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LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES | 9 Months Ended
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Sep. 30, 2023
Loans and Leases Receivable Disclosure [Abstract] |
LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES | LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES Major categories of loans are summarized as follows:
(dollars in thousands) | September 30, 2023 |  | December 31, 2022
Commercial and industrial | $ | 386,933 |  |  | $ | 266,757 |
Commercial real estate - owner occupied | 297,242 |  |  | 218,503 |
Commercial real estate - non-owner occupied | 901,929 |  |  | 713,202 |
Construction and land development | 371,158 |  |  | 360,824 |
Multi-family | 388,742 |  |  | 287,865 |
One-to-four family residential | 488,655 |  |  | 338,253 |
Agricultural and farmland | 275,239 |  |  | 237,746 |
Municipal, consumer, and other | 232,888 |  |  | 197,103 |
Loans, before allowance for credit losses | 3,342,786 |  |  | 2,620,253 |
Allowance for credit losses | (38,863) |  |  | (25,333) |
Loans, net of allowance for credit losses | $ | 3,303,923 |  |  | $ | 2,594,920 |
As of September 30, 2023 and December 31, 2022, commercial and industrial loans include $18 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 September 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 nine months ended September 30:
| Three Months Ended September 30, 2023
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
Beginning balance | $ | 3,735 |  |  | $ | 2,362 |  |  | $ | 7,538 |  |  | $ | 5,834 |  |  | $ | 2,603 |  |  | $ | 4,077 |  |  | $ | 2,607 |  |  | $ | 9,058 |  |  | $ | 37,814 |
Provision for credit losses | 515 |  |  | (108) |  |  | 248 |  |  | 1,004 |  |  | (348) |  |  | (21) |  |  | (337) |  |  | 30 |  |  | 983 |
Charge-offs | (15) |  |  | (2) |  |  | (171) |  |  | — |  |  | — |  |  | (8) |  |  | — |  |  | (216) |  |  | (412) |
Recoveries | 14 |  |  | 2 |  |  | 15 |  |  | 44 |  |  | 280 |  |  | 40 |  |  | 2 |  |  | 81 |  |  | 478 |
Ending balance | $ | 4,249 |  |  | $ | 2,254 |  |  | $ | 7,630 |  |  | $ | 6,882 |  |  | $ | 2,535 |  |  | $ | 4,088 |  |  | $ | 2,272 |  |  | $ | 8,953 |  |  | $ | 38,863 |
| Three Months Ended September 30, 2022
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
Beginning balance | $ | 2,981 |  |  | $ | 1,224 |  |  | $ | 6,611 |  |  | $ | 4,059 |  |  | $ | 1,375 |  |  | $ | 1,696 |  |  | $ | 924 |  |  | $ | 5,864 |  |  | $ | 24,734 |
Provision for loan losses | 14 |  |  | (65) |  |  | 268 |  |  | 316 |  |  | (52) |  |  | (78) |  |  | (83) |  |  | 66 |  |  | 386 |
Charge-offs | (17) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (18) |  |  | — |  |  | (187) |  |  | (222) |
Recoveries | 6 |  |  | 1 |  |  | 3 |  |  | 1 |  |  | — |  |  | 60 |  |  | — |  |  | 91 |  |  | 162 |
Ending balance | $ | 2,984 |  |  | $ | 1,160 |  |  | $ | 6,882 |  |  | $ | 4,376 |  |  | $ | 1,323 |  |  | $ | 1,660 |  |  | $ | 841 |  |  | $ | 5,834 |  |  | $ | 25,060 |
| Nine Months Ended September 30, 2023
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
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 | 1,693 |  |  | 336 |  |  | 87 |  |  | 398 |  |  | 630 |  |  | 939 |  |  | (100) |  |  | 1,021 |  |  | 5,004 |
Charge-offs | (15) |  |  | (5) |  |  | (171) |  |  | — |  |  | — |  |  | (34) |  |  | — |  |  | (508) |  |  | (733) |
Recoveries | 45 |  |  | 16 |  |  | 253 |  |  | 52 |  |  | 280 |  |  | 135 |  |  | 4 |  |  | 244 |  |  | 1,029 |
Ending balance | $ | 4,249 |  |  | $ | 2,254 |  |  | $ | 7,630 |  |  | $ | 6,882 |  |  | $ | 2,535 |  |  | $ | 4,088 |  |  | $ | 2,272 |  |  | $ | 8,953 |  |  | $ | 38,863 |
| Nine Months Ended September 30, 2022
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
Beginning balance | $ | 2,440 |  |  | $ | 1,840 |  |  | $ | 8,145 |  |  | $ | 4,914 |  |  | $ | 1,263 |  |  | $ | 1,311 |  |  | $ | 845 |  |  | $ | 3,178 |  |  | $ | 23,936 |
Provision for loan losses | (189) |  |  | (781) |  |  | (1,536) |  |  | (539) |  |  | 60 |  |  | 93 |  |  | (4) |  |  | 2,843 |  |  | (53) |
Charge-offs | (22) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (67) |  |  | — |  |  | (426) |  |  | (515) |
Recoveries | 755 |  |  | 101 |  |  | 273 |  |  | 1 |  |  | — |  |  | 323 |  |  | — |  |  | 239 |  |  | 1,692 |
Ending balance | $ | 2,984 |  |  | $ | 1,160 |  |  | $ | 6,882 |  |  | $ | 4,376 |  |  | $ | 1,323 |  |  | $ | 1,660 |  |  | $ | 841 |  |  | $ | 5,834 |  |  | $ | 25,060 |
Gross charge-offs, further sorted by origination year, were as follows during the three and nine months ended September 30, 2023:
| Gross Charge-Offs for the Three Months Ended September 30, 2023
| Term Loans by Origination Year |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
(dollars in thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 15 |  |  | $ | — |  |  | $ | 15 |
Commercial real estate - owner occupied | — |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2 |
Commercial real estate - non-owner occupied | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 171 |  |  | — |  |  | 171 |
Construction and land development | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
One-to-four family residential | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Agricultural and farmland | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Municipal, consumer, and other | 141 |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 66 |  |  | — |  |  | 216 |
Total | $ | 141 |  |  | $ | 11 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 8 |  |  | $ | 252 |  |  | $ | — |  |  | $ | 412 |
| Gross Charge-Offs for the Nine Months Ended September 30, 2023
| Term Loans by Origination Year |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
(dollars in thousands) | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 15 |  |  | $ | — |  |  | $ | 15 |
Commercial real estate - owner occupied | — |  |  | 5 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5 |
Commercial real estate - non-owner occupied | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 171 |  |  | — |  |  | 171 |
Construction and land development | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
One-to-four family residential | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 33 |  |  | — |  |  | — |  |  | 34 |
Agricultural and farmland | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Municipal, consumer, and other | 276 |  |  | 83 |  |  | — |  |  | 9 |  |  | — |  |  | — |  |  | 140 |  |  | — |  |  | 508 |
Total | $ | 276 |  |  | $ | 88 |  |  | $ | — |  |  | $ | 9 |  |  | $ | 1 |  |  | $ | 33 |  |  | $ | 326 |  |  | $ | — |  |  | $ | 733 |
The following tables present loans and the related allowance for credit losses by category:
|  | September 30, 2023
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
Loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | $ | 386,763 |  |  | $ | 297,068 |  |  | $ | 888,068 |  |  | $ | 370,942 |  |  | $ | 388,282 |  |  | $ | 482,838 |  |  | $ | 275,111 |  |  | $ | 217,638 |  |  | $ | 3,306,710 |
Individually evaluated for impairment |  | 170 |  |  | 174 |  |  | 13,861 |  |  | 216 |  |  | 460 |  |  | 5,817 |  |  | 128 |  |  | 15,250 |  |  | 36,076 |
Total |  | $ | 386,933 |  |  | $ | 297,242 |  |  | $ | 901,929 |  |  | $ | 371,158 |  |  | $ | 388,742 |  |  | $ | 488,655 |  |  | $ | 275,239 |  |  | $ | 232,888 |  |  | $ | 3,342,786 |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for impairment |  | $ | 4,244 |  |  | $ | 2,254 |  |  | $ | 6,503 |  |  | $ | 6,882 |  |  | $ | 2,535 |  |  | $ | 3,737 |  |  | $ | 2,272 |  |  | $ | 5,844 |  |  | $ | 34,271 |
Individually evaluated for impairment |  | 5 |  |  | — |  |  | 1,127 |  |  | — |  |  | — |  |  | 351 |  |  | — |  |  | 3,109 |  |  | 4,592 |
Total |  | $ | 4,249 |  |  | $ | 2,254 |  |  | $ | 7,630 |  |  | $ | 6,882 |  |  | $ | 2,535 |  |  | $ | 4,088 |  |  | $ | 2,272 |  |  | $ | 8,953 |  |  | $ | 38,863 |
|  | December 31, 2022
(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 |  | Agricultural and Farmland |  | Municipal, Consumer, and Other |  | Total
Loan balances: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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:
|  | September 30, 2023
|  | Amortized Cost |  | Allowance for Credit Losses
|  | Primary Collateral Type |  |  |
(dollars in thousands) |  | Real Estate |  | Vehicles |  | Other |  | Total |
Commercial and industrial |  | $ | — |  |  | $ | — |  |  | $ | 170 |  |  | $ | 170 |  |  | $ | 5 |
Commercial real estate - owner occupied |  | 174 |  |  | — |  |  | — |  |  | 174 |  |  | — |
Commercial real estate - non-owner occupied |  | 13,861 |  |  | — |  |  | — |  |  | 13,861 |  |  | 1,127 |
Construction and land development |  | 216 |  |  | — |  |  | — |  |  | 216 |  |  | — |
Multi-family |  | 460 |  |  | — |  |  | — |  |  | 460 |  |  | — |
One-to-four family residential |  | 5,817 |  |  | — |  |  | — |  |  | 5,817 |  |  | 351 |
Agricultural and farmland |  | 128 |  |  | — |  |  | — |  |  | 128 |  |  | — |
Municipal, consumer, and other |  | 15,141 |  |  | 31 |  |  | 78 |  |  | 15,250 |  |  | 3,109 |
Total |  | $ | 35,797 |  |  | $ | 31 |  |  | $ | 248 |  |  | $ | 36,076 |  |  | $ | 4,592 |
Accrued interest on loans totaled $17.0 million as of September 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:
|  | December 31, 2022
(dollars in thousands) |  | Unpaid Principal Balance |  | Recorded Investment |  | Related Allowance
With an allowance recorded: |  |  |  |  |  |
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 September 30, 2022
(dollars in thousands) | Average Recorded Investment |  | Interest Income Recognized
With an allowance recorded: |  |  |
Commercial and industrial | $ | 258 |  |  | $ | 5 |
Commercial real estate - owner occupied | 739 |  |  | 11 |
Commercial real estate - non-owner occupied | 14,441 |  |  | 185 |
Construction and land development | — |  |  | — |
Multi-family | — |  |  | — |
One-to-four family residential | 349 |  |  | 2 |
Agricultural and farmland | — |  |  | — |
Municipal, consumer, and other | 8,254 |  |  | 66 |
Total | $ | 24,041 |  |  | $ | 269 |
With no related allowance: |  |  |
Commercial and industrial | $ | 3,894 |  |  | $ | 41 |
Commercial real estate - owner occupied | 11,651 |  |  | 141 |
Commercial real estate - non-owner occupied | 17,220 |  |  | 369 |
Construction and land development | 2,010 |  |  | 57 |
Multi-family | — |  |  | — |
One-to-four family residential | 8,119 |  |  | 99 |
Agricultural and farmland | 425 |  |  | 5 |
Municipal, consumer, and other | 4,457 |  |  | 44 |
Total | $ | 47,776 |  |  | $ | 756 |
Total loans individually evaluated for impairment: |  |  |
Commercial and industrial | $ | 4,152 |  |  | $ | 46 |
Commercial real estate - owner occupied | 12,390 |  |  | 152 |
Commercial real estate - non-owner occupied | 31,661 |  |  | 554 |
Construction and land development | 2,010 |  |  | 57 |
Multi-family | — |  |  | — |
One-to-four family residential | 8,468 |  |  | 101 |
Agricultural and farmland | 425 |  |  | 5 |
Municipal, consumer, and other | 12,711 |  |  | 110 |
Total | $ | 71,817 |  |  | $ | 1,025 |
| Nine Months Ended September 30, 2022
(dollars in thousands) | Average Recorded Investment |  | Interest Income Recognized
With an allowance recorded: |  |  |
Commercial and industrial | $ | 272 |  |  | $ | 13 |
Commercial real estate - owner occupied | 1,297 |  |  | 55 |
Commercial real estate - non-owner occupied | 14,631 |  |  | 556 |
Construction and land development | — |  |  | — |
Multi-family | — |  |  | — |
One-to-four family residential | 513 |  |  | 11 |
Agricultural and farmland | — |  |  | — |
Municipal, consumer, and other | 8,368 |  |  | 151 |
Total | $ | 25,081 |  |  | $ | 786 |
With no related allowance: |  |  |
Commercial and industrial | $ | 12,793 |  |  | $ | 397 |
Commercial real estate - owner occupied | 11,524 |  |  | 388 |
Commercial real estate - non-owner occupied | 16,894 |  |  | 907 |
Construction and land development | 2,012 |  |  | 105 |
Multi-family | — |  |  | — |
One-to-four family residential | 8,341 |  |  | 240 |
Agricultural and farmland | 305 |  |  | 8 |
Municipal, consumer, and other | 4,493 |  |  | 98 |
Total | $ | 56,362 |  |  | $ | 2,143 |
Total loans individually evaluated for impairment: |  |  |
Commercial and industrial | $ | 13,065 |  |  | $ | 410 |
Commercial real estate - owner occupied | 12,821 |  |  | 443 |
Commercial real estate - non-owner occupied | 31,525 |  |  | 1,463 |
Construction and land development | 2,012 |  |  | 105 |
Multi-family | — |  |  | — |
One-to-four family residential | 8,854 |  |  | 251 |
Agricultural and farmland | 305 |  |  | 8 |
Municipal, consumer, and other | 12,861 |  |  | 249 |
Total | $ | 81,443 |  |  | $ | 2,929 |
Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows:
(dollars in thousands) | Three Months Ended September 30, 2022 |  | Nine Months Ended September 30, 2022
Beginning balance | $ | 537 |  | $ | 413
Reclassification from non-accretable difference | 283 |  | 500
Accretion income | (58) |  |  | (151) |
Ending balance | $ | 762 |  | $ | 762
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:
|  | September 30, 2023
|  | Accruing Interest |  |  |  |
(dollars in thousands) |  | Current |  | 30 - 89 Days Past Due |  | 90+ Days Past Due |  | Nonaccrual |  | Total Loans
Commercial and industrial |  | $ | 386,383 |  |  | $ | 380 |  |  | $ | — |  |  | $ | 170 |  |  | $ | 386,933 |
Commercial real estate - owner occupied |  | 297,069 |  |  | — |  |  | — |  |  | 173 |  |  | 297,242 |
Commercial real estate - non-owner occupied |  | 900,058 |  |  | 1,605 |  |  | — |  |  | 266 |  |  | 901,929 |
Construction and land development |  | 370,922 |  |  | 20 |  |  | — |  |  | 216 |  |  | 371,158 |
Multi-family |  | 387,966 |  |  | 316 |  |  | — |  |  | 460 |  |  | 388,742 |
One-to-four family residential |  | 481,603 |  |  | 1,897 |  |  | — |  |  | 5,155 |  |  | 488,655 |
Agricultural and farmland |  | 275,096 |  |  | 15 |  |  | — |  |  | 128 |  |  | 275,239 |
Municipal, consumer, and other |  | 232,561 |  |  | 217 |  |  | — |  |  | 110 |  |  | 232,888 |
Total |  | $ | 3,331,658 |  |  | $ | 4,450 |  |  | $ | — |  |  | $ | 6,678 |  |  | $ | 3,342,786 |
|  | December 31, 2022
|  | Accruing Interest |  |  |  |
(dollars in thousands) |  | Current |  | 30 - 89 Days Past Due |  | 90+ Days Past Due |  | Nonaccrual |  | Total Loans
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:
|  | September 30, 2023
(dollars in thousands) |  | Nonaccrual With Allowance for Credit Losses |  | Nonaccrual With No Allowance for Credit Losses |  | Total Nonaccrual
Commercial and industrial |  | $ | 127 |  |  | $ | 43 |  |  | $ | 170 |
Commercial real estate - owner occupied |  | — |  |  | 173 |  |  | 173 |
Commercial real estate - non-owner occupied |  | 220 |  |  | 46 |  |  | 266 |
Construction and land development |  | — |  |  | 216 |  |  | 216 |
Multi-family |  | — |  |  | 460 |  |  | 460 |
One-to-four family residential |  | 100 |  |  | 5,055 |  |  | 5,155 |
Agricultural and farmland |  | — |  |  | 128 |  |  | 128 |
Municipal, consumer, and other |  | 31 |  |  | 79 |  |  | 110 |
Total |  | $ | 478 |  |  | $ | 6,200 |  |  | $ | 6,678 |
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:
|  | September 30, 2023
(dollars in thousands) |  | Pass |  | Pass-Watch |  | Substandard |  | Doubtful |  | Total
Commercial and industrial |  | $ | 382,041 |  |  | $ | 4,114 |  |  | $ | 778 |  |  | $ | — |  |  | $ | 386,933 |
Commercial real estate - owner occupied |  | 279,081 |  |  | 8,249 |  |  | 9,912 |  |  | — |  |  | 297,242 |
Commercial real estate - non-owner occupied |  | 842,816 |  |  | 33,767 |  |  | 25,346 |  |  | — |  |  | 901,929 |
Construction and land development |  | 366,198 |  |  | 4,667 |  |  | 293 |  |  | — |  |  | 371,158 |
Multi-family |  | 363,214 |  |  | 24,753 |  |  | 775 |  |  | — |  |  | 388,742 |
One-to-four family residential |  | 468,736 |  |  | 7,572 |  |  | 12,347 |  |  | — |  |  | 488,655 |
Agricultural and farmland |  | 266,353 |  |  | 5,466 |  |  | 3,420 |  |  | — |  |  | 275,239 |
Municipal, consumer, and other |  | 215,726 |  |  | 1,771 |  |  | 15,391 |  |  | — |  |  | 232,888 |
Total |  | $ | 3,184,165 |  |  | $ | 90,359 |  |  | $ | 68,262 |  |  | $ | — |  |  | $ | 3,342,786 |
|  | December 31, 2022
(dollars in thousands) |  | Pass |  | Pass-Watch |  | Substandard |  | Doubtful |  | Total
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 |

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