XML 22 R13.htm IDEA: XBRL DOCUMENT
v3.23.3

Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Loan and Lease Losses | 9 Months Ended
--- | ---
Sep. 30, 2023
Receivables [Abstract] |
Loan and Lease Receivables, Impaired Loans and Leases and Allowance for Credit Losses | Loans and Allowance for Credit Losses Loan and lease receivables consist of the following:
|  | September 30, 2023 |  | December 31, 2022
|  | (In Thousands)
Commercial real estate: |  |  |  |
Commercial real estate — owner occupied |  | $ | 236,058 |  |  | $ | 268,354 |
Commercial real estate — non-owner occupied |  | 753,517 |  |  | 687,091 |
Construction |  | 211,828 |  |  | 218,751 |
Multi-family |  | 409,714 |  |  | 350,026 |
1-4 family |  | 24,235 |  |  | 17,728 |
Total commercial real estate |  | 1,635,352 |  |  | 1,541,950 |
Commercial and industrial |  | 1,083,698 |  |  | 853,327 |
Consumer and other |  | 44,808 |  |  | 47,938 |
Total gross loans and leases receivable |  | 2,763,858 |  |  | 2,443,215 |
Less: |  |  |  |
Allowance for credit losses |  | 29,331 |  |  | 24,230 |
Deferred loan fees and costs, net |  | (156) |  |  | 149 |
Loans and leases receivable, net |  | $ | 2,734,683 |  |  | $ | 2,418,836 |
Loans transferred to third parties consist of the guaranteed portions of SBA loans which the Corporation sold in the secondary market and participation interests in other, non-SBA originated loans. The total principal amount of the guaranteed portions of SBA loans sold during the three months ended September 30, 2023, and 2022, was $10.7 million and $9.2 million, respectively. The total principal amount of the guaranteed portions of SBA loans sold during the nine months ended September 30, 2023, and 2022, was $20.5 million and $26.6 million, respectively. Each of the transfers of these financial assets met the qualifications for sale accounting, and therefore all of the loans transferred during the three and nine months ended September 30, 2023, and 2022, have been derecognized in the unaudited Consolidated Financial Statements. The guaranteed portions of SBA loans were transferred at their fair value and the related gain was recognized upon the transfer as non-interest income in the unaudited Consolidated Financial Statements. The total outstanding balance of sold SBA loans at September 30, 2023, and December 31, 2022, was $91.1 million and $88.5 million, respectively. The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended September 30, 2023, and 2022, was $39.2 million and $25.4 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. The total principal amount of transferred participation interests in other, non-SBA originated loans during the nine months ended September 30, 2023, and 2022, was $93.9 million and $70.6 million, respectively, all of which were treated as sales and derecognized under the applicable accounting guidance at the time of transfer. No gain or loss was recognized on participation interests in other, non-SBA originated loans as they were transferred at or near the date of loan origination and the payments received for servicing the portion of the loans participated represents adequate compensation. The total outstanding balance of these transferred loans at September 30, 2023, and December 31, 2022, was $265.2 million and $222.9 million, respectively. As of September 30, 2023, and December 31, 2022, the total amount of the Corporation’s partial ownership of these transferred loans on the unaudited Consolidated Balance Sheets was $362.9 million and $339.0 million, respectively. As of September 30, 2023 and December 31, 2022, the non-SBA originated participation portfolio contained no non-performing loans. The Corporation does not share in the participant’s portion of any potential charge-offs. There were no loan participations purchased on the unaudited Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022. The following table illustrates ending balances of the Corporation’s loan and lease portfolio, including non-performing loans by class of receivable, and considering certain credit quality indicators:
September 30, 2023 |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |
(In Thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Total
Commercial real estate — owner occupied |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 23,686 |  |  | $ | 35,050 |  |  | $ | 30,899 |  |  | $ | 45,517 |  |  | $ | 22,815 |  |  | $ | 74,599 |  |  | $ | 854 |  |  | $ | 233,420 |
II |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,638 |  |  | — |  |  | 2,638 |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 23,686 |  |  | $ | 35,050 |  |  | $ | 30,899 |  |  | $ | 45,517 |  |  | $ | 22,815 |  |  | $ | 77,237 |  |  | $ | 854 |  |  | $ | 236,058 |
Commercial real estate — non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 63,933 |  |  | $ | 88,468 |  |  | $ | 73,530 |  |  | $ | 50,707 |  |  | $ | 61,700 |  |  | $ | 327,526 |  |  | $ | 30,764 |  |  | $ | 696,628 |
II |  | — |  |  | — |  |  | — |  |  | 2,277 |  |  | 16,621 |  |  | 9,177 |  |  | — |  |  | 28,075 |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | 8,709 |  |  | 20,105 |  |  | — |  |  | 28,814 |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 63,933 |  |  | $ | 88,468 |  |  | $ | 73,530 |  |  | $ | 52,984 |  |  | $ | 87,030 |  |  | $ | 356,808 |  |  | $ | 30,764 |  |  | $ | 753,517 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 22,994 |  |  | $ | 83,860 |  |  | $ | 48,685 |  |  | $ | 34,645 |  |  | $ | 439 |  |  | $ | 7,055 |  |  | $ | 14,150 |  |  | $ | 211,828 |
II |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 22,994 |  |  | $ | 83,860 |  |  | $ | 48,685 |  |  | $ | 34,645 |  |  | $ | 439 |  |  | $ | 7,055 |  |  | $ | 14,150 |  |  | $ | 211,828 |
Multi-family |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 66,904 |  |  | $ | 35,342 |  |  | $ | 48,858 |  |  | $ | 113,872 |  |  | $ | 23,015 |  |  | $ | 118,710 |  |  | $ | 3,013 |  |  | $ | 409,714 |
II |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 66,904 |  |  | $ | 35,342 |  |  | $ | 48,858 |  |  | $ | 113,872 |  |  | $ | 23,015 |  |  | $ | 118,710 |  |  | $ | 3,013 |  |  | $ | 409,714 |
1-4 family |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | — |  |  | $ | 8,161 |  |  | $ | 2,710 |  |  | $ | 2,378 |  |  | $ | 451 |  |  | $ | 2,941 |  |  | $ | 7,570 |  |  | $ | 24,211 |
II |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 24 |  |  | — |  |  | 24 |
Total |  | $ | — |  |  | $ | 8,161 |  |  | $ | 2,710 |  |  | $ | 2,378 |  |  | $ | 451 |  |  | $ | 2,965 |  |  | $ | 7,570 |  |  | $ | 24,235 |
September 30, 2023 |  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |
(In Thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 238,317 |  |  | $ | 154,061 |  |  | $ | 92,754 |  |  | $ | 43,801 |  |  | $ | 23,071 |  |  | $ | 30,303 |  |  | $ | 426,772 |  |  | $ | 1,009,079 |
II |  | 1,005 |  |  | 8,967 |  |  | 866 |  |  | 248 |  |  | 3,372 |  |  | 167 |  |  | 8,537 |  |  | 23,162 |
III |  | 945 |  |  | 9,024 |  |  | 5,134 |  |  | 6,136 |  |  | 1,184 |  |  | 4,077 |  |  | 7,353 |  |  | 33,853 |
IV |  | 592 |  |  | 5,325 |  |  | 1,272 |  |  | 425 |  |  | 126 |  |  | 315 |  |  | 9,549 |  |  | 17,604 |
Total |  | $ | 240,859 |  |  | $ | 177,377 |  |  | $ | 100,026 |  |  | $ | 50,610 |  |  | $ | 27,753 |  |  | $ | 34,862 |  |  | $ | 452,211 |  |  | $ | 1,083,698 |
Consumer and other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 6,102 |  |  | $ | 9,068 |  |  | $ | 3,266 |  |  | $ | 12,588 |  |  | $ | 2,162 |  |  | $ | 3,579 |  |  | $ | 8,043 |  |  | $ | 44,808 |
II |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
III |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
IV |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | $ | 6,102 |  |  | $ | 9,068 |  |  | $ | 3,266 |  |  | $ | 12,588 |  |  | $ | 2,162 |  |  | $ | 3,579 |  |  | $ | 8,043 |  |  | $ | 44,808 |
Total Loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
I |  | $ | 421,936 |  |  | $ | 414,010 |  |  | $ | 300,702 |  |  | $ | 303,508 |  |  | $ | 133,653 |  |  | $ | 564,713 |  |  | $ | 491,166 |  |  | $ | 2,629,688 |
II |  | 1,005 |  |  | 8,967 |  |  | 866 |  |  | 2,525 |  |  | 19,993 |  |  | 11,982 |  |  | 8,537 |  |  | 53,875 |
III |  | 945 |  |  | 9,024 |  |  | 5,134 |  |  | 6,136 |  |  | 9,893 |  |  | 24,182 |  |  | 7,353 |  |  | 62,667 |
IV |  | 592 |  |  | 5,325 |  |  | 1,272 |  |  | 425 |  |  | 126 |  |  | 339 |  |  | 9,549 |  |  | $ | 17,628 |
Total |  | $ | 424,478 |  |  | $ | 437,326 |  |  | $ | 307,974 |  |  | $ | 312,594 |  |  | $ | 163,665 |  |  | $ | 601,216 |  |  | $ | 516,605 |  |  | $ | 2,763,858 |
Each credit is evaluated for proper risk rating upon origination, at the time of each subsequent renewal, upon receipt and evaluation of updated financial information from the Corporation’s borrowers, or as other circumstances dictate. The Corporation primarily uses a nine grade risk rating system to monitor the ongoing credit quality of its loans and leases. The risk rating grades follow a consistent definition and are then applied to specific loan types based on the nature of the loan. Each risk rating is subjective and, depending on the size and nature of the credit, subject to various levels of review and concurrence on the stated risk rating. In addition to its nine grade risk rating system, the Corporation groups loans into four loan and related risk categories which determine the level and nature of review by management. Category I — Loans and leases in this category are performing in accordance with the terms of the contract and generally exhibit no immediate concerns regarding the security and viability of the underlying collateral, financial stability of the borrower, integrity or strength of the borrowers’ management team, or the industry in which the borrower operates. The Corporation monitors Category I loans and leases through payment performance, continued maintenance of its personal relationships with such borrowers, and continued review of such borrowers’ compliance with the terms of their respective agreements. Category II — Loans and leases in this category are beginning to show signs of deterioration in one or more of the Corporation’s core underwriting criteria such as financial stability, management strength, industry trends, or collateral values. Management will place credits in this category to allow for proactive monitoring and resolution with the borrower to possibly mitigate the area of concern and prevent further deterioration or risk of loss to the Corporation. Category II loans are considered performing but are monitored frequently by the assigned business development officer and by asset quality review committees. Category III — Loans and leases in this category are identified by management as warranting special attention. However, the balance in this category is not intended to represent the amount of adversely classified assets held by the Bank. Category III loans and leases generally exhibit undesirable characteristics, such as evidence of adverse financial trends and conditions, managerial problems, deteriorating economic conditions within the related industry, or evidence of adverse public filings and may exhibit collateral shortfall positions. Management continues to believe that it will collect all contractual principal and interest in accordance with the original terms of the contracts relating to the loans and leases in this category, and therefore Category III loans are considered performing with no specific reserves established for this category. Category III loans are monitored by management and asset quality review committees on a monthly basis. Category IV — Loans and leases in this category are non-performing loans. Management has determined that it is unlikely that the Bank will receive the contractual principal and interest in accordance with the original terms of the agreement. Non-performing loans are individually evaluated to assess the need for the establishment of specific reserves or charge-offs. When analyzing the adequacy of collateral, the Corporation obtains external appraisals at least annually. External appraisals are obtained from the Corporation’s approved appraiser listing and are independently reviewed to monitor the quality of such appraisals. To the extent a collateral shortfall position is present, a specific reserve or charge-off will be recorded. Loans and leases in this category are monitored by management and asset quality review committees on a monthly basis. The delinquency aging of the loan and lease portfolio by class of receivable was as follows:
|  | September 30, 2023
|  | 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 90 Days Past Due |  | Total Past Due |  | Current |  | Total Loans and Leases
|  | (Dollars in Thousands)
Performing loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 236,058 |  |  | $ | 236,058 |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 753,517 |  |  | 753,517 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 211,828 |  |  | 211,828 |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | 409,714 |  |  | 409,714 |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,211 |  |  | 24,211 |
Commercial and industrial |  | 1,874 |  |  | 1,269 |  |  | — |  |  | 3,143 |  |  | 1,062,951 |  |  | 1,066,094 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | 44,808 |  |  | 44,808 |
Total |  | 1,874 |  |  | 1,269 |  |  | — |  |  | 3,143 |  |  | 2,743,087 |  |  | 2,746,230 |
Non-performing loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 24 |  |  | 24 |
Commercial and industrial |  | 408 |  |  | 1,406 |  |  | 5,184 |  |  | 6,998 |  |  | 10,606 |  |  | 17,604 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 408 |  |  | 1,406 |  |  | 5,184 |  |  | 6,998 |  |  | 10,630 |  |  | 17,628 |
Total loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 236,058 |  |  | 236,058 |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 753,517 |  |  | 753,517 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 211,828 |  |  | 211,828 |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | 409,714 |  |  | 409,714 |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 24,235 |  |  | 24,235 |
Commercial and industrial |  | 2,282 |  |  | 2,675 |  |  | 5,184 |  |  | 10,141 |  |  | 1,073,557 |  |  | 1,083,698 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | 44,808 |  |  | 44,808 |
Total |  | $ | 2,282 |  |  | $ | 2,675 |  |  | $ | 5,184 |  |  | $ | 10,141 |  |  | $ | 2,753,717 |  |  | $ | 2,763,858 |
Percent of portfolio |  | 0.08 | % |  | 0.10 | % |  | 0.19 | % |  | 0.37 | % |  | 99.63 | % |  | 100.00 | %
|  | December 31, 2022
|  | 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 90 Days Past Due |  | Total Past Due |  | Current |  | Total Loans and Leases
|  | (Dollars in Thousands)
Performing loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 268,354 |  |  | $ | 268,354 |
Non-owner occupied |  | 215 |  |  | — |  |  | — |  |  | 215 |  |  | 686,876 |  |  | 687,091 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 218,751 |  |  | 218,751 |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | 350,026 |  |  | 350,026 |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,698 |  |  | 17,698 |
Commercial and industrial |  | 1,437 |  |  | 403 |  |  | — |  |  | 1,840 |  |  | 847,858 |  |  | 849,698 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | 47,938 |  |  | 47,938 |
Total |  | 1,652 |  |  | 403 |  |  | — |  |  | 2,055 |  |  | 2,437,501 |  |  | 2,439,556 |
Non-performing loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 30 |  |  | 30 |
Commercial and industrial |  | 439 |  |  | 126 |  |  | 2,464 |  |  | 3,029 |  |  | 600 |  |  | 3,629 |
Other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 439 |  |  | 126 |  |  | 2,464 |  |  | 3,029 |  |  | 630 |  |  | 3,659 |
Total loans and leases |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | 268,354 |  |  | 268,354 |
Non-owner occupied |  | 215 |  |  | — |  |  | — |  |  | 215 |  |  | 686,876 |  |  | 687,091 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 218,751 |  |  | 218,751 |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | 350,026 |  |  | 350,026 |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | 17,728 |  |  | 17,728 |
Commercial and industrial |  | 1,876 |  |  | 529 |  |  | 2,464 |  |  | 4,869 |  |  | 848,458 |  |  | 853,327 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | 47,938 |  |  | 47,938 |
Total |  | $ | 2,091 |  |  | $ | 529 |  |  | $ | 2,464 |  |  | $ | 5,084 |  |  | $ | 2,438,131 |  |  | $ | 2,443,215 |
Percent of portfolio |  | 0.09 | % |  | 0.02 | % |  | 0.10 | % |  | 0.21 | % |  | 99.79 | % |  | 100.00 | %
The Corporation’s total non-performing assets consisted of the following:
|  | September 30, 2023 |  | December 31, 2022
|  | (In Thousands)
Non-performing loans and leases |  |  |  |
Commercial real estate: |  |  |  |
Commercial real estate — owner occupied |  | $ | — |  |  | $ | — |
Commercial real estate — non-owner occupied |  | — |  |  | — |
Construction |  | — |  |  | — |
Multi-family |  | — |  |  | — |
1-4 family |  | 24 |  |  | 30 |
Total non-performing commercial real estate |  | 24 |  |  | 30 |
Commercial and industrial |  | 17,604 |  |  | 3,629 |
Consumer and other |  | — |  |  | — |
Total non-performing loans and leases |  | 17,628 |  |  | 3,659 |
Repossessed assets, net |  | 61 |  |  | 95 |
Total non-performing assets |  | $ | 17,689 |  |  | $ | 3,754 |
|  | September 30, 2023 |  | December 31, 2022
Total non-performing loans and leases to gross loans and leases |  | 0.64 | % |  | 0.15 | %
Total non-performing assets to total gross loans and leases plus repossessed assets, net |  | 0.64 |  |  | 0.15 |
Total non-performing assets to total assets |  | 0.52 |  |  | 0.13 |
Allowance for credit losses to gross loans and leases |  | 1.12 |  |  | 0.99 |
Allowance for credit losses to non-performing loans and leases |  | 176.06 |  |  | 662.20 |
Occasionally, the Corporation modifies loans to borrowers in financial distress. There were two commercial and industrial loans for a total of $716,000 modified during the three and nine months ended September 30, 2023. The modifications consisted of payment deferrals. These loans are included in total non-performing loans and are currently 25 and 117 days past due, respectively. No loans were modified during the three and nine ended September 30, 2022. There were no loans to borrowers experiencing financial distress that were modified during the previous 12 months and which subsequently defaulted during the three and nine months ended September 30, 2023 and 2022. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of September 30, 2023. The following represents additional information regarding the Corporation’s non-performing loans and leases, by portfolio segment:
|  | As of and for the Nine Months Ended September 30, 2023
|  | Recorded Investment(1) |  | Unpaid Principal Balance |  | Individual Reserve |  | Average Recorded Investment(2) |  | Foregone Interest Income |  | Interest Income Recognized |  | Net Foregone Interest Income
|  | (In Thousands)
With no individual reserve recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | 24 |  |  | 29 |  |  | — |  |  | 27 |  |  | 3 |  |  | 17 |  |  | (14) |
Commercial and industrial |  | 11,357 |  |  | 11,361 |  |  | — |  |  | 4,263 |  |  | 436 |  |  | 70 |  |  | 366 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 11,381 |  |  | 11,390 |  |  | — |  |  | 4,290 |  |  | 439 |  |  | 87 |  |  | 352 |
With individual reserve recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  | 6,247 |  |  | 6,247 |  |  | 3,982 |  |  | 3,412 |  |  | 265 |  |  | 21 |  |  | 244 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 6,247 |  |  | 6,247 |  |  | 3,982 |  |  | 3,412 |  |  | 265 |  |  | 21 |  |  | 244 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | 24 |  |  | 29 |  |  | — |  |  | 27 |  |  | 3 |  |  | 17 |  |  | (14) |
Commercial and industrial |  | 17,604 |  |  | 17,608 |  |  | 3,982 |  |  | 7,675 |  |  | 701 |  |  | 91 |  |  | 610 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Grand total |  | $ | 17,628 |  |  | $ | 17,637 |  |  | $ | 3,982 |  |  | $ | 7,702 |  |  | $ | 704 |  |  | $ | 108 |  |  | $ | 596 |
(1)The recorded investment represents the unpaid principal balance net of any partial charge-offs. (2)Average recorded investment is calculated primarily using daily average balances.
|  | As of and for the Year Ended December 31, 2022
|  | Recorded Investment(1) |  | Unpaid Principal Balance |  | Individual Reserve |  | Average Recorded Investment(2) |  | Foregone Interest Income |  | Interest Income Recognized |  | Net Foregone Interest Income
|  | (In Thousands)
With no individual reserve recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 180 |  |  | $ | 14 |  |  | $ | 759 |  |  | $ | (745) |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | (1) |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 47 |  |  | (47) |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | 30 |  |  | 35 |  |  | — |  |  | 112 |  |  | 8 |  |  | 41 |  |  | (33) |
Commercial and industrial |  | 1,037 |  |  | 1,037 |  |  | — |  |  | 3,153 |  |  | 277 |  |  | 587 |  |  | (310) |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 1,067 |  |  | 1,072 |  |  | — |  |  | 3,445 |  |  | 299 |  |  | 1,435 |  |  | (1,136) |
With individual reserve recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial and industrial |  | 2,592 |  |  | 2,612 |  |  | 1,650 |  |  | 1,454 |  |  | 101 |  |  | 1 |  |  | 100 |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  | 2,592 |  |  | 2,612 |  |  | 1,650 |  |  | 1,454 |  |  | 101 |  |  | 1 |  |  | 100 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | — |  |  | — |  |  | — |  |  | 180 |  |  | 14 |  |  | 759 |  |  | (745) |
Non-owner occupied |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | (1) |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 47 |  |  | (47) |
Multi-family |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
1-4 family |  | 30 |  |  | 35 |  |  | — |  |  | 112 |  |  | 8 |  |  | 41 |  |  | (33) |
Commercial and industrial |  | 3,629 |  |  | 3,649 |  |  | 1,650 |  |  | 4,607 |  |  | 378 |  |  | 588 |  |  | (210) |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Grand total |  | $ | 3,659 |  |  | $ | 3,684 |  |  | $ | 1,650 |  |  | $ | 4,899 |  |  | $ | 400 |  |  | $ | 1,436 |  |  | $ | (1,036) |
(1)The recorded investment represents the unpaid principal balance net of any partial charge-offs. (2)Average recorded investment is calculated primarily using daily average balances. The difference between the recorded investment of loans and leases and the unpaid principal balance of $9,000 and $26,000 as of September 30, 2023, and December 31, 2022, respectively, represents partial charge-offs of loans and leases resulting from losses due to the value of the collateral securing the loans and leases being below the carrying values of the loans and leases. When a loan is placed on non-accrual, interest accrual is discontinued and previously accrued but uncollected interest is deducted from interest income. Cash payments collected on non-accrual loans are first applied to such loan’s principal. Foregone interest represents the interest that was contractually due on the loan but not received or recorded. To the extent the amount of principal on a non-accrual loan is fully collected and additional cash is received, the Corporation will recognize interest income. Allowance for Credit Losses The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. A provision for credit losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors as discussed within Note 1 – Nature of Operations and Summary of Significant Accounting Policies included in the Corporation’s Form 10-Q for the period ended March 31, 2023. During the first quarter of 2023, the Corporation adopted ASU 2016-13, including the CECL methodology for estimating the ACL. This standard was adopted using a modified retrospective approach on January 1, 2023, resulting in a $484,000 increase to the ACL and a $1.3 million increase to the unfunded credit commitments reserve. A cumulative effect adjustment resulting in an $1.4 million decrease to retained earnings and a $465,000 increase to deferred tax assets was also recorded as of the adoption of ASU 2016-13. Quantitative Considerations The ACL is primarily calculated utilizing a discounted cash flow (“DCF”) model. Key inputs and assumptions used in this model are discussed below: •Forecast model - For each portfolio segment, a loss driver analysis (“LDA”) was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA analysis utilized peer FFIEC Call Report data for all pools. The Corporation plans to update the LDA annually. •Probability of default – PD is the probability that an asset will be in default within a given time frame. The Corporation has defined default as when a charge-off has occurred, a loan goes to non-accrual status, or a loan is greater than 90 days past due. The forecast model is utilized to estimate PDs. •Loss given default – LGD is the percentage of the asset not expected to be collected due to default. The LGD is derived from using a method referred to as Frye Jacobs which uses industry data. •Prepayments and curtailments – Prepayments and curtailments are calculated based on the Corporation’s own data. This analysis is updated annually. •Forecast and reversion – the Corporation has established a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average. •Economic forecast – the Corporation utilizes a third party to provide economic forecasts under various scenarios, which are assessed against economic indicators and management’s observations in the market. As of June 30, 2023, the Corporation selected a forecast which forecasts unemployment between 3.81% and 4.58% and GDP growth change between 0.66% and 1.39% over the next four quarters. As of September 30, 2023, the Corporation selected a forecast which forecasts unemployment between 3.89% and 4.10% and GDP growth change between 1.06% and 1.87% over the next four quarters. Following the forecast period, the model reverts to long-term averages over four quarters. Management believes that the resulting quantitative reserve appropriately balances economic indicators with identified risks. Qualitative Considerations In addition to the quantitative model, management considers the need for qualitative adjustment for risks not considered in the DCF. Factors that are considered by management in determining loan collectability and the appropriate level of the ACL are listed below: •The Corporation’s lending policies and procedures, including changes in lending strategies, underwriting standards and practices for collections, write-offs, and recoveries; •Actual and expected changes in international, national, regional, and local economic and business conditions and developments in which the Corporation operates that affect the collectability of financial assets; •The experience, ability, and depth of the Corporation’s lending, investment, collection, and other relevant management and staff; •The volume of past due financial assets, the volume of non-performing assets, and the volume and severity of adversely classified or graded assets; •The existence and effect of industry concentrations of credit; •The nature and volume of the portfolio segment or class; •The quality of the Corporation’s credit review function; •The effect of other external factors such as the regulatory, legal and technological environments, competition, and events such as natural disasters or pandemics. ACL Activity A summary of the activity in the allowance for credit losses by portfolio segment is as follows:
|  | As of and for the Three Months Ended September 30, 2023
|  | Owner Occupied |  | Non-Owner Occupied |  | Construction |  | Multi-Family |  | 1-4 Family |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Beginning balance |  | $ | 1,721 |  |  | $ | 5,241 |  |  | $ | 2,293 |  |  | $ | 3,426 |  |  | $ | 249 |  |  | $ | 16,223 |  |  | $ | 544 |  |  | $ | 29,697 |
Charge-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (562) |  |  | — |  |  | (562) |
Recoveries |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 9 |  |  | 72 |  |  | — |  |  | 84 |
Net recoveries (charge-offs) |  | 3 |  |  | — |  |  | — |  |  | — |  |  | 9 |  |  | (490) |  |  | — |  |  | (478) |
Provision for credit losses |  | (151) |  |  | 26 |  |  | 68 |  |  | 96 |  |  | (10) |  |  | 1,833 |  |  | (45) |  |  | 1,817 |
Ending balance |  | $ | 1,573 |  |  | $ | 5,267 |  |  | $ | 2,361 |  |  | $ | 3,522 |  |  | $ | 248 |  |  | $ | 17,566 |  |  | $ | 499 |  |  | $ | 31,036 |
Components: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses |  | 1,556 |  |  | 5,209 |  |  | 1,441 |  |  | 3,512 |  |  | 228 |  |  | 16,946 |  |  | 439 |  |  | 29,331 |
Allowance for unfunded credit commitments |  | 17 |  |  | 58 |  |  | 920 |  |  | 10 |  |  | 20 |  |  | 620 |  |  | 60 |  |  | 1,705 |
Total ACL |  | $ | 1,573 |  |  | $ | 5,267 |  |  | $ | 2,361 |  |  | $ | 3,522 |  |  | $ | 248 |  |  | $ | 17,566 |  |  | $ | 499 |  |  | $ | 31,036 |
|  | As of and for the Three Months Ended September 30, 2022
|  | Commercial Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Beginning balance |  | $ | 13,410 |  |  | $ | 9,866 |  |  | $ | 828 |  |  | $ | 24,104 |
Charge-offs |  | — |  |  | (33) |  |  | (21) |  |  | (54) |
Recoveries |  | 23 |  |  | 50 |  |  | 8 |  |  | 81 |
Net recoveries |  | 23 |  |  | 17 |  |  | (13) |  |  | 27 |
Provision for credit losses |  | (492) |  |  | 629 |  |  | (125) |  |  | 12 |
Ending balance |  | $ | 12,941 |  |  | $ | 10,512 |  |  | $ | 690 |  |  | $ | 24,143 |
|  | As of and for the Nine Months Ended September 30, 2023
|  | Owner Occupied |  | Non-Owner Occupied |  | Construction |  | Multi-Family |  | 1-4 Family |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Beginning balance |  | $ | 1,766 |  |  | $ | 5,108 |  |  | $ | 1,646 |  |  | $ | 2,634 |  |  | $ | 207 |  |  | $ | 12,403 |  |  | $ | 466 |  |  | $ | 24,230 |
Impact of adopting ASC 326 |  | (204) |  |  | (242) |  |  | 796 |  |  | (386) |  |  | (45) |  |  | 1,873 |  |  | 26 |  |  | 1,818 |
Charge-offs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,057) |  |  | — |  |  | (1,057) |
Recoveries |  | 5 |  |  | 1 |  |  | — |  |  | — |  |  | 30 |  |  | 386 |  |  | 13 |  |  | 435 |
Net recoveries (charge-offs) |  | 5 |  |  | 1 |  |  | — |  |  | — |  |  | 30 |  |  | (671) |  |  | 13 |  |  | (622) |
Provision for credit losses |  | 6 |  |  | 400 |  |  | (81) |  |  | 1,274 |  |  | 56 |  |  | 3,961 |  |  | (6) |  |  | 5,610 |
Ending balance |  | $ | 1,573 |  |  | $ | 5,267 |  |  | $ | 2,361 |  |  | $ | 3,522 |  |  | $ | 248 |  |  | $ | 17,566 |  |  | $ | 499 |  |  | $ | 31,036 |
Components: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses |  | 1,556 |  |  | 5,209 |  |  | 1,441 |  |  | 3,512 |  |  | 228 |  |  | 16,946 |  |  | 439 |  |  | 29,331 |
Allowance for unfunded credit commitments |  | 17 |  |  | 58 |  |  | 920 |  |  | 10 |  |  | 20 |  |  | 620 |  |  | 60 |  |  | 1,705 |
Total ACL |  | $ | 1,573 |  |  | $ | 5,267 |  |  | $ | 2,361 |  |  | $ | 3,522 |  |  | $ | 248 |  |  | $ | 17,566 |  |  | $ | 499 |  |  | $ | 31,036 |
|  | As of and for the Nine Months Ended September 30, 2022
|  | Commercial Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Beginning balance |  | $ | 15,110 |  |  | $ | 8,413 |  |  | $ | 813 |  |  | $ | 24,336 |
Charge-offs |  | — |  |  | (140) |  |  | (21) |  |  | (161) |
Recoveries |  | 4,259 |  |  | 251 |  |  | 27 |  |  | 4,537 |
Net recoveries (charge-offs) |  | 4,259 |  |  | 111 |  |  | 6 |  |  | 4,376 |
Provision for credit losses |  | (6,428) |  |  | 1,988 |  |  | (129) |  |  | (4,569) |
Ending balance |  | $ | 12,941 |  |  | $ | 10,512 |  |  | $ | 690 |  |  | $ | 24,143 |
ACL Summary Loans collectively evaluated for credit losses in the following tables include all performing loans at September 30, 2023 and December 31, 2022. Loans individually evaluated for credit losses include all non-performing loans. The following tables provide information regarding the allowance for credit losses and balances by type of allowance methodology.
|  | As of September 30, 2023
|  | Owner Occupied |  | Non-Owner Occupied |  | Construction |  | Multi-Family |  | 1-4 Family |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for credit losses |  | $ | 1,556 |  |  | $ | 5,209 |  |  | $ | 1,441 |  |  | $ | 3,512 |  |  | $ | 228 |  |  | $ | 12,964 |  |  | $ | 439 |  |  | $ | 25,349 |
Individually evaluated for credit loss |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,982 |  |  | — |  |  | 3,982 |
Total |  | $ | 1,556 |  |  | $ | 5,209 |  |  | $ | 1,441 |  |  | $ | 3,512 |  |  | $ | 228 |  |  | $ | 16,946 |  |  | $ | 439 |  |  | $ | 29,331 |
Loans and lease receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collectively evaluated for credit losses |  | $ | 236,058 |  |  | $ | 753,517 |  |  | $ | 211,828 |  |  | $ | 409,714 |  |  | $ | 24,211 |  |  | $ | 1,066,094 |  |  | $ | 44,808 |  |  | $ | 2,746,230 |
Individually evaluated for credit loss |  | — |  |  | — |  |  | — |  |  | — |  |  | 24 |  |  | 17,604 |  |  | — |  |  | 17,628 |
Total |  | $ | 236,058 |  |  | $ | 753,517 |  |  | $ | 211,828 |  |  | $ | 409,714 |  |  | $ | 24,235 |  |  | $ | 1,083,698 |  |  | $ | 44,808 |  |  | $ | 2,763,858 |
|  | As of December 31, 2022
|  | Commercial Real Estate |  | Commercial and Industrial |  | Consumer and Other |  | Total
|  | (In Thousands)
Allowance for credit losses: |  |  |  |  |  |  |  |
Collectively evaluated for credit losses |  | $ | 11,361 |  |  | $ | 10,753 |  |  | $ | 466 |  |  | $ | 22,580 |
Individually evaluated for credit loss |  | — |  |  | 1,650 |  |  | — |  |  | 1,650 |
Total |  | $ | 11,361 |  |  | $ | 12,403 |  |  | $ | 466 |  |  | $ | 24,230 |
Loans and lease receivables: |  |  |  |  |  |  |  |
Collectively evaluated for credit losses |  | $ | 1,541,920 |  |  | $ | 849,698 |  |  | $ | 47,938 |  |  | $ | 2,439,556 |
Individually evaluated for credit loss |  | 30 |  |  | 3,629 |  |  | — |  |  | 3,659 |
Total |  | $ | 1,541,950 |  |  | $ | 853,327 |  |  | $ | 47,938 |  |  | $ | 2,443,215 |

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent + Details
Name: | us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_ReceivablesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration