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Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Note 6 Allowance for Credit Losses

The tables below detail the Company’s allowance for credit losses as of the dates shown:


	Three months ended June 30, 2024
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	46,315	$	30,838	$	20,100	$	354	$	97,607
Charge-offs		—		(4,422)		—		(183)		(4,605)
Recoveries		177		7		84		231		499
Provision expense (release) for credit losses		2,418		989		(425)		(26)		2,956
Ending balance	$	48,910	$	27,412	$	19,759	$	376	$	96,457


	Six months ended June 30, 2024
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	45,304	$	32,665	$	19,550	$	428	$	97,947
Charge-offs		(24)		(4,422)		—		(437)		(4,883)
Recoveries		293		7		90		297		687
Provision expense (release) for credit losses		3,337		(838)		119		88		2,706
Ending balance	$	48,910	$	27,412	$	19,759	$	376	$	96,457


	Three months ended June 30, 2023
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	37,395	$	32,890	$	19,574	$	484	$	90,343
Charge-offs		(3)		—		(46)		(305)		(354)
Recoveries		5		1		5		31		42
Provision expense (release) for credit losses		4,661		(2,123)		(202)		214		2,550
Ending balance	$	42,058	$	30,768	$	19,331	$	424	$	92,581


	Six months ended June 30, 2023
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	37,608	$	32,050	$	19,306	$	589	$	89,553
Charge-offs		(3)		—		(46)		(630)		(679)
Recoveries		45		2		12		48		107
Provision expense (release) for credit losses		4,408		(1,284)		59		417		3,600
Ending balance	$	42,058	$	30,768	$	19,331	$	424	$	92,581

In evaluating the loan portfolio for an appropriate ACL level, excluding loans evaluated individually, loans were grouped into segments based on broad characteristics such as primary use and underlying collateral. Within the segments, the portfolio was further disaggregated into classes of loans with similar attributes and risk characteristics for purposes of developing the underlying data used within the discounted cash flow model including, but not limited to, prepayment and recovery rates as well as loss rates tied to macro-economic conditions within management’s reasonable and supportable forecast. The ACL also includes subjective adjustments based upon qualitative risk factors including asset quality, loss trends, lending management, portfolio growth and loan review/internal audit results.

The Company recorded a decrease in the allowance for credit losses of $1.2 million and $1.5 million during the three and six months ended June 30, 2024, respectively, due to a decrease in specific reserves related to the resolution of non-performing loans. Net charge-offs on loans during the three and six months ended June 30, 2024 were $4.1 million and $4.2 million, respectively.

The Company recorded an increase in the allowance for credit losses of $2.2 million and $3.0 million during the three and six months ended June 30, 2023, respectively, driven by loan growth and higher reserve requirements. Net charge-offs on loans during the three and six months ended June 30, 2023 were $0.3 million and $0.6 million, respectively.

The Company has elected to exclude AIR from the allowance for credit losses calculation. As of June 30, 2024 and December 31, 2023, AIR from loans totaled $42.5 million and $42.4 million, respectively.