The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the three months ended March 31, 2022 and 2021 (in thousands). The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments.


	Beginning Balance		Charge-offs		Recoveries		(Recovery of) provision for credit losses		Ending Balance
March 31, 2022
Commercial and industrial	$	3,480	$	(34)	$	59	$	(47)	$	3,458

1-4 Family	598		—		29		(53)		574
Hotels	2,426		—		—		119		2,545
Multi-family	483		—		—		(6)		477
Non Residential Non-Owner Occupied	2,319		—		24		(62)		2,281
Non Residential Owner Occupied	1,485		—		—		(103)		1,382
Commercial real estate	7,311		—		53		(105)		7,259

Residential real estate	5,716		(50)		45		(672)		5,039
Home equity	517		—		17		(124)		410
Consumer	106		(23)		28		(25)		86
DDA overdrafts	1,036		(631)		406		217		1,028
	$	18,166	$	(738)	$	608	$	(756)	$	17,280

March 31, 2021
Commercial and industrial	$	3,644	$	(34)	$	46	$	(131)	$	3,525

1-4 Family	771		—		84		(106)		749
Hotels	3,347		—		—		(166)		3,181
Multi-family	674		—		—		(16)		658
Non Residential Non-Owner Occupied	3,223		(1)		31		234		3,487
Non Residential Owner Occupied	2,982		—		49		(239)		2,792
Commercial real estate	10,997		(1)		164		(293)		10,867

Residential real estate	8,093		(93)		74		(14)		8,060
Home equity	630		(64)		23		19		608
Consumer	163		(147)		39		96		151
DDA Overdrafts	1,022		(453)		413		(117)		865
	$	24,549	$	(792)	$	759	$	(440)	$	24,076

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected losses inherent in the portfolio. Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range.

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return. Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan. The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types. However, any loan may be placed on non-accrual status if the Company receives information that indicates a borrower is unable to meet the contractual terms of its respective loan agreement. Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable. When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for credit losses. Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured. Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid. Generally, loans are restored to accrual status when the obligation is brought current, the borrower has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.


	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	138	$	931	$	—

1-4 Family	—		997		—
Hotels	—		113		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		685		—
Non Residential Owner Occupied	—		446		—
Commercial Real Estate	—		2,241		—

Residential Real Estate	63		1,723		—
Home Equity	—		99		21
Consumer	—		—		—
Total	$	201	$	4,994	$	21


	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	—	$	996	$	43

1-4 Family	—		1,016		—
Hotels	—		113		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		652		—
Non Residential Owner Occupied	—		592		—
Commercial Real Estate	—		2,373		—

Residential Real Estate	63		2,746		—
Home Equity	—		40		—
Consumer	—		—		—
Total	$	63	$	6,155	$	43

There were no individually evaluated impaired collateral-dependent loans as of March 31, 2022 or December 31, 2021. Changes in the fair value of the collateral for collateral-dependent loans are reported as credit loss expense or a reversal of credit loss expense in the period of change.

The Company would have recognized less than $0.1 million of interest income during each of the three months ended March 31, 2022 and 2021 if such loans had been current in accordance with their original terms. There were no significant commitments to provide additional funds on non-accrual or impaired loans at March 31, 2022.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment. Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance. Commercial loans are generally charged off when the loan becomes 120 days past due. Open-end consumer loans are generally charged off when the loan becomes 180 days past due.


	March 31, 2022
	30-59		60-89		90+		Total		Current		Non-		Total
	Past Due		Past Due		Past Due		Past Due		Loans		accrual		Loans
Commercial and industrial	$	56	$	—	$	—	$	56	$	336,259	$	1,069	$	337,384

1-4 Family	310		—		—		310		107,117		997		108,424
Hotels	—		—		—		—		314,789		113		314,902
Multi-family	—		—		—		—		209,359		—		209,359
Non Residential Non-Owner Occupied	434		—		—		434		635,973		685		637,092
Non Residential Owner Occupied	—		—		—		—		199,734		446		200,180
Commercial real estate	744		—		—		744		1,466,972		2,241		1,469,957

Residential real estate	4,740		236		—		4,976		1,582,098		1,786		1,588,860
Home Equity	442		42		21		505		120,856		99		121,460
Consumer	32		—		—		32		39,746		—		39,778
Overdrafts	332		60		—		392		2,074		—		2,466
Total	$	6,346	$	338	$	21	$	6,705	$	3,548,005	$	5,195	$	3,559,905


	December 31, 2021
	30-59		60-89		90+		Total		Current		Non-		Total
	Past Due		Past Due		Past Due		Past Due		Loans		accrual		Loans
Commercial and industrial	$	116	$	177	$	43	$	336	$	344,852	$	996	$	346,184

1-4 Family	21		—		—		21		106,836		1,016		107,873
Hotels	—		—		—		—		311,202		113		311,315
Multi-family	—		—		—		—		215,677		—		215,677
Non Residential Non-Owner Occupied	—		—		—		—		639,166		652		639,818
Non Residential Owner Occupied	—		—		—		—		203,641		592		204,233
Commercial real estate	21		—		—		21		1,476,522		2,373		1,478,916

Residential real estate	5,166		156		—		5,322		1,540,834		2,809		1,548,965
Home Equity	592		26		—		618		121,687		40		122,345
Consumer	59		1		—		60		40,841		—		40,901
Overdrafts	485		4		—		489		6,014		—		6,503
Total	$	6,439	$	364	$	43	$	6,846	$	3,530,750	$	6,218	$	3,543,814

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company. However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-02, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession. These modifications range from partial deferrals (interest only) to full deferrals (principal and interest). When determining whether the borrower is experiencing financial difficulties, the

Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification. Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.


	March 31, 2022		December 31, 2021
Commercial and industrial	$	397	$	414

1-4 Family	109		112
Hotels	—		—
Multi-family	1,781		1,802
Non Residential Non-Owner Occupied	—		—
Non Residential Owner Occupied	—		—
Commercial real estate	1,890		1,914

Residential real estate	16,182		16,943
Home equity	1,694		1,784
Consumer	194		225
Total	$	20,357	$	21,280


	March 31, 2022					March 31, 2021
		Pre-		Post-			Pre-		Post-
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—

1-4 Family	—	—		—		—	—		—
Hotels	—	—		—		—	—		—
Multi-family	—	—		—		—	—		—
Non Owner Non-Owner Occupied	—	—		—		—	—		—
Non Owner Owner Occupied	—	—		—		—	—		—
Commercial real estate	—	—		—		—	—		—

Residential real estate	3	326		326		3	154		154
Home equity	—	—		—		—	—		—
Consumer	—	—		—		—	—		—
Total	3	$	326	$	326	3	$	154	$	154

Most TDRs above are reported due to filing Chapter 7 bankruptcy. Regulatory guidance requires that loans be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of debt by the bankruptcy court is deemed to be a concession granted to the borrower.

In March of 2020, in response to the COVID-19 pandemic, regulatory guidance was issued that clarified the accounting for loan modifications. Modifications of loan terms do not automatically result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time of modification. In addition, modifications or deferrals pursuant to the CARES Act do not represent TDRs. However, these deferrals do not absolve the company from performing its normal risk rating and therefore a loan could be current and have a less than satisfactory risk rating.

Through March 31, 2022, the Company granted deferrals of approximately $144 million to its mortgage customers. These deferral arrangements ranged from 30 days to 90 days. As of March 31, 2022, approximately $1 million of these loans were still deferring, while approximately $143 million have resumed making their normal loan payment. As of March 31, 2022, approximately $4 million of the loans previously deferred were previously and currently considered TDRs due to Chapter 7 bankruptcies. As of March 31, 2022, all outstanding commercial deferrals had resumed making their normal loan payment.

All commercial loans within the portfolio are subject to internal risk rating. All non-commercial loans are evaluated based on payment history. The Company’s internal risk ratings for commercial loans are: Exceptional, Good, Acceptable, Pass/Watch, Special Mention, Substandard and Doubtful. Each internal risk rating is defined in the loan policy using the following criteria: balance sheet yields; ratios and leverage; cash flow spread and coverage; prior history; capability of management; market position/industry; potential impact of changing economic, legal, regulatory or environmental conditions; purpose; structure; collateral support; and guarantor support. Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process. Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of expected loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity and overall collateral position, along with other economic trends and historical payment performance. The risk rating for each credit is updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review and credit administration departments, or the loan becomes delinquent or impaired. The risk grades are updated a minimum of annually for loans rated Exceptional, Good, Acceptable, or Pass/Watch. Loans rated Special Mention, Substandard or Doubtful are reviewed at least quarterly. The Company uses the following definitions for its risk ratings:


													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	11,848	$	96,310	$	78,015	$	40,495	$	25,796	$	11,612	$	63,174	$	327,250
Special mention	—		2		461		12		—		21		3,348		3,844
Substandard	—		224		1,632		1,439		439		1,835		721		6,290
Total	$	11,848	$	96,536	$	80,108	$	41,946	$	26,235	$	13,468	$	67,243	$	337,384






Commercial real estate -
1-4 Family
Pass	$	8,038	$	24,740	$	14,703	$	10,247	$	5,856	$	30,235	$	10,445	$	104,264
Special mention	—		—		120		—		—		707		—		827
Substandard	—		—		273		153		—		2,907		—		3,333
Total	$	8,038	$	24,740	$	15,096	$	10,400	$	5,856	$	33,849	$	10,445	$	108,424






Commercial real estate -
Hotels
Pass	$	14,042	$	37,616	$	16,133	$	68,712	$	21,051	$	88,940	$	229	$	246,723
Special mention	—		—		—		24,682		—		—		—		24,682
Substandard	133		372		—		15,327		—		27,665		—		43,497
Total	$	14,175	$	37,988	$	16,133	$	108,721	$	21,051	$	116,605	$	229	$	314,902






Commercial real estate -
Multi-family
Pass	$	2,927	$	21,687	$	69,256	$	52,692	$	2,246	$	58,120	$	587	$	207,515
Special mention	—		—		—		1,781		—		—		—		1,781
Substandard	—		—		—		—		—		63		—		63
Total	$	2,927	$	21,687	$	69,256	$	54,473	$	2,246	$	58,183	$	587	$	209,359






													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2022		2021		2020		2019		2018		Prior		Cost Basis		Total
Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	19,114	$	142,855	$	131,657	$	78,366	$	98,815	$	156,784	$	3,050	$	630,641
Special mention	—		116		180		184		—		136		—		616
Substandard	—		667		11		1,356		2,077		1,724		—		5,835
Total	$	19,114	$	143,638	$	131,848	$	79,906	$	100,892	$	158,644	$	3,050	$	637,092






Commercial real estate -
Non Residential Owner Occupied
Pass	$	5,849	$	45,949	$	28,013	$	26,747	$	19,311	$	52,974	$	2,819	$	181,662
Special mention	—		—		30		353		40		842		—		1,265
Substandard	984		198		113		2,258		621		12,305		774		17,253
Total	$	6,833	$	46,147	$	28,156	$	29,358	$	19,972	$	66,121	$	3,593	$	200,180


Commercial real estate -
Total
Pass	$	49,970	$	272,847	$	259,762	$	236,764	$	147,279	$	387,053	$	17,130	$	1,370,805
Special mention	—		116		330		27,000		40		1,685		—		29,171
Substandard	1,117		1,237		397		19,094		2,698		44,664		774		69,981
Total	$	51,087	$	274,200	$	260,489	$	282,858	$	150,017	$	433,402	$	17,904	$	1,469,957

Residential real estate
Performing	$	118,349	$	367,840	$	304,894	$	145,177	$	101,772	$	449,528	$	99,512	$	1,587,072
Non-performing	—		204		—		231		15		973		365		1,788
Total	$	118,349	$	368,044	$	304,894	$	145,408	$	101,787	$	450,501	$	99,877	$	1,588,860


													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2021		2020		2019		2018		2017		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	87,148	$	82,946	$	41,908	$	27,355	$	23,895	$	6,755	$	65,775	$	335,782
Special mention	3		480		17		—		21		—		3,324		3,845
Substandard	319		1,531		1,574		510		395		1,550		678		6,557
Total	$	87,470	$	84,957	$	43,499	$	27,865	$	24,311	$	8,305	$	69,777	$	346,184






Commercial real estate -
1-4 Family
Pass	$	26,425	$	16,163	$	10,659	$	6,208	$	4,250	$	28,734	$	10,877	$	103,316
Special mention	—		122		—		—		—		718		—		840
Substandard	—		276		158		—		722		2,561		—		3,717
Total	$	26,425	$	16,561	$	10,817	$	6,208	$	4,972	$	32,013	$	10,877	$	107,873






Commercial real estate -
Hotels
Pass	$	38,197	$	16,183	$	64,107	$	21,222	$	41,526	$	55,895	$	279	$	237,409
Special mention	103		—		29,914		—		—		—		—		30,017
Substandard	398		140		15,413		—		5,601		22,337		—		43,889
Total	$	38,698	$	16,323	$	109,434	$	21,222	$	47,127	$	78,232	$	279	$	311,315






Commercial real estate -
Multi-family
Pass	$	20,434	$	78,837	$	53,033	$	2,264	$	19,783	$	38,918	$	540	$	213,809
Special mention	—		—		1,802		—		—		—		—		1,802
Substandard	—		—		—		—		—		66		—		66
Total	$	20,434	$	78,837	$	54,835	$	2,264	$	19,783	$	38,984	$	540	$	215,677






													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2021		2020		2019		2018		2017		Prior		Cost Basis		Total
Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	144,927	$	135,423	$	85,296	$	99,618	$	33,770	$	130,342	$	2,655	$	632,031
Special mention	119		183		186		257		—		138		—		883
Substandard	640		16		1,365		2,134		22		2,727		—		6,904
Total	$	145,686	$	135,622	$	86,847	$	102,009	$	33,792	$	133,207	$	2,655	$	639,818






Commercial real estate -
Non Residential Owner Occupied
Pass	$	46,445	$	28,535	$	25,647	$	22,197	$	15,296	$	37,806	$	2,509	$	178,435
Special mention	—		30		2,744		42		319		2,294		—		5,429
Substandard	199		114		2,372		634		6,677		9,503		870		20,369
Total	$	46,644	$	28,679	$	30,763	$	22,873	$	22,292	$	49,603	$	3,379	$	204,233


Commercial real estate -
Total
Pass	$	276,429	$	275,141	$	238,742	$	151,509	$	114,626	$	291,696	$	16,860	$	1,365,003
Special mention	222		334		34,647		299		319		3,151		—		38,972
Substandard	1,238		546		19,308		2,769		13,023		37,191		866		74,941
Total	$	277,889	$	276,021	$	292,697	$	154,577	$	127,968	$	332,038	$	17,726	$	1,478,916

Residential real estate
Performing	$	375,465	$	326,107	$	155,829	$	110,551	$	87,870	$	389,519	$	100,815	$	1,546,156
Non-performing	—		—		232		29		120		692		1,736		2,809
Total	$	375,465	$	326,107	$	156,061	$	110,580	$	87,990	$	390,211	$	102,551	$	1,548,965