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LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables)
12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Summary of Loan Portfolio, Excluding Residential Loans Held for Sale
The following table presents the loan portfolio by segment and class, excluding residential LHFS, at December 31, 2023 and 2022.
20232022
Commercial real estate:
Owner-occupied$373,757 $315,770 
Non-owner occupied694,638 608,043 
Multi-family150,675 138,832 
Non-owner occupied residential95,040 104,604 
Acquisition and development:
1-4 family residential construction24,516 25,068 
Commercial and land development115,249 158,308 
Commercial and industrial (1)
367,085 357,774 
Municipal9,812 12,173 
Residential mortgage:
First lien266,239 229,849 
Home equity – term5,078 5,505 
Home equity – lines of credit186,450 183,241 
Installment and other loans9,774 12,065 
Total loans$2,298,313 $2,151,232 
(1) This balance includes $5.7 million and $13.8 million of SBA PPP loans, net of deferred fees and costs, at December 31, 2023 and 2022, respectively.
Amortized Cost of the Loan Portfolio, by Year of Origination, Loan Class, and Credit Quality
The following table presents the amortized cost basis of the loan portfolio, by year of origination, loan class, and credit quality, as of December 31, 2023. For residential and consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan and payment activity, which residential mortgage and installment and other consumer loans are presented below based on payment performance: performing or nonperforming.
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 202320232022202120202019PriorRevolving Loans Amortized BasisRevolving Loans Converted to TermTotal
Commercial Real Estate:
Owner-occupied:
Risk rating
Pass$50,829 $103,192 $69,888 $21,232 $21,251 $62,634 $4,941 $— $333,967 
Special mention — 2,517 1,176 — 1,314 — — 5,007 
Substandard - Non-IEL 9,923 — 6,075 — 2,687 312 — 18,997 
Substandard - IEL — — 13,366 — 2,420 — — 15,786 
Total owner-occupied loans$50,829 $113,115 $72,405 $41,849 $21,251 $69,055 $5,253 $— $373,757 
Current period gross charge offs - owner-occupied$ $— $— $— $— $— $— $— $— 
Non-owner occupied:
Risk rating
Pass$82,879 $102,212 $235,031 $83,652 $63,176 $120,696 $509 $— $688,155 
Special mention — — 524 — 2,112 — — 2,636 
Substandard - Non-IEL — — — — 2,739 — 868 3,607 
Substandard - IEL — — — — 240 — — 240 
Total non-owner occupied loans$82,879 $102,212 $235,031 $84,176 $63,176 $125,787 $509 $868 $694,638 
Current period gross charge offs - non-owner occupied$ $— $— $— $— $— $— $— $— 
Multi-family:
Risk rating
Pass$2,701 $61,805 $28,541 $12,694 $7,437 $33,895 $117 $— $147,190 
Special mention — — — 244 2,008 — — 2,252 
Substandard - Non-IEL — — — — — — — — 
Substandard - IEL — — — — 1,233 — — 1,233 
Total multi-family loans$2,701 $61,805 $28,541 $12,694 $7,681 $37,136 $117 $— $150,675 
Current period gross charge offs - multi-family$ $— $— $— $— $— $— $— $— 
Non-owner occupied residential:
Risk rating
Pass$10,075 $20,473 $16,947 $7,974 $6,444 $28,319 $1,130 $— $91,362 
Special mention — — — — 731 — — 731 
Substandard - Non-IEL — — — — 375 — — 375 
Substandard - IEL2 — 192 1,461 — 917 — — 2,572 
Total non-owner occupied residential loans$10,077 $20,473 $17,139 $9,435 $6,444 $30,342 $1,130 $— $95,040 
Current period gross charge offs - non-owner occupied residential$ $— $— $— $— $12 $— $— $12 
(continued)
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 202320232022202120202019PriorRevolving Loans Amortized BasisRevolving Loans Converted to TermTotal
Acquisition and development:
1-4 family residential construction:
Risk rating
Pass$18,820 $5,400 $— $— $— $— $— $— $24,220 
Special mention222 — 74 — — — — — 296 
Substandard - Non-IEL — — — — — — — — 
Substandard - IEL — — — — — — — — 
Total 1-4 family residential construction loans$19,042 $5,400 $74 $— $— $— $— $— $24,516 
Current period gross charge offs - 1-4 family residential construction$ $— $— $— $— $— $— $— $— 
Commercial and land development:
Risk rating
Pass$28,829 $48,453 $9,847 $9,927 $110 $1,774 $6,574 $6,936 $112,450 
Special mention — — 1,001 — 437 — — 1,438 
Substandard - Non-IEL — — — — — — — — 
Substandard - IEL — — — — 1,361 — — 1,361 
Total commercial and land development loans$28,829 $48,453 $9,847 $10,928 $110 $3,572 $6,574 $6,936 $115,249 
Current period gross charge offs - commercial and land development$ $— $— $— $— $— $— $— $— 
Commercial and Industrial:
Risk rating
Pass$67,735 $69,670 $67,117 $24,580 $10,753 $20,775 $86,475 $1,522 $348,627 
Special mention 4,251 4,364 11 552 356 2,258 — 11,792 
Substandard - Non-IEL — 4,682 — 225 1,082 — 5,994 
Substandard - IEL 69 — — 455 141 — 672 
Total commercial and industrial loans$67,735 $73,990 $76,163 $24,598 $11,310 $21,811 $89,956 $1,522 $367,085 
Current period gross charge offs - commercial and industrial$ $161 $106 $— $— $$473 $— $748 
Municipal:
Risk rating
Pass$ $— $3,403 $— $— $6,409 $— $— $9,812 
Total municipal loans$ $— $3,403 $— $— $6,409 $— $— $9,812 
Current period gross charge offs - municipal$ $— $— $— $— $— $— $— $— 
Residential mortgage:
First lien:
Payment performance
Performing$43,641 $71,311 $34,704 $8,056 $7,465 $97,943 $— $638 $263,758 
Nonperforming — — — 120 2,361 — — 2,481 
Total first lien loans$43,641 $71,311 $34,704 $8,056 $7,585 $100,304 $— $638 $266,239 
Current period gross charge offs - first lien$ $— $— $— $— $58 $— $— $58 
Home equity - term:
Payment performance
Performing$607 $732 $90 $426 $115 $3,105 $— $— $5,075 
Nonperforming — — — — — — 
(continued)
Term Loans Amortized Cost Basis by Origination Year
As of December 31, 202320232022202120202019PriorRevolving Loans Amortized BasisRevolving Loans Converted to TermTotal
Total home equity - term loans$607 $732 $90 $426 $115 $3,108 $— $— $5,078 
Current period gross charge offs - home equity - term$ $— $— $— $— $— $— $— $— 
Home equity - lines of credit:
Payment performance
Performing$ $— $— $— $— $— $107,967 $77,171 $185,138 
Nonperforming — — — — — 1,296 16 1,312 
Total residential real estate - home equity - lines of credit loans$ $— $— $— $— $— $109,263 $77,187 $186,450 
Current period gross charge offs - home equity - lines of credit$ $— $— $— $— $— $40 $— $40 
Installment and other loans:
Payment performance
Performing$758 $413 $332 $106 $670 $947 $6,500 $— $9,726 
Nonperforming3 — — — 33 12 — — 48 
Total Installment and other loans$761 $413 $332 $106 $703 $959 $6,500 $— $9,774 
Current period gross charge offs - installment and other$181 $24 $— $— $$10 $28 $— $247 
The following table summarizes the Company’s loan portfolio ratings based on its internal risk rating system at December 31, 2022, which presents the most comparable required information. Prior to the adoption of CECL, PCD loans were classified as PCI loans and accounted for under ASC 310-30. In accordance with the CECL standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the adoption date. At December 31, 2023, the amortized cost of the PCD loans was $8.6 million.
PassSpecial MentionNon-Impaired SubstandardImpaired - SubstandardDoubtfulPCI LoansTotal
December 31, 2022
Commercial real estate:
Owner occupied$305,159 $2,109 $3,532 $2,767 $— $2,203 $315,770 
Non-owner occupied601,244 4,243 2,273 — — 283 608,043 
Multi-family130,851 7,739 242 — — — 138,832 
Non-owner occupied residential102,674 810 482 81 — 557 104,604 
Acquisition and development:
1-4 family residential construction25,068 — — — — — 25,068 
Commercial and land development142,424 458 — 15,426 — — 158,308 
Commercial and industrial331,103 17,579 7,013 31 — 2,048 357,774 
Municipal12,173 — — — — — 12,173 
Residential mortgage:
First lien222,849 — 215 2,520 — 4,265 229,849 
Home equity - term5,485 — — — 15 5,505 
Home equity - lines of credit182,801 — 45 395 — — 183,241 
Installment and other loans12,017 — — 40 — 12,065 
$2,073,848 $32,938 $13,802 $21,265 $— $9,379 $2,151,232 
Schedule Of Amortized Cost Of Nonaccrual Loans By Class, With And Without Loan Allowance For Credit Loss
The following table presents the amortized cost basis of nonaccrual loans, according to loan class, with and without reserves on individually evaluated loans as of December 31, 2023, as compared to nonaccrual loans at December 31, 2022. The Company did not recognize interest income on nonaccrual loans during the year ended December 31, 2023.
December 31, 2023
December 31, 2022
Nonaccrual loans with a related ACLNonaccrual loans with no related ACLTotal nonaccrual loansLoans Past Due 90+ AccruingTotal nonaccrual loans
Commercial real estate:
Owner-occupied$ $15,786 $15,786 $ $2,767 
Non-owner occupied 240 240  — 
Multi-family 1,233 1,233  — 
Non-owner occupied residential 2,572 2,572  81 
Acquisition and development:
1-4 family residential construction    — 
Commercial and land development 1,361 1,361  15,426 
Commercial and industrial68 604 672  31 
Municipal    — 
Residential mortgage:
First lien 2,309 2,309 66 1,838 
Home equity – term 3 3  
Home equity – lines of credit 1,312 1,312  395 
Installment and other loans3 36 39  40 
Total$71 $25,456 $25,527 $66 $20,583 
Schedule Of Amortized Cost Basis Of Collateral-Dependent Loans The following table presents the amortized cost basis of collateral-dependent loans by class as of December 31, 2023:
Type of Collateral
Business AssetsCommercial Real EstateEquipmentLandResidential Real EstateOtherTotal
Commercial real estate:
Owner occupied$ $15,786 $ $ $ $ $15,786 
Non-owner occupied 240     240 
Multi-family 1,233     1,233 
Non-owner occupied residential 2,572     2,572 
Acquisition and development:
1-4 family residential construction       
Commercial and land development   1,361   1,361 
Commercial and industrial2 76 594    672 
Municipal       
Residential mortgage:
First lien    2,231  2,231 
Home equity - term    3  3 
Home equity - lines of credit    1,312  1,312 
Installment and other loans  18    18 
Total$2 $19,907 $612 $1,361 $3,546 $ $25,428 
Summary of Impaired Loans by Class The following table, which excludes accruing PCI loans, presents the most comparable required information at December 31, 2022, which summarizes impaired loans by segment and class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required at December 31, 2022. The recorded investment in loans excludes accrued interest receivable. Related allowances established generally pertain to those loans in which loan forbearance agreements were in the process of being negotiated or updated appraisals were pending, and any partial charge-off will be recorded when final information is received.
 
 Impaired Loans with a Specific AllowanceImpaired Loans with No Specific Allowance
Recorded
Investment
(Book Balance)
Unpaid
Principal Balance
(Legal Balance)
Related
Allowance
Recorded
Investment
(Book Balance)
Unpaid
Principal Balance
(Legal Balance)
December 31, 2022
Commercial real estate:
Owner-occupied$— $— $— $2,767 $3,799 
Non-owner occupied residential— — — 81 207 
Commercial and industrial— — — 31 112 
Residential mortgage:
First lien178 178 28 2,342 3,126 
Home equity—term— — — 
Home equity—lines of credit— — — 395 684 
Installment and other loans— — — 40 40 
$178 $178 $28 $21,087 $23,402 
Summary of Average Recorded Investment in Impaired Loans and Related Interest Income
The following table, which excludes accruing PCI loans, presents the most comparable required information for the prior comparative periods and summarizes the average recorded investment in impaired loans and related recognized interest income for the years ended December 31, 2022 and 2021.
 20222021
Average
Impaired
Balance
Interest
Income
Recognized
Average
Impaired
Balance
Interest
Income
Recognized
Commercial real estate:
Owner-occupied$3,050 $— $3,825 $
Non-owner occupied— — — — 
Multi-family— — — — 
Non-owner occupied residential96 — 225 — 
Acquisition and development:
Commercial and land development1,187 — 187 — 
Commercial and industrial109 — 3,030 — 
Residential mortgage:
First lien2,389 33 2,539 43 
Home equity – term— 11 — 
Home equity – lines of credit405 — 521 — 
Installment and other loans44 — 25 — 
$7,286 $33 $10,363 $44 
Schedule of Loans Modified By Class and Type of Modification and Effectiveness of Modifications
The following table presents the amortized cost of loans at December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023, by loan class and by type of modification. The percentage of the amortized cost of loans that were modified to borrowers experiencing difficulty as compared to the amortized cost of loan class is also presented below. The Company has not committed to lend additional amounts to the borrowers included in the table below.
Principal ForgivenessPayment DelayTerm ExtensionInterest Rate ReductionCombination Term Extension and Principal ForgivenessCombination Term Extension and Interest Rate ReductionsTotal Class of Financing Receivable
Acquisition and development:
Commercial and land development$ $ $1,361 $ $ $ 1.18 %
Installment and other loans  9    0.09 %
The Company monitors the performance of the modified loans to borrowers experiencing financial difficulty to determine the effectiveness of its modification efforts. The following table presents the performance of the modified loans in the previous twelve months:
Current30-59 Days Past Due60-89 Days Past Due90 Days or More Past DueTotalNon-Accrual
Acquisition and development:
Commercial and land development$ $ $ $ $ $1,361 
Installment and other loans9    9  
Total:$9 $ $ $ $9 $1,361 

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2023. For loans modified to borrowers experiencing financial difficulty in the twelve months, there were no payment defaults in the subsequent twelve months.
Principal ForgivenessWeighted Average interest Rate ReductionWeighted Average Term Extension (in years)
Acquisition and development:
Commercial and land development  %1.0
Installment and other loans  %1.1
Schedule of Impaired Loans that are TDRs
The following table presents the most comparable required information for impaired loans that were TDRs, with the recorded investment at December 31, 2022:
 2022
Number of
Contracts
Recorded
Investment
Accruing:
Residential mortgage:
First lien682 
682 
Nonaccruing:
Residential mortgage:
First lien212 
Installment and other loans
214 
13 $896 
Schedule of TDR Loans Pre and Post Modification
The loan presented in the table below was considered a TDR at December 31, 2022 as a result of the Company agreeing to a below market interest rate given the risk of the transaction and a term extension, in order to give the borrowers an opportunity to improve their cash flows. For new and accruing TDRs, impairment was generally assessed using a DCF analysis. For TDRs in default of their modified terms, impairment was generally determined on a collateral dependent approach.
Number of
Contracts
Pre-
Modification
Investment
Balance
Post-
Modification
Investment
Balance
December 31, 2022
Installment and other loans$$
Schedule of Classes of Loan Portfolio Summarized by Aging Categories
The following table presents the most comparable required information, which includes the classes of the loan portfolio summarized by aging categories of performing loans and nonaccrual loans at December 31, 2022:
Days Past Due
Current30-5960-89
90+
(still accruing)
Total
Past Due
Non-
Accrual
Total
Loans
December 31, 2022
Commercial real estate:
Owner-occupied$310,769 $31 $— $— $31 $2,767 $313,567 
Non-owner occupied607,760 — — — — — 607,760 
Multi-family138,832 — — — — — 138,832 
Non-owner occupied residential103,782 184 — — 184 81 104,047 
Acquisition and development:
1-4 family residential construction24,622 446 — — 446 — 25,068 
Commercial and land development142,613 269 — — 269 15,426 158,308 
Commercial and industrial355,179 464 52 — 516 31 355,726 
Municipal12,173 — — — — — 12,173 
Residential mortgage:
First lien219,715 3,485 414 132 4,031 1,838 225,584 
Home equity – term5,485 — — — — 5,490 
Home equity – lines of credit181,350 1,395 101 — 1,496 395 183,241 
Installment and other loans11,953 64 — — 64 40 12,057 
Subtotal2,114,233 6,338 567 132 7,037 20,583 2,141,853 
Loans acquired with credit deterioration:
Commercial real estate:
Owner-occupied2,203 — — — — — 2,203 
Non-owner occupied283 — — — — — 283 
Non-owner occupied residential452 — — 105 105 — 557 
Commercial and industrial2,048 — — — — — 2,048 
Residential mortgage:
First lien3,657 327 79 202 608 — 4,265 
Home equity – term15 — — — — — 15 
Installment and other loans— — — — — 
Subtotal8,666 327 79 307 713 — 9,379 
$2,122,899 $6,665 $646 $439 $7,750 $20,583 $2,151,232 
Summary of Activity in the ALL and Ending Loan Balances Individually Evaluated for Impairment Based on Loan Segment
The following table presents the activity in the ACL, including the impact of adopting CECL, for the year ended December 31, 2023, and the activity in the ALL for the years ended December 31, 2022 and 2021.
 CommercialConsumer  
Commercial
Real Estate
Acquisition
and
Development
Commercial
and
Industrial
MunicipalTotal
Residential
Mortgage
Installment
and Other
TotalUnallocatedTotal
December 31, 2023
Balance, beginning of year
$13,558 $3,214 $4,505 $24 $21,301 $3,444 $188 $3,632 $245 $25,178 
Impact of adopting ASC 326$2,857 $(214)$928 $169 $3,740 $(1,121)$49 $(1,072)$(245)$2,423 
Provision for credit losses1,360 (764)1,023 (36)1,583 6 93 99  1,682 
Charge-offs(12) (748) (760)(98)(247)(345) (1,105)
Recoveries110 5 98  213 193 118 311  524 
Balance, end of year
$17,873 $2,241 $8 $157 $26,077 $2,424 $201 $2,625 $ $28,702 
December 31, 2022
Balance, beginning of year
$12,037 $2,062 $3,814 $30 $17,943 $2,785 $215 $3,000 $237 $21,180 
Provision for loan losses1,489 1,142 640 (6)3,265 669 218 887 4,160 
Charge-offs— — — — — (50)(360)(410)— (410)
Recoveries32 10 51 — 93 40 115 155 — 248 
Balance, end of year
$13,558 $3,214 $4,505 $24 $21,301 $3,444 $188 $3,632 $245 $25,178 
December 31, 2021
Balance, beginning of year
$11,151 $1,114 $3,942 $40 $16,247 $3,362 $324 $3,686 $218 $20,151 
Provision for loan losses710 938 23 (10)1,661 (517)(73)(590)19 1,090 
Charge-offs(293)— (663)— (956)(92)(70)(162)— (1,118)
Recoveries469 10 512 — 991 32 34 66 — 1,057 
Balance, end of year
$12,037 $2,062 $3,814 $30 $17,943 $2,785 $215 $3,000 $237 $21,180 

The information presented in the table below is not required for periods subsequent to the adoption of CECL. The following table summarizes the ALL allocation for loans individually and collectively evaluated for impairment by loan segment at December 31, 2022. Accruing PCI loans are excluded from loans individually evaluated for impairment.
 CommercialConsumer  
Commercial
Real Estate
Acquisition
and
Development
Commercial
and
Industrial
MunicipalTotal
Residential
Mortgage
Installment
and Other
TotalUnallocatedTotal
December 31, 2022
Loans allocated by:
Individually evaluated for impairment
$2,848 $15,426 $31 $— $18,305 $2,920 $40 $2,960 $— $21,265 
Collectively evaluated for impairment
1,164,401 167,950 357,743 12,173 1,702,267 415,675 12,025 427,700 — 2,129,967 
$1,167,249 $183,376 $357,774 $12,173 $1,720,572 $418,595 $12,065 $430,660 $— $2,151,232 
Allowance for credit losses allocated by:
Individually evaluated for impairment
$— $— $— $— $— $28 $— $28 $— $28 
Collectively evaluated for impairment
13,558 3,214 4,505 24 21,301 3,416 188 3,604 245 25,150 
$13,558 $3,214 $4,505 $24 $21,301 $3,444 $188 $3,632 $245 $25,178