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Loans and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2024
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses
 
The following table presents the composition of the loan portfolio:

(In thousands)September 30, 2024December 31, 2023
Commercial real estate$957,904 $898,709 
Residential mortgage397,994 394,189 
Commercial and industrial152,148 152,344 
Home equity lines of credit84,316 90,163 
Real estate construction75,953 84,341 
Consumer9,773 9,954 
Gross loans1,678,088 1,629,700 
Unearned income(976)(1,712)
Total loans, net of unearned income$1,677,112 $1,627,988 
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
September 30, 2024
Commercial real estate$318 $— $346 $664 $957,240 $957,904 $32 
Residential mortgage— 585 375 960 397,034 397,994 375 
Commercial and industrial138 50 175 363 151,785 152,148 19 
Home equity lines of credit454 — — 454 83,862 84,316 — 
Real estate construction15 — 12 27 75,926 75,953 12 
Consumer21 — — 21 9,752 9,773 — 
Gross Loans$946 $635 $908 $2,489 $1,675,599 $1,678,088 $438 

(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 
Gross Loans$1,927 $735 $1,665 $4,327 $1,625,373 $1,629,700 $1,162 

Nonaccrual and Nonperforming Loans

Loans individually evaluated consist of nonaccrual loans, presented in the following table: 

(In thousands)With a Related AllowanceWithout a Related AllowanceTotal
September 30, 2024
Commercial real estate$314 $3,292 $3,606 
Commercial and industrial991 1,368 2,359 
Home equity lines of credit— 168 168 
 $1,305 $4,828 $6,133 
December 31, 2023
Commercial real estate$315 $1,164 $1,479 
Residential mortgage— 343 343 
Commercial and industrial1,004 — 1,004 
Home equity lines of credit— 185 185 
$1,319 $1,692 $3,011 

During both the three and nine months ended September 30, 2024 and 2023, no material amount of interest income was recognized on nonaccrual loans subsequent to their classification as nonaccrual.
Total nonperforming loans are as follows:
(In thousands)September 30, 2024December 31, 2023
Nonaccrual loans$6,133 $3,011 
Greater than or equal to 90 days past due and accruing438 1,162 
Total nonperforming loans$6,571 $4,173 
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.

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. The following table presents the amortized cost basis of individually evaluated loans as of the periods presented:
Type of Collateral
(In thousands)Business AssetsReal Estate
September 30, 2024
Commercial real estate$— $3,606 
Commercial and industrial2,359 — 
Home equity lines of credit— 168 
Total$2,359 $3,774 
December 31, 2023
Commercial real estate$— $1,479 
Residential mortgage— 343 
Commercial and industrial1,004 — 
Home equity lines of credit— 185 
Total$1,004 $2,007 

Consumer residential mortgages and home equity lines of credit which are well secured by residential real estate properties and are in the process of collection are not considered nonaccrual, however, formal foreclosure proceedings are in process. These loans totaled $515 thousand at September 30, 2024 and $1.3 million at December 31, 2023 and are included in nonperforming loans if they are greater than or equal to 90 days past due.

Loan Modifications

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, or combinations of the above. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows.
The following table presents the amortized cost basis of loans that were both experiencing financial difficulty and modified during the three and nine months ended September 30, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:
(Dollars in thousands)Combination Payment Deferral and Interest Only PaymentsPercent of Class of Financing Receivable
Commercial real estate$2,293 0.2 %
Commercial and industrial1,748 1.1 %
Total$4,041 

During the three and nine months ended September 30, 2023, the Corporation did not modify any loans. During the nine months ended September 30, 2024 and 2023, the Corporation did not have any commitments to lend any additional funds on existing modified loans.

The following presents the performance of loans modified in the previous twelve months as of September 30, 2024:

(In thousands)Current30-89 Days Past Due≥ 90 Days
Past Due		Total Past Due
Commercial real estate$2,293 $— $— $— 
Commercial and industrial1,967 — — — 
Total$4,260 $— $— $— 

As of September 30, 2024, the Corporation had 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.

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 ACL consists of loans evaluated collectively and individually for expected credit losses. The Corporation considers the performance of the loan portfolio and its impact on the ACL and 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 Corporation 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 assigned a risk rating and those evaluated based on the performance status:
September 30, 2024
Term Loans Amortized Cost Basis by Origination YearRevolving Loans Amortized Cost Basis
(In thousands)20242023202220212020PriorTotal
Internally Risk Rated:
Commercial real estate
Pass$97,426 $134,288 $164,910 $123,922 $56,029 $318,720 $18,020 $913,315 
Special Mention488 2,848 4,830 5,878 2,795 15,505 1,797 34,141 
Substandard— — 1,781 — 1,496 7,171 — 10,448 
Total Commercial real estate$97,914 $137,136 $171,521 $129,800 $60,320 $341,396 $19,817 $957,904 
Residential mortgage
Pass$18,113 $37,415 $23,683 $38,909 $13,743 $33,124 $419 $165,406 
Special Mention— 881 270 575 246 3,199 94 5,265 
Substandard— — — — — 68 — 68 
Total Residential Mortgage$18,113 $38,296 $23,953 $39,484 $13,989 $36,391 $513 $170,739 
Commercial and industrial
Pass$8,979 $11,038 $20,545 $30,192 $13,511 $25,644 $33,010 $142,919 
Special Mention172 153 248 223 82 449 2,703 4,030 
Substandard— 536 468 354 16 780 3,045 5,199 
Total Commercial and industrial$9,151 $11,727 $21,261 $30,769 $13,609 $26,873 $38,758 $152,148 
Home equity lines of credit
Pass$— $296 $94 $— $— $281 $5,227 $5,898 
Special Mention— — — — — — 696 696 
Substandard— — — — — 174 — 174 
Total Home equity lines of credit$— $296 $94 $— $— $455 $5,923 $6,768 
Real estate construction
Pass$9,985 $29,172 $16,397 $1,220 $306 $1,091 $8,739 $66,910 
Special Mention— 118 281 — — 679 46 1,124 
Substandard— — — — — 64 — 64 
Total Real estate construction$9,985 $29,290 $16,678 $1,220 $306 $1,834 $8,785 $68,098 
Performance Rated:
Residential mortgage
Performing$12,390 $40,244 $41,284 $13,732 $14,879 $104,279 $72 $226,880 
Nonperforming— — — — — 375 — 375 
Total Residential Mortgage$12,390 $40,244 $41,284 $13,732 $14,879 $104,654 $72 $227,255 
Home equity lines of credit
Performing$— $19 $35 $— $12 $2,809 $74,673 $77,548 
Total Home equity lines of credit$— $19 $35 $— $12 $2,809 $74,673 $77,548 
Real estate construction
Performing$4,240 $1,773 $565 $165 $193 $907 $— $7,843 
Nonperforming— — — — — 12 — 12 
Total Real estate construction$4,240 $1,773 $565 $165 $193 $919 $— $7,855 
Consumer
Performing$1,823 $1,710 $1,917 $552 $333 $904 $2,534 $9,773 
Total Consumer$1,823 $1,710 $1,917 $552 $333 $904 $2,534 $9,773 
Year-to-date gross charge-offs$— $— $9 $— $— $7 $147 $163 
Total Portfolio loans:
Pass$134,503 $212,209 $225,629 $194,243 $83,589 $378,860 $65,415 $1,294,448 
Special Mention660 4,000 5,629 6,676 3,123 19,832 5,336 45,256 
Substandard— 536 2,249 354 1,512 8,257 3,045 15,953 
Performing18,453 43,746 43,801 14,449 15,417 108,899 77,279 322,044 
Nonperforming— — — — — 387 — 387 
Total Portfolio loans$153,616 $260,491 $277,308 $215,722 $103,641 $516,235 $151,075 $1,678,088 
Year-to-date gross charge-offs$— $— $9 $— $— $7 $147 $163 
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 
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 
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 
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 
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 
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 
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 
During the three months ended June 30, 2024, the Corporation revised estimates driven by a realignment of the peer group used for the CECL allowance process, an update to loss driver factors from third-party data, and an update to the application of prepayment and curtailment rate studies since implementation of CECL on January 1, 2023. These estimates, which were based on more current information available as of June 30, 2024, drive input assumptions which are used in the determination of the Corporation’s allowance for credit losses and the reserve for unfunded commitments. These updated estimates were the primary
drivers for a $2.7 million and $370 thousand reversal of the provisions for credit losses and for unfunded commitments, respectively, for the nine months ended September 30, 2024.
The following table presents the activity in the ACL by loan portfolio segment:
(In thousands)Commercial
Real Estate		Residential
Mortgage		Commercial
and
Industrial		Home Equity
Lines of
Credit		Real Estate
Construction		ConsumerUnallocatedTotal
Three Months Ended September 30, 2024     
Beginning balance - July 1, 2024$10,196 $2,839 $1,465 $312 $2,247 $103 $— $17,162 
Charge-offs— — — — — (51)— (51)
Recoveries— — 6 — — 16 — 22 
Provisions (credits)196 31 301 (16)(467)36 — 81 
Ending balance - September 30, 2024$10,392 $2,870 $1,772 $296 $1,780 $104 $— $17,214 
Nine Months Ended September 30, 2024
Beginning balance - January 1, 2024$12,010 $3,303 $2,048 $397 $2,070 $141 $— $19,969 
Charge-offs— — — — — (163)— (163)
Recoveries— — 24 — — 70 — 94 
Provisions (credits)(1,618)(433)(300)(101)(290)56 — (2,686)
Ending balance - September 30, 2024$10,392 $2,870 $1,772 $296 $1,780 $104 $— $17,214 
Three Months Ended September 30, 2023     
Beginning balance - July 1, 2023$11,728 $3,075 $1,941 $388 $1,885 $131 $— $19,148 
Charge-offs— — (81)— — (109)— (190)
Recoveries— — 32 — — 24 — 56 
Provisions170 78 (381)5 279 99 — 250 
Ending balance - September 30, 2023$11,898 $3,153 $1,511 $393 $2,164 $145 $— $19,264 
Nine Months Ended September 30, 2023
Beginning balance - January 1, 2023$10,016 $3,029 $2,848 $347 $1,000 $376 $245 $17,861 
Impact of CECL adoption1,106 297 (762)17 1,347 (142)(245)1,618 
Charge-offs— — (110)— — (279)— (389)
Recoveries— — 42 — — 58 — 100 
Provisions776 (173)(507)29 (183)132 — 74 
Ending balance - September 30, 2023$11,898 $3,153 $1,511 $393 $2,164 $145 $— $19,264