Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

NOTE 5 Loans and Allowance for Credit Losses

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

	June 30,		December 31,
(dollars in thousands)	2024		2023
Commercial
Commercial and industrial	$	591,779	$	562,180
Commercial real estate
Construction, land and development		161,751		124,034
Multifamily		242,041		245,103
Non-owner occupied		647,776		569,354
Owner occupied		283,356		271,623
Total commercial real estate		1,334,924		1,210,114
Agricultural
Land		41,410		40,832
Production		40,549		36,141
Total agricultural		81,959		76,973
Total commercial		2,008,662		1,849,267
Consumer
Residential real estate
First lien		686,286		697,900
Construction		22,573		28,979
HELOC		126,211		118,315
Junior lien		36,323		35,819
Total residential real estate		871,393		881,013
Other consumer		35,737		29,303
Total consumer		907,130		910,316
Total loans	$	2,915,792	$	2,759,583

Total loans included net deferred loan fees and costs of $264 thousand and $248 thousand at June 30, 2024 and December 31, 2023, respectively. Unearned discounts associated with the acquisition of Metro Phoenix Bank totaled $3.9 million and $5.1 million as of June 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on loans is recorded within accrued interest receivable, and totaled $13.5 million at June 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 as of June 30, 2024 and December 31, 2023, 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 six months ended June 30, 2024 and 2023:

	Three months ended June 30, 2024
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Credit Losses(1)		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	9,508	$	(663)	$	(2,730)	$	119	$	6,234
Commercial real estate
Construction, land and development		5,922		4,898		—		—		10,820
Multifamily		2,148		282		—		—		2,430
Non-owner occupied		8,104		668		—		—		8,772
Owner occupied		2,461		(190)		—		9		2,280
Total commercial real estate		18,635		5,658		—		9		24,302
Agricultural
Land		248		11		—		—		259
Production		219		(34)		—		—		185
Total agricultural		467		(23)		—		—		444
Total commercial		28,610		4,972		(2,730)		128		30,980
Consumer
Residential real estate
First lien		6,152		(786)		—		—		5,366
Construction		489		(31)		—		—		458
HELOC		864		22		—		—		886
Junior lien		284		(41)		(3)		74		314
Total residential real estate		7,789		(836)		(3)		74		7,024
Other consumer		185		134		(1)		10		328
Total consumer		7,974		(702)		(4)		84		7,352
Total	$	36,584	$	4,270	$	(2,734)	$	212	$	38,332

(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 $275 thousand related to off-balance sheet credit exposure and $(56) thousand related to HTM investment securities.

	Six months ended June 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	$	(819)	$	(2,894)	$	242	$	6,234
Commercial real estate
Construction, land and development		6,135		4,685		—		—		10,820
Multifamily		1,776		654		—		—		2,430
Non-owner occupied		7,726		1,046		—		—		8,772
Owner occupied		2,449		(160)		(29)		20		2,280
Total commercial real estate		18,086		6,225		(29)		20		24,302
Agricultural
Land		96		163		—		—		259
Production		84		101		—		—		185
Total agricultural		180		264		—		—		444
Total commercial		27,971		5,670		(2,923)		262		30,980
Consumer
Residential real estate
First lien		6,087		(721)		—		—		5,366
Construction		485		(27)		—		—		458
HELOC		835		51		—		—		886
Junior lien		264		(21)		(3)		74		314
Total residential real estate		7,671		(718)		(3)		74		7,024
Other consumer		201		117		(13)		23		328
Total consumer		7,872		(601)		(16)		97		7,352
Total	$	35,843	$	5,069	$	(2,939)	$	359	$	38,332

(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 ($518) thousand related to off-balance sheet credit exposure and $(62) thousand related to HTM investment securities.

	Three months ended June 30, 2023
	Beginning		Provision for		Loan		Loan		Ending
(dollars in thousands)	Balance		Credit Losses(1)		Charge-offs		Recoveries		Balance
Commercial
Commercial and industrial	$	7,954	$	(137)	$	(85)	$	438	$	8,170
Commercial real estate
Construction, land and development		4,349		(618)		—		—		3,731
Multifamily		1,562		429		—		—		1,991
Non-owner occupied		8,045		510		—		—		8,555
Owner occupied		2,900		(17)		—		11		2,894
Total commercial real estate		16,856		304		—		11		17,171
Agricultural
Land		192		(56)		—		1		137
Production		152		(49)		—		—		103
Total agricultural		344		(105)		—		1		240
Total commercial		25,154		62		(85)		450		25,581
Consumer
Residential real estate
First lien		7,389		182		—		—		7,571
Construction		908		(123)		—		—		785
HELOC		1,038		79		—		—		1,117
Junior lien		290		(5)		—		46		331
Total residential real estate		9,625		133		—		46		9,804
Other consumer		323		(4)		(23)		15		311
Total consumer		9,948		129		(23)		61		10,115
Total	$	35,102	$	191	$	(108)	$	511	$	35,696

(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 $186 thousand related to off-balance sheet credit exposure and $5 thousand related to HTM investment securities.

	Six months ended June 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)	$	(219)	$	(260)	$	494	$	8,170
Commercial real estate
Construction, land and development		1,458		2,551		(278)		—		—		3,731
Multifamily		1,062		(162)		1,091		—		—		1,991
Non-owner occupied		7,543		1,344		(332)		—		—		8,555
Owner occupied		4,188		(1,324)		8		—		22		2,894
Total commercial real estate		14,251		2,409		489		—		22		17,171
Agricultural
Land		281		(86)		(59)		—		1		137
Production		250		(76)		(71)		—		—		103
Total agricultural		531		(162)		(130)		—		1		240
Total commercial		23,472		1,712		140		(260)		517		25,581
Consumer
Residential real estate
First lien		5,495		1,800		274		—		2		7,571
Construction		345		468		(28)		—		—		785
HELOC		951		59		104		—		3		1,117
Junior lien		352		(85)		92		(77)		49		331
Total residential real estate		7,143		2,242		442		(77)		54		9,804
Other consumer		531		(97)		(122)		(28)		27		311
Total consumer		7,674		2,145		320		(105)		81		10,115
Total	$	31,146	$	3,857	$	460	$	(365)	$	598	$	35,696

(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 June 30, 2024 was $38.3 million, an increase of $2.5 million, or 6.9%, from December 31, 2023. The increase was primarily due to a combined ACL increase of $5.7 million in the provision for credit losses on construction, land and development and non-owner occupied commercial real estate (“CRE”) loans. This increase was primarily due to organic loan growth and an increased reserve related to an individually evaluated construction, land and development CRE loan. This was partially offset by a decreased ACL for commercial and industrial loans. This decrease was primarily driven by a $2.6 million charge-off of one loan.

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. As of June 30, 2024, the Company’s total exposure to the general business industry was 10.0% of total loans. There were no other industry concentrations exceeding 10% of the Company’s total loan portfolio as of June 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 June 30, 2024 and December 31, 2023:

													Revolving
(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year												Loans Amortized
As of June 30, 2024	2024		2023		2022		2021		2020		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	80,726	$	163,047	$	75,992	$	51,180	$	49,204	$	42,627	$	109,070	$	571,846
Special mention		—		534		—		7,634		—		10		3		8,181
Substandard		—		685		—		2,469		3,084		2,158		3,356		11,752
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	80,726	$	164,266	$	75,992	$	61,283	$	52,288	$	44,795	$	112,429	$	591,779
Gross charge-offs for the period ended	$	—	$	85	$	—	$	—	$	2,566	$	243	$	—	$	2,894
CRE − Construction, land and development
Pass	$	23,657	$	40,253	$	63,103	$	5,113	$	17	$	915	$	7,218	$	140,276
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		21,475		—		—		—		—		21,475
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	23,657	$	40,253	$	84,578	$	5,113	$	17	$	915	$	7,218	$	161,751
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Multifamily
Pass	$	22,571	$	67,366	$	66,831	$	19,364	$	31,879	$	20,581	$	261	$	228,853
Special mention		—		—		—		—		12,884		—		—		12,884
Substandard		—		—		—		—		—		304		—		304
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	22,571	$	67,366	$	66,831	$	19,364	$	44,763	$	20,885	$	261	$	242,041
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Non-owner occupied
Pass	$	49,799	$	161,500	$	145,403	$	64,835	$	61,646	$	139,166	$	5,179	$	627,528
Special mention		—		—		—		7,070		—		1,109		—		8,179
Substandard		—		5,717		—		2,592		—		3,760		—		12,069
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	49,799	$	167,217	$	145,403	$	74,497	$	61,646	$	144,035	$	5,179	$	647,776
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
CRE − Owner occupied
Pass	$	27,824	$	30,586	$	52,609	$	42,915	$	35,143	$	82,351	$	2,523	$	273,951
Special mention		—		—		—		—		—		339		—		339
Substandard		—		244		97		2,506		—		6,219		—		9,066
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	27,824	$	30,830	$	52,706	$	45,421	$	35,143	$	88,909	$	2,523	$	283,356
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	29	$	—	$	29
Agricultural − Land
Pass	$	3,308	$	5,769	$	12,754	$	4,581	$	5,709	$	6,819	$	—	$	38,940
Special mention		—		—		—		—		—		—		—		—
Substandard		—		304		2,166		—		—		—		—		2,470
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	3,308	$	6,073	$	14,920	$	4,581	$	5,709	$	6,819	$	—	$	41,410
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Agricultural − Production
Pass	$	6,650	$	6,451	$	4,868	$	620	$	1,513	$	715	$	18,385	$	39,202
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		1,347		—		—		—		—		1,347
Doubtful		—		—		—		—		—		—		—		—
Subtotal	$	6,650	$	6,451	$	6,215	$	620	$	1,513	$	715	$	18,385	$	40,549
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − First lien
Performing	$	11,419	$	61,592	$	189,493	$	210,737	$	104,462	$	107,778	$	180	$	685,661
Nonperforming		—		—		—		7		12		606		—		625
Subtotal	$	11,419	$	61,592	$	189,493	$	210,744	$	104,474	$	108,384	$	180	$	686,286
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − Construction
Performing	$	1,162	$	10,085	$	10,022	$	1,304	$	—	$	—	$	—	$	22,573
Nonperforming		—		—		—		—		—		—		—		—
Subtotal	$	1,162	$	10,085	$	10,022	$	1,304	$	—	$	—	$	—	$	22,573
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − HELOC
Performing	$	1,505	$	6,663	$	6,403	$	1,245	$	1,052	$	1,248	$	107,932	$	126,048
Nonperforming		—		—		—		—		—		163		—		163
Subtotal	$	1,505	$	6,663	$	6,403	$	1,245	$	1,052	$	1,411	$	107,932	$	126,211
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential real estate − Junior lien
Performing	$	3,796	$	9,981	$	8,277	$	4,712	$	3,035	$	4,596	$	1,807	$	36,204
Nonperforming		—		—		—		107		—		12		—		119
Subtotal	$	3,796	$	9,981	$	8,277	$	4,819	$	3,035	$	4,608	$	1,807	$	36,323
Gross charge-offs for the period ended	$	—	$	—	$	—	$	—	$	—	$	3	$	—	$	3
Other consumer
Performing	$	5,002	$	4,131	$	5,415	$	704	$	2,807	$	1,236	$	16,442	$	35,737
Nonperforming		—		—		—		—		—		—		—		—
Subtotal	$	5,002	$	4,131	$	5,415	$	704	$	2,807	$	1,236	$	16,442	$	35,737
Gross charge-offs for the period ended	$	—	$	—	$	3	$	—	$	—	$	10	$	—	$	13
Total loans	$	237,419	$	574,908	$	666,255	$	429,695	$	312,447	$	422,712	$	272,356	$	2,915,792
Gross charge-offs for the period ended	$	—	$	85	$	3	$	—	$	2,566	$	285	$	—	$	2,939

													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 June 30, 2024 and December 31, 2023:

	June 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	$	586,979	$	1,594	$	128	$	—	$	3,078	$	591,779
Commercial real estate
Construction, land and development		140,276		—		—		—		21,475		161,751
Multifamily		242,041		—		—		—		—		242,041
Non-owner occupied		641,975		—		5,801		—		—		647,776
Owner occupied		280,989		279		—		—		2,088		283,356
Total commercial real estate		1,305,281		279		5,801		—		23,563		1,334,924
Agricultural
Land		41,410		—		—		—		—		41,410
Production		40,479		—		—		—		70		40,549
Total agricultural		81,889		—		—		—		70		81,959
Total commercial		1,974,149		1,873		5,929		—		26,711		2,008,662
Consumer
Residential real estate
First lien		684,325		877		460		—		624		686,286
Construction		17,893		—		4,680		—		—		22,573
HELOC		124,392		274		1,382		—		163		126,211
Junior lien		35,648		108		447		—		120		36,323
Total residential real estate		862,258		1,259		6,969		—		907		871,393
Other consumer		35,309		132		296		—		—		35,737
Total consumer		897,567		1,391		7,265		—		907		907,130
Total	$	2,871,716	$	3,264	$	13,194	$	—	$	27,618	$	2,915,792

	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 June 30, 2024 and December 31, 2023:

	As of June 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	$	3,061	$	3,078	$	—
Commercial real estate
Construction, land and development		—		21,475		—
Multifamily		—		—		—
Non-owner occupied		—		—		—
Owner occupied		1,446		2,088		—
Total commercial real estate		1,446		23,563		—
Agricultural
Land		—		—		—
Production		70		70		—
Total agricultural		70		70		—
Total commercial		4,577		26,711		—
Consumer
Residential real estate
First lien		618		624		—
Construction		—		—		—
HELOC		163		163		—
Junior lien		120		120		—
Total residential real estate		901		907		—
Other consumer		—		—		—
Total consumer		901		907		—
Total	$	5,478	$	27,618	$	—

	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 June 30, 2024 and 2023, is estimated to have been $188 thousand and $63 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 June 30, 2024 or 2023. At June 30, 2024 and December 31, 2023, total accrued interest receivable on loans, which had been excluded from reported amortized cost basis on loans, was $13.5 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 six months ended June 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 June 30, 2024 and December 31, 2023:

	As of June 30, 2024
	Primary Type of Collateral
									Allowance for
(dollars in thousands)	Real estate		Equipment		Other		Total		Credit Losses
Commercial
Commercial and industrial	$	2,790	$	—	$	—	$	2,790	$	—
Commercial real estate
Construction, land and development		21,475		—		—		21,475		5,756
Multifamily		—		—		—		—		—
Non-owner occupied		—		—		—		—		—
Owner occupied		828		—		29		857		328
Total commercial real estate		22,303		—		29		22,332		6,084
Agricultural
Land		—		—		—		—		—
Production		—		70		—		70		—
Total agricultural		—		70		—		70		—
Total commercial		25,093		70		29		25,192		6,084
Consumer
Residential real estate
First lien		624		—		—		624		3
Construction		—		—		—		—		—
HELOC		163		—		—		163		—
Junior lien		107		6		—		113		—
Total residential real estate		894		6		—		900		3
Other consumer		—		—		—		—		—
Total consumer		894		6		—		900		3
Total	$	25,987	$	76	$	29	$	26,092	$	6,087

	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 and there are no other available and reliable sources of repayment.