Loans

9 Months Ended

Sep. 30, 2023

Loans:

Loan balances were as follows:


(In Thousands of Dollars)	September 30, 2023			December 31, 2022
Commercial real estate
Owner occupied	$	371,356		$	330,768
Non-owner occupied		711,391			563,652
Farmland		200,148			188,850
Other		213,100			133,630
Commercial
Commercial and industrial		357,691			293,643
Agricultural		61,590			58,087
Residential real estate
1-4 family residential		842,729			475,791
Home equity lines of credit		140,772			132,179
Consumer
Indirect		228,377			197,125
Direct		24,900			16,421
Other		7,859			7,714
Total loans	$	3,159,913		$	2,397,860
Net deferred loan costs		8,641			6,890
Allowance for credit losses		(34,753	)		(26,978	)
Net loans	$	3,133,801		$	2,377,772

Allowance for credit loss activity

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and nine month periods ended September 30, 2023 and 2022:

Three Months Ended September 30, 2023


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	18,537		$	5,295		$	6,866		$	4,259		$	34,957
PCD ACL on loans acquired		0			0			0			0			0
(Credit) Provision for credit losses		182			(45	)		13			32			182
Loans charged off		(3	)		(154	)		(157	)		(211	)		(525	)
Recoveries		0			6			12			121			139
Total ending allowance balance	$	18,716		$	5,102		$	6,734		$	4,201		$	34,753

Nine Months Ended September 30, 2023


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	14,840		$	4,186		$	4,374		$	3,578		$	26,978
PCD ACL on loans acquired		850			138			11			0			999
Provision for credit losses		3,185			1,638			2,542			867			8,232
Loans charged off		(160	)		(888	)		(251	)		(666	)		(1,965	)
Recoveries		1			28			58			422			509
Total ending allowance balance	$	18,716		$	5,102		$	6,734		$	4,201		$	34,753

Three Months Ended September 30, 2022


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	14,859		$	3,893		$	4,915		$	3,787		$	27,454
(Credit) Provision for credit losses		(47	)		260			2			218			433
Loans charged off		0			(473	)		(9	)		(301	)		(783	)
Recoveries		1			2			41			134			178
Total ending allowance balance	$	14,813		$	3,682		$	4,949		$	3,838		$	27,282

Nine Months Ended September 30, 2022


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	15,879		$	4,949		$	4,870		$	3,688		$	29,386
(Credit) Provision for credit losses		(1,068	)		601			53			399			(15	)
Loans charged off		0			(1,878	)		(43	)		(630	)		(2,551	)
Recoveries		2			10			69			381			462
Total ending allowance balance	$	14,813		$	3,682		$	4,949		$	3,838		$	27,282

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Company's historical loss experience from December 31, 2011 to September 30, 2023. As of September 30, 2023, the Company expects that the markets in which it operates will experience minimal changes to economic conditions, stable trend in unemployment rate, and a level trend of delinquencies. Management adjusted historical loss experience for these expectations. No reversion adjustments were necessary, as the starting point for the Company's estimate was a cumulative loss rate covering the expected contractual term of the portfolio. While there are many factors that go into the calculation of the allowance for credit losses, the change in the balances from September 30, 2022 to September 30, 2023 is largely attributed to the Emlenton merger.

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of September 30, 2023:


(In Thousands of Dollars)	Nonaccrual with no allowance for credit loss		Nonaccrual with an allowance for credit loss		Loans past due over 89 days still accruing
September 30, 2023
Commercial real estate
Owner occupied	$	671	$	460	$	0
Non-owner occupied		1,848		4,876		0
Farmland		2,006		11		0
Other		0		90		0
Commercial
Commercial and industrial		321		1,472		0
Agricultural		213		272		0
Residential real estate
1-4 family residential		382		3,526		1,020
Home equity lines of credit		264		228		188
Consumer
Indirect		25		225		117
Direct		65		66		17
Other		0		5		0
Total loans	$	5,795	$	11,231	$	1,342

The following table presents the recorded investment in nonaccrual and loans past due 90 days or more still on accrual by class of loans as of December 31, 2022:


	December 31, 2022
(In Thousands of Dollars)	Nonaccrual		Loans Past Due 90 Days or More Still Accruing
Commercial real estate
Owner occupied	$	993	$	0
Non-owner occupied		3,031		0
Farmland		2,183		0
Other		33		0
Commercial
Commercial and industrial		3,840		50
Agricultural		299		0
Residential real estate
1-4 family residential		2,703		310
Home equity lines of credit		735		58
Consumer
Indirect		313		62
Direct		179		12
Other		2		0
Total loans	$	14,311	$	492

The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of September 30, 2023:


(In Thousands of Dollars)	Real Estate		Business Assets		Vehicles		Cash
September 30, 2023
Commercial real estate
Owner occupied	$	793	$	0	$	0	$	0
Non-owner occupied		4,956		0		0		0
Farmland		2,006		0		0		0
Other		0		0		0		0
Commercial
Commercial and industrial		0		1,144		0		0
Agricultural		0		213		0		0
Residential real estate
1-4 family residential		3,288		0		0		0
Home equity lines of credit		397		0		0		0
Consumer
Indirect		0		0		59		0
Direct		0		0		22		66
Other		0		0		0		0
Total loans	$	11,440	$	1,357	$	81	$	66

The following tables present the aging of the recorded investment in past due loans as of September 30, 2023 and December 31, 2022 by class of loans.


(In Thousands of Dollars)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
September 30, 2023
Commercial real estate
Owner occupied	$	475	$	294	$	1,131	$	1,900	$	369,200	$	371,100
Non-owner occupied		0		0		6,724		6,724		704,160		710,884
Farmland		900		0		2,017		2,917		197,009		199,926
Other		0		0		90		90		212,572		212,662
Commercial
Commercial and industrial		660		289		1,793		2,742		356,323		359,065
Agricultural		328		10		485		823		61,501		62,324
Residential real estate
1-4 family residential		7,204		875		4,928		13,007		829,480		842,487
Home equity lines of credit		373		0		680		1,053		139,751		140,804
Consumer
Indirect		1,471		267		367		2,105		234,415		236,520
Direct		126		34		148		308		24,616		24,924
Other		7		1		5		13		7,845		7,858
Total loans	$	11,544	$	1,770	$	18,368	$	31,682	$	3,136,872	$	3,168,554


(In Thousands of Dollars)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due and Nonaccrual		Total Past Due		Loans Not Past Due		Total
December 31, 2022
Commercial real estate
Owner occupied	$	159	$	0	$	993	$	1,152	$	329,305	$	330,457
Non-owner occupied		0		0		3,031		3,031		560,013		563,044
Farmland		0		0		2,183		2,183		186,399		188,582
Other		0		0		33		33		133,288		133,321
Commercial
Commercial and industrial		1,034		185		3,890		5,109		289,297		294,406
Agricultural		104		20		299		423		58,166		58,589
Residential real estate
1-4 family residential		4,247		1,775		3,013		9,035		466,313		475,348
Home equity lines of credit		115		92		793		1,000		131,209		132,209
Consumer
Indirect		1,267		298		375		1,940		202,683		204,623
Direct		234		70		191		495		15,962		16,457
Other		0		5		2		7		7,707		7,714
Total loans	$	7,160	$	2,445	$	14,803	$	24,408	$	2,380,342	$	2,404,750