ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR OFF-BALANCE SHEET CREDIT EXPOSURES

12 Months Ended

Dec. 31, 2023

ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR OFF-BALANCE SHEET CREDIT EXPOSURES

4. ALLOWANCE FOR CREDIT LOSSES AND RESERVE FOR OFF-BALANCE SHEET CREDIT EXPOSURES

The following tables present the activity in the ACL for loans by class for the years ended December 31, 2023, 2022 and 2021:


	Commercial and Industrial				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2023
Beginning balance	$	2	$	6,822	$	2,867	$	11,804	$	4,114	$	17,902	$	20,227	$	63,738


Provision (credit) for credit losses on loans	(2)		1,601		1,136		2,745		(670)		(359)		10,784		15,235
Subtotal	—		8,423		4,003		14,549		3,444		17,543		31,011		78,973
Charge-offs	—		1,962		—		—		—		—		17,245		19,207
Recoveries	—		720		1		77		57		—		3,313		4,168
Net charge-offs (recoveries)	—		1,242		(1)		(77)		(57)		—		13,932		15,039
Ending balance	$	—	$	7,181	$	4,004	$	14,626	$	3,501	$	17,543	$	17,079	$	63,934


	Commercial and Industrial				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2022
Beginning balance	$	77	$	10,314	$	3,908	$	12,463	$	4,509	$	18,411	$	18,415	$	68,097


Provision (credit) for credit losses on loans	(75)		(2,518)		(1,117)		(954)		(431)		(509)		5,892		288
Subtotal	2		7,796		2,791		11,509		4,078		17,902		24,307		68,385
Charge-offs	—		1,969		—		—		—		—		6,399		8,368
Recoveries	—		995		76		295		36		—		2,319		3,721
Net charge-offs (recoveries)	—		974		(76)		(295)		(36)		—		4,080		4,647
Ending balance	$	2	$	6,822	$	2,867	$	11,804	$	4,114	$	17,902	$	20,227	$	63,738


	Commercial and Industrial				Real Estate
(Dollars in thousands)	SBA PPP		Other		Construction		Residential Mortgage		Home Equity		Commercial Mortgage		Consumer		Total
Year ended December 31, 2021
Beginning balance	$	304	$	18,717	$	4,277	$	16,484	$	5,449	$	22,163	$	15,875	$	83,269


Provision (credit) for credit losses on loans [1]	(227)		(7,684)		(1,528)		(4,379)		(949)		(3,825)		4,269		(14,323)
Subtotal	77		11,033		2,749		12,105		4,500		18,338		20,144		68,946
Charge-offs	—		1,723		—		—		—		—		4,402		6,125
Recoveries	—		1,004		1,159		358		9		73		2,673		5,276
Net charge-offs	—		719		(1,159)		(358)		(9)		(73)		1,729		849
Ending balance	$	77	$	10,314	$	3,908	$	12,463	$	4,509	$	18,411	$	18,415	$	68,097

[1] In 2020, the Company recorded a reserve on accrued interest receivable for loans on active payment forbearance or deferral, which were granted to borrowers impacted by the COVID-19 pandemic. This reserve was recorded as a contra-asset against accrued interest receivable with the offset to provision for credit losses. Due to the significant decline in loans on active forbearance or deferral, the Company reversed the $0.2 million reserve during the second quarter of 2021 and no longer has a reserve on accrued interest receivable as of December 31, 2023, 2022 and 2021. The provision for credit losses presented in this table excludes the provision (credit) for credit losses on accrued interest receivable of $0.2 million.

The following table presents the activity in the reserve for off-balance sheet credit exposures, included in other liabilities, under ASC 326 during the years ended December 31, 2023, 2022 and 2021.


	Year Ended December 31,
(Dollars in thousands)	2023		2022		2021
Balance, beginning of year	$	3,243	$	4,804	$	4,884


Provision (credit) for off-balance sheet credit exposures	463		(1,561)		(80)
Balance, end of year	$	3,706	$	3,243	$	4,804

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the ACL.

In determining the amount of our ACL, the Company relies on an analysis of its loan portfolio, experience and evaluation of general economic conditions, as well as regulatory requirements and input. If assumptions prove to be incorrect, the current ACL may not be sufficient to cover future credit losses and the Company may experience significant increases to the provision.