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Note 3 - Loans and Allowance for Loan Losses | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Financing Receivables [Text Block] | Note 3 – Loans and Allowance for Loan Losses The Bank’s loan portfolio as of December 31 was as follows:
(Dollars in thousands) |  |  |  |  |  |  |  |
|  | 2022 |  |  | 2021 |
Agricultural |  | $ | 64,159 |  |  | $ | 64,819 |
Commercial and industrial |  |  | 210,210 |  |  |  | 203,024 |
Consumer |  |  | 39,808 |  |  |  | 35,174 |
Real estate - commercial |  |  | 630,953 |  |  |  | 525,884 |
Real estate - construction |  |  | 14,736 |  |  |  | 19,066 |
Real estate - residential |  |  | 229,916 |  |  |  | 168,881 |
Loans, gross |  | $ | 1,189,782 |  |  | $ | 1,016,848 |
Allowance for Loan Losses |  |  | (7,619 | ) |  |  | (7,688 | )
Loans, net |  | $ | 1,182,163 |  |  | $ | 1,009,160 |
ChoiceOne manages its credit risk through the use of its loan policy and its loan approval process and by monitoring of loan credit performance. The loan approval process for commercial loans involves individual and group approval authorities. Individual authority levels are based on the experience of the lender. Group authority approval levels can consist of an internal loan committee that includes the Bank’s President or Senior Lender and other loan officers for loans that exceed individual approval levels, or a loan committee of the Board of Directors for larger commercial loans. Most consumer loans are approved by individual loan officers based on standardized underwriting criteria, with larger consumer loans subject to approval by the internal loan committee. Ongoing credit review of commercial loans is the responsibility of the loan officers. ChoiceOne’s internal credit committee meets at least monthly and reviews loans with payment issues and loans with a risk rating of 6, 7, or 8. Risk ratings of commercial loans are reviewed periodically and adjusted if needed. ChoiceOne’s consumer loan portfolio is primarily monitored on an exception basis. Loans where payments are past due are turned over to the applicable Bank’s collection department, which works with the borrower to bring payments current or take other actions when necessary. In addition to internal reviews of credit performance, ChoiceOne contracts with a third party for independent loan review that monitors the loan approval process and the credit quality of the loan portfolio. The table below details the outstanding balances of the County Bank Corp. acquired portfolio and the acquisition fair value adjustments at acquisition date:
(Dollars in thousands) |  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Loans acquired - contractual payments |  | $ | 7,729 |  |  | $ | 387,394 |  |  | $ | 395,123 |
Nonaccretable difference |  |  | (2,928 | ) |  |  | - |  |  |  | (2,928 | )
Expected cash flows |  |  | 4,801 |  |  |  | 387,394 |  |  |  | 392,195 |
Accretable yield |  |  | (185 | ) |  |  | (1,894 | ) |  |  | (2,079 | )
Carrying balance at acquisition date |  | $ | 4,616 |  |  | $ | 385,500 |  |  | $ | 390,116 |
The table below presents a roll-forward of the accretable yield on County Bank Corp. acquired loans for the year ended December 31, 2022:
(Dollars in thousands) |  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Balance, January 1, 2019 |  | $ | - |  |  | $ | - |  |  | $ | - |
Merger with County Bank Corp. on October 1, 2019 |  |  | 185 |  |  |  | 1,894 |  |  |  | 2,079 |
Accretion October 1, 2019 through December 31, 2019 |  |  | - |  |  |  | (75 | ) |  |  | -75 |
Balance January 1, 2020 |  |  | 185 |  |  |  | 1,819 |  |  |  | 2,004 |
Accretion January 1, 2020 through December 31, 2020 |  |  | (50 | ) |  |  | (295 | ) |  |  | (345 | )
Balance January 1, 2021 |  |  | 135 |  |  |  | 1,524 |  |  |  | 1,659 |
Accretion January 1, 2021 through December 31, 2021 |  |  | (247 | ) |  |  | (348 | ) |  |  | (595 | )
Transfer from non-accretable to accretable yield |  |  | 400 |  |  |  | - |  |  |  | 400 |
Balance January 1, 2022 |  |  | 288 |  |  |  | 1,176 |  |  |  | 1,464 |
Transfer from non-accretable to accretable yield |  |  | 2,192 |  |  |  | - |  |  |  | 2,192 |
Accretion January 1, 2022 through December 31, 2022 |  |  | (553 | ) |  |  | (98 | ) |  |  | (651 | )
Balance, December 31, 2022 |  | $ | 1,927 |  |  | $ | 1,078 |  |  | $ | 3,005 |
The table below details the outstanding balances of the Community Shores Bank Corporation acquired loan portfolio and the acquisition fair value adjustments at acquisition date:
(Dollars in thousands) |  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Loans acquired - contractual payments |  | $ | 20,491 |  |  | $ | 158,495 |  |  | $ | 178,986 |
Nonaccretable difference |  |  | (2,719 | ) |  |  | - |  |  |  | (2,719 | )
Expected cash flows |  |  | 17,772 |  |  |  | 158,495 |  |  |  | 176,267 |
Accretable yield |  |  | (869 | ) |  |  | (596 | ) |  |  | (1,465 | )
Carrying balance at acquisition date |  | $ | 16,903 |  |  | $ | 157,899 |  |  | $ | 174,802 |
The table below presents a roll-forward of the accretable yield on Community Shores Bank Corporation acquired loans for the year ended December 31, 2022:
(Dollars in thousands) |  | Acquired |  |  | Acquired |  |  | Acquired |
|  | Impaired |  |  | Non-impaired |  |  | Total |
Balance January 1, 2020 |  | $ | - |  |  | $ | - |  |  | $ | - |
Merger with Community Shores Bank Corporation on July 1, 2020 |  |  | 869 |  |  |  | 596 |  |  |  | 1,465 |
Accretion July 1, 2020 through December 31, 2020 |  |  | (26 | ) |  |  | (141 | ) |  |  | (167 | )
Balance, January 1, 2021 |  |  | 843 |  |  |  | 455 |  |  |  | 1,298 |
Accretion January 1, 2021 through December 31, 2021 |  |  | (321 | ) |  |  | (258 | ) |  |  | (579 | )
Balance January 1, 2022 |  |  | 522 |  |  |  | 197 |  |  |  | 719 |
Transfer from non-accretable to accretable yield |  |  | 1,086 |  |  |  | - |  |  |  | 1,086 |
Accretion January 1, 2022 through December 31, 2022 |  |  | (993 | ) |  |  | (197 | ) |  |  | (1,190 | )
Balance, December 31, 2022 |  | $ | 615 |  |  | $ | - |  |  | $ | 615 |
Activity in the allowance for loan losses and balances in the loan portfolio was as follows:
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Year Ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 448 |  |  | $ | 1,454 |  |  | $ | 290 |  |  | $ | 3,705 |  |  | $ | 110 |  |  | $ | 671 |  |  | $ | 1,010 |  |  | $ | 7,688 |
Charge-offs |  |  | — |  |  |  | (177 | ) |  |  | (496 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (673 | )
Recoveries |  |  | — |  |  |  | 143 |  |  |  | 206 |  |  |  | 3 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 354 |
Provision |  |  | (304 | ) |  |  | (59 | ) |  |  | 310 |  |  |  | 1,114 |  |  |  | (47 | ) |  |  | 233 |  |  |  | (997 | ) |  |  | 250 |
Ending balance |  | $ | 144 |  |  | $ | 1,361 |  |  | $ | 310 |  |  | $ | 4,822 |  |  | $ | 63 |  |  | $ | 906 |  |  | $ | 13 |  |  | $ | 7,619 |
Individually evaluated for impairment |  | $ | 2 |  |  | $ | 14 |  |  | $ | 1 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 131 |  |  | $ | — |  |  | $ | 153 |
Collectively evaluated for impairment |  | $ | 142 |  |  | $ | 1,347 |  |  | $ | 309 |  |  | $ | 4,817 |  |  | $ | 63 |  |  | $ | 775 |  |  | $ | 13 |  |  | $ | 7,466 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 23 |  |  | $ | 177 |  |  | $ | 7 |  |  | $ | 165 |  |  | $ | — |  |  | $ | 2,474 |  |  |  |  |  |  | $ | 2,846 |
Collectively evaluated for impairment |  |  | 64,136 |  |  |  | 206,074 |  |  |  | 39,793 |  |  |  | 622,131 |  |  |  | 14,736 |  |  |  | 225,792 |  |  |  |  |  |  |  | 1,172,662 |
Acquired with deteriorated credit quality |  |  | — |  |  |  | 3,959 |  |  |  | 8 |  |  |  | 8,657 |  |  |  | — |  |  |  | 1,650 |  |  |  |  |  |  |  | 14,274 |
Ending balance |  | $ | 64,159 |  |  | $ | 210,210 |  |  | $ | 39,808 |  |  | $ | 630,953 |  |  | $ | 14,736 |  |  | $ | 229,916 |  |  |  |  |  |  | $ | 1,189,782 |
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Year Ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 257 |  |  | $ | 1,327 |  |  | $ | 317 |  |  | $ | 4,178 |  |  | $ | 97 |  |  | $ | 1,300 |  |  | $ | 117 |  |  | $ | 7,593 |
Charge-offs |  |  | — |  |  |  | (195 | ) |  |  | (370 | ) |  |  | (111 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (676 | )
Recoveries |  |  | — |  |  |  | 86 |  |  |  | 214 |  |  |  | 48 |  |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 355 |
Provision |  |  | 191 |  |  |  | 236 |  |  |  | 129 |  |  |  | (410 | ) |  |  | 13 |  |  |  | (636 | ) |  |  | 893 |  |  |  | 416 |
Ending balance |  | $ | 448 |  |  | $ | 1,454 |  |  | $ | 290 |  |  | $ | 3,705 |  |  | $ | 110 |  |  | $ | 671 |  |  | $ | 1,010 |  |  | $ | 7,688 |
Individually evaluated for impairment |  | $ | 251 |  |  | $ | 95 |  |  | $ | 2 |  |  | $ | 9 |  |  | $ | — |  |  | $ | 146 |  |  | $ | — |  |  | $ | 503 |
Collectively evaluated for impairment |  | $ | 197 |  |  | $ | 1,359 |  |  | $ | 288 |  |  | $ | 3,696 |  |  | $ | 110 |  |  | $ | 525 |  |  | $ | 1,010 |  |  | $ | 7,185 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 2,616 |  |  | $ | 339 |  |  | $ | 14 |  |  | $ | 273 |  |  | $ | — |  |  | $ | 2,191 |  |  |  |  |  |  | $ | 5,433 |
Collectively evaluated for impairment |  |  | 62,203 |  |  |  | 197,656 |  |  |  | 35,148 |  |  |  | 515,528 |  |  |  | 19,066 |  |  |  | 164,647 |  |  |  |  |  |  |  | 994,248 |
Acquired with deteriorated credit quality |  |  | — |  |  |  | 5,029 |  |  |  | 12 |  |  |  | 10,083 |  |  |  | — |  |  |  | 2,043 |  |  |  |  |  |  |  | 17,167 |
Ending balance |  | $ | 64,819 |  |  | $ | 203,024 |  |  | $ | 35,174 |  |  | $ | 525,884 |  |  | $ | 19,066 |  |  | $ | 168,881 |  |  |  |  |  |  | $ | 1,016,848 |
|  |  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  |  | and |  |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Year Ended December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 471 |  |  | $ | 655 |  |  | $ | 270 |  |  | $ | 1,663 |  |  | $ | 76 |  |  | $ | 640 |  |  | $ | 282 |  |  | $ | 4,057 |
Charge-offs |  |  | (15 | ) |  |  | (148 | ) |  |  | (329 | ) |  |  | (254 | ) |  |  | - |  |  |  | (8 | ) |  |  | - |  |  |  | (754 | )
Recoveries |  |  | - |  |  |  | 57 |  |  |  | 204 |  |  |  | 10 |  |  |  | - |  |  |  | 19 |  |  |  | - |  |  |  | 290 |
Provision |  |  | (199 | ) |  |  | 763 |  |  |  | 172 |  |  |  | 2,759 |  |  |  | 21 |  |  |  | 649 |  |  |  | (165 | ) |  |  | 4,000 |
Ending balance |  | $ | 257 |  |  | $ | 1,327 |  |  | $ | 317 |  |  | $ | 4,178 |  |  | $ | 97 |  |  | $ | 1,300 |  |  | $ | 117 |  |  | $ | 7,593 |
Individually evaluated for impairment |  | $ | - |  |  | $ | 19 |  |  | $ | 1 |  |  | $ | 157 |  |  | $ | - |  |  | $ | 254 |  |  | $ | - |  |  | $ | 431 |
Collectively evaluated for impairment |  | $ | 257 |  |  | $ | 1,308 |  |  | $ | 316 |  |  | $ | 4,021 |  |  | $ | 97 |  |  | $ | 1,046 |  |  | $ | 117 |  |  | $ | 7,162 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 348 |  |  | $ | 1,663 |  |  | $ | 8 |  |  | $ | 3,032 |  |  | $ | 80 |  |  | $ | 2,720 |  |  |  |  |  |  | $ | 7,851 |
Collectively evaluated for impairment |  |  | 53,387 |  |  |  | 295,154 |  |  |  | 33,982 |  |  |  | 453,681 |  |  |  | 16,559 |  |  |  | 186,982 |  |  |  |  |  |  |  | 1,039,745 |
Acquired with deteriorated credit quality |  |  | - |  |  |  | 6,710 |  |  |  | 24 |  |  |  | 12,534 |  |  |  | - |  |  |  | 2,804 |  |  |  |  |  |  |  | 22,072 |
Ending balance |  | $ | 53,735 |  |  | $ | 303,527 |  |  | $ | 34,014 |  |  | $ | 469,247 |  |  | $ | 16,639 |  |  | $ | 192,506 |  |  |  |  |  |  | $ | 1,069,668 |
The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows: Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations. Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current sound worth and debt service capacity of the borrower or of any pledged collateral. These obligations, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne Bank will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual assets classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to determine which direction the relationship will move. Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and Retail loans must be at a minimum graded a risk code “7”. Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral. Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne Bank. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future. Information regarding the Bank’s credit exposure as of December 31 was as follows: Corporate Credit Exposure - Credit Risk Profile By Creditworthiness Category
(Dollars in thousands) |  | Agricultural |  |  | Commercial and Industrial |  |  | Commercial Real Estate |
|  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Pass |  | $ | 63,867 |  |  | $ | 61,864 |  |  | $ | 209,700 |  |  | $ | 201,202 |  |  | $ | 624,555 |  |  | $ | 519,537 |
Special Mention |  |  | 289 |  |  |  | 339 |  |  |  | 400 |  |  |  | 300 |  |  |  | 2,048 |  |  |  | 778 |
Substandard |  |  | 3 |  |  |  | 2,616 |  |  |  | 110 |  |  |  | 1,266 |  |  |  | 4,350 |  |  |  | 5,569 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 256 |  |  |  | - |  |  |  | - |
Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
|  | $ | 64,159 |  |  | $ | 64,819 |  |  | $ | 210,210 |  |  | $ | 203,024 |  |  | $ | 630,953 |  |  | $ | 525,884 |
Consumer Credit Exposure - Credit Risk Profile Based On Payment Activity
(Dollars in thousands) |  | Consumer |  |  | Construction Real Estate |  |  | Residential Real Estate |
|  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Performing |  | $ | 39,808 |  |  | $ | 35,174 |  |  | $ | 14,736 |  |  | $ | 19,066 |  |  | $ | 228,653 |  |  | $ | 168,031 |
Nonperforming |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,263 |  |  |  | 850 |
|  | $ | 39,808 |  |  | $ | 35,174 |  |  | $ | 14,736 |  |  | $ | 19,066 |  |  | $ | 229,916 |  |  | $ | 168,881 |
Included within the loan categories above were loans in the process of foreclosure. As of December 31, 2022 and 2021, loans in the process of foreclosure totaled $1.1 million and $813,000, respectively. Loans are classified as performing when they are current as to principal and interest payments or are past due on payments less than 90 days. Loans are classified as nonperforming when they are past due 90 days or more as to principal and interest payments or are considered a troubled debt restructuring. The following schedule provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the years ended December 31, 2022 and 2021:
|  | Year Ended December 31, 2022 |  |  | Year Ended December 31, 2021 |  |  | Year Ended December 31, 2020 |
|  |  |  |  |  | Pre- |  |  | Post- |  |  |  |  |  |  | Pre- |  |  | Post- |  |  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |  |  |  |  |  |  | Modification |  |  | Modification |  |  |  |  |  |  | Modification |  |  | Modification |
|  |  |  |  |  | Outstanding |  |  | Outstanding |  |  |  |  |  |  | Outstanding |  |  | Outstanding |  |  |  |  |  |  | Outstanding |  |  | Outstanding |
(Dollars in thousands) |  | Number of |  |  | Recorded |  |  | Recorded |  |  | Number of |  |  | Recorded |  |  | Recorded |  |  | Number of |  |  | Recorded |  |  | Recorded |
|  | Loans |  |  | Investment |  |  | Investment |  |  | Loans |  |  | Investment |  |  | Investment |  |  | Loans |  |  | Investment |  |  | Investment |
Agricultural |  |  | - |  |  | $ | - |  |  | $ | - |  |  |  | 5 |  |  | $ | 1,803 |  |  | $ | 1,803 |  |  |  | 5 |  |  | $ | 1,803 |  |  | $ | 1,803 |
Commercial and Industrial |  |  | 1 |  |  |  | 15 |  |  |  | 15 |  |  |  | 4 |  |  |  | 270 |  |  |  | 270 |  |  |  | 4 |  |  |  | 270 |  |  |  | 270 |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 619 |  |  |  | 619 |  |  |  | 2 |  |  |  | 619 |  |  |  | 619 |
Total |  |  | 1 |  |  | $ | 15 |  |  | $ | 15 |  |  |  | 11 |  |  | $ | 2,692 |  |  | $ | 2,692 |  |  |  | 11 |  |  | $ | 2,692 |  |  | $ | 2,692 |
There were no TDRs as of December 31, 2022 where the borrower was past due with respect to principal and interest for 30 days or more during the year ended December 31, 2022. The following schedule provides information on TDRs as of December 31, 2021 where the borrower was past due with respect to principal and/or interest for 30 days or more during the year ended December 31, 2021 that had been modified during the year prior to the default:
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | December 31, 2021 |  |  | December 31, 2020 |
(Dollars in thousands) |  | Number |  |  | Recorded |  |  | Number |  |  | Recorded |  |  | Number |  |  | Recorded |
|  | of Loans |  |  | Investment |  |  | of Loans |  |  | Investment |  |  | of Loans |  |  | Investment |
Commercial Real Estate |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | 185 |  |  |  | - |  |  |  | - |
Total |  |  | - |  |  | $ | - |  |  |  | 1 |  |  | $ | 185 |  |  |  | - |  |  | $ | - |
Impaired loans by loan category as of December 31 were as follows:
|  |  |  |  |  | Unpaid |  |  |  |  |  |  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 250 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 18 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 19 |  |  |  | - |
Residential real estate |  |  | 550 |  |  |  | 595 |  |  |  | - |  |  |  | 231 |  |  |  | 1 |
Subtotal |  |  | 550 |  |  |  | 595 |  |  |  | - |  |  |  | 518 |  |  |  | 1 |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 23 |  |  |  | 27 |  |  |  | 2 |  |  |  | 913 |  |  |  | 2 |
Commercial and industrial |  |  | 177 |  |  |  | 177 |  |  |  | 14 |  |  |  | 209 |  |  |  | 13 |
Consumer |  |  | 7 |  |  |  | 7 |  |  |  | 1 |  |  |  | 14 |  |  |  | 1 |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 165 |  |  |  | 165 |  |  |  | 5 |  |  |  | 158 |  |  |  | 13 |
Residential real estate |  |  | 1,924 |  |  |  | 1,954 |  |  |  | 131 |  |  |  | 1,897 |  |  |  | 93 |
Subtotal |  |  | 2,296 |  |  |  | 2,330 |  |  |  | 153 |  |  |  | 3,191 |  |  |  | 122 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 23 |  |  |  | 27 |  |  |  | 2 |  |  |  | 1,163 |  |  |  | 2 |
Commercial and industrial |  |  | 177 |  |  |  | 177 |  |  |  | 14 |  |  |  | 227 |  |  |  | 13 |
Consumer |  |  | 7 |  |  |  | 7 |  |  |  | 1 |  |  |  | 14 |  |  |  | 1 |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 165 |  |  |  | 165 |  |  |  | 5 |  |  |  | 177 |  |  |  | 13 |
Residential real estate |  |  | 2,474 |  |  |  | 2,549 |  |  |  | 131 |  |  |  | 2,128 |  |  |  | 94 |
Total |  | $ | 2,846 |  |  | $ | 2,925 |  |  | $ | 153 |  |  | $ | 3,709 |  |  | $ | 123 |
|  |  |  |  |  | Unpaid |  |  |  |  |  |  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | 314 |  |  | $ | 428 |  |  | $ | - |  |  | $ | 598 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 596 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | - |
Commercial real estate |  |  | 94 |  |  |  | 94 |  |  |  | - |  |  |  | 1,117 |  |  |  | 5 |
Residential real estate |  |  | 164 |  |  |  | 172 |  |  |  | - |  |  |  | 228 |  |  |  | - |
Subtotal |  |  | 572 |  |  |  | 694 |  |  |  | - |  |  |  | 2,555 |  |  |  | 5 |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 2,302 |  |  |  | 2,302 |  |  |  | 251 |  |  |  | 1,873 |  |  |  | 139 |
Commercial and industrial |  |  | 339 |  |  |  | 363 |  |  |  | 95 |  |  |  | 226 |  |  |  | 5 |
Consumer |  |  | 14 |  |  |  | 15 |  |  |  | 2 |  |  |  | 4 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 179 |  |  |  | 179 |  |  |  | 9 |  |  |  | 456 |  |  |  | 10 |
Residential real estate |  |  | 2,027 |  |  |  | 2,084 |  |  |  | 146 |  |  |  | 2,177 |  |  |  | 64 |
Subtotal |  |  | 4,861 |  |  |  | 4,943 |  |  |  | 503 |  |  |  | 4,736 |  |  |  | 218 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 2,616 |  |  |  | 2,730 |  |  |  | 251 |  |  |  | 2,471 |  |  |  | 139 |
Commercial and industrial |  |  | 339 |  |  |  | 363 |  |  |  | 95 |  |  |  | 822 |  |  |  | 5 |
Consumer |  |  | 14 |  |  |  | 15 |  |  |  | 2 |  |  |  | 4 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | - |
Commercial real estate |  |  | 273 |  |  |  | 273 |  |  |  | 9 |  |  |  | 1,573 |  |  |  | 15 |
Residential real estate |  |  | 2,191 |  |  |  | 2,256 |  |  |  | 146 |  |  |  | 2,405 |  |  |  | 64 |
Total |  | $ | 5,433 |  |  | $ | 5,637 |  |  | $ | 503 |  |  | $ | 7,291 |  |  | $ | 223 |
|  |  |  |  |  | Unpaid |  |  |  |  |  |  | Average |  |  | Interest |
(Dollars in thousands) |  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |
December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | 348 |  |  | $ | 434 |  |  | $ | - |  |  | $ | 329 |  |  | $ | - |
Commercial and industrial |  |  | 1,516 |  |  |  | 1,629 |  |  |  | - |  |  |  | 464 |  |  |  | 2 |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | - |
Construction real estate |  |  | 80 |  |  |  | 80 |  |  |  | - |  |  |  | 16 |  |  |  | - |
Commercial real estate |  |  | 1,852 |  |  |  | 2,664 |  |  |  | - |  |  |  | 1,495 |  |  |  | 14 |
Residential real estate |  |  | 162 |  |  |  | 162 |  |  |  | - |  |  |  | 99 |  |  |  | 3 |
Subtotal |  |  | 3,958 |  |  |  | 4,969 |  |  |  | - |  |  |  | 2,404 |  |  |  | 19 |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 152 |  |  |  | - |
Commercial and industrial |  |  | 147 |  |  |  | 147 |  |  |  | 19 |  |  |  | 111 |  |  |  | 12 |
Consumer |  |  | 8 |  |  |  | 8 |  |  |  | 1 |  |  |  | 16 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial real estate |  |  | 1,180 |  |  |  | 1,180 |  |  |  | 157 |  |  |  | 897 |  |  |  | 35 |
Residential real estate |  |  | 2,558 |  |  |  | 2,651 |  |  |  | 254 |  |  |  | 2,330 |  |  |  | 87 |
Subtotal |  |  | 3,893 |  |  |  | 3,986 |  |  |  | 431 |  |  |  | 3,506 |  |  |  | 134 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  |  | 348 |  |  |  | 434 |  |  |  | - |  |  |  | 481 |  |  |  | - |
Commercial and industrial |  |  | 1,663 |  |  |  | 1,776 |  |  |  | 19 |  |  |  | 575 |  |  |  | 14 |
Consumer |  |  | 8 |  |  |  | 8 |  |  |  | 1 |  |  |  | 17 |  |  |  | - |
Construction real estate |  |  | 80 |  |  |  | 80 |  |  |  | - |  |  |  | 16 |  |  |  | - |
Commercial real estate |  |  | 3,032 |  |  |  | 3,844 |  |  |  | 157 |  |  |  | 2,392 |  |  |  | 49 |
Residential real estate |  |  | 2,720 |  |  |  | 2,813 |  |  |  | 254 |  |  |  | 2,429 |  |  |  | 90 |
Total |  | $ | 7,851 |  |  | $ | 8,955 |  |  | $ | 431 |  |  | $ | 5,910 |  |  | $ | 153 |
An aging analysis of loans by loan category as of December 31 follows:
|  |  |  |  |  |  |  |  |  | Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Loans |  |  | Loans |  |  | Past Due |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |
|  | Past Due |  |  | Past Due |  |  | Greater |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 90 Days Past |
(Dollars in thousands) |  | 30 to 59 |  |  | 60 to 89 |  |  | Than 90 |  |  |  |  |  |  | Loans Not |  |  | Total |  |  | Due and |
|  | Days (1) |  |  | Days (1) |  |  | Days (1) |  |  | Total (1) |  |  | Past Due |  |  | Loans |  |  | Accruing |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 64,159 |  |  | $ | 64,159 |  |  | $ | - |
Commercial and industrial |  |  | - |  |  |  | 171 |  |  |  | - |  |  |  | 171 |  |  |  | 210,039 |  |  |  | 210,210 |  |  |  | - |
Consumer |  |  | 39 |  |  |  | 7 |  |  |  | - |  |  |  | 46 |  |  |  | 39,762 |  |  |  | 39,808 |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 630,953 |  |  |  | 630,953 |  |  |  | - |
Construction real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 14,736 |  |  |  | 14,736 |  |  |  | - |
Residential real estate |  |  | 682 |  |  |  | - |  |  |  | 842 |  |  |  | 1,524 |  |  |  | 228,392 |  |  |  | 229,916 |  |  |  | - |
|  | $ | 721 |  |  | $ | 178 |  |  | $ | 842 |  |  | $ | 1,741 |  |  | $ | 1,188,041 |  |  | $ | 1,189,782 |  |  | $ | - |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 64,819 |  |  | $ | 64,819 |  |  | $ | - |
Commercial and industrial |  |  | 21 |  |  |  | - |  |  |  | 88 |  |  |  | 109 |  |  |  | 202,915 |  |  |  | 203,024 |  |  |  | - |
Consumer |  |  | 70 |  |  |  | 15 |  |  |  | - |  |  |  | 85 |  |  |  | 35,089 |  |  |  | 35,174 |  |  |  | - |
Commercial real estate |  |  | 422 |  |  |  | 13 |  |  |  | 279 |  |  |  | 714 |  |  |  | 525,170 |  |  |  | 525,884 |  |  |  | - |
Construction real estate |  |  | 1,149 |  |  |  | 1,235 |  |  |  | - |  |  |  | 2,384 |  |  |  | 16,682 |  |  |  | 19,066 |  |  |  | - |
Residential real estate |  |  | 1,489 |  |  |  | 306 |  |  |  | 454 |  |  |  | 2,249 |  |  |  | 166,632 |  |  |  | 168,881 |  |  |  | - |
|  | $ | 3,151 |  |  | $ | 1,569 |  |  | $ | 821 |  |  | $ | 5,541 |  |  | $ | 1,011,307 |  |  | $ | 1,016,848 |  |  | $ | - |
(1) Includes nonaccrual loans Nonaccrual loans by loan category as of December 31 as follows:
(Dollars in thousands) |  |  |  |  |  |
|  | 2022 |  |  | 2021 |
Agricultural |  | $ | - |  |  | $ | 313 |
Commercial and industrial |  |  | - |  |  |  | 285 |
Consumer |  |  | - |  |  |  | - |
Commercial real estate |  |  | - |  |  |  | 279 |
Construction real estate |  |  | - |  |  |  | - |
Residential real estate |  |  | 1,263 |  |  |  | 850 |
|  | $ | 1,263 |  |  | $ | 1,727 |

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