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ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

9 Months Ended

Sep. 30, 2024

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted monthly. The ultimate recovery of all loans is susceptible to future market factors beyond the Company’s control.

The level of credit loss provision is influenced by growth in the overall loan portfolio, emerging market risk, emerging concentration risk, commercial loan focus and large credit concentration, new industry lending activity, general economic conditions and historical loss analysis. In addition, management gives consideration to changes in the facts and circumstances

of watch list credits, which includes the security position of the borrower, in determining the appropriate level of the credit loss provision. Furthermore, management’s overall view on credit quality is a factor in the determination of the provision.

The determination of the appropriate allowance is inherently subjective, as it requires significant estimates by management. The Company has an established process to determine the adequacy of the allowance for credit losses that generally includes consideration of changes in the nature and volume of the loan portfolio and overall portfolio quality, along with current and forecasted economic conditions that may affect borrowers’ ability to repay. Consideration is not limited to these factors although they represent the most commonly cited factors. To determine the specific allocation levels for individual credits, management considers the current valuation of collateral and the amounts and timing of expected future cash flows as the primary measures. Management also considers trends in adversely classified loans based upon an ongoing review of those credits. With respect to pools of similar loans, an appropriate level of general allowance is determined by portfolio segment using a probability of default-loss given default (“PD/LGD”) model, subject to a floor. A default can be triggered by one of several different asset quality factors, including past due status, nonaccrual status, material modification status or if the loan has had a charge-off. This PD is then combined with a LGD derived from historical charge-off data to construct a default rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, particularly the unemployment rate forecast from the Federal Open Market Committee’s Summary of Economic Projections, and other environmental factors based on the risks present for each portfolio segment. These environmental factors include consideration of the following: levels of, and trends in, delinquencies and nonperforming loans; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedure, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the allowance results in two forms of allocations, specific and general. These two components represent the total allowance for credit losses deemed adequate to cover probable losses inherent in the loan portfolio.

Commercial loans are subject to a dual standardized grading process administered by the credit administration function. These grade assignments are performed independent of each other and a consensus is reached by credit administration and the loan review officer. Specific allowances are established in cases where management has identified significant conditions or circumstances related to an individual credit that indicate it should be evaluated on an individual basis. Considerations with respect to specific allocations for these individual credits include, but are not limited to, the following: (a) the sufficiency of the customer’s cash flow or net worth to repay the loan; (b) the adequacy of the discounted value of collateral relative to the loan balance; (c) whether the loan has been criticized in a regulatory examination; (d) whether the loan is nonperforming; (e) any other reasons the ultimate collectability of the loan may be in question; or (f) any unique loan characteristics that require special monitoring.

Allocations are also applied to categories of loans considered not to be individually analyzed, but for which the rate of loss is expected to be consistent with or greater than historical averages. Such allocations are based on past loss experience and information about specific borrower situations and estimated collateral values. These general pooled loan allocations are performed for portfolio segments of commercial and industrial; commercial real estate, multi-family, and construction; agri-business and agricultural; other commercial loans; and consumer 1-4 family mortgage and other consumer loans. General allocations of the allowance are determined by a historical loss rate based on the calculation of each pool’s probability of default-loss given default, subject to a floor. The length of the historical period for each pool is based on the average life of the pool, which is updated at least annually. The historical loss rates are supplemented with consideration of economic conditions and portfolio trends.

Due to the imprecise nature of estimating the allowance for credit losses, the Company’s allowance for credit losses includes an immaterial unallocated component. The unallocated component of the allowance for credit losses incorporates the Company’s judgmental determination of potential expected losses that may not be fully reflected in other allocations. As a practical expedient, the Company has elected to disclose accrued interest separately from loan principal balances on the consolidated balance sheet. Additionally, when a loan is placed on non-accrual, interest payments are reversed through interest income.

For off balance sheet credit exposures outlined in the ASU at 326-20-30-11, it is the Company’s position that nearly all of the unfunded amounts on lines of credit are unconditionally cancellable, and therefore not subject to having a liability recorded.

The following tables present the activity in the allowance for credit losses by portfolio segment for the periods ended:

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Three Months Ended September 30, 2024
Beginning balance, July 1						$	39,161					$	31,687					$	3,668					$	820					$	3,586					$	1,390					$	399					$	80,711
Provision for credit losses						3,498						(355)						(254)						(86)						(16)						308						(36)						3,059
Loans charged-off						(72)						0						0						0						(3)						(156)						0						(231)
Recoveries						18						26						0						0						4						40						0						88
Net loans (charged-off) recovered						(54)						26						0						0						1						(116)						0						(143)
Ending balance						$	42,605					$	31,358					$	3,414					$	734					$	3,571					$	1,582					$	363					$	83,627

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Three Months Ended September 30, 2023
Beginning balance, July 1						$	30,978					$	30,913					$	4,402					$	1,120					$	3,448					$	846					$	351					$	72,058
Provision for credit losses						(167)						230						(139)						(102)						197						283						98						400
Loans charged-off						(193)						0						0						0						(149)						(138)						0						(480)
Recoveries						21						12						0						0						3						91						0						127
Net loans (charged-off) recovered						(172)						12						0						0						(146)						(47)						0						(353)
Ending balance						$	30,639					$	31,155					$	4,263					$	1,018					$	3,499					$	1,082					$	449					$	72,105

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Nine Months Ended September 30, 2024
Beginning balance, January 1						$	30,338					$	31,335					$	4,150					$	1,129					$	3,474					$	1,174					$	372					$	71,972
Provision for credit losses						12,452						784						(736)						(395)						73						890						(9)						13,059
Loans charged-off						(278)						(840)						0						0						(25)						(668)						0						(1,811)
Recoveries						93						79						0						0						49						186						0						407
Net loans (charged-off) recovered						(185)						(761)						0						0						24						(482)						0						(1,404)
Ending balance						$	42,605					$	31,358					$	3,414					$	734					$	3,571					$	1,582					$	363					$	83,627

(dollars in thousands)						Commercial and Industrial						Commercial Real Estate and Multifamily Residential						Agri-business and Agricultural						Other Commercial						Consumer 1-4 Family Mortgage						Other Consumer						Unallocated						Total
Nine Months Ended September 30, 2023
Beginning balance, January 1						$	35,290					$	27,394					$	4,429					$	917					$	3,001					$	1,021					$	554					$	72,606
Provision for credit losses						1,065						3,465						(166)						101						642						548						(105)						5,550
Loans charged-off						(5,844)						0						0						0						(163)						(759)						0						(6,766)
Recoveries						128						296						0						0						19						272						0						715
Net loans (charged-off) recovered						(5,716)						296						0						0						(144)						(487)						0						(6,051)
Ending balance						$	30,639					$	31,155					$	4,263					$	1,018					$	3,499					$	1,082					$	449					$	72,105

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 Company’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 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 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, 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.

The following table summarizes the risk category of loans by loan segment and year of origination as of September 30, 2024:

(dollars in thousands)			2024						2023						2022						2021						2020						Prior						Term Total						Revolving						Total
Commercial and industrial loans:
Working capital lines of credit loans:
Pass			$	0					$	141					$	1,730					$	1,824					$	773					$	0					$	4,468					$	556,307					$	560,775
Special Mention			0						0						0						0						0						0						0						49,662						49,662
Substandard			0						0						1,011						0						245						269						1,525						22,855						24,380
Doubtful			0						3,090						39,994						0						0						0						43,084						0						43,084
Total			0						3,231						42,735						1,824						1,018						269						49,077						628,824						677,901
Working capital lines of credit loans:
Current period gross write offs			0						0						94						0						0						0						94						136						230
Non-working capital loans:
Pass			111,883						164,110						173,692						67,117						38,804						32,074						587,680						182,203						769,883
Special Mention			2,998						2,783						9,670						1,892						441						3,014						20,798						6,753						27,551
Substandard			0						3,269						1,608						134						4,400						673						10,084						467						10,551
Doubtful			0						227						0						540						416						0						1,183						0						1,183
Not Rated			1,101						1,809						1,265						506						455						46						5,182						0						5,182
Total			115,982						172,198						186,235						70,189						44,516						35,807						624,927						189,423						814,350
Non-working capital loans:
Current period gross write offs			0						0						0						0						0						0						0						48						48
Commercial real estate and multi-family residential loans:
Construction and land development loans:
Pass			26,122						78,524						6,339						46,776						0						153						157,914						566,886						724,800
Special Mention			603						0						0						0						0						0						603						1,832						2,435
Total			26,725						78,524						6,339						46,776						0						153						158,517						568,718						727,235
Construction and land development loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Owner occupied loans:
Pass			48,999						138,425						124,911						144,352						119,933						138,956						715,576						58,462						774,038
Special Mention			6,404						1,501						14,942						3,330						626						3,436						30,239						0						30,239
Substandard			0						329						0						3,545						1,462						323						5,659						0						5,659
Total			55,403						140,255						139,853						151,227						122,021						142,715						751,474						58,462						809,936
Owner occupied loans:
Current period gross write offs			0						0						0						0						0						840						840						0						840
Nonowner occupied loans:

Pass (continued)			108,277						123,755						152,690						107,647						121,272						80,108						693,749						50,584						744,333
Special Mention			0						15,790						109						5,967						0						0						21,866						0						21,866
Nonowner occupied loans:
Total			108,277						139,545						152,799						113,614						121,272						80,108						715,615						50,584						766,199
Nonowner occupied loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Multifamily loans:
Pass			39,959						61,825						21,799						8,868						29,457						7,714						169,622						28,061						197,683
Special Mention			42,750						0						311						0						0						2,193						45,254						0						45,254
Total			82,709						61,825						22,110						8,868						29,457						9,907						214,876						28,061						242,937
Multifamily 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			8,437						22,063						30,104						23,670						25,940						21,147						131,361						25,973						157,334
Substandard			0						0						0						0						0						80						80						0						80
Total			8,437						22,063						30,104						23,670						25,940						21,227						131,441						25,973						157,414
Loans secured by farmland:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Loans for agricultural production:
Pass			14,238						28,084						21,946						24,986						22,259						3,807						115,320						85,084						200,404
Special Mention			0						0						0						171						0						0						171						500						671
Total			14,238						28,084						21,946						25,157						22,259						3,807						115,491						85,584						201,075
Loans for agricultural production:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other commercial loans:
Pass			6,715						10,648						30,858						3,661						11,851						5,711						69,444						22,872						92,316
Special Mention			0						0						0						0						0						1,900						1,900						0						1,900
Total			6,715						10,648						30,858						3,661						11,851						7,611						71,344						22,872						94,216
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			9,358						10,486						9,391						11,531						6,485						5,381						52,632						6,217						58,849
Special Mention			124						228						167						66						0						0						585						0						585
Substandard			0						86						322						90						0						219						717						0						717

Not Rated (continued)			18,866						58,659						47,720						34,711						16,226						24,767						200,949						0						200,949
Total			28,348						69,459						57,600						46,398						22,711						30,367						254,883						6,217						261,100
Closed end first mortgage loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Open end and junior lien loans:
Pass			47						751						0						451						0						5						1,254						11,476						12,730
Special Mention			0						0						0						0						315						0						315						0						315
Substandard			0						105						0						18						0						81						204						180						384
Not Rated			17,554						18,349						20,546						5,571						822						3,043						65,885						132,942						198,827
Total			17,601						19,205						20,546						6,040						1,137						3,129						67,658						144,598						212,256
Open end and junior lien loans:
Current period gross write offs			0						0						22						0						0						0						22						3						25
Residential construction loans:
Not Rated			5,602						2,790						2,097						1,410						777						1,432						14,108						0						14,108
Total			5,602						2,790						2,097						1,410						777						1,432						14,108						0						14,108
Residential construction loans:
Current period gross write offs			0						0						0						0						0						0						0						0						0
Other consumer loans:
Pass			78						979						254						1,011						40						0						2,362						18,308						20,670
Special Mention			0						0						475						0						184						0						659						0						659
Substandard			0						181						44						86						17						0						328						0						328
Not Rated			19,849						24,849						13,148						7,327						4,145						2,063						71,381						10,225						81,606
Total			19,927						26,009						13,921						8,424						4,386						2,063						74,730						28,533						103,263
Other consumer loans:
Current period gross write offs			4						229						158						28						0						26						445						223						668
Total Loans			$	489,964					$	773,836					$	727,143					$	507,258					$	407,345					$	338,595					$	3,244,141					$	1,837,849					$	5,081,990
Total period gross write offs			$	4					$	229					$	274					$	28					$	0					$	866					$	1,401					$	410					$	1,811

As of September 30, 2024, $1.2 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the Small Business Administration ("SBA").

The following table summarizes the risk category of loans by loan segment and year of origination as of December 31, 2023:

(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

Nonowner occupied loans (continued):
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
Multifamily 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
Multifamily 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

Closed end first mortgage loans (continued):
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
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

As of December 31, 2023, $1.3 million in PPP loans were included in the "Pass" category of non-working capital commercial and industrial loans. These loans were included in this risk rating category because they are fully guaranteed by the SBA.

Nonaccrual and Past Due Loans:

The Company does not record interest on nonaccrual loans until principal is recovered. For all loan classes, a loan is generally placed on nonaccrual status when principal or interest becomes 90 days past due unless it is well secured and in the process of collection, or earlier when concern exists as to the ultimate collectability of principal or interest. Interest accrued but not received is reversed against earnings. Cash interest received on these loans is applied to the principal balance until the principal is recovered or until the loan returns to accrual status. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current, remain current for a prescribed period, and future payments are reasonably assured.

The following table presents the aging of the amortized cost basis in past due loans as of September 30, 2024 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)						Loans Not Past Due						30-89 Days Past Due						Greater than 89 Days Past Due and Accruing						Total Accruing						Total Nonaccrual						Nonaccrual With No Allowance For Credit Loss						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	632,488					$	0					$	0					$	632,488					$	45,413					$	596					$	677,901
Non-working capital loans						805,427						97						0						805,524						8,826						86						814,350
Commercial real estate and multi-family residential loans:
Construction and land development loans						727,235						0						0						727,235						0						0						727,235
Owner occupied loans						808,145						0						0						808,145						1,791						329						809,936
Nonowner occupied loans						766,199						0						0						766,199						0						0						766,199
Multifamily loans						242,937						0						0						242,937						0						0						242,937
Agri-business and agricultural loans:
Loans secured by farmland						157,334						0						0						157,334						80						0						157,414
Loans for agricultural production						201,075						0						0						201,075						0						0						201,075
Other commercial loans						94,216						0						0						94,216						0						0						94,216
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans						260,271						86						26						260,383						717						170						261,100
Open end and junior lien loans						211,534						269						69						211,872						384						384						212,256
Residential construction loans						14,108						0						0						14,108						0						0						14,108
Other consumer loans						102,560						375						0						102,935						328						17						103,263
Total						$	5,023,529					$	827					$	95					$	5,024,451					$	57,539					$	1,582					$	5,081,990

An insignificant amount of interest income was recognized on nonaccrual loans during the nine month period ended September 30, 2024.

The following table presents the aging of the amortized cost basis in past due loans as of December 31, 2023 by class of loans and loans past due 90 days or more and still accruing by class of loan:

(dollars in thousands)						Loans Not Past Due						30-89 Days Past Due						Greater than 89 Days Past Due and Accruing						Total Accruing						Total Nonaccrual						Nonaccrual With No Allowance For Credit Loss						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	602,236					$	0					$	0					$	602,236					$	2,654					$	0					$	604,890
Non-working capital loans						805,305						1,372						0						806,677						8,741						244						815,418
Commercial real estate and multi-family residential loans:
Construction and land development loans						631,653						0						0						631,653						0						0						631,653
Owner occupied loans						821,701						0						0						821,701						3,247						1,161						824,948
Nonowner occupied loans						723,589						0						0						723,589						0						0						723,589
Multifamily loans						253,197						0						0						253,197						0						0						253,197
Agri-business and agricultural loans:
Loans secured by farmland						162,783						0						0						162,783						100						0						162,883
Loans for agricultural production						225,980						0						0						225,980						0						0						225,980
Other commercial loans						120,567						0						0						120,567						0						0						120,567
Consumer 1‑4 family mortgage loans:
Closed end first mortgage loans						256,016						1,142						27						257,185						559						329						257,744
Open end and junior lien loans						190,956						344						0						191,300						272						164						191,572
Residential construction loans						8,344						0						0						8,344						0						0						8,344
Other consumer loans						95,135						502						0						95,637						112						3						95,749
Total						$	4,897,462					$	3,360					$	27					$	4,900,849					$	15,685					$	1,901					$	4,916,534

An insignificant amount of interest income was recognized on nonaccrual loans during the year ended December 31, 2023.

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 quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

The following tables present the amortized cost basis of collateral dependent loans by class of loan as of:

						September 30, 2024
(dollars in thousands)						Real Estate						General Business  Assets						Other						Total
Commercial and industrial loans:
Working capital lines of credit loans						$	50					$	61,463					$	449					$	61,962
Non-working capital loans						285						9,319						79						9,683
Commercial real estate and multi-family residential loans:
Owner occupied loans						323						3,925						0						4,248
Agri-business and agricultural loans:
Loans secured by farmland						0						80						0						80
Consumer 1-4 family mortgage loans:
Closed end first mortgage loans						717						0						0						717
Open end and junior lien loans						384						0						0						384
Residential construction and land development loans						0						0						0						0
Other consumer loans						0						0						183						183
Total						$	1,759					$	74,787					$	711					$	77,257

						December 31, 2023
(dollars in thousands)						Real Estate						General Business  Assets						Other						Total
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
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

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses using historical loss information. The Company uses a probability of default/loss given default model to determine an estimate which is recorded for each asset upon origination. Occasionally, the Company has reason to modify certain terms of loans for borrowers experiencing financial distress by providing the following forms of relief: forgiveness of loan principal, extension of repayment terms, interest rate reduction or an other than insignificant payment delay. The Company can make any or all of these types of concessions as part of such modifications. Since an estimate for historical losses is already included as a component of the allowance for credit losses, a change to the allowance for credit losses is generally not recorded at the time of such modifications unless the loan is individually analyzed and the modification changes the specific reserve allocation. In the event forgiveness of principal is provided, the amount of the forgiveness is charged off against the allowance for credit losses.

During the three and nine months ended September 30, 2024, there were no material modifications made to borrowers experiencing financial difficulty.

The following tables present the amortized cost basis of loans that were experiencing financial difficulty and received a modification of terms during the three and nine months ended September 30, 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 is also presented below:

(dollars in thousands)						Interest Rate Reduction						Combination Interest Rate Reduction, Term Extension and Payment Delay						Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay						Total Modifications						Total Class of Financing Receivable
Three Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans						$	931					$	0					$	0					$	931					0.16		%
Non-working capital loans						0						2,000						0						2,000						0.25
Total commercial and industrial loans						931						2,000						0						2,931						0.21
Total loan modifications made to borrowers experiencing financial difficulty						$	931					$	2,000					$	0					$	2,931					0.06		%

(dollars in thousands)						Interest Rate Reduction						Combination Interest Rate Reduction, Term Extension and Payment Delay						Combination Principal Forgiveness, Interest Rate Reduction, Term Extension and Payment Delay						Total Modifications						Total Class of Financing Receivable
Nine Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans						$	931					$	0					$	0					$	931					0.16		%
Non-working capital loans						0						2,000						1,596						3,596						0.44
Total commercial and industrial loans						931						2,000						1,596						4,527						0.32
Total loan modifications made to borrowers experiencing financial difficulty						$	931					$	2,000					$	1,596					$	4,527					0.09		%

The Company had committed, as of September 30, 2024, to lend additional funds of $694,000 to borrowers included in the previous tables

The following tables present the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the three and nine months ended September 30, 2023:

(dollars in thousands)						Principal Forgiveness						Weighted Average Interest Rate Reduction						Weighted Average Term Extension						Payment Delay
Three Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans						$	0					7.50		%				None						None
Non-working capital loans						0						8.50						180 months						Extension of payment terms from monthly variable rate interest only payments with balloon payment at end of term to fully amortizing ten year fixed rate principal and interest payment schedule
Total						$	0					8.15		%				70 months

(dollars in thousands)						Principal Forgiveness						Weighted Average Interest Rate Reduction						Weighted Average Term Extension						Payment Delay
Nine Months Ended September 30, 2023
Commercial and industrial loans:
Working capital lines of credit loans						$	0					7.50		%				None						None
Non-working capital loans (1)						9,380						7.87						58 months						Extension of payment terms from fully amortizing variable rate 40 month term to 60 month fixed rate term with 480 month amortization schedule, monthly interest and semiannual principal payments, and excess cash flow recapture provisions Extension of payment terms from monthly variable rate interest only payments with balloon payment at end of term to fully amortizing ten year fixed rate principal and interest payment schedule
Total						$	9,380					7.84		%				44 months

(1) Principal forgiveness of $9.4 million represents one $11.0 million non-working capital loan, of which $9.3 million was charged off.

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 September 30, 2024, no loans receiving such a modification within the last twelve months were 30 days or greater past due.

At September 30, 2024, no loans receiving a modification due to borrower financial difficulty within the last twelve months 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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