Loans

6 Months Ended

Jun. 30, 2024

Loans:

Loan balances were as follows:


(In Thousands of Dollars)	June 30, 2024			December 31, 2023
Commercial real estate
Owner occupied	$	389,882		$	399,273
Non-owner occupied		703,316			712,315
Farmland		205,437			202,950
Other		255,477			224,218
Commercial
Commercial and industrial		343,694			346,354
Agricultural		59,598			58,338
Residential real estate
1-4 family residential		849,561			843,697
Home equity lines of credit		151,511			142,441
Consumer
Indirect		238,437			226,815
Direct		21,700			23,805
Other		8,469			9,164
Total loans	$	3,227,082		$	3,189,370
Net deferred loan costs		10,287			8,757
Allowance for credit losses		(33,991	)		(34,440	)
Net loans	$	3,203,378		$	3,163,687

Allowance for credit loss activity

The following tables present the activity in the allowance for credit losses by portfolio segment for the three and six month periods ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	17,481		$	4,543		$	6,840		$	4,295		$	33,159
(Credit) Provision for credit losses		(258	)		428			628			597			1,395
Loans charged off		0			(372	)		(51	)		(238	)		(661	)
Recoveries		0			29			5			64			98
Total ending allowance balance	$	17,223		$	4,628		$	7,422		$	4,718		$	33,991

Six Months Ended June 30, 2024


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	18,150		$	5,087		$	6,916		$	4,287		$	34,440
(Credit) Provision for credit losses		(799	)		490			559			875			1,125
Loans charged off		(146	)		(1,015	)		(81	)		(701	)		(1,943	)
Recoveries		18			66			28			257			369
Total ending allowance balance	$	17,223		$	4,628		$	7,422		$	4,718		$	33,991

Three Months Ended June 30, 2023


(In Thousands of Dollars)	Commercial Real Estate			Commercial			Residential Real Estate			Consumer			Total
Allowance for credit losses
Beginning balance	$	19,819		$	5,230		$	6,732		$	4,230		$	36,011
PCD ACL on loans acquired		0			0			0			0			0
(Credit) Provision for credit losses		(1,125	)		639			131			100			(255	)
Loans charged off		(157	)		(591	)		(11	)		(212	)		(971	)
Recoveries		0			17			14			141			172
Total ending allowance balance	$	18,537		$	5,295		$	6,866		$	4,259		$	34,957

Six Months Ended June 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		3,003			1,683			2,529			835			8,050
Loans charged off		(157	)		(734	)		(94	)		(455	)		(1,440	)
Recoveries		1			22			46			301			370
Total ending allowance balance	$	18,537		$	5,295		$	6,866		$	4,259		$	34,957

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 June 30, 2024. As of June 30, 2024, 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 June 30, 2023 to June 30, 2024 is largely attributed to adjustments made to the Commercial Staffing qualitative factor, release of reserves related to loans transferred to held for sale and reclassification of construction loan balances that were placed into their permanent loan pool. These factors were partially offset by increases to loan balances and increases in the Company's loss rates that anchor the qualitative factors and impact the quantitative reserve.

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of June 30, 2024 and December 31, 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
June 30, 2024
Commercial real estate
Owner occupied	$	1,694	$	762	$	0
Non-owner occupied		16		146		0
Farmland		1,839		7		0
Other		0		70		0
Commercial
Commercial and industrial		944		1,311		432
Agricultural		184		247		0
Residential real estate
1-4 family residential		373		2,592		1,412
Home equity lines of credit		162		153		0
Consumer
Indirect		57		226		111
Direct		66		45		20
Other		0		1		0
Total loans	$	5,335	$	5,560	$	1,975


(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
December 31, 2023
Commercial real estate
Owner occupied	$	1,804	$	830	$	0
Non-owner occupied		19		1,491		0
Farmland		1,957		9		0
Other		0		80		0
Commercial
Commercial and industrial		394		1,408		0
Agricultural		203		317		0
Residential real estate
1-4 family residential		348		3,009		460
Home equity lines of credit		240		210		69
Consumer
Indirect		22		300		125
Direct		65		69		1
Other		0		5		0
Total loans	$	5,052	$	7,728	$	655

The above table for the period ending December 31, 2023 does not include a $1.63 million non-owner occupied commercial real estate loan that was held-for-sale and in nonaccrual status. There were no nonaccrual or past due loans related to loans held-for-sale at June 30, 2024.

The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2024 and December 31, 2023:


(In Thousands of Dollars)	Real Estate		Business Assets		Vehicles		Cash
June 30, 2024
Commercial real estate
Owner occupied	$	1,694	$	0	$	0	$	0
Non-owner occupied		16		0		0		0
Farmland		1,839		0		0		0
Other		0		0		0		0
Commercial
Commercial and industrial		86		1,044		0		0
Agricultural		0		184		0		0
Residential real estate
1-4 family residential		3,277		0		0		0
Home equity lines of credit		242		0		0		0
Consumer
Indirect		0		0		99		0
Direct		0		0		14		66
Other		0		0		0		0
Total loans	$	7,154	$	1,228	$	113	$	66


(In Thousands of Dollars)	Real Estate		Business Assets		Vehicles		Cash
December 31, 2023
Commercial real estate
Owner occupied	$	1,804	$	0	$	0	$	0
Non-owner occupied		1,335		0		0		0
Farmland		1,957		0		0		0
Other		0		0		0		0
Commercial
Commercial and industrial		94		867		0		0
Agricultural		0		203		0		0
Residential real estate
1-4 family residential		3,352		0		0		0
Home equity lines of credit		294		0		0		0
Consumer
Indirect		0		0		53		0
Direct		0		0		19		66
Other		0		0		0		0
Total loans	$	8,836	$	1,070	$	72	$	66

The following tables present the aging of the recorded investment in past due loans as of June 30, 2024 and December 31, 2023 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
June 30, 2024
Commercial real estate
Owner occupied	$	647	$	1,070	$	2,456	$	4,173	$	385,506	$	389,679
Non-owner occupied		13		0		162		175		702,678		702,853
Farmland		145		0		1,846		1,991		203,233		205,224
Other		528		0		70		598		254,496		255,094
Commercial
Commercial and industrial		636		347		2,687		3,670		341,644		345,314
Agricultural		290		72		431		793		59,649		60,442
Residential real estate
1-4 family residential		11,346		946		4,377		16,669		833,124		849,793
Home equity lines of credit		367		52		315		734		150,851		151,585
Consumer
Indirect		1,467		474		394		2,335		244,846		247,181
Direct		110		34		131		275		21,457		21,732
Other		1		1		1		3		8,469		8,472
Total loans	$	15,550	$	2,996	$	12,870	$	31,416	$	3,205,953	$	3,237,369


(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, 2023
Commercial real estate
Owner occupied	$	302	$	293	$	2,634	$	3,229	$	395,799	$	399,028
Non-owner occupied		90		0		1,510		1,600		710,195		711,795
Farmland		365		0		1,966		2,331		200,395		202,726
Other		0		0		80		80		223,697		223,777
Commercial
Commercial and industrial		540		199		1,802		2,541		345,278		347,819
Agricultural		292		40		520		852		58,223		59,075
Residential real estate
1-4 family residential		6,819		4,488		3,817		15,124		828,437		843,561
Home equity lines of credit		729		34		519		1,282		141,189		142,471
Consumer
Indirect		2,045		289		447		2,781		232,105		234,886
Direct		153		23		135		311		23,514		23,825
Other		4		0		5		9		9,155		9,164
Total loans	$	11,339	$	5,366	$	13,435	$	30,140	$	3,167,987	$	3,198,127