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ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY | 12 Months Ended
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Dec. 31, 2023
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY |
ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY | ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY The Company adopted ASC 326 using the modified retrospective for all financial assets measured at amortized cost. Results for reporting periods after January 1, 2021 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The following table presents the activity in the allowance for credit losses by portfolio segment for the year ended December 31, 2023, 2022 and 2021:
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 35,290 |  |  | $ | 27,394 |  |  | $ | 4,429 |  |  | $ | 917 |  |  | $ | 3,001 |  |  | $ | 1,021 |  |  | $ | 554 |  |  | $ | 72,606 |
Provision for credit losses | 1,209 |  |  | 3,619 |  |  | (279) |  |  | 212 |  |  | 598 |  |  | 673 |  |  | (182) |  |  | 5,850 |
Loans charged-off | (6,341) |  |  | 0 |  |  | 0 |  |  | 0 |  |  | (163) |  |  | (828) |  |  | 0 |  |  | (7,332) |
Recoveries | 180 |  |  | 322 |  |  | 0 |  |  | 0 |  |  | 38 |  |  | 308 |  |  | 0 |  |  | 848 |
Net loans (charged-off) recovered | (6,161) |  |  | 322 |  |  | 0 |  |  | 0 |  |  | (125) |  |  | (520) |  |  | 0 |  |  | (6,484) |
Ending balance | $ | 30,338 |  |  | $ | 31,335 |  |  | $ | 4,150 |  |  | $ | 1,129 |  |  | $ | 3,474 |  |  | $ | 1,174 |  |  | $ | 372 |  |  | $ | 71,972 |
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 30,595 |  |  | $ | 26,535 |  |  | $ | 5,034 |  |  | $ | 1,146 |  |  | $ | 2,866 |  |  | $ | 1,147 |  |  | $ | 450 |  |  | $ | 67,773 |
Provision for credit losses | 8,646 |  |  | 1,179 |  |  | (605) |  |  | (229) |  |  | 125 |  |  | 155 |  |  | 104 |  |  | 9,375 |
Loans charged-off | (4,022) |  |  | (597) |  |  | 0 |  |  | 0 |  |  | (42) |  |  | (473) |  |  | 0 |  |  | (5,134) |
Recoveries | 71 |  |  | 277 |  |  | 0 |  |  | 0 |  |  | 52 |  |  | 192 |  |  | 0 |  |  | 592 |
Net loans (charged-off) recovered | (3,951) |  |  | (320) |  |  | 0 |  |  | 0 |  |  | 10 |  |  | (281) |  |  | 0 |  |  | (4,542) |
Ending balance | $ | 35,290 |  |  | $ | 27,394 |  |  | $ | 4,429 |  |  | $ | 917 |  |  | $ | 3,001 |  |  | $ | 1,021 |  |  | $ | 554 |  |  | $ | 72,606 |
(dollars in thousands) | Commercial and Industrial |  | Commercial Real Estate and Multi-family Residential |  | Agri-business and Agricultural |  | Other Commercial |  | Consumer 1-4 Family Mortgage |  | Other Consumer |  | Unallocated |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 28,333 |  |  | $ | 22,907 |  |  | $ | 3,043 |  |  | $ | 416 |  |  | $ | 2,619 |  |  | $ | 951 |  |  | $ | 3,139 |  |  | $ | 61,408 |
Impact of adopting ASC 326 | 4,312 |  |  | 4,316 |  |  | 1,060 |  |  | 941 |  |  | 953 |  |  | 349 |  |  | (2,881) |  |  | 9,050 |
Provision for credit losses | 1,966 |  |  | (632) |  |  | 611 |  |  | (211) |  |  | (777) |  |  | (72) |  |  | 192 |  |  | 1,077 |
Loans charged-off | (5,575) |  |  | (70) |  |  | 0 |  |  | 0 |  |  | (51) |  |  | (287) |  |  | 0 |  |  | (5,983) |
Recoveries | 1,559 |  |  | 14 |  |  | 320 |  |  | 0 |  |  | 122 |  |  | 206 |  |  | 0 |  |  | 2,221 |
Net loans (charged-off) recovered | (4,016) |  |  | (56) |  |  | 320 |  |  | 0 |  |  | 71 |  |  | (81) |  |  | 0 |  |  | (3,762) |
Ending balance | $ | 30,595 |  |  | $ | 26,535 |  |  | $ | 5,034 |  |  | $ | 1,146 |  |  | $ | 2,866 |  |  | $ | 1,147 |  |  | $ | 450 |  |  | $ | 67,773 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis for Special Mention, Substandard and Doubtful grade loans and annually on Pass grade loans over $250,000. The Company uses the following definitions for risk ratings: 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 deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as Substandard are inadequately protected by the current net worth and paying capacity of the obligor 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 as the distinct possibility that the institution 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 characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans are considered to be "Pass" rated when they are reviewed as part of the previously described process and do not meet the criteria above with the exception of consumer troubled debt restructurings, which are evaluated and listed with Substandard commercial grade loans and consumer nonaccrual loans which are evaluated individually and listed with “Not Rated” loans. Loans listed as Not Rated are consumer loans or commercial loans with consumer characteristics included in groups of homogenous loans which are analyzed for credit quality indicators utilizing delinquency status. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following tables summarize the risk category of loans by loan segment and origination date as of December 31, 2023 and 2022. Balances presented are at the amortized cost basis by origination year.
(dollars in thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Term Total |  | Revolving |  | Total
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 193 |  |  | $ | 1,876 |  |  | $ | 2,214 |  |  | $ | 1,132 |  |  | $ | 0 |  |  | $ | 50 |  |  | $ | 5,465 |  |  | $ | 532,086 |  |  | $ | 537,551 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 46,498 |  |  | 46,498 |
Substandard | 0 |  |  | 200 |  |  | 0 |  |  | 0 |  |  | 125 |  |  | 0 |  |  | 325 |  |  | 20,516 |  |  | 20,841 |
Total | 193 |  |  | 2,076 |  |  | 2,214 |  |  | 1,132 |  |  | 125 |  |  | 50 |  |  | 5,790 |  |  | 599,100 |  |  | 604,890 |
Working capital lines of credit loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 75 |  |  | 0 |  |  | 139 |  |  | 0 |  |  | 214 |  |  | 327 |  |  | 541 |
Non-working capital loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 199,071 |  |  | 224,333 |  |  | 85,273 |  |  | 49,999 |  |  | 28,773 |  |  | 10,501 |  |  | 597,950 |  |  | 171,264 |  |  | 769,214 |
Special Mention | 4,038 |  |  | 9,577 |  |  | 1,051 |  |  | 2,498 |  |  | 2,306 |  |  | 4,298 |  |  | 23,768 |  |  | 5,477 |  |  | 29,245 |
Substandard | 3,754 |  |  | 1,612 |  |  | 683 |  |  | 3,892 |  |  | 51 |  |  | 218 |  |  | 10,210 |  |  | 397 |  |  | 10,607 |
Not Rated | 2,585 |  |  | 1,999 |  |  | 881 |  |  | 707 |  |  | 162 |  |  | 18 |  |  | 6,352 |  |  | 0 |  |  | 6,352 |
Total | 209,448 |  |  | 237,521 |  |  | 87,888 |  |  | 57,096 |  |  | 31,292 |  |  | 15,035 |  |  | 638,280 |  |  | 177,138 |  |  | 815,418 |
Non-working capital loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 5,445 |  |  | 0 |  |  | 178 |  |  | 129 |  |  | 0 |  |  | 5,752 |  |  | 48 |  |  | 5,800 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 50,693 |  |  | 15,558 |  |  | 17,655 |  |  | 0 |  |  | 177 |  |  | 0 |  |  | 84,083 |  |  | 547,570 |  |  | 631,653 |
Total | 50,693 |  |  | 15,558 |  |  | 17,655 |  |  | 0 |  |  | 177 |  |  | 0 |  |  | 84,083 |  |  | 547,570 |  |  | 631,653 |
Construction and land development loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Owner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 144,411 |  |  | 132,850 |  |  | 156,680 |  |  | 132,407 |  |  | 61,415 |  |  | 118,406 |  |  | 746,169 |  |  | 40,288 |  |  | 786,457 |
Special Mention | 7,597 |  |  | 686 |  |  | 4,913 |  |  | 0 |  |  | 1,394 |  |  | 2,245 |  |  | 16,835 |  |  | 14,739 |  |  | 31,574 |
Substandard | 362 |  |  | 250 |  |  | 3,325 |  |  | 1,474 |  |  | 345 |  |  | 1,161 |  |  | 6,917 |  |  | 0 |  |  | 6,917 |
Total | 152,370 |  |  | 133,786 |  |  | 164,918 |  |  | 133,881 |  |  | 63,154 |  |  | 121,812 |  |  | 769,921 |  |  | 55,027 |  |  | 824,948 |
Owner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Nonowner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 123,633 |  |  | 158,415 |  |  | 112,582 |  |  | 134,050 |  |  | 87,288 |  |  | 66,755 |  |  | 682,723 |  |  | 27,860 |  |  | 710,583 |
Special Mention | 4,503 |  |  | 0 |  |  | 6,257 |  |  | 0 |  |  | 0 |  |  | 2,246 |  |  | 13,006 |  |  | 0 |  |  | 13,006 |
Total | 128,136 |  |  | 158,415 |  |  | 118,839 |  |  | 134,050 |  |  | 87,288 |  |  | 69,001 |  |  | 695,729 |  |  | 27,860 |  |  | 723,589 |
Nonowner occupied loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Multi-family loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 90,954 |  |  | 23,315 |  |  | 9,042 |  |  | 35,648 |  |  | 13,971 |  |  | 14,609 |  |  | 187,539 |  |  | 45,987 |  |  | 233,526 |
Special Mention | 19,671 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 19,671 |  |  | 0 |  |  | 19,671 |
Total | 110,625 |  |  | 23,315 |  |  | 9,042 |  |  | 35,648 |  |  | 13,971 |  |  | 14,609 |  |  | 207,210 |  |  | 45,987 |  |  | 253,197 |
Multi-family loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans secured by farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 24,503 |  |  | 32,060 |  |  | 25,308 |  |  | 27,924 |  |  | 9,104 |  |  | 19,160 |  |  | 138,059 |  |  | 24,724 |  |  | 162,783 |
Substandard | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 100 |  |  | 100 |  |  | 0 |  |  | 100 |
Total | 24,503 |  |  | 32,060 |  |  | 25,308 |  |  | 27,924 |  |  | 9,104 |  |  | 19,260 |  |  | 138,159 |  |  | 24,724 |  |  | 162,883 |
Loans secured by farmland: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Loans for agricultural production: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 28,657 |  |  | 13,589 |  |  | 27,175 |  |  | 25,504 |  |  | 3,533 |  |  | 10,429 |  |  | 108,887 |  |  | 116,406 |  |  | 225,293 |
Special Mention | 0 |  |  | 0 |  |  | 187 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 187 |  |  | 500 |  |  | 687 |
Total | 28,657 |  |  | 13,589 |  |  | 27,362 |  |  | 25,504 |  |  | 3,533 |  |  | 10,429 |  |  | 109,074 |  |  | 116,906 |  |  | 225,980 |
Loans for agricultural production: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Other commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 7,058 |  |  | 26,918 |  |  | 33,247 |  |  | 13,684 |  |  | 90 |  |  | 7,332 |  |  | 88,329 |  |  | 29,819 |  |  | 118,148 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 2,419 |  |  | 2,419 |  |  | 0 |  |  | 2,419 |
Total | 7,058 |  |  | 26,918 |  |  | 33,247 |  |  | 13,684 |  |  | 90 |  |  | 9,751 |  |  | 90,748 |  |  | 29,819 |  |  | 120,567 |
Other commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Consumer 1-4 family mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Closed end first mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 9,910 |  |  | 10,541 |  |  | 12,486 |  |  | 8,614 |  |  | 3,924 |  |  | 4,625 |  |  | 50,100 |  |  | 8,330 |  |  | 58,430 |
Special Mention | 0 |  |  | 0 |  |  | 0 |  |  | 519 |  |  | 0 |  |  | 0 |  |  | 519 |  |  | 0 |  |  | 519 |
Substandard | 87 |  |  | 0 |  |  | 96 |  |  | 123 |  |  | 0 |  |  | 253 |  |  | 559 |  |  | 0 |  |  | 559 |
Not Rated | 64,233 |  |  | 51,018 |  |  | 38,014 |  |  | 17,432 |  |  | 4,314 |  |  | 23,225 |  |  | 198,236 |  |  | 0 |  |  | 198,236 |
Total | 74,230 |  |  | 61,559 |  |  | 50,596 |  |  | 26,688 |  |  | 8,238 |  |  | 28,103 |  |  | 249,414 |  |  | 8,330 |  |  | 257,744 |
Closed end first mortgage loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued)
Open end and junior lien loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 557 |  |  | 137 |  |  | 491 |  |  | 335 |  |  | 0 |  |  | 6 |  |  | 1,526 |  |  | 8,689 |  |  | 10,215 |
Substandard | 108 |  |  | 0 |  |  | 23 |  |  | 0 |  |  | 26 |  |  | 48 |  |  | 205 |  |  | 68 |  |  | 273 |
Not Rated | 24,792 |  |  | 29,648 |  |  | 8,471 |  |  | 1,554 |  |  | 2,286 |  |  | 1,962 |  |  | 68,713 |  |  | 112,371 |  |  | 181,084 |
Total | 25,457 |  |  | 29,785 |  |  | 8,985 |  |  | 1,889 |  |  | 2,312 |  |  | 2,016 |  |  | 70,444 |  |  | 121,128 |  |  | 191,572 |
Open end and junior lien loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 50 |  |  | 14 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 64 |  |  | 99 |  |  | 163 |
Residential construction loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Not Rated | 1,525 |  |  | 2,982 |  |  | 1,515 |  |  | 839 |  |  | 263 |  |  | 1,220 |  |  | 8,344 |  |  | 0 |  |  | 8,344 |
Total | 1,525 |  |  | 2,982 |  |  | 1,515 |  |  | 839 |  |  | 263 |  |  | 1,220 |  |  | 8,344 |  |  | 0 |  |  | 8,344 |
Residential construction loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Other consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | 1,082 |  |  | 789 |  |  | 1,391 |  |  | 301 |  |  | 0 |  |  | 0 |  |  | 3,563 |  |  | 11,894 |  |  | 15,457 |
Substandard | 40 |  |  | 34 |  |  | 35 |  |  | 0 |  |  | 2 |  |  | 0 |  |  | 111 |  |  | 0 |  |  | 111 |
Not Rated | 32,481 |  |  | 17,585 |  |  | 9,994 |  |  | 6,008 |  |  | 1,611 |  |  | 1,957 |  |  | 69,636 |  |  | 10,545 |  |  | 80,181 |
Total | 33,603 |  |  | 18,408 |  |  | 11,420 |  |  | 6,309 |  |  | 1,613 |  |  | 1,957 |  |  | 73,310 |  |  | 22,439 |  |  | 95,749 |
Other consumer loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period gross write offs | 16 |  |  | 258 |  |  | 90 |  |  | 8 |  |  | 212 |  |  | 1 |  |  | 585 |  |  | 243 |  |  | 828 |
Total Loans | $ | 846,498 |  |  | $ | 755,972 |  |  | $ | 558,989 |  |  | $ | 464,644 |  |  | $ | 221,160 |  |  | $ | 293,243 |  |  | $ | 3,140,506 |  |  | $ | 1,776,028 |  |  | $ | 4,916,534 |
Total current period gross write offs | $ | 16 |  |  | $ | 5,753 |  |  | $ | 179 |  |  | $ | 186 |  |  | $ | 480 |  |  | $ | 1 |  |  | $ | 6,615 |  |  | $ | 717 |  |  | $ | 7,332 |
When management determines that foreclosure is probable, expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. A loan is considered collateral dependent when the borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of the collateral. The class of loan represents the primary collateral type associated with the loan. Significant year over year changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following tables present the amortized cost basis of collateral dependent loans by class of loan as of December 31, 2023 and 2022:
(dollars in thousands) |  | Real Estate |  | General Business Assets |  | Other |  | Total
2023 |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 50 |  |  | $ | 2,454 |  |  | $ | 0 |  |  | $ | 2,504 |
Non-working capital loans |  | 40 |  |  | 8,202 |  |  | 400 |  |  | 8,642 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |
Owner occupied loans |  | 595 |  |  | 1,474 |  |  | 1,161 |  |  | 3,230 |
Nonowner occupied loans |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |
Loans secured by farmland |  | 0 |  |  | 100 |  |  | 0 |  |  | 100 |
Consumer 1-4 family mortgage loans: |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 559 |  |  | 0 |  |  | 0 |  |  | 559 |
Open end and junior lien loans |  | 164 |  |  | 0 |  |  | 0 |  |  | 164 |
Other consumer loans |  | 0 |  |  | 0 |  |  | 112 |  |  | 112 |
Total |  | $ | 1,408 |  |  | $ | 12,230 |  |  | $ | 1,673 |  |  | $ | 15,311 |
(dollars in thousands) |  | Real Estate |  | General Business Assets |  | Other |  | Total
2022 |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 50 |  |  | $ | 5,402 |  |  | $ | 0 |  |  | $ | 5,452 |
Non-working capital loans |  | 544 |  |  | 18,109 |  |  | 229 |  |  | 18,882 |
Commercial real estate and multi-family residential loans: |  |  |  |  |  |  |  |
Owner occupied loans |  | 413 |  |  | 1,491 |  |  | 1,161 |  |  | 3,065 |
Nonowner occupied loans |  | 0 |  |  | 0 |  |  | 0 |  |  | 0 |
Agri-business and agricultural loans: |  |  |  |  |  |  |  |
Loans secured by farmland |  | 0 |  |  | 145 |  |  | 0 |  |  | 145 |
Consumer 1-4 family mortgage loans: |  |  |  |  |  |  |  |
Closed end first mortgage loans |  | 2,030 |  |  | 0 |  |  | 0 |  |  | 2,030 |
Open end and junior lien loans |  | 188 |  |  | 0 |  |  | 0 |  |  | 188 |
Other consumer loans |  | 0 |  |  | 0 |  |  | 7 |  |  | 7 |
Total |  | $ | 3,225 |  |  | $ | 25,147 |  |  | $ | 1,397 |  |  | $ | 29,769 |
NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) Modifications Made to Borrowers Experiencing Financial Difficulty The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination. The starting point to estimate such credit losses is historical loss information. The Company uses a probability of default/loss given default model to determine the allowance for credit losses recorded at origination. Occasionally, the Company subsequently modifies loans for borrowers experiencing financial distress by providing the following forms of relief: forgiveness of loan principal, extension of repayment terms, reduction of interest rate or an other than insignificant payment delay. In some instances, the Company provides multiple types of concessions for such modifications. Because the effect of most modifications to borrowers experiencing financial difficulty is already included in the allowance for credit losses, no change to the allowance for credit losses is generally recorded for these modifications. The following tables present the amortized cost basis at the end of the reporting period of loans that were experiencing financial difficulty and received a modification of terms during the twelve months ended December 31, 2023, by class and 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 receivables at the end of the reporting period is also presented below:
(dollars in thousands) |  | Interest Rate Reduction |  | Combination Interest Rate Reduction and Term Extension |  | Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay |  | Total Modifications |  | Total Class of Financing Receivable
Twelve Months Ended December 31, 2023 |  |  |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 1,912 |  |  | $ | 944 |  |  | $ | 0 |  |  | $ | 2,856 |  |  | 0.47 | %
Non-working capital loans |  | 0 |  |  | 0 |  |  | 1,572 |  |  | 1,572 |  |  | 0.19 |
Total commercial and industrial loans |  | 1,912 |  |  | 944 |  |  | 1,572 |  |  | 4,428 |  |  | 0.31 |
Total loan modifications made to borrowers experiencing financial difficulty |  | $ | 1,912 |  |  | $ | 944 |  |  | $ | 1,572 |  |  | $ | 4,428 |  |  | 0.09 | %
The Company has no material commitments to lend additional funds to borrowers included in the previous table. NOTE 4 – ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY (continued) The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the twelve months ended December 31, 2023:
(dollars in thousands) |  | Principal Forgiveness |  | Interest Rate Reduction |  | Term Extension |  | Payment Delay |  | Total Class of Financing Receivable
Twelve Months Ended December 31, 2023 |  |  |  |  |  |  |  |  |  |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |
Working capital lines of credit loans |  | $ | 0 |  |  | Reduction of two variable Prime Rate lines of credit to 1.00% Fixed Reduction of one variable line of credit from Prime plus 1.00% to 1.00% Fixed |  | Term extension for one variable rate line of credit from 12 months to 120 months |  | None |  | 0.47 | %
Non-working capital loans (1) |  | 9,380 |  |  | Reduction of one term loan from Prime plus 0.75% to 1.00% Fixed |  | Term extension from 40 months to 60 months |  | Extension of amortization period from 40 months to 480 months with excess cash flow recapture provisions for earlier repayment |  | 0.19 |
(1) Represents one $11.0 million non-working capital loan that received principal forgiveness of $9.4 million, of which $3.7 million and $5.6 million was charged off during the twelve months ended December 31, 2023 and 2022, respectively. During the twelve months ended December 31, 2022, no modifications were made to loans for borrowers experiencing financial difficulty. The company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. At December 31, 2023, no loans receiving such a modification within the last twelve months were 30 days or greater past due. At December 31, 2023, no loans receiving a modification due to borrower financial difficulty within the last twelve months has experienced a payment default. Upon the Company's determination that a modified loan (or portion thereof) has subsequently been deemed uncollectible, the loan (or a portion thereof) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

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