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Loans and Allowance for Credit Losses | 6 Months Ended
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Jun. 30, 2024
Receivables [Abstract] |
Loans and Allowance for Credit Losses | Loans and Allowance for Credit Losses The Company’s loan portfolio is its largest class of earning assets and typically provides higher yields than other types of earning assets. Associated with the higher yields is an inherent amount of credit risk which the Company attempts to mitigate through strong underwriting practices. Table 4.1 presents the balance of each major product type within the Company’s portfolio as of the dates indicated.
Table 4.1: Loans Outstanding
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Real estate: |  |  |  |
Commercial |  | $ | 2,774,001 |  |  | $ | 2,685,419 |
Commercial land and development |  | 4,766 |  |  | 15,551 |
Commercial construction |  | 72,444 |  |  | 62,863 |
Residential construction |  | 9,011 |  |  | 15,456 |
Residential |  | 29,641 |  |  | 25,893 |
Farmland |  | 48,852 |  |  | 51,669 |
Commercial: |  |  |  |
Secured |  | 154,080 |  |  | 165,109 |
Unsecured |  | 23,198 |  |  | 23,850 |
Consumer and other |  | 152,564 |  |  | 38,166 |
Subtotal |  | 3,268,557 |  |  | 3,083,976 |
Net deferred loan fees |  | (2,266) |  |  | (2,257) |
Loans held for investment |  | 3,266,291 |  |  | 3,081,719 |
Allowance for credit losses |  | (35,406) |  |  | (34,431) |
Loans held for investment, net of allowance for credit losses |  | $ | 3,230,885 |  |  | $ | 3,047,288 |
Underwriting Commercial loans: Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, the Company’s management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Real estate loans: Real estate loans are subject to underwriting standards and processes similar to commercial loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected than other loans by conditions in the real estate market or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. Construction loans: With respect to construction loans that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans may be underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the ultimate success of the project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property, or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored using on-site inspections and are generally considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing. Residential real estate loans: Residential real estate loans are underwritten based upon the borrower’s income, credit history, and collateral. To monitor and manage residential loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements. Farmland loans: Farmland loans are generally made to producers and processors of crops and livestock. Repayment is primarily from the sale of an agricultural product or service. Farmland loans are secured by real property and are susceptible to changes in market demand for specific commodities. This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business cycles, as well as adverse weather conditions. Consumer loans: The Company purchased consumer loans underwritten utilizing credit scoring analysis to supplement the underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage, collection remedies, the number of such loans a borrower can have at one time, and documentation requirements. Credit Quality Indicators The Company has established a loan risk rating system to measure and monitor the quality of the loan portfolio. All loans are assigned a risk rating from the inception of the loan until the loan is paid off. The primary loan grades are as follows: Loans rated pass: These are loans to borrowers with satisfactory financial support, repayment capacity, and credit strength. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history, and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Company’s policy regarding debt service coverage ratios. These borrowers are capable of sustaining normal economic, market, or operational setbacks without significant financial impacts and their financial ratios and trends are acceptable. Negative external industry factors are generally not present. The loan may be secured, unsecured, or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. Loans rated watch: These are loans which have deficient loan quality and potentially significant issues, but losses do not appear to be imminent, and the issues may be temporary in nature. The significant issues are typically: (i) a history of losses or events that threaten the borrower’s viability; (ii) a property with significant depreciation and/or marketability concerns; or (iii) poor or deteriorating credit, occasional late payments, and/or limited reserves but the loan is generally kept current. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Loans rated substandard: These are loans which are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged (if any). Loans so classified exhibit a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans are characterized by the distinct possibility that the Company may sustain some loss if the deficiencies are not corrected. Loans rated doubtful: These are loans for which the collection or liquidation of the entire debt is highly questionable or improbable. Typically, the possibility of loss is extremely high. The losses on these loans are deferred until all pending factors have been addressed. Table 4.2 presents the amortized cost basis of the Company’s loans by origination year, where origination is defined as the later of origination or renewal date, and credit quality indicator as of the periods indicated.
Table 4.2: Loans by Risk Category and Vintage
|  | Amortized Cost Basis by Origination Year as of June 30, 2024 |  |  |  |  |  |
(in thousands) |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans |  | Revolving Converted to Term |  | Total
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 250,845 |  |  | $ | 323,243 |  |  | $ | 934,312 |  |  | $ | 651,701 |  |  | $ | 231,487 |  |  | $ | 330,193 |  |  | $ | 4,879 |  |  | $ | — |  |  | $ | 2,726,660 |
Watch |  | 644 |  |  | — |  |  | 17,734 |  |  | 19,363 |  |  | 4,670 |  |  | 340 |  |  | — |  |  | — |  |  | 42,751 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,818 |  |  | — |  |  | — |  |  | 1,818 |
Total |  | 251,489 |  |  | 323,243 |  |  | 952,046 |  |  | 671,064 |  |  | 236,157 |  |  | 332,351 |  |  | 4,879 |  |  | — |  |  | 2,771,229 |
Commercial land and development |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 1,636 |  |  | 1,000 |  |  | 1,259 |  |  | — |  |  | 182 |  |  | 695 |  |  | — |  |  | — |  |  | 4,772 |
Total |  | 1,636 |  |  | 1,000 |  |  | 1,259 |  |  | — |  |  | 182 |  |  | 695 |  |  | — |  |  | — |  |  | 4,772 |
Commercial construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 2,982 |  |  | 28,518 |  |  | 23,512 |  |  | — |  |  | 11,231 |  |  | 5,897 |  |  | — |  |  | — |  |  | 72,140 |
Total |  | 2,982 |  |  | 28,518 |  |  | 23,512 |  |  | — |  |  | 11,231 |  |  | 5,897 |  |  | — |  |  | — |  |  | 72,140 |
Residential construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 5,099 |  |  | — |  |  | — |  |  | 3,914 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,013 |
Total |  | 5,099 |  |  | — |  |  | — |  |  | 3,914 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,013 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 5,686 |  |  | 4,814 |  |  | 2,911 |  |  | 6,148 |  |  | 2,240 |  |  | 6,559 |  |  | 1,308 |  |  | — |  |  | 29,666 |
Total |  | 5,686 |  |  | 4,814 |  |  | 2,911 |  |  | 6,148 |  |  | 2,240 |  |  | 6,559 |  |  | 1,308 |  |  | — |  |  | 29,666 |
Farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 900 |  |  | 2,074 |  |  | 7,114 |  |  | 11,761 |  |  | 7,129 |  |  | 18,552 |  |  | — |  |  | — |  |  | 47,530 |
Watch |  | — |  |  | — |  |  | 799 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 502 |  |  | 1,301 |
Total |  | 900 |  |  | 2,074 |  |  | 7,913 |  |  | 11,761 |  |  | 7,129 |  |  | 18,552 |  |  | — |  |  | 502 |  |  | 48,831 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 10,976 |  |  | 24,789 |  |  | 24,675 |  |  | 11,212 |  |  | 10,608 |  |  | 17,313 |  |  | 41,113 |  |  | — |  |  | 140,686 |
Watch |  | — |  |  | 193 |  |  | 9,661 |  |  | 2,591 |  |  | 97 |  |  | 1,338 |  |  | — |  |  | — |  |  | 13,880 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 60 |  |  | — |  |  | — |  |  | 60 |
Total |  | 10,976 |  |  | 24,982 |  |  | 34,336 |  |  | 13,803 |  |  | 10,705 |  |  | 18,711 |  |  | 41,113 |  |  | — |  |  | 154,626 |
Unsecured |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 2,394 |  |  | 4,782 |  |  | 3,292 |  |  | 4,260 |  |  | 5,322 |  |  | 1,883 |  |  | 1,280 |  |  | — |  |  | 23,213 |
Total |  | 2,394 |  |  | 4,782 |  |  | 3,292 |  |  | 4,260 |  |  | 5,322 |  |  | 1,883 |  |  | 1,280 |  |  | — |  |  | 23,213 |
Consumer and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 98,048 |  |  | 38,134 |  |  | 9,468 |  |  | 6,874 |  |  | 2 |  |  | 250 |  |  | — |  |  | — |  |  | 152,776 |
Watch |  | — |  |  | — |  |  | 15 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15 |
Substandard |  | — |  |  | — |  |  | 10 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10 |
Total |  | 98,048 |  |  | 38,134 |  |  | 9,493 |  |  | 6,874 |  |  | 2 |  |  | 250 |  |  | — |  |  | — |  |  | 152,801 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 378,566 |  |  | 427,354 |  |  | 1,006,543 |  |  | 695,870 |  |  | 268,201 |  |  | 381,342 |  |  | 48,580 |  |  | — |  |  | 3,206,456 |
Watch |  | 644 |  |  | 193 |  |  | 28,209 |  |  | 21,954 |  |  | 4,767 |  |  | 1,678 |  |  | — |  |  | 502 |  |  | 57,947 |
Substandard |  | — |  |  | — |  |  | 10 |  |  | — |  |  | — |  |  | 1,878 |  |  | — |  |  | — |  |  | 1,888 |
Total |  | $ | 379,210 |  |  | $ | 427,547 |  |  | $ | 1,034,762 |  |  | $ | 717,824 |  |  | $ | 272,968 |  |  | $ | 384,898 |  |  | $ | 48,580 |  |  | $ | 502 |  |  | $ | 3,266,291 |
Table 4.2: Loans by Risk Category and Vintage (continued)
|  | Amortized Cost Basis by Origination Year as of December 31, 2023 |  |  |  |  |  |
(in thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans |  | Revolving Converted to Term |  | Total
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 329,876 |  |  | $ | 992,181 |  |  | $ | 714,965 |  |  | $ | 238,655 |  |  | $ | 128,424 |  |  | $ | 247,030 |  |  | $ | 4,685 |  |  | $ | — |  |  | $ | 2,655,816 |
Watch |  | — |  |  | 8,534 |  |  | 6,274 |  |  | 4,727 |  |  | 574 |  |  | 4,896 |  |  | — |  |  | — |  |  | 25,005 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,890 |  |  | — |  |  | — |  |  | 1,890 |
Total |  | 329,876 |  |  | 1,000,715 |  |  | 721,239 |  |  | 243,382 |  |  | 128,998 |  |  | 253,816 |  |  | 4,685 |  |  | — |  |  | 2,682,711 |
Commercial land and development |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 11,388 |  |  | 3,229 |  |  | — |  |  | 184 |  |  | — |  |  | 733 |  |  | — |  |  | — |  |  | 15,534 |
Total |  | 11,388 |  |  | 3,229 |  |  | — |  |  | 184 |  |  | — |  |  | 733 |  |  | — |  |  | — |  |  | 15,534 |
Commercial construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 9,074 |  |  | 32,154 |  |  | 4,189 |  |  | 11,230 |  |  | — |  |  | 5,897 |  |  | — |  |  | — |  |  | 62,544 |
Total |  | 9,074 |  |  | 32,154 |  |  | 4,189 |  |  | 11,230 |  |  | — |  |  | 5,897 |  |  | — |  |  | — |  |  | 62,544 |
Residential construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 2,412 |  |  | 9,128 |  |  | 3,912 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,452 |
Total |  | 2,412 |  |  | 9,128 |  |  | 3,912 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,452 |
Residential |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 4,838 |  |  | 3,964 |  |  | 6,244 |  |  | 2,279 |  |  | 1,182 |  |  | 5,995 |  |  | 1,420 |  |  | — |  |  | 25,922 |
Total |  | 4,838 |  |  | 3,964 |  |  | 6,244 |  |  | 2,279 |  |  | 1,182 |  |  | 5,995 |  |  | 1,420 |  |  | — |  |  | 25,922 |
Farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 2,311 |  |  | 8,037 |  |  | 12,678 |  |  | 7,860 |  |  | 12,365 |  |  | 8,391 |  |  | 4 |  |  | — |  |  | 51,646 |
Total |  | 2,311 |  |  | 8,037 |  |  | 12,678 |  |  | 7,860 |  |  | 12,365 |  |  | 8,391 |  |  | 4 |  |  | — |  |  | 51,646 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 25,299 |  |  | 28,879 |  |  | 14,304 |  |  | 12,164 |  |  | 9,918 |  |  | 10,363 |  |  | 50,020 |  |  | — |  |  | 150,947 |
Watch |  | 189 |  |  | 8,802 |  |  | 2,705 |  |  | 63 |  |  | 154 |  |  | 941 |  |  | 1,727 |  |  | — |  |  | 14,581 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 45 |  |  | 27 |  |  | — |  |  | — |  |  | 72 |
Total |  | 25,488 |  |  | 37,681 |  |  | 17,009 |  |  | 12,227 |  |  | 10,117 |  |  | 11,331 |  |  | 51,747 |  |  | — |  |  | 165,600 |
Unsecured |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 3,891 |  |  | 3,782 |  |  | 4,902 |  |  | 5,963 |  |  | 2,240 |  |  | 7 |  |  | 3,072 |  |  | — |  |  | 23,857 |
Total |  | 3,891 |  |  | 3,782 |  |  | 4,902 |  |  | 5,963 |  |  | 2,240 |  |  | 7 |  |  | 3,072 |  |  | — |  |  | 23,857 |
Consumer and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 18,489 |  |  | 11,359 |  |  | 8,264 |  |  | 6 |  |  | — |  |  | 307 |  |  | — |  |  | — |  |  | 38,425 |
Watch |  | — |  |  | 16 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16 |
Substandard |  | — |  |  | 12 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 12 |
Total |  | 18,489 |  |  | 11,387 |  |  | 8,264 |  |  | 6 |  |  | — |  |  | 307 |  |  | — |  |  | — |  |  | 38,453 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 407,578 |  |  | 1,092,713 |  |  | 769,458 |  |  | 278,341 |  |  | 154,129 |  |  | 278,723 |  |  | 59,201 |  |  | — |  |  | 3,040,143 |
Watch |  | 189 |  |  | 17,352 |  |  | 8,979 |  |  | 4,790 |  |  | 728 |  |  | 5,837 |  |  | 1,727 |  |  | — |  |  | 39,602 |
Substandard |  | — |  |  | 12 |  |  | — |  |  | — |  |  | 45 |  |  | 1,917 |  |  | — |  |  | — |  |  | 1,974 |
Total |  | $ | 407,767 |  |  | $ | 1,110,077 |  |  | $ | 778,437 |  |  | $ | 283,131 |  |  | $ | 154,902 |  |  | $ | 286,477 |  |  | $ | 60,928 |  |  | $ | — |  |  | $ | 3,081,719 |
Management regularly reviews the Company’s loans for accuracy of risk grades whenever new information is received. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals generally ranging from monthly to annually depending on credit size, risk, and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. Management monitors construction loans monthly and reviews consumer loans based on delinquency. Management also reviews loans graded “watch” or worse, regardless of loan type, no less than quarterly. Table 4.3 shows the age analysis of past due loans by class as of the dates shown.
Table 4.3: Age Analysis of Past Due Loans by Class
(in thousands) |  | Past Due |  |  |  |  |  |
| 30-59 Days |  | 60-89 Days |  | Greater Than 90 Days |  | Total Past Due |  | Current |  | Total Loans Receivable
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,771,229 |  |  | $ | 2,771,229 |
Commercial land and development |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,772 |  |  | 4,772 |
Commercial construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 72,140 |  |  | 72,140 |
Residential construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 9,013 |  |  | 9,013 |
Residential |  | — |  |  | — |  |  | — |  |  | — |  |  | 29,666 |  |  | 29,666 |
Farmland |  | — |  |  | — |  |  | — |  |  | — |  |  | 48,831 |  |  | 48,831 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 549 |  |  | — |  |  | — |  |  | 549 |  |  | 154,077 |  |  | 154,626 |
Unsecured |  | — |  |  | — |  |  | — |  |  | — |  |  | 23,213 |  |  | 23,213 |
Consumer and other |  | 80 |  |  | — |  |  | — |  |  | 80 |  |  | 152,721 |  |  | 152,801 |
Total |  | $ | 629 |  |  | $ | — |  |  | $ | — |  |  | $ | 629 |  |  | $ | 3,265,662 |  |  | $ | 3,266,291 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,682,711 |  |  | $ | 2,682,711 |
Commercial land and development |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,534 |  |  | 15,534 |
Commercial construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 62,544 |  |  | 62,544 |
Residential construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 15,452 |  |  | 15,452 |
Residential |  | — |  |  | — |  |  | — |  |  | — |  |  | 25,922 |  |  | 25,922 |
Farmland |  | — |  |  | — |  |  | — |  |  | — |  |  | 51,646 |  |  | 51,646 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | — |  |  | — |  |  | — |  |  | — |  |  | 165,600 |  |  | 165,600 |
Unsecured |  | — |  |  | — |  |  | — |  |  | — |  |  | 23,857 |  |  | 23,857 |
Consumer and other |  | 76 |  |  | — |  |  | — |  |  | 76 |  |  | 38,377 |  |  | 38,453 |
Total |  | $ | 76 |  |  | $ | — |  |  | $ | — |  |  | $ | 76 |  |  | $ | 3,081,643 |  |  | $ | 3,081,719 |
There were no loans greater than 90 days past due and still accruing interest income as of June 30, 2024 or December 31, 2023. No collateral dependent loans were in process of foreclosure at June 30, 2024 or December 31, 2023. Non-accrual loans, segregated by class, as of June 30, 2024 and December 31, 2023 are shown in Table 4.4.
Table 4.4: Nonaccrual Loans
(in thousands) |  | June 30, 2024 |  | December 31, 2023
Real estate: |  |  |  |
Commercial |  | $ | 1,821 |  |  | $ | 1,893 |
Commercial: |  |  |  |
Secured |  | 60 |  |  | 72 |
Total non-accrual loans |  | $ | 1,881 |  |  | $ | 1,965 |
No interest income was recognized on non-accrual loans in the three and six months ended June 30, 2024 or June 30, 2023. Non-accrual real estate loans did not have an allowance for credit losses as of June 30, 2024. Interest income can be recognized on non-accrual loans in cases where resolution occurs through a sale or full payment is received on the non-accrual loan. The amount of foregone interest income related to non-accrual loans was $38.2 thousand and $77.4 thousand for the three and six months ended June 30, 2024, respectively, as compared to $26.1 thousand and $35.3 thousand for the three and six months ended June 30, 2023, respectively. Allowance for Credit Losses Table 4.5 discloses activity in the allowance for credit losses for the periods indicated.
Table 4.5: Allowance for Credit Losses
(in thousands) |  | Beginning Balance |  | Effect of Adoption of ASC 326 |  | Charge-offs |  | Recoveries |  | Provision (Benefit) |  | Ending Balance
Three months ended June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 28,895 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (4,187) |  |  | $ | 24,708 |
Commercial land and development |  | 164 |  |  | — |  |  | — |  |  | — |  |  | (92) |  |  | 72 |
Commercial construction |  | 697 |  |  | — |  |  | — |  |  | — |  |  | 400 |  |  | 1,097 |
Residential construction |  | 114 |  |  | — |  |  | — |  |  | — |  |  | (14) |  |  | 100 |
Residential |  | 164 |  |  | — |  |  | — |  |  | — |  |  | 31 |  |  | 195 |
Farmland |  | 438 |  |  | — |  |  | — |  |  | — |  |  | (36) |  |  | 402 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 3,262 |  |  | — |  |  | (1,239) |  |  | 57 |  |  | 5,306 |  |  | 7,386 |
Unsecured |  | 259 |  |  | — |  |  | (36) |  |  | — |  |  | (9) |  |  | 214 |
Consumer and other |  | 660 |  |  | — |  |  | (72) |  |  | 93 |  |  | 551 |  |  | 1,232 |
Total |  | $ | 34,653 |  |  | $ | — |  |  | $ | (1,347) |  |  | $ | 150 |  |  | $ | 1,950 |  |  | $ | 35,406 |
Table 4.5: Allowance for Credit Losses (continued)
(in thousands) |  | Beginning Balance |  | Effect of Adoption of ASC 326 |  | Charge-offs |  | Recoveries |  | Provision (Benefit) |  | Ending Balance
Three months ended June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 27,119 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 434 |  |  | $ | 27,553 |
Commercial land and development |  | 226 |  |  | — |  |  | — |  |  | — |  |  | (42) |  |  | 184 |
Commercial construction |  | 1,438 |  |  | — |  |  | — |  |  | — |  |  | (226) |  |  | 1,212 |
Residential construction |  | 175 |  |  | — |  |  | — |  |  | — |  |  | 42 |  |  | 217 |
Residential |  | 181 |  |  | — |  |  | — |  |  | — |  |  | (29) |  |  | 152 |
Farmland |  | 219 |  |  | — |  |  | — |  |  | — |  |  | 17 |  |  | 236 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 4,258 |  |  | — |  |  | (1,124) |  |  | 47 |  |  | 570 |  |  | 3,751 |
Unsecured |  | 152 |  |  | — |  |  | — |  |  | — |  |  | 57 |  |  | 209 |
Consumer and other |  | 404 |  |  | — |  |  | (137) |  |  | 106 |  |  | 97 |  |  | 470 |
Total |  | $ | 34,172 |  |  | $ | — |  |  | $ | (1,261) |  |  | $ | 153 |  |  | $ | 920 |  |  | $ | 33,984 |
Six months ended June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 29,015 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (4,307) |  |  | $ | 24,708 |
Commercial land and development |  | 178 |  |  | — |  |  | — |  |  | — |  |  | (106) |  |  | 72 |
Commercial construction |  | 718 |  |  | — |  |  | — |  |  | — |  |  | 379 |  |  | 1,097 |
Residential construction |  | 89 |  |  | — |  |  | — |  |  | — |  |  | 11 |  |  | 100 |
Residential |  | 151 |  |  | — |  |  | — |  |  | — |  |  | 44 |  |  | 195 |
Farmland |  | 399 |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | 402 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 3,314 |  |  | — |  |  | (2,237) |  |  | 239 |  |  | 6,070 |  |  | 7,386 |
Unsecured |  | 189 |  |  | — |  |  | (70) |  |  | — |  |  | 95 |  |  | 214 |
Consumer and other |  | 378 |  |  | — |  |  | (143) |  |  | 186 |  |  | 811 |  |  | 1,232 |
Total |  | $ | 34,431 |  |  | $ | — |  |  | $ | (2,450) |  |  | $ | 425 |  |  | $ | 3,000 |  |  | $ | 35,406 |
Six months ended June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 19,216 |  |  | $ | 7,606 |  |  | $ | — |  |  | $ | — |  |  | $ | 731 |  |  | $ | 27,553 |
Commercial land and development |  | 54 |  |  | 74 |  |  | — |  |  | — |  |  | 56 |  |  | 184 |
Commercial construction |  | 645 |  |  | 882 |  |  | — |  |  | — |  |  | (315) |  |  | 1,212 |
Residential construction |  | 49 |  |  | 81 |  |  | — |  |  | — |  |  | 87 |  |  | 217 |
Residential |  | 175 |  |  | 3 |  |  | — |  |  | — |  |  | (26) |  |  | 152 |
Farmland |  | 644 |  |  | (396) |  |  | — |  |  | — |  |  | (12) |  |  | 236 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Secured |  | 7,098 |  |  | (3,060) |  |  | (1,611) |  |  | 139 |  |  | 1,185 |  |  | 3,751 |
Unsecured |  | 116 |  |  | 37 |  |  | — |  |  | — |  |  | 56 |  |  | 209 |
Consumer and other |  | 347 |  |  | 80 |  |  | (522) |  |  | 507 |  |  | 58 |  |  | 470 |
Unallocated |  | 45 |  |  | (45) |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 28,389 |  |  | $ | 5,262 |  |  | $ | (2,133) |  |  | $ | 646 |  |  | $ | 1,820 |  |  | $ | 33,984 |
Unfunded Loan Commitment Reserves Unfunded loan commitment reserves are included in “Interest payable and other liabilities” in the unaudited consolidated balance sheets. Provisions for unfunded loan commitments are included in “Provision for credit losses” in the unaudited consolidated statements of income.
Table 4.6: Unfunded Loan Commitment Reserves
|  | Three months ended |  | Six months ended
(in thousands) |  | June 30, 2024 |  | June 30, 2023 |  | June 30, 2024 |  | June 30, 2023
Balance at beginning of period |  | $ | 1,097 |  |  | $ | 1,217 |  |  | $ | 1,247 |  |  | $ | 125 |
Effect of adoption of ASC 326 |  | — |  |  | — |  |  | — |  |  | 1,092 |
Provision |  | 50 |  |  | 330 |  |  | (100) |  |  | 330 |
Balance at end of period |  | $ | 1,147 |  |  | $ | 1,547 |  |  | $ | 1,147 |  |  | $ | 1,547 |
Pledged Loans The Company’s FHLB line of credit is secured under terms of a collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1.6 billion and $1.7 billion at June 30, 2024 and December 31, 2023, respectively. In addition, the Company pledges eligible tenants in common loans, which totaled $1.2 billion at June 30, 2024 and December 31, 2023, to secure its borrowing capacity with the Federal Reserve Discount Window. See Note 6, Long Term Debt and Other Borrowings, for further discussion of these borrowings.

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