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Loans and Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Loans and Allowance for Credit Losses | NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES Loans by type as a percentage of the portfolio were as follows:
| September 30, 2023 |  |  | December 31, 2022 |  |  |  |  |
(Dollars in thousands) | Balance |  | % |  |  | Balance |  | % |  |  | Percent Increase (Decrease)
Agricultural | $ | 43,290 |  |  | 3.31 | % |  | $ | 64,159 |  |  | 5.39 | % |  |  | (32.53 | ) | %
Commercial and Industrial |  | 222,357 |  |  | 16.98 | % |  |  | 210,210 |  |  | 17.67 | % |  |  | 5.78 |  | %
Commercial Real Estate |  | 709,960 |  |  | 54.20 | % |  |  | 630,953 |  |  | 53.03 | % |  |  | 12.52 |  | %
Consumer |  | 37,605 |  |  | 2.87 | % |  |  | 39,808 |  |  | 3.35 | % |  |  | (5.53 | ) | %
Construction Real Estate |  | 16,477 |  |  | 1.26 | % |  |  | 14,736 |  |  | 1.24 | % |  |  | 11.81 |  | %
Residential Real Estate |  | 256,348 |  |  | 19.57 | % |  |  | 229,916 |  |  | 19.32 | % |  |  | 11.50 |  | %
Loans to Other Financial Institutions |  | 23,763 |  |  | 1.81 | % |  |  | - |  |  | 0.00 | % |  |  | 100.00 |  | %
Gross Loans | $ | 1,309,800 |  |  |  |  | $ | 1,189,782 |  |  |  |  |  |  |
Allowance for credit losses |  | 14,872 |  |  | 1.14 | % |  |  | 7,619 |  |  | 0.64 | % |  |  |  |
Net loans | $ | 1,294,928 |  |  |  |  | $ | 1,182,163 |  |  |  |  |  |  |
Activity in the allowance for credit losses and balances in the loan portfolio were as follows:
|  |  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans to Other |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  |  | and |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  | Financial |  |  |  |  |  |  |
|  | Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Institutions |  |  | Unallocated |  |  | Total |
Allowance for Credit Losses Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 78 |  |  | $ | 2,896 |  |  | $ | 885 |  |  | $ | 7,237 |  |  | $ | 70 |  |  | $ | 3,376 |  |  | $ | 40 |  |  | $ | — |  |  | $ | 14,582 |
Charge-offs |  |  | — |  |  |  | (73 | ) |  |  | (161 | ) |  |  | — |  |  |  | — |  |  |  | (27 | ) |  |  | — |  |  |  | — |  |  |  | (261 | )
Recoveries |  |  | — |  |  |  | 28 |  |  |  | 80 |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | 113 |
Provision |  |  | 5 |  |  |  | (328 | ) |  |  | 22 |  |  |  | 908 |  |  |  | (19 | ) |  |  | (150 | ) |  |  | — |  |  |  | — |  |  |  | 438 |
Ending balance |  | $ | 83 |  |  | $ | 2,523 |  |  | $ | 826 |  |  | $ | 8,145 |  |  | $ | 51 |  |  | $ | 3,204 |  |  | $ | 40 |  |  | $ | — |  |  | $ | 14,872 |
Allowance for Credit Losses Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 144 |  |  | $ | 1,361 |  |  | $ | 310 |  |  | $ | 4,822 |  |  | $ | 63 |  |  | $ | 906 |  |  | $ | — |  |  | $ | 13 |  |  | $ | 7,619 |
Cumulative effect of change in accounting principle |  |  | 14 |  |  |  | 1,587 |  |  |  | 541 |  |  |  | 3,006 |  |  |  | 20 |  |  |  | 2,010 |  |  |  | — |  |  |  | (13 | ) |  |  | 7,165 |
Charge-offs |  |  | — |  |  |  | (73 | ) |  |  | (432 | ) |  |  | — |  |  |  | — |  |  |  | (27 | ) |  |  | — |  |  |  | — |  |  |  | (532 | )
Recoveries |  |  | — |  |  |  | 57 |  |  |  | 208 |  |  |  | 13 |  |  |  | — |  |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | 288 |
Provision |  |  | (75 | ) |  |  | (409 | ) |  |  | 199 |  |  |  | 304 |  |  |  | (32 | ) |  |  | 305 |  |  |  | 40 |  |  |  | — |  |  |  | 332 |
Ending balance |  | $ | 83 |  |  | $ | 2,523 |  |  | $ | 826 |  |  | $ | 8,145 |  |  | $ | 51 |  |  | $ | 3,204 |  |  | $ | 40 |  |  | $ | — |  |  | $ | 14,872 |
Individually evaluated for credit loss |  | $ | 3 |  |  | $ | 89 |  |  | $ | — |  |  | $ | 347 |  |  | $ | — |  |  | $ | 45 |  |  | $ | — |  |  | $ | — |  |  | $ | 484 |
Collectively evaluated for credit loss |  | $ | 80 |  |  | $ | 2,434 |  |  | $ | 826 |  |  | $ | 7,798 |  |  | $ | 51 |  |  | $ | 3,159 |  |  | $ | 40 |  |  | $ | — |  |  | $ | 14,388 |
Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for credit loss |  | $ | 65 |  |  | $ | 269 |  |  | $ | 6 |  |  | $ | 1,070 |  |  | $ | — |  |  | $ | 1,738 |  |  | $ | — |  |  |  |  |  | $ | 3,148 |
Collectively evaluated for credit loss |  |  | 43,225 |  |  |  | 222,088 |  |  |  | 37,599 |  |  |  | 708,890 |  |  |  | 16,477 |  |  |  | 254,610 |  |  |  | 23,763 |  |  |  |  |  |  | 1,306,652 |
Ending balance |  | $ | 43,290 |  |  | $ | 222,357 |  |  | $ | 37,605 |  |  | $ | 709,960 |  |  | $ | 16,477 |  |  | $ | 256,348 |  |  | $ | 23,763 |  |  |  |  |  | $ | 1,309,800 |
|  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  | and |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |
| Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 132 |  |  | $ | 1,613 |  |  | $ | 309 |  |  | $ | 4,224 |  |  | $ | 45 |  |  | $ | 691 |  |  | $ | 402 |  |  | $ | 7,416 |
Charge-offs |  | — |  |  |  | (47 | ) |  |  | (128 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (175 | )
Recoveries |  | — |  |  |  | 59 |  |  |  | 56 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 116 |
Provision |  | 8 |  |  |  | (252 | ) |  |  | 66 |  |  |  | 384 |  |  |  | 14 |  |  |  | 178 |  |  |  | (298 | ) |  |  | 100 |
Ending balance | $ | 140 |  |  | $ | 1,373 |  |  | $ | 303 |  |  | $ | 4,609 |  |  | $ | 59 |  |  | $ | 869 |  |  | $ | 104 |  |  | $ | 7,457 |
Allowance for Loan Losses Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 448 |  |  | $ | 1,454 |  |  | $ | 290 |  |  | $ | 3,705 |  |  | $ | 110 |  |  | $ | 671 |  |  | $ | 1,010 |  |  | $ | 7,688 |
Charge-offs |  | — |  |  |  | (177 | ) |  |  | (383 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (560 | )
Recoveries |  | — |  |  |  | 62 |  |  |  | 162 |  |  |  | 3 |  |  |  | - |  |  |  | 2 |  |  |  | — |  |  |  | 229 |
Provision |  | (308 | ) |  |  | 34 |  |  |  | 234 |  |  |  | 901 |  |  |  | (51 | ) |  |  | 196 |  |  |  | (906 | ) |  |  | 100 |
Ending balance | $ | 140 |  |  | $ | 1,373 |  |  | $ | 303 |  |  | $ | 4,609 |  |  | $ | 59 |  |  | $ | 869 |  |  | $ | 104 |  |  | $ | 7,457 |
Individually evaluated for impairment | $ | 1 |  |  | $ | 6 |  |  | $ | 1 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 143 |  |  | $ | — |  |  | $ | 157 |
Collectively evaluated for impairment | $ | 139 |  |  | $ | 1,367 |  |  | $ | 302 |  |  | $ | 4,603 |  |  | $ | 59 |  |  | $ | 726 |  |  | $ | 104 |  |  | $ | 7,300 |
|  |  |  | Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands) |  |  |  | and |  |  |  |  |  | Commercial |  |  | Construction |  |  | Residential |  |  |  |  |  |  |
| Agricultural |  |  | Industrial |  |  | Consumer |  |  | Real Estate |  |  | Real Estate |  |  | Real Estate |  |  | Unallocated |  |  | Total |
Allowance for Loan Losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
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 |
The provision for credit losses on loans was an expense of $438,000 and an expense of $332,000 in the third quarter and first nine months of 2023 respectively, compared to an expense of $100,000 in the same periods in the prior year. The provision expense was deemed necessary due to third quarter 2023 core loan growth of $60.6 million offset by the impact of improvements in the Federal Open Market Committee ("FOMC") forecast for unemployment and Gross Domestic Product ("GDP"). The FOMC forecast for change in real GDP improved from 1.0% in June 2023 to 2.1% in September 2023, while the unemployment rate forecast improved from 4.1% in June 2023 to 3.8% in September 2023. 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 net worth and debt service capacity of the borrower or of any pledged collateral. These loans, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual credit classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to return to a pass grade. 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 graded a risk rating “7” or worse. 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. 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. The following table reflects the amortized cost basis of loans as of September 30, 2023 based on year of origination (dollars in thousands):
Commercial: | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Term Loans Total |  |  | Revolving Loans |  |  | Grand Total |
Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 1,963 |  |  | $ | 4,129 |  |  | $ | 3,134 |  |  | $ | 1,813 |  |  | $ | 7,184 |  |  | $ | 18,311 |  |  | $ | 36,534 |  |  | $ | 6,512 |  |  | $ | 43,046 |
Special mention |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 176 |  |  |  | 68 |  |  |  | 244 |  |  |  | - |  |  |  | 244 |
Substandard |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loss |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 1,963 |  |  | $ | 4,129 |  |  | $ | 3,134 |  |  | $ | 1,813 |  |  | $ | 7,360 |  |  | $ | 18,379 |  |  | $ | 36,778 |  |  | $ | 6,512 |  |  | $ | 43,290 |
Current year-to-date gross write-offs | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial and Industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 17,445 |  |  | $ | 47,330 |  |  | $ | 25,078 |  |  | $ | 11,584 |  |  | $ | 11,077 |  |  | $ | 12,891 |  |  | $ | 125,405 |  |  | $ | 96,604 |  |  | $ | 222,009 |
Special mention |  | - |  |  |  | - |  |  |  | 31 |  |  |  | 39 |  |  |  | 83 |  |  |  | 82 |  |  |  | 235 |  |  |  | 7 |  |  |  | 242 |
Substandard |  | - |  |  |  | 60 |  |  |  | 30 |  |  |  | - |  |  |  | - |  |  |  | 16 |  |  |  | 106 |  |  |  | - |  |  |  | 106 |
Doubtful |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loss |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 17,445 |  |  | $ | 47,390 |  |  | $ | 25,139 |  |  | $ | 11,623 |  |  | $ | 11,160 |  |  | $ | 12,989 |  |  | $ | 125,746 |  |  | $ | 96,611 |  |  | $ | 222,357 |
Current year-to-date gross write-offs | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 71 |  |  | $ | - |  |  | $ | - |  |  | $ | 71 |  |  | $ | - |  |  | $ | 71 |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 72,271 |  |  | $ | 137,771 |  |  | $ | 109,265 |  |  | $ | 73,112 |  |  | $ | 45,074 |  |  | $ | 141,265 |  |  | $ | 578,758 |  |  | $ | 129,070 |  |  | $ | 707,828 |
Special mention |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 572 |  |  |  | 572 |  |  |  | - |  |  |  | 572 |
Substandard |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,560 |  |  |  | 1,560 |  |  |  | - |  |  |  | 1,560 |
Doubtful |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loss |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 72,271 |  |  | $ | 137,771 |  |  | $ | 109,265 |  |  | $ | 73,112 |  |  | $ | 45,074 |  |  | $ | 143,397 |  |  | $ | 580,890 |  |  | $ | 129,070 |  |  | $ | 709,960 |
Retail: | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Term Loans Total |  |  | Revolving Loans |  |  | Grand Total |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing | $ | 8,246 |  |  | $ | 14,922 |  |  | $ | 7,421 |  |  | $ | 3,332 |  |  | $ | 1,472 |  |  | $ | 1,404 |  |  | $ | 36,797 |  |  | $ | 808 |  |  | $ | 37,605 |
Nonperforming |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 8,246 |  |  | $ | 14,922 |  |  | $ | 7,421 |  |  | $ | 3,332 |  |  | $ | 1,472 |  |  | $ | 1,404 |  |  | $ | 36,797 |  |  | $ | 808 |  |  | $ | 37,605 |
Current year-to-date gross write-offs | $ | 1 |  |  | $ | 13 |  |  | $ | 11 |  |  | $ | 28 |  |  | $ | - |  |  | $ | 1 |  |  | $ | 54 |  |  | $ | - |  |  | $ | 54 |
Construction real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing | $ | 777 |  |  | $ | 1,089 |  |  | $ | 557 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,423 |  |  | $ | 14,054 |  |  | $ | 16,477 |
Nonperforming |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 777 |  |  | $ | 1,089 |  |  | $ | 557 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,423 |  |  | $ | 14,054 |  |  | $ | 16,477 |
Current year-to-date gross write-offs | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing | $ | 38,656 |  |  | $ | 66,921 |  |  | $ | 29,360 |  |  | $ | 17,023 |  |  | $ | 13,292 |  |  | $ | 41,778 |  |  | $ | 207,030 |  |  | $ | 47,751 |  |  | $ | 254,781 |
Nonperforming |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  | - |  |  |  | 464 |  |  |  | 70 |  |  |  | - |  |  |  | - |  |  |  | 541 |  |  |  | 1,075 |  |  |  | 492 |  |  |  | 1,567 |
Total | $ | 38,656 |  |  | $ | 67,385 |  |  | $ | 29,430 |  |  | $ | 17,023 |  |  | $ | 13,292 |  |  | $ | 42,319 |  |  | $ | 208,105 |  |  | $ | 48,243 |  |  | $ | 256,348 |
Current year-to-date gross write-offs | $ | - |  |  | $ | 27 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |  |  | $ | 28 |  |  | $ | - |  |  | $ | 28 |
Loans to Other Financial Institutions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing | $ | 23,763 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 23,763 |  |  | $ | - |  |  | $ | 23,763 |
Nonperforming |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Nonaccrual |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total | $ | 23,763 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 23,763 |  |  | $ | - |  |  | $ | 23,763 |
Current year-to-date gross write-offs | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Grand Total | $ | 71,442 |  |  | $ | 83,396 |  |  | $ | 37,408 |  |  | $ | 20,355 |  |  | $ | 14,764 |  |  | $ | 43,723 |  |  | $ | 271,088 |  |  | $ | 63,105 |  |  | $ | 334,193 |
Corporate Credit Exposure - Credit risk profile by credit worthiness category
(Dollars in thousands) | Agricultural |  |  | Commercial and Industrial |  |  | Commercial Real Estate |
| December 31, |  |  | December 31, |  |  | December 31, |
| 2022 |  |  | 2022 |  |  | 2022 |
Pass | $ | 63,867 |  |  | $ | 209,700 |  |  | $ | 624,555 |
Special Mention |  | 289 |  |  |  | 400 |  |  |  | 2,048 |
Substandard |  | 3 |  |  |  | 110 |  |  |  | 4,350 |
Doubtful |  | — |  |  |  | - |  |  |  | — |
Loss |  | - |  |  |  | - |  |  |  | - |
| $ | 64,159 |  |  | $ | 210,210 |  |  | $ | 630,953 |
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, |
| 2022 |  |  | 2022 |  |  | 2022 |
Performing | $ | 39,808 |  |  | $ | 14,736 |  |  | $ | 228,653 |
Nonperforming |  | — |  |  |  | — |  |  |  | — |
Nonaccrual |  | — |  |  |  | — |  |  |  | 1,263 |
| $ | 39,808 |  |  | $ | 14,736 |  |  | $ | 229,916 |
The following table presents the amortized cost basis as of September 30, 2023 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the reporting period.
For the period ended: | September 30, 2023 |  |
| Term Extension |  |
|  |  |  | % of Total |  |
|  |  |  | Class of |  |
(Dollars in thousands) | Amortized |  |  | Financing |  |
| Cost Basis |  |  | Receivable |  |
Commercial and industrial | $ | 70 |  |  |  | 0 | % |
Residential real estate |  | 129 |  |  |  | 0 | % |
Total | $ | 199 |  |  |  |  |
The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable.
For the period ended: | September 30, 2023 |
| Term Extension |
Commercial and industrial | Termed out line of credit & termed out draw note |
Residential real estate | Provided with new twelve month payment plan to catch up on past due balance. |
The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.
For the period ended: | September 30, 2023 |
(Dollars in thousands) | Term extension |
Commercial and industrial |  | 70 |
Residential real estate |  | 129 |
Total | $ | 199 |
The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.
For the period ended: | September 30, 2023 |
(Dollars in thousands) | Current |  |  | 30-89 days |  |  | Greater than 90 days |  |  | Total |
Commercial and industrial |  | 62 |  |  |  | 8 |  |  |  | — |  |  |  | 70 |
Residential real estate |  | — |  |  |  | — |  |  |  | 129 |  |  |  | 129 |
Total | $ | 62 |  |  | $ | 8 |  |  | $ | 129 |  |  | $ | 199 |
The following table provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the three and nine months ended September 30, 2022.
| Three Months Ended September 30, 2022 |  |  | Nine Months Ended September 30, 2022 |
|  |  |  | Pre- |  |  | Post- |  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  | Modification |  |  | Modification |  |  |  |  |  | Modification |  |  | Modification |
|  |  |  | Outstanding |  |  | Outstanding |  |  |  |  |  | Outstanding |  |  | Outstanding |
(Dollars in thousands) | Number of |  |  | Recorded |  |  | Recorded |  |  | Number of |  |  | Recorded |  |  | Recorded |
| Loans |  |  | Investment |  |  | Investment |  |  | Loans |  |  | Investment |  |  | Investment |
Agricultural |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 1 |  |  | $ | 253 |  |  | $ | 253 |
Commercial and industrial |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 18 |  |  |  | 18 |
Total |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 2 |  |  | $ | 271 |  |  | $ | 271 |
There were no TDRs where the borrower was past due with respect to principal and/or interest for 30 days or more during the three months ended September 30, 2022, which loans had been modified and classified as TDRs during the year prior to the default. Nonaccrual loans by loan category as of September 30, 2023 were as follows:
(Dollars in thousands) | Nonaccrual loans with no ACL |  |  | Total nonaccrual loans |  |  | Interest income recognized during the period on nonaccrual loans |  |  | Interest income recognized during the period on nonaccrual loans |  |
Commercial and industrial | $ | — |  |  | $ | 103 |  |  | $ | — |  |  | $ | 5 |  |
Residential real estate |  | 457 |  |  |  | 1,567 |  |  |  | - |  |  |  | 10 |  |
Total nonaccrual loans | $ | 457 |  |  | $ | 1,670 |  |  | $ | — |  |  | $ | 15 |  |
Nonaccrual loans by loan category as of December 31, 2022 were as follows:
(Dollars in thousands) | Total nonaccrual loans |
Residential real estate | $ | 1,263 |
| $ | 1,263 |
The following schedule provides information regarding average balances of loans evaluated for impairment at December 31, 2022 and September 30, 2022 and interest recognized on impaired loans for the three months and nine months ended September 30, 2022:
|  |  |  | Unpaid |  |  |  |  |
(Dollars in thousands) | Recorded |  |  | Principal |  |  | Related |  |
| Investment |  |  | Balance |  |  | Allowance |  |
December 31, 2022 |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |
Agricultural | $ | — |  |  | $ | — |  |  | $ | — |  |
Commercial and industrial |  | — |  |  |  | — |  |  |  | — |  |
Consumer |  | — |  |  |  | — |  |  |  | — |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | — |  |  |  | — |  |  |  | — |  |
Residential real estate |  | 550 |  |  |  | 595 |  |  |  | — |  |
Subtotal |  | 550 |  |  |  | 595 |  |  |  | — |  |
With an allowance recorded |  |  |  |  |  |  |  |  |
Agricultural |  | 23 |  |  |  | 27 |  |  |  | 2 |  |
Commercial and industrial |  | 177 |  |  |  | 177 |  |  |  | 14 |  |
Consumer |  | 7 |  |  |  | 7 |  |  |  | 1 |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | 165 |  |  |  | 165 |  |  |  | 5 |  |
Residential real estate |  | 1,924 |  |  |  | 1,954 |  |  |  | 131 |  |
Subtotal |  | 2,296 |  |  |  | 2,330 |  |  |  | 153 |  |
Total |  |  |  |  |  |  |  |  |
Agricultural |  | 23 |  |  |  | 27 |  |  |  | 2 |  |
Commercial and industrial |  | 177 |  |  |  | 177 |  |  |  | 14 |  |
Consumer |  | 7 |  |  |  | 7 |  |  |  | 1 |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | 165 |  |  |  | 165 |  |  |  | 5 |  |
Residential real estate |  | 2,474 |  |  |  | 2,549 |  |  |  | 131 |  |
Total | $ | 2,846 |  |  | $ | 2,925 |  |  | $ | 153 |  |
|  |  |  | Unpaid |  |  |  |  |
(Dollars in thousands) | Recorded |  |  | Principal |  |  | Related |  |
| Investment |  |  | Balance |  |  | Allowance |  |
September 30, 2022 |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |
Agricultural | $ | 307 |  |  | $ | 428 |  |  | $ | — |  |
Commercial and industrial |  | — |  |  |  | — |  |  |  | — |  |
Consumer |  | — |  |  |  | — |  |  |  | — |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | — |  |  |  | — |  |  |  | — |  |
Residential real estate |  | — |  |  |  | — |  |  |  | — |  |
Subtotal |  | 307 |  |  |  | 428 |  |  |  | — |  |
With an allowance recorded |  |  |  |  |  |  |  |  |
Agricultural |  | 5 |  |  |  | 5 |  |  |  | 1 |  |
Commercial and industrial |  | 108 |  |  |  | 185 |  |  |  | 6 |  |
Consumer |  | 7 |  |  |  | 7 |  |  |  | 1 |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | 140 |  |  |  | 140 |  |  |  | 6 |  |
Residential real estate |  | 2,070 |  |  |  | 2,149 |  |  |  | 143 |  |
Subtotal |  | 2,330 |  |  |  | 2,486 |  |  |  | 157 |  |
Total |  |  |  |  |  |  |  |  |
Agricultural |  | 312 |  |  |  | 433 |  |  |  | 1 |  |
Commercial and industrial |  | 108 |  |  |  | 185 |  |  |  | 6 |  |
Consumer |  | 7 |  |  |  | 7 |  |  |  | 1 |  |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |
Commercial real estate |  | 140 |  |  |  | 140 |  |  |  | 6 |  |
Residential real estate |  | 2,070 |  |  |  | 2,149 |  |  |  | 143 |  |
Total | $ | 2,637 |  |  | $ | 2,914 |  |  | $ | 157 |  |
| Average |  |  | Interest |
(Dollars in thousands) | Recorded |  |  | Income |
| Investment |  |  | Recognized |
Three Months Ended September 30, 2022 |  |  |  |  |
With no related allowance recorded |  |  |  |  |
Agricultural | $ | 310 |  |  | $ | — |
Commercial and industrial |  | — |  |  |  | — |
Consumer |  | — |  |  |  | — |
Construction real estate |  | — |  |  |  | — |
Commercial real estate |  | — |  |  |  | — |
Residential real estate |  | 220 |  |  |  | — |
Subtotal |  | 530 |  |  |  | — |
With an allowance recorded |  |  |  |  |
Agricultural |  | 6 |  |  |  | - |
Commercial and industrial |  | 134 |  |  |  | 1 |
Consumer |  | 7 |  |  |  | — |
Construction real estate |  | — |  |  |  | — |
Commercial real estate |  | 145 |  |  |  | 2 |
Residential real estate |  | 1,842 |  |  |  | 16 |
Subtotal |  | 2,134 |  |  |  | 19 |
Total |  |  |  |  |
Agricultural |  | 316 |  |  |  | — |
Commercial and industrial |  | 134 |  |  |  | 1 |
Consumer |  | 7 |  |  |  | — |
Construction real estate |  | — |  |  |  | — |
Commercial real estate |  | 145 |  |  |  | 2 |
Residential real estate |  | 2,062 |  |  |  | 16 |
Total | $ | 2,664 |  |  | $ | 19 |
| Average |  |  | Interest |
(Dollars in thousands) | Recorded |  |  | Income |
| Investment |  |  | Recognized |
Nine Months Ended September 30, 2022 |  |  |  |  |
With no related allowance recorded |  |  |  |  |
Agricultural | $ | 312 |  |  | $ | — |
Commercial and industrial |  | 23 |  |  |  | — |
Consumer |  | — |  |  |  | — |
Construction real estate |  | — |  |  |  | — |
Commercial real estate |  | 23 |  |  |  | — |
Residential real estate |  | 151 |  |  |  | — |
Subtotal |  | 509 |  |  |  | - |
With an allowance recorded |  |  |  |  |
Agricultural |  | 1,136 |  |  |  | — |
Commercial and industrial |  | 217 |  |  |  | 3 |
Consumer |  | 15 |  |  |  | — |
Construction real estate |  | — |  |  |  | — |
Commercial real estate |  | 159 |  |  |  | 7 |
Residential real estate |  | 1,891 |  |  |  | 49 |
Subtotal |  | 3,418 |  |  |  | 59 |
Total |  |  |  |  |
Agricultural |  | 1,448 |  |  |  | - |
Commercial and industrial |  | 240 |  |  |  | 3 |
Consumer |  | 15 |  |  |  | - |
Construction real estate |  | - |  |  |  | - |
Commercial real estate |  | 182 |  |  |  | 7 |
Residential real estate |  | 2,042 |  |  |  | 49 |
Total | $ | 3,927 |  |  | $ | 59 |
An aging analysis of loans by loan category follows:
|  |  |  |  |  |  | Loans |  |  |  |  |  |  |  |  |  |  |  | Loans |
| Loans |  |  | Loans |  |  | Past Due |  |  |  |  |  |  |  |  |  |  |  | 90 Days |
| Past Due |  |  | Past Due |  |  | Greater |  |  |  |  |  |  |  |  |  |  |  | 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 |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agricultural | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 43,290 |  |  | $ | 43,290 |  |  | $ | — |
Commercial and industrial |  | 101 |  |  |  | — |  |  |  | 90 |  |  |  | 191 |  |  |  | 222,166 |  |  |  | 222,357 |  |  |  | — |
Consumer |  | 30 |  |  |  | 6 |  |  |  | — |  |  |  | 36 |  |  |  | 37,569 |  |  |  | 37,605 |  |  |  | — |
Commercial real estate |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 709,960 |  |  |  | 709,960 |  |  |  | — |
Construction real estate |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16,477 |  |  |  | 16,477 |  |  |  | — |
Residential real estate |  | 1,320 |  |  |  | 30 |  |  |  | 702 |  |  |  | 2,052 |  |  |  | 254,296 |  |  |  | 256,348 |  |  |  |
Loans to Other Financial Institutions |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23,763 |  |  |  | 23,763 |  |  |  |
| $ | 1,451 |  |  | $ | 36 |  |  | $ | 792 |  |  | $ | 2,279 |  |  | $ | 1,307,521 |  |  | $ | 1,309,800 |  |  | $ | — |
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 |  |  | $ | — |
(1) Includes nonaccrual loans. The table below presents a roll forward of the accretable yield on the County Bank Corp. acquired loan portfolio for the year ended December 31, 2022 and the nine months ended September 30, 2023 (dollars in thousands):
(Dollars in thousands) |  | Purchased with credit deterioration |  |  | Purchased without credit deterioration |  |  | Acquired |
|  |  |  |  |  |  |  | Total |
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 January 1, 2023 |  |  | 1,927 |  |  |  | 1,078 |  |  |  | 3,005 |
Transfer from non-accretable to accretable yield |  |  | — |  |  |  | — |  |  |  | — |
Accretion January 1, 2023 through September 30, 2023 |  |  | (402 | ) |  |  | (405 | ) |  |  | (807 | )
Balance, September 30, 2023 |  | $ | 1,525 |  |  | $ | 673 |  |  | $ | 2,198 |
The table below presents a roll forward of the accretable yield on the Community Shores Bank Corporation acquired loan portfolio for the year ended December 31, 2022 and the nine months ended September 30, 2023 (dollars in thousands):
|  | Purchased with credit deterioration |  |  | Purchased without credit deterioration |  |  | Acquired |
|  |  |  |  |  |  |  | Total |
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 January 1, 2023 |  |  | 615 |  |  |  | — |  |  |  | 615 |
Transfer from non-accretable to accretable yield |  |  | 622 |  |  |  | — |  |  |  | 622 |
Accretion January 1, 2023 through September 30, 2023 |  |  | (470 | ) |  |  | — |  |  |  | (470 | )
Balance, September 30, 2023 |  | $ | 767 |  |  |  | — |  |  | $ | 767 |

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