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LOANS AND ALLOWANCE FOR CREDIT LOSSES
 12 Months Ended
Dec. 31, 2023
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
LOANS AND ALLOWANCE FOR CREDIT LOSSES LOANS AND ALLOWANCE FOR CREDIT LOSSES
 
The composition of the loan portfolio as of December 31:
(In thousands)20232022
Commercial real estate$898,709 $824,111 
Residential mortgage394,189 361,905 
Commercial and industrial152,344 180,958 
Home equity lines of credit90,163 83,463 
Real estate construction84,341 80,491 
Consumer9,954 11,336 
Gross loans1,629,700 1,542,264 
Unearned income(1,712)(3,654)
Total loans, net of unearned income$1,627,988 $1,538,610 
The Bank has granted loans to certain of its executive officers, directors and their related interests. These loans were made on substantially the same basis, including interest rates and collateral as those prevailing for comparable transactions with other borrowers at the same time. None of these loans were past due, in nonaccrual status, or restructured at December 31, 2023.
Following is a summary of the activity for these related-party loans:
(In thousands)2023
Balance at January 1$5,950 
New loans (1)
344 
Repayments (1)
987 
Balance at December 31$5,307 
————————————————
(1) Includes one additional loan and the removal of one loan due to changes in executive management and directors.
One of the factors used to monitor the performance and credit quality of the loan portfolio is to analyze the age of the loans receivable as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the past due status:
(In thousands)30–59 Days Past Due60–89 Days
Past Due		>90 Days
Past Due		Total Past
Due		CurrentTotal Loans
Receivable		Loans
Receivable
>90 Days
and
Accruing
December 31, 2023
Commercial real estate$150 $347 $— $497 $898,212 $898,709 $— 
Residential mortgage1,293 388 849 2,530 391,659 394,189 505 
Commercial and industrial50 — 159 209 152,135 152,344 — 
Home equity lines of credit414 — 654 1,068 89,095 90,163 654 
Real estate construction12 — — 12 84,329 84,341 — 
Consumer8 — 3 11 9,943 9,954 3 
Total Loans$1,927 $735 $1,665 $4,327 $1,625,373 $1,629,700 $1,162 
(In thousands)30–59 Days Past Due60–89 Days
Past Due		>90 Days
Past Due		Total Past
Due		CurrentTotal Loans
Receivable		Loans
Receivable
>90 Days
and
Accruing
December 31, 2022
Commercial real estate$2,026 $350 $255 $2,631 $821,480 $824,111 $— 
Residential mortgage2,969 970 705 4,644 357,261 361,905 705 
Commercial and industrial287 — 162 449 180,509 180,958 — 
Home equity lines of credit438 117 498 1,053 82,410 83,463 498 
Real estate construction24 — — 24 80,467 80,491 — 
Consumer155 80 — 235 11,101 11,336 — 
Total Loans$5,899 $1,517 $1,620 $9,036 $1,533,228 $1,542,264 $1,203 
Allowance for Credit Losses, effective January 1, 2023
As discussed in Note 1, “Summary of Significant Account Polices,” the Corporation adopted CECL effective January 1, 2023. CECL requires estimated credit losses on loans to be determined based on an expected life of loan model, as compared to an incurred loss model, which was in effect for periods prior to 2023. Accordingly, ACL disclosures subsequent to January 1, 2023 are not always comparable to prior periods. In addition, certain new disclosures required under CECL are not applicable to prior periods. As a result, the tables in this disclosure present separately for each period, where appropriate.
Under CECL, loans individually evaluated consist of nonaccrual loans. Under the incurred loss model in effect prior to the adoption of CECL, loans evaluated individually for impairment were referred to as impaired loans.
The following table presents nonaccrual loans: 
December 31, 2023December 31, 2022
(In thousands)With a Related AllowanceWithout a Related AllowanceTotalTotal
Commercial real estate$315 $1,164 $1,479 $1,873 
Residential mortgage— 343 343 — 
Commercial and industrial1,004 — 1,004 781 
Home equity lines of credit— 185 185 — 
 $1,319 $1,692 $3,011 $2,654 
No additional funds are committed to be advanced in connection with individually evaluated loans. If interest on all nonaccrual loans had been accrued at original contract rates, interest income would have increased by $302 thousand in 2023 and $410 thousand in 2022.
One accruing TDR was included in the table above as of December 31, 2022. That loan was moved to performing status during 2023 due to its loan repayment history .
Total nonperforming loans at December 31 are as follows:
(In thousands)20232022
Nonaccrual loans$3,011 $2,654 
Greater than 90 days past due and still accruing1,162 1,203 
Total nonperforming loans$4,173 $3,857 
Loan Modifications
On January 1, 2023, the Corporation adopted the accounting guidance in ASU 2022-02, which eliminated the recognition and measurement of TDRs. Due to the removal of the TDR designation, the Corporation evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and combinations of the above. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.
Loans modified as of December 31, 2023 were as follows:
(In thousands)Term Extension% of Total Class of Financing Receivable
Commercial and industrial$549 0.4 %
As of December 31, 2023, the Corporation had no commitments to lend any additional funds on modified loans. There were no loans that defaulted during the period that had been modified preceding the payment default when the borrower was experiencing financial difficulty at the time of modification. For purposes of this disclosure, a default occurs when, within 12 months of the original modification, either a full or partial charge-off occurs or the loan becomes 90 days or more past due.
Collateral-Dependent Loans
A loan is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Corporation elected the practical expedient to estimate expected credit losses based on the collateral’s fair value less cost to sell. In most cases, the Corporation records a partial charge-off to reduce the collateral-dependent loan’s carrying value to the collateral’s fair value less cost to sell. Substantially all of the collateral supporting collateral-dependent loans consists of various types of real estate, including residential properties, commercial properties, such as retail centers, office buildings, and lodging, agriculture land, and vacant land.
The following table presents the amortized cost basis of individually evaluated loans as of December 31, 2023. Changes in the fair value of the collateral for individually evaluated loans are reported as provision for credit losses or a reversal of provision for credit losses in the period of change.
December 31, 2023
Type of Collateral
(In thousands)Business AssetsReal Estate
Commercial real estate$— $1,479 
Residential mortgage— 343 
Commercial and industrial1,004 — 
Home equity lines of credit— 185 
Total$1,004 $2,007 
Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process at December 31, 2023 and December 31, 2022, totaled $1.3 million and $1.1 million, respectively.
Allowance for Credit Losses
The Corporation maintains an ACL at a level determined to be adequate to absorb expected credit losses associated with the Corporation’s financial instruments over the life of those instruments as of the balance sheet date. The Corporation’s systematic ACL methodology is based on the following portfolio segments: commercial real estate, residential mortgage, commercial and industrial, home equity lines of credit, real estate construction and consumer. The Corporation’s loan portfolio is segmented by loan types that have similar risk characteristics, type of collateral and behave similarly during economic cycles. The segmentation in the CECL model is different from the segmentation in the incurred loss model, however there was minimal impact on the presentation of the financial statement disclosures. See Note 1 “Summary of Significant Accounting Policies” for discussion of the key risks by portfolio segment that management assesses in preparing the ACL.
The Bank considers the performance of the loan portfolio and its impact on the ACL. The Bank does not assign internal risk ratings to smaller balance, homogeneous loans such as certain residential mortgage, home equity lines of credit, construction loans to individuals secured by residential real estate and consumer loans. For these loans, the Bank evaluates credit quality based on the aging status of the loan and designates as performing and nonperforming.
The following summarizes designated internal risk categories by portfolio segment for loans that the Bank assigns a risk rating and those that Bank evaluates based on the performance status:
December 31, 2023
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost Basis
(In thousands)20232022202120202019PriorTotal
Internally Risk Rated:
Commercial real estate
Pass$136,158 $152,767 $130,994 $60,918 $65,856 $287,026 $13,636 $847,355 
Special Mention1,927 6,385 5,920 1,904 8,222 16,244 1,994 42,596 
Substandard— — — 1,530 704 6,524 — 8,758 
Total Commercial real estate$138,085 $159,152 $136,914 $64,352 $74,782 $309,794 $15,630 $898,709 
Residential mortgage
Pass$39,146 $27,612 $41,031 $14,758 $10,492 $27,274 $402 $160,715 
Special Mention588 82 593 397 826 2,457 62 5,005 
Substandard— — — — — 218 — 218 
Total Residential Mortgage$39,734 $27,694 $41,624 $15,155 $11,318 $29,949 $464 $165,938 
Commercial and industrial
Pass$12,319 $24,259 $34,830 $15,614 $13,922 $17,780 $25,147 $143,871 
Special Mention128 303 290 529 140 459 2,014 3,863 
Substandard7 135 499 91 9 1,597 2,272 4,610 
Total Commercial and industrial$12,454 $24,697 $35,619 $16,234 $14,071 $19,836 $29,433 $152,344 
Year-to-date gross charge-offs$— $— $— $— $— $110 $— $110 
Real estate construction
Pass$19,766 $39,758 $3,953 $1,160 $— $2,604 $8,003 $75,244 
Special Mention— 465 — 92 — 725 — 1,282 
Substandard— — — — — 69 — 69 
Total Real estate construction$19,766 $40,223 $3,953 $1,252 $— $3,398 $8,003 $76,595 
Home equity lines of credit
Pass$300 $99 $— $— $— $131 $5,235 $5,765 
Special Mention— — — — — — 727 727 
Substandard— — — — — 362 — 362 
Total Home equity lines of credit$300 $99 $— $— $— $493 $5,962 $6,854 
Performance Rated:
Residential mortgage
Performing$33,884 $45,221 $14,878 $16,184 $9,059 $108,021 $156 $227,403 
Nonperforming— — — — — 848 — 848 
Total Residential Mortgage$33,884 $45,221 $14,878 $16,184 $9,059 $108,869 $156 $228,251 
Home equity lines of credit
Performing$23 $38 $— $13 $94 $4,742 $77,745 $82,655 
Nonperforming— — — — — 92 562 654 
Total Home equity lines of credit$23 $38 $— $13 $94 $4,834 $78,307 $83,309 
Consumer
Performing$2,351 $2,685 $778 $522 $271 $1,085 $2,259 $9,951 
Nonperforming— — — — — — 3 3 
Total Consumer$2,351 $2,685 $778 $522 $271 $1,085 $2,262 $9,954 
Year-to-date gross charge-offs$48 $83 $42 $55 $23 $78 $67 $396 
Real estate construction
Performing$5,571 $753 $175 $210 $170 $867 $— $7,746 
Total Real estate construction$5,571 $753 $175 $210 $170 $867 $— $7,746 
Total Portfolio loans
Pass$207,689 $244,495 $210,808 $92,450 $90,270 $334,815 $52,423 $1,232,950 
Special Mention2,643 7,235 6,803 2,922 9,188 19,885 4,797 53,473 
Substandard7 135 499 1,621 713 8,770 2,272 14,017 
Performing41,829 48,697 15,831 16,929 9,594 114,715 80,160 327,755 
Nonperforming— — — — — 940 565 1,505 
Total Portfolio loans$252,168 $300,562 $233,941 $113,922 $109,765 $479,125 $140,217 $1,629,700 
Year-to-date gross charge-offs$48 $83 $42 $55 $23 $188 $67 $506 
The information presented in the preceding table is not required to be disclosed for periods prior to the adoption of CECL. The following table presents the most comparable required information, the recorded investment in loan classes by internally assigned risk ratings and loan classes by performing and nonperforming status as of December 31, 2022:
(In thousands)Commercial
and
Industrial		Commercial
Real Estate		Real Estate
Construction		Residential
Mortgage		Home Equity
Lines of
Credit		ConsumerTotal
December 31, 2022
Pass$175,633 $789,017 $78,673 $355,888 $82,366 $11,336 $1,492,913 
Special Mention4,035 29,540 1,818 5,803 712 — 41,908 
Substandard1,290 5,554 — 214 385 — 7,443 
Total Portfolio Loans$180,958 $824,111 $80,491 $361,905 $83,463 $11,336 $1,542,264 
Performing Loans$180,177 $822,238 $80,491 $361,200 $82,965 $11,336 $1,538,407 
Nonperforming Loans781 1,873 — 705 498 — 3,857 
Total Portfolio Loans$180,958 $824,111 $80,491 $361,905 $83,463 $11,336 $1,542,264 
The following table summarizes the allowance for credit losses by loan portfolio class for the year ended December 31, 2023:
(In thousands)Commercial
and
Industrial		Commercial
Real Estate		Real Estate
Construction		Residential
Mortgage		Home Equity
Lines of
Credit		ConsumerUnallocatedTotal
Allowance for Credit Losses       
Beginning balance - January 1, 2023$2,848 $10,016 $1,000 $3,029 $347 $376 $245 $17,861 
Impact of CECL adoption(762)1,106 1,347 297 17 (142)(245)1,618 
Charge-offs(110)— — — — (396)— (506)
Recoveries64 — — — — 72 — 136 
Provisions (credits)8 888 (277)(23)33 231 — 860 
Ending balance - December 31, 2023$2,048 $12,010 $2,070 $3,303 $397 $141 $— $19,969 
The following table summarizes the allowance for loan losses by loan portfolio class for the year ended December 31, 2022:
(In thousands)Commercial
and
Industrial		Commercial
Real Estate		Real Estate
Construction		Residential
Mortgage		Home Equity
Lines of
Credit		ConsumerUnallocatedTotal
Allowance for Loan Losses        
Beginning balance - January 1, 2022$3,176 $10,716 $616 $3,235 $501 $408 $381 $19,033 
Charge-offs(238)(831)— (3)(33)(181)— (1,286)
Recoveries58 — — 5 22 29 — 114 
Provisions (credits)(148)131 384 (208)(143)120 (136)— 
Ending balance - December 31, 2022$2,848 $10,016 $1,000 $3,029 $347 $376 $245 $17,861 
The following summarizes information relative to individually evaluated loans by loan portfolio class as of December 31, 2022:
 Individually Evaluated Loans with AllowanceIndividually Evaluated Loans with
No Allowance
(In thousands)Recorded
Investment		Unpaid
Principal
Balance		Related
Allowance		Recorded
Investment		Unpaid
Principal
Balance
December 31, 2022     
Commercial and industrial$781 $781 $628 $— $— 
Commercial real estate350 350 192 4,984 4,984 
Total$1,131 $1,131 $820 $4,984 $4,984 
The following summarizes information in regards to the average of individually evaluated loans and related interest income by loan portfolio class as of December 31, 2022:
 Individually Evaluated Loans with
Allowance		Individually Evaluated Loans with
No Allowance
(In thousands)Average
Recorded
Investment		Interest
Income		Average
Recorded
Investment		Interest
Income
December 31, 2022    
Commercial and industrial$991 $— $2 $— 
Commercial real estate856 — 5,566 589 
Total$1,847 $— $5,568 $589