—		—		—		944		—		336		—		1,280
Substandard		—		244		2,635		2,437		—		6,397		—		11,713
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	52,339	$	33,230	$	52,002	$	45,787	$	28,424	$	82,786	$	1,798	$	296,366
Gross charge-offs for the period ended	$	—	$	—	$	29	$	—	$	—	$	98	$	—	$	127
Agricultural − Land
Pass	$	8,423	$	5,653	$	12,726	$	4,504	$	5,461	$	6,502	$	82	$	43,351
Special mention		—		—		—		—		—		—		—		—
Substandard		—		304		2,166		—		—		—		—		2,470
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	8,423	$	5,957	$	14,892	$	4,504	$	5,461	$	6,502	$	82	$	45,821
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural − Production
Pass	$	6,913	$	6,178	$	4,709	$	493	$	1,294	$	599	$	17,915	$	38,101
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		1,335		—		—		—		—		1,335
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	6,913	$	6,178	$	6,044	$	493	$	1,294	$	599	$	17,915	$	39,436
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − First lien
Performing	$	17,117	$	69,102	$	191,133	$	204,117	$	100,781	$	106,253	$	—	$	688,503
Nonperforming		—		579		—		301		12		1,056		—		1,948
Subtotal	$	17,117	$	69,681	$	191,133	$	204,418	$	100,793	$	107,309	$	—	$	690,451
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − Construction
Performing	$	4,035	$	1,796	$	—	$	1,297	$	—	$	—	$	—	$	7,128
Nonperforming		—		—		4,680		—		—		—		—		4,680
Subtotal	$	4,035	$	1,796	$	4,680	$	1,297	$	—	$	—	$	—	$	11,808
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − HELOC
Performing	$	2,712	$	6,392	$	6,103	$	1,199	$	968	$	1,398	$	114,041	$	132,813
Nonperforming		—		—		—		—		—		138		1,350		1,488
Subtotal	$	2,712	$	6,392	$	6,103	$	1,199	$	968	$	1,536	$	115,391	$	134,301
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − Junior lien
Performing	$	3,942	$	9,803	$	7,643	$	4,304	$	2,865	$	3,937	$	200	$	32,694
Nonperforming		1,775		—		300		107		—		1,569		—		3,751
Subtotal	$	5,717	$	9,803	$	7,943	$	4,411	$	2,865	$	5,506	$	200	$	36,445
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	3	$	—	$	3
Other consumer
Performing	$	7,452	$	3,662	$	4,732	$	418	$	2,236	$	849	$	16,754	$	36,103
Nonperforming		—		—		272		—		7		11		—		290
Subtotal	$	7,452	$	3,662	$	5,004	$	418	$	2,243	$	860	$	16,754	$	36,393
Gross charge-offs for the period ended	$	—	$	6	$	3	$	150	$	4	$	11	$	—	$	174
Total loans	$	428,011	$	559,360	$	658,012	$	407,847	$	300,980	$	405,919	$	272,214	$	3,032,343
Gross charge-offs for the period ended	$	—	$	197	$	32	$	150	$	2,672	$	393	$	—	$	3,444

													Revolving
(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year												Loans Amortized
As of December 31, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	189,643	$	83,233	$	66,837	$	62,367	$	31,859	$	14,879	$	83,522	$	532,340
Special mention		—		—		—		—		—		—		—		—
Substandard		464		4,844		236		6,328		94		2,513		15,361		29,840
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	190,107	$	88,077	$	67,073	$	68,695	$	31,953	$	17,392	$	98,883	$	562,180
Gross charge-offs for the period ended	$	39	$	—	$	49	$	11	$	247	$	90	$	—	$	436
CRE − Construction, land and development
Pass	$	29,902	$	57,944	$	14,326	$	122	$	—	$	952	$	121	$	103,367
Special mention		—		—		—		—		—		—		—		—
Substandard		—		20,667		—		—		—		—		—		20,667
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	29,902	$	78,611	$	14,326	$	122	$	—	$	952	$	121	$	124,034
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Multifamily
Pass	$	71,994	$	67,368	$	16,637	$	48,643	$	24,581	$	15,435	$	135	$	244,793
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		310		—		310
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	71,994	$	67,368	$	16,637	$	48,643	$	24,581	$	15,745	$	135	$	245,103
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Non-owner occupied
Pass	$	154,813	$	127,550	$	79,046	$	62,857	$	69,269	$	69,680	$	5,121	$	568,336
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		875		143		—		1,018
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	154,813	$	127,550	$	79,046	$	62,857	$	70,144	$	69,823	$	5,121	$	569,354
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Owner occupied
Pass	$	39,030	$	55,337	$	41,623	$	36,339	$	22,340	$	66,574	$	2,538	$	263,781
Special mention		—		—		—		—		—		262		—		262
Substandard		—		587		2,872		—		2,815		1,306		—		7,580
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	39,030	$	55,924	$	44,495	$	36,339	$	25,155	$	68,142	$	2,538	$	271,623
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural − Land
Pass	$	6,424	$	15,294	$	4,721	$	5,958	$	672	$	7,763	$	—	$	40,832
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	6,424	$	15,294	$	4,721	$	5,958	$	672	$	7,763	$	—	$	40,832
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural − Production
Pass	$	7,890	$	5,858	$	854	$	1,904	$	2,744	$	174	$	16,717	$	36,141
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	7,890	$	5,858	$	854	$	1,904	$	2,744	$	174	$	16,717	$	36,141
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − First lien
Performing	$	61,201	$	190,749	$	217,146	$	108,100	$	33,102	$	87,213	$	284	$	697,795
Nonperforming		—		—		—		—		—		105		—		105
Subtotal	$	61,201	$	190,749	$	217,146	$	108,100	$	33,102	$	87,318	$	284	$	697,900
Gross charge-offs for the period ended	$	—	$	—	$	9	$	—	$	—	$	—	$	—	$	9
Residential real estate − Construction
Performing	$	10,978	$	16,428	$	1,573	$	—	$	—	$	—	$	—	$	28,979
Nonperforming		—		—		—		—		—		—		—		—
Subtotal	$	10,978	$	16,428	$	1,573	$	—	$	—	$	—	$	—	$	28,979
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − HELOC
Performing	$	7,470	$	6,835	$	789	$	1,184	$	308	$	1,341	$	100,388	$	118,315
Nonperforming		—		—		—		—		—		—		—		—
Subtotal	$	7,470	$	6,835	$	789	$	1,184	$	308	$	1,341	$	100,388	$	118,315
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	40	$	—	$	40
Residential real estate − Junior lien
Performing	$	10,938	$	8,820	$	5,157	$	3,673	$	1,461	$	3,939	$	50	$	34,038
Nonperforming		—		—		—		—		—		—		1,781		1,781
Subtotal	$	10,938	$	8,820	$	5,157	$	3,673	$	1,461	$	3,939	$	1,831	$	35,819
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	77	$	—	$	77
Other consumer
Performing	$	5,320	$	6,395	$	980	$	4,489	$	1,554	$	952	$	9,613	$	29,303
Nonperforming		—		—		—		—		—		—		—		—
Subtotal	$	5,320	$	6,395	$	980	$	4,489	$	1,554	$	952	$	9,613	$	29,303
Gross charge-offs for the period ended	$	4	$	2	$	—	$	31	$	6	$	8	$	—	$	51
Total loans	$	596,067	$	667,909	$	452,797	$	341,964	$	191,674	$	273,541	$	235,631	$	2,759,583
Gross charge-offs for the period ended	$	43	$	2	$	58	$	42	$	253	$	215	$	—	$	613

Past Due and Nonaccrual Loans

The Company closely monitors the performance of its loan portfolio. A loan is placed on nonaccrual status when the financial condition of the borrower is deteriorating, payment in full of both principal and interest is not expected as scheduled or principal or interest has been in default for 90 days or more. Exceptions may be made if the asset is secured by collateral sufficient to satisfy both the principal and accrued interest in full and collection is reasonably assured. When one loan to a borrower is placed on nonaccrual status, all other loans to the borrower are re-evaluated to determine if they should also be placed on nonaccrual status. All previously accrued and unpaid interest is reversed at that time. A loan will return to accrual when collection of principal and interest is assured and the borrower has demonstrated timely payments of principal and interest for a reasonable period, generally at least six months.

The following tables present a past due aging analysis of total loans outstanding, by portfolio segment, as of September 30, 2024 and December 31, 2023:

	*September 30, 2024*
							*90 Days*
	*Accruing*		*30 - 59 Days*		*60 - 89 Days*		*or More*				*Total*
(dollars in thousands)	*Current*		*Past Due*		*Past Due*		*Past Due*		*Nonaccrual*		*Loans*
Commercial
Commercial and industrial	$	600,976	$	1,807	$	397	$	—	$	3,065	$	606,245
Commercial real estate
Construction, land and development		148,624		—		—		—		25,005		173,629
Multifamily		275,377		—		—		—		—		275,377
Non-owner occupied		677,266		3,588		—		—		5,217		686,071
Owner occupied		293,851		3		—		—		2,512		296,366
Total commercial real estate		1,395,118		3,591		—		—		32,734		1,431,443
Agricultural
Land		45,821		—		—		—		—		45,821
Production		39,366		—		—		—		70		39,436
Total agricultural		85,187		—		—		—		70		85,257
Total commercial		2,081,281		5,398		397		—		35,869		2,122,945
Consumer
Residential real estate
First lien		687,874		151		478		—		1,948		690,451
Construction		7,128		—		—		—		4,680		11,808
HELOC		132,077		655		81		—		1,488		134,301
Junior lien		32,653		17		24		—		3,751		36,445
Total residential real estate		859,732		823		583		—		11,867		873,005
Other consumer		36,007		88		8		—		290		36,393
Total consumer		895,739		911		591		—		12,157		909,398
Total	$	2,977,020	$	6,309	$	988	$	—	$	48,026	$	3,032,343

	December 31, 2023
							90 Days
	*Accruing*		*30 - 59 Days*		*60 - 89 Days*		*or More*				*Total*
(dollars in thousands)	*Current*		*Past Due*		*Past Due*		*Past Due*		*Nonaccrual*		*Loans*
Commercial
Commercial and industrial	$	554,602	$	844	$	—	$	139	$	6,595	$	562,180
Commercial real estate
Construction, land and development		124,034		—		—		—		—		124,034
Multifamily		245,103		—		—		—		—		245,103
Non-owner occupied		569,267		87		—		—		—		569,354
Owner occupied		270,467		41		—		—		1,115		271,623
Total commercial real estate		1,208,871		128		—		—		1,115		1,210,114
Agricultural
Land		40,832		—		—		—		—		40,832
Production		36,061		80		—		—		—		36,141
Total agricultural		76,893		80		—		—		—		76,973
Total commercial		1,840,366		1,052		—		139		7,710		1,849,267
Consumer
Residential real estate
First lien		695,807		901		554		—		638		697,900
Construction		28,979		—		—		—		—		28,979
HELOC		117,540		597		—		—		178		118,315
Junior lien		35,680		69		—		—		70		35,819
Total residential real estate		878,006		1,567		554		—		886		881,013
Other consumer		29,086		170		47		—		—		29,303
Total consumer		907,092		1,737		601		—		886		910,316
Total	$	2,747,458	$	2,789	$	601	$	139	$	8,596	$	2,759,583

In calculating expected credit losses, the Company includes loans on nonaccrual status and loans 90 days or more past due and still accruing. The following tables present the amortized cost basis on nonaccrual status loans and loans 90 days or more past due and still accruing as of September 30, 2024 and December 31, 2023:

	*As of September 30, 2024*
					*90 Days*
	*Nonaccrual*				*or More*
	*with no Allowance*				*Past Due*
(dollars in thousands)	*for Credit Losses*		*Nonaccrual*		*and Accruing*
Commercial
Commercial and industrial	$	2,790	$	3,065	$	—
Commercial real estate
Construction, land and development		—		25,005		—
Multifamily		—		—		—
Non-owner occupied		5,217		5,217		—
Owner occupied		1,781		2,512		—
Total commercial real estate		6,998		32,734		—
Agricultural
Land		—		—		—
Production		70		70		—
Total agricultural		70		70		—
Total commercial		9,858		35,869		—
Consumer
Residential real estate
First lien		1,941		1,948		—
Construction		4,680		4,680		—
HELOC		138		1,488		—
Junior lien		1,894		3,751		—
Total residential real estate		8,653		11,867		—
Other consumer		—		290		—
Total consumer		8,653		12,157		—
Total	$	18,511	$	48,026	$	—

	December 31, 2023
					90 Days
	*Nonaccrual*				*or More*
	*with no Allowance*				*Past Due*
(dollars in thousands)	*for Credit Losses*		*Nonaccrual*		*and Accruing*
Commercial
Commercial and industrial	$	79	$	6,595	$	139
Commercial real estate
Construction, land and development		—		—		—
Multifamily		—		—		—
Non-owner occupied		—		—		—
Owner occupied		95		1,115		—
Total commercial real estate		95		1,115		—
Agricultural
Land		—		—		—
Production		—		—		—
Total agricultural		—		—		—
Total commercial		174		7,710		139
Consumer
Residential real estate
First lien		632		638		—
Construction		—		—		—
HELOC		115		178		—
Junior lien		70		70		—
Total residential real estate		817		886		—
Other consumer		—		—		—
Total consumer		817		886		—
Total	$	991	$	8,596	$	139

Interest income that would have been recognized if loans on nonaccrual status had been current in accordance with their original terms for the three months ended September 30, 2024 and 2023, is estimated to have been $1.9 million and $186 thousand, respectively.

The Company’s policy is to reverse previously recorded interest income when a loan is placed on nonaccrual status. As a result, the Company did not record any interest income on its nonaccrual loans for the three months ended September 30, 2024 or 2023. At September 30, 2024 and December 31, 2023, total accrued interest receivable on loans, which had been excluded from reported amortized cost basis on loans, was $13.4 million and $12.2 million, respectively, and was reported within accrued interest receivable on the consolidated statements of condition. An allowance was not carried on the accrued interest receivable at either date.

In cases where a borrower experiences financial difficulty, the Company may make certain concessions for which the terms of the loan are modified. Loans experiencing financial difficulty can include modifications for an interest rate reduction below current market rates, a forgiveness of principal balance, an extension of the loan term, an-other than significant payment delay, or some combination of similar types of modifications. During both the three and nine months ended September 30, 2024 and 2023, the Company did not provide any modifications to loans under these circumstances that were experiencing financial difficulty.

The following tables present the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans, as of September 30, 2024 and December 31, 2023:

	*As of September 30, 2024*
	*Primary Type of Collateral*
									*Allowance for*
(dollars in thousands)	*Real estate*		*Equipment*		*Other*		*Total*		*Credit Losses*
Commercial
Commercial and industrial	$	2,790	$	76	$	—	$	2,866	$	76
Commercial real estate
Construction, land and development		25,005		—		—		25,005		4,984
Multifamily		—		—		—		—		—
Non-owner occupied		5,217		—		—		5,217		—
Owner occupied		864		—		—		864		298
Total commercial real estate		31,086		—		—		31,086		5,282
Agricultural
Land		—		—		—		—		—
Production		—		70		—		70		—
Total agricultural		—		70		—		70		—
Total commercial		33,876		146		—		34,022		5,358
Consumer
Residential real estate
First lien		1,948		—		—		1,948		3
Construction		4,680		—		—		4,680		—
HELOC		1,529		—		—		1,529		54
Junior lien		3,745		—		—		3,745		825
Total residential real estate		11,902		—		—		11,902		882
Other consumer		—		—		280		280		47
Total consumer		11,902		—		280		12,182		929
Total	$	45,778	$	146	$	280	$	46,204	$	6,287

	As of December 31, 2023
	Primary Type of Collateral
									Allowance for
(dollars in thousands)	Real estate		Equipment		Other		Total		Credit Losses
Commercial
Commercial and industrial	$	6,124	$	—	$	—	$	6,124	$	2,384
Commercial real estate
Construction, land and development		—		—		—		—		—
Multifamily		—				—		—		—
Non-owner occupied		—				—		—		—
Owner occupied		695				96		791		601
Total commercial real estate		695		—		96		791		601
Agricultural
Land		—		—		—		—		—
Production		—		—		—		—		—
Total agricultural		—		—		—		—		—
Total commercial		6,819		—		96		6,915		2,985
Consumer
Residential real estate
First lien		638		—		—		638		3
Construction		—				—		—		—
HELOC		64		22		—		86		—
Junior lien		70		—		93		163		6
Total residential real estate		772		22		93		887		9
Other consumer		—		—		—		—		—
Total consumer		772		22		93		887		9
Total	$	7,591	$	22	$	189	$	7,802	$	2,994

Collateral dependent loans are loans for which the repayment is expected to be provided substantially by the underlying collateral when there are no other available and reliable sources of repayment.