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Loans | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Loans | NOTE 4 LOANS Loan balances as of September 30, 2023 and December 31, 2022 are summarized below:
|  | (In Thousands) |
Loans: |  | September 30, 2023 |  |  | December 31, 2022 |
Consumer Real Estate |  | $ | 512,973 |  |  | $ | 494,423 |
Agricultural Real Estate |  |  | 225,672 |  |  |  | 220,819 |
Agricultural |  |  | 123,735 |  |  |  | 128,733 |
Commercial Real Estate |  |  | 1,304,118 |  |  |  | 1,152,603 |
Commercial and Industrial |  |  | 250,891 |  |  |  | 242,360 |
Consumer |  |  | 83,024 |  |  |  | 89,147 |
Other |  |  | 31,083 |  |  |  | 29,818 |
|  |  | 2,531,496 |  |  |  | 2,357,903 |
Less: Net deferred loan fees and costs |  |  | (1,890 | ) |  |  | (1,516 | )
|  |  | 2,529,606 |  |  |  | 2,356,387 |
Less: Allowance for credit losses |  |  | (25,277 | ) |  |  | (20,313 | )
Loans - Net |  | $ | 2,504,329 |  |  | $ | 2,336,074 |
Other loans primarily fund public improvements in the Bank’s service area. The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of September 30, 2023 and December 31, 2022:
|  | (In Thousands) |
|  | September 30, 2023 |  |  | December 31, 2022 |
|  | Fixed |  |  | Variable |  |  | Fixed |  |  | Variable |
Consumer Real Estate |  | $ | 330,689 |  |  | $ | 182,284 |  |  | $ | 354,420 |  |  | $ | 140,003 |
Agricultural Real Estate |  |  | 128,681 |  |  |  | 96,991 |  |  |  | 144,702 |  |  |  | 76,117 |
Agricultural |  |  | 57,301 |  |  |  | 66,434 |  |  |  | 52,867 |  |  |  | 75,866 |
Commercial Real Estate |  |  | 1,013,000 |  |  |  | 291,118 |  |  |  | 941,927 |  |  |  | 210,676 |
Commercial and Industrial |  |  | 141,010 |  |  |  | 109,881 |  |  |  | 130,513 |  |  |  | 111,847 |
Consumer |  |  | 82,956 |  |  |  | 68 |  |  |  | 88,972 |  |  |  | 175 |
Other |  |  | 21,499 |  |  |  | 9,584 |  |  |  | 20,029 |  |  |  | 9,789 |
As of September 30, 2023 and December 31, 2022 one to four family residential mortgage loans amounting to $213.0 million and $222.5 million, respectively, have been pledged as security for future loans and existing loans the Bank has received from the Federal Home Loan Bank. $11.2 million and $10.4 million of HELOCs were pledged as of September 30, 2023 and December 31, 2022 as well. During the second quarter of 2023 the Bank began pledging eligible commercial real estate to the FHLB. At September 30, 2023 the amount pledged was $161.2 million. Unless listed separately, Other loans are included in the Commercial and Industrial category for the remainder of the tables in this Note 4. The following table represents the contractual aging of the recorded investment (in thousands) in past due loans by portfolio classification of loans as of September 30, 2023 and December 31, 2022, net of deferred loan fees and costs:
September 30, 2023 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater Than 90 Days |  |  | Total Past Due |  |  | Current |  |  | Total Financing Receivables |  |  | Recorded Investment > 90 Days and Accruing |
Consumer Real Estate |  | $ | 2,116 |  |  | $ | 559 |  |  | $ | 346 |  |  | $ | 3,021 |  |  | $ | 509,969 |  |  | $ | 512,990 |  |  | $ | - |
Agricultural Real Estate |  |  | 1,227 |  |  |  | - |  |  |  | 60 |  |  |  | 1,287 |  |  |  | 224,083 |  |  |  | 225,370 |  |  |  | - |
Agricultural |  |  | 60 |  |  |  | 1,498 |  |  |  | 1,524 |  |  |  | 3,082 |  |  |  | 120,889 |  |  |  | 123,971 |  |  |  | - |
Commercial Real Estate |  |  | 503 |  |  |  | 5 |  |  |  | 255 |  |  |  | 763 |  |  |  | 1,300,851 |  |  |  | 1,301,614 |  |  |  | - |
Commercial and Industrial |  |  | 16 |  |  |  | - |  |  |  | 855 |  |  |  | 871 |  |  |  | 280,968 |  |  |  | 281,839 |  |  |  | - |
Consumer |  |  | 104 |  |  |  | 67 |  |  |  | 7 |  |  |  | 178 |  |  |  | 83,644 |  |  |  | 83,822 |  |  |  | - |
Total |  | $ | 4,026 |  |  | $ | 2,129 |  |  | $ | 3,047 |  |  | $ | 9,202 |  |  | $ | 2,520,404 |  |  | $ | 2,529,606 |  |  | $ | - |
December 31, 2022 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater Than 90 Days |  |  | Total Past Due |  |  | Current |  |  | Total Financing Receivables |  |  | Recorded Investment > 90 Days and Accruing |
Consumer Real Estate |  | $ | 1,536 |  |  | $ | 635 |  |  | $ | 90 |  |  | $ | 2,261 |  |  | $ | 492,162 |  |  | $ | 494,423 |  |  | $ | - |
Agricultural Real Estate |  |  | 118 |  |  |  | 2 |  |  |  | 1,550 |  |  |  | 1,670 |  |  |  | 218,844 |  |  |  | 220,514 |  |  |  | - |
Agricultural |  |  | 433 |  |  |  | - |  |  |  | 152 |  |  |  | 585 |  |  |  | 128,341 |  |  |  | 128,926 |  |  |  | - |
Commercial Real Estate |  |  | 74 |  |  |  | - |  |  |  | 180 |  |  |  | 254 |  |  |  | 1,150,257 |  |  |  | 1,150,511 |  |  |  | - |
Commercial and Industrial |  |  | 953 |  |  |  | - |  |  |  | 182 |  |  |  | 1,135 |  |  |  | 270,984 |  |  |  | 272,119 |  |  |  | - |
Consumer |  |  | 83 |  |  |  | 37 |  |  |  | - |  |  |  | 120 |  |  |  | 89,774 |  |  |  | 89,894 |  |  |  | - |
Total |  | $ | 3,197 |  |  | $ | 674 |  |  | $ | 2,154 |  |  | $ | 6,025 |  |  | $ | 2,350,362 |  |  | $ | 2,356,387 |  |  | $ | - |
The following tables present the amortized cost of nonaccrual loans by class of loans as of September 30, 2023 and the recorded investment of nonaccrual loans by class of loans as of December 31, 2022:
|  | (In Thousands) |
|  | September 30, 2023 |
|  | Nonaccrual |  |  |  |  |  | Loans Past |
|  | With No |  |  |  |  |  | Due Over |
|  | Allowance |  |  |  |  |  | 89 Days |
|  | for Credit Loss |  |  | Nonaccrual |  |  | Still Accruing |
Consumer Real Estate |  | $ | 689 |  |  | $ | 689 |  |  | $ | - |
Agricultural Real Estate |  |  | 15,948 |  |  |  | 15,948 |  |  |  | - |
Agricultural |  |  | 4,695 |  |  |  | 4,695 |  |  |  | - |
Commercial Real Estate |  |  | 254 |  |  |  | 254 |  |  |  | - |
Commercial & Industrial |  |  | 854 |  |  |  | 854 |  |  |  | - |
Consumer |  |  | 7 |  |  |  | 7 |  |  |  | - |
Total |  | $ | 22,447 |  |  | $ | 22,447 |  |  | $ | - |
|  | (In Thousands) |
|  | December 31, 2022 |
Consumer Real Estate |  | $ | 612 |
Agricultural Real Estate |  |  | 1,921 |
Agricultural |  |  | 152 |
Commercial Real Estate |  |  | 903 |
Commercial & Industrial |  |  | 1,096 |
Consumer |  |  | 5 |
Total |  | $ | 4,689 |
Two borrower relationships resulted in a combined increase to nonaccrual totals of $15.6 million in the agricultural real estate portfolio and a combined increase of $4.5 million in the agricultural portfolio as compared to December 31, 2022. The Company recognized $74 thousand and $210 thousand of interest income on nonaccrual loans for the three and nine months ending September 30, 2023, respectively. Following are the characteristics and underwriting criteria for each major type of loan the Bank offers: Consumer Real Estate: Purchase, refinance, or equity financing of one to four family owner occupied dwelling. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment, and others. Agricultural Real Estate: Purchase of farm real estate or for permanent improvements to the farm real estate. Cash flow from the farm operation is the repayment source and is therefore subject to the financial success of the farm operation. Agricultural: Loans for the production and housing of crops, fruits, vegetables, and livestock or to fund the purchase or re-finance of capital assets such as machinery and equipment and livestock. The production of crops and livestock is especially vulnerable to commodity prices and weather. The vulnerability to commodity prices is offset by the farmer’s ability to hedge their position by the use of various pricing mechanisms. The risk related to weather is often mitigated by crop insurance. Commercial Real Estate: Construction, purchase, and refinance of business purpose real estate. Risks include potential construction delays and overruns, vacancies, collateral value subject to market value fluctuations, interest rate, market demands, borrower’s ability to repay in orderly fashion, and others. The Bank does employ stress testing on higher balance loans to mitigate risk by ensuring the customer’s ability to repay in a changing rate environment before granting loan approval. Commercial and Industrial: Loans to proprietorships, partnerships, limited liability companies or corporations to provide temporary working capital and seasonal loans as well as long term loans for capital asset acquisition. Risks include adequacy of cash flow, reasonableness of projections, financial leverage, economic trends, management ability and estimated capital expenditures during the fiscal year. The Bank does employ stress testing on higher balance loans to mitigate risk by ensuring the customer's ability to repay in a changing rate environment before granting loan approval. Consumer: Funding for individual and family purposes. Success in repayment is subject to borrower’s income, debt level, character in fulfilling payment obligations, employment, and others. Other: Primarily funds public improvements in the Bank’s service area. Repayment ability is based on the continuance of the taxation revenue as the source of repayment. The Bank uses a nine tier risk rating system to grade its loans. The grade of a loan may change during the life of the loan. The risk ratings are described as follows. 1. Zero (0) Unclassified. Any loan which has not been assigned a classification. 2. One (1) Excellent. Credit to premier customers having the highest credit rating based on an extremely strong financial condition, which compares favorably with industry standards (upper quartile of RMA ratios). Financial statements indicate a sound earnings and financial ratio trend for several years with satisfactory profit margins and excellent liquidity exhibited. Prime credits may also be borrowers with loans fully secured by highly liquid collateral such as traded stocks, bonds, certificates of deposit, savings account, etc. No credit or collateral exceptions exist, and the loan adheres to The Bank's loan policy in every respect. Financing alternatives would be readily available and would qualify for unsecured credit. This rate is summarized by high liquidity, minimum risk, strong ratios, and low handling costs. 3. Two (2) Good. Desirable loans of somewhat less stature than rate 1, but with strong financial statements. Loan supported by financial statements containing strong balance sheets and a history of profitability. Probability of serious financial deterioration is unlikely. Possessing a sound repayment source (and a secondary source), which would allow repayment in a reasonable period of time. Individual loans backed by liquid personal assets, established history and unquestionable character. 4. Three (3) Satisfactory. Satisfactory loans of average or slightly above average risk – having some deficiency or vulnerability to changing economic conditions, but still fully collectible. Projects should normally demonstrate acceptable debt service coverage. There may be some weakness but with offsetting features of other support readily available. Loans that are meeting the terms of repayment. Loans may be rated 3 when there is no recent information on which to base a current risk evaluation and the following conditions apply: At inception, the loan was properly underwritten and did not possess an unwarranted level of credit risk; a. At inception, the loan was secured with collateral possessing a loan-to-value adequate to protect The Bank from loss; b. The loan exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance; c. During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the business is in an industry which is known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk rating is warranted. 5. Four (4) Satisfactory / Monitored. A “4” (Satisfactory/Monitored) risk rating may be established for a loan considered satisfactory but which is of average credit risk due to financial weakness or uncertainty. The loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in Satisfactory/Monitored classification is considered acceptable and within normal underwriting guidelines, so long as the loan is given management supervision. 6. Five (5) Special Mention. Loans that possess some credit deficiency or potential weakness which deserve close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a 5 (Special Mention) classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential” versus “defined” impairments to the primary source of loan repayment and collateral. 7. Six (6) Substandard. One or more of the following characteristics may be exhibited in loans classified substandard: a. Loans which possess a defined credit weakness and the likelihood that a loan will be paid from the primary source are uncertain. Financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss. b. Loans are inadequately protected by the current net worth and paying capacity of the borrower. c. The primary source of repayment is weakened, and The Bank is forced to rely on a secondary source of repayment such as collateral liquidation or guarantees. d. Loans are characterized by the distinct possibility that The Bank will sustain some loss if deficiencies are not corrected. e. Unusual courses of action are needed to maintain a high probability of repayment. f. The borrower is not generating enough cash flow to repay loan principal; however, continues to make interest payments. g. The lender is forced into a subordinate position or unsecured collateral position due to flaws in documentation. h. Loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms. i. The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan. j. There is significant deterioration in the market conditions and the borrower is highly vulnerable to these conditions. 8. Seven (7) Doubtful. One or more of the following characteristics may be exhibited in loans classified Doubtful: a. Loans have all of the weaknesses of those classified as Substandard. Additionally, however, these weaknesses make collection or liquidation in full based on existing conditions improbable. b. The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment. c. The possibility of loss is high, but, because of certain important pending factors which may strengthen the loan, loss classification is deferred until its exact status is known. A Doubtful classification is established deferring the realization of the loss. 9. Eight (8) Loss. Loans are considered uncollectable and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future. The following table represents the risk category of loans by portfolio class, net of deferred fees and costs, based on the most recent analysis performed as of December 31, 2022:
|  | (In Thousands) |
|  | Agricultural |  |  |  |  |  | Commercial |  |  | Commercial |  |  |  |
|  | Real Estate |  |  | Agricultural |  |  | Real Estate |  |  | and Industrial |  |  | Other |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
1-2 |  | $ | 9,912 |  |  | $ | 5,857 |  |  | $ | 8,718 |  |  | $ | 780 |  |  | $ | - |
3 |  |  | 47,405 |  |  |  | 33,671 |  |  |  | 370,035 |  |  |  | 67,506 |  |  |  | 10,921 |
4 |  |  | 146,143 |  |  |  | 88,992 |  |  |  | 737,745 |  |  |  | 167,291 |  |  |  | 18,897 |
5 |  |  | 10,389 |  |  |  | 228 |  |  |  | 9,751 |  |  |  | 3,592 |  |  |  | - |
6 |  |  | 6,665 |  |  |  | 178 |  |  |  | 24,262 |  |  |  | 3,132 |  |  |  | - |
7 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
8 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 220,514 |  |  | $ | 128,926 |  |  | $ | 1,150,511 |  |  | $ | 242,301 |  |  | $ | 29,818 |
For consumer residential real estate, and other, the Company also evaluates credit quality based on the aging status of the loan, as was previously stated, and by payment activity. The following tables present the recorded investment in those classes based on payment activity and assigned risk grading as of December 31, 2022.
|  | (In Thousands) |
|  | Consumer |
|  | Real Estate |
|  | December 31, 2022 |
Grade |  |  |
Pass (1-4) |  | $ | 492,575 |
Special Mention (5) |  |  | 676 |
Substandard (6) |  |  | 1,172 |
Doubtful (7) |  |  | - |
Total |  | $ | 494,423 |
|  |  | (In Thousands) |
|  |  | Consumer |
|  |  | December 31, 2022 |
Performing |  |  | $ | 89,853 |
Nonperforming |  |  |  | 41 |
Total |  |  | $ | 89,894 |
The following table reflects loan balances as of September 30, 2023 based on year of origination:
| (In Thousands) |
| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Term |  |  | Amortized |  |  | Grand |
| 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Total |  |  | Cost Basis |  |  | Total |
Consumer Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 60,417 |  |  | $ | 92,081 |  |  | $ | 92,221 |  |  | $ | 84,478 |  |  | $ | 131,759 |  |  | $ | 460,956 |  |  | $ | 49,921 |  |  | $ | 510,877 |
Special Mention (5) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 68 |  |  |  | 68 |  |  |  | - |  |  |  | 68 |
Substandard (6) |  | - |  |  |  | 40 |  |  |  | 640 |  |  |  | - |  |  |  | 1,337 |  |  |  | 2,017 |  |  |  | 28 |  |  |  | 2,045 |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Consumer Real Estate | $ | 60,417 |  |  | $ | 92,121 |  |  | $ | 92,861 |  |  | $ | 84,478 |  |  | $ | 133,164 |  |  | $ | 463,041 |  |  | $ | 49,949 |  |  | $ | 512,990 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Agricultural Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 24,866 |  |  | $ | 39,508 |  |  | $ | 25,649 |  |  | $ | 26,348 |  |  | $ | 87,181 |  |  | $ | 203,552 |  |  | $ | 97 |  |  | $ | 203,649 |
Special Mention (5) |  | - |  |  |  | 249 |  |  |  | 16 |  |  |  | - |  |  |  | 5,307 |  |  |  | 5,572 |  |  |  | - |  |  |  | 5,572 |
Substandard (6) |  | - |  |  |  | - |  |  |  | 12,196 |  |  |  | 187 |  |  |  | 3,766 |  |  |  | 16,149 |  |  |  | - |  |  |  | 16,149 |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Agricultural Real Estate | $ | 24,866 |  |  | $ | 39,757 |  |  | $ | 37,861 |  |  | $ | 26,535 |  |  | $ | 96,254 |  |  | $ | 225,273 |  |  | $ | 97 |  |  | $ | 225,370 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Agricultural |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 15,439 |  |  | $ | 22,361 |  |  | $ | 9,654 |  |  | $ | 4,977 |  |  | $ | 6,281 |  |  | $ | 58,712 |  |  | $ | 59,510 |  |  | $ | 118,222 |
Special Mention (5) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard (6) |  | 516 |  |  |  | 634 |  |  |  | 2,011 |  |  |  | 1,090 |  |  |  | - |  |  |  | 4,251 |  |  |  | 1,498 |  |  |  | 5,749 |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Agricultural | $ | 15,955 |  |  | $ | 22,995 |  |  | $ | 11,665 |  |  | $ | 6,067 |  |  | $ | 6,281 |  |  | $ | 62,963 |  |  | $ | 61,008 |  |  | $ | 123,971 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
| (In Thousands) |
| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Term |  |  | Amortized |  |  | Grand |
| 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Total |  |  | Cost Basis |  |  | Total |
Commercial Real Estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 159,888 |  |  | $ | 448,961 |  |  | $ | 252,124 |  |  | $ | 127,752 |  |  | $ | 254,825 |  |  | $ | 1,243,550 |  |  | $ | - |  |  | $ | 1,243,550 |
Special Mention (5) |  | 33,926 |  |  |  | - |  |  |  | - |  |  |  | 10,944 |  |  |  | 11,392 |  |  |  | 56,262 |  |  |  | - |  |  |  | 56,262 |
Substandard (6) |  | 92 |  |  |  | - |  |  |  | - |  |  |  | 75 |  |  |  | 1,635 |  |  |  | 1,802 |  |  |  | - |  |  |  | 1,802 |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Commercial Real Estate | $ | 193,906 |  |  | $ | 448,961 |  |  | $ | 252,124 |  |  | $ | 138,771 |  |  | $ | 267,852 |  |  | $ | 1,301,614 |  |  | $ | - |  |  | $ | 1,301,614 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Commercial & Industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 45,543 |  |  | $ | 54,615 |  |  | $ | 26,541 |  |  | $ | 21,958 |  |  | $ | 3,952 |  |  | $ | 152,609 |  |  | $ | 93,655 |  |  | $ | 246,264 |
Special Mention (5) |  | 189 |  |  |  | - |  |  |  | 216 |  |  |  | 184 |  |  |  | 451 |  |  |  | 1,040 |  |  |  | 356 |  |  |  | 1,396 |
Substandard (6) |  | - |  |  |  | 469 |  |  |  | - |  |  |  | 906 |  |  |  | 257 |  |  |  | 1,632 |  |  |  | 1,458 |  |  |  | 3,090 |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Commercial & Industrial | $ | 45,732 |  |  | $ | 55,084 |  |  | $ | 26,757 |  |  | $ | 23,048 |  |  | $ | 4,660 |  |  | $ | 155,281 |  |  | $ | 95,469 |  |  | $ | 250,750 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass (1-4) | $ | 2,810 |  |  | $ | - |  |  | $ | 17,360 |  |  | $ | 6,017 |  |  | $ | 4,902 |  |  | $ | 31,089 |  |  | $ | - |  |  | $ | 31,089 |
Special Mention (5) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard (6) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful (7) |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Other | $ | 2,810 |  |  | $ | - |  |  | $ | 17,360 |  |  | $ | 6,017 |  |  | $ | 4,902 |  |  | $ | 31,089 |  |  | $ | - |  |  | $ | 31,089 |
Gross charge-offs YTD | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
The following table presents payment performance as of September 30, 2023 by year of origination:
| (In Thousands) |
| Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Term |  |  | Amortized |  |  | Grand |
| 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | Prior |  |  | Total |  |  | Cost Basis |  |  | Total |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing | $ | 18,585 |  |  | $ | 44,435 |  |  | $ | 11,939 |  |  | $ | 5,811 |  |  | $ | 2,999 |  |  | $ | 83,769 |  |  | $ | 46 |  |  | $ | 83,815 |
Nonperforming |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | 7 |
Total Consumer | $ | 18,585 |  |  | $ | 44,435 |  |  | $ | 11,939 |  |  | $ | 5,818 |  |  | $ | 2,999 |  |  | $ | 83,776 |  |  | $ | 46 |  |  | $ | 83,822 |
Gross charge-offs YTD | $ | 163 |  |  | $ | 41 |  |  | $ | 88 |  |  | $ | 38 |  |  | $ | - |  |  | $ | 330 |  |  | $ | - |  |  | $ | 330 |
The following table presents collateral-dependent loans grouped by collateral as of September 30, 2023:
|  | (In Thousands) |
|  | Real |
|  | Estate |
Consumer Real Estate |  | $ | - |
Agricultural Real Estate |  |  | - |
Agricultural |  |  | 311 |
Commercial Real Estate |  |  | - |
Commercial & Industrial |  |  | 1 |
Consumer |  |  | - |
Total |  | $ | 312 |
Information about impaired loans as of December 31, 2022 and September 30, 2022 are presented for comparison purposes and are as follows:
|  | (In Thousands) |
|  | December 31, 2022 |  |  | September 30, 2022 |
Impaired loans without a valuation allowance |  | $ | 4,194 |  |  | $ | 5,835 |
Impaired loans with a valuation allowance |  |  | 4,663 |  |  |  | 4,918 |
Total impaired loans |  | $ | 8,857 |  |  | $ | 10,753 |
Valuation allowance related to impaired loans |  | $ | 1,996 |  |  | $ | 2,436 |
Total non-accrual loans |  | $ | 4,689 |  |  | $ | 5,470 |
Total loans past-due ninety days or more and still accruing |  | $ | - |  |  | $ | - |
Quarter ended average investment in impaired loans |  | $ | 9,660 |  |  | $ | 10,662 |
Year to date average investment in impaired loans |  | $ | 10,710 |  |  | $ | 11,059 |
The Bank had approximately $3.6 million of its impaired loans classified as troubled debt restructured (TDR) as of December 31, 2022 and $4.0 million as of September 30, 2022. Under ASC 310-40, TDRs were eliminated from being classified as such for 2023 and will no longer be reported as such. Modification programs focus on payment pattern changes and/or modified maturity dates with most receiving a combination of the two concessions. The modifications did not result in the contractual forgiveness of principal. During the three months ended September 30, 2023, there were no new modifications to borrowers experiencing financial difficulty. During the third quarter of 2022, three new loans were considered TDR as a result of the continuance of interest only payment modifications. These three loans stemmed from a single relationship with a borrower. For the three months ended September 30, 2023 and 2022, there were no modifications to borrowers experiencing financial difficulty that subsequently defaulted after modification. For the majority of the Bank’s impaired loans, the Bank applied the fair value of collateral or used a measurement incorporating the present value of expected future cash flows discounted at the loan’s effective rate of interest. To determine fair value of collateral, collateral asset values securing an impaired loan were periodically evaluated. Maximum time of re-evaluation was every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations were obtained. Until such time that updated appraisals were received, the Bank may have discounted the collateral value used. The Bank used the following guidelines as stated in policy to determine when to realize a charge-off, whether a partial or full loan balance. A charge-off in whole or in part was realized when unsecured consumer loans, credit card credits and overdraft lines of credit reached 90 days delinquency. At 90 days delinquent, secured consumer loans were charged down to the value of the collateral, if repossession of the collateral was assured and/or in the process of repossession. Consumer mortgage loan deficiencies were charged down upon the sale of the collateral or sooner upon the recognition of collateral deficiency. A broker’s price opinion or appraisal was completed on all home loans in litigation and any deficiency was charged off before reaching 150 days delinquent. Commercial and agricultural credits were charged down/allocated at 120 days delinquency, unless an established and approved work-out plan was in place or litigation of the credit was likely to result in recovery of the loan balance. Upon notification of bankruptcy, unsecured debt was charged off. Additional charge-off was realized as further unsecured positions were recognized. The following tables present loans individually evaluated for impairment by class of loans for the three and nine months ended September 30, 2022 and for the year ended December 31, 2022.
|  | (In Thousands) |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | QTD |
|  |  |  |  |  |  |  |  |  |  | QTD |  |  | QTD |  |  | Interest |
Three Months Ended September 30, 2022 |  |  |  |  | Unpaid |  |  |  |  |  | Average |  |  | Interest |  |  | Income |
|  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |  |  | Recognized |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |  |  | Cash Basis |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 624 |  |  | $ | 624 |  |  | $ | - |  |  | $ | 352 |  |  | $ | 1 |  |  | $ | 5 |
Agricultural Real Estate |  |  | 2,588 |  |  |  | 2,693 |  |  |  | - |  |  |  | 2,467 |  |  |  | 6 |  |  |  | 1 |
Agricultural |  |  | 1,334 |  |  |  | 1,334 |  |  |  | - |  |  |  | 1,309 |  |  |  | - |  |  |  | - |
Commercial Real Estate |  |  | 1,251 |  |  |  | 1,251 |  |  |  | - |  |  |  | 1,505 |  |  |  | 9 |  |  |  | 14 |
Commercial and Industrial |  |  | 21 |  |  |  | 21 |  |  |  | - |  |  |  | 63 |  |  |  | - |  |  |  | - |
Consumer |  |  | 17 |  |  |  | 17 |  |  |  | - |  |  |  | 17 |  |  |  | - |  |  |  | - |
With a specific allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Agricultural Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Real Estate |  |  | 2,936 |  |  |  | 2,936 |  |  |  | 500 |  |  |  | 2,960 |  |  |  | 39 |  |  |  | - |
Commercial and Industrial |  |  | 1,982 |  |  |  | 1,982 |  |  |  | 1,936 |  |  |  | 1,989 |  |  |  | 72 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Totals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 624 |  |  | $ | 624 |  |  | $ | - |  |  | $ | 352 |  |  | $ | 1 |  |  | $ | 5 |
Agricultural Real Estate |  | $ | 2,588 |  |  | $ | 2,693 |  |  | $ | - |  |  | $ | 2,467 |  |  | $ | 6 |  |  | $ | 1 |
Agricultural |  | $ | 1,334 |  |  | $ | 1,334 |  |  | $ | - |  |  | $ | 1,309 |  |  | $ | - |  |  | $ | - |
Commercial Real Estate |  | $ | 4,187 |  |  | $ | 4,187 |  |  | $ | 500 |  |  | $ | 4,465 |  |  | $ | 48 |  |  | $ | 14 |
Commercial and Industrial |  | $ | 2,003 |  |  | $ | 2,003 |  |  | $ | 1,936 |  |  | $ | 2,052 |  |  | $ | 72 |  |  | $ | - |
Consumer |  | $ | 17 |  |  | $ | 17 |  |  | $ | - |  |  | $ | 17 |  |  | $ | - |  |  | $ | - |
|  | (In Thousands) |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | YTD |
|  |  |  |  |  |  |  |  |  |  | YTD |  |  | YTD |  |  | Interest |
Nine Months Ended September 30, 2022 |  |  |  |  | Unpaid |  |  |  |  |  | Average |  |  | Interest |  |  | Income |
|  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |  |  | Recognized |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |  |  | Cash Basis |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 624 |  |  | $ | 624 |  |  | $ | - |  |  | $ | 372 |  |  | $ | 3 |  |  | $ | 10 |
Agricultural Real Estate |  |  | 2,588 |  |  |  | 2,693 |  |  |  | - |  |  |  | 1,953 |  |  |  | 19 |  |  |  | 6 |
Agricultural |  |  | 1,334 |  |  |  | 1,334 |  |  |  | - |  |  |  | 591 |  |  |  | - |  |  |  | 2 |
Commercial Real Estate |  |  | 1,251 |  |  |  | 1,251 |  |  |  | - |  |  |  | 1,162 |  |  |  | 20 |  |  |  | 33 |
Commercial and Industrial |  |  | 21 |  |  |  | 21 |  |  |  | - |  |  |  | 175 |  |  |  | 2 |  |  |  | 10 |
Consumer |  |  | 17 |  |  |  | 17 |  |  |  | - |  |  |  | 18 |  |  |  | 1 |  |  |  | - |
With a specific allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Agricultural Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,850 |  |  |  | - |  |  |  | - |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Real Estate |  |  | 2,936 |  |  |  | 2,936 |  |  |  | 500 |  |  |  | 3,270 |  |  |  | 113 |  |  |  | - |
Commercial and Industrial |  |  | 1,982 |  |  |  | 1,982 |  |  |  | 1,936 |  |  |  | 1,665 |  |  |  | 138 |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3 |  |  |  | - |  |  |  | - |
Totals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 624 |  |  | $ | 624 |  |  | $ | - |  |  | $ | 372 |  |  | $ | 3 |  |  | $ | 10 |
Agricultural Real Estate |  | $ | 2,588 |  |  | $ | 2,693 |  |  | $ | - |  |  | $ | 3,803 |  |  | $ | 19 |  |  | $ | 6 |
Agricultural |  | $ | 1,334 |  |  | $ | 1,334 |  |  | $ | - |  |  | $ | 591 |  |  | $ | - |  |  | $ | 2 |
Commercial Real Estate |  | $ | 4,187 |  |  | $ | 4,187 |  |  | $ | 500 |  |  | $ | 4,432 |  |  | $ | 133 |  |  | $ | 33 |
Commercial and Industrial |  | $ | 2,003 |  |  | $ | 2,003 |  |  | $ | 1,936 |  |  | $ | 1,840 |  |  | $ | 140 |  |  | $ | 10 |
Consumer |  | $ | 17 |  |  | $ | 17 |  |  | $ | - |  |  | $ | 21 |  |  | $ | 1 |  |  | $ | - |
|  | (In Thousands) |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Interest |
Year Ended December 31, 2022 |  |  |  |  | Unpaid |  |  |  |  |  | Average |  |  | Interest |  |  | Income |
|  | Recorded |  |  | Principal |  |  | Related |  |  | Recorded |  |  | Income |  |  | Recognized |
|  | Investment |  |  | Balance |  |  | Allowance |  |  | Investment |  |  | Recognized |  |  | Cash Basis |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 509 |  |  | $ | 509 |  |  | $ | - |  |  | $ | 355 |  |  | $ | 5 |  |  | $ | 12 |
Agricultural Real Estate |  |  | 2,280 |  |  |  | 2,385 |  |  |  | - |  |  |  | 2,048 |  |  |  | 25 |  |  |  | 6 |
Agricultural |  |  | 152 |  |  |  | 152 |  |  |  | - |  |  |  | 588 |  |  |  | - |  |  |  | 2 |
Commercial Real Estate |  |  | 1,234 |  |  |  | 1,272 |  |  |  | - |  |  |  | 1,252 |  |  |  | 29 |  |  |  | 43 |
Commercial and Industrial |  |  | 17 |  |  |  | 417 |  |  |  | - |  |  |  | 135 |  |  |  | 2 |  |  |  | 10 |
Consumer |  |  | 2 |  |  |  | 2 |  |  |  | - |  |  |  | 15 |  |  |  | 1 |  |  |  | - |
With a specific allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  |  | 60 |  |  |  | 60 |  |  |  | 6 |  |  |  | 15 |  |  |  | - |  |  |  | 1 |
Agricultural Real Estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,388 |  |  |  | - |  |  |  | - |
Agricultural |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial Real Estate |  |  | 2,874 |  |  |  | 2,874 |  |  |  | 438 |  |  |  | 3,176 |  |  |  | 150 |  |  |  | - |
Commercial and Industrial |  |  | 1,564 |  |  |  | 1,564 |  |  |  | 1,551 |  |  |  | 1,736 |  |  |  | 149 |  |  |  | 23 |
Consumer |  |  | 165 |  |  |  | 165 |  |  |  | 1 |  |  |  | 2 |  |  |  | - |  |  |  | - |
Totals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer Real Estate |  | $ | 569 |  |  | $ | 569 |  |  | $ | 6 |  |  | $ | 370 |  |  | $ | 5 |  |  | $ | 13 |
Agricultural Real Estate |  | $ | 2,280 |  |  | $ | 2,385 |  |  | $ | - |  |  | $ | 3,436 |  |  | $ | 25 |  |  | $ | 6 |
Agricultural |  | $ | 152 |  |  | $ | 152 |  |  | $ | - |  |  | $ | 588 |  |  | $ | - |  |  | $ | 2 |
Commercial Real Estate |  | $ | 4,108 |  |  | $ | 4,146 |  |  | $ | 438 |  |  | $ | 4,428 |  |  | $ | 179 |  |  | $ | 43 |
Commercial and Industrial |  | $ | 1,581 |  |  | $ | 1,981 |  |  | $ | 1,551 |  |  | $ | 1,871 |  |  | $ | 151 |  |  | $ | 33 |
Consumer |  | $ | 167 |  |  | $ | 167 |  |  | $ | 1 |  |  | $ | 17 |  |  | $ | 1 |  |  | $ | - |
As of September 30, 2023, the Company had no foreclosed residential real estate property obtained by physical possession and $92 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process according to local jurisdictions. This compares to the Company having no foreclosed residential real estate property obtained by physical possession or consumer mortgage loans secured by residential real estate properties for which foreclosure proceeding were in process according to local jurisdictions as of December 31, 2022. As of September 30, 2022, the Company had no foreclosed residential real estate property obtained by physical possession and $211 thousand of consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings were in process according to local jurisdictions. On January 1, 2023, the Company adopted Accounting Standards Update ("ASU") No. 2016-13 - "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and implemented the current expected credit losses accounting standard. As a result, the Company recorded a one-time adjustment from equity into the allowance for credit losses for loan losses and unfunded commitment liability in the amount of $4.5 million, or $3.4 million, net of tax. Allowance for Credit Losses (ACL) has a direct impact on the provision expense. An increase in the ACL is funded through recoveries and provision expense. The Company segregates its allowance into two reserves: The Allowance for Credit Losses (ACL) and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total Current Expected Credit Losses (CECL). The allowance does not include an accretable yield of $4.6 million and $6.3 million as of September 30, 2023 and December 31, 2022, respectively, nor a nonaccretable yield of $138 thousand as of December 31, 2022, related to the acquisitions of Bank of Geneva in 2019 and Ossian State Bank and Perpetual Federal Savings Bank in 2021 and Peoples Federal Savings and Loan Bank in 2022 as previously discussed in Note 2. The AULC is reported within other liabilities while the ACL portion associated with loans is netted within the loans, net asset line on the Company’s Condensed Consolidated Balance Sheets. The following tables break down the activity within ACL for each loan portfolio classification and shows the contribution provided by both the recoveries and the provision along with the reduction of the allowance caused by charge-offs for the three and nine months ended September 30, 2023:
|  | (In Thousands) |
|  | Consumer Real Estate |  |  | Agricultural Real Estate |  |  | Agricultural |  |  | Commercial Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Total |
Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR CREDIT LOSSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 3,998 |  |  | $ | 237 |  |  | $ | 107 |  |  | $ | 16,681 |  |  | $ | 2,767 |  |  | $ | 1,120 |  |  | $ | 24,910 |
Provision for credit losses - loans |  |  | (170 | ) |  |  | 77 |  |  |  | 78 |  |  |  | 123 |  |  |  | (65 | ) |  |  | 417 |  |  |  | 460 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (148 | ) |  |  | (148 | )
Recoveries |  |  | 14 |  |  |  | 1 |  |  |  | - |  |  |  | 1 |  |  |  | 6 |  |  |  | 33 |  |  |  | 55 |
Ending Balance |  | $ | 3,842 |  |  | $ | 315 |  |  | $ | 185 |  |  | $ | 16,805 |  |  | $ | 2,708 |  |  | $ | 1,422 |  |  | $ | 25,277 |
|  | (In Thousands) |
|  | Consumer Real Estate |  |  |  | Agricultural Real Estate |  |  | Agricultural |  |  | Commercial Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Total |
Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR CREDIT LOSSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 998 |  |  |  | $ | 349 |  |  | $ | 751 |  |  | $ | 11,924 |  |  | $ | 5,382 |  |  | $ | 909 |  |  | $ | 20,313 |
Adoption of ASU 2016-13 |  |  | 2,874 |  |  | - |  |  | (166 | ) |  |  | (650 | ) |  |  | 3,501 |  |  |  | (2,165 | ) |  |  | 170 |  |  |  | 3,564 |
Provision for credit losses-loans |  |  | (57 | ) |  |  |  | 27 |  |  |  | 84 |  |  |  | 1,374 |  |  |  | (527 | ) |  |  | 519 |  |  |  | 1,420 |
Charge-offs |  |  | - |  |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (330 | ) |  |  | (330 | )
Recoveries |  |  | 27 |  |  |  |  | 105 |  |  |  | - |  |  |  | 6 |  |  |  | 18 |  |  |  | 154 |  |  |  | 310 |
Ending Balance |  | $ | 3,842 |  |  |  | $ | 315 |  |  | $ | 185 |  |  | $ | 16,805 |  |  | $ | 2,708 |  |  | $ | 1,422 |  |  | $ | 25,277 |
The following tables break down the activity in the AULC for the three and nine months ended September 30, 2023:
|  | (In Thousands) |
|  | Unfunded Loan Commitment & Letters of Credit |
Three Months Ended September 30, 2023 |  |  |
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |  |  |
Beginning balance |  | $ | 2,099 |
Provision for credit losses - off balance sheet credit exposures |  |  | (76 | )
Charge-offs |  |  | - |
Recoveries |  |  | - |
Ending Balance |  | $ | 2,023 |
|  | (In Thousands) |
|  | Unfunded Loan Commitment & Letters of Credit |
Nine Months Ended September 30, 2023 |  |  |
ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT |  |  |
Beginning balance |  | $ | 1,262 |
Adoption of ASU 2016-13 |  |  | 904 |
Provision for credit losses-off balance sheet credit exposures |  |  | (143 | )
Charge-offs |  |  | - |
Recoveries |  |  | - |
Ending Balance |  | $ | 2,023 |
Additional analysis, presented in thousands, related to the ALLL for the three and nine months ended September 30, 2022 in addition to the ending balances, presented in thousands, as of December 31, 2022 is as follows:
|  | Consumer Real Estate |  |  | Agricultural Real Estate |  |  | Agricultural |  |  | Commercial Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Unfunded Loan Commitment & Letters of Credit |  |  | Unallocated |  |  | Total |
Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR CREDIT LOSSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 939 |  |  | $ | 346 |  |  | $ | 754 |  |  | $ | 10,427 |  |  | $ | 5,365 |  |  | $ | 567 |  |  | $ | 1,167 |  |  | $ | 26 |  |  | $ | 19,591 |
Charge Offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (123 | ) |  |  | - |  |  |  | - |  |  |  | (123 | )
Recoveries |  |  | 6 |  |  |  | - |  |  |  | 1 |  |  |  | 2 |  |  |  | 8 |  |  |  | 35 |  |  |  | - |  |  |  | - |  |  |  | 52 |
Provision (Credit) |  |  | (19 | ) |  |  | 10 |  |  |  | 1 |  |  |  | 1,122 |  |  |  | 297 |  |  |  | 246 |  |  |  | - |  |  |  | (20 | ) |  |  | 1,637 |
Other Non-interest expense related to unfunded |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (49 | ) |  |  | - |  |  |  | (49 | )
Ending Balance |  | $ | 926 |  |  | $ | 356 |  |  | $ | 756 |  |  | $ | 11,551 |  |  | $ | 5,670 |  |  | $ | 725 |  |  | $ | 1,118 |  |  | $ | 6 |  |  | $ | 21,108 |
Ending balance: individually evaluated for impairment |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 500 |  |  | $ | 1,936 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,436 |
Ending balance: collectively evaluated for impairment |  | $ | 926 |  |  | $ | 356 |  |  | $ | 756 |  |  | $ | 11,051 |  |  | $ | 3,734 |  |  | $ | 725 |  |  | $ | 1,118 |  |  | $ | 6 |  |  | $ | 18,672 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
FINANCING RECEIVABLES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 416,044 |  |  | $ | 204,787 |  |  | $ | 128,818 |  |  | $ | 1,061,904 |  |  | $ | 260,000 |  |  | $ | 71,063 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,142,616 |
Ending balance: individually evaluated for impairment |  | $ | 624 |  |  | $ | 2,588 |  |  | $ | 1,334 |  |  | $ | 4,187 |  |  | $ | 2,003 |  |  | $ | 17 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,753 |
Ending balance: collectively evaluated for impairment |  | $ | 414,951 |  |  | $ | 202,003 |  |  | $ | 127,484 |  |  | $ | 1,057,699 |  |  | $ | 257,948 |  |  | $ | 71,046 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,131,131 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | 469 |  |  | $ | 196 |  |  | $ | - |  |  | $ | 18 |  |  | $ | 49 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 732 |
|  | Consumer Real Estate |  |  | Agricultural Real Estate |  |  | Agricultural |  |  | Commercial Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Unfunded Loan Commitment & Letters of Credit |  |  | Unallocated |  |  | Total |
Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALLOWANCE FOR CREDIT LOSSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 857 |  |  | $ | 1,040 |  |  | $ | 709 |  |  | $ | 9,130 |  |  | $ | 3,847 |  |  | $ | 625 |  |  | $ | 1,041 |  |  | $ | 34 |  |  | $ | 17,283 |
Charge Offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | (328 | ) |  |  | - |  |  |  | - |  |  |  | (334 | )
Recoveries |  |  | 15 |  |  |  | - |  |  |  | 1 |  |  |  | 7 |  |  |  | 82 |  |  |  | 132 |  |  |  | - |  |  |  | - |  |  |  | 237 |
Provision (Credit) |  |  | 54 |  |  |  | (684 | ) |  |  | 46 |  |  |  | 2,414 |  |  |  | 1,747 |  |  |  | 296 |  |  |  | - |  |  |  | (28 | ) |  |  | 3,845 |
Other Non-interest expense related to unfunded |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 77 |  |  |  | - |  |  |  | 77 |
Ending Balance |  | $ | 926 |  |  | $ | 356 |  |  | $ | 756 |  |  | $ | 11,551 |  |  | $ | 5,670 |  |  | $ | 725 |  |  | $ | 1,118 |  |  | $ | 6 |  |  | $ | 21,108 |
Ending balance: individually evaluated for impairment |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 500 |  |  | $ | 1,936 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 2,436 |
Ending balance: collectively evaluated for impairment |  | $ | 926 |  |  | $ | 356 |  |  | $ | 756 |  |  | $ | 11,051 |  |  | $ | 3,734 |  |  | $ | 725 |  |  | $ | 1,118 |  |  | $ | 6 |  |  | $ | 18,672 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
FINANCING RECEIVABLES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 416,044 |  |  | $ | 204,787 |  |  | $ | 128,818 |  |  | $ | 1,061,904 |  |  | $ | 260,000 |  |  | $ | 71,063 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,142,616 |
Ending balance: individually evaluated for impairment |  | $ | 624 |  |  | $ | 2,588 |  |  | $ | 1,334 |  |  | $ | 4,187 |  |  | $ | 2,003 |  |  | $ | 17 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,753 |
Ending balance: collectively evaluated for impairment |  | $ | 414,951 |  |  | $ | 202,003 |  |  | $ | 127,484 |  |  | $ | 1,057,699 |  |  | $ | 257,948 |  |  | $ | 71,046 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,131,131 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | 469 |  |  | $ | 196 |  |  | $ | - |  |  | $ | 18 |  |  | $ | 49 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 732 |
December 31, 2022 |  | Consumer Real Estate |  |  | Agricultural Real Estate |  |  | Agricultural |  |  | Commercial Real Estate |  |  | Commercial and Industrial |  |  | Consumer |  |  | Unfunded Loan Commitment & Letters of Credit |  |  | Unallocated |  |  | Total |
ALLOWANCE FOR CREDIT LOSSES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 857 |  |  | $ | 1,040 |  |  | $ | 709 |  |  | $ | 9,130 |  |  | $ | 3,847 |  |  | $ | 625 |  |  | $ | 1,041 |  |  | $ | 34 |  |  | $ | 17,283 |
Charge Offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (418 | ) |  |  | (409 | ) |  |  | - |  |  |  | - |  |  |  | (827 | )
Recoveries |  |  | 20 |  |  |  | - |  |  |  | 7 |  |  |  | 9 |  |  |  | 93 |  |  |  | 169 |  |  |  | - |  |  |  | - |  |  |  | 298 |
Provision (Credit) |  |  | 121 |  |  |  | (691 | ) |  |  | 35 |  |  |  | 2,785 |  |  |  | 1,860 |  |  |  | 506 |  |  |  | - |  |  |  | (16 | ) |  |  | 4,600 |
Other Non-interest expense related to unfunded |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 221 |  |  |  | - |  |  |  | 221 |
Ending Balance |  | $ | 998 |  |  | $ | 349 |  |  | $ | 751 |  |  | $ | 11,924 |  |  | $ | 5,382 |  |  | $ | 891 |  |  | $ | 1,262 |  |  | $ | 18 |  |  | $ | 21,575 |
Ending balance: individually evaluated for impairment |  | $ | 6 |  |  | $ | - |  |  | $ | - |  |  | $ | 438 |  |  | $ | 1,551 |  |  | $ | 1 |  |  | $ | - |  |  | $ | - |  |  | $ | 1,996 |
Ending balance: collectively evaluated for impairment |  | $ | 992 |  |  | $ | 349 |  |  | $ | 751 |  |  | $ | 11,486 |  |  | $ | 3,831 |  |  | $ | 890 |  |  | $ | 1,262 |  |  | $ | 18 |  |  | $ | 19,579 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
FINANCING RECEIVABLES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | $ | 494,423 |  |  | $ | 220,514 |  |  | $ | 128,926 |  |  | $ | 1,150,511 |  |  | $ | 272,119 |  |  | $ | 89,894 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,356,387 |
Ending balance: individually evaluated for impairment |  | $ | 569 |  |  | $ | 2,280 |  |  | $ | 152 |  |  | $ | 4,108 |  |  | $ | 1,581 |  |  | $ | 167 |  |  | $ | - |  |  | $ | - |  |  | $ | 8,857 |
Ending balance: collectively evaluated for impairment |  | $ | 493,449 |  |  | $ | 218,039 |  |  | $ | 128,774 |  |  | $ | 1,146,389 |  |  | $ | 270,493 |  |  | $ | 89,727 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,346,871 |
Ending balance: loans acquired with deteriorated credit quality |  | $ | 405 |  |  | $ | 195 |  |  | $ | - |  |  | $ | 14 |  |  | $ | 45 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 659 |

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
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- References No definition available. + Details
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