SEGMENT REPORTING
Currently, management measures the performance and allocates the resources of the Company as a single segment.
EARNING ASSETS
Earning assets are defined as those assets that produce interest income. By maintaining a healthy asset utilization rate, i.e., the volume of earning assets as a percentage of total assets, the Company maximizes income. The earning asset ratio (average interest earning assets divided by average total assets) equaled 93.3% at March 31, 2023 and 94.4% at March 31, 2022. This indicates that the management of earning assets is a priority and non-earning assets, primarily cash and due from banks, fixed assets and other assets, are maintained at minimal levels. The primary earning assets are loans and securities.
Our primary earning asset, total loans, increased to $862,183,000 as of March 31, 2023, up $3,714,000, or 0.4% since year-end 2022. The loan portfolio continues to be well diversified. Non-performing assets decreased since year-end 2022, and overall asset quality has remained consistent. Total non-performing assets were $5,169,000 as of March 31, 2023, a decrease of $190,000, or 3.5% from $5,359,000 reported in non-performing assets as of December 31, 2022. Total allowance for credit losses to total non-performing assets was 138.14% as of March 31, 2023 and 154.39% at December 31, 2022. See the Non-Performing Assets section on page 48 for more information.
In addition to loans, another primary earning asset is our overall securities portfolio, which decreased in size from December 31, 2022 to March 31, 2023. Debt securities available-for-sale amounted to $346,270,000 as of March 31, 2023, a decrease of $27,174,000 from year-end 2022. The decrease in debt securities available-for-sale is mainly due to the sales of $23,131,000 of tax-exempt municipals during the first quarter of 2023. There were also principal paydowns on debt securities of $7,665,000 offset by an increase in the market value of the portfolio of $4,782,000 during the quarter ended March 31, 2023.
Interest-bearing deposits in other banks decreased as of March 31, 2023, to $1,035,000 from $1,297,000 at year-end 2022 due to decreased cash held at the Federal Home Loan Bank.
LOANS
Total loans increased to $862,183,000 as of March 31, 2023 as compared to $858,469,000 as of December 31, 2022. The table on page 21 provides data relating to the composition of the Company’s loan portfolio on the dates indicated. Total loans increased by $3,714,000 or 0.4%.
Steady demand for borrowing by businesses accounted for the 0.4% increase in the loan portfolio from December 31, 2022 to March 31, 2023. The Real Estate portfolio increased $2,180,000 or 0.30% from $764,880,000 at December 31, 2022 to $767,060,000 at March 31, 2023. The increase in the Real Estate portfolio for the three months ended March 31, 2023 was mainly the result of $16,448,000 in new loan originations, which were offset by loan payoffs of $8,449,000 and a decrease of $1,447,000 in utilization of existing real estate lines of credit, along with regular principal payments and other typical fluctuations in the Real Estate portfolio. The Agricultural portfolio decreased $77,000 or 9.0% from $860,000 at December 31, 2022 to $783,000 at March 31, 2023. The decrease in the Agricultural portfolio was mainly the result of a decrease of $71,000 in utilization of existing agricultural-related lines of credit during the three months ended March 31, 2023, along with regular principal payments. There were no new agricultural loans originated during the three months ended March 31, 2023 and payoffs of agricultural loans for the three months ended March 31, 2023 did not have a material impact on the change in the portfolio balance. Overall, the Commercial and Industrial portfolio increased $2,203,000 from $56,077,000 or 3.9% from December 31, 2022 to $58,280,000 at March 31, 2023. The increase in the Commercial and Industrial portfolio during the three months ended March 31, 2023 was mainly attributable to the portion of the Commercial and Industrial portfolio excluding PPP loans which increased $2,215,000 during the three months ended March 31, 2023. The increase was attributable to $4,088,000 in new loan originations, offset by loan payoffs of $422,000 and a decrease of $200,000 in utilization of existing commercial and industrial lines of credit, as well as regular principal payments and other typical amortization in the Commercial and