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Loans and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses on Loans
 
The majority of the disclosures in this footnote are prepared at the class level, which is equivalent to the call report or call code classification. The roll forward of the allowance for credit losses is presented at the portfolio segment level. Accrued interest receivable on loans of $3,773,000 and $4,512,000 at March 31, 2023 and December 31, 2022 respectively is not included in the loan tables below and is included in other assets on the Company’s balance sheets. Outstanding loans are summarized by class as follows:
Loan Type (Dollars in thousands)March 31, 2023December 31, 2022
Commercial:  
Commercial and industrial$149,689 $141,197 
Agricultural production22,104 37,007 
Total commercial171,793 178,204 
Real estate:  
Construction & other land loans112,989 109,175 
Commercial real estate - owner occupied196,117 194,663 
Commercial real estate - non-owner occupied500,420 464,809 
Farmland116,723 119,648 
Multi-family residential23,694 24,586 
1-4 family - close-ended91,696 93,510 
1-4 family - revolving27,260 30,071 
Total real estate1,068,899 1,036,462 
Consumer:43,431 40,252 
Total gross loans1,284,123 1,254,918 
Net deferred origination fees 1,431 1,386 
Loans, net of deferred origination fees1,285,554 1,256,304 
Allowance for credit losses(15,257)(10,848)
Total loans, net$1,270,297 $1,245,456 

At March 31, 2023 and December 31, 2022, loans originated under Small Business Administration (SBA) programs totaling $18,964,000 and $19,947,000, respectively, were included in the real estate and commercial categories, of which, $14,505,000 or 76% and $15,333,000 or 77%, respectively, are secured by government guarantees.
Allowance for Credit Losses on Loans

The measurement of the allowance for credit losses on collectively evaluated loans is based on modeled expectations of lifetime expected credit losses utilizing national and peer group historical losses, weighting of economic scenarios, and other relevant factors. The Company incorporates forward-looking information using macroeconomic scenarios, which include variables that are considered key drivers of credit losses within the portfolio. The Company uses a probability-weighted, multiple scenario forecast approach. These scenarios may consist of a base forecast representing the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions.

When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for credit losses on an individual loan basis. There were no loans on nonaccrual or individually evaluated as of March 31, 2023 or December 31, 2022.

The following table shows the summary of activities for the allowance for credit losses as of and for the three months ended March 31, 2023 and 2022 by portfolio segment (in thousands):
 CommercialCommercial Real Estate1-4 Family Real EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2023 prior to adoption of ASU 2016-13 (CECL)$1,814 $7,803 $607 $284 $340 $10,848 
Impact of adoption of ASU 2016-13454 1,693 1,614 489 (340)3,910 
Provision (credit) for credit losses (1)
(240)569 64 125 — 518 
Charge-offs(322)— — (32)— (354)
Recoveries322 — — 13 — 335 
Ending balance, March 31, 2023$2,028 $10,065 $2,285 $879 $— $15,257 
(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $633 includes a $(92) credit for held-to-maturity securities and a $207 provision for unfunded loan commitments.
CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2022$2,011 $6,741 $568 $280 $9,600 
Provision (credit) for credit losses(356)307 31 18 — 
Charge-offs(18)— (83)— (101)
Recoveries356 — 9 — 365 
Ending balance, March 31, 2022$1,993 $7,048 $525 $298 $9,864 

The following table shows the loan portfolio by class, net of deferred fees, allocated by management’s internal risk ratings for the period indicated (in thousands):
Term Loans Amortized Cost Basis by Origination Year - As of March 31, 2023
20232022202120202019PriorRevolving LoansRevolving Converted to TermTotal
Commercial and industrial
Pass/Watch$10,246 $33,809 $42,922 $6,238 $2,545 $9,035 $33,886 $— $138,681 
Special mention— — 174 197 2,718 283 6,150 — 9,522 
Substandard— — 26 6 — 1,583 335 — 1,950 
Total$10,246 $33,809 $43,122 $6,441 $5,263 $10,901 $40,371 $— $150,153 
Current period gross write-offs$— $— $323 $— $— $— $— $— $323 
Agricultural production
Pass/Watch$83 $347 $51 $— $257 $185 $11,538 $535 $12,996 
Special mention— — — — — — 3,941 — 3,941 
Substandard— 1,160 1,123 — — — 2,900 — 5,183 
Total$83 $1,507 $1,174 $— $257 $185 $18,379 $535 $22,120 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Construction & other land loans
Pass/Watch$366 $25,445 $49,585 $10,083 $1,695 $2,875 $6,772 $— $96,821 
Special mention— — — — — — — — — 
Substandard— 291 — — 15,530 — — — 15,821 
Total$366 $25,736 $49,585 $10,083 $17,225 $2,875 $6,772 $— $112,642 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - owner occupied
Pass/Watch$6,316 $16,369 $17,587 $29,281 $23,675 $94,432 $2,951 $— $190,611 
Special mention— — — — — 3,421 — — 3,421 
Substandard— — — — — 2,159 — — 2,159 
Total$6,316 $16,369 $17,587 $29,281 $23,675 $100,012 $2,951 $— $196,191 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - non-owner occupied
Pass/Watch$23,172 $114,471 $79,092 $41,919 $23,613 $200,311 $11,803 $— $494,381 
Special mention— 600 — — — 2,798 — — 3,398 
Substandard— — — — — 2,395 — — 2,395 
Total$23,172 $115,071 $79,092 $41,919 $23,613 $205,504 $11,803 $— $500,174 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Farmland
Pass/Watch$— $19,886 $12,981 $27,859 $11,563 $26,291 $6,286 $— $104,866 
Special mention— 3,613 — 4,092 — 1,074 — — 8,779 
Substandard— — 871 — — 196 — 1,955 3,022 
Total$— $23,499 $13,852 $31,951 $11,563 $27,561 $6,286 $1,955 $116,667 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Multi-family residential
Pass/Watch$— $— $2,870 $2,769 $4,603 $13,306 $191 $— $23,739 
Special mention— — — — — — — — — 
Substandard— — — — — — — — 
Total$— $— $2,870 $2,769 $4,603 $13,306 $191 $— $23,739 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - close-ended
Pass/Watch$— $66,199 $8,353 $2,396 $2,183 $11,937 $751 $— $91,819 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$— $66,199 $8,353 $2,396 $2,183 $11,937 $751 $— $91,819 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - revolving
Pass/Watch$— $— $— $— $— $— $20,729 $6,763 $27,492 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$— $— $— $— $— $— $20,729 $6,763 $27,492 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Consumer
Pass/Watch$7,097 $10,694 $8,306 $3,154 $2,977 $11,831 $448 $— $44,507 
Special mention— — — — — — — — — 
Substandard— — 33 — — 17 — — 50 
Total$7,097 $10,694 $8,339 $3,154 $2,977 $11,848 $448 $— $44,557 
Current period gross write-offs$5 $— $— $— $26 $— $— $— $31 
Grand Total$47,280 $292,884 $223,974 $127,994 $91,359 $384,129 $108,681 $9,253 $1,285,554 
The following table shows the loan portfolio by class, net of deferred fees, allocated by management’s internal risk ratings at December 31, 2022 (in thousands):
PassSpecial MentionSubstandardDoubtfulTotal
Commercial:
Commercial and industrial$131,300 $8,707 $1,655 $— $141,662 
Agricultural production24,926 6,713 5,399 — 37,038 
Real Estate:
Construction & other land loans93,817 — 15,024 — 108,841 
Commercial real estate - owner occupied189,344 3,283 2,169 — 194,796 
Commercial real estate - non-owner occupied458,746 3,440 2,412 — 464,598 
Farmland109,898 8,879 824 — 119,601 
Multi-family residential24,636 — — — 24,636 
1-4 family - close-ended93,644 — — — 93,644 
1-4 family - revolving30,031 — 266 — 30,297 
Consumer:41,155 2 34 — 41,191 
Total$1,197,497 $31,024 $27,783 $— $1,256,304 
The following table shows an aging analysis of the loan portfolio by class at March 31, 2023 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due
Greater
Than
 89 Days
Past Due
Total Past
Due		CurrentTotal
Loans		Loans Past Due > 89 Days, Still AccruingNon-accrual
Commercial:        
Commercial and industrial$— $— $— $— $149,689 $149,689 $— $— 
Agricultural production— — — — 22,104 22,104 — — 
Real estate:—    
Construction & other land loans— — — — 112,989 112,989 — — 
Commercial real estate - owner occupied— — — — 196,117 196,117 — — 
Commercial real estate - non-owner occupied— — — — 500,420 500,420 — — 
Farmland— — — — 116,723 116,723 — — 
Multi-family residential— — — 23,694 23,694 
1-4 family - close-ended— — — 91,696 91,696 
1-4 family - revolving— — — — 27,260 27,260 — — 
Consumer:8 17 — 25 43,406 43,431 — — 
Deferred fees— — — — $1,431 1,431 — — 
Total$8 $17 $— $25 $1,285,529 $1,285,554 $— $— 

The following table shows an aging analysis of the loan portfolio by class at December 31, 2022 (in thousands):
 30-59 Days
Past Due		60-89
Days Past
Due		Greater
Than
 89 Days
Past Due		Total Past
Due		CurrentTotal
Loans		Loans Past Due > 89 Days, Still AccruingNon-
accrual
Commercial:        
Commercial and industrial$440 $— $— $440 $140,757 $141,197 $— $— 
Agricultural production— — — — 37,007 37,007 — — 
Real estate:—       
Construction & other land loans— — — — 109,175 109,175 — — 
Commercial real estate - owner occupied250 — — 250 194,413 194,663 — — 
Commercial real estate - non-owner occupied4,507 — — 4,507 460,302 464,809 — — 
Farmland— — — — 119,648 119,648 — — 
Multi-family residential— — — — 24,586 24,586 
1-4 family - close-ended— — — — 93,510 93,510 
1-4 family - revolving465 — — 465 29,606 30,071 — — 
Consumer233 — — 233 40,019 40,252 — 0— 
Deferred fees— — — — 1,386 1,386 — — 
Total$5,895 $— $— $5,895 $1,250,409 $1,256,304 $— $— 

As of March 31, 2023 and December 31, 2022 there were no collateral dependent loans.
Foregone interest on nonaccrual loans totaled $0 and $4,000 for the three month period ended March 31, 2023 and 2022, respectively.

Occasionally, the Company modifies loans to borrowers in financial distress by providing reductions of the stated interest rate of the loan or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk. There were no loan modifications granted to borrowers experiencing financial difficulty during the quarter ended March 31, 2023 or during 2022. As of December 31, 2022, the Company had a recorded investment in troubled debt restructurings (“TDR”) of $2,372,000. The Company allocated $314,000 of specific reserves for those loans at December 31, 2022. The Company committed to lend no additional amounts as of December 31, 2022 to customers with outstanding loans that were classified as troubled debt restructurings.