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Loans and Allowance for Credit Losses on Loans | 3 Months Ended
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Mar. 31, 2022
Receivables [Abstract] |
Loans and Allowance for Credit Losses on Loans | Loans and Allowance for Credit Losses on Loans The following table presents the amortized cost of loans by class as of March 31, 2022 and December 31, 2021.
(in thousands) | March 31, 2022 | December 31, 2021
Commercial and industrial | $ | 248,625 |  | $ | 301,602 |
Real estate: |  |
Commercial owner-occupied | 391,924 |  | 392,345 |
Commercial investor-owned | 1,176,918 |  | 1,189,021 |
Construction | 131,015 |  | 119,840 |
Home equity | 88,092 |  | 88,746 |
Other residential | 114,277 |  | 114,558 |
Installment and other consumer loans | 51,003 |  | 49,533 |
Total loans, at amortized cost 1 | 2,201,854 |  | 2,255,645 |
Allowance for credit losses on loans | (22,547) |  | (23,023) |
Total loans, net of allowance for credit losses on loans | $ | 2,179,307 |  | $ | 2,232,622 |
1 Amortized cost includes net deferred loan origination costs (fees) of $690 thousand and $(901) thousand at March 31, 2022 and December 31, 2021, respectively. Amounts are also net of unrecognized purchase discounts of $2.6 million and $2.5 million at March 31, 2022 and December 31, 2021, respectively. Amortized cost excludes accrued interest, which totaled $6.2 million and $7.1 million at March 31, 2022 and December 31, 2021, respectively, and is included in interest receivable and other assets in the consolidated statements of condition. Lending Risks Commercial and Industrial Loans - Commercial loans are generally made to established small and mid-sized businesses to provide financing for their growth and working capital needs, equipment purchases and acquisitions. Management examines historical, current, and projected cash flows to determine the ability of the borrower to repay obligations as agreed. Commercial loans are made based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral and guarantor support. The cash flows of borrowers, however, may not occur as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed, such as accounts receivable and inventory, and typically include personal guarantees. We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress. A weakened economy, and resultant decreased consumer and/or business spending, may have an effect on the credit quality of commercial loans. Pursuant to the 2020 CARES Act, Bank of Marin originated 2,876 guaranteed loans totaling $444.1 million in two rounds of the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"). Additionally in 2021, Bank of Marin assumed 113 PPP loans totaling $18.6 million from ARB as of the merger date. As of March 31, 2022, there were 191 PPP loans outstanding totaling $40.6 million (net of $993 thousand in unrecognized fees and costs), compared to 368 loans outstanding at December 31, 2021 totaling $111.2 million (net of $2.5 million in unrecognized fees and costs) included in commercial and industrial loan balances. PPP loans have terms of two to five years and earn interest at 1%. In addition, the SBA paid the Bank a fee of 1%-5% depending on the loan amount, which was netted with loan origination costs and accreted/amortized into interest income using the effective yield method over the contractual life of each loan. The recognition of fees and costs is accelerated when the SBA forgives the loan and/or the loan is paid off prior to maturity. PPP loans are fully guaranteed by the SBA if they meet the requirements of the program. As expected, the vast majority of the PPP loans have been fully forgiven by the SBA and we expect the majority of remaining loans to be forgiven as well. Commercial Real Estate Loans - Commercial real estate loans, which include income producing investment properties and owner-occupied real estate used for business purposes, are subject to underwriting standards and processes similar to commercial loans discussed above. We underwrite these loans to be repaid from cash flow from either the business or investment property and supported by real property collateral. Underwriting standards for commercial real estate loans include, but are not limited to, debt coverage and loan-to-value ratios. Furthermore, a large majority of our loans are guaranteed by the owners of the properties. Conditions in the real estate markets or downturn in the general economy may adversely affect our commercial real estate loans. In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant. The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects. As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio. Construction Loans - Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development. Construction loans include interest reserves that are used for the payment of interest during the development and marketing periods and are capitalized as part of the loan balance. When a construction loan is placed on nonaccrual status before the depletion of the interest reserve, we apply the interest funded by the interest reserve against the loan's principal balance. These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals. We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets. Significant events can affect the construction industry, including: the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes. Estimates of construction costs and value associated with the completed project may be inaccurate. Repayment of construction loans is largely dependent on the ultimate success of the project. Consumer Loans - Consumer loans primarily consist of home equity lines of credit, other residential loans, floating homes, and indirect luxury auto loans, along with a small number of installment loans. Our other residential loans include tenancy-in-common fractional interest loans ("TIC") located almost entirely in San Francisco County. We originate consumer loans utilizing credit score information, debt-to-income ratio and loan-to-value ratio analysis. Diversification among consumer loan types, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk. We do not originate sub-prime residential mortgage loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are reduced documentation, borrowers with low FICO scores or collateral with high loan-to-value ratios. Credit Quality Indicators We use a risk rating system to evaluate asset quality, and to identify and monitor credit risk in individual loans, and in the loan portfolio. Our definitions of “Special Mention” risk graded loans, or worse, are consistent with those used by the Federal Deposit Insurance Corporation ("FDIC"). Our internally assigned grades are as follows: Pass and Watch - Loans to borrowers of acceptable or better credit quality. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt-service-coverage ratios. These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences. Negative external industry factors are generally not present. The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. This category also includes “Watch” loans, where the primary source of repayment has been delayed. “Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period. Special Mention - Potential weaknesses that deserve close attention. If left uncorrected, those potential weaknesses may result in deterioration of the payment prospects for the asset. Special Mention assets do not present sufficient risk to warrant adverse classification. Substandard - Inadequately protected by either the current sound worth and paying capacity of the obligor or the collateral pledged, if any. A Substandard asset has a well-defined weakness or weaknesses that jeopardize(s) the liquidation of the debt. Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected. Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies. Doubtful - Critical weaknesses that make collection or liquidation in full improbable. There may be specific pending events that work to strengthen the asset; however, the amount or timing of the loss may not be determinable. Pending events generally occur within one year of the asset being classified as Doubtful. Examples include: merger, acquisition, or liquidation; capital injection; guarantee; perfecting liens on additional collateral; and refinancing. Such loans are placed on non-accrual status and usually are collateral-dependent. We regularly review our credits for accuracy of risk grades whenever we receive new information. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. We monitor construction loans monthly. We review home equity and other consumer loans based on delinquency. We also review loans graded “Watch” or worse, regardless of loan type, no less than quarterly. The following tables present the loan portfolio by loan class, origination year and internal risk rating as of March 31, 2022 and December 31, 2021. We early adopted the vintage disclosure requirements of ASU 2022-02 prospectively as described in Note 2 beginning with the first quarter of 2022. Accordingly, the 2022 vintage table reflects gross charge-offs by loan class and year of origination. Generally, existing term loans that were re-underwritten are reflected in the table in the year of renewal. Lines of credit that have a conversion feature at the time of origination, such as construction to perm loans, are presented by year of origination.
(in thousands) | Term Loans - Amortized Cost by Origination Year | Revolving Loans Amortized Cost |
March 31, 2022 | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Total
Commercial and industrial: |  |  |  |  |  |  |  |
Pass and Watch | $ | 2,563 |  | $ | 44,716 |  | $ | 12,583 |  | $ | 24,654 |  | $ | 7,862 |  | $ | 30,950 |  | $ | 112,839 |  | $ | 236,167 |
Special Mention | — |  | — |  | — |  | 530 |  | 4,330 |  | — |  | 3 |  | 4,863 |
Substandard | — |  | — |  | 1,576 |  | — |  | — |  | — |  | 6,019 |  | 7,595 |
Total commercial and industrial | $ | 2,563 |  | $ | 44,716 |  | $ | 14,159 |  | $ | 25,184 |  | $ | 12,192 |  | $ | 30,950 |  | $ | 118,861 |  | $ | 248,625 |
Commercial real estate, owner-occupied: |  |  |  |  |  |  |  |
Pass and Watch | $ | 14,542 |  | $ | 53,334 |  | $ | 43,851 |  | $ | 47,384 |  | $ | 35,681 |  | $ | 151,304 |  | $ | — |  | $ | 346,096 |
Special Mention | 6,215 |  | 16,471 |  | — |  | 1,763 |  | 5,419 |  | 5,152 |  | — |  | 35,020 |
Substandard | — |  | — |  | 7,162 |  | — |  | — |  | 3,536 |  | — |  | 10,698 |
Doubtful | — |  | — |  | 110 |  | — |  | — |  | — |  | — |  | 110 |
Total commercial real estate, owner-occupied | $ | 20,757 |  | $ | 69,805 |  | $ | 51,123 |  | $ | 49,147 |  | $ | 41,100 |  | $ | 159,992 |  | $ | — |  | $ | 391,924 |
(in thousands) | Term Loans - Amortized Cost by Origination Year | Revolving Loans Amortized Cost |
March 31, 2022 | 2022 | 2021 | 2020 | 2019 | 2018 | Prior | Total
Commercial real estate, investor-owned: |  |  |  |  |  |  |  |
Pass and Watch | $ | 42,615 |  | $ | 222,832 |  | $ | 177,077 |  | $ | 177,477 |  | $ | 141,444 |  | $ | 374,554 |  | $ | 78 |  | $ | 1,136,077 |
Special Mention | — |  | — |  | 1,213 |  | 2,714 |  | 9,761 |  | 9,621 |  | — |  | 23,309 |
Substandard | — |  | — |  | — |  | — |  | — |  | 17,532 |  | — |  | 17,532 |
Total commercial real estate, investor-owned | $ | 42,615 |  | $ | 222,832 |  | $ | 178,290 |  | $ | 180,191 |  | $ | 151,205 |  | $ | 401,707 |  | $ | 78 |  | $ | 1,176,918 |
Construction: |  |  |  |  |  |  |  |
Pass and Watch | $ | 2,708 |  | $ | 30,721 |  | $ | 79,544 |  | $ | 8,933 |  | $ | 9,109 |  | $ | — |  | $ | — |  | $ | 131,015 |
Total construction | $ | 2,708 |  | $ | 30,721 |  | $ | 79,544 |  | $ | 8,933 |  | $ | 9,109 |  | $ | — |  | $ | — |  | $ | 131,015 |
Home equity: |  |  |  |  |  |  |  |
Pass and Watch | $ | — |  | $ | 24 |  | $ | — |  | $ | — |  | $ | — |  | $ | 320 |  | $ | 87,173 |  | $ | 87,517 |
Special Mention | — |  | — |  | — |  | — |  | — |  | — |  | 66 |  | 66 |
Substandard | — |  | — |  | — |  | — |  | — |  | 370 |  | 139 |  | 509 |
Total home equity | $ | — |  | $ | 24 |  | $ | — |  | $ | — |  | $ | — |  | $ | 690 |  | $ | 87,378 |  | $ | 88,092 |
Other residential: |  |  |  |  |  |  |  |
Pass and Watch | $ | 5,249 |  | $ | 15,690 |  | $ | 31,776 |  | $ | 24,342 |  | $ | 14,848 |  | $ | 22,372 |  | $ | — |  | $ | 114,277 |
Total other residential | $ | 5,249 |  | $ | 15,690 |  | $ | 31,776 |  | $ | 24,342 |  | $ | 14,848 |  | $ | 22,372 |  | $ | — |  | $ | 114,277 |
Installment and other consumer: |  |  |  |  |  |  |  |
Pass and Watch | $ | 6,038 |  | $ | 15,852 |  | $ | 7,074 |  | $ | 8,219 |  | $ | 4,873 |  | $ | 7,103 |  | $ | 1,828 |  | $ | 50,987 |
Substandard | — |  | — |  | — |  | — |  | — |  | 16 |  | — |  | 16 |
Total installment and other consumer | $ | 6,038 |  | $ | 15,852 |  | $ | 7,074 |  | $ | 8,219 |  | $ | 4,873 |  | $ | 7,119 |  | $ | 1,828 |  | $ | 51,003 |
Gross current period charge-offs | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 2 |  | $ | 2 |
Total loans: |  |  |  |  |  |  |  |
Pass and Watch | $ | 73,715 |  | $ | 383,169 |  | $ | 351,905 |  | $ | 291,009 |  | $ | 213,817 |  | $ | 586,603 |  | $ | 201,918 |  | $ | 2,102,136 |
Total Special Mention | $ | 6,215 |  | $ | 16,471 |  | $ | 1,213 |  | $ | 5,007 |  | $ | 19,510 |  | $ | 14,773 |  | $ | 69 |  | $ | 63,258 |
Total Substandard | $ | — |  | $ | — |  | $ | 8,738 |  | $ | — |  | $ | — |  | $ | 21,454 |  | $ | 6,158 |  | $ | 36,350 |
Total Doubtful | $ | — |  | $ | — |  | $ | 110 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 110 |
Totals | $ | 79,930 |  | $ | 399,640 |  | $ | 361,966 |  | $ | 296,016 |  | $ | 233,327 |  | $ | 622,830 |  | $ | 208,145 |  | $ | 2,201,854 |
Total gross current period charge-offs | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 2 |  | $ | 2 |
(in thousands) | Term Loans - Amortized Cost by Origination Year | Revolving Loans Amortized Cost |
December 31, 2021 | 2021 | 2020 | 2019 | 2018 | 2017 | Prior | Total
Commercial and industrial: |  |  |  |  |  |  |  |
Pass and Watch | $ | 96,643 |  | $ | 35,967 |  | $ | 25,754 |  | $ | 12,763 |  | $ | 2,729 |  | $ | 31,280 |  | $ | 90,744 |  | $ | 295,880 |
Special Mention | — |  | 1,700 |  | 584 |  | 273 |  | — |  | — |  | 2,088 |  | 4,645 |
Substandard | — |  | — |  | — |  | — |  | — |  | — |  | 1,077 |  | 1,077 |
Total commercial and industrial | $ | 96,643 |  | $ | 37,667 |  | $ | 26,338 |  | $ | 13,036 |  | $ | 2,729 |  | $ | 31,280 |  | $ | 93,909 |  | $ | 301,602 |
Commercial real estate, owner-occupied: |  |  |  |  |  |  |  |
Pass and Watch | $ | 58,395 |  | $ | 43,216 |  | $ | 49,485 |  | $ | 36,174 |  | $ | 42,430 |  | $ | 104,898 |  | $ | — |  | $ | 334,598 |
Special Mention | 16,748 |  | — |  | — |  | 7,846 |  | — |  | 16,996 |  | — |  | 41,590 |
Substandard | — |  | 7,155 |  | 285 |  | — |  | — |  | 8,603 |  | — |  | 16,043 |
Doubtful | — |  | 114 |  | — |  | — |  | — |  | — |  | — |  | 114 |
Total commercial real estate, owner-occupied | $ | 75,143 |  | $ | 50,485 |  | $ | 49,770 |  | $ | 44,020 |  | $ | 42,430 |  | $ | 130,497 |  | $ | — |  | $ | 392,345 |
Commercial real estate, investor-owned: |  |  |  |  |  |  |  |
Pass and Watch | $ | 225,722 |  | $ | 186,214 |  | $ | 187,418 |  | $ | 143,028 |  | $ | 75,419 |  | $ | 325,882 |  | $ | 84 |  | $ | 1,143,767 |
Special Mention | — |  | 1,214 |  | 2,714 |  | 11,773 |  | 1,787 |  | 9,540 |  | — |  | 27,028 |
Substandard | — |  | — |  | — |  | 695 |  | — |  | 17,531 |  | — |  | 18,226 |
Total commercial real estate, investor-owned | $ | 225,722 |  | $ | 187,428 |  | $ | 190,132 |  | $ | 155,496 |  | $ | 77,206 |  | $ | 352,953 |  | $ | 84 |  | $ | 1,189,021 |
Construction: |  |  |  |  |  |  |  |
Pass and Watch | $ | 31,269 |  | $ | 70,528 |  | $ | 8,935 |  | $ | 9,108 |  | $ | — |  | $ | — |  | $ | — |  | $ | 119,840 |
Total construction | $ | 31,269 |  | $ | 70,528 |  | $ | 8,935 |  | $ | 9,108 |  | $ | — |  | $ | — |  | $ | — |  | $ | 119,840 |
Home equity: |  |  |  |  |  |  |  |
Pass and Watch | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 10 |  | $ | 268 |  | $ | 87,693 |  | $ | 87,971 |
Substandard | — |  | — |  | — |  | — |  | — |  | 377 |  | 398 |  | 775 |
Total home equity | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 10 |  | $ | 645 |  | $ | 88,091 |  | $ | 88,746 |
Other residential: |  |  |  |  |  |  |  |
Pass and Watch | $ | 15,800 |  | $ | 31,981 |  | $ | 25,529 |  | $ | 15,411 |  | $ | 7,964 |  | $ | 17,873 |  | $ | — |  | $ | 114,558 |
Total other residential | $ | 15,800 |  | $ | 31,981 |  | $ | 25,529 |  | $ | 15,411 |  | $ | 7,964 |  | $ | 17,873 |  | $ | — |  | $ | 114,558 |
Installment and other consumer: |  |  |  |  |  |  |  |
Pass and Watch | $ | 17,207 |  | $ | 7,748 |  | $ | 9,436 |  | $ | 5,633 |  | $ | 1,123 |  | $ | 6,620 |  | $ | 1,766 |  | $ | 49,533 |
Total installment and other consumer | $ | 17,207 |  | $ | 7,748 |  | $ | 9,436 |  | $ | 5,633 |  | $ | 1,123 |  | $ | 6,620 |  | $ | 1,766 |  | $ | 49,533 |
Total loans: |  |  |  |  |  |  |  |
Pass and Watch | $ | 445,036 |  | $ | 375,654 |  | $ | 306,557 |  | $ | 222,117 |  | $ | 129,675 |  | $ | 486,821 |  | $ | 180,287 |  | $ | 2,146,147 |
Total Special Mention | $ | 16,748 |  | $ | 2,914 |  | $ | 3,298 |  | $ | 19,892 |  | $ | 1,787 |  | $ | 26,536 |  | $ | 2,088 |  | $ | 73,263 |
Total Substandard | $ | — |  | $ | 7,155 |  | $ | 285 |  | $ | 695 |  | $ | — |  | $ | 26,511 |  | $ | 1,475 |  | $ | 36,121 |
Doubtful | $ | — |  | $ | 114 |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 114 |
Totals | $ | 461,784 |  | $ | 385,837 |  | $ | 310,140 |  | $ | 242,704 |  | $ | 131,462 |  | $ | 539,868 |  | $ | 183,850 |  | $ | 2,255,645 |
The following table shows the amortized cost of loans by class, payment aging and non-accrual status as of March 31, 2022 and December 31, 2021.
Loan Aging Analysis by Class
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor-owned | Construction | Home equity | Other residential | Installment and other consumer | Total
March 31, 2022 |  |  |  |  |  |  |  |
30-59 days past due | $ | 435 |  | $ | 324 |  | $ | — |  | $ | — |  | $ | 399 |  | $ | 635 |  | $ | 337 |  | $ | 2,130 |
60-89 days past due | 341 |  | — |  | — |  | — |  | 100 |  | — |  | 2 |  | 443 |
90 days or more past due | — |  | — |  |  | — |  | 54 |  | — |  | 16 |  | 70 |
Total past due | 776 |  | 324 |  | — |  | — |  | 553 |  | 635 |  | 355 |  | 2,643 |
Current | 247,849 |  | 391,600 |  | 1,176,918 |  | 131,015 |  | 87,539 |  | 113,642 |  | 50,648 |  | 2,199,211 |
Total loans 1 | $ | 248,625 |  | $ | 391,924 |  | $ | 1,176,918 |  | $ | 131,015 |  | $ | 88,092 |  | $ | 114,277 |  | $ | 51,003 |  | $ | 2,201,854 |
Non-accrual loans 2 | $ | — |  | $ | 7,272 |  | $ | — |  | $ | — |  | $ | 390 |  | $ | — |  | $ | 16 |  | $ | 7,678 |
Non-accrual loans with no allowance | $ | — |  | $ | 7,272 |  | $ | — |  | $ | — |  | $ | 390 |  | $ | — |  | $ | 16 |  | $ | 7,678 |
December 31, 2021 |  |  |  |  |  |  |  |
30-59 days past due | $ | 2 |  | $ | — |  | $ | — |  | $ | — |  | $ | 498 |  | $ | — |  | $ | 1,036 |  | $ | 1,536 |
60-89 days past due | 394 |  | — |  | — |  | — |  | 67 |  | — |  | — |  | 461 |
90 days or more past due | 229 |  | — |  | — |  | — |  | 88 |  | — |  | — |  | 317 |
Total past due | 625 |  | — |  | — |  | — |  | 653 |  | — |  | 1,036 |  | 2,314 |
Current | 300,977 |  | 392,345 |  | 1,189,021 |  | 119,840 |  | 88,093 |  | 114,558 |  | 48,497 |  | 2,253,331 |
Total loans 1 | $ | 301,602 |  | $ | 392,345 |  | $ | 1,189,021 |  | $ | 119,840 |  | $ | 88,746 |  | $ | 114,558 |  | $ | 49,533 |  | $ | 2,255,645 |
Non-accrual loans 2 | $ | — |  | $ | 7,269 |  | $ | 694 |  | $ | — |  | $ | 413 |  | $ | — |  | $ | — |  | $ | 8,376 |
Non-accrual loans with no allowance | $ | — |  | $ | 7,269 |  | $ | 694 |  | $ | — |  | $ | 413 |  | $ | — |  | $ | — |  | $ | 8,376 |
1 There were no loans past due more than ninety days accruing interest at March 31, 2022. There were two SBA PPP loans past due more than ninety days totaling $229 thousand accruing interest as of December 31, 2021 for which we requested "guarantee" payment from the SBA. The SBA subsequently purchased both loans in January 2022. 2 None of the non-accrual loans as of March 31, 2022 or December 31, 2021 were earning interest on a cash basis. We recognized no interest income on non-accrual loans for the three months ended March 31, 2022 and 2021. There was one loan with amortized cost of $16 thousand placed on non-accrual status during the three months ended March 31, 2022 for which we reversed less than one thousand in interest income at the time of change in status. There were no loans placed on non-accrual status during the three months ended March 31, 2021. Collateral Dependent Loans The following table presents the amortized cost basis of individually analyzed collateral-dependent non-accrual loans by class at March 31, 2022 and December 31, 2021.
| Amortized Cost by Collateral Type |
(in thousands) | Commercial Real Estate | Residential Real Estate |  | Other | Total | Allowance for Credit Losses
March 31, 2022 |  |  |  |  |  |
Commercial real estate, owner-occupied | $ | 7,272 |  | $ | — |  |  | $ | — |  | $ | 7,272 |  | $ | — |
Home equity | — |  | 390 |  |  | — |  | 390 |  | — |
Installment and other consumer | — |  | — |  |  | 16 |  | 16 |  | $ | — |
Total | $ | 7,272 |  | $ | 390 |  |  | $ | 16 |  | $ | 7,678 |  | $ | — |
December 31, 2021 |  |  |  |  |  |
Commercial real estate, owner-occupied | $ | 7,269 |  | $ | — |  |  | $ | — |  | $ | 7,269 |  | $ | — |
Commercial real estate, investor-owned | 694 |  | — |  |  | — |  | 694 |  | — |
Home equity | — |  | 413 |  |  | — |  | 413 |  | — |
Total | $ | 7,963 |  | $ | 413 |  |  | $ | — |  | $ | 8,376 |  | $ | — |
No collateral-dependent loans were in process of foreclosure at March 31, 2022 or December 31, 2021. In addition, the weighted average loan-to-value of collateral dependent loans was approximately 69% at March 31, 2022 and 67% at December 31, 2021. Troubled Debt Restructuring Our loan portfolio includes certain loans modified in a troubled debt restructuring (“TDR”), where we have granted economic concessions to borrowers experiencing financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. TDRs on non-accrual status at the time of restructure may be returned to accruing status after management considers the borrower’s sustained repayment performance for a reasonable period, generally nine months, and obtains reasonable assurance of repayment and performance. We may remove a loan from TDR designation if it meets all of the following conditions: •The loan is subsequently refinanced or restructured at current market interest rates and the new terms are consistent with the treatment of creditworthy borrowers under regular underwriting standards; •The borrower is no longer considered to be in financial difficulty; •Performance on the loan is reasonably assured; and •Existing loan did not have any forgiveness of principal or interest. There were no loans removed from TDR designation during the three months ended March 31, 2022 and 2021. In accordance with section 4013 of the CARES Act, subsequently amended by section 541 of the 2020 Economic Aid Act, we elected to apply the temporary accounting relief provisions for loan modifications that met certain criteria, which would otherwise be designated as TDRs under existing GAAP. As of March 31, 2022, two borrowing relationships with three loans totaling $23.6 million were continuing to benefit from payment relief. The weighted average loan-to-value ratio of the remaining payment relief loans was approximately 44%. We accrue and recognize interest income on loans under payment relief based on the original contractual interest rates. When payments resume at the end of the relief period, the payments will generally be applied to accrued interest due until accrued interest is fully paid. We monitor the financial situation of these clients closely and expect them to resume payments as the economy continues to recover. The following table summarizes the amortized cost of TDR loans by loan class as of March 31, 2022 and December 31, 2021.
(in thousands) | March 31, 2022 | December 31, 2021
Commercial and industrial | $ | 1,180 |  | $ | 1,183 |
Commercial real estate, owner-occupied | 7,162 |  | 7,155 |
Commercial real estate, investor-owned | 175 |  | 179 |
Home equity | 379 |  | 386 |
Installment and other consumer | 596 |  | 607 |
Total 1 | $ | 9,492 |  | $ | 9,510 |
1 TDR loans on non-accrual status totaled $7.4 million at both March 31, 2022 and December 31, 2021. Unfunded commitments for TDR loans totaled $241 thousand and $441 thousand as of March 31, 2022 and December 31, 2021, respectively.
There were no loans modified in a TDR during the three months ended March 31, 2022 and 2021. During the three months ended March 31, 2022 and March 31, 2021, there were no defaults on loans that had been modified in a TDR within the prior twelve-month period. We report defaulted TDRs based on a payment default definition of more than ninety days past due. Allowance for Credit Losses on Loans Rollforward The following table discloses activity in the allowance for credit losses on loans for the periods presented.
Allowance for Credit Losses on Loans Rollforward
(in thousands) | Commercial and industrial | Commercial real estate, owner-occupied | Commercial real estate, investor-owned | Construction | Home equity | Other residential | Installment and other consumer | Unallocated | Total
Three months ended March 31, 2022 |  |  |  |  |  |  |
Beginning balance | $ | 1,709 |  | $ | 2,776 |  | $ | 12,739 |  | $ | 1,653 |  | $ | 595 |  | $ | 644 |  | $ | 621 |  | $ | 2,286 |  | $ | 23,023 |
Provision (reversal) | 72 |  | (154) |  | (438) |  | 56 |  | (46) |  | (16) |  | 22 |  | 19 |  | (485) |
Charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | (2) |  | — |  | (2) |
Recoveries | 3 |  | — |  | — |  | 8 |  | — |  | — |  | — |  | — |  | 11 |
Ending balance | $ | 1,784 |  | $ | 2,622 |  | $ | 12,301 |  | $ | 1,717 |  | $ | 549 |  | $ | 628 |  | $ | 641 |  | $ | 2,305 |  | $ | 22,547 |
Three months ended March 31, 2021 |  |  |  |  |  |  |
Beginning balance | $ | 2,530 |  | $ | 2,778 |  | $ | 12,682 |  | $ | 1,557 |  | $ | 738 |  | $ | 998 |  | $ | 291 |  | $ | 1,300 |  | $ | 22,874 |
Provision (reversal) | (880) |  | (474) |  | (1,826) |  | (254) |  | (218) |  | (241) |  | (36) |  | 1,000 |  | (2,929) |
Charge-offs | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |  | — |
Recoveries | 4 |  | — |  | — |  | 9 |  | — |  | — |  | — |  | — |  | 13 |
Ending balance | $ | 1,654 |  | $ | 2,304 |  | $ | 10,856 |  | $ | 1,312 |  | $ | 520 |  | $ | 757 |  | $ | 255 |  | $ | 2,300 |  | $ | 19,958 |
Pledged Loans Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1.295 billion and $1.330 billion at March 31, 2022 and December 31, 2021, respectively. In addition, we pledge eligible TIC loans, which totaled $102.2 million and $106.2 million at March 31, 2022 and December 31, 2021, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB"). For additional information, see Note 6, Borrowings. Related Party Loans The Bank has, and expects to have in the future, banking transactions in the ordinary course of its business with directors, officers, principal shareholders and their businesses or associates. These transactions, including loans, are granted on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to us. Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features. Related party loans totaled $5.1 million at March 31, 2022 and $7.9 million at December 31, 2021. In addition, undisbursed commitments to related parties totaled $562 thousand at March 31, 2022 and $8.6 million at December 31, 2021. The decreases in both the outstanding amount and undisbursed commitment as of March 31, 2022 were primarily due to a Director retirement in the first quarter.

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