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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2023

NOTE 4 – LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Major categories of loans are summarized as follows:


	June 30, 2023		December 31, 2022

	(dollars in thousands)
Commercial and industrial	$	385,768	$	266,757
Commercial real estate - owner occupied		303,522		218,503
Commercial real estate - non-owner occupied		882,598		713,202
Construction and land development		335,262		360,824
Multi-family		375,536		287,865
One-to-four family residential		482,442		338,253
Agricultural and farmland		259,858		237,746
Municipal, consumer, and other		219,669		197,103
Loans, before allowance for credit losses		3,244,655		2,620,253
Allowance for credit losses		(37,814)		(25,333)
Loans, net of allowance for credit losses	$	3,206,841	$	2,594,920

As of June 30, 2023 and December 31, 2022, commercial and industrial loans include $22 thousand and $28 thousand Paycheck Protection Program (“PPP”) loans, respectively.

Allowance for Credit Losses

Management estimates the allowance for credit losses using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The discounted cash flow method is used to estimate expected credit losses for all loan categories, except for consumer loans where the weighted average remaining maturity method is utilized.

At June 30, 2023, the economic forecast used by management anticipates a mild recession starting in 2024, with the unemployment rate increasing and GDP growth slowing and then shrinking over the next 4 quarters considered in the forecast period. After the forecast period, the Company reverts to long-term averages over a 4-quarter reversion period. Additionally, management may make qualitative adjustments to the loss estimates, as necessary, to reflect other factors that influence credit losses.

The following tables detail activity in the allowance for credit losses for the three and six months ended June 30:


	Three Months Ended June 30, 2023
			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

	(dollars in thousands)
Beginning balance	$	2,932	$	2,535	$	7,840	$	7,574	$	2,151	$	4,165	$	2,674	$	8,905	$	38,776
Provision for credit losses		791		(175)		(466)		(1,745)		452		(121)		(68)		252		(1,080)
Charge-offs		—		—		—		—		—		(4)		—		(175)		(179)
Recoveries		12		2		164		5		—		37		1		76		297
Ending balance	$	3,735	$	2,362	$	7,538	$	5,834	$	2,603	$	4,077	$	2,607	$	9,058	$	37,814

	Three Months Ended June 30, 2022
			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

	(dollars in thousands)
Beginning balance	$	2,491	$	1,511	$	7,014	$	4,493	$	1,354	$	1,583	$	842	$	5,220	$	24,508
Provision for loan losses		450		(287)		(408)		(434)		21		51		82		670		145
Charge-offs		—		—		—		—		—		(47)		—		(112)		(159)
Recoveries		40		—		5		—		—		109		—		86		240
Ending balance	$	2,981	$	1,224	$	6,611	$	4,059	$	1,375	$	1,696	$	924	$	5,864	$	24,734


	Six Months Ended June 30, 2023
			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

	(dollars in thousands)
Beginning balance	$	3,279	$	1,193	$	6,721	$	4,223	$	1,472	$	1,759	$	796	$	5,890	$	25,333
Adoption of ASC 326		(822)		587		501		1,969		85		797		1,567		2,299		6,983
PCD allowance established in acquisition		69		127		239		240		68		492		5		7		1,247
Provision for credit losses		1,178		444		(161)		(606)		978		960		237		991		4,021
Charge-offs		—		(3)		—		—		—		(26)		—		(292)		(321)
Recoveries		31		14		238		8		—		95		2		163		551
Ending balance	$	3,735	$	2,362	$	7,538	$	5,834	$	2,603	$	4,077	$	2,607	$	9,058	$	37,814

	Six Months Ended June 30, 2022
			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

	(dollars in thousands)
Beginning balance	$	2,440	$	1,840	$	8,145	$	4,914	$	1,263	$	1,311	$	845	$	3,178	$	23,936
Provision for loan losses		(203)		(716)		(1,804)		(855)		112		171		79		2,777		(439)
Charge-offs		(5)		—		—		—		—		(49)		—		(239)		(293)
Recoveries		749		100		270		—		—		263		—		148		1,530
Ending balance	$	2,981	$	1,224	$	6,611	$	4,059	$	1,375	$	1,696	$	924	$	5,864	$	24,734

Gross charge-offs, further sorted by origination year, were as follows during the three and six months ended June 30, 2023:


	Gross Charge-Offs for the Three Months Ended June 30, 2023
															Revolving
															Loans
	Term Loans by Origination Year												Revolving		Converted
	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total

	(dollars in thousands)
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate - owner occupied		—		—		—		—		—		—		—		—		—
Commercial real estate - non-owner occupied		—		—		—		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—		—		—		—
Multi-family		—		—		—		—		—		—		—		—		—
One-to-four family residential		—		—		—		—		—		4		—		—		4
Agricultural and farmland		—		—		—		—		—		—		—		—		—
Municipal, consumer, and other		100		21		—		—		—		—		54		—		175
Total	$	100	$	21	$	—	$	—	$	—	$	4	$	54	$	—	$	179


	Gross Charge-Offs for the Six Months Ended June 30, 2023
															Revolving
															Loans
	Term Loans by Origination Year												Revolving		Converted
	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total

	(dollars in thousands)
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate - owner occupied		—		3		—		—		—		—		—		—		3
Commercial real estate - non-owner occupied		—		—		—		—		—		—		—		—		—
Construction and land development		—		—		—		—		—		—		—		—		—
Multi-family		—		—		—		—		—		—		—		—		—
One-to-four family residential		—		—		—		—		1		25		—		—		26
Agricultural and farmland		—		—		—		—		—		—		—		—		—
Municipal, consumer, and other		135		74		—		9		—		—		74		—		292
Total	$	135	$	77	$	—	$	9	$	1	$	25	$	74	$	—	$	321

The following tables present loans and the related allowance for credit losses by category:


			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
June 30, 2023	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	385,594	$	303,271	$	868,421	$	335,024	$	374,578	$	476,326	$	259,858	$	203,767	$	3,206,839
Individually evaluated for impairment		174		251		14,177		238		958		6,116		—		15,902		37,816
Total	$	385,768	$	303,522	$	882,598	$	335,262	$	375,536	$	482,442	$	259,858	$	219,669	$	3,244,655

Allowance for credit losses:
Collectively evaluated for impairment	$	3,730	$	2,350	$	6,280	$	5,834	$	2,603	$	3,705	$	2,607	$	5,656	$	32,765
Individually evaluated for impairment		5		12		1,258		—		—		372		—		3,402		5,049
Total	$	3,735	$	2,362	$	7,538	$	5,834	$	2,603	$	4,077	$	2,607	$	9,058	$	37,814

			Commercial		Commercial										Municipal,
	Commercial		Real Estate		Real Estate		Construction				One-to-four		Agricultural		Consumer,
	and		Owner		Non-owner		and Land				Family		and		and
December 31, 2022	Industrial		Occupied		Occupied		Development		Multi-Family		Residential		Farmland		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	261,833	$	203,558	$	671,663	$	359,892	$	287,298	$	325,621	$	233,118	$	184,579	$	2,527,562
Individually evaluated for impairment		4,818		11,366		30,509		82		—		8,399		4,033		12,508		71,715
Acquired with deteriorated credit quality		106		3,579		11,030		850		567		4,233		595		16		20,976
Total	$	266,757	$	218,503	$	713,202	$	360,824	$	287,865	$	338,253	$	237,746	$	197,103	$	2,620,253

Allowance for loan losses:
Collectively evaluated for impairment	$	3,121	$	1,008	$	4,332	$	4,221	$	1,470	$	1,709	$	796	$	2,327	$	18,984
Individually evaluated for impairment		158		168		2,388		—		—		44		—		3,562		6,320
Acquired with deteriorated credit quality		—		17		1		2		2		6		—		1		29
Total	$	3,279	$	1,193	$	6,721	$	4,223	$	1,472	$	1,759	$	796	$	5,890	$	25,333

The following table presents collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans:


	Amortized Cost								Allowance
	Primary Collateral Type								for Credit
June 30, 2023	Real Estate		Vehicles		Other		Total		Losses

	(dollars in thousands)
Commercial and industrial	$	—	$	—	$	174	$	174	$	5
Commercial real estate - owner occupied		251		—		—		251		12
Commercial real estate - non-owner occupied		14,177		—		—		14,177		1,258
Construction and land development		238		—		—		238		—
Multi-family		958		—		—		958		—
One-to-four family residential		6,116		—		—		6,116		372
Agricultural and farmland		—		—		—		—		—
Municipal, consumer, and other		15,826		31		45		15,902		3,402
Total	$	37,566	$	31	$	219	$	37,816	$	5,049

Accrued interest on loans totaled $13.7 million as of June 30, 2023 and is excluded from the estimate of credit losses.

Pre-ASC 326 Adoption Impaired Loan Disclosures

The following table presents loans individually evaluated for impairment by category of loans:


	Unpaid
	Principal		Recorded		Related
December 31, 2022	Balance		Investment		Allowance

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	268	$	254	$	158
Commercial real estate - owner occupied		635		610		168
Commercial real estate - non-owner occupied		14,269		14,261		2,388
Construction and land development		—		—		—
Multi-family		—		—		—
One-to-four family residential		569		524		44
Agricultural and farmland		—		—		—
Municipal, consumer, and other		8,152		8,131		3,562
Total	$	23,893	$	23,780	$	6,320

With no related allowance:
Commercial and industrial	$	4,564	$	4,564	$	—
Commercial real estate - owner occupied		10,912		10,756		—
Commercial real estate - non-owner occupied		16,327		16,248		—
Construction and land development		92		82		—
Multi-family		—		—		—
One-to-four family residential		9,181		7,875		—
Agricultural and farmland		4,440		4,033		—
Municipal, consumer, and other		4,410		4,377		—
Total	$	49,926	$	47,935	$	—

Total loans individually evaluated for impairment:
Commercial and industrial	$	4,832	$	4,818	$	158
Commercial real estate - owner occupied		11,547		11,366		168
Commercial real estate - non-owner occupied		30,596		30,509		2,388
Construction and land development		92		82		—
Multi-family		—		—		—
One-to-four family residential		9,750		8,399		44
Agricultural and farmland		4,440		4,033		—
Municipal, consumer, and other		12,562		12,508		3,562
Total	$	73,819	$	71,715	$	6,320

The following tables present the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans:


	Three Months Ended June 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	267	$	4
Commercial real estate - owner occupied		745		11
Commercial real estate - non-owner occupied		14,603		185
Construction and land development		—		—
Multi-family		—		—
One-to-four family residential		548		4
Agricultural and farmland		—		—
Municipal, consumer, and other		8,344		46
Total	$	24,507	$	250

With no related allowance:
Commercial and industrial	$	15,156	$	156
Commercial real estate - owner occupied		11,887		141
Commercial real estate - non-owner occupied		17,947		340
Construction and land development		2,012		26
Multi-family		—		—
One-to-four family residential		8,181		84
Agricultural and farmland		252		3
Municipal, consumer, and other		4,480		33
Total	$	59,915	$	783

Total loans individually evaluated for impairment:
Commercial and industrial	$	15,423	$	160
Commercial real estate - owner occupied		12,632		152
Commercial real estate - non-owner occupied		32,550		525
Construction and land development		2,012		26
Multi-family		—		—
One-to-four family residential		8,729		88
Agricultural and farmland		252		3
Municipal, consumer, and other		12,824		79
Total	$	84,422	$	1,033


	Six Months Ended June 30, 2022
	Average		Interest
	Recorded		Income
	Investment		Recognized

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	280	$	8
Commercial real estate - owner occupied		1,580		44
Commercial real estate - non-owner occupied		14,728		371
Construction and land development		—		—
Multi-family		—		—
One-to-four family residential		597		9
Agricultural and farmland		—		—
Municipal, consumer, and other		8,426		85
Total	$	25,611	$	517

With no related allowance:
Commercial and industrial	$	17,316	$	356
Commercial real estate - owner occupied		11,460		247
Commercial real estate - non-owner occupied		16,728		538
Construction and land development		2,014		48
Multi-family		—		—
One-to-four family residential		8,453		141
Agricultural and farmland		244		3
Municipal, consumer, and other		4,511		54
Total	$	60,726	$	1,387

Total loans individually evaluated for impairment:
Commercial and industrial	$	17,596	$	364
Commercial real estate - owner occupied		13,040		291
Commercial real estate - non-owner occupied		31,456		909
Construction and land development		2,014		48
Multi-family		—		—
One-to-four family residential		9,050		150
Agricultural and farmland		244		3
Municipal, consumer, and other		12,937		139
Total	$	86,337	$	1,904

Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022

	(dollars in thousands)
Beginning balance	$	484	$	413
Reclassification from non-accretable difference		100		217
Accretion income		(47)		(93)
Ending balance	$	537	$	537

Past Due and Nonaccrual Status

Past due status is based on the contractual terms of the loan. Typically, loans are placed on nonaccrual when they reach 90 days past due, or when, in management’s opinion, there is reasonable doubt regarding the collection of the amounts due through the normal means of the borrower. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is reversed from interest income. Interest payments received on nonaccrual loans are recognized in accordance with our significant accounting policies. Once a loan is placed on nonaccrual status, the borrower must generally demonstrate at least six months of payment performance and we must believe that all remaining principal and interest is fully collectible, before the loan is eligible to return to accrual status.

The following tables present loans by category based on current payment and accrual status:


	Accruing Interest
			30 - 89 Days		90+ Days				Total
June 30, 2023	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	385,504	$	90	$	—	$	174	$	385,768
Commercial real estate - owner occupied		303,145		126		—		251		303,522
Commercial real estate - non-owner occupied		882,208		—		—		390		882,598
Construction and land development		335,024		—		—		238		335,262
Multi-family		374,488		90		—		958		375,536
One-to-four family residential		475,473		1,522		—		5,447		482,442
Agricultural and farmland		259,730		128		—		—		259,858
Municipal, consumer, and other		219,335		257		1		76		219,669
Total	$	3,234,907	$	2,213	$	1	$	7,534	$	3,244,655


	Accruing Interest
			30 - 89 Days		90+ Days				Total
December 31, 2022	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	266,521	$	17	$	—	$	219	$	266,757
Commercial real estate - owner occupied		218,242		187		—		74		218,503
Commercial real estate - non-owner occupied		713,031		—		—		171		713,202
Construction and land development		360,763		61		—		—		360,824
Multi-family		287,854		11		—		—		287,865
One-to-four family residential		335,576		894		145		1,638		338,253
Agricultural and farmland		237,727		19		—		—		237,746
Municipal, consumer, and other		196,892		157		1		53		197,103
Total	$	2,616,606	$	1,346	$	146	$	2,155	$	2,620,253

The following table presents nonaccrual loans with and without a related allowance for credit losses:


	Nonaccrual		Nonaccrual
	With		With No
	Allowance for		Allowance for		Total
June 30, 2023	Credit Losses		Credit Losses		Nonaccrual

	(dollars in thousands)
Commercial and industrial	$	128	$	46	$	174
Commercial real estate - owner occupied		74		177		251
Commercial real estate - non-owner occupied		219		171		390
Construction and land development		—		238		238
Multi-family		—		958		958
One-to-four family residential		129		5,318		5,447
Agricultural and farmland		—		—		—
Municipal, consumer, and other		—		76		76
Total	$	550	$	6,984	$	7,534

Credit Quality Indicators

The Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all such loans that are part of relationships with over $750,000 in total exposure to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan. These credit quality indicators are used to assign a risk rating to each individual loan. Risk ratings are grouped into four major categories, defined as follows:

Pass – a pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Pass-Watch – a pass-watch loan is still considered a "pass" credit and is not a classified or criticized asset, but is a reflection of a borrower who exhibits credit weaknesses or downward trends warranting close attention and increased monitoring. These potential weaknesses may result in deterioration of the repayment prospects for the loan. No loss of principal or interest is expected, and the borrower does not pose sufficient risk to warrant classification.

Substandard – a substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized as probable that the borrower will not pay principal and interest in accordance with the contractual terms.

Doubtful – a doubtful loan has all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present loans by category based on their assigned risk ratings determined by management:


June 30, 2023	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	378,223	$	3,900	$	3,645	$	—	$	385,768
Commercial real estate - owner occupied		281,115		11,660		10,747		—		303,522
Commercial real estate - non-owner occupied		825,108		33,361		24,129		—		882,598
Construction and land development		329,877		5,055		330		—		335,262
Multi-family		349,513		24,749		1,274		—		375,536
One-to-four family residential		461,525		7,654		13,263		—		482,442
Agricultural and farmland		251,388		5,142		3,328		—		259,858
Municipal, consumer, and other		201,708		1,921		16,040		—		219,669
Total	$	3,078,457	$	93,442	$	72,756	$	—	$	3,244,655


December 31, 2022	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	255,309	$	6,630	$	4,818	$	—	$	266,757
Commercial real estate - owner occupied		198,546		10,105		9,852		—		218,503
Commercial real estate - non-owner occupied		652,691		27,282		33,229		—		713,202
Construction and land development		358,215		2,527		82		—		360,824
Multi-family		283,682		4,183		—		—		287,865
One-to-four family residential		323,632		5,907		8,714		—		338,253
Agricultural and farmland		223,114		10,004		4,628		—		237,746
Municipal, consumer, and other		184,299		296		12,508		—		197,103
Total	$	2,479,488	$	66,934	$	73,831	$	—	$	2,620,253

Risk ratings of loans, further sorted by origination year, are as follows as of June 30, 2023:


															Revolving
															Loans
	Term Loans by Origination Year												Revolving		Converted
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Loans		to Term		Total
Commercial and industrial
Pass	$	69,081	$	63,617	$	27,992	$	31,141	$	6,418	$	10,665	$	166,040	$	3,269	$	378,223
Pass-Watch		117		934		—		535		825		211		581		697		3,900
Substandard		5		101		—		46		—		49		617		2,827		3,645
Total	$	69,203	$	64,652	$	27,992	$	31,722	$	7,243	$	10,925	$	167,238	$	6,793	$	385,768

Commercial real estate - owner occupied
Pass	$	19,573	$	63,767	$	61,278	$	59,353	$	34,394	$	35,565	$	7,185	$	—	$	281,115
Pass-Watch		672		2,365		2,773		358		2,747		1,795		950		—		11,660
Substandard		—		1,688		3,430		262		673		3,200		1,494		—		10,747
Total	$	20,245	$	67,820	$	67,481	$	59,973	$	37,814	$	40,560	$	9,629	$	—	$	303,522

Commercial real estate - non-owner occupied
Pass	$	53,549	$	260,402	$	264,052	$	98,430	$	86,880	$	48,439	$	9,567	$	3,789	$	825,108
Pass-Watch		758		—		7,475		—		7,379		3,870		13,734		145		33,361
Substandard		11,774		127		—		73		2,515		9,469		—		171		24,129
Total	$	66,081	$	260,529	$	271,527	$	98,503	$	96,774	$	61,778	$	23,301	$	4,105	$	882,598

Construction and land development
Pass	$	82,321	$	154,790	$	68,926	$	5,676	$	3,284	$	1,791	$	7,868	$	5,221	$	329,877
Pass-Watch		156		2,867		—		—		—		12		1,183		837		5,055
Substandard		—		—		—		—		—		317		—		13		330
Total	$	82,477	$	157,657	$	68,926	$	5,676	$	3,284	$	2,120	$	9,051	$	6,071	$	335,262

Multi-family
Pass	$	35,047	$	79,926	$	105,151	$	58,069	$	34,925	$	29,929	$	5,954	$	512	$	349,513
Pass-Watch		2,674		7,273		—		8,833		59		5,558		343		9		24,749
Substandard		—		—		315		—		489		470		—		—		1,274
Total	$	37,721	$	87,199	$	105,466	$	66,902	$	35,473	$	35,957	$	6,297	$	521	$	375,536

One-to-four family residential
Pass	$	69,055	$	90,014	$	88,637	$	69,356	$	23,957	$	57,917	$	57,698	$	4,891	$	461,525
Pass-Watch		1,011		670		1,164		572		713		2,909		295		320		7,654
Substandard		415		2,490		857		1,045		823		4,461		25		3,147		13,263
Total	$	70,481	$	93,174	$	90,658	$	70,973	$	25,493	$	65,287	$	58,018	$	8,358	$	482,442

Agricultural and farmland
Pass	$	24,392	$	40,120	$	39,227	$	40,052	$	9,319	$	9,194	$	86,766	$	2,318	$	251,388
Pass-Watch		825		1,691		96		1,021		145		960		404		—		5,142
Substandard		—		—		16		3,312		—		—		—		—		3,328
Total	$	25,217	$	41,811	$	39,339	$	44,385	$	9,464	$	10,154	$	87,170	$	2,318	$	259,858

Municipal, Consumer, and other
Pass	$	31,397	$	70,574	$	28,952	$	15,154	$	1,793	$	45,049	$	8,787	$	2	$	201,708
Pass-Watch		—		20		26		20		—		1,855		—		—		1,921
Substandard		32		94		7		—		46		15,861		—		—		16,040
Total	$	31,429	$	70,688	$	28,985	$	15,174	$	1,839	$	62,765	$	8,787	$	2	$	219,669

Total by Risk Rating
Pass	$	384,415	$	823,210	$	684,215	$	377,231	$	200,970	$	238,549	$	349,865	$	20,002	$	3,078,457
Pass-Watch		6,213		15,820		11,534		11,339		11,868		17,170		17,490		2,008		93,442
Substandard		12,226		4,500		4,625		4,738		4,546		33,827		2,136		6,158		72,756
Total	$	402,854	$	843,530	$	700,374	$	393,308	$	217,384	$	289,546	$	369,491	$	28,168	$	3,244,655

Modifications and Troubled Debt Restructurings

There were no loan modifications to borrowers in financial distress during the three and six months ended June 30, 2023.

There were no new troubled debt restructurings during the three and six months ended June 30, 2022. As of December 31, 2022, the Company had $3.0 million of troubled debt restructurings.

Pledged Loans

As of June 30, 2023 and December 31, 2022, the Company pledged loans totaling $1.04 billion and $892.1 million, respectively, to the Federal Home Loan Bank of Chicago (“FHLB”) to secure available FHLB advance borrowing capacity.