Loans, Lease Receivables, and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2024

Loans, Lease Receivables, and Allowance for Credit Losses

Note 5 — Loans, Lease Receivables, and Allowance for Credit Losses

Loan and lease receivables consist of the following:


	June 30, 2024			December 31, 2023
	(In Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	258,636		$	256,479
Commercial real estate — non-owner occupied		777,704			773,494
Construction		229,181			193,080
Multi-family		470,176			450,529
1-4 family		39,680			26,289
Total commercial real estate		1,775,377			1,699,871
Commercial and industrial		1,161,711			1,105,835
Consumer and other		48,145			44,312
Total gross loans and leases receivable		2,985,233			2,850,018
Less:
Allowance for credit losses		33,088			31,275
Deferred loan fees and costs, net		(181	)		(243	)
Loans and leases receivable, net	$	2,952,326		$	2,818,986

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 June 30, 2024 and 2023, was $3.5 million and $4.9 million, respectively. The total principal amount of the guaranteed portions of SBA loans sold during the six months ended June 30, 2024 and 2023, was $5.7 million and $9.8 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 six months ended June 30, 2024 and 2023, 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 serviced by the Corporation at June 30, 2024, and December 31, 2023, was $74.1 million and $84.2 million, respectively.

The total principal amount of transferred participation interests in other, non-SBA originated loans during the three months ended June 30, 2024 and 2023, was $23.8 million and $32.0 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 six months ended June 30, 2024 and 2023, was $58.6 million and $54.7 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 serviced by the Corporation at June 30, 2024, and December 31, 2023, was $312.4 million and $279.5 million, respectively. As of June 30, 2024, and December 31, 2023, the total amount of the Corporation’s retained ownership of these transferred loans was $375.2 million and $367.4 million, respectively. As of June 30, 2024 and December 31, 2023, the non-SBA originated participation portfolio contained no non-accrual loans. The Corporation does not share in the participant’s portion of any potential charge-offs.

The following table illustrates ending balances of the Corporation’s loan and lease portfolio, including non-accrual loans by class of receivable, and considering certain credit quality indicators:


June 30, 2024	Term Loans Amortized Cost Basis by Origination Year
(In Thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
Commercial real estate — owner occupied
Category
I	$	4,462	$	38,855	$	45,831	$	37,625	$	43,147	$	85,762	$	1,601	$	257,283
II		—		—		—		—		—		627		—		627
III		—		—		—		—		—		726		—		726
IV		—		—		—		—		—		—		—		—
Total	$	4,462	$	38,855	$	45,831	$	37,625	$	43,147	$	87,115	$	1,601	$	258,636
Commercial real estate — non-owner occupied
Category
I	$	20,745	$	69,397	$	76,022	$	71,520	$	86,670	$	355,584	$	38,587	$	718,525
II		—		—		—		2,273		2,202		38,409		—		42,884
III		—		664		—		—		—		15,631		—		16,295
IV		—		—		—		—		—		—		—		—
Total	$	20,745	$	70,061	$	76,022	$	73,793	$	88,872	$	409,624	$	38,587	$	777,704
Construction
Category
I	$	34,511	$	107,512	$	48,498	$	7,418	$	734	$	6,108	$	9,813	$	214,594
II		—		—		—		—		—		—		—		—
III		—		—		454		8,155		5,713		265		—		14,587
IV		—		—		—		—		—		—		—		—
Total	$	34,511	$	107,512	$	48,952	$	15,573	$	6,447	$	6,373	$	9,813	$	229,181
Multi-family
Category
I	$	26,146	$	71,764	$	60,429	$	69,456	$	102,624	$	136,857	$	2,900	$	470,176
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		—		—		—
Total	$	26,146	$	71,764	$	60,429	$	69,456	$	102,624	$	136,857	$	2,900	$	470,176
1-4 family
Category
I	$	10,330	$	4,221	$	7,275	$	2,624	$	2,322	$	2,670	$	10,220	$	39,662
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		18		—		18
Total	$	10,330	$	4,221	$	7,275	$	2,624	$	2,322	$	2,688	$	10,220	$	39,680
Commercial and industrial
Category
I	$	139,782	$	259,683	$	119,737	$	65,817	$	30,702	$	35,736	$	442,498	$	1,093,955
II		—		6,502		3,675		377		623		69		13,790		25,036
III		4,087		693		5,121		1,463		2,837		4,918		4,620		23,739
IV		—		3,224		5,840		959		468		2,033		6,457		18,981
Total	$	143,869	$	270,102	$	134,373	$	68,616	$	34,630	$	42,756	$	467,365	$	1,161,711
Consumer and other
Category
I	$	6,701	$	5,530	$	7,929	$	2,967	$	11,798	$	6,408	$	6,812	$	48,145
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		—		—		—
Total	$	6,701	$	5,530	$	7,929	$	2,967	$	11,798	$	6,408	$	6,812	$	48,145
Total Loans
Category
I	$	242,677	$	556,962	$	365,721	$	257,427	$	277,997	$	629,125	$	512,431	$	2,842,340
II		—		6,502		3,675		2,650		2,825		39,105		13,790		68,547
III		4,087		1,357		5,575		9,618		8,550		21,540		4,620		55,347
IV		—		3,224		5,840		959		468		2,051		6,457		18,999
Total	$	246,764	$	568,045	$	380,811	$	270,654	$	289,840	$	691,821	$	537,298	$	2,985,233


December 31, 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	$	31,637	$	43,156	$	38,803	$	44,704	$	22,078	$	72,774	$	451	$	253,603
II		—		—		—		260		—		—		—		260
III		—		—		—		—		—		2,616		—		2,616
IV		—		—		—		—		—		—		—		—
Total	$	31,637	$	43,156	$	38,803	$	44,964	$	22,078	$	75,390	$	451	$	256,479
Commercial real estate — non-owner occupied
Category
I	$	71,857	$	76,689	$	72,660	$	78,212	$	66,262	$	314,970	$	32,478	$	713,128
II		—		—		2,302		2,252		19,838		16,274		—		40,666
III		—		—		—		—		—		19,700		—		19,700
IV		—		—		—		—		—		—		—		—
Total	$	71,857	$	76,689	$	74,962	$	80,464	$	86,100	$	350,944	$	32,478	$	773,494
Construction
Category
I	$	63,660	$	83,161	$	8,542	$	744	$	433	$	6,528	$	15,011	$	178,079
II		—		—		9,289		5,712		—		—		—		15,001
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		—		—		—
Total	$	63,660	$	83,161	$	17,831	$	6,456	$	433	$	6,528	$	15,011	$	193,080
Multi-family
Category
I	$	84,932	$	41,068	$	70,054	$	113,294	$	22,925	$	115,243	$	3,013	$	450,529
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		—		—		—
Total	$	84,932	$	41,068	$	70,054	$	113,294	$	22,925	$	115,243	$	3,013	$	450,529
1-4 family
Category
I	$	4,242	$	7,684	$	2,672	$	2,359	$	443	$	2,805	$	6,062	$	26,267
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		22		—		22
Total	$	4,242	$	7,684	$	2,672	$	2,359	$	443	$	2,827	$	6,062	$	26,289
Commercial and industrial
Category
I	$	302,612	$	144,167	$	85,504	$	38,164	$	20,151	$	26,490	$	415,301	$	1,032,389
II		1,496		5,280		785		353		94		219		5,706		13,933
III		1,093		7,168		1,882		5,919		3,861		3,957		15,058		38,938
IV		1,482		6,519		1,319		321		133		1,644		9,157		20,575
Total	$	306,683	$	163,134	$	89,490	$	44,757	$	24,239	$	32,310	$	445,222	$	1,105,835
Consumer and other
Category
I	$	5,920	$	8,786	$	3,167	$	12,193	$	2,049	$	3,485	$	8,712	$	44,312
II		—		—		—		—		—		—		—		—
III		—		—		—		—		—		—		—		—
IV		—		—		—		—		—		—		—		—
Total	$	5,920	$	8,786	$	3,167	$	12,193	$	2,049	$	3,485	$	8,712	$	44,312
Total Loans
Category
I	$	564,860	$	404,711	$	281,402	$	289,670	$	134,341	$	542,295	$	481,028	$	2,698,307
II		1,496		5,280		12,376		8,577		19,932		16,493		5,706		69,860
III		1,093		7,168		1,882		5,919		3,861		26,273		15,058		61,254
IV		1,482		6,519		1,319		321		133		1,666		9,157		20,597
Total	$	568,931	$	423,678	$	296,979	$	304,487	$	158,267	$	586,727	$	510,949	$	2,850,018

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 determined based on various quantitative and qualitative factors and is 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-accrual 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-accrual 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:


	June 30, 2024
	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)
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	258,636		$	258,636
Non-owner occupied		—			—			—			—			777,704			777,704
Construction		—			—			—			—			229,181			229,181
Multi-family		—			—			—			—			470,176			470,176
1-4 family		18			—			—			18			39,662			39,680
Commercial and industrial		4,539			1,163			8,483			14,185			1,147,526			1,161,711
Consumer and other		—			—			—			—			48,145			48,145
Total	$	4,557		$	1,163		$	8,483		$	14,203		$	2,971,030		$	2,985,233
Percent of portfolio		0.15	%		0.04	%		0.28	%		0.47	%		99.53	%		100.00	%


	December 31, 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)
Total loans and leases
Commercial real estate:
Owner occupied	$	—		$	—		$	—		$	—		$	256,479		$	256,479
Non-owner occupied		—			—			—			—			773,494			773,494
Construction		—			—			—			—			193,080			193,080
Multi-family		—			—			—			—			450,529			450,529
1-4 family		—			—			—			—			26,289			26,289
Commercial and industrial		3,430			1,041			18,347			22,818			1,083,017			1,105,835
Consumer and other		—			—			—			—			44,312			44,312
Total	$	3,430		$	1,041		$	18,347		$	22,818		$	2,827,200		$	2,850,018
Percent of portfolio		0.12	%		0.04	%		0.64	%		0.80	%		99.20	%		100.00	%

The following tables present the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing as of:


	June 30, 2024
	Non-accrual With No Allowance for Credit Loss		Non-accrual With Allowance for Credit Loss		Loans Past Due Over 89 Days Still Accruing
	(In Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	—	$	—	$	—
Commercial real estate — non-owner occupied		—		—		—
Construction		—		—		—
Multi-family		—		—		—
1-4 family		18		—		—
Total commercial real estate		18		—		—
Commercial and industrial		9,546		9,435		—
Consumer and other		—		—		—
Total non-accrual loans and leases	$	9,564	$	9,435	$	—


	December 31, 2023
	Non-accrual With No Allowance for Credit Loss		Non-accrual With Allowance for Credit Loss		Loans Past Due Over 89 Days Still Accruing
	(In Thousands)
Commercial real estate:
Commercial real estate — owner occupied	$	—	$	—	$	—
Commercial real estate — non-owner occupied		—		—		—
Construction		—		—		—
Multi-family		—		—		—
1-4 family		—		22		—
Total commercial real estate		—		22		—
Commercial and industrial		9,690		10,885		—
Consumer and other		—		—		—
Total non-accrual loans and leases	$	9,690	$	10,907	$	—


	June 30, 2024			December 31, 2023
Total non-accrual loans and leases to gross loans and leases		0.64	%		0.72	%
Allowance for credit losses to gross loans and leases		1.17			1.16
Allowance for credit losses to non-accrual loans and leases		183.96			160.21

The following table presents the amortized cost basis of the non-accrual, collateral-dependent commercial and industrial loans as of:


	June 30, 2024		December 31, 2023
	(In Thousands)
Inventory	$	436	$	8,879
Equipment		9,506		8,903
Real Estate		136		46
Accounts Receivable		6,021		278
Other		1,147		1,348
Total	$	17,246	$	19,454

Occasionally, the Corporation modifies loans to borrowers in financial distress. There were seven commercial and industrial loans for a total of $1.6 million and two commercial real estate non-owner occupied loans for a total of $5.9 million modified during the six months ended June 30, 2024. The modifications consisted of payment deferrals and modified loan repayment schedules. Of these modified loans, four are included in total non-performing loans and are currently between zero and 117 days past due as of June 30, 2024. There was one commercial and industrial loan for a total of $382,000 modified during the six months ended June 30, 2023. This modification consisted of a payment deferral. There was one commercial and industrial loan to borrowers experiencing financial distress in the amount of $238,000 that was modified during the 12 months ended June 30, 2024 which subsequently defaulted. There were no loans to borrowers experiencing financial distress that were modified during the 12 months ended June 30, 2023 which subsequently defaulted. There were no unfunded commitments associated with loans modified for borrowers experiencing financial distress as of June 30, 2024.

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-K for the year ended December 31, 2023.

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") – 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") – 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 semi-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 December 31, 2023, the Corporation selected a forecast which estimates unemployment between 3.89% and 4.04% and GDP growth change between 1.29% and 2.32% over the next four quarters. As of June 30, 2024, the Corporation selected a forecast which estimates unemployment between 4.06% and 4.08% and GDP growth change between 1.76% and 2.21% 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-accrual loans and leases, 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 function; and

•

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 June 30, 2024
	Owner Occupied			Non-Owner Occupied		Construction		Multi- Family		1-4 Family		Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	1,576		$	6,202	$	2,537	$	3,599	$	312	$	19,914		$	489		$	34,629
Charge-offs		—			—		—		—		—		(1,583	)		—			(1,583	)
Recoveries		—			—		—		—		5		165			21			191
Net recoveries (charge-offs)		—			—		—		—		5		(1,418	)		21			(1,392	)
Provision for credit losses		(45	)		213		508		153		144		784			(44	)		1,713
Ending balance	$	1,531		$	6,415	$	3,045	$	3,752	$	461	$	19,280		$	466		$	34,950
Components:
Allowance for credit losses on loans	$	1,519		$	6,374	$	1,963	$	3,723	$	425	$	18,671		$	413		$	33,088
Allowance for credit losses on unfunded credit commitments		12			41		1,082		29		36		609			53			1,862
Total ACL	$	1,531		$	6,415	$	3,045	$	3,752	$	461	$	19,280		$	466		$	34,950


	As of and for the Three Months Ended June 30, 2023
	Owner Occupied		Non-Owner Occupied		Construction		Multi- Family		1-4 Family		Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	1,656	$	4,966	$	2,287	$	2,901	$	221	$	14,905		$	614		$	27,550
Charge-offs		—		—		—		—		—		(329	)		—			(329	)
Recoveries		2		—		—		—		21		220			2			245
Net recoveries (charge-offs)		2		—		—		—		21		(109	)		2			(84	)
Provision for credit losses		63		275		6		525		7		1,427			(72	)		2,231
Ending balance	$	1,721	$	5,241	$	2,293	$	3,426	$	249	$	16,223		$	544		$	29,697
Components:
Allowance for credit losses on loans	$	1,703	$	5,182	$	1,483	$	3,414	$	228	$	15,624		$	481		$	28,115
Allowance for credit losses on unfunded credit commitments		18		59		810		12		21		599			63			1,582
Total ACL	$	1,721	$	5,241	$	2,293	$	3,426	$	249	$	16,223		$	544		$	29,697


	As of and for the Six Months Ended June 30, 2024
	Owner Occupied			Non-Owner Occupied		Construction		Multi- Family		1-4 Family		Commercial and Industrial			Consumer and Other			Total
	(In Thousands)
Beginning balance	$	1,540		$	5,636	$	2,125	$	3,571	$	266	$	19,408		$	451		$	32,997
Charge-offs		—			—		—		—		—		(2,482	)		(22	)		(2,504	)
Recoveries		1			—		—		—		115		281			21			418
Net recoveries (charge-offs)		1			—		—		—		115		(2,201	)		(1	)		(2,086	)
Provision for credit losses		(10	)		779		920		181		80		2,073			16			4,039
Ending balance	$	1,531		$	6,415	$	3,045	$	3,752	$	461	$	19,280		$	466		$	34,950
Components:
Allowance for credit losses on loans	$	1,519		$	6,374	$	1,963	$	3,723	$	425	$	18,671		$	413		$	33,088
Allowance for credit losses on unfunded credit commitments		12			41		1,082		29		36		609			53			1,862
Total ACL	$	1,531		$	6,415	$	3,045	$	3,752	$	461	$	19,280		$	466		$	34,950


	As of and for the Six Months Ended June 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		—			—			—			—			—			(495	)		—		(495	)
Recoveries		2			1			—			—			21			314			13		351
Net recoveries (charge-offs)		2			1			—			—			21			(181	)		13		(144	)
Provision for credit losses		157			374			(149	)		1,178			66			2,128			39		3,793
Ending balance	$	1,721		$	5,241		$	2,293		$	3,426		$	249		$	16,223		$	544	$	29,697
Components:
Allowance for credit losses on loans	$	1,703		$	5,182		$	1,483		$	3,414		$	228		$	15,624		$	481	$	28,115
Allowance for credit losses on unfunded credit commitments		18			59			810			12			21			599			63		1,582
Total ACL	$	1,721		$	5,241		$	2,293		$	3,426		$	249		$	16,223		$	544	$	29,697

ACL Summary

Loans collectively evaluated for credit losses in the following tables include all performing loans at June 30, 2024 and December 31, 2023. Loans individually evaluated for credit losses include all non-accrual loans.

The following tables provide information regarding the allowance for credit losses and balances by type of allowance methodology.


	As of June 30, 2024
	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	$	1,519	$	6,374	$	1,963	$	3,723	$	425	$	13,090	$	413	$	27,507
Individually evaluated for credit loss		—		—		—		—		—		5,581		—		5,581
Total	$	1,519	$	6,374	$	1,963	$	3,723	$	425	$	18,671	$	413	$	33,088
Loans and lease receivables:
Collectively evaluated for credit losses	$	258,636	$	777,704	$	229,181	$	470,176	$	39,662	$	1,142,730	$	48,145	$	2,966,234
Individually evaluated for credit loss		—		—		—		—		18		18,981		—		18,999
Total	$	258,636	$	777,704	$	229,181	$	470,176	$	39,680	$	1,161,711	$	48,145	$	2,985,233


	As of December 31, 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	$	1,525	$	5,596	$	1,244	$	3,562	$	221	$	12,743	$	395	$	25,286
Individually evaluated for credit loss		—		—		—		—		22		5,967		—		5,989
Total	$	1,525	$	5,596	$	1,244	$	3,562	$	243	$	18,710	$	395	$	31,275
Loans and lease receivables:
Collectively evaluated for credit losses	$	256,479	$	773,494	$	193,080	$	450,529	$	26,267	$	1,085,260	$	44,312	$	2,829,421
Individually evaluated for credit loss		—		—		—		—		22		20,575		—		20,597
Total	$	256,479	$	773,494	$	193,080	$	450,529	$	26,289	$	1,105,835	$	44,312	$	2,850,018