Loans and Allowance for Credit Losses | NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES Types of loans and normal collateral securing those loans are listed below. Commercial real estate : Commercial real estate loans include all loans secured by nonfarm, nonresidential properties and by multifamily residential properties, as well as 1-4 family investment-purpose real estate loans. Commercial and industrial : Commercial and industrial loans include loans used to purchase fixed assets, provide working capital or meet other financing needs of the business. Loans are normally secured by the assets being purchased or already owned by the borrower, inventory or accounts receivable. These may include SBA and other guaranteed or partially guaranteed types of loans. Residential real estate : Residential real estate loans include loans secured by primary or secondary personal residences. Agricultural real estate : Agricultural real estate loans are loans typically secured by farmland. Agricultural : Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. These loans may be secured by growing crops, stored crops, livestock, equipment, and miscellaneous receivables. Consumer : Consumer loans may include installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit. These loans are generally secured by consumer assets but may be unsecured. The following table lists categories of loans at June 30, 2022, and December 31, 2021. June 30, 2022 December 31, 2021 Commercial real estate $ 1,643,068 $ 1,486,148 Commercial and industrial 578,899 567,497 Residential real estate 578,936 638,087 Agricultural real estate 197,938 198,330 Agricultural 124,753 166,975 Consumer 99,852 98,590 Total loans 3,223,446 3,155,627 Allowance for credit losses (48,238 ) (48,365 ) Net loans $ 3,175,208 $ 3,107,262 Included in the commercial and industrial loan balances at June 30, 2022, and December 31, 2021, are $7,440 and $44,783 of loans that were originated under the SBA PPP program. At June 30, 2022, and December 31, 2021, unamortized loan fees on these loans were $125 and $1,252. From time to time, the Company has purchased pools of residential real estate loans originated by other financial institutions to hold for investment with the intent to diversify the residential real estate portfolio. During the six months ended June 30, 2022, the Company purchased one pool of residential mortgage loans totaling $795. During the first six months of 2021, the Company purchased three pools of residential real estate loans totaling $168,206. As of June 30, 2022, and December 31, 2021, residential real estate loans include $343,966 and $372,069 of purchased residential real estate loans. The Company occasionally purchases the government guaranteed portion of loans originated by other financial institutions to hold for investment. During the six months ended June 30, 2022, the Company purchased $2,293 in loans guaranteed by governmental agencies. Government guaranteed loans totaling $3,861 were purchased in the six months ended June 30, 2021. The unamortized discount of merger purchase accounting adjustments related to non-purchase credit deteriorated loans included in the loan totals above are $4,548 with related loans of $368,703 at June 30, 2022, and $6,649 with related loans of $527,422 at December 31, 2021. Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled $577 at June 30, 2022, and $886 at December 31, 2021. The following tables present the activity in the allowance for credit losses by class for the three month periods ended June 30, 2022 and 2021. June 30, 2022 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Beginning balance $ 21,764 $ 13,814 $ 5,960 $ 1,542 $ 2,472 $ 2,038 $ 47,590 Provision for credit losses 911 (650 ) 870 (535 ) (182 ) 410 824 Loans charged-off (11 ) (35 ) (46 ) — (1 ) (289 ) (382 ) Recoveries 1 80 34 — — 91 206 Total ending allowance balance $ 22,665 $ 13,209 $ 6,818 $ 1,007 $ 2,289 $ 2,250 $ 48,238 June 30, 2021 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Beginning balance, prior to adoption of ASC 326 $ 15,118 $ 19,965 $ 11,511 $ 1,900 $ 4,349 $ 2,682 $ 55,525 Cumulative effect adjustment of adopting ASC 326 72 52 (11 ) (1 ) — 3 115 Impact of adopting ASC 326 - PCD loans (56 ) (1,898 ) (1 ) (226 ) 599 — (1,582 ) Provision for credit losses 91 578 (1,692 ) (354 ) (253 ) (27 ) (1,657 ) Loans charged-off — (54 ) (3 ) (490 ) (1 ) (165 ) (713 ) Recoveries — 47 4 18 1 76 146 Total ending allowance balance $ 15,225 $ 18,690 $ 9,808 $ 847 $ 4,695 $ 2,569 $ 51,834 The following tables present the activity in the allowance for credit losses by class for the six month periods ended June 30, 2022 and 2021. June 30, 2022 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Beginning balance $ 22,478 $ 12,248 $ 5,560 $ 2,235 $ 3,756 $ 2,088 $ 48,365 Provision for credit losses 419 922 1,272 (1,235 ) (1,466 ) 500 412 Loans charged-off (294 ) (79 ) (48 ) — (1 ) (494 ) (916 ) Recoveries 62 118 34 7 — 156 377 Total ending allowance balance $ 22,665 $ 13,209 $ 6,818 $ 1,007 $ 2,289 $ 2,250 $ 48,238 June 30, 2021 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Beginning balance, prior to adoption of ASC 326 $ 9,012 $ 12,456 $ 4,559 $ 904 $ 758 $ 6,020 $ 33,709 Cumulative effect adjustment of adopting ASC 326 5,612 4,167 8,870 167 (207 ) (2,877 ) 15,732 Impact of adopting ASC 326 - PCD loans 4,571 (218 ) 220 960 4,905 — 10,438 Provision for credit losses (4,044 ) 2,276 (3,834 ) (700 ) (764 ) (347 ) (7,413 ) Loans charged-off (53 ) (61 ) (12 ) (502 ) (1 ) (375 ) (1,004 ) Recoveries 127 70 5 18 4 148 372 Total ending allowance balance $ 15,225 $ 18,690 $ 9,808 $ 847 $ 4,695 $ 2,569 $ 51,834 The following tables present the recorded investment in loans and the balance in the allowance for credit losses by portfolio and class based on method to determine allowance for credit loss as of June 30, 2022, and December 31, 2021. June 30, 2022 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Individually evaluated for credit losses $ 1,188 $ 1,034 $ 723 $ 346 $ 1,923 $ 67 $ 5,281 Collectively evaluated for credit losses 21,477 12,175 6,095 661 366 2,183 42,957 Total $ 22,665 $ 13,209 $ 6,818 $ 1,007 $ 2,289 $ 2,250 $ 48,238 Loan Balance: Individually evaluated for credit losses $ 6,735 $ 5,993 $ 3,017 $ 4,067 $ 4,903 $ 276 $ 24,991 Collectively evaluated for credit losses 1,636,333 572,906 575,919 193,871 119,850 99,576 3,198,455 Total $ 1,643,068 $ 578,899 $ 578,936 $ 197,938 $ 124,753 $ 99,852 $ 3,223,446 December 31, 2021 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses: Individually evaluated for credit losses $ 4,381 $ 3,650 $ 892 $ 1,488 $ 3,546 $ 75 $ 14,032 Collectively evaluated for credit losses 18,097 8,598 4,668 747 210 2,013 34,333 Total $ 22,478 $ 12,248 $ 5,560 $ 2,235 $ 3,756 $ 2,088 $ 48,365 Loan Balance: Individually evaluated for credit losses $ 45,421 $ 13,786 $ 5,362 $ 14,959 $ 13,049 $ 357 $ 92,934 Collectively evaluated for credit losses 1,440,727 553,711 632,725 183,371 153,926 98,233 3,062,693 Total $ 1,486,148 $ 567,497 $ 638,087 $ 198,330 $ 166,975 $ 98,590 $ 3,155,627 The following table presents information related to nonaccrual loans and the level of collateral that supports the nonaccrual loans at June 30, 2022, and December 31, 2021. June 30, 2022 Unpaid Principal Balance Recorded Investment Allowance for Credit Losses Allocated With no related allowance recorded: Commercial real estate $ 2,989 $ 2,327 $ — Commercial and industrial 6,081 1,964 — Residential real estate 32 — — Agricultural real estate 1,276 1,140 — Agricultural 41 — — Consumer 19 — — Subtotal 10,438 5,431 — With an allowance recorded: Commercial real estate 3,353 2,778 930 Commercial and industrial 1,679 1,387 367 Residential real estate 3,147 2,903 718 Agricultural real estate 3,635 2,337 335 Agricultural 6,298 3,757 1,639 Consumer 335 267 66 Subtotal 18,447 13,429 4,055 Total $ 28,885 $ 18,860 $ 4,055 December 31, 2021 Unpaid Principal Balance Recorded Investment Allowance for Credit Losses Allocated With no related allowance recorded: Commercial real estate $ — $ — $ — Commercial and industrial 6,060 1,964 — Residential real estate 609 429 — Agricultural real estate 1,795 1,660 — Agricultural — — — Consumer 49 49 — Subtotal 8,513 4,102 — With an allowance recorded: Commercial real estate 7,690 6,833 1,632 Commercial and industrial 4,976 4,593 1,800 Residential real estate 5,170 4,646 888 Agricultural real estate 3,726 2,738 637 Agricultural 8,836 6,175 2,307 Consumer 314 274 74 Subtotal 30,712 25,259 7,338 Total $ 39,225 $ 29,361 $ 7,338 The table below presents average recorded investment and interest income related to nonaccrual loans for the three and six months ended June 30, 2022, and 2021. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality. As of and for the three months ended June 30, 2022 June 30, 2021 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Commercial real estate $ 1,572 $ — $ — $ 2 Commercial and industrial 982 — — — Residential real estate 553 — 11 — Agricultural real estate 1,400 — 3,210 83 Agricultural — — 2,066 33 Consumer — — — 1 Subtotal 4,507 — 5,287 119 With an allowance recorded: Commercial real estate 2,800 — 8,010 3 Commercial and industrial 2,549 — 29,034 11 Residential real estate 3,160 1 2,752 2 Agricultural real estate 2,378 3 3,787 — Agricultural 4,072 — 8,033 10 Consumer 312 — 253 1 Subtotal 15,271 4 51,869 27 Total $ 19,778 $ 4 $ 57,156 $ 146 As of and for the six months ended June 30, 2022 June 30, 2021 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized With no related allowance recorded: Commercial real estate $ 1,048 $ — $ 561 $ 3 Commercial and industrial 1,309 — 214 — Residential real estate 512 1 67 — Agricultural real estate 1,487 — 2,504 83 Agricultural — — 2,874 33 Consumer 16 — — 1 Subtotal 4,372 1 6,220 120 With an allowance recorded: Commercial real estate 4,144 — 7,306 18 Commercial and industrial 3,231 — 26,961 119 Residential real estate 3,655 1 2,760 2 Agricultural real estate 2,498 3 3,531 20 Agricultural 4,773 — 5,629 44 Consumer 299 — 260 1 Subtotal 18,600 4 46,447 204 Total $ 22,972 $ 5 $ 52,667 $ 324 The following tables present the aging of the recorded investment in past due loans as of June 30, 2022, and December 31, 2021, by portfolio and class of loans. June 30, 2022 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 90 Days Past Due Still On Accrual Nonaccrual Loans Not Past Due Total Commercial real estate $ 598 $ 249 $ 386 $ 5,105 $ 1,636,730 $ 1,643,068 Commercial and industrial 655 2,923 — 3,351 571,970 578,899 Residential real estate 623 357 — 2,903 575,053 578,936 Agricultural real estate 7 — — 3,477 194,454 197,938 Agricultural 1 95 — 3,757 120,900 124,753 Consumer 466 47 — 267 99,072 99,852 Total $ 2,350 $ 3,671 $ 386 $ 18,860 $ 3,198,179 $ 3,223,446 December 31, 2021 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 90 Days Past Due Still On Accrual Nonaccrual Loans Not Past Due Total Commercial real estate $ 4,633 $ 408 $ 256 $ 6,833 $ 1,474,018 $ 1,486,148 Commercial and industrial 424 88 — 6,557 560,428 567,497 Residential real estate 620 1,126 — 5,075 631,266 638,087 Agricultural real estate 28 57 — 4,398 193,847 198,330 Agricultural 5 — — 6,175 160,795 166,975 Consumer 316 61 — 323 97,890 98,590 Total $ 6,026 $ 1,740 $ 256 $ 29,361 $ 3,118,244 $ 3,155,627 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. Loans that participated in the short-term deferral program are not automatically considered classified solely due to a deferral, are subject to ongoing monitoring and will be downgraded or placed on nonaccrual if a noted weakness exists. The Company uses the following definitions for risk ratings. Pass: Special Mention Substandard Doubtful Based on the most recent analysis performed, the risk category of loans, by type and year of origination, at June 30, 2022, is as follows. June 30, 2022 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Revolving Loans Converted to Term Total Commercial real estate Risk rating Pass $ 229,399 $ 278,359 $ 210,424 $ 133,787 $ 125,997 $ 206,294 $ 447,861 $ 1,318 $ 1,633,439 Special mention 294 220 — — — 576 — — 1,090 Substandard — 3,145 369 173 73 4,170 609 — 8,539 Doubtful — — — — — — — — — Total commercial real estate $ 229,693 $ 281,724 $ 210,793 $ 133,960 $ 126,070 $ 211,040 $ 448,470 $ 1,318 $ 1,643,068 Commercial and industrial Risk rating Pass $ 113,838 $ 108,123 $ 79,707 $ 46,546 $ 8,109 $ 14,022 $ 177,644 $ 2,027 $ 550,016 Special mention — — — — 693 3,775 — — 4,468 Substandard 148 4,215 2,913 10,162 1,480 831 4,666 — 24,415 Doubtful — — — — — — — — — Total commercial and industrial $ 113,986 $ 112,338 $ 82,620 $ 56,708 $ 10,282 $ 18,628 $ 182,311 $ 2,026 $ 578,899 Residential real estate Risk rating Pass $ 17,504 $ 311,614 $ 6,352 $ 16,170 $ 52,637 $ 115,386 $ 56,027 $ 152 $ 575,842 Special mention — — — — — 24 — — 24 Substandard — — 52 47 223 2,673 75 — 3,070 Doubtful — — — — — — — — — Total residential real estate $ 17,504 $ 311,614 $ 6,404 $ 16,217 $ 52,860 $ 118,083 $ 56,102 $ 152 $ 578,936 Agricultural real estate Risk rating Pass $ 18,490 $ 24,251 $ 30,299 $ 20,000 $ 9,169 $ 23,511 $ 67,465 $ 300 $ 193,485 Special mention — — — — — 486 22 — 508 Substandard 107 1,519 — 117 467 1,292 443 — 3,945 Doubtful — — — — — — — — — Total agricultural real estate $ 18,597 $ 25,770 $ 30,299 $ 20,117 $ 9,636 $ 25,289 $ 67,930 $ 300 $ 197,938 Agricultural Risk rating Pass $ 14,040 $ 14,438 $ 13,361 $ 3,702 $ 2,641 $ 2,575 $ 65,845 $ 75 $ 116,677 Special mention — — — 86 32 375 — — 493 Substandard — 1,724 1,925 2,086 388 251 1,209 — 7,583 Doubtful — — — — — — — — — Total agricultural $ 14,040 $ 16,162 $ 15,286 $ 5,874 $ 3,061 $ 3,201 $ 67,054 $ 75 $ 124,753 Consumer Risk rating Pass $ 39,242 $ 23,191 $ 11,006 $ 4,740 $ 2,264 $ 4,234 $ 14,907 $ 1 $ 99,585 Special mention — — — — — — — — — Substandard — 41 66 96 25 39 — — 267 Doubtful — — — — — — — — — Total consumer $ 39,242 $ 23,232 $ 11,072 $ 4,836 $ 2,289 $ 4,273 $ 14,907 $ 1 $ 99,852 Total loans Risk rating Pass $ 432,513 $ 759,976 $ 351,149 $ 224,945 $ 200,817 $ 366,022 $ 829,749 $ 3,873 $ 3,169,044 Special mention 294 220 — 86 725 5,236 22 — 6,583 Substandard 255 10,644 5,325 12,681 2,656 9,256 7,002 — 47,819 Doubtful — — — — — — — — — Total loans $ 433,062 $ 770,840 $ 356,474 $ 237,712 $ 204,198 $ 380,514 $ 836,773 $ 3,873 $ 3,223,446 Based on the analysis performed at December 31, 2021, the risk category of loans, by type and year of origination is as follows. December 31, 2021 2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Revolving Loans Converted to Term Total Commercial real estate Risk rating Pass $ 301,947 $ 212,444 $ 159,374 $ 134,465 $ 72,249 $ 164,363 $ 409,109 $ 594 $ 1,454,545 Special mention 126 885 — 11,817 1,168 8,705 — — 22,701 Substandard 1,687 401 145 77 828 5,764 — — 8,902 Doubtful — — — — — — — — — Total commercial real estate $ 303,760 $ 213,730 $ 159,519 $ 146,359 $ 74,245 $ 178,832 $ 409,109 $ 594 $ 1,486,148 Commercial and industrial Risk rating Pass $ 170,263 $ 100,457 $ 57,955 $ 11,019 $ 17,327 $ 8,855 $ 155,181 $ 9,726 $ 530,783 Special mention 19 — 1,958 1,482 284 5,750 — — 9,493 Substandard 4,200 5,410 10,238 1,417 444 43 5,469 — 27,221 Doubtful — — — — — — — — — Total commercial and industrial $ 174,482 $ 105,867 $ 70,151 $ 13,918 $ 18,055 $ 14,648 $ 160,650 $ 9,726 $ 567,497 Residential real estate Risk rating Pass $ 336,775 $ 24,633 $ 22,520 $ 60,461 $ 34,453 $ 102,363 $ 51,584 $ 184 $ 632,973 Special mention — — — — — 25 — — 25 Substandard — 79 48 159 1,909 2,740 154 — 5,089 Doubtful — — — — — — — — — Total residential real estate $ 336,775 $ 24,712 $ 22,568 $ 60,620 $ 36,362 $ 105,128 $ 51,738 $ 184 $ 638,087 Agricultural real estate Risk rating Pass $ 38,412 $ 36,667 $ 18,442 $ 12,142 $ 14,432 $ 21,792 $ 42,541 $ — $ 184,428 Special mention 682 — — — 40 456 32 — 1,210 Substandard 1,705 206 6,020 592 2,530 554 1,085 — 12,692 Doubtful — — — — — — — — — Total agricultural real estate $ 40,799 $ 36,873 $ 24,462 $ 12,734 $ 17,002 $ 22,802 $ 43,658 $ — $ 198,330 Agricultural Risk rating Pass $ 27,637 $ 17,393 $ 6,391 $ 2,399 $ 2,930 $ 1,593 $ 93,982 $ 172 $ 152,497 Special mention — — 90 1,299 — 645 — — 2,034 Substandard 3,456 2,112 1,414 1,651 137 1,164 2,510 — 12,444 Doubtful — — — — — — — — — Total agricultural $ 31,093 $ 19,505 $ 7,895 $ 5,349 $ 3,067 $ 3,402 $ 96,492 $ 172 $ 166,975 Consumer Risk rating Pass $ 40,692 $ 15,171 $ 7,186 $ 3,640 $ 2,228 $ 3,551 $ 25,799 $ 1 $ 98,268 Special mention — — — — — — — — — Substandard 6 154 94 15 24 29 — — 322 Doubtful — — — — — — — — — Total consumer $ 40,698 $ 15,325 $ 7,280 $ 3,655 $ 2,252 $ 3,580 $ 25,799 $ 1 $ 98,590 Total loans Risk rating Pass $ 915,726 $ 406,765 $ 271,868 $ 224,126 $ 143,619 $ 302,517 $ 778,196 $ 10,677 $ 3,053,494 Special mention 827 885 2,048 14,598 1,492 15,581 32 — 35,463 Substandard 11,054 8,362 17,959 3,911 5,872 10,294 9,218 — 66,670 Doubtful — — — — — — — — — Total loans $ 927,607 $ 416,012 $ 291,875 $ 242,635 $ 150,983 $ 328,392 $ 787,446 $ 10,677 $ 3,155,627 Troubled Debt Restructurings (“TDR”) Consistent with accounting and regulatory guidance, the Company recognizes a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that would not normally be considered. Regardless of the form of concession granted, the Company’s objective in offering a TDR is to increase the probability of repayment of the borrower’s loans. The following table summarizes the Company’s TDRs by accrual status at June 30, 2022, and December 31, 2021. The allowance for credit losses on nonaccrual loans represents specific loan reserves, while the allowance on accrual loans represents collectively evaluated estimated losses. June 30, 2022 Nonaccrual Related Allowance for Credit Losses Accrual Related Allowance for Credit Losses Total TDR Loan Balance Total Related Allowance for Credit Losses Commercial real estate $ 4,045 $ 688 $ 4,226 $ 251 $ 8,271 $ 939 Commercial and industrial 2,321 109 1,813 223 4,134 332 Residential real estate — — — — — — Agricultural real estate 1,181 602 1,650 284 2,831 886 Agricultural 2,956 189 — — 2,956 189 Total troubled debt restructurings $ 10,503 $ 1,588 $ 7,689 $ 758 $ 18,192 $ 2,346 December 31, 2021 Nonaccrual Related Allowance for Credit Losses Commercial real estate $ 5,784 $ 1,370 Commercial and industrial 54 27 Residential real estate 1,547 13 Agricultural real estate 2,122 488 Agricultural 1,292 480 Total troubled debt restructurings $ 10,799 $ 2,378 At June 30, 2022, and December 31, 2021, there were no commitments to lend additional amounts on these loans. During the three and six month periods ending June 30, 2022, there were a total of $2,412 and $8,743 in loan modifications considered to be troubled debt restructurings. There were no loan modifications considered to be troubled debt restructurings that occurred during the three or six month periods ended June 30, 2021. There was $15 The Company had $752 thousand in agricultural loans that subsequently defaulted on their modified terms within the twelve months preceding June 30, 2022, as compared to no loans at June 30, 2021. Default is determined at 90 or more days past due, charge-off, or foreclosure. As of June 30, 2022, the Company had no loans deferred as compared to December 31, 2021, with 20 deferrals of either the full loan payment or the principal component of the loan payment on outstanding loan balances of $36.3 million in connection with the COVID-19 relief provided by the CARES Act. These deferrals were not considered troubled debt restructurings based on the CARES Act, Consolidated Appropriations Act (“CAA”), or regulatory guidance. The following table lists loans included in the payment deferral program under the CARES Act by deferment type and category at December 31, 2021. There were no CARES Act deferred loans at June 30, 2022. December 31, 2021 Commercial Real Estate Commercial and Industrial Total 3 months principal and interest, then 6 months principal only $ 31,884 $ 3,052 $ 34,936 6 months principal and interest, then 9 months principal only 971 398 1,369 Total loans $ 32,855 $ 3,450 $ 36,305 The classification status of loans participating in the payment deferral program at December 31, 2021, is listed below. There were no such deferrals at June 30, 2022. December 31, 2021 Unclassified Classified Total Commercial real estate $ 32,855 $ — $ 32,855 Commercial and industrial 3,450 — 3,450 Total loans $ 36,305 $ — $ 36,305 Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit loss expense recognized within other non-interest expense on the consolidated statements of income and included in other liabilities on the consolidated balance sheets. The estimated credit loss includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate of expected credit loss is based on the historical loss rate for the class of loan the commitments would be classified as if funded. The following table lists allowance for credit losses on off-balance-sheet credit exposures as of June 30, 2022, and December 31, 2021. Allowance for Credit Losses June 30, 2022 December 31, 2021 Commercial real estate $ 402 $ 484 Commercial and industrial 742 1,323 Residential real estate 49 16 Agricultural 4 3 Consumer 321 397 Total allowance for credit losses $ 1,518 $ 2,223 |