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Allowance for Credit Losses

9 Months Ended

Sep. 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 September 30, 2024
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	48,910	$	27,412	$	19,759	$	376	$	96,457
Charge-offs		(2,930)		(293)		—		(282)		(3,505)
Recoveries		60		—		5		30		95
Provision expense for credit losses		210		937		636		217		2,000
Ending balance	$	46,250	$	28,056	$	20,400	$	341	$	95,047


	Nine months ended September 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		(2,954)		(4,715)		—		(718)		(8,387)
Recoveries		352		7		95		327		781
Provision expense for credit losses		3,548		99		755		304		4,706
Ending balance	$	46,250	$	28,056	$	20,400	$	341	$	95,047


	Three months ended September 30, 2023
			Non-owner
			occupied
			commercial		Residential
	Commercial		real estate		real estate		Consumer		Total
Beginning balance	$	42,058	$	30,768	$	19,331	$	424	$	92,581
Charge-offs		(239)		—		—		(301)		(540)
Recoveries		241		1		7		31		280
Provision expense (release) for credit losses		3,231		(2,301)		(47)		242		1,125
Ending balance	$	45,291	$	28,468	$	19,291	$	396	$	93,446


	Nine months ended September 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		(242)		—		(46)		(930)		(1,218)
Recoveries		286		3		19		78		386
Provision expense (release) for credit losses		7,639		(3,585)		12		659		4,725
Ending balance	$	45,291	$	28,468	$	19,291	$	396	$	93,446

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 $1.4 million and $2.9 million during the three and nine months ended September 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 nine months ended September 30, 2024 were $3.4 million and $7.6 million, respectively.

The Company recorded an increase in the allowance for credit losses of $1.1 million and $4.7 million during the three and nine months ended September 30, 2023, respectively, driven by loan growth and higher reserve requirements. Net charge-offs on loans during the three and nine months ended September 30, 2023 were $0.3 million and $0.8 million, respectively.

The Company has elected to exclude AIR from the allowance for credit losses calculation. As of September 30, 2024 and December 31, 2023, AIR from loans totaled $45.7 million and $42.4 million, respectively.