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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES
LOANS AND ALLOWANCE FOR CREDIT LOSSES

The Corporation’s primary lending focus is small business and middle market commercial, commercial real estate, public finance and residential real estate, which results in portfolio diversification. The following tables show the composition of the loan portfolio and credit quality characteristics by collateral classification, excluding loans held for sale.  Loans held for sale at December 31, 2024 and December 31, 2023, were $18.7 million and $18.9 million, respectively.


The following table illustrates the composition of the Corporation’s loan portfolio by loan class as of the dates indicated:
December 31, 2024December 31, 2023
Commercial and industrial loans$4,114,292 $3,670,948 
Agricultural land, production and other loans to farmers256,312 263,414 
Real estate loans:
Construction792,144 957,545 
Commercial real estate, non-owner occupied2,274,016 2,400,839 
Commercial real estate, owner occupied1,157,944 1,162,083 
Residential2,374,729 2,288,921 
Home equity659,811 617,571 
Individuals' loans for household and other personal expenditures166,028 168,388 
Public finance and other commercial loans1,059,083 956,318 
Loans$12,854,359 $12,486,027 

Credit Quality

As part of the ongoing monitoring of the credit quality of the Corporation’s loan portfolio, management tracks certain credit quality indicators including trends related to: (i) the level of criticized commercial loans, (ii) net charge-offs, (iii) nonperforming loans, (iv) covenant failures and (v) the general national and local economic conditions.

The Corporation utilizes a risk grading of pass, special mention, substandard, doubtful and loss to assess the overall credit quality of large commercial loans. All large commercial credit grades are reviewed at a minimum of once a year for pass grade loans. Loans with grades below pass are reviewed more frequently depending on the grade. A description of the general characteristics of these grades is as follows:

•Pass - Loans that are considered to be of acceptable credit quality.

•Special Mention - Loans which possess some credit deficiency or potential weakness, which deserves close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Corporation’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Corporation to sufficient risk to warrant adverse classification.

•Substandard - Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

•Doubtful - Loans that have all of the weaknesses of those classified as Substandard. However, based on currently existing facts, conditions and values, these weaknesses make full collection of principal highly questionable and improbable.

•Loss – Loans that are considered uncollectible and of such little value that continuing to carry them as an asset is not warranted. Loans will be classified as Loss when it is neither practical or desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.
The following tables summarize the risk grading of the Corporation’s loan portfolio by loan class and gross charge-offs by year of origination for the years indicated. Consumer loans are not risk graded. For the purposes of this disclosure, the consumer loans are classified in the following manner: loans that are less than 30 days past due are Pass, loans 30-89 days past due are Special Mention and loans greater than 89 days past due are Substandard.  The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.
December 31, 2024
Term Loans (amortized cost basis by origination year)
20242023202220212020PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Commercial and industrial loans
Pass$1,314,174 $493,138 $196,877 $158,215 $55,639 $49,554 $1,576,409 $130 $3,844,136 
Special Mention14,982 13,282 20,837 1,097 2,222 348 41,187 — 93,955 
Substandard29,238 32,285 26,973 7,249 1,081 1,134 75,649 513 174,122 
Doubtful1,473 606 — — — — — — 2,079 
Total Commercial and industrial loans1,359,867 539,311 244,687 166,561 58,942 51,036 1,693,245 643 4,114,292 
Current period gross write-offs1,242 39,087 341 8,605 500 424 — — 50,199 
Agricultural land, production and other loans to farmers
Pass28,600 23,070 30,518 26,442 27,105 29,930 84,502 — 250,167 
Special Mention169 — 245 — 446 422 528 — 1,810 
Substandard2,554 48 800 682 34 81 136 — 4,335 
Total Agricultural land, production and other loans to farmers31,323 23,118 31,563 27,124 27,585 30,433 85,166 — 256,312 
Current period gross write-offs— — — — — — — — — 
Real estate loans:
Construction
Pass241,622 203,829 114,794 31,864 6,398 8,549 12,836 — 619,892 
Special Mention74,879 21,853 19,019 15,214 — 40 — — 131,005 
Substandard22,305 — 18,292 — — — — — 40,597 
Doubtful— — — 650 — — — — 650 
Total Construction338,806 225,682 152,105 47,728 6,398 8,589 12,836 — 792,144 
Current period gross write-offs— — — — — — — — — 
Commercial real estate, non-owner occupied
Pass383,279 275,907 342,442 406,289 327,372 278,362 19,863 — 2,033,514 
Special Mention79,440 9,051 35,230 12,975 5,287 28,200 — — 170,183 
Substandard34,215 2,506 6,737 6,656 18,607 1,598 — — 70,319 
Total Commercial real estate, non-owner occupied496,934 287,464 384,409 425,920 351,266 308,160 19,863 — 2,274,016 
Current period gross write-offs— 339 3 — — 1 — — 343 
Commercial real estate, owner occupied
Pass194,703 141,964 164,725 217,319 198,314 127,431 31,573 — 1,076,029 
Special Mention1,887 11,013 7,555 9,910 8,603 1,951 460 — 41,379 
Substandard13,310 7,669 3,189 11,294 1,522 3,552 — — 40,536 
Total Commercial real estate, owner occupied209,900 160,646 175,469 238,523 208,439 132,934 32,033 — 1,157,944 
Current period gross write-offs— — — — 9 — — — 9 
Residential
Pass221,016 413,552 672,713 397,192 326,154 293,785 8,887 13 2,333,312 
Special Mention1,528 1,953 6,228 4,102 2,891 3,152 150 — 20,004 
Substandard1,306 1,912 8,849 3,989 1,216 3,794 347 — 21,413 
Total Residential223,850 417,417 687,790 405,283 330,261 300,731 9,384 13 2,374,729 
Current period gross write-offs— 173 779 136 20 288 — — 1,396 
Home equity
Pass6,788 4,354 24,810 51,313 10,486 3,976 535,132 12,124 648,983 
Special Mention38 — 375 285 297 69 4,568 442 6,074 
Substandard61 — 572 815 — 96 2,244 966 4,754 
Total Home Equity6,887 4,354 25,757 52,413 10,783 4,141 541,944 13,532 659,811 
Current period gross write-offs— 10 35 22 — 267 — — 334 
Individuals' loans for household and other personal expenditures
Pass40,819 21,867 31,356 10,520 2,276 4,693 53,180 180 164,891 
Special Mention153 234 347 175 59 40 128 — 1,136 
Substandard— — — — — — — 1 1 
Total Individuals' loans for household and other personal expenditures40,972 22,101 31,703 10,695 2,335 4,733 53,308 181 166,028 
Current period gross write-offs208 920 523 184 47 80 — — 1,962 
Public finance and other commercial loans
Pass161,072 53,750 203,884 195,066 146,377 298,802 132 — 1,059,083 
Total Public finance and other commercial loans161,072 53,750 203,884 195,066 146,377 298,802 132 — 1,059,083 
Loans$2,869,611 $1,733,843 $1,937,367 $1,569,313 $1,142,386 $1,139,559 $2,447,911 $14,369 $12,854,359 
Total current period gross charge-offs$1,450 $40,529 $1,681 $8,947 $576 $1,060 $— $— $54,243 
December 31, 2023
Term Loans (amortized cost basis by origination year)
20232022202120202019PriorRevolving loans amortized cost basisRevolving loans converted to termTotal
Commercial and industrial loans
Pass$1,175,967 $474,601 $253,148 $86,226 $47,910 $45,020 $1,393,756 $60 $3,476,688 
Special Mention34,356 3,911 1,546 5,149 2,986 241 45,994 — 94,183 
Substandard12,311 20,245 17,733 2,479 1,507 1,512 40,449 144 96,380 
Doubtful857 — — — — — 2,840 — 3,697 
Total Commercial and industrial loans1,223,491 498,757 272,427 93,854 52,403 46,773 1,483,039 204 3,670,948 
Current period gross write-offs13,973 2,711 576 5,665 78 261 — — 23,264 
Agricultural land, production and other loans to farmers
Pass35,633 38,145 31,511 31,048 12,995 25,462 87,534 — 262,328 
Special Mention— 266 — — — 122 — — 388 
Substandard58 150 — 454 — 36 — — 698 
Total Agricultural land, production and other loans to farmers35,691 38,561 31,511 31,502 12,995 25,620 87,534 — 263,414 
Current period gross write-offs— — — — — — — — — 
Real estate loans:
Construction
Pass403,578 267,587 198,350 8,372 7,723 2,357 11,735 — 899,702 
Special Mention25,894 — — 20,846 — — — — 46,740 
Substandard1,451 4,330 5,322 — — — — — 11,103 
Total Construction430,923 271,917 203,672 29,218 7,723 2,357 11,735 — 957,545 
Current period gross write-offs— — — — — — — — — 
Commercial real estate, non-owner occupied
Pass373,378 504,280 535,327 418,553 141,320 200,821 16,744 — 2,190,423 
Special Mention76,382 21,145 7,005 4,531 19,479 27,941 37 — 156,520 
Substandard20,358 10,537 219 20,236 — 2,299 247 — 53,896 
Total Commercial real estate, non-owner occupied470,118 535,962 542,551 443,320 160,799 231,061 17,028 — 2,400,839 
Current period gross write-offs— 66 — — — — — — 66 
Commercial real estate, owner occupied
Pass176,750 199,821 256,346 263,522 99,180 77,485 27,369 — 1,100,473 
Special Mention6,712 5,034 9,319 2,460 919 2,902 514 — 27,860 
Substandard18,092 3,712 4,183 4,545 289 2,929 — — 33,750 
Total Commercial real estate, owner occupied201,554 208,567 269,848 270,527 100,388 83,316 27,883 — 1,162,083 
Current period gross write-offs48 — — — 2 — — — 50 
Residential
Pass395,363 695,056 442,495 365,297 98,654 254,718 4,988 83 2,256,654 
Special Mention2,167 5,591 3,202 1,924 1,065 4,837 200 81 19,067 
Substandard804 3,708 2,529 1,199 866 4,063 31 — 13,200 
Total Residential398,334 704,355 448,226 368,420 100,585 263,618 5,219 164 2,288,921 
Current period gross write-offs101 252 208 3 3 94 — — 661 
Home equity
Pass9,375 29,784 61,591 11,084 1,092 3,875 484,330 5,837 606,968 
Special Mention— 715 — 1,092 15 2 5,031 149 7,004 
Substandard63 — 727 — — 123 2,589 97 3,599 
Total Home Equity9,438 30,499 62,318 12,176 1,107 4,000 491,950 6,083 617,571 
Current period gross write-offs69 213 224 149 193 1,596 — — 2,444 
Individuals' loans for household and other personal expenditures
Pass35,781 49,295 28,387 6,726 2,070 5,904 38,619 772 167,554 
Special Mention184 246 138 69 — 14 176 — 827 
Substandard— 6 — — 1 — — — 7 
Total Individuals' loans for household and other personal expenditures35,965 49,547 28,525 6,795 2,071 5,918 38,795 772 168,388 
Current period gross write-offs147 770 342 77 62 156 — — 1,554 
Public finance and other commercial loans
Pass65,357 208,347 204,863 155,132 91,619 229,355 1,645 — 956,318 
Total Public finance and other commercial loans65,357 208,347 204,863 155,132 91,619 229,355 1,645 — 956,318 
Loans$2,870,871 $2,546,512 $2,063,941 $1,410,944 $529,690 $892,018 $2,164,828 $7,223 $12,486,027 
Total current period gross charge-offs$14,338 $4,012 $1,350 $5,894 $338 $2,107 $— $— $28,039 
Total past due loans equaled $116.2 million as of December 31, 2024, a $37.0 million increase from the total of $79.2 million for December 31, 2023. At December 31, 2024, 30-59 Days Past Due loans totaled $35.8 million, an increase of $1.7 million from December 31, 2023. At December 31, 2024, 60-89 Days Past Due loans totaled $32.6 million, an increase of $21.4 million from December 31, 2023. Of the $21.4 million increase, $20.0 million was in the construction loan class. At December 31, 2024, 90 Days or More Past Due loans totaled $47.8 million, an increase of $13.8 million from December 31, 2023. The primary increases were $2.9 million, $4.0 million, and $6.7 million, in the commercial and industrial, construction and residential loan classes, respectively. The tables below show a past due aging of the Corporation’s loan portfolio, by loan class, as of the dates indicated:
December 31, 2024
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 90 Days or More Past Due
And Accruing
Commercial and industrial loans$4,096,605 $7,428 $473 $9,786 $4,114,292 $2,010 
Agricultural land, production and other loans to farmers256,148 164 — — 256,312 — 
Real estate loans:
Construction761,819 4,332 22,005 3,988 792,144 3,683 
Commercial real estate, non-owner occupied2,259,549 2,407 1,718 10,342 2,274,016 — 
Commercial real estate, owner occupied1,153,861 3,783 — 300 1,157,944 — 
Residential2,337,002 12,302 6,606 18,819 2,374,729 208 
Home equity649,238 4,431 1,569 4,573 659,811 — 
Individuals' loans for household and other personal expenditures164,891 926 210 1 166,028 1 
Public finance and other commercial loans1,059,083 — — — 1,059,083 — 
Loans$12,738,196 $35,773 $32,581 $47,809 $12,854,359 $5,902 


December 31, 2023
Current30-59 Days
Past Due		60-89 Days
Past Due		90 Days or More Past DueTotalLoans > 90 Days or More Past Due
And Accruing
Commercial and industrial loans$3,657,447 $5,021 $1,622 $6,858 $3,670,948 $86 
Agricultural land, production and other loans to farmers263,414 — — — 263,414 — 
Real estate loans:
Construction955,588 — 1,957 — 957,545 — 
Commercial real estate, non-owner occupied2,376,184 12,995 195 11,465 2,400,839 — 
Commercial real estate, owner occupied1,161,869 — 104 110 1,162,083 — 
Residential2,259,496 11,810 5,472 12,143 2,288,921 — 
Home equity608,948 3,614 1,647 3,362 617,571 52 
Individuals' loans for household and other personal expenditures167,553 635 192 8 168,388 — 
Public finance and other commercial loans956,284 — — 34 956,318 34 
Loans$12,406,783 $34,075 $11,189 $33,980 $12,486,027 $172 


Loans are reclassified to a non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in the prior year, if any, is charged to the allowance for credit losses. Payments subsequently received on non-accrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of six consecutive months of performance.

The following table summarizes the Corporation’s non-accrual loans by loan class as of the dates indicated:

December 31, 2024December 31, 2023
Nonaccrual LoansNonaccrual Loans with no Allowance for Credit LossesNonaccrual LoansNonaccrual Loans with no Allowance for Credit Losses
Commercial and industrial loans$8,090 $4,937 $9,050 $1,015 
Agricultural land, production and other loans to farmers75 — 58 — 
Real estate loans:
Construction24,629 22,650 520 — 
Commercial real estate, non-owner occupied12,118 10,153 11,932 11,095 
Commercial real estate, owner occupied2,440 1,904 3,041 2,257 
Residential21,491 — 25,140 — 
Home equity4,924 — 3,820 — 
Individuals' loans for household and other personal expenditures6 — 19 — 
Loans$73,773 $39,644 $53,580 $14,367 
Interest income on non-accrual loans is recognized only to the extent that cash payments are received in excess of principal due. There was no interest income recognized on non-accrual loans for the twelve months ended December 31, 2024 and 2023.

Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions.

The following tables present the amortized cost basis of collateral dependent loans by loan class and their respective collateral type, which are individually evaluated to determine expected credit losses, for December 31, 2024 and 2023. The total collateral dependent loans for December 31, 2024 increased $24.1 million from December 31, 2023. The primary changes were related to an increase of $22.6 million and $10.1 million, respectively, in the construction and commercial real estate, non-owner occupied loan classes, which was offset by a decrease of $8.6 million in the commercial and industrial loan class.
December 31, 2024
Commercial Real EstateResidential Real EstateOtherTotalAllowance on Collateral Dependent Loans
Commercial and industrial loans$— $— $23,455 $23,455 $7,803 
Real estate loans:
Construction— 22,652 — 22,652 — 
Commercial real estate, non-owner occupied27,583 — — 27,583 4,295 
Commercial real estate, owner occupied9,748 — — 9,748 — 
Residential— 1,174 — 1,174 189 
Home equity— 201 — 201 25 
Loans$37,331 $24,027 $23,455 $84,813 $12,312 

December 31, 2023
Commercial Real EstateResidential Real EstateOtherTotalAllowance on Collateral Dependent Loans
Commercial and industrial loans$— $— $32,029 $32,029 $11,474 
Real estate loans:
Construction— 7 — 7 — 
Commercial real estate, non-owner occupied17,516 — — 17,516 35 
Commercial real estate, owner occupied9,452 — — 9,452 — 
Residential— 1,439 — 1,439 230 
Home equity— 223 — 223 30 
Loans$26,968 $1,669 $32,029 $60,666 $11,769 
In certain situations, the Corporation may modify the terms of a loan to a debtor experiencing financial difficulty. The modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions or combinations of the above. The following table presents the amortized cost basis of loans at December 31, 2024 and 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2024 and 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

Year Ended December 31, 2024
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Payment DelayTerm ExtensionInterest Rate ReductionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination Interest Rate Reduction, Term Extension, & Payment Delay% of Total Class of Financing Receivable
Commercial and industrial loans$11,073 $19,152 $246 $— $68 $— 0.74 %
Agricultural land, production and other loans to farmers2,230 — — — — — 0.87 %
Real estate loans:
Construction— 2,393 — 22,000 — — 3.08 %
Commercial real estate, non-owner occupied— 18,933 — — — — 0.83 %
Commercial real estate, owner occupied— 6,133 — — — — 0.53 %
Residential2,509 340 — 683 43 532 0.17 %
Home equity— 61 — 161 — — 0.03 %
Total$15,812 $47,012 $246 $22,844 $111 $532 

Year Ended December 31, 2023
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Payment DelayTerm ExtensionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term Extension% of Total Class of Financing Receivable
Commercial and industrial loans$857 $16,572 $— $231 0.48 %
Agricultural land, production and other loans to farmers— 58 — — 0.02 %
Real estate loans:
Construction— 11 — — — %
Commercial real estate, non-owner occupied— 11,823 — 7,657 0.81 %
Commercial real estate, owner occupied5,540 10,123 — 71 1.35 %
Residential— 129 469 — 0.03 %
Home equity— 63 — 29 0.01 %
Total$6,397 $38,779 $469 $7,988 
The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2024 and 2023.

Year Ended December 31, 2024
Financial Effect of Loan Modifications
Payment DelayTerm ExtensionInterest Rate ReductionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term ExtensionCombination Interest Rate Reduction, Term Extension, & Payment Delay
Commercial and industrial loans
Provided payment deferrals with weighted average delayed amounts of $180,000.
Extended loans by a weighted average of 8 months.
Reduced the weighted average contractual interest rate from 9.00% to 8.00%.
Reduced the weighted average contractual interest rate from 10.24% to 7.90%. Extended loans by a weighted average of 67 months.
Agricultural land, production and other loans to farmers
Provided payment deferrals with weighted average delayed amounts of $17,000.
Real estate loans:
Construction
Extended loans by a weighted average of 6 months.
Provided payment deferrals with weighted average delayed amounts of $475,000. Extended loans by a weighted average of 2 months.
Commercial real estate, non-owner occupied
Extended loans by a weighted average of 16 months.
Commercial real estate, owner occupied
Extended loans by a weighted average of 12 months.
Residential
Provided payment deferrals with weighted average delayed amounts of $23,000.
Extended loans by a weighted average of 11 months.
Provided payment deferrals with weighted average delayed amounts of $8,000. Extended loans by a weighted average of 152 months.
Reduced the weighted average contractual interest rate from 8.00% to 6.00%. Extended loans by a weighted average of 120 months.
Reduced the weighted average contractual interest rate from 5.74% to 4.02%. Extended loans by a weighted average of 90 months. Provided payment deferrals with weighted average delayed amounts of $13,000.
Home equity
Extended loans by a weighted average of 5 months.
Provided payment deferrals with weighted average delayed amounts of $7,800. Extended loans by a weighted average of 60 months.
Year Ended December 31, 2023
Financial Effect of Loan Modifications
Payment DelayTerm ExtensionCombination Payment Delay & Term ExtensionCombination Interest Rate Reduction & Term Extension
Commercial and industrial loans
Provided payment deferrals with weighted average delayed amounts of $24,000.
Extended loans by a weighted average of 10 months.
Reduced the weighted average contractual interest rate from 9.67% to 7.39%. Extended loans by a weighted average of 13 months.
Agricultural land, production and other loans to farmers
Extended loans by a weighted average of 144 months.
Real estate loans:
Construction
Extended loans by a weighted average of 24 months.
Commercial real estate, non-owner occupied
Extended loans by a weighted average of 11 months.
Reduced the weighted average contractual interest rate from 8.57% to 7.89%. Extended loans by a weighted average of 34 months.
Commercial real estate, owner occupied
Provided payment deferrals with weighted average delayed amounts of $4.5 million.
Extended loans by a weighted average of 6 months.
Reduced the weighted average contractual interest rate from 10.25% to 6.61%. Extended loans by a weighted average of 114 months.
Residential
Extended loans by a weighted average of 6 months.
Provided payment deferrals with weighted average delayed amounts of $3,400. Extended loans by a weighted average of 3 months.
Home equity
Extended loans by a weighted average of 7 months.
Reduced the weighted average contractual interest rate from 9.25% to 7.25%. Extended loans by a weighted average of 240 months.
The Corporation closely monitors the performance of financial difficulty modifications to understand the effectiveness of its efforts. The following tables present the performance of financial difficulty modifications in the twelve months following modification.

Year Ended December 31, 2024
Current30-59 Days Past Due60-89 Days Past Due90+ Days Past DueTotal
Commercial and industrial loans$26,208 $2,858 $— $1,473 $30,539 
Agricultural land, production and other loans to farmers2,230 — — — 2,230 
Real estate loans:
Construction2,393 — 22,000 — 24,393 
Commercial real estate, non-owner occupied10,253 — — 8,680 18,933 
Commercial real estate, owner occupied2,560 3,573 — — 6,133 
Residential2,046 237 365 1,459 4,107 
Home equity222 — — — 222 
Total$45,912 $6,668 $22,365 $11,612 $86,557 

Year Ended December 31, 2023
Current60-89 Days Past DueTotal
Commercial and industrial loans$17,660 $— $17,660 
Agricultural land, production and other loans to farmers58 — 58 
Real estate loans:
Construction11 — 11 
Commercial real estate, non-owner occupied19,480 — 19,480 
Commercial real estate, owner occupied15,734 — 15,734 
Residential473 125 598 
Home equity92 — 92 
Total$53,508 $125 $53,633 

Allowance for Credit Losses on Loans

The ACL - Loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on loans over the contractual term. The ACL - Loans is adjusted by the provision for credit losses, which is reported in earnings, and reduced by charge-offs for loans, net of recoveries. Provision for credit losses on loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Loans are charged off against the allowance when the collectibility of the loan is unlikely. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off.

The allowance represents the Corporation’s best estimate of current expected credit losses on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. The current expected credit loss (“CECL”) calculation is performed and evaluated quarterly and losses are estimated over the expected life of the loan. The level of the ACL - Loans is believed to be adequate to absorb all expected future losses inherent in the loan portfolio at the measurement date.

In calculating the ACL - Loans, the loan portfolio was pooled into ten loan segments with similar risk characteristics. Common characteristics include the type or purpose of the loan, underlying collateral and historical/expected credit loss patterns. In developing the loan segments, the Corporation analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors.

The expected credit losses are measured over the life of each loan segment utilizing the Probability of Default / Loss Given Default methodology combined with economic forecast models to estimate the current expected credit loss inherent in the loan portfolio. This approach is also leveraged to estimate the expected credit losses associated with unfunded loan commitments incorporating expected utilization rates.

The Corporation sub-segmented certain commercial portfolios by risk level and certain consumer portfolios by delinquency status where appropriate. The Corporation utilized a four-quarter reasonable and supportable economic forecast period followed by a six-quarter, straight-line reversion period to the historical macroeconomic mean for the remaining life of the loans. Econometric modeling was performed using historical default rates and a selection of economic forecast scenarios published by Moody’s to develop a range of estimated credit losses for which to determine the best credit loss estimate within. Macroeconomic factors utilized in the modeling process include the national unemployment rate, BBB US corporate index, CRE price index and the home price index.
The Corporation qualitatively adjusts model results for risk factors that are not inherently considered in the quantitative modeling process, but are nonetheless relevant in assessing the expected credit losses within the loan portfolio. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that may be considered in making qualitative adjustments include, among other factors, the impact of (i) changes in the nature and volume of the loan portfolio, (ii) changes in the existence, growth and effect of any concentrations in credit, (iii) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (iv) changes in the quality of the credit review function, (v) changes in the experience, ability and depth of lending, investment, collection and other relevant management staff, (vi) changes in the volume and severity of past due financial assets, the volume of the nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vii) the value of underlying collateral for loans that are not collateral dependent, and (viii) other environmental factors of a borrower such as regulatory, legal and technological considerations, as well as competition and changes in the economic and business conditions that affect the collectability of financial assets. At CECL adoption, the Corporation established certain qualitative factors that were expected to correlate to losses within the loan portfolio. During a scheduled review of qualitative factors in 2023, the Corporation determined there had not been significant evidence of correlation to losses for the qualitative factors that included i) changes in experience, ability and depth of lending management and staff; ii) changes in lending policies and procedures; iii) changes in the quality of the credit review function; iv) portfolio mix and growth; and v) industry concentration. The Corporation decided to refine these qualitative factors in order to improve our ability to assess related risk and enhance our ability to correlate to losses. The Corporation’s evaluation of the qualitative approach resulted in an insignificant change to the ACL – Loans estimate.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within the loan segments. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific reserve allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other factors. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The fair value of collateral supporting collateral dependent loans is evaluated on a quarterly basis.

The risk characteristics of the Corporation’s portfolio segments are as follows:

Commercial
Commercial lending is primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the tangible assets being financed such as equipment or real estate or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Other loans may be unsecured, secured but under-collateralized or otherwise made on the basis of the enterprise value of an organization. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Corporation monitors commercial real estate loans based on collateral and risk grade criteria, as well as the levels of owner-occupied versus non-owner occupied loans.

Construction
Construction loans are underwritten utilizing a combination of tools and techniques including feasibility and market studies, independent appraisals and appraisal reviews, absorption and interest rate sensitivity analysis as well as the financial analysis of the developer and all guarantors. Construction loans are monitored by either in house or third party inspectors limiting advances to a percentage of costs or stabilized project value. These loans frequently involve the disbursement of significant funds with the repayment dependent upon the successful completion and, where necessary, the future stabilization of the project. The predominant inherent risk of this portfolio is associated with the borrower’s ability to successfully complete a project on time, within budget and stabilize the projected as originally projected.

Consumer and Residential
With respect to residential loans that are secured by 1-4 family residences, which are typically owner occupied, the Corporation generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans, such as small installment loans and certain lines of credit, are unsecured. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers and can also be impacted by changes in property values. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

The ACL - Loans decreased $12.2 million during the year ended December 31, 2024. The allowance decreased primarily due to $49.4 million of net charge-offs during the year ended December 31, 2024. The increase in net charge-offs was primarily related to two commercial relationships that accounted for $42.7 million of charge-offs. One borrower experienced a sudden change in revenue from the cancellation and inability to renegotiate their contracts with the U.S. Government. This negatively impacted the value of the borrower’s business and resulted in their inability to repay principal and interest. The second borrower provided notification of its plans to cease operations. The Corporation does not believe these charge-offs are indicative of the portfolio as a whole. In 2024, the Corporation recorded $37.2 million in provision for credit losses - loans, which was offset by a release in reserve of $1.5 million related to the allowance for unfunded commitments, resulting in a net provision expense for the year ended December 31, 2024 of $35.7 million.
The following tables summarize changes in the ACL - Loans by loan segment for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31, 2024
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, December 31, 2023$97,348 $44,048 $24,823 $38,715 $204,934 
Provision for credit losses - loans44,455 7,167 (15,039)617 37,200 
Recoveries on loans3,153 236 — 1,477 4,866 
Loans charged off(50,199)(352)— (3,692)(54,243)
Balances. December 31, 2024$94,757 $51,099 $9,784 $37,117 $192,757 


Year Ended December 31, 2023
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, December 31, 2022$102,216 $46,839 $28,955 $45,267 $223,277 
Provision for credit losses - loans17,401 (2,735)(4,132)(3,234)7,300 
Recoveries on loans995 60 — 1,341 2,396 
Loans charged off(23,264)(116)— (4,659)(28,039)
Balances. December 31, 2023$97,348 $44,048 $24,823 $38,715 $204,934 

Year Ended December 31, 2022
CommercialCommercial Real EstateConstructionConsumer & ResidentialTotal
Allowance for credit losses - loans
Balances, December 31, 2021$69,935 $60,665 $20,206 $44,591 $195,397 
Provision for credit losses - loans16,697 (20,425)6,367 (2,639)— 
CECL Day 1 non-PCD provision for credit losses - loans2,957 5,539 871 4,588 13,955 
CECL Day 1 PCD ACL - loans12,970 2,981 648 — 16,599 
Recoveries on loans872 1,096 863 1,096 3,927 
Loans charged off(1,215)(3,017)— (2,369)(6,601)
Balances. December 31, 2022$102,216 $46,839 $28,955 $45,267 $223,277 


Off-Balance Sheet Arrangements, Commitments And Contingencies

In the normal course of business, the Corporation has entered into off-balance sheet financial instruments which include commitments to extend credit and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness. Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions, and thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing for their cash flows. Other typical lines of credit are related to home equity loans granted to customers. Commitments to extend credit generally have fixed expiration dates or other termination clauses that may require a fee.

Standby letters of credit are generally issued on behalf of an applicant (the Corporation’s customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary. Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit. The standby letter of credit would permit the beneficiary to obtain payment from the Corporation under certain prescribed circumstances. Subsequently, the Corporation would seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.

The Corporation typically follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments. Each customer’s creditworthiness is typically evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer. Collateral held varies but may include cash, real estate, marketable securities, accounts receivable, inventory, equipment and personal property. The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future. Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements. However, should the commitments be drawn upon and should the Corporation’s customers default on their resulting obligation to the Corporation, the maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

Financial instruments with off-balance sheet risk were as follows:
December 31, 2024December 31, 2023
Amounts of commitments:
Loan commitments to extend credit$5,006,085 $5,025,790 
Standby letters of credit$71,271 $65,580 
The Corporation maintains an accrual for credit losses on off-balance sheet commitments using the CECL methodology. Reserves for unfunded commitments declined by $1.5 million and $3.8 million during the years ended December 31, 2024 and 2023, respectively. This reserve level remains appropriate and is reported in Other Liabilities as of December 31, 2024 in the Consolidated Balance Sheets.


The following table details activity in the ACL for off-balance sheet commitments:
20242023
Balance, January 1$19,500 $23,300 
Provision for credit losses - unfunded commitments(1,500)(3,800)
Balance, December 31$18,000 $19,500