XML 25 R12.htm IDEA: XBRL DOCUMENT

Loans

12 Months Ended

Dec. 31, 2023

NOTE 4: Loans

On January 1, 2023, the Corporation adopted ASC 326. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. For further discussion on the Corporation’s accounting policies and policy elections related to the accounting standard update see Note 1 and Note 2. All loan information presented as of December 31, 2023 is in accordance with ASC 326. All loan information presented as of December 31, 2022 or a prior date is presented in accordance with previously applicable GAAP.

The Corporation’s loans are stated at their face amount, net of deferred fees and costs and discounts, and consist of the classes of loans included in the table below. The Corporation has elected to exclude accrued interest receivable, totaling $7.65 million at December 31, 2023, from the recorded balance of loans.


	December 31,		December 31,
(Dollars in thousands)	2023		2022
Commercial real estate	$	668,122	$	592,301
Commercial business		115,348		118,605
Construction - commercial real estate		69,768		49,136
Land acquisition and development		29,064		37,537
Builder lines		24,668		34,538
Construction - consumer real estate		11,223		10,539
Residential mortgage		293,256		266,267
Equity lines		51,592		43,300
Other consumer		10,588		8,938
Consumer finance - automobiles		401,276		411,112
Consumer finance - marine and recreational vehicles		67,234		63,445
Subtotal		1,742,139		1,635,718
Less allowance for credit losses		(39,651)		(40,518)
Loans, net	$	1,702,488	$	1,595,200

Other consumer loans included $228,000 and $284,000 of demand deposit overdrafts at December 31, 2023 and 2022, respectively.

The following table shows the aging of the Corporation’s loan portfolio, by class, at December 31, 2023:


	30-59		60-89		90+								90+ Days
	Days		Days		Days		Total						Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current¹		Total Loans		Accruing
Commercial real estate	$	92	$	—	$	—	$	92	$	668,030	$	668,122	$	—
Commercial business		—		—		1		1		115,347		115,348		1
Construction - commercial real estate		—		—		—		—		69,768		69,768		—
Land acquisition and development		—		—		—		—		29,064		29,064		—
Builder lines		—		—		—		—		24,668		24,668		—
Construction - consumer real estate		—		—		—		—		11,223		11,223		—
Residential mortgage		1,643		387		273		2,303		290,953		293,256		89
Equity lines		215		103		115		433		51,159		51,592		38
Other consumer		3		—		9		12		10,576		10,588		—
Consumer finance - automobiles		15,263		2,628		892		18,783		382,493		401,276		—
Consumer finance - marine and recreational vehicles		282		115		—		397		66,837		67,234		—
Total	$	17,498	$	3,233	$	1,290	$	22,021	$	1,720,118	$	1,742,139	$	128

For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $113,000, 60-89 days past due of $22,000 and 90+ days past due of $1.16 million.

The following table shows the Corporation’s recorded balance of loans on nonaccrual status as of December 31, 2023 and December 31, 2022. The Corporation recognized no interest income on loans on nonaccrual status as of December 31, 2023 and had $19,000 of reversals of interest income upon placing loans on nonaccrual status during the year ended December 31, 2023. All nonaccrual loans at December 31, 2023 had an allowance for credit losses.


	December 31,		December 31,
(Dollars in thousands)	2023		2022
Residential mortgage	$	320	$	156
Equity lines		77		108
Other consumer		9		—
Consumer finance - automobiles		892		842
Consumer finance - marine and recreational vehicles		—		83
Total	$	1,298	$	1,189

Occasionally, the Corporation modifies loans to borrowers experiencing financial difficulties by providing principal forgiveness, term extensions, interest rate reductions or other-than-insignificant payment delays. As the effect of most modifications is already included in the allowance for credit losses due to the measurement methodologies used in its estimate, the allowance for credit losses is typically not adjusted upon modification. When principal forgiveness is provided at modification, the amount forgiven is charged against the allowance for credit losses. In some cases, the Corporation may provide multiple types of modifications on one loan and when multiple types of modifications occur within the same period, the combination of modifications is separately reported.

The following table presents the amortized cost basis of loans as of December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023.


	Year Ended December 31, 2023
			% of Total
			Class of
	Amortized		Financing
(Dollars in thousands)	Cost		Receivable
Term Extension
Commercial real estate	$	1,127		0.2	%
Commercial business		169		0.1
Residential mortgage		70		0.0
Total Term Extension	$	1,366

Combination Term Extension and Interest Rate Reduction
Commercial real estate		45		0.0
Commercial business		174		0.2
Total Combination Term Extension and Interest Rate Reduction	$	219
Total	$	1,585		0.1	%

The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2023.


	Year Ended December 31, 2023
	Weighted-			Weighted-
	Average			Average
	Interest Rate			Term Extension
(Dollars in thousands)	Reduction			(in years)
Commercial real estate		0.75	%		2.6
Commercial business		1.75			4.1
Residential mortgage		—			10.0
Total		1.54	%		3.2

The Corporation closely monitors the performance of modified loans to understand the effectiveness of its modification efforts. Upon the determination that all or a portion of a modified loan is uncollectible, that amount is charged against the allowance for credit losses. There were no payment defaults during the year ended December 31, 2023 of loans to borrowers experiencing financial difficulties that were modified during the previous twelve months, and all were current as of December 31, 2023.

Prior to the adoption of ASC 326

Loans acquired in business combinations are recorded in the Consolidated Balance Sheets at fair value at the acquisition date under the acquisition method of accounting. The outstanding principal balance and the carrying amount at December 31, 2022 of loans acquired in business combinations were as follows:


	December 31, 2022
	Acquired Loans -		Acquired Loans -
	Purchased		Purchased		Acquired Loans -
(Dollars in thousands)	Credit Impaired		Performing		Total
Outstanding principal balance	$	4,522	$	38,157	$	42,679
Carrying amount
Real estate – residential mortgage	$	300	$	8,587	$	8,887
Real estate – construction		—		—		—
Commercial, financial and agricultural¹		1,114		23,023		24,137
Equity lines		15		5,047		5,062
Consumer		26		755		781
Total acquired loans	$	1,455	$	37,412	$	38,867

1	Includes acquired loans classified by the Corporation as commercial real estate lending and commercial business lending.

The following table presents a summary of the change in the accretable yield of loans classified as PCI loans:


	Year Ended December 31,
(Dollars in thousands)	2022
Accretable yield, balance at beginning of period	$	3,111
Accretion		(1,566)
Reclassification of nonaccretable difference due to improvement in expected cash flows		1,921
Other changes, net		(222)
Accretable yield, balance at end of period	$	3,244

The past due status of loans as of December 31, 2022 was as follows:


															90+ Days
	30 - 59 Days		60 - 89 Days		90+ Days		Total								Past Due and
(Dollars in thousands)	Past Due		Past Due		Past Due		Past Due		PCI		Current¹		Total Loans		Accruing
Residential mortgage	$	1,649	$	452	$	20	$	2,121	$	300	$	263,846	$	266,267	$	—
Real estate – construction:
Construction - commercial real estate		—		—		—		—		—		49,136		49,136		—
Construction - consumer real estate		—		—		—		—		—		10,539		10,539		—
Commercial, financial and agricultural:
Commercial real estate		—		—		—		—		1,114		591,187		592,301		—
Land acquisition and development		—		—		—		—		—		37,537		37,537		—
Builder lines		—		—		—		—		—		34,538		34,538		—
Commercial business		—		1		—		1		—		118,604		118,605		—
Equity lines		—		39		—		39		15		43,246		43,300		—
Other consumer		9		—		191		200		26		8,712		8,938		191
Consumer finance:
Automobiles		10,557		1,570		842		12,969		—		398,143		411,112		—
Marine and recreational vehicles		114		35		83		232		—		63,213		63,445		—
Total	$	12,329	$	2,097	$	1,136	$	15,562	$	1,455	$	1,618,701	$	1,635,718	$	191

1For the purposes of the table above, “Current” includes loans that are 1-29 days past due.

The table above includes nonaccrual loans that are current of $244,000 and 90+ days past due of $945,000.

Loan modifications that were classified as TDRs, and the recorded investment in those loans at the time of their modification, during the years ended December 31, 2022 and 2021 were as follows:



	2022			2021
	Number of	Recorded		Number of	Recorded
(Dollars in thousands)	Loans	Investment		Loans	Investment
Real estate – residential mortgage	1	$	45	1	$	4
Total	1	$	45	1	$	4

One TDR during each of the years ended December 31, 2022 and 2021 included modifications of the loan’s payment structure. There were no TDRs in the years ended December 31, 2022 or 2021 that included a reduction in principal or a modification of the loan’s interest rate as part of the loan’s modification.

All TDRs are considered impaired loans and are individually evaluated in the determination of the allowance for loan losses. A TDR payment default occurs when, within 12 months of the original TDR modification, either a full or partial charge-off occurs or a TDR becomes 90 days or more past due. The specific reserve associated with a TDR is reevaluated when a TDR payment default occurs. There were no TDR payment defaults during the years ended December 31, 2022 or 2021.

Impaired loans, which included TDRs of $823,000, and the related allowance at December 31, 2022 were as follows:



			Recorded		Recorded
			Investment		Investment				Average
	Unpaid		in Loans		in Loans				Balance-		Interest
	Principal		without		with		Related		Impaired		Income
(Dollars in thousands)	Balance		Specific Reserve		Specific Reserve		Allowance		Loans		Recognized
Real estate – residential mortgage	$	797	$	36	$	761	$	51	$	806	$	35
Equity lines		26		26		—		—		28		2
Total	$	823	$	62	$	761	$	51	$	834	$	37