| LOANS AND ALLOWANCE FOR CREDIT LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES Portfolio Segments: Commercial and agricultural real estate loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and prudently expand its business. Management examines current and projected cash flows to determine the ability of the borrower to repay its obligations as agreed. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The level of owner-occupied property versus non-owner-occupied property are tracked and monitored on a regular basis. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Loan-to-value ratios on loans secured by farmland generally do not exceed 75%. Commercial and industrial (“C&I”) loans are primarily underwritten based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. These cash flows, however, may not be as expected and the value of collateral securing the loans may fluctuate. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. Agricultural operating loans are generally comprised of term loans to fund the purchase of equipment, livestock and seasonal operating lines. Operating lines are typically written for one year and secured by the crop and other farm assets or other business assets, as considered necessary. Agricultural loans carry significant credit risks as they may involve larger balances concentrated with single borrowers or groups of related borrowers. In addition, repayment of such loans depends on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. Farming operations may be affected by adverse weather conditions such as drought, hail or floods that can severely limit crop yields. Residential mortgage loans are collateralized by primary and secondary positions on real estate and are underwritten primarily based on borrower’s documented income, credit scores, and collateral values. Under consumer home equity loan guidelines, the borrower will be approved for a loan based on a percentage of their home’s appraised value less the balance owed on the existing first mortgage. Credit risk is minimized within the residential mortgage portfolio due to relatively small loan account balances spread across many individual borrowers. Management evaluates trends in past due loans and current economic factors such as the housing price index on a regular basis. Consumer installment loans are comprised of originated indirect paper loans secured primarily by boats and recreational vehicles and other consumer loans secured primarily by automobiles and other personal assets. Consumer loan underwriting terms often depend on the collateral type, debt to income ratio and the borrower’s creditworthiness as evidenced by their credit score. In the event of a consumer installment loan default, collateral value alone may not provide an adequate source of repayment of the outstanding loan balance. This shortage is a result of the greater likelihood of damage, loss and depreciation for consumer based collateral. Loans are stated at the principal amount outstanding net of unearned net deferred fees and costs and loans in process, unearned discounts on acquired loans, and allowance for credit losses (“ACL”). Unearned net deferred fees and costs includes deferred loan origination fees reduced by loan origination costs and is amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at September 30, 2024, and December 31, 2023, follows: September 30, 2024 December 31, 2023 Amortized Cost % of Total Amortized Cost % of Total Commercial/Agricultural real estate: Commercial real estate $ 728,447 51.1 % $ 748,447 51.2 % Agricultural real estate 75,613 5.3 % 83,157 5.7 % Multi-family real estate 239,065 16.8 % 228,004 15.6 % Construction and land development 87,381 6.1 % 110,218 7.5 % C&I/Agricultural operating: Commercial and industrial 119,514 8.4 % 121,190 8.3 % Agricultural operating 27,567 1.9 % 25,695 1.8 % Residential mortgage: Residential mortgage 134,467 9.5 % 128,479 8.8 % Purchased HELOC loans 2,932 0.2 % 2,880 0.2 % Consumer installment: Originated indirect paper 4,405 0.3 % 6,535 0.4 % Other consumer 5,437 0.4 % 6,187 0.4 % Total loans receivable $ 1,424,828 100 % $ 1,460,792 100 % Less: Allowance for credit losses (21,000) (22,908) Net loans receivable $ 1,403,828 $ 1,437,884 Credit Quality/Risk Ratings: Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its commercial/agricultural real estate and commercial and industrial/agricultural operating loan portfolios. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant. Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio ratings are presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows: 1 through 4 - Pass. A “Pass” loan means that the condition of the borrower and the performance of the loan is satisfactory or better. 5 - Watch. A “Watch” loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future. 6 - Special Mention. A “Special Mention” loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future. 7 - Substandard. A “Substandard” loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 8 - Doubtful. A “Doubtful” loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. 9 - Loss. Loans classified as “Loss” are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future. As of September 30, 2024, and December 31, 2023, there were no loans classified as doubtful with a risk rating of 8 and no loans classified as loss with a risk rating of 9. Residential and consumer loans are typically not rated until they are past due 90 days at month-end which is why they are classified as pass graded 1-5 and once past due or have a history of delinquencies, get assigned a grade 7. Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of September 30, 2024, and gross charge-offs for the nine months ended September 30, 2024: Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Revolving to Term Total Commercial/Agricultural real estate: Commercial real estate Risk rating 1 to 5 $ 43,710 $ 80,008 $ 131,156 $ 213,090 $ 91,417 $ 153,335 $ 6,110 $ — $ 718,826 Risk rating 6 174 1,182 — 41 — 184 — — 1,581 Risk rating 7 — — 560 2,637 215 4,628 — — 8,040 Total $ 43,884 $ 81,190 $ 131,716 $ 215,768 $ 91,632 $ 158,147 $ 6,110 $ — $ 728,447 Current period gross charge-offs $ — $ — $ — $ 39 $ — $ — $ — $ — $ 39 Agricultural real estate Risk rating 1 to 5 $ 2,840 $ 11,214 $ 17,260 $ 10,480 $ 7,457 $ 18,923 $ 1,043 $ — $ 69,217 Risk rating 6 — 202 — — — — — — 202 Risk rating 7 — — 481 5,256 — 457 — — 6,194 Total $ 2,840 $ 11,416 $ 17,741 $ 15,736 $ 7,457 $ 19,380 $ 1,043 $ — $ 75,613 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Multi-family real estate Risk rating 1 to 5 $ 7,186 $ 7,831 $ 45,895 $ 103,118 $ 43,476 $ 22,798 $ 22 $ — $ 230,326 Risk rating 6 — — 8,739 — — — — — 8,739 Risk rating 7 — — — — — — — — — Total $ 7,186 $ 7,831 $ 54,634 $ 103,118 $ 43,476 $ 22,798 $ 22 $ — $ 239,065 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Construction and land development Risk rating 1 to 5 $ 19,026 $ 34,974 $ 9,964 $ 6,177 $ 1,355 $ 881 $ 14,898 $ — $ 87,275 Risk rating 6 — — — — — — — — — Risk rating 7 — — — — — 106 — — 106 Total $ 19,026 $ 34,974 $ 9,964 $ 6,177 $ 1,355 $ 987 $ 14,898 $ — $ 87,381 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial/Agricultural operating: Commercial and industrial Risk rating 1 to 5 $ 12,380 $ 14,760 $ 32,378 $ 24,049 $ 8,436 $ 4,646 $ 19,955 $ — $ 116,604 Risk rating 6 — — 244 13 — — 260 — 517 Risk rating 7 — 384 35 421 53 — 1,500 — 2,393 Total $ 12,380 $ 15,144 $ 32,657 $ 24,483 $ 8,489 $ 4,646 $ 21,715 $ — $ 119,514 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Agricultural operating Risk rating 1 to 5 $ 2,706 $ 3,219 $ 3,210 $ 708 $ 537 $ 2,128 $ 14,158 $ — $ 26,666 Risk rating 6 — — — — — — — — — Risk rating 7 — — 473 428 — — — — 901 Total $ 2,706 $ 3,219 $ 3,683 $ 1,136 $ 537 $ 2,128 $ 14,158 $ — $ 27,567 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Continued Amortized Cost Basis by Origination Year 2024 2023 2022 2021 2020 Prior Revolving Revolving to Term Total Residential mortgage: Residential mortgage Risk rating 1 to 5 $ 11,617 $ 30,760 $ 31,412 $ 7,530 $ 2,274 $ 31,177 $ 16,415 $ — $ 131,185 Risk rating 7 — — 493 — — 2,689 100 — 3,282 Total $ 11,617 $ 30,760 $ 31,905 $ 7,530 $ 2,274 $ 33,866 $ 16,515 $ — $ 134,467 Current period gross charge-offs $ — $ — $ — $ — $ — $ 4 $ — $ — $ 4 Purchased HELOC loans Risk rating 1 to 5 $ — $ — $ — $ — $ — $ — $ 2,815 $ — $ 2,815 Risk rating 7 — — — — — — 117 — 117 Total $ — $ — $ — $ — $ — $ — $ 2,932 $ — $ 2,932 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer installment: Originated indirect paper Risk rating 1 to 5 $ — $ — $ — $ — $ — $ 4,361 $ — $ — $ 4,361 Risk rating 7 — — — — — 44 — — 44 Total $ — $ — $ — $ — $ — $ 4,405 $ — $ — $ 4,405 Current period gross charge-offs $ — $ — $ — $ — $ — $ 17 $ — $ — $ 17 Other consumer Risk rating 1 to 5 $ 1,367 $ 1,492 $ 939 $ 451 $ 375 $ 263 $ 543 $ — $ 5,430 Risk rating 7 — 5 — — — 1 1 — 7 Total $ 1,367 $ 1,497 $ 939 $ 451 $ 375 $ 264 $ 544 $ — $ 5,437 Current period gross charge-offs $ — $ — $ 3 $ 1 $ — $ — $ 7 $ — $ 11 Total loans receivable $ 101,006 $ 186,031 $ 283,239 $ 374,399 $ 155,595 $ 246,621 $ 77,937 $ — $ 1,424,828 Total current period gross charge-offs $ — $ — $ 3 $ 40 $ — $ 21 $ 7 $ — $ 71 Below is a summary of the amortized cost of loans summarized by class, credit quality risk rating and year of origination as of December 31, 2023, and gross charge-offs for the twelve months ended December 31, 2023: Amortized Cost Basis by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Revolving to Term Total Commercial/Agricultural real estate: Commercial real estate Risk rating 1 to 5 $ 73,564 $ 133,583 $ 236,774 $ 90,881 $ 71,104 $ 107,999 $ 10,204 $ — $ 724,109 Risk rating 6 309 — 9,510 — — — — — 9,819 Risk rating 7 25 696 3,213 4,548 183 5,854 — — 14,519 Total $ 73,898 $ 134,279 $ 249,497 $ 95,429 $ 71,287 $ 113,853 $ 10,204 $ — $ 748,447 Current period gross charge-offs $ — $ — $ 10 $ — $ — $ 4 $ — $ — $ 14 Agricultural real estate Risk rating 1 to 5 $ 16,335 $ 19,026 $ 11,582 $ 7,719 $ 5,463 $ 15,418 $ 1,009 $ — $ 76,552 Risk rating 6 — 171 5,409 — 152 482 — — 6,214 Risk rating 7 — 360 — — 31 — — — 391 Total $ 16,335 $ 19,557 $ 16,991 $ 7,719 $ 5,646 $ 15,900 $ 1,009 $ — $ 83,157 Current period gross charge-offs $ — $ — $ — $ 32 $ — $ — $ — $ — $ 32 Multi-family real estate Risk rating 1 to 5 $ 5,016 $ 50,617 $ 95,686 $ 45,685 $ 8,591 $ 22,364 $ 45 $ — $ 228,004 Risk rating 6 — — — — — — — — — Risk rating 7 — — — — — — — — — Total $ 5,016 $ 50,617 $ 95,686 $ 45,685 $ 8,591 $ 22,364 $ 45 $ — $ 228,004 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Construction and land development Risk rating 1 to 5 $ 42,639 $ 37,783 $ 18,912 $ 8,014 $ 119 $ 1,124 $ 1,314 $ — $ 109,905 Risk rating 6 — — — — — 110 — — 110 Risk rating 7 — — — — — 54 149 — 203 Total $ 42,639 $ 37,783 $ 18,912 $ 8,014 $ 119 $ 1,288 $ 1,463 $ — $ 110,218 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial/Agricultural operating: Commercial and industrial Risk rating 1 to 5 $ 16,758 $ 31,915 $ 28,059 $ 11,406 $ 4,746 $ 2,023 $ 24,059 $ — $ 118,966 Risk rating 6 — — — — 5 — 2,200 — 2,205 Risk rating 7 — — — — — 2 — 17 19 Total $ 16,758 $ 31,915 $ 28,059 $ 11,406 $ 4,751 $ 2,025 $ 26,259 $ 17 $ 121,190 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Agricultural operating Risk rating 1 to 5 $ 4,734 $ 3,908 $ 856 $ 746 $ 295 $ 2,144 $ 11,831 $ — $ 24,514 Risk rating 6 — — — — — — — — — Risk rating 7 — 476 704 — — 1 — — 1,181 Total $ 4,734 $ 4,384 $ 1,560 $ 746 $ 295 $ 2,145 $ 11,831 $ — $ 25,695 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Continued Amortized Cost Basis by Origination Year 2023 2022 2021 2020 2019 Prior Revolving Revolving to Term Total Residential mortgage: Residential mortgage Risk rating 1 to 5 $ 28,808 $ 33,660 $ 8,743 $ 2,610 $ 2,292 $ 33,744 $ 15,544 $ — 125,401 Risk rating 7 — 141 — — 14 2,875 — 48 3,078 Total $ 28,808 $ 33,801 $ 8,743 $ 2,610 $ 2,306 $ 36,619 $ 15,544 $ 48 $ 128,479 Current period gross charge-offs $ — $ — $ 10 $ — $ — $ 68 $ — $ — $ 78 Purchased HELOC loans Risk rating 1 to 5 $ — $ — $ — $ — $ — $ — $ 2,880 $ — $ 2,880 Risk rating 7 — — — — — — — — — Total $ — $ — $ — $ — $ — $ — $ 2,880 $ — $ 2,880 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer installment: Originated indirect paper Risk rating 1 to 5 $ — $ — $ — $ — $ — $ 6,491 $ — $ — $ 6,491 Risk rating 7 — — — — — 44 — — 44 Total $ — $ — $ — $ — $ — $ 6,535 $ — $ — $ 6,535 Current period gross charge-offs $ — $ — $ — $ — $ — $ 13 $ — $ — $ 13 Other consumer Risk rating 1 to 5 $ 2,104 $ 1,525 $ 763 $ 559 $ 402 $ 274 $ 530 $ 1 $ 6,158 Risk rating 7 9 2 — — 16 1 1 — 29 Total $ 2,113 $ 1,527 $ 763 $ 559 $ 418 $ 275 $ 531 $ 1 $ 6,187 Current period gross charge-offs $ — $ 2 $ 1 $ 11 $ 3 $ 6 $ — $ — $ 23 Total loans receivable $ 190,301 $ 313,863 $ 420,211 $ 172,168 $ 93,413 $ 201,004 $ 69,766 $ 66 $ 1,460,792 Total current period gross charge-offs $ — $ 2 $ 21 $ 43 $ 3 $ 91 $ — $ — $ 160 Allowance for Credit Losses - Loans- On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial instruments and transitioned to the Current Expected Credit Loss (“CECL”) model to estimate losses based on the lifetime of the loan. Under the new methodology, the ACL is comprised of collectively evaluated and individually evaluated components. The allowance for credit losses (“ACL”) represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, the borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and modifications, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating loans collectively on a pooled basis when similar risk characteristics exist, and on an individual basis when management determines that a loan does not share similar risk characteristics with other loans. The following tables present the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and nine months ended September 30, 2024: Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total Three months ended September 30, 2024 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 17,033 $ 1,117 $ 2,784 $ 244 $ 21,178 Charge-offs (39) — (4) (11) (54) Recoveries 5 10 4 5 24 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (76) 224 (290) (6) (148) ACL - Loans, at end of period $ 16,923 $ 1,351 $ 2,494 $ 232 $ 21,000 Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Total Nine months ended September 30, 2024 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 18,784 $ 1,105 $ 2,744 $ 275 $ 22,908 Charge-offs (39) — (4) (28) (71) Recoveries 46 35 7 10 98 Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations (1,868) 211 (253) (25) (1,935) ACL - Loans, at end of period $ 16,923 $ 1,351 $ 2,494 $ 232 $ 21,000 The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the three and nine months ended September 30, 2023: Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total Three months ended September 30, 2023 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 18,933 $ 1,458 $ 2,452 $ 321 $ — $ 23,164 Charge-offs — — (54) (3) — (57) Recoveries 206 10 — 2 — 218 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (284) (279) 235 (24) — (352) ACL - Loans, at end of period $ 18,855 $ 1,189 $ 2,633 $ 296 $ — $ 22,973 Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total Nine months ended September 30, 2023 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 14,085 $ 2,318 $ 599 $ 129 $ 808 $ 17,939 Cumulative effect of ASU 2016-13 adoption 4,510 (331) 1,119 216 (808) 4,706 Charge-offs (46) — (78) (30) — (154) Recoveries 236 41 40 24 — 341 Additions/(reversals) to ACL - Loans via provision for credit losses charged to operations 70 (839) 953 (43) — 141 ACL - Loans, at end of period $ 18,855 $ 1,189 $ 2,633 $ 296 $ — $ 22,973 The following table presents the balance and activity in the allowance for credit losses (“ACL”) - loans by portfolio segment for the twelve months ended December 31, 2023: Commercial/Agricultural Real Estate C&I/Agricultural operating Residential Mortgage Consumer Installment Unallocated Total Twelve months ended December 31, 2023 Allowance for Credit Losses - Loans: ACL - Loans, at beginning of period $ 14,085 $ 2,318 $ 599 $ 129 $ 808 $ 17,939 Cumulative effect of ASU 2016-13 adoption 4,510 (331) 1,119 216 (808) 4,706 Charge-offs (46) — (78) (36) — (160) Recoveries 489 47 42 33 — 611 (Reversals)/additions to ACL - Loans via provision for credit losses charged to operations (254) (929) 1,062 (67) — (188) ACL - Loans, at end of period $ 18,784 $ 1,105 $ 2,744 $ 275 $ — $ 22,908 Allowance for Credit Losses - Unfunded Commitments - In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of $460 at September 30, 2024, and $1,250 at December 31, 2023, classified in other liabilities on the consolidated balance sheets. The following table presents the balance and activity in the ACL - Unfunded Commitments for the three and nine months ended September 30, 2024, and the twelve months ended December 31, 2023. September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended December 31, 2023 and Twelve Months Ended ACL - Unfunded Commitments - beginning of period $ 712 $ 1,250 $ — Cumulative effect of ASU 2016-13 adoption — — 1,537 Additions to ACL - Unfunded Commitments via provision for credit losses charged to operations (252) (790) (287) ACL - Unfunded Commitments - End of period $ 460 $ 460 $ 1,250 Provision for credit losses - The provision for credit losses is determined by the Company as the amount to be added (reversed) to the ACL loss accounts for various types of financial instruments (including loans and off-balance sheet credit exposures) after net charge-offs have been deducted to bring the ACL to a level that, in managements judgement, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The following table presents the components of the negative provision for credit losses. September 30, 2024 and Three Months Ended September 30, 2024 and Nine Months Ended (Negative) provision for credit losses on: Loans $ (148) $ (1,935) Unfunded Commitments (252) (790) Total (negative) provision for credit losses $ (400) $ (2,725) An aging analysis of the Company’s commercial/agricultural real estate, C&I, agricultural operating, residential mortgage, consumer installment and purchased third party loans as of September 30, 2024, and December 31, 2023, respectively, was as follows: (Loan balances at amortized cost) 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total Current Total September 30, 2024 Commercial/Agricultural real estate: Commercial real estate $ 125 $ — $ 232 $ 357 $ 728,090 $ 728,447 Agricultural real estate 229 — 354 583 75,030 75,613 Multi-family real estate — — — — 239,065 239,065 Construction and land development 413 — — 413 86,968 87,381 C&I/Agricultural operating: Commercial and industrial 48 253 421 722 118,792 119,514 Agricultural operating — — 901 901 26,666 27,567 Residential mortgage: Residential mortgage 1,534 770 1,070 3,374 131,093 134,467 Purchased HELOC loans — — 117 117 2,815 2,932 Consumer installment: Originated indirect paper 9 — 12 21 4,384 4,405 Other consumer 21 29 2 52 5,385 5,437 Total $ 2,379 $ 1,052 $ 3,109 $ 6,540 $ 1,418,288 $ 1,424,828 (Loan balances at amortized cost) 30-59 Days Past Due 60-89 Days Past Due Greater Than 89 Days Past Due Total Current Total December 31, 2023 Commercial/Agricultural real estate: Commercial real estate $ 50 $ 308 $ 5,579 $ 5,937 $ 742,510 $ 748,447 Agricultural real estate 30 — 361 391 82,766 83,157 Multi-family real estate — — — — 228,004 228,004 Construction and land development — — 54 54 110,164 110,218 C&I/Agricultural operating: Commercial and industrial 248 — — 248 120,942 121,190 Agricultural operating — — 1,179 1,179 24,516 25,695 Residential mortgage: Residential mortgage 856 583 1,023 2,462 126,017 128,479 Purchased HELOC loans 117 — — 117 2,763 2,880 Consumer installment: Originated indirect paper 66 — 12 78 6,457 6,535 Other consumer 38 — 20 58 6,129 6,187 Total $ 1,405 $ 891 $ 8,228 $ 10,524 $ 1,450,268 $ 1,460,792 Nonaccrual Loans - The following tables present the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated at September 30, 2024, December 31, 2023, and September 30, 2023, with no allowance for credit losses: September 30, 2024 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Commercial/Agricultural real estate: Commercial real estate $ 4,778 $ 4,547 Agricultural real estate 6,193 6,193 Construction and land development 106 106 C&I/Agricultural operating: Commercial and industrial 1,956 1,775 Agricultural operating 901 901 Residential mortgage: Residential mortgage 971 767 Purchased HELOC loans 117 117 Consumer installment: Originated indirect paper 19 19 Other consumer 1 1 Total $ 15,042 $ 14,426 December 31, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Commercial/Agricultural real estate: Commercial real estate $ 10,359 $ 10,347 Agricultural real estate 391 391 Construction and land development 54 54 C&I/Agricultural operating: Agricultural operating 1,180 1,180 Residential mortgage: Residential mortgage 1,167 934 Consumer installment: Originated indirect paper 15 15 Other consumer 18 18 Total $ 13,184 $ 12,939 September 30, 2023 Total Nonaccrual Loans Nonaccrual with no Allowance for Credit Losses Commercial/Agricultural real estate: Commercial real estate $ 10,570 $ 10,556 Agricultural real estate 469 469 Construction and land development 94 94 C&I/Agricultural operating: Agricultural operating 1,373 1,373 Residential mortgage: Residential mortgage 923 685 Consumer installment: Originated indirect paper 26 26 Other consumer 1 1 Total $ 13,456 $ 13,204 The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is past due according to the following schedules: • Commercial/agricultural real estate loans, past due 90 days or more; • Commercial and industrial/agricultural operating loans past due 90 days or more; • Closed ended consumer installment loans past due 120 days or more; and • Residential mortgage and open ended consumer installment loans past due 180 days or more. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be modified is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. Collateral Dependent Loans - A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. For collateral dependent loans, expected credit losses are based on the fair value of the collateral at the balance sheet date, with consideration for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. The following tables present the amortized cost basis of collateral dependent loans by portfolio segment and collateral type that were individually evaluated to determine expected credit losses and the related allowance for credit losses as of September 30, 2024, and December 31, 2023. Collateral Type September 30, 2024 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation Commercial/Agricultural real estate: Commercial real estate $ 8,214 $ — $ 8,214 $ 6,784 $ 1,430 $ 203 Agricultural real estate 6,193 — 6,193 6,193 — — Construction and land development 106 — 106 106 — — C&I/Agricultural operating: Commercial and industrial — 2,394 2,394 2,160 234 88 Agricultural operating — 901 901 901 — — Residential mortgage: Residential mortgage 3,487 — 3,487 3,003 484 52 Consumer installment: Originated indirect paper — 44 44 44 — — Other consumer — 6 6 6 — — Total $ 18,000 $ 3,345 $ 21,345 $ 19,197 $ 2,148 $ 343 Collateral Type December 31, 2023 Real Estate Other Assets Total Without an Allowance With an Allowance Allowance Allocation Commercial/Agricultural real estate: Commercial real estate $ 15,086 $ — $ 15,086 $ 11,350 $ 3,736 $ 703 Agricultural real estate 6,605 — 6,605 6,605 — — Construction and land development 313 — 313 313 — — C&I/Agricultural operating: Commercial and industrial — 2,219 2,219 2,219 — — Agricultural operating — 1,181 1,181 1,181 — — Residential mortgage: Residential mortgage 3,145 — 3,145 2,591 554 88 Consumer installment: Originated indirect paper — 44 44 44 — — Other consumer — 29 29 29 — — Total $ 25,149 $ 3,473 $ 28,622 $ 24,332 $ 4,290 $ 791 There were no outstanding commitments to borrowers experiencing financial difficulty as of September 30, 2024. There were unused lines of credit totaling $10 on loans with borrowers experiencing financial difficulties as of September 30, 2024. The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2024: Term Extension Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables Residential mortgage $ 5 — % Other consumer $ 1 0.02 % Other-Than-Insignificant Payment Delay Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables Commercial real estate $ 1,182 0.16 % The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2024: Term Extension Loan Class Financial Effect Residential mortgage A weighted average of 36 months was added to the term of the loans Other Consumer A weighted average of 12 months was added to the term of the loans Other-Than-Insignificant Payment Delay Loan Class Financial Effect Commercial real estate Payments were deferred a weighted average of 3 months The tables below detail Loan Modifications made to Borrowers Experiencing Financial Difficulty during the twelve months ended September 30, 2024: Term Extension Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables Commercial and industrial $ 1,500 1.26 % Residential mortgage $ 5 — % Other Consumer $ 1 0.02 % Other-Than-Insignificant Payment Delay Loan Class Amortized Cost Basis at September 30, 2024 % of Total Class of Financing Receivables Commercial real estate $ 1,182 0.16 % Commercial and industrial $ 836 0.70 % Residential mortgage $ 240 0.18 % The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty during the twelve months ended September 30, 2024: Term Extension Loan Class Financial Effect Commercial and industrial A weighted average of 11 months was added to the term of the loans Residential mortgage A weighted average of 36 months was added to the term of the loans Other consumer Payments were deferred a weighted average of 12 months Other-Than-Insignificant Payment Delay Loan Class Financial Effect Commercial real estate Payments were deferred a weighted average of 3 months Commercial and industrial Payments were deferred a weighted average of 3 months Residential mortgage Payments were deferred a weighted average of 3 months The tables below detail Loan Modifications Made to Borrowers Experiencing Financial Difficulty during the three months ended September 30, 2023: Term Extension Loan Class Amortized Cost Basis at % of |
