XML 20 R11.htm IDEA: XBRL DOCUMENT v3.23.3
Loans and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2023
Receivables [Abstract]  
Loans and Allowance for Credit Losses

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

 

Loans by type as a percentage of the portfolio were as follows:

 

September 30, 2023

 

 

December 31, 2022

 

 

 

 

 

(Dollars in thousands)

 Balance

 

%

 

 

 Balance

 

%

 

 

Percent Increase (Decrease)

Agricultural

$

43,290

 

 

3.31

%

 

$

64,159

 

 

5.39

%

 

 

(32.53

)

%

Commercial and Industrial

 

222,357

 

 

16.98

%

 

 

210,210

 

 

17.67

%

 

 

5.78

 

%

Commercial Real Estate

 

709,960

 

 

54.20

%

 

 

630,953

 

 

53.03

%

 

 

12.52

 

%

Consumer

 

37,605

 

 

2.87

%

 

 

39,808

 

 

3.35

%

 

 

(5.53

)

%

Construction Real Estate

 

16,477

 

 

1.26

%

 

 

14,736

 

 

1.24

%

 

 

11.81

 

%

Residential Real Estate

 

256,348

 

 

19.57

%

 

 

229,916

 

 

19.32

%

 

 

11.50

 

%

Loans to Other Financial Institutions

 

23,763

 

 

1.81

%

 

 

-

 

 

0.00

%

 

 

100.00

 

%

Gross Loans

$

1,309,800

 

 

 

 

$

1,189,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses

 

14,872

 

 

1.14

%

 

 

7,619

 

 

0.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loans

$

1,294,928

 

 

 

 

$

1,182,163

 

 

 

 

 

 

 

 

Activity in the allowance for credit losses and balances in the loan portfolio were as follows:

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans to Other

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

and

 

 

 

 

 

Commercial

 

 

Construction

 

 

Residential

 

 

Financial

 

 

 

 

 

 

 

 

 

Agricultural

 

 

Industrial

 

 

Consumer

 

 

Real Estate

 

 

Real Estate

 

 

Real Estate

 

 

Institutions

 

 

Unallocated

 

 

Total

 

Allowance for Credit Losses Three Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

78

 

 

$

2,896

 

 

$

885

 

 

$

7,237

 

 

$

70

 

 

$

3,376

 

 

$

40

 

 

$

—

 

 

$

14,582

 

Charge-offs

 

 

—

 

 

 

(73

)

 

 

(161

)

 

 

—

 

 

 

—

 

 

 

(27

)

 

 

—

 

 

 

—

 

 

 

(261

)

Recoveries

 

 

—

 

 

 

28

 

 

 

80

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

—

 

 

 

—

 

 

 

113

 

Provision

 

 

5

 

 

 

(328

)

 

 

22

 

 

 

908

 

 

 

(19

)

 

 

(150

)

 

 

—

 

 

 

—

 

 

 

438

 

Ending balance

 

$

83

 

 

$

2,523

 

 

$

826

 

 

$

8,145

 

 

$

51

 

 

$

3,204

 

 

$

40

 

 

$

—

 

 

$

14,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses Nine Months Ended September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

144

 

 

$

1,361

 

 

$

310

 

 

$

4,822

 

 

$

63

 

 

$

906

 

 

$

—

 

 

$

13

 

 

$

7,619

 

Cumulative effect of change in accounting principle

 

 

14

 

 

 

1,587

 

 

 

541

 

 

 

3,006

 

 

 

20

 

 

 

2,010

 

 

 

—

 

 

 

(13

)

 

 

7,165

 

Charge-offs

 

 

—

 

 

 

(73

)

 

 

(432

)

 

 

—

 

 

 

—

 

 

 

(27

)

 

 

—

 

 

 

—

 

 

 

(532

)

Recoveries

 

 

—

 

 

 

57

 

 

 

208

 

 

 

13

 

 

 

—

 

 

 

10

 

 

 

—

 

 

 

—

 

 

 

288

 

Provision

 

 

(75

)

 

 

(409

)

 

 

199

 

 

 

304

 

 

 

(32

)

 

 

305

 

 

 

40

 

 

 

—

 

 

 

332

 

Ending balance

 

$

83

 

 

$

2,523

 

 

$

826

 

 

$

8,145

 

 

$

51

 

 

$

3,204

 

 

$

40

 

 

$

—

 

 

$

14,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit loss

 

$

3

 

 

$

89

 

 

$

—

 

 

$

347

 

 

$

—

 

 

$

45

 

 

$

—

 

 

$

—

 

 

$

484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for credit loss

 

$

80

 

 

$

2,434

 

 

$

826

 

 

$

7,798

 

 

$

51

 

 

$

3,159

 

 

$

40

 

 

$

—

 

 

$

14,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for credit loss

 

$

65

 

 

$

269

 

 

$

6

 

 

$

1,070

 

 

$

—

 

 

$

1,738

 

 

$

—

 

 

 

 

 

$

3,148

 

Collectively evaluated for credit loss

 

 

43,225

 

 

 

222,088

 

 

 

37,599

 

 

 

708,890

 

 

 

16,477

 

 

 

254,610

 

 

 

23,763

 

 

 

 

 

 

1,306,652

 

Ending balance

 

$

43,290

 

 

$

222,357

 

 

$

37,605

 

 

$

709,960

 

 

$

16,477

 

 

$

256,348

 

 

$

23,763

 

 

 

 

 

$

1,309,800

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

and

 

 

 

 

 

Commercial

 

 

Construction

 

 

Residential

 

 

 

 

 

 

 

 

Agricultural

 

 

Industrial

 

 

Consumer

 

 

Real Estate

 

 

Real Estate

 

 

Real Estate

 

 

Unallocated

 

 

Total

 

Allowance for Loan Losses Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

$

132

 

 

$

1,613

 

 

$

309

 

 

$

4,224

 

 

$

45

 

 

$

691

 

 

$

402

 

 

$

7,416

 

Charge-offs

 

—

 

 

 

(47

)

 

 

(128

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(175

)

Recoveries

 

—

 

 

 

59

 

 

 

56

 

 

 

1

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

116

 

Provision

 

8

 

 

 

(252

)

 

 

66

 

 

 

384

 

 

 

14

 

 

 

178

 

 

 

(298

)

 

 

100

 

Ending balance

$

140

 

 

$

1,373

 

 

$

303

 

 

$

4,609

 

 

$

59

 

 

$

869

 

 

$

104

 

 

$

7,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan Losses Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

$

448

 

 

$

1,454

 

 

$

290

 

 

$

3,705

 

 

$

110

 

 

$

671

 

 

$

1,010

 

 

$

7,688

 

Charge-offs

 

—

 

 

 

(177

)

 

 

(383

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(560

)

Recoveries

 

—

 

 

 

62

 

 

 

162

 

 

 

3

 

 

 

-

 

 

 

2

 

 

 

—

 

 

 

229

 

Provision

 

(308

)

 

 

34

 

 

 

234

 

 

 

901

 

 

 

(51

)

 

 

196

 

 

 

(906

)

 

 

100

 

Ending balance

$

140

 

 

$

1,373

 

 

$

303

 

 

$

4,609

 

 

$

59

 

 

$

869

 

 

$

104

 

 

$

7,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

1

 

 

$

6

 

 

$

1

 

 

$

6

 

 

$

—

 

 

$

143

 

 

$

—

 

 

$

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for impairment

$

139

 

 

$

1,367

 

 

$

302

 

 

$

4,603

 

 

$

59

 

 

$

726

 

 

$

104

 

 

$

7,300

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

and

 

 

 

 

 

Commercial

 

 

Construction

 

 

Residential

 

 

 

 

 

 

 

 

Agricultural

 

 

Industrial

 

 

Consumer

 

 

Real Estate

 

 

Real Estate

 

 

Real Estate

 

 

Unallocated

 

 

Total

 

Allowance for Loan Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

2

 

 

$

14

 

 

$

1

 

 

$

5

 

 

$

—

 

 

$

131

 

 

$

—

 

 

$

153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collectively evaluated for impairment

$

142

 

 

$

1,347

 

 

$

309

 

 

$

4,817

 

 

$

63

 

 

$

775

 

 

$

13

 

 

$

7,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

$

23

 

 

$

177

 

 

$

7

 

 

$

165

 

 

$—

 

 

$

2,474

 

 

 

 

 

$

2,846

 

Collectively evaluated for impairment

 

64,136

 

 

 

206,074

 

 

 

39,793

 

 

 

622,131

 

 

 

14,736

 

 

 

225,792

 

 

 

 

 

 

1,172,662

 

Acquired with deteriorated credit quality

—

 

 

 

3,959

 

 

 

8

 

 

 

8,657

 

 

—

 

 

 

1,650

 

 

 

 

 

 

14,274

 

Ending balance

$

64,159

 

 

$

210,210

 

 

$

39,808

 

 

$

630,953

 

 

$

14,736

 

 

$

229,916

 

 

 

 

 

$

1,189,782

 

 

 

The provision for credit losses on loans was an expense of $438,000 and an expense of $332,000 in the third quarter and first nine months of 2023 respectively, compared to an expense of $100,000 in the same periods in the prior year. The provision expense was deemed necessary due to third quarter 2023 core loan growth of $60.6 million offset by the impact of improvements in the Federal Open Market Committee ("FOMC") forecast for unemployment and Gross Domestic Product ("GDP"). The FOMC forecast for change in real GDP improved from 1.0% in June 2023 to 2.1% in September 2023, while the unemployment rate forecast improved from 4.1% in June 2023 to 3.8% in September 2023.

 

The process to monitor the credit quality of ChoiceOne’s loan portfolio includes tracking (1) the risk ratings of business loans, (2) the level of classified business loans, and (3) delinquent and nonperforming consumer loans. Business loans are risk rated on a scale of 1 to 9. A description of the characteristics of the ratings follows:

Risk Rating 1 through 5 or pass: These loans are considered pass credits. They exhibit acceptable credit risk and demonstrate the ability to repay the loan from normal business operations.

 

Risk rating 6 or special mention: Loans and other credit extensions bearing this grade are considered to be inadequately protected by the current net worth and debt service capacity of the borrower or of any pledged collateral. These loans, even if apparently protected by collateral value, have well-defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have jeopardized repayment of principal and interest as originally intended. Furthermore, there is the possibility that ChoiceOne will sustain some future loss if such weaknesses are not corrected. Clear loss potential, however, does not have to exist in any individual credit classified as substandard. Loans falling into this category should have clear action plans and timelines with benchmarks to return to a pass grade.

Risk rating 7 or substandard: Loans and other credit extensions graded “7” have all the weaknesses inherent in those graded “6”, with the added characteristic that the severity of the weaknesses makes collection or liquidation in full highly questionable or improbable based upon currently existing facts, conditions, and values. Loans in this classification should be evaluated for non-accrual status. All nonaccrual commercial and retail loans must be graded a risk rating “7” or worse.

Risk rating 8 or doubtful: Loans and other credit extensions bearing this grade have been determined to have the extreme probability of some loss, but because of certain important and reasonably specific factors, the amount of loss cannot be determined. Such pending factors could include merger or liquidation, additional capital injection, refinancing plans, or perfection of liens on additional collateral.

Risk rating 9 or loss: Loans in this classification are considered uncollectible and cannot be justified as a viable asset of ChoiceOne. This classification does not mean the loan has absolutely no recovery value, but that it is neither practical nor desirable to defer writing off this loan even though partial recovery may be obtained in the future.

The following table reflects the amortized cost basis of loans as of September 30, 2023 based on year of origination (dollars in thousands):

 

Commercial:

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Term Loans Total

 

 

Revolving Loans

 

 

Grand Total

 

 Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Pass

$

1,963

 

 

$

4,129

 

 

$

3,134

 

 

$

1,813

 

 

$

7,184

 

 

$

18,311

 

 

$

36,534

 

 

$

6,512

 

 

$

43,046

 

 Special mention

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

176

 

 

 

68

 

 

 

244

 

 

 

-

 

 

 

244

 

 Substandard

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Doubtful

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Total

$

1,963

 

 

$

4,129

 

 

$

3,134

 

 

$

1,813

 

 

$

7,360

 

 

$

18,379

 

 

$

36,778

 

 

$

6,512

 

 

$

43,290

 

Current year-to-date gross write-offs

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Commercial and Industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Pass

$

17,445

 

 

$

47,330

 

 

$

25,078

 

 

$

11,584

 

 

$

11,077

 

 

$

12,891

 

 

$

125,405

 

 

$

96,604

 

 

$

222,009

 

 Special mention

 

-

 

 

 

-

 

 

 

31

 

 

 

39

 

 

 

83

 

 

 

82

 

 

 

235

 

 

 

7

 

 

 

242

 

 Substandard

 

-

 

 

 

60

 

 

 

30

 

 

 

-

 

 

 

-

 

 

 

16

 

 

 

106

 

 

 

-

 

 

 

106

 

 Doubtful

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Total

$

17,445

 

 

$

47,390

 

 

$

25,139

 

 

$

11,623

 

 

$

11,160

 

 

$

12,989

 

 

$

125,746

 

 

$

96,611

 

 

$

222,357

 

Current year-to-date gross write-offs

$

-

 

 

$

-

 

 

$

-

 

 

$

71

 

 

$

-

 

 

$

-

 

 

$

71

 

 

$

-

 

 

$

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Commercial Real Estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Pass

$

72,271

 

 

$

137,771

 

 

$

109,265

 

 

$

73,112

 

 

$

45,074

 

 

$

141,265

 

 

$

578,758

 

 

$

129,070

 

 

$

707,828

 

 Special mention

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

572

 

 

 

572

 

 

 

-

 

 

 

572

 

 Substandard

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,560

 

 

 

1,560

 

 

 

-

 

 

 

1,560

 

 Doubtful

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Loss

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 Total

$

72,271

 

 

$

137,771

 

 

$

109,265

 

 

$

73,112

 

 

$

45,074

 

 

$

143,397

 

 

$

580,890

 

 

$

129,070

 

 

$

709,960

 

 

 Retail:

2023

 

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Term Loans Total

 

 

Revolving Loans

 

 

Grand Total

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

$

8,246

 

 

$

14,922

 

 

$

7,421

 

 

$

3,332

 

 

$

1,472

 

 

$

1,404

 

 

$

36,797

 

 

$

808

 

 

$

37,605

 

Nonperforming

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Nonaccrual

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

$

8,246

 

 

$

14,922

 

 

$

7,421

 

 

$

3,332

 

 

$

1,472

 

 

$

1,404

 

 

$

36,797

 

 

$

808

 

 

$

37,605

 

Current year-to-date gross write-offs

$

1

 

 

$

13

 

 

$

11

 

 

$

28

 

 

$

-

 

 

$

1

 

 

$

54

 

 

$

-

 

 

$

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

$

777

 

 

$

1,089

 

 

$

557

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

2,423

 

 

$

14,054

 

 

$

16,477

 

Nonperforming

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Nonaccrual

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

$

777

 

 

$

1,089

 

 

$

557

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

2,423

 

 

$

14,054

 

 

$

16,477

 

Current year-to-date gross write-offs

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

$

38,656

 

 

$

66,921

 

 

$

29,360

 

 

$

17,023

 

 

$

13,292

 

 

$

41,778

 

 

$

207,030

 

 

$

47,751

 

 

$

254,781

 

Nonperforming

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Nonaccrual

 

-

 

 

 

464

 

 

 

70

 

 

 

-

 

 

 

-

 

 

 

541

 

 

 

1,075

 

 

 

492

 

 

 

1,567

 

Total

$

38,656

 

 

$

67,385

 

 

$

29,430

 

 

$

17,023

 

 

$

13,292

 

 

$

42,319

 

 

$

208,105

 

 

$

48,243

 

 

$

256,348

 

Current year-to-date gross write-offs

$

-

 

 

$

27

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

1

 

 

$

28

 

 

$

-

 

 

$

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans to Other Financial Institutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

$

23,763

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

23,763

 

 

$

-

 

 

$

23,763

 

Nonperforming

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Nonaccrual

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total

$

23,763

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

23,763

 

 

$

-

 

 

$

23,763

 

Current year-to-date gross write-offs

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total

$

71,442

 

 

$

83,396

 

 

$

37,408

 

 

$

20,355

 

 

$

14,764

 

 

$

43,723

 

 

$

271,088

 

 

$

63,105

 

 

$

334,193

 

 

 

 

Corporate Credit Exposure - Credit risk profile by credit worthiness category

 

(Dollars in thousands)

Agricultural

 

 

Commercial and Industrial

 

 

Commercial Real Estate

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

2022

 

 

2022

 

 

2022

 

Pass

$

63,867

 

 

$

209,700

 

 

$

624,555

 

Special Mention

 

289

 

 

 

400

 

 

 

2,048

 

Substandard

 

3

 

 

 

110

 

 

 

4,350

 

Doubtful

 

—

 

 

 

-

 

 

 

—

 

Loss

 

-

 

 

 

-

 

 

 

-

 

$

64,159

 

 

$

210,210

 

 

$

630,953

 

 

Consumer Credit Exposure - Credit risk profile based on payment activity

 

(Dollars in thousands)

Consumer

 

 

Construction Real Estate

 

 

Residential Real Estate

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

2022

 

 

2022

 

 

2022

 

Performing

$

39,808

 

 

$

14,736

 

 

$

228,653

 

Nonperforming

 

—

 

 

 

—

 

 

 

—

 

Nonaccrual

 

—

 

 

 

—

 

 

 

1,263

 

 

$

39,808

 

 

$

14,736

 

 

$

229,916

 

 

The following table presents the amortized cost basis as of September 30, 2023 of the loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted during the reporting period.

 

For the period ended:

September 30, 2023

 

 

 

 

 

 

 

 

 

 

Term Extension

 

 

 

 

 

 

% of Total

 

 

 

 

 

 

Class of

 

 

(Dollars in thousands)

Amortized

 

 

Financing

 

 

 

Cost Basis

 

 

Receivable

 

 

Commercial and industrial

$

70

 

 

 

0

%

 

Residential real estate

 

129

 

 

 

0

%

 

Total

$

199

 

 

 

 

 

 

 

The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty and class of financing receivable.

 

For the period ended:

September 30, 2023

 

 

Term Extension

 

Commercial and industrial

Termed out line of credit & termed out draw note

 

Residential real estate

Provided with new twelve month payment plan to catch up on past due balance.

 

 

The following table presents the period-end amortized cost basis of financing receivables that had a payment default during the period and were modified in the 12 months before default to borrowers experiencing financial difficulty.

 

For the period ended:

September 30, 2023

 

(Dollars in thousands)

Term extension

 

 

 

 

Commercial and industrial

 

70

 

Residential real estate

 

129

 

Total

$

199

 

 

The following table presents the period-end amortized cost basis of loans that have been modified in the past 12 months to borrowers experiencing financial difficulty by payment status and class of financing receivable.

 

 

For the period ended:

September 30, 2023

 

(Dollars in thousands)

Current

 

 

30-89 days

 

 

Greater than 90 days

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

62

 

 

 

8

 

 

 

—

 

 

 

70

 

Residential real estate

 

—

 

 

 

—

 

 

 

129

 

 

 

129

 

Total

$

62

 

 

$

8

 

 

$

129

 

 

$

199

 

 

 

The following table provides information on loans that were considered troubled debt restructurings ("TDRs") that were modified during the three and nine months ended September 30, 2022.

 

 

 

Three Months Ended September 30, 2022

 

 

Nine Months Ended September 30, 2022

 

 

 

 

 

Pre-

 

 

Post-

 

 

 

 

 

Pre-

 

 

Post-

 

 

 

 

 

Modification

 

 

Modification

 

 

 

 

 

Modification

 

 

Modification

 

 

 

 

 

Outstanding

 

 

Outstanding

 

 

 

 

 

Outstanding

 

 

Outstanding

 

(Dollars in thousands)

Number of

 

 

Recorded

 

 

Recorded

 

 

Number of

 

 

Recorded

 

 

Recorded

 

 

Loans

 

 

Investment

 

 

Investment

 

 

Loans

 

 

Investment

 

 

Investment

 

Agricultural

 

—

 

 

$

—

 

 

$

—

 

 

 

1

 

 

$

253

 

 

$

253

 

Commercial and industrial

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

 

 

18

 

 

 

18

 

Total

 

—

 

 

$

—

 

 

$

—

 

 

 

2

 

 

$

271

 

 

$

271

 

 

 

There were no TDRs where the borrower was past due with respect to principal and/or interest for 30 days or more during the three months ended September 30, 2022, which loans had been modified and classified as TDRs during the year prior to the default.

 

Nonaccrual loans by loan category as of September 30, 2023 were as follows:

 

(Dollars in thousands)

Nonaccrual loans with no ACL

 

 

Total nonaccrual loans

 

 

Interest income recognized during the period on nonaccrual loans

 

 

Interest income recognized during the period on nonaccrual loans

 

 

Commercial and industrial

$

—

 

 

$

103

 

 

$

—

 

 

$

5

 

 

Residential real estate

 

457

 

 

 

1,567

 

 

 

-

 

 

 

10

 

 

Total nonaccrual loans

$

457

 

 

$

1,670

 

 

$

—

 

 

$

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans by loan category as of December 31, 2022 were as follows:

 

(Dollars in thousands)

Total nonaccrual loans

 

Residential real estate

$

1,263

 

 

$

1,263

 

 

 

The following schedule provides information regarding average balances of loans evaluated for impairment at December 31, 2022 and September 30, 2022 and interest recognized on impaired loans for the three months and nine months ended September 30, 2022:

 

 

 

 

 

Unpaid

 

 

 

 

 

(Dollars in thousands)

Recorded

 

 

Principal

 

 

Related

 

 

 

Investment

 

 

Balance

 

 

Allowance

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

With no related allowance recorded

 

 

 

 

 

 

 

 

 

Agricultural

$

—

 

 

$

—

 

 

$

—

 

 

Commercial and industrial

 

—

 

 

 

—

 

 

 

—

 

 

Consumer

 

—

 

 

 

—

 

 

 

—

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

—

 

 

 

—

 

 

 

—

 

 

Residential real estate

 

550

 

 

 

595

 

 

 

—

 

 

Subtotal

 

550

 

 

 

595

 

 

 

—

 

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

Agricultural

 

23

 

 

 

27

 

 

 

2

 

 

Commercial and industrial

 

177

 

 

 

177

 

 

 

14

 

 

Consumer

 

7

 

 

 

7

 

 

 

1

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

165

 

 

 

165

 

 

 

5

 

 

Residential real estate

 

1,924

 

 

 

1,954

 

 

 

131

 

 

Subtotal

 

2,296

 

 

 

2,330

 

 

 

153

 

 

Total

 

 

 

 

 

 

 

 

 

Agricultural

 

23

 

 

 

27

 

 

 

2

 

 

Commercial and industrial

 

177

 

 

 

177

 

 

 

14

 

 

Consumer

 

7

 

 

 

7

 

 

 

1

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

165

 

 

 

165

 

 

 

5

 

 

Residential real estate

 

2,474

 

 

 

2,549

 

 

 

131

 

 

Total

$

2,846

 

 

$

2,925

 

 

$

153

 

 

 

 

 

 

 

Unpaid

 

 

 

 

 

(Dollars in thousands)

Recorded

 

 

Principal

 

 

Related

 

 

 

Investment

 

 

Balance

 

 

Allowance

 

 

September 30, 2022

 

 

 

 

 

 

 

 

 

With no related allowance recorded

 

 

 

 

 

 

 

 

 

Agricultural

$

307

 

 

$

428

 

 

$

—

 

 

Commercial and industrial

 

—

 

 

 

—

 

 

 

—

 

 

Consumer

 

—

 

 

 

—

 

 

 

—

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

—

 

 

 

—

 

 

 

—

 

 

Residential real estate

 

—

 

 

 

—

 

 

 

—

 

 

Subtotal

 

307

 

 

 

428

 

 

 

—

 

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

Agricultural

 

5

 

 

 

5

 

 

 

1

 

 

Commercial and industrial

 

108

 

 

 

185

 

 

 

6

 

 

Consumer

 

7

 

 

 

7

 

 

 

1

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

140

 

 

 

140

 

 

 

6

 

 

Residential real estate

 

2,070

 

 

 

2,149

 

 

 

143

 

 

Subtotal

 

2,330

 

 

 

2,486

 

 

 

157

 

 

Total

 

 

 

 

 

 

 

 

 

Agricultural

 

312

 

 

 

433

 

 

 

1

 

 

Commercial and industrial

 

108

 

 

 

185

 

 

 

6

 

 

Consumer

 

7

 

 

 

7

 

 

 

1

 

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

Commercial real estate

 

140

 

 

 

140

 

 

 

6

 

 

Residential real estate

 

2,070

 

 

 

2,149

 

 

 

143

 

 

Total

$

2,637

 

 

$

2,914

 

 

$

157

 

 

 

 

 

Average

 

 

Interest

 

(Dollars in thousands)

Recorded

 

 

Income

 

 

Investment

 

 

Recognized

 

Three Months Ended September 30, 2022

 

 

 

 

 

With no related allowance recorded

 

 

 

 

 

Agricultural

$

310

 

 

$

—

 

Commercial and industrial

 

—

 

 

 

—

 

Consumer

 

—

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

Commercial real estate

 

—

 

 

 

—

 

Residential real estate

 

220

 

 

 

—

 

Subtotal

 

530

 

 

 

—

 

With an allowance recorded

 

 

 

 

 

Agricultural

 

6

 

 

 

-

 

Commercial and industrial

 

134

 

 

 

1

 

Consumer

 

7

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

Commercial real estate

 

145

 

 

 

2

 

Residential real estate

 

1,842

 

 

 

16

 

Subtotal

 

2,134

 

 

 

19

 

Total

 

 

 

 

 

Agricultural

 

316

 

 

 

—

 

Commercial and industrial

 

134

 

 

 

1

 

Consumer

 

7

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

Commercial real estate

 

145

 

 

 

2

 

Residential real estate

 

2,062

 

 

 

16

 

Total

$

2,664

 

 

$

19

 

 

 

Average

 

 

Interest

 

(Dollars in thousands)

Recorded

 

 

Income

 

 

Investment

 

 

Recognized

 

Nine Months Ended September 30, 2022

 

 

 

 

 

With no related allowance recorded

 

 

 

 

 

Agricultural

$

312

 

 

$

—

 

Commercial and industrial

 

23

 

 

 

—

 

Consumer

 

—

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

Commercial real estate

 

23

 

 

 

—

 

Residential real estate

 

151

 

 

 

—

 

Subtotal

 

509

 

 

 

-

 

With an allowance recorded

 

 

 

 

 

Agricultural

 

1,136

 

 

 

—

 

Commercial and industrial

 

217

 

 

 

3

 

Consumer

 

15

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

Commercial real estate

 

159

 

 

 

7

 

Residential real estate

 

1,891

 

 

 

49

 

Subtotal

 

3,418

 

 

 

59

 

Total

 

 

 

 

 

Agricultural

 

1,448

 

 

 

-

 

Commercial and industrial

 

240

 

 

 

3

 

Consumer

 

15

 

 

 

-

 

Construction real estate

 

-

 

 

 

-

 

Commercial real estate

 

182

 

 

 

7

 

Residential real estate

 

2,042

 

 

 

49

 

Total

$

3,927

 

 

$

59

 

 

 

An aging analysis of loans by loan category follows:

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

Loans

 

 

Loans

 

 

Past Due

 

 

 

 

 

 

 

 

 

 

 

90 Days

 

 

Past Due

 

 

Past Due

 

 

Greater

 

 

 

 

 

 

 

 

 

 

 

Past

 

(Dollars in thousands)

30 to 59

 

 

60 to 89

 

 

Than 90

 

 

 

 

 

Loans Not

 

 

Total

 

 

Due and

 

 

Days (1)

 

 

Days (1)

 

 

Days (1)

 

 

Total (1)

 

 

Past Due

 

 

Loans

 

 

Accruing

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

43,290

 

 

$

43,290

 

 

$

—

 

Commercial and industrial

 

101

 

 

 

—

 

 

 

90

 

 

 

191

 

 

 

222,166

 

 

 

222,357

 

 

 

—

 

Consumer

 

30

 

 

 

6

 

 

 

—

 

 

 

36

 

 

 

37,569

 

 

 

37,605

 

 

 

—

 

Commercial real estate

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

709,960

 

 

 

709,960

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

16,477

 

 

 

16,477

 

 

 

—

 

Residential real estate

 

1,320

 

 

 

30

 

 

 

702

 

 

 

2,052

 

 

 

254,296

 

 

 

256,348

 

 

 

 

Loans to Other Financial Institutions

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,763

 

 

 

23,763

 

 

 

 

 

$

1,451

 

 

$

36

 

 

$

792

 

 

$

2,279

 

 

$

1,307,521

 

 

$

1,309,800

 

 

$

—

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

64,159

 

 

$

64,159

 

 

$

—

 

Commercial and industrial

 

—

 

 

 

171

 

 

 

—

 

 

 

171

 

 

 

210,039

 

 

 

210,210

 

 

 

—

 

Consumer

 

39

 

 

 

7

 

 

 

—

 

 

 

46

 

 

 

39,762

 

 

 

39,808

 

 

 

—

 

Commercial real estate

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

630,953

 

 

 

630,953

 

 

 

—

 

Construction real estate

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,736

 

 

 

14,736

 

 

 

—

 

Residential real estate

 

682

 

 

 

—

 

 

 

842

 

 

 

1,524

 

 

 

228,392

 

 

 

229,916

 

 

 

—

 

 

$

721

 

 

$

178

 

 

$

842

 

 

$

1,741

 

 

$

1,188,041

 

 

$

1,189,782

 

 

$

—

 

 

(1) Includes nonaccrual loans.

The table below presents a roll forward of the accretable yield on the County Bank Corp. acquired loan portfolio for the year ended December 31, 2022 and the nine months ended September 30, 2023 (dollars in thousands):

 

(Dollars in thousands)

 

Purchased with credit deterioration

 

 

Purchased without credit deterioration

 

 

Acquired

 

 

 

 

 

 

 

 

 

Total

 

Balance January 1, 2022

 

$

288

 

 

$

1,176

 

 

$

1,464

 

Transfer from non-accretable to accretable yield

 

 

2,192

 

 

 

—

 

 

 

2,192

 

Accretion January 1, 2022 through December 31, 2022

 

 

(553

)

 

 

(98

)

 

 

(651

)

Balance January 1, 2023

 

 

1,927

 

 

 

1,078

 

 

 

3,005

 

Transfer from non-accretable to accretable yield

 

 

—

 

 

 

—

 

 

 

—

 

Accretion January 1, 2023 through September 30, 2023

 

 

(402

)

 

 

(405

)

 

 

(807

)

Balance, September 30, 2023

 

$

1,525

 

 

$

673

 

 

$

2,198

 

 

The table below presents a roll forward of the accretable yield on the Community Shores Bank Corporation acquired loan portfolio for the year ended December 31, 2022 and the nine months ended September 30, 2023 (dollars in thousands):

 

 

 

Purchased with credit deterioration

 

 

Purchased without credit deterioration

 

 

Acquired

 

 

 

 

 

 

 

 

 

Total

 

Balance January 1, 2022

 

$

522

 

 

$

197

 

 

$

719

 

Transfer from non-accretable to accretable yield

 

 

1,086

 

 

 

—

 

 

 

1,086

 

Accretion January 1, 2022 through December 31, 2022

 

 

(993

)

 

 

(197

)

 

 

(1,190

)

Balance January 1, 2023

 

 

615

 

 

 

—

 

 

 

615

 

Transfer from non-accretable to accretable yield

 

 

622

 

 

 

—

 

 

 

622

 

Accretion January 1, 2023 through September 30, 2023

 

 

(470

)

 

 

—

 

 

 

(470

)

Balance, September 30, 2023

 

$

767

 

 

 

—

 

 

$

767