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Loans | 9 Months Ended
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Sep. 30, 2023
Loans [Abstract] |
Loans | Note 6 – Loans The Company grants commercial, industrial, agricultural, residential, and consumer loans primarily to customers throughout north central, central and south central Pennsylvania, southern New York and Wilmington and Dover, Delaware. The recently completed HVBC acquisition has expanded our lending market further into southeast Pennsylvania, including Montgomery, Bucks and Philadelphia Counties as well as Burlington County, New Jersey. Although the Company had a diversified loan portfolio at September 30, 2023 and December 31, 2022, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within these regions. The following table summarizes the primary segments of the loan portfolio and how those segments are analyzed within the allowance for credit losses - loans as of September 30, 2023 and December 31, 2022 (in thousands):
|  | September 30, 2023 |  |  | December 31, 2022 |
Real estate loans: |  |  |  |  |  |
Residential |  | $ | 356,381 |  |  | $ | 210,213 |
Commercial |  |  | 1,081,123 |  |  |  | 876,569 |
Agricultural |  |  | 314,164 |  |  |  | 313,614 |
Construction |  |  | 175,320 |  |  |  | 80,691 |
Consumer |  |  | 115,753 |  |  |  | 86,650 |
Other commercial loans |  |  | 120,347 |  |  |  | 63,222 |
Other agricultural loans |  |  | 26,648 |  |  |  | 34,832 |
State and political subdivision loans |  |  | 56,660 |  |  |  | 59,208 |
Total |  |  | 2,246,396 |  |  |  | 1,724,999 |
Allowance for credit losses - loans |  |  | 21,455 |  |  |  | 18,552 |
Net loans |  | $ | 2,224,941 |  |  | $ | 1,706,447 |
Allowance for Credit Losses, effective January 1, 2023 As discussed in Note 1 “Basis of Presentation”, the Company adopted CECL effective January 1, 2023. CECL requires estimated credit losses on loans to be determined based on an expected life of loan model, as compared to an incurred loss model (in effect for periods prior to 2023). Accordingly, allowance for losses disclosures subsequent to January 1, 2023 are not always comparable to prior dates. In addition, certain new disclosures required under CECL are not applicable to prior periods. As a result, the following tables present disclosures separately for each period, where appropriate. New disclosures required under CECL are only shown for the current period and are noted. See Note 1, “Basis of Presentation”, for a summary of the impact of adopting CECL on January 1, 2023. Under CECL, loans evaluated for impairment consist of non-accrual commercial loans and recently modified loans that were experiencing financial difficulty at the time of the modification. Under the incurred loss model in effect prior to the adoption of CECL, loans evaluated individually for impairment were referred to as impaired loans. The allowance for credit losses related to loans consists of loans evaluated collectively and individually for expected credit losses. It represents an estimate of credit losses over the expected life of the loans as of the balance sheet date and is recorded as a reduction to net loans. The allowance for credit losses for off-balance sheet credit exposures includes estimated losses on unfunded loan commitments, letters of credit and other off-balance sheet credit exposures. The total allowance for credit losses is increased by charges to expense, through the provision for credit losses, and decreased by charge-offs, net of recoveries. The following table presents the components of the allowance for credit losses as of September 30, 2023 (in thousands):
|  | September 30, 2023 |
Allowance for Credit Losses - Loans |  | $ | 21,455 |
Allowance for Credit Losses - Off-Balance Sheet credit Exposure |  |  | 1,265 |
Total allowance for credit losses |  | $ | 22,720 |
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2023 (in thousands):
|  | Allowance for Credit Losses - Loans |  |  | Allowance for Credit Losses - Off- Balance Sheet credit Exposure |  |  | Total |
Balance at June 30, 2023 |  | $ | 21,652 |  |  | $ | 1,391 |  |  | $ | 23,043 |
Loans charge-off |  |  | (808 | ) |  |  | - |  |  |  | (808 | )
Recoveries of loans previously charged-off |  |  | 10 |  |  |  | - |  |  |  | 10 |
Net loans charged-off |  |  | (798 | ) |  |  | - |  |  |  | (798 | )
Provision for credit losses |  |  | 601 |  |  |  | (126 | ) |  |  | 475 |
Balance at September 30, 2023 |  | $ | 21,455 |  |  | $ | 1,265 |  |  | $ | 22,720 |
|  | Allowance for Credit Losses -Loans |  |  | Allowance for Credit Losses - Off- Balance Sheet credit Exposure |  |  | Total |
Balance at December 31, 2022 |  | $ | 18,552 |  |  | $ | 165 |  |  | $ | 18,717 |
Impact of adopting CECL |  |  | (3,300 | ) |  |  | 1,064 |  |  |  | (2,236 | )
Allowance for credit loss on PCD acquired loans |  |  | 1,689 |  |  |  | - |  |  |  | 1,689 |
Loans charge-off |  |  | (819 | ) |  |  | - |  |  |  | (819 | )
Recoveries of loans previously charged-off |  |  | 41 |  |  |  | - |  |  |  | 41 |
Net loans charged-off |  |  | (778 | ) |  |  | - |  |  |  | (778 | )
Provision for credit losses - acquisition day 1 non-PCD |  |  | 4,591 |  |  |  | - |  |  |  | 4,591 |
Provision for credit losses |  |  | 701 |  |  |  | 36 |  |  |  | 737 |
Balance at September 30, 2023 |  | $ | 21,455 |  |  | $ | 1,265 |  |  | $ | 22,720 |
The following tables presents the activity in the allowance for credit losses – loans, by portfolio segment, for the three and nine months ended September 30, 2023 (in thousands).
|  | For the three months ended September 30, 2023 |
|  | Balance at June 30, 2023 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at September 30, 2023 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 2,675 |  |  | $ | - |  |  | $ | - |  |  | $ | (110 | ) |  | $ | 2,565 |
Commercial |  |  | 9,274 |  |  |  | - |  |  |  | 2 |  |  |  | (91 | ) |  |  | 9,185 |
Agricultural |  |  | 3,579 |  |  |  | - |  |  |  | - |  |  |  | (104 | ) |  |  | 3,475 |
Construction |  |  | 1,667 |  |  |  | - |  |  |  | - |  |  |  | 166 |  |  |  | 1,833 |
Consumer |  |  | 1,259 |  |  |  | (45 | ) |  |  | 3 |  |  |  | 503 |  |  |  | 1,720 |
Other commercial loans |  |  | 2,477 |  |  |  | (763 | ) |  |  | 5 |  |  |  | 353 |  |  |  | 2,072 |
Other agricultural loans |  |  | 268 |  |  |  | - |  |  |  | - |  |  |  | (39 | ) |  |  | 229 |
State and political subdivision loans |  |  | 52 |  |  |  | - |  |  |  | - |  |  |  | (4 | ) |  |  | 48 |
Unallocated |  |  | 401 |  |  |  | - |  |  |  | - |  |  |  | (73 | ) |  |  | 328 |
Total |  | $ | 21,652 |  |  | $ | (808 | ) |  | $ | 10 |  |  | $ | 601 |  |  | $ | 21,455 |
|  | For the nine months ended September 30, 2023 |
|  | Balance at December 31, 2022 |  |  | Impact of adopting CECL |  |  | Allowance for credit loss on PCD acquired loans |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at September 30, 2023 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,056 |  |  | $ | 79 |  |  | $ | 108 |  |  | $ | (1 | ) |  | $ | - |  |  | $ | 1,323 |  |  | $ | 2,565 |
Commercial |  |  | 10,120 |  |  |  | (3,070 | ) |  |  | 39 |  |  |  | - |  |  |  | 2 |  |  |  | 2,094 |  |  |  | 9,185 |
Agricultural |  |  | 4,589 |  |  |  | (1,145 | ) |  |  | 37 |  |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | 3,475 |
Construction |  |  | 801 |  |  |  | (103 | ) |  |  |  |  |  |  | - |  |  |  | - |  |  |  | 1,135 |  |  |  | 1,833 |
Consumer |  |  | 135 |  |  |  | 1,040 |  |  |  | 677 |  |  |  | (55 | ) |  |  | 30 |  |  |  | (107 | ) |  |  | 1,720 |
Other commercial loans |  |  | 1,040 |  |  |  | (328 | ) |  |  | 828 |  |  |  | (763 | ) |  |  | 9 |  |  |  | 1,286 |  |  |  | 2,072 |
Other agricultural loans |  |  | 489 |  |  |  | (219 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (41 | ) |  |  | 229 |
State and political subdivision loans |  |  | 322 |  |  |  | (280 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6 |  |  |  | 48 |
Unallocated |  |  | - |  |  |  | 726 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (398 | ) |  |  | 328 |
Total |  | $ | 18,552 |  |  | $ | (3,300 | ) |  | $ | 1,689 |  |  | $ | (819 | ) |  | $ | 41 |  |  | $ | 5,292 |  |  | $ | 21,455 |
The following table presents the allowance for credit losses – loans and amortized cost basis of loans under CECL methodology as of September 30, 2023 (in thousands):
|  | Allowance for Credit Losses - Loans |  |  | Loans |
September 30, 2023 |  | Collectively evaluated |  |  | Individually evaluated |  |  | Total Allowance for Credit Losses - Loans |  |  | Collectively evaluated |  |  | Individually evaluated |  |  | Total Loans |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 2,484 |  |  | $ | 81 |  |  | $ | 2,565 |  |  | $ | 355,129 |  |  | $ | 1,252 |  |  | $ | 356,381 |
Commercial |  |  | 9,030 |  |  |  | 155 |  |  |  | 9,185 |  |  |  | 1,078,360 |  |  |  | 2,763 |  |  |  | 1,081,123 |
Agricultural |  |  | 3,456 |  |  |  | 19 |  |  |  | 3,475 |  |  |  | 310,507 |  |  |  | 3,657 |  |  |  | 314,164 |
Construction |  |  | 1,547 |  |  |  | 286 |  |  |  | 1,833 |  |  |  | 172,963 |  |  |  | 2,357 |  |  |  | 175,320 |
Consumer |  |  | 1,316 |  |  |  | 404 |  |  |  | 1,720 |  |  |  | 114,613 |  |  |  | 1,140 |  |  |  | 115,753 |
Other commercial loans |  |  | 1,697 |  |  |  | 375 |  |  |  | 2,072 |  |  |  | 118,419 |  |  |  | 1,928 |  |  |  | 120,347 |
Other agricultural loans |  |  | 229 |  |  |  | - |  |  |  | 229 |  |  |  | 26,349 |  |  |  | 299 |  |  |  | 26,648 |
State and political subdivision loans |  |  | 48 |  |  |  | - |  |  |  | 48 |  |  |  | 56,660 |  |  |  | - |  |  |  | 56,660 |
Unallocated |  |  | 328 |  |  |  | - |  |  |  | 328 |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 20,135 |  |  | $ | 1,320 |  |  | $ | 21,455 |  |  | $ | 2,233,000 |  |  | $ | 13,396 |  |  | $ | 2,246,396 |
Allowance for Credit Losses, prior to January 1, 2023 The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments. The allowance for loan losses represents management’s estimate of incurred losses in the loan portfolio as of the balance sheet date and is recorded as a reduction to net loans. The reserve for unfunded lending commitments represents management’s estimate of incurred losses in unfunded commitments and letters of credit, and is recorded in other liabilities on the consolidated balance sheet. The allowance for credit losses is increased by charges to expense, through the provision for credit losses and decreased by charge-offs, net of recoveries. The following table presents the components of the allowance for credit losses as of December 31, 2022 (in thousands):
|  | December 31, 2022 |
Allowance for loan Losses |  | $ | 18,552 |
Reserve for unfunded commitments |  |  | 165 |
Total allowance for credit losses |  | $ | 18,717 |
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2022 (in thousands):
|  | Allowance for Credit Losses - Loans |  |  | Reserve for unfunded commitments |  |  | Total |
Balance at June 30, 2022 |  | $ | 17,570 |  |  | $ | 165 |  |  | $ | 17,735 |
Loans charge-off |  |  | (13 | ) |  |  | - |  |  |  | (13 | )
Recoveries of loans previously charged-off |  |  | 9 |  |  |  | - |  |  |  | 9 |
Net loans charged-off |  |  | (4 | ) |  |  | - |  |  |  | (4 | )
Provision for credit losses |  |  | 725 |  |  |  | - |  |  |  | 725 |
Balance at September 30, 2022 |  | $ | 18,291 |  |  | $ | 165 |  |  | $ | 18,456 |
Balance at December 31, 2021 |  | $ | 17,304 |  |  | $ | 165 |  |  | $ | 17,469 |
Loans charge-off |  |  | (464 | ) |  |  | - |  |  |  | (464 | )
Recoveries of loans previously charged-off |  |  | 26 |  |  |  | - |  |  |  | 26 |
Net loans charged-off |  |  | (438 | ) |  |  | - |  |  |  | (438 | )
Provision for credit losses |  |  | 1,425 |  |  |  | - |  |  |  | 1,425 |
Balance at September 30, 2022 |  | $ | 18,291 |  |  | $ | 165 |  |  | $ | 18,456 |
The following table presents the activity in the allowance for loan losses, by portfolio segment, for the three and nine months ended September 30, 2022 (in thousands).
|  | For the three months ended September 30, 2022 |
|  | Balance at June 30, 2022 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at September 30, 2022 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,015 |  |  | $ | - |  |  | $ | - |  |  | $ | (10 | ) |  | $ | 1,005 |
Commercial |  |  | 9,216 |  |  |  | - |  |  |  | - |  |  |  | 721 |  |  |  | 9,937 |
Agricultural |  |  | 4,484 |  |  |  | - |  |  |  | - |  |  |  | 54 |  |  |  | 4,538 |
Construction |  |  | 563 |  |  |  | - |  |  |  | - |  |  |  | 115 |  |  |  | 678 |
Consumer |  |  | 464 |  |  |  | (13 | ) |  |  | 5 |  |  |  | (224 | ) |  |  | 232 |
Other commercial loans |  |  | 1,173 |  |  |  | - |  |  |  | 4 |  |  |  | (784 | ) |  |  | 393 |
Other agricultural loans |  |  | 446 |  |  |  | - |  |  |  | - |  |  |  | 913 |  |  |  | 1,359 |
State and political subdivision loans |  |  | 323 |  |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | 325 |
Unallocated |  |  | (114 | ) |  |  | - |  |  |  | - |  |  |  | (62 | ) |  |  | (176 | )
Total |  | $ | 17,570 |  |  | $ | (13 | ) |  | $ | 9 |  |  | $ | 725 |  |  | $ | 18,291 |
|  | For the nine months ended September 30, 2022 |
|  | Balance at December 31, 2021 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision |  |  | Balance at September 30, 2022 |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 1,147 |  |  | $ | - |  |  | $ | - |  |  | $ | (142 | ) |  | $ | 1,005 |
Commercial |  |  | 8,099 |  |  |  | - |  |  |  | - |  |  |  | 1,838 |  |  |  | 9,937 |
Agricultural |  |  | 4,729 |  |  |  | - |  |  |  | - |  |  |  | (191 | ) |  |  | 4,538 |
Construction |  |  | 434 |  |  |  | - |  |  |  | - |  |  |  | 244 |  |  |  | 678 |
Consumer |  |  | 262 |  |  |  | (30 | ) |  |  | 15 |  |  |  | (15 | ) |  |  | 232 |
Other commercial loans |  |  | 1,023 |  |  |  | (434 | ) |  |  | 11 |  |  |  | (207 | ) |  |  | 393 |
Other agricultural loans |  |  | 558 |  |  |  | - |  |  |  | - |  |  |  | 801 |  |  |  | 1,359 |
State and political subdivision loans |  |  | 281 |  |  |  | - |  |  |  | - |  |  |  | 44 |  |  |  | 325 |
Unallocated |  |  | 771 |  |  |  | - |  |  |  | - |  |  |  | (947 | ) |  |  | (176 | )
Total |  | $ | 17,304 |  |  | $ | (464 | ) |  | $ | 26 |  |  | $ | 1,425 |  |  | $ | 18,291 |
The following table presents loans and their related allowance for loan losses, by portfolio segment, as of December 31, 2022 (in thousands):
|  | Allowance for loan losses |  |  | Loans |
|  | Collectively evaluated for impairment |  |  | Individually evaluated for impairment |  |  | Total allowance for loan losses |  |  | Collectively evaluated for impairment |  |  | Individually evaluated for impairment |  |  | Loans acquired with deteriorated credit quality |  |  | Total Loans |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential |  | $ | 4 |  |  | $ | 1,052 |  |  | $ | 1,056 |  |  | $ | 209,869 |  |  | $ | 335 |  |  | $ | 9 |  |  | $ | 210,213 |
Commercial |  |  | 57 |  |  |  | 10,063 |  |  |  | 10,120 |  |  |  | 869,038 |  |  |  | 5,675 |  |  |  | 1,856 |  |  |  | 876,569 |
Agricultural |  |  | 24 |  |  |  | 4,565 |  |  |  | 4,589 |  |  |  | 306,793 |  |  |  | 5,380 |  |  |  | 1,441 |  |  |  | 313,614 |
Construction |  |  | - |  |  |  | 801 |  |  |  | 801 |  |  |  | 80,691 |  |  |  | - |  |  |  | - |  |  |  | 80,691 |
Consumer |  |  | 4 |  |  |  | 131 |  |  |  | 135 |  |  |  | 86,646 |  |  |  | 4 |  |  |  | - |  |  |  | 86,650 |
Other commercial loans |  |  | 13 |  |  |  | 1,027 |  |  |  | 1,040 |  |  |  | 63,120 |  |  |  | 102 |  |  |  | - |  |  |  | 63,222 |
Other agricultural loans |  |  | - |  |  |  | 489 |  |  |  | 489 |  |  |  | 34,359 |  |  |  | 473 |  |  |  | - |  |  |  | 34,832 |
State and political subdivision loans |  |  | - |  |  |  | 322 |  |  |  | 322 |  |  |  | 59,208 |  |  |  | - |  |  |  | - |  |  |  | 59,208 |
Total |  | $ | 102 |  |  | $ | 18,450 |  |  | $ | 18,552 |  |  | $ | 1,709,724 |  |  | $ | 11,969 |  |  | $ | 3,306 |  |  | $ | 1,724,999 |
Non-performing Loans Non-performing loans include those loans that are considered nonaccrual, described in more detail below and all loans past due 90 or more days. Loans are considered for non-accrual status upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans, or if full payment of principal and interest is not expected. Additionally, if management is made aware of other information including bankruptcy, repossession, death, or legal proceedings, the loan may be placed on non-accrual status. If a loan is 90 days or more past due and is well secured and in the process of collection, it may still be considered accruing. The following table reflects the non-performing loan receivables, as well as those on non-accrual status as of September 30, 2023 and December 31, 2022, respectively. The balances are presented by class of loan receivable (in thousands):
|  | September 30, 2023 |  |  | December 31, 2022 |
|  | Nonaccrual With a related allowance |  |  | Nonaccrual Without a related allowance |  |  | 90 days or greater past due and accruing |  |  | Total non-performing loans |  |  | Nonaccrual |  |  | 90 days or greater past due and accruing |  |  | Total non-performing loans |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 318 |  |  | $ | 2,517 |  |  | $ | - |  |  | $ | 2,835 |  |  | $ | 562 |  |  | $ | - |  |  | $ | 562 |
Home Equity |  |  | - |  |  |  | 121 |  |  |  | - |  |  |  | 121 |  |  |  | 29 |  |  |  | - |  |  |  | 29 |
Commercial |  |  | 260 |  |  |  | 1,337 |  |  |  | - |  |  |  | 1,597 |  |  |  | 2,778 |  |  |  | - |  |  |  | 2,778 |
Agricultural |  |  | 182 |  |  |  | 2,803 |  |  |  | - |  |  |  | 2,985 |  |  |  | 3,222 |  |  |  | - |  |  |  | 3,222 |
Construction |  |  | 2,357 |  |  |  | - |  |  |  | - |  |  |  | 2,357 |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer |  |  | 1,007 |  |  |  | 10 |  |  |  | 8 |  |  |  | 1,025 |  |  |  | - |  |  |  | 7 |  |  |  | 7 |
Other commercial loans |  |  | 526 |  |  |  | 1,402 |  |  |  | - |  |  |  | 1,928 |  |  |  | 62 |  |  |  | - |  |  |  | 62 |
Other agricultural loans |  |  | - |  |  |  | 299 |  |  |  | - |  |  |  | 299 |  |  |  | 285 |  |  |  | - |  |  |  | 285 |
|  | $ | 4,650 |  |  | $ | 8,489 |  |  | $ | 8 |  |  | $ | 13,147 |  |  | $ | 6,938 |  |  | $ | 7 |  |  | $ | 6,945 |
As of September 30, 2023, there were $8.5 million of non-accrual loans that did not have a related allowance for credit losses. The estimated fair values of the collateral securing these loans exceeded their carrying amount, or the loans were previously charge down to the realizable collateral values. Accordingly, no specific valuation allowance was considered to be necessary. The following table presents, by class of loans and leases, the amortized cost basis of collateral-dependent nonaccrual loans and leases and type of collateral as of September 30, 2023 and December 31, 2022 (in thousands):
September 30, 2023 |  | Real Estate |  |  | Other |  |  | None |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 2,835 |  |  | $ | - |  |  | $ | - |  |  | $ | 2,835 |
Home Equity |  |  | 121 |  |  |  | - |  |  |  | - |  |  |  | 121 |
Commercial |  |  | 1,597 |  |  |  | - |  |  |  | - |  |  |  | 1,597 |
Agricultural |  |  | 2,985 |  |  |  | - |  |  |  | - |  |  |  | 2,985 |
Construction |  |  | 2,357 |  |  |  | - |  |  |  | - |  |  |  | 2,357 |
Consumer |  |  | - |  |  |  | - |  |  |  | 1,017 |  |  |  | 1,017 |
Other commercial loans |  |  | - |  |  |  | 1,928 |  |  |  | - |  |  |  | 1,928 |
Other agricultural loans |  |  | - |  |  |  | 299 |  |  |  | - |  |  |  | 299 |
|  | $ | 9,895 |  |  | $ | 2,227 |  |  | $ | 1,017 |  |  | $ | 13,139 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 562 |  |  | $ | - |  |  | $ | - |  |  | $ | 562 |
Home Equity |  |  | 29 |  |  |  | - |  |  |  | - |  |  |  | 29 |
Commercial |  |  | 2,778 |  |  |  | - |  |  |  | - |  |  |  | 2,778 |
Agricultural |  |  | 3,222 |  |  |  | - |  |  |  | - |  |  |  | 3,222 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other commercial loans |  |  | - |  |  |  | 62 |  |  |  | - |  |  |  | 62 |
Other agricultural loans |  |  | - |  |  |  | 285 |  |  |  | - |  |  |  | 285 |
|  | $ | 6,591 |  |  | $ | 347 |  |  | $ | - |  |  | $ | 6,938 |
Credit Quality Information For commercial real estate, agricultural real estate, construction, other commercial, other agricultural, and state and political subdivision loans, management uses a internal risk rating system to monitor and assess credit quality. During the third quarter of 2023, this rating system was expanded from a nine grade rating system to a ten grade rating system. The first six categories under the revised system are considered not criticized and are aggregated as “Pass” rated. Under the prior system, the first five categories were considered not criticized and aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The definitions of each rating are defined below:
| • | Pass (Grades 1-6) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.
| • | Special Mention (Grade 7) – This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.
| • | Substandard (Grade 8) – This loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
| • | Doubtful (Grade 9) – This loan grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.
| • | Loss (Grade 10) – This loan grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that continuance as an asset is not warranted.
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay the loan as agreed, the Company’s loan rating process includes several layers of internal and external oversight. The Company’s loan officers are responsible for the timely and accurate risk rating of the loans in each of their portfolios at origination and on an ongoing basis under the supervision of management. All commercial, agricultural and state and political relationships over $500,000 are reviewed annually to ensure the appropriateness of the loan grade. In addition, the Company engages an external consultant on at least an annual basis to: 1) review a minimum of 50% of the dollar volume of the commercial, agricultural and municipal loan portfolios on an annual basis, 2) review a sample of new loans originated for over $1.0 million in the last year, 3) review a sample of borrowers with commitments greater than or equal to $1.0 million, 4) review selected loan relationships over $750,000 which are over 30 days past due or classified Special Mention, Substandard, Doubtful, or Loss, and 5) such other loans which management or the consultant deems appropriate. The following tables represent credit exposures by internally assigned grades, by origination year, as of September 30, 2023 (in thousands):
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  | Revolving |  |  |  |
|  |  |  |  | Loans |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Amortized |  |  | Converted |  |  |  |
September 30, 2023 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Cost Basis |  |  | to Term |  |  | Total |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 65,893 |  |  | $ | 333,600 |  |  | $ | 215,198 |  |  | $ | 123,779 |  |  | $ | 82,640 |  |  | $ | 195,576 |  |  | $ | 29,476 |  |  | $ | 1,166 |  |  | $ | 1,047,328 |
Special Mention |  |  | - |  |  |  | 8,824 |  |  |  | 3,412 |  |  |  | 1,563 |  |  |  | 7,659 |  |  |  | 9,391 |  |  |  | 123 |  |  |  | - |  |  |  | 30,972 |
Substandard |  |  | - |  |  |  | 233 |  |  |  | 6 |  |  |  | - |  |  |  | 161 |  |  |  | 1,686 |  |  |  | 729 |  |  |  | 8 |  |  |  | 2,823 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 65,893 |  |  | $ | 342,657 |  |  | $ | 218,616 |  |  | $ | 125,342 |  |  | $ | 90,460 |  |  | $ | 206,653 |  |  | $ | 30,328 |  |  | $ | 1,174 |  |  | $ | 1,081,123 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Agricultural real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 16,361 |  |  | $ | 54,306 |  |  | $ | 29,828 |  |  | $ | 32,559 |  |  | $ | 26,760 |  |  | $ | 123,598 |  |  | $ | 12,926 |  |  | $ | 1,689 |  |  | $ | 298,027 |
Special Mention |  |  | 149 |  |  |  | 1,915 |  |  |  | 1,211 |  |  |  | - |  |  |  | - |  |  |  | 6,702 |  |  |  | 94 |  |  |  | - |  |  |  | 10,071 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 103 |  |  |  | 5,645 |  |  |  | 75 |  |  |  | 243 |  |  |  | 6,066 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 16,510 |  |  | $ | 56,221 |  |  | $ | 31,039 |  |  | $ | 32,559 |  |  | $ | 26,863 |  |  | $ | 135,945 |  |  | $ | 13,095 |  |  | $ | 1,932 |  |  | $ | 314,164 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 37,135 |  |  | $ | 92,252 |  |  | $ | 35,486 |  |  | $ | - |  |  | $ | - |  |  | $ | 385 |  |  | $ | - |  |  | $ | - |  |  | $ | 165,258 |
Special Mention |  |  | 2,130 |  |  |  | 1,165 |  |  |  | 4,410 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,705 |
Substandard |  |  | - |  |  |  | - |  |  |  | 2,357 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,357 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 39,265 |  |  | $ | 93,417 |  |  | $ | 42,253 |  |  | $ | - |  |  | $ | - |  |  | $ | 385 |  |  | $ | - |  |  | $ | - |  |  | $ | 175,320 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Other commercial loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 5,227 |  |  | $ | 12,057 |  |  | $ | 9,234 |  |  | $ | 5,487 |  |  | $ | 5,291 |  |  | $ | 4,213 |  |  | $ | 71,633 |  |  | $ | 99 |  |  | $ | 113,241 |
Special Mention |  |  | - |  |  |  | 81 |  |  |  | 1,555 |  |  |  | 216 |  |  |  | 286 |  |  |  | 22 |  |  |  | 1,214 |  |  |  | 1,708 |  |  |  | 5,082 |
Substandard |  |  | - |  |  |  | 100 |  |  |  | - |  |  |  | - |  |  |  | 186 |  |  |  | 1,202 |  |  |  | 294 |  |  |  | - |  |  |  | 1,782 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 218 |  |  |  | 24 |  |  |  | 242 |
Total |  | $ | 5,227 |  |  | $ | 12,238 |  |  | $ | 10,789 |  |  | $ | 5,703 |  |  | $ | 5,763 |  |  | $ | 5,437 |  |  | $ | 73,359 |  |  | $ | 1,831 |  |  | $ | 120,347 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 763 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 763 |
Other agricultural loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 3,464 |  |  | $ | 1,645 |  |  | $ | 7,005 |  |  | $ | 1,154 |  |  | $ | 666 |  |  | $ | 521 |  |  | $ | 10,554 |  |  | $ | - |  |  | $ | 25,009 |
Special Mention |  |  | - |  |  |  | 491 |  |  |  | 223 |  |  |  | 45 |  |  |  | 8 |  |  |  | 42 |  |  |  | 500 |  |  |  | - |  |  |  | 1,309 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6 |  |  |  | 265 |  |  |  | 25 |  |  |  | 34 |  |  |  | 330 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 3,464 |  |  | $ | 2,136 |  |  | $ | 7,228 |  |  | $ | 1,199 |  |  | $ | 680 |  |  | $ | 828 |  |  | $ | 11,079 |  |  | $ | 34 |  |  | $ | 26,648 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
State and political subdivision loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,426 |  |  | $ | 14,207 |  |  | $ | 10,984 |  |  | $ | 4,363 |  |  | $ | 2 |  |  | $ | 25,678 |  |  | $ | - |  |  | $ | - |  |  | $ | 56,660 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | 1,426 |  |  | $ | 14,207 |  |  | $ | 10,984 |  |  | $ | 4,363 |  |  | $ | 2 |  |  | $ | 25,678 |  |  | $ | - |  |  | $ | - |  |  | $ | 56,660 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 129,506 |  |  | $ | 508,067 |  |  | $ | 307,735 |  |  | $ | 167,342 |  |  | $ | 115,359 |  |  | $ | 349,971 |  |  | $ | 124,589 |  |  | $ | 2,954 |  |  | $ | 1,705,523 |
Special Mention |  |  | 2,279 |  |  |  | 12,476 |  |  |  | 10,811 |  |  |  | 1,824 |  |  |  | 7,953 |  |  |  | 16,157 |  |  |  | 1,931 |  |  |  | 1,708 |  |  |  | 55,139 |
Substandard |  |  | - |  |  |  | 333 |  |  |  | 2,363 |  |  |  | - |  |  |  | 456 |  |  |  | 8,798 |  |  |  | 1,123 |  |  |  | 285 |  |  |  | 13,358 |
Doubtful |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 218 |  |  |  | 24 |  |  |  | 242 |
Total |  | $ | 131,785 |  |  | $ | 520,876 |  |  | $ | 320,909 |  |  | $ | 169,166 |  |  | $ | 123,768 |  |  | $ | 374,926 |  |  | $ | 127,861 |  |  | $ | 4,971 |  |  | $ | 1,774,262 |
Information presented in the table above is not required for periods prior to adoption of CECL. The following table presents the most comparable information for the prior period, internal credit risk ratings for the indicated loan class segments as of December 31, 2022 (in thousands).
December 31, 2022 |  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful |  |  | Loss |  |  | Ending Balance |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 842,912 |  |  | $ | 28,047 |  |  | $ | 5,610 |  |  | $ | - |  |  | $ | - |  |  | $ | 876,569 |
Agricultural |  |  | 295,443 |  |  |  | 11,960 |  |  |  | 6,211 |  |  |  | - |  |  |  | - |  |  |  | 313,614 |
Construction |  |  | 75,703 |  |  |  | 2,642 |  |  |  | 2,346 |  |  |  | - |  |  |  | - |  |  |  | 80,691 |
Other commercial loans |  |  | 59,902 |  |  |  | 2,953 |  |  |  | 337 |  |  |  | 30 |  |  |  | - |  |  |  | 63,222 |
Other agricultural loans |  |  | 32,708 |  |  |  | 1,307 |  |  |  | 817 |  |  |  | - |  |  |  | - |  |  |  | 34,832 |
State and political |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
subdivision loans |  |  | 59,208 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 59,208 |
Total |  | $ | 1,365,876 |  |  | $ | 46,909 |  |  | $ | 15,321 |  |  | $ | 30 |  |  | $ | - |  |  | $ | 1,428,136 |
For residential real estate mortgage loans, home equity loans, and consumer loans, credit quality is monitored based on whether the loan is performing or non-performing, which is typically based on the aging status of the loan and payment activity, unless a specific action, such as bankruptcy, repossession, death or significant delay in payment occurs to raise awareness of a possible credit event. Non-performing loans include those loans that are considered nonaccrual, described in more detail above, and all loans past due 90 or more days and still accruing. The following table presents the recorded investment in those loan classes based on payment activity, by origination year, as of September 30, 2023 (in thousands):
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Revolving |  |  | Revolving |  |  |  |
|  |  |  |  | Loans |  |  | Loans |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Amortized |  |  | Converted |  |  |  |
September 30, 2023 |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Cost Basis |  |  | to Term |  |  | Total |
Residential real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 15,478 |  |  | $ | 89,640 |  |  | $ | 48,451 |  |  | $ | 30,300 |  |  | $ | 19,086 |  |  | $ | 101,162 |  |  | $ | - |  |  | $ | - |  |  | $ | 304,117 |
Nonperforming |  |  | - |  |  |  | 406 |  |  |  | 771 |  |  |  | 399 |  |  |  | - |  |  |  | 1,259 |  |  |  | - |  |  |  | - |  |  |  | 2,835 |
Total |  | $ | 15,478 |  |  | $ | 90,046 |  |  | $ | 49,222 |  |  | $ | 30,699 |  |  | $ | 19,086 |  |  | $ | 102,421 |  |  | $ | - |  |  | $ | - |  |  | $ | 306,952 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 3,188 |  |  | $ | 3,105 |  |  | $ | 1,980 |  |  | $ | 2,142 |  |  | $ | 2,593 |  |  | $ | 8,412 |  |  | $ | 27,613 |  |  | $ | 275 |  |  | $ | 49,308 |
Nonperforming |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 53 |  |  |  | 68 |  |  |  | - |  |  |  | 121 |
Total |  | $ | 3,188 |  |  | $ | 3,105 |  |  | $ | 1,980 |  |  | $ | 2,142 |  |  | $ | 2,593 |  |  | $ | 8,465 |  |  | $ | 27,681 |  |  | $ | 275 |  |  | $ | 49,429 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 1,742 |  |  | $ | 1,115 |  |  | $ | 598 |  |  | $ | 509 |  |  | $ | 570 |  |  | $ | 3,024 |  |  | $ | 107,168 |  |  | $ | 2 |  |  | $ | 114,728 |
Nonperforming |  |  | - |  |  |  | 18 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,007 |  |  |  | - |  |  |  | - |  |  |  | 1,025 |
Total |  | $ | 1,742 |  |  | $ | 1,133 |  |  | $ | 598 |  |  | $ | 509 |  |  | $ | 570 |  |  | $ | 4,031 |  |  | $ | 107,168 |  |  | $ | 2 |  |  | $ | 115,753 |
Current period gross charge-offs |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 1 |  |  | $ | 38 |  |  | $ | 16 |  |  | $ | - |  |  | $ | 55 |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment Performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 20,408 |  |  | $ | 93,860 |  |  | $ | 51,029 |  |  | $ | 32,951 |  |  | $ | 22,249 |  |  | $ | 112,593 |  |  | $ | 134,781 |  |  | $ | 277 |  |  | $ | 468,148 |
Nonperforming |  |  | - |  |  |  | 424 |  |  |  | 771 |  |  |  | 399 |  |  |  | - |  |  |  | 2,324 |  |  |  | 68 |  |  |  | - |  |  |  | 3,986 |
Total |  | $ | 20,408 |  |  | $ | 94,284 |  |  | $ | 51,800 |  |  | $ | 33,350 |  |  | $ | 22,249 |  |  | $ | 114,917 |  |  | $ | 134,849 |  |  | $ | 277 |  |  | $ | 472,134 |
Information presented in the table above is not required for periods prior to adoption of CECL. The following table presents the most comparable information for the prior period, internal credit risk ratings for the indicated loan class segments as of December 31, 2022 (in thousands).
December 31, 2022 |  | Performing |  |  | Non-performing |  |  | PCI |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 161,998 |  |  | $ | 562 |  |  | $ | 9 |  |  | $ | 162,569 |
Home Equity |  |  | 47,615 |  |  |  | 29 |  |  |  | - |  |  |  | 47,644 |
Consumer |  |  | 86,643 |  |  |  | 7 |  |  |  | - |  |  |  | 86,650 |
Total |  | $ | 296,256 |  |  | $ | 598 |  |  | $ | 9 |  |  | $ | 296,863 |
Aging Analysis of Past Due Loan Receivables Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table includes an aging analysis of the recorded investment of past due loan receivables as of September 30, 2023 and December 31, 2022 (in thousands):
September 30, 2023 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days Or Greater |  |  | Total Past Due |  |  | Current |  |  | Total Loans Receivables |  |  | 90 Days or Greater and Accruing |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 836 |  |  | $ | 282 |  |  | $ | 2,335 |  |  | $ | 3,453 |  |  | $ | 303,499 |  |  | $ | 306,952 |  |  | $ | - |
Home Equity |  |  | 130 |  |  |  | 77 |  |  |  | 100 |  |  |  | 307 |  |  |  | 49,122 |  |  |  | 49,429 |  |  |  | - |
Commercial |  |  | 1,797 |  |  |  | 514 |  |  |  | 1,003 |  |  |  | 3,314 |  |  |  | 1,077,809 |  |  |  | 1,081,123 |  |  |  | - |
Agricultural |  |  | 299 |  |  |  | - |  |  |  | 1,367 |  |  |  | 1,666 |  |  |  | 312,498 |  |  |  | 314,164 |  |  |  | - |
Construction |  |  | 677 |  |  |  | - |  |  |  | 2,357 |  |  |  | 3,034 |  |  |  | 172,286 |  |  |  | 175,320 |  |  |  | - |
Consumer |  |  | 647 |  |  |  | 124 |  |  |  | 1,025 |  |  |  | 1,796 |  |  |  | 113,957 |  |  |  | 115,753 |  |  |  | 8 |
Other commercial loans |  |  | 633 |  |  |  | 59 |  |  |  | - |  |  |  | 692 |  |  |  | 119,655 |  |  |  | 120,347 |  |  |  | - |
Other agricultural loans |  |  | - |  |  |  | 224 |  |  |  | - |  |  |  | 224 |  |  |  | 26,424 |  |  |  | 26,648 |  |  |  | - |
State and political subdivision loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 56,660 |  |  |  | 56,660 |  |  |  | - |
Total |  | $ | 5,019 |  |  | $ | 1,280 |  |  | $ | 8,187 |  |  | $ | 14,486 |  |  | $ | 2,231,910 |  |  | $ | 2,246,396 |  |  | $ | 8 |
Loans considered non-accrual |  | $ | 241 |  |  | $ | 98 |  |  | $ | 8,179 |  |  | $ | 8,518 |  |  | $ | 4,621 |  |  | $ | 13,139 |  |  |  |  |
Loans still accruing |  |  | 4,778 |  |  |  | 1,182 |  |  |  | 8 |  |  |  | 5,968 |  |  |  | 2,227,289 |  |  |  | 2,233,257 |  |  |  |  |
Total |  | $ | 5,019 |  |  | $ | 1,280 |  |  | $ | 8,187 |  |  | $ | 14,486 |  |  | $ | 2,231,910 |  |  | $ | 2,246,396 |  |  |  |  |
December 31, 2022 |  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days Or Greater |  |  | Total Past Due |  |  | Current |  |  | PCI |  |  | Total Loan Receivables |  |  | 90 Days or Greater and Accruing |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 356 |  |  | $ | 132 |  |  | $ | 229 |  |  | $ | 717 |  |  | $ | 161,843 |  |  | $ | 9 |  |  | $ | 162,569 |  |  | $ | - |
Home Equity |  |  | 48 |  |  |  | 9 |  |  |  | 29 |  |  |  | 86 |  |  |  | 47,558 |  |  |  | - |  |  |  | 47,644 |  |  |  | - |
Commercial |  |  | 1,065 |  |  |  | 115 |  |  |  | 1,788 |  |  |  | 2,968 |  |  |  | 871,745 |  |  |  | 1,856 |  |  |  | 876,569 |  |  |  | - |
Agricultural |  |  | - |  |  |  | - |  |  |  | 1,368 |  |  |  | 1,368 |  |  |  | 310,805 |  |  |  | 1,441 |  |  |  | 313,614 |  |  |  | - |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 80,691 |  |  |  | - |  |  |  | 80,691 |  |  |  | - |
Consumer |  |  | 147 |  |  |  | - |  |  |  | 7 |  |  |  | 154 |  |  |  | 86,496 |  |  |  | - |  |  |  | 86,650 |  |  |  | 7 |
Other commercial loans |  |  | 1,660 |  |  |  | 35 |  |  |  | 32 |  |  |  | 1,727 |  |  |  | 61,495 |  |  |  | - |  |  |  | 63,222 |  |  |  | - |
Other agricultural loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 34,832 |  |  |  | - |  |  |  | 34,832 |  |  |  | - |
State and political subdivision loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 59,208 |  |  |  | - |  |  |  | 59,208 |  |  |  | - |
Total |  | $ | 3,276 |  |  | $ | 291 |  |  | $ | 3,453 |  |  | $ | 7,020 |  |  | $ | 1,714,673 |  |  | $ | 3,306 |  |  | $ | 1,724,999 |  |  | $ | 7 |
Loans considered non-accrual |  | $ | 46 |  |  | $ | 76 |  |  | $ | 3,446 |  |  | $ | 3,568 |  |  | $ | 3,370 |  |  | $ | - |  |  | $ | 6,938 |  |  |  |  |
Loans still accruing |  |  | 3,230 |  |  |  | 215 |  |  |  | 7 |  |  |  | 3,452 |  |  |  | 1,711,303 |  |  |  | 3,306 |  |  |  | 1,718,061 |  |  |  |  |
Total |  | $ | 3,276 |  |  | $ | 291 |  |  | $ | 3,453 |  |  | $ | 7,020 |  |  | $ | 1,714,673 |  |  | $ | 3,306 |  |  | $ | 1,724,999 |  |  |  |  |
Modifications to Borrowers Experiencing Financial Difficulty Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. In some cases, the Company provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. The following table shows, the amortized cost basis by class of loans receivable, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023 (dollars in thousands):
|  | Three months ended September 30, 2023 |
|  | Number of loans |  | Amortized Cost Basis |  | % of Total Class of Financing Receivable |
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |
Real estate loans: |  |  |  |  |
Commercial |  |  | 1 |  |  | $ | 42 |  |  |  | 0.00 | %
Agricultural |  |  | 2 |  |  |  | 673 |  |  |  | 0.21 | %
Other commercial loans |  |  | 5 |  |  |  | 1,378 |  |  |  | 1.15 | %
Total |  |  | 8 |  |  | $ | 2,093 |  |  |  |  |
|  | Nine months ended September 30, 2023 |
|  | Number of loans |  |  | Amortized Cost Basis |  |  | % of Total Class of Financing Receivable |
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |
Real estate loans: |  |  |  |  |  |  |
Mortgages |  |  | 1 |  |  | $ | 129 |  |  |  | 0.04 | %
Commercial |  |  | 7 |  |  |  | 1,969 |  |  |  | 0.18 | %
Agricultural |  |  | 3 |  |  |  | 728 |  |  |  | 0.23 | %
Other commercial loans |  |  | 5 |  |  |  | 1,378 |  |  |  | 1.15 | %
Total |  |  | 16 |  |  | $ | 4,204 |  |  |  |  |
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |
Real estate loans: |  |  |  |  |  |  |  |  |
Commercial |  |  | 1 |  |  | $ | 86 |  |  |  | 0.01 | %
Total |  |  | 1 |  |  | $ | 86 |  |  |  |  |
The following table shows, by class of loans receivable, information regarding the financial effect on accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023:
Three months ended September 30, 2023
Term Extension
Loan Type | Number of loans |  | Financial Effect
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |  |
Real estate loans: |  |  |
Commercial |  |  | 1 |  | Extended the weighted average loan maturity 6 months
Agricultural |  |  | 2 |  | Extended the weighted average loan maturity 3 months
Consumer |  |  | 5 |  | Extended the loan maturity 10 months
Total |  |  | 8 |  |
Nine months ended September 30, 2023
Term Extension
Loan Type |  | Number of loans |  | Financial Effect
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |  |
Real estate loans: |  |  |  |
Mortgages |  |  | 1 |  | Extended the loan maturity 4 months
Commercial |  |  | 7 |  | Extended the weighted average loan maturity 22 months
Agricultural |  |  | 3 |  | Extended the weighted average loan maturity 5 months
Other commercial loans |  |  | 5 |  | Extended the loan maturity 10 months
Total |  |  | 16 |  |
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |  |
Real estate loans: |  |  |  |  |
Commercial |  |  | 1 |  | Extended the loan maturity 6 months
Total |  |  | 1 |  |
There were no accruing or nonaccrual modified loans to borrowers experiencing financial difficulty for which there were payment defaults after the modification date for the three and nine months ended September 30, 2023. The following presents, by class of loans, the amortized cost and payment status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty at September 30, 2023 (in thousands):
|  | September 30, 2023 |
|  |  |  |  | 30-89 Days |  |  | 90 Days |  |  |  |
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |  | Current |  |  | Past Due |  |  | Or Greater |  |  | Total |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |
Mortgages |  | $ | 129 |  |  | $ | - |  |  | $ | - |  |  | $ | 129 |
Commercial |  |  | 1,969 |  |  |  | - |  |  |  | - |  |  |  | 1,969 |
Agricultural |  |  | 728 |  |  |  | - |  |  |  | - |  |  |  | 728 |
Total |  | $ | 4,204 |  |  | $ | - |  |  | $ | - |  |  | $ | 4,204 |
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial |  | $ | 86 |  |  | $ | - |  |  | $ | - |  |  | $ | 86 |
Total |  | $ | 86 |  |  | $ | - |  |  | $ | - |  |  | $ | 86 |
Foreclosed Assets Held For Sale Foreclosed assets acquired in settlement of loans are carried at fair value, less estimated costs to sell, and are included in other assets on the Consolidated Balance Sheet. As of September 30, 2023 and December 31, 2022, included within other assets are $474,000 and $543,000, respectively, of foreclosed assets. As of September 30, 2023, included within the foreclosed assets are $176,000 of consumer residential mortgages that were foreclosed on or received via a deed in lieu transaction prior to the period end. As of September 30, 2023, the Company had initiated formal foreclosure proceedings on $241,000 of residential mortgage loans, the collateral properties which have not yet been transferred into foreclosed assets.

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