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Note 3 - Loans and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2022

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans originated for investment are stated at their principal amount outstanding adjusted for partial charge-offs, the allowance, and net deferred loan fees and costs. Interest income on loans is accrued over the term of the loans primarily using the simple interest method based on the principal balance outstanding. Interest is not accrued on loans where collectability is uncertain. Accrued interest is included in other assets in the Consolidated Balance Sheets. Loan origination fees and certain direct costs incurred to extend credit are deferred and amortized over the term of the loan or loan commitment period as an adjustment to the related loan yield.

Year-end loans disaggregated by class of loan within the loan portfolio segments were as follows:

	December 31, 2022					December 31, 2021					Percent Increase
	Balance		%			Balance		%			(Decrease)

Commercial:
Commercial and industrial (1)	$	1,185,083,000		30.3	%	$	1,137,419,000		32.9	%		4.2	%
Vacant land, land development, and residential construction		61,873,000		1.6			43,239,000		1.3			43.1
Real estate – owner occupied		639,192,000		16.3			565,758,000		16.4			13.0
Real estate – non-owner occupied		1,033,734,000		26.4			1,027,415,000		29.7			0.6
Real estate – multi-family and residential rental		211,948,000		5.4			176,593,000		5.1			20.0
Total commercial		3,131,830,000		80.0			2,950,424,000		85.4			6.1

Retail:
1-4 family mortgages		755,036,000		19.3			442,547,000		12.8			70.6
Other consumer loans (2)		29,753,000		0.7			60,488,000		1.8			(50.8	)
Total retail		784,789,000		20.0			503,035,000		14.6			56.0

Total loans	$	3,916,619,000		100.0	%	$	3,453,459,000		100.0	%		13.4	%

(1)

For December 31, 2022, and December 31, 2021, includes $0.9 million and $40.1 million in loans originated under the Paycheck Protection Program, respectively.

(2)

In conjunction with the adoption of the CECL methodology effective January 1, 2022, home equity lines of credit were reclassified to 1-4 family mortgage loans from other consumer loans. Home equity lines of credit totaled $37.4 million and $29.5 million as of December 31, 2022, and 2021, respectively.

Concentrations within the loan portfolio were as follows at year-end:

	2022					2021
			Percentage					Percentage
			of					of
			Loan					Loan
	Balance		Portfolio			Balance		Portfolio
Commercial real estate loans to lessors of non-residential buildings	$	738,891,000		18.9	%	$	737,589,000		21.4	%

Year-end nonperforming loans were as follows:

	2022		2021

Loans past due 90 days or more still accruing interest	$	0	$	155,000
Nonaccrual loans		7,728,000		2,313,000
Total nonperforming loans	$	7,728,000	$	2,468,000

The recorded principal balance of nonperforming loans was as follows:

	December 31, 2022		December 31, 2021
Commercial:
Commercial and industrial	$	6,024,000	$	663,000
Vacant land, land development, and residential construction		0		0
Real estate – owner occupied		248,000		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		6,272,000		663,000

Retail:
1-4 family mortgages		1,456,000		1,686,000
Other consumer loans		0		119,000
Total retail		1,456,000		1,805,000

Total nonperforming loans	$	7,728,000	$	2,468,000

An age analysis of past due loans is as follows as of December 31, 2022:

													Recorded
					Greater								Balance >
	30 – 59		60 – 89		Than 89								89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing

Commercial:
Commercial and industrial	$	0	$	5,705,000	$	249,000	$	5,954,000	$	1,179,129,000	$	1,185,083,000	$	0
Vacant land, land development, and residential construction		0		0		0		0		61,873,000		61,873,000		0
Real estate – owner occupied		0		248,000		0		248,000		638,944,000		639,192,000		0
Real estate – non-owner occupied		0		0		0		0		1,033,734,000		1,033,734,000		0
Real estate – multi-family and residential rental		0		0		0		0		211,948,000		211,948,000		0
Total commercial		0		5,953,000		249,000		6,202,000		3,125,628,000		3,131,830,000		0

Retail:
1-4 family mortgages		1,334,000		88,000		116,000		1,538,000		753,498,000		755,036,000		0
Other consumer loans		15,000		1,000		0		16,000		29,737,000		29,753,000		0
Total retail		1,349,000		89,000		116,000		1,554,000		783,235,000		784,789,000		0

Total past due loans	$	1,349,000	$	6,042,000	$	365,000	$	7,756,000	$	3,908,863,000	$	3,916,619,000	$	0

An age analysis of past due loans is as follows as of December 31, 2021:

													Recorded
					Greater								Balance >
	30 – 59		60 – 89		Than 89								89
	Days		Days		Days		Total				Total		Days and
	Past Due		Past Due		Past Due		Past Due		Current		Loans		Accruing

Commercial:
Commercial and industrial	$	14,000	$	0	$	193,000	$	207,000	$	1,137,212,000	$	1,137,419,000	$	155,000
Vacant land, land development, and residential construction		13,000		0		0		13,000		43,226,000		43,239,000		0
Real estate – owner occupied		0		0		0		0		565,758,000		565,758,000		0
Real estate – non-owner occupied		0		0		0		0		1,027,415,000		1,027,415,000		0
Real estate – multi-family and residential rental		0		0		0		0		176,593,000		176,593,000		0
Total commercial		27,000		0		193,000		220,000		2,950,204,000		2,950,424,000		155,000

Retail:
Home equity and other		132,000		2,000		20,000		154,000		60,334,000		60,488,000		0
1- 4 family mortgages		1,265,000		241,000		82,000		1,588,000		440,959,000		442,547,000		0
Total retail		1,397,000		243,000		102,000		1,742,000		501,293,000		503,035,000		0

Total past due loans	$	1,424,000	$	243,000	$	295,000	$	1,962,000	$	3,451,497,000	$	3,453,459,000	$	155,000

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Identified problem loans, which exhibit characteristics (financial or otherwise) that could cause the loans to become nonperforming or require restructuring in the future, are included on an internal watch list. Senior management and the Board of Directors review this list regularly. Fair value estimates of collateral on distressed lending relationships, as well as on foreclosed and repossessed assets, are reviewed periodically. We also have a process in place to monitor whether value estimates at each quarter-end are reflective of current market conditions. Our credit policies establish criteria for obtaining appraisals and determining internal value estimates. We may also adjust outside and internal valuations based on identifiable trends within our markets, such as recent sales of similar properties or assets, listing prices and offers received. In addition, we may discount certain appraised and internal value estimates to address distressed market conditions. Under CECL for collateral dependent loans in instances where the borrower is experiencing financial difficulties, we adopted the practical expedient to measure the allowance based on the fair value of collateral. The allowance is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral and the recorded principal balance. If the fair value of the collateral exceeds the recorded principal balance, no allowance is required. Collateral dependent loans, representing the entire amount of loans on nonaccrual, totaled $7.7 million as of December 31, 2022.

Nonaccrual loans as of December 31, 2022 were as follows:

	Recorded
	Principal		Related
	Balance		Allowance
With no allowance recorded:
Commercial:
Commercial and industrial	$	249,000	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		249,000		0

Retail:
1-4 family mortgages		1,064,000		0
Other consumer loans		0		0
Total retail		1,064,000		0

Total with no allowance recorded	$	1,313,000	$	0

With an allowance recorded:
Commercial:
Commercial and industrial	$	5,775,000	$	2,051,000
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		248,000		32,000
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		6,023,000		2,083,000

Retail:
1-4 family mortgages		392,000		200,000
Other consumer loans		0		0
Total retail		392,000		200,000

Total with an allowance recorded	$	6,415,000	$	2,283,000

Total nonaccrual loans:
Commercial	$	6,272,000	$	2,083,000
Retail		1,456,000		200,000
Total nonaccrual loans	$	7,728,000	$	2,283,000

Impaired loans with no related allowance recorded were as follows as of December 31, 2021:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance	Year-To-Date Average Recorded Principal Balance
With no related allowance recorded:
Commercial:
Commercial and industrial	$	2,893,000	$	2,818,000		$	3,632,000
Vacant land, land development and residential construction		0		0			0
Real estate – owner occupied		9,674,000		9,674,000			12,634,000
Real estate – non-owner occupied		0		0			131,000
Real estate – multi-family and residential rental		91,000		91,000			37,000
Total commercial		12,658,000		12,583,000			16,434,000
Retail:
Home equity and other		1,173,000		1,107,000			1,096,000
1-4 family mortgages		3,166,000		2,025,000			2,327,000
Total retail		4,339,000		3,132,000			3,423,000

Total with no related allowance recorded	$	16,997,000	$	15,715,000		$	19,857,000

Impaired loans with an allowance recorded and total impaired loans were as follows as of December 31, 2021:

	Unpaid Contractual Principal Balance		Recorded Principal Balance		Related Allowance		Year-To-Date Average Recorded Principal Balance
With an allowance recorded:
Commercial:
Commercial and industrial	$	2,192,000	$	2,192,000	$	266,000	$	1,732,000
Vacant land, land development and residential construction		0		0		0		0
Real estate – owner occupied		761,000		761,000		84,000		803,000
Real estate – non-owner occupied		146,000		146,000		4,000		154,000
Real estate – multi-family and residential rental		0		0		0		0
Total commercial		3,099,000		3,099,000		354,000		2,689,000
Retail:
Home equity and other		160,000		140,000		123,000		214,000
1-4 family mortgages		412,000		412,000		69,000		537,000
Total retail		572,000		552,000		192,000		751,000

Total with an allowance recorded	$	3,671,000	$	3,651,000	$	546,000	$	3,440,000

Total impaired loans:
Commercial	$	15,757,000	$	15,682,000	$	354,000	$	19,123,000
Retail		4,911,000		3,684,000		192,000		4,174,000
Total impaired loans	$	20,668,000	$	19,366,000	$	546,000	$	23,297,000

Impaired commercial loans for which no allocation of the allowance has been made in large part consist of performing troubled debt restructurings where the estimated collateral fair value exceeds the recorded principal balance, while impaired retail loans with no allowance allocation generally reflect situations whereby the recorded principal balances have been charged-down to estimated collateral fair value. Interest income recognized on accruing troubled debt restructurings totaled $1.5 million in 2021. Interest income recognized on nonaccrual loans totaled less than $0.1 million in 2021, reflecting the collection of interest at the time of principal pay-off. Lost interest income on nonaccrual loans totaled $0.1 million in 2021.

Credit Quality Indicators. We utilize a comprehensive grading system for our commercial loans. All commercial loans are graded on a ten grade rating system. The rating system utilizes standardized grade paradigms that analyze several critical factors such as cash flow, operating performance, financial condition, collateral, industry condition and management. All commercial loans are graded at inception and reviewed and, if appropriate, re-graded at various intervals thereafter. The risk assessment for retail loans is primarily based on the type of collateral.

Loans by credit quality indicators were as follows as of December 31, 2022:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	719,583,000	$	41,711,000	$	406,341,000	$	447,606,000	$	118,385,000
Grades 5 – 7		450,405,000		20,057,000		229,766,000		573,728,000		93,514,000
Grades 8 – 9		15,095,000		105,000		3,085,000		12,400,000		49,000
Total commercial	$	1,185,083,000	$	61,873,000	$	639,192,000	$	1,033,734,000	$	211,948,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail 1-4 Family Mortgages		Retail Other Consumer Loans

Performing	$	753,580,000	$	29,753,000
Nonperforming		1,456,000		0
Total retail	$	755,036,000	$	29,753,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $0.9 million of loans originated under the Paycheck Protection Program.

Loans by credit quality indicators were as follows as of December 31, 2021:

Commercial credit exposure – credit risk profiled by internal credit risk grades:

	Commercial and Industrial		Commercial Vacant Land, Land Development, and Residential Construction		Commercial Real Estate - Owner Occupied		Commercial Real Estate - Non-Owner Occupied		Commercial Real Estate - Multi-Family and Residential Rental

Internal credit risk grade groupings:
Grades 1 – 4 (1)	$	729,224,000	$	28,390,000	$	346,082,000	$	503,482,000	$	119,473,000
Grades 5 – 7		398,378,000		14,730,000		208,060,000		511,280,000		56,968,000
Grades 8 – 9		9,817,000		119,000		11,616,000		12,653,000		152,000
Total commercial	$	1,137,419,000	$	43,239,000	$	565,758,000	$	1,027,415,000	$	176,593,000

Retail credit exposure – credit risk profiled by collateral type:

	Retail Home Equity and Other		Retail 1-4 Family Mortgages

Performing	$	60,369,000	$	440,861,000
Nonperforming		119,000		1,686,000
Total retail	$	60,488,000	$	442,547,000

(1)

Included in Commercial and Industrial Loans Grades 1 – 4 are $40.1 million of loans originated under the Paycheck Protection Program.

All commercial loans are graded using the following criteria:

Grade 1.

“Exceptional” Loans with this rating contain very little, if any, risk.

Grade 2.

“Outstanding” Loans with this rating have excellent and stable sources of repayment and conform to bank policy and regulatory requirements.

Grade 3.

“Very Good” Loans with this rating have strong sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are acceptable.

Grade 4.

“Good” Loans with this rating have solid sources of repayment and conform to bank policy and regulatory requirements. These are loans for which repayment risks are modest.

Grade 5.

“Acceptable” Loans with this rating exhibit acceptable sources of repayment and conform with most bank policies and all regulatory requirements. These are loans for which repayment risks are satisfactory.

Grade 6.

“Monitor” Loans with this rating are considered to have emerging weaknesses which may include negative current cash flow, high leverage, or operating losses. Generally, if further deterioration is observed, these credits will be downgraded to the criticized asset report.

Grade 7.

“Special Mention” Loans with this rating have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan at some future date.

Grade 8.

“Substandard” Loans with this rating are inadequately protected by current sound net worth, paying capacity of the obligor, or of the pledged collateral, if any. A Substandard loan normally has one or more well-defined weaknesses that jeopardize the repayment of the debt. They are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Grade 9.

“Doubtful” Loans with this rating exhibit all the weaknesses inherent in the Substandard classification and where collection or liquidation in full is highly questionable and improbable.

Grade 10.

“Loss” Loans with this rating are considered uncollectable, and of such little value that continuance as an active asset is not warranted.

The primary risk elements with respect to commercial loans are the financial condition of the borrower, the sufficiency of collateral, and timeliness of scheduled payments. We have a policy of requesting and reviewing periodic financial statements from commercial loan customers and employ a disciplined and formalized review of the existence of collateral and its value. The primary risk element with respect to each residential real estate loan and consumer loan is the timeliness of scheduled payments; loans 90 days or more past due are considered nonperforming. We have a reporting system that monitors past due loans and have adopted policies to pursue creditors’ rights in order to preserve our collateral position.

The following table reflects loan balances as of December 31, 2022 based on year of origination (dollars in thousands):

	2022		2021		2020		2019		2018		Prior		Term Total		Revolving Loans		Grand Total
Commercial:
Commercial and Industrial:
Grades 1 – 4	$	115,494	$	141,481	$	43,961	$	9,194	$	3,230	$	9,851	$	323,211	$	396,372	$	719,583
Grades 5 – 7		151,783		47,030		31,697		8,870		569		93		240,042		210,363		450,405
Grades 8 – 9		3,784		249		0		0		48		29		4,110		10,985		15,095
Total	$	271,061	$	188,760	$	75,658	$	18,064	$	3,847	$	9,973	$	567,363	$	617,720	$	1,185,083

Vacant Land, Land Development and Residential Construction:
Grades 1 – 4	$	31,756	$	6,196	$	3,428	$	0	$	0	$	331	$	41,711	$	0	$	41,711
Grades 5 – 7		10,270		8,760		351		50		0		626		20,057		0		20,057
Grades 8 – 9		0		0		0		0		14		91		105		0		105
Total	$	42,026	$	14,956	$	3,779	$	50	$	14	$	1,048	$	61,873	$	0	$	61,873

Real Estate – Owner Occupied:
Grades 1 – 4	$	194,072	$	113,528	$	53,630	$	19,670	$	19,279	$	6,162	$	406,341	$	0	$	406,341
Grades 5 – 7		115,720		56,173		33,913		10,245		12,550		1,165		229,766		0		229,766
Grades 8 – 9		2,919		0		44		0		122		0		3,085		0		3,085
Total	$	312,711	$	169,701	$	87,587	$	29,915	$	31,951	$	7,327	$	639,192	$	0	$	639,192

Real Estate – Non-Owner Occupied:
Grades 1 – 4	$	129,153	$	163,035	$	89,125	$	44,196	$	10,079	$	12,018	$	447,606	$	0	$	447,606
Grades 5 – 7		183,388		164,334		139,951		35,200		13,456		37,399		573,728		0		573,728
Grades 8 – 9		6,712		5,688		0		0		0		0		12,400		0		12,400
Total	$	319,253	$	333,057	$	229,076	$	79,396	$	23,535	$	49,417	$	1,033,734	$	0	$	1,033,734

Real Estate – Multi-Family and Residential Rental:
Grades 1 – 4	$	31,470	$	38,176	$	36,348	$	5,306	$	3,082	$	4,003	$	118,385	$	0	$	118,385
Grades 5 – 7		48,847		25,786		12,879		3,162		2,557		283		93,514		0		93,514
Grades 8 – 9		0		0		0		0		0		49		49		0		49
Total	$	80,317	$	63,962	$	49,227	$	8,468	$	5,639	$	4,335	$	211,948	$	0	$	211,948
Total Commercial	$	1,025,368	$	770,436	$	445,327	$	135,893	$	64,986	$	72,100	$	2,514,110	$	617,720	$	3,131,830

	2022		2021		2020		2019		2018		Prior		Term Total		Revolving Loans		Grand Total
Retail:
1-4 Family Mortgages:
Performing	$	313,611	$	242,950	$	91,936	$	12,094	$	14,297	$	41,622	$	716,510	$	37,070	$	753,580
Nonperforming		142		82		0		0		203		1,029		1,456		0		1,456
Total	$	313,753	$	243,032	$	91,936	$	12,094	$	14,500	$	42,651	$	717,966	$	37,070	$	755,036

Other Consumer Loans:
Performing	$	4,349	$	2,870	$	1,040	$	1,074	$	395	$	430	$	10,158	$	19,595	$	29,753
Nonperforming		0		0		0		0		0		0		0		0		0
Total	$	4,349	$	2,870	$	1,040	$	1,074	$	395	$	430	$	10,158	$	19,595	$	29,753
Total Retail	$	318,102	$	245,902	$	92,976	$	13,168	$	14,895	$	43,081	$	728,124	$	56,665	$	784,789

Grand Total	$	1,343,470	$	1,016,338	$	538,303	$	149,061	$	79,881	$	115,181	$	3,242,234	$	674,385	$	3,916,619

The allowance for credit losses for the year-ended December 31, 2022 is as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non-owner occupied			Commercial real estate – multi-family and residential rental			1-4 family mortgages			Other consumer loans			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	10,782		$	420		$	6,045		$	13,301		$	1,695		$	2,449		$	626		$	45		$	35,363
Adoption of ASU 2016-13		(1,571	)		(43	)		(560	)		(2,534	)		(621	)		5,395			(411	)		(55	)		(400	)
Provision for credit losses		946			138			378			(603	)		152			5,621			(111	)		29			6,550
Charge-offs		(171	)		(29	)		(38	)		0			0			(33	)		(21	)		0			(292	)
Recoveries		217			4			89			0			43			595			77			0			1,025
Ending balance	$	10,203		$	490		$	5,914		$	10,164		$	1,269		$	14,027		$	160		$	19		$	42,246

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2021 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non- owner occupied			Commercial real estate – multi-family and residential rental			Home equity and other			1 – 4 family mortgages			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	9,424		$	679		$	8,246		$	13,611		$	1,819		$	889		$	3,240		$	59		$	37,967
Provision for loan losses		2,030			(618	)		(3,308	)		(310	)		(150	)		(301	)		(1,629	)		(14	)		(4,300	)
Charge-offs		(882	)		(15	)		(12	)		0			0			(43	)		(92	)		0			(1,044	)
Recoveries		210			374			1,119			0			26			81			930			0			2,740
Ending balance	$	10,782		$	420		$	6,045		$	13,301		$	1,695		$	626		$	2,449		$	45		$	35,363

Ending balance: individually evaluated for impairment	$	266		$	0		$	84		$	0		$	4		$	123		$	69		$	0		$	546

Ending balance: collectively evaluated for impairment	$	10,516		$	420		$	5,961		$	13,301		$	1,691		$	503		$	2,380		$	45		$	34,817

Total loans (*):
Ending balance	$	1,097,309		$	43,239		$	565,758		$	1,027,415		$	176,593		$	60,488		$	442,547					$	3,413,349

Ending balance: individually evaluated for impairment	$	5,010		$	0		$	10,435		$	146		$	91		$	1,247		$	2,437					$	19,366

Ending balance: collectively evaluated for impairment	$	1,092,299		$	43,239		$	555,323		$	1,027,269		$	176,502		$	59,241		$	440,110					$	3,393,983

(*) Excludes $40.1 million in loans originated under the Paycheck Protection Program.

The allowance for loan losses and recorded investments in loans for the year-ended December 31, 2020 are as follows (dollars in thousands):

	Commercial and industrial			Commercial vacant land, land development and residential construction			Commercial real estate – owner occupied			Commercial real estate – non- owner occupied		Commercial real estate – multi-family and residential rental			Home equity and other			1 – 4 family mortgages			Unallocated			Total
Allowance for loan losses:
Beginning balance	$	6,659		$	466		$	6,291		$	6,761	$	893		$	861			1,888		$	70		$	23,889
Provision for loan losses		2,921			289			1,881			6,837		907			58			1,168			(11	)		14,050
Charge-offs		(247	)		(113	)		(235	)		0		(18	)		(96	)		(129	)		0			(838	)
Recoveries		91			37			309			13		37			66			313			0			866
Ending balance	$	9,424		$	679		$	8,246		$	13,611	$	1,819		$	889		$	3,240		$	59		$	37,967

Ending balance: individually evaluated for impairment	$	53		$	0		$	77		$	8	$	0		$	241		$	172		$	0		$	551

Ending balance: collectively evaluated for impairment	$	9,371		$	679		$	8,169		$	13,603	$	1,819		$	648		$	3,068		$	59		$	37,416

Total loans (*):
Ending balance	$	780,164		$	55,055		$	529,953		$	917,436	$	146,095		$	61,620		$	337,888					$	2,828,211

Ending balance: individually evaluated for impairment	$	6,585		$	0		$	15,327		$	503	$	0		$	1,270		$	3,273					$	26,958

Ending balance: collectively evaluated for impairment	$	773,579		$	55,055		$	514,626		$	916,933	$	146,095		$	60,350		$	334,615					$	2,801,253

(*) Excludes $365 million in loans originated under the Paycheck Protection Program.

Loans modified as troubled debt restructurings generally reflect payment extensions and below market interest rates.

Loans modified as troubled debt restructurings during the year-ended December 31, 2022 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance

Commercial:
Commercial and industrial		3	$	6,593,000	$	6,593,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		0		0		0
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		0		0		0
Total commercial		3		6,593,000		6,593,000

Retail:
Home equity and other		0		0		0
1-4 family mortgages		7		758,000		757,000
Total retail		7		758,000		757,000

Total		10	$	7,351,000	$	7,350,000

Loans modified as troubled debt restructurings during the year-ended December 31, 2021 were as follows:

			Pre-		Post-
			Modification		Modification
			Recorded		Recorded
	Number of		Principal		Principal
	Contracts		Balance		Balance

Commercial:
Commercial and industrial		10	$	3,017,000	$	3,016,000
Vacant land, land development and residential construction		0		0		0
Real estate – owner occupied		1		692,000		692,000
Real estate – non-owner occupied		0		0		0
Real estate – multi-family and residential rental		1		93,000		93,000
Total commercial		12		3,802,000		3,801,000

Retail:
Home equity and other		4		485,000		482,000
1-4 family mortgages		2		46,000		46,000
Total retail		6		531,000		528,000
Total		18	$	4,333,000	$	4,329,000

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the year-ended December 31, 2022 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		2	$	5,665,000
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		2		5,665,000
Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0

Total		2	$	5,665,000

The following loans, modified as troubled debt restructurings within the previous twelve months, became over 30 days past due during the year-ended December 31, 2021 (amounts as of period end):

	Number of Contracts		Recorded Principal Balance
Commercial:
Commercial and industrial		0	$	0
Vacant land, land development and residential construction		0		0
Real estate – owner occupied		0		0
Real estate – non-owner occupied		0		0
Real estate – multi-family and residential rental		0		0
Total commercial		0		0

Retail:
Home equity and other		0		0
1-4 family mortgages		0		0
Total retail		0		0

Total		0	$	0

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2022 is as follows:

	Commercial and			Commercial Vacant Land, Land Development, and Residential		Commercial Real Estate - Owner			Commercial Real Estate - Non-Owner			Commercial Real Estate - Multi-Family and Residential
	Industrial			Construction		Occupied			Occupied			Rental

Commercial Loan Portfolio:
Beginning Balance	$	4,973,000		$	0	$	10,435,000		$	146,000		$	91,000
Charge-Offs		(95,000	)		0		(39,000	)		0			0
Payments		(772,000	)		0		(9,683,000	)		(16,000	)		(91,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		4,566,000			0		(669,000	)		0			0
Ending Balance	$	8,672,000		$	0	$	44,000		$	130,000		$	0

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,202,000		$	627,000
Charge-Offs		0			0
Payments		(14,000	)		(317,000	)
Transfers to ORE		0			0
Net Additions/Deletions (1)		(1,187,000	)		2,426,000
Ending Balance	$	1,000		$	2,736,000

(1)

Includes $1.2 million in the transfer of home equity lines of credit from other consumer loans to 1-4 family mortgages in association with the adoption of the CECL methodology effective January 1, 2022.

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2021 is as follows:

	Commercial and			Commercial Vacant Land, Land Development, and Residential		Commercial Real Estate - Owner			Commercial Real Estate - Non-Owner			Commercial Real Estate - Multi-Family and Residential
	Industrial			Construction		Occupied			Occupied			Rental

Commercial Loan Portfolio:
Beginning Balance	$	6,414,000		$	0	$	14,797,000		$	480,000		$	0
Charge-Offs		(17,000	)		0		0			0			0
Payments		(4,278,000	)		0		(5,048,000	)		(334,000	)		(1,000	)
Transfers to ORE		0			0		0			0			0
Net Additions/Deletions		2,854,000			0		686,000			0			92,000
Ending Balance	$	4,973,000		$	0	$	10,435,000		$	146,000		$	91,000

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,146,000		$	806,000
Charge-Offs		0			0
Payments		(426,000	)		(224,000	)
Transfers to ORE		0			0
Net Additions/Deletions		482,000			45,000
Ending Balance	$	1,202,000		$	627,000

Activity for loans categorized as troubled debt restructurings during the year-ended December 31, 2020 is as follows:

	Commercial and			Commercial Vacant Land, Land Development, and Residential			Commercial Real Estate - Owner			Commercial Real Estate - Non-Owner			Commercial Real Estate - Multi-Family and Residential
	Industrial			Construction			Occupied			Occupied			Rental

Commercial Loan Portfolio:
Beginning Balance	$	8,587,000		$	85,000		$	1,145,000		$	178,000		$	7,000
Charge-Offs		0			0			0			0			0
Payments		(11,260,000	)		(85,000	)		(3,765,000	)		(585,000	)		(7,000	)
Transfers to ORE		0			0			0			0			0
Net Additions/Deletions		9,087,000			0			17,417,000			887,000			0
Ending Balance	$	6,414,000		$	0		$	14,797,000		$	480,000		$	0

	Retail Home Equity and Other			Retail 1-4 Family Mortgages

Retail Loan Portfolio:
Beginning Balance	$	1,415,000		$	724,000
Charge-Offs		0			0
Payments		(881,000	)		(68,000	)
Transfers to ORE		0			0
Net Additions/Deletions		612,000			150,000
Ending Balance	$	1,146,000		$	806,000