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Loans and Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses LOANS AND ALLOWANCE FOR CREDIT LOSSES
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 $4,752,000 and $4,512,000 at December 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)December 31, 2023December 31, 2022
Commercial:  
Commercial and industrial$105,466 $141,197 
Agricultural production33,556 37,007 
Total commercial139,022 178,204 
Real estate:  
Construction & other land loans33,472 109,175 
Commercial real estate - owner occupied215,146 194,663 
Commercial real estate - non-owner occupied539,522 464,809 
Farmland120,674 119,648 
Multi-family residential61,307 24,586 
1-4 family - close-ended96,558 93,510 
1-4 family - revolving27,648 30,071 
Total real estate1,094,327 1,036,462 
Consumer55,606 40,252 
Total gross loans1,288,955 1,254,918 
Net deferred origination fees 1,842 1,386 
Loans, net of deferred origination fees1,290,797 1,256,304 
Allowance for credit losses(14,653)(10,848)
Total loans, net$1,276,144 $1,245,456 
At December 31, 2023 and December 31, 2022, loans originated under Small Business Administration (SBA) programs totaling $18,246,000 and $19,947,000, respectively, were included in the real estate and commercial categories, of which, $13,955,000 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 local 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 December 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 year ended December 31, 2023, 2022, and 2021 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 
(Credit) provision for credit losses (1)
(766)296 199 186 — (85)
Charge-offs(636)— — (53)— (689)
Recoveries609 — 15 45 — 669 
Ending balance, December 31, 2023$1,475 $9,792 $2,435 $951 $— $14,653 
(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $309 includes a $276 provision for held-to-maturity securities and a $118 provision for unfunded loan commitments.

CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2022$2,011 $6,741 $568 $280 $9,600 
(Credit) provision for credit losses (1)
(531)1,062 409 60 1,000 
Charge-offs(27)— (151)— (178)
Recoveries367 — 59 — 426 
Ending balance, December 31, 2022$1,820 $7,803 $885 $340 $10,848 
(1) Represents credit losses for loans only. The provision for credit losses on the Consolidated Statements of Income of $995 includes a $(5) credit for unfunded loan commitments.
CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Beginning balance, January 1, 2021$2,019 $9,174 $1,091 $631 $12,915 
Credit for credit losses (1)
(663)(2,752)(534)(351)(4,300)
Charge-offs(46)— (221)— (267)
Recoveries701 319 232 — 1,252 
Ending balance, December 31, 2021$2,011 $6,741 $568 $280 $9,600 
(1) Represents credit losses for loans only. The credit for credit losses on the Consolidated Statements of Income of $(4,435) includes a $(135) credit for unfunded loan commitments.

During the year ended December 31, 2023, the credit to credit losses was primarily driven by stable economic scenario forecasts in commercial real estates, partially offset by loan balances changes. Management believes that the allowance for credit losses at December 31, 2023 appropriately reflected expected credit losses in the loan portfolio at that date.

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 December 31, 2023
20232022202120202019PriorRevolving LoansRevolving Converted to TermTotal
Commercial and industrial
Pass/Watch$19,886 $17,129 $21,050 $4,643 $1,561 $6,980 $29,391 $215 $100,855 
Special mention— 277 139 183 107 272 3,750 — 4,728 
Substandard— — — 156 — 66 — — 222 
Total$19,886 $17,406 $21,189 $4,982 $1,668 $7,318 $33,141 $215 $105,805 
Current period gross write-offs$241 $— $323 $— $— $— $— $— $564 
Agricultural production
Pass/Watch$153 $830 $14 $— $251 $112 $30,241 $999 $32,600 
Special mention— — — — — — — — — 
Substandard— 676 — — — — 300 — 976 
Total$153 $1,506 $14 $— $251 $112 $30,541 $999 $33,576 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Construction & other land loans
Pass/Watch$6,953 $15,593 $1,305 $701 $1,538 $3,039 $4,167 $— $33,296 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$6,953 $15,593 $1,305 $701 $1,538 $3,039 $4,167 $— $33,296 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - owner occupied
Pass/Watch$20,648 $25,132 $20,783 $39,356 $21,831 $80,384 $3,207 $— $211,341 
Special mention— — — — — 3,026 272 — 3,298 
Substandard— — — — — 497 — — 497 
Total$20,648 $25,132 $20,783 $39,356 $21,831 $83,907 $3,479 $— $215,136 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Commercial real estate - non-owner occupied
Pass/Watch$81,153 $115,031 $77,375 $38,307 $12,181 $175,419 $19,218 $3,216 $521,900 
Special mention— 600 — — — 374 — — 974 
Substandard— — — — 13,625 2,344 — — 15,969 
Total$81,153 $115,631 $77,375 $38,307 $25,806 $178,137 $19,218 $3,216 $538,843 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Farmland
Pass/Watch$8,382 $24,063 $10,873 $29,770 $11,155 $23,324 $8,695 $1,955 $118,217 
Special mention— — — — — — — — — 
Substandard— — — 2,213 — 200 — — 2,413 
Total$8,382 $24,063 $10,873 $31,983 $11,155 $23,524 $8,695 $1,955 $120,630 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
Multi-family residential
Pass/Watch$2,988 $1,847 $38,644 $2,364 $4,538 $10,417 $532 $— $61,330 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$2,988 $1,847 $38,644 $2,364 $4,538 $10,417 $532 $— $61,330 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - close-ended
Pass/Watch$1,689 $64,056 $7,898 $2,259 $1,703 $18,237 $— $809 $96,651 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$1,689 $64,056 $7,898 $2,259 $1,703 $18,237 $— $809 $96,651 
Current period gross write-offs$— $— $— $— $— $— $— $— $— 
1-4 family - revolving
Pass/Watch$— $— $— $— $— $— $21,662 $6,213 $27,875 
Special mention— — — — — — — — — 
Substandard— — — — — — — — — 
Total$— $— $— $— $— $— $21,662 $6,213 $27,875 
Current period gross write-offs$75 $— $— $— $— $— $— $— $75 
Consumer
Pass/Watch$34,866 $8,745 $6,503 $2,265 $2,007 $2,398 $643 $4 $57,431 
Special mention— — — — — — — — — 
Substandard182 — 42 — — — — — 224 
Total$35,048 $8,745 $6,545 $2,265 $2,007 $2,398 $643 $4 $57,655 
Current period gross write-offs$23 $— $— $— $27 $— $— $— $50 
Total loans outstanding (risk rating):
Pass/Watch$176,718 $272,426 $184,445 $119,665 $56,765 $320,310 $117,756 $13,411 $1,261,496 
Special mention— 877 139 183 107 3,672 4,022 — 9,000 
Substandard182 676 42 2,369 13,625 3,107 300 — 20,301 
Grand Total$176,900 $273,979 $184,626 $122,217 $70,497 $327,089 $122,078 $13,411 $1,290,797 
Current period total gross write-offs$339 $— $323 $— $27 $— $— $— $689 

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 December 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$25 $— $— $25 $105,441 $105,466 $— $— 
Agricultural production507 — — 507 33,049 33,556 — — 
Real estate:— 
Construction & other land loans— — — — 33,472 33,472 — — 
Commercial real estate - owner occupied— — — — 215,146 215,146 — — 
Commercial real estate - non-owner occupied— — — — 539,522 539,522 — — 
Farmland— — — — 120,674 120,674 — — 
Multi-family residential— — — — 61,307 61,307 — — 
1-4 family - close-ended2,973 — — — 96,558 96,558 — — 
1-4 family - revolving— — — — 27,648 27,648 — — 
Consumer169 68 — 237 55,369 55,606 — — 
Deferred fees— — — — $1,842 1,842 — — 
Total$3,674 $68 $— $769 $1,290,028 $1,290,797 $— $— 
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:—  0 
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 — — 
Deferred fees— — — — 1,386 1,386 — — 
Total$5,895 $— $— $5,895 $1,250,409 $1,256,304 $— $— 

As of December 31, 2023 and December 31, 2022 there were no collateral dependent loans.
There was no foregone interest on nonaccrual loans for the year ended December 31, 2023. Foregone interest on nonaccrual loans totaled $132,000 and $99,000 for the years ended December 31, 2022 and 2021, 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 years ended December 31, 2023 or 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.

The following is a summary of the allowance for credit losses by impairment methodology and portfolio segment as of December 31, 2022 and December 31, 2021 (in thousands):
 CommercialReal EstateConsumerUnallocatedTotal
Allowance for credit losses:     
Ending balance, December 31, 2022$1,820 $7,803 $885 $340 $10,848 
Ending balance: individually evaluated for impairment$309 $5 $— $— $314 
Ending balance: collectively evaluated for impairment$1,511 $7,798 $885 $340 $10,534 
The following table shows the ending balances of loans as of December 31, 2022 and December 31, 2021 by portfolio segment and by impairment methodology (in thousands):
 CommercialReal EstateConsumerTotal
Loans:    
Ending balance, December 31, 2022$180,204 $910,881 $163,833 $1,254,918 
Ending balance: individually evaluated for impairment
$1,240 $139 $993 $2,372 
Ending balance: collectively evaluated for impairment
$178,964 $910,742 $162,840 $1,252,546 

The following table shows information related to impaired loans by class at December 31, 2022 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Consumer:   
Equity loans and lines of credit$993 $1,007 $— 
Total with no related allowance recorded993 1,007 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial1,240 1,240 309 
Real estate:   
Commercial real estate126 126 2 
Agricultural real estate13 13 3 
Total real estate139 139 5 
Total with an allowance recorded1,379 1,379 314 
Total$2,372 $2,386 $314 

The recorded investment in loans excludes accrued interest receivable and net loan origination fees, due to immateriality.
The following table shows information related to impaired loans by class at December 31, 2021 (in thousands):
Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance
With no related allowance recorded:   
Consumer:   
Equity loans and lines of credit$136 $172 $— 
Total with no related allowance recorded136 172 — 
With an allowance recorded:   
Commercial:   
Commercial and industrial6,452 6,491 544 
Agricultural land and production634 714 63 
Total commercial7,086 7,205 607 
Real estate:   
Real estate construction and other land loans292 292 30 
Commercial real estate137 138 3 
Agricultural real estate21 21 5 
Total real estate450 451 38 
Consumer:   
Equity loans and lines of credit914 914 4 
Total consumer914 914 4 
Total with an allowance recorded8,450 8,570 649 
Total$8,586 $8,742 $649