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Loans and Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Loans and Allowance for Credit Losses | NOTE 4 – Loans and Allowance for Credit Losses The following table summarizes the composition of our loan portfolio. Total gross loans are recorded net of deferred loan fees and costs, which totaled $7.1 million as of September 30, 2023 and $7.3 million as of December 31, 2022.
Schedule of composition of our loan portfolio |  |  |  |  |  |
|  | September 30, 2023 |  |  | December 31, 2022 |
(dollars in thousands) Commercial [Member] |  | Amount |  |  | % of Total |  |  | Amount |  |  | % of Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE Owner occupied RE [Member] |  | $ | 637,038 |  |  |  | 17.9 | % |  | $ | 612,901 |  |  |  | 18.7 | %
Non-owner occupied RE Non-owner occupied RE [Member] |  |  | 937,749 |  |  |  | 26.4 | % |  |  | 862,579 |  |  |  | 26.3 | %
Construction Construction [Member] |  |  | 119,629 |  |  |  | 3.4 | % |  |  | 109,726 |  |  |  | 3.4 | %
Business Business [Member] |  |  | 500,253 |  |  |  | 14.1 | % |  |  | 468,112 |  |  |  | 14.3 | %
Total commercial loans Consumer [Member] |  |  | 2,194,669 |  |  |  | 61.8 | % |  |  | 2,053,318 |  |  |  | 62.7 | %
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate Real estate [Member] |  |  | 1,074,679 |  |  |  | 30.2 | % |  |  | 931,278 |  |  |  | 28.4 | %
Home equity Home equity [Member] |  |  | 180,856 |  |  |  | 5.1 | % |  |  | 179,300 |  |  |  | 5.5 | %
Construction Construction [Member] |  |  | 54,210 |  |  |  | 1.5 | % |  |  | 80,415 |  |  |  | 2.5 | %
Other Other [Member] |  |  | 49,218 |  |  |  | 1.4 | % |  |  | 29,052 |  |  |  | 0.9 | %
Total consumer loans |  |  | 1,358,963 |  |  |  | 38.2 | % |  |  | 1,220,045 |  |  |  | 37.3 | %
Total gross loans, net of deferred fees |  |  | 3,553,632 |  |  |  | 100.0 | % |  |  | 3,273,363 |  |  |  | 100.0 | %
Less—allowance for credit losses |  |  | (41,131 | ) |  |  |  |  |  |  | (38,639 | ) |  |  |  |
Total loans, net |  | $ | 3,512,501 |  |  |  |  |  |  | $ | 3,234,724 |  |  |  |  |
Maturities and Sensitivity of Loans to Changes in Interest Rates The information in the following tables summarizes the loan maturity distribution by type and related interest rate characteristics based on the contractual maturities of individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may differ from the maturities reflected below, because borrowers have the right to prepay obligations with or without prepayment penalties.
Schedule of loan maturity distribution by type and related interest rate |  |  |  |  | September 30, 2023 |
(dollars in thousands) |  | One year or less |  |  | After one but within five years |  |  | After five but within fifteen years |  |  | After fifteen years |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 13,679 |  |  |  | 177,138 |  |  |  | 404,693 |  |  |  | 41,528 |  |  |  | 637,038 |
Non-owner occupied RE |  |  | 66,746 |  |  |  | 501,700 |  |  |  | 343,953 |  |  |  | 25,350 |  |  |  | 937,749 |
Construction |  |  | 23,899 |  |  |  | 44,452 |  |  |  | 51,278 |  |  |  | - |  |  |  | 119,629 |
Business |  |  | 106,126 |  |  |  | 198,150 |  |  |  | 191,559 |  |  |  | 4,418 |  |  |  | 500,253 |
Total commercial loans |  |  | 210,450 |  |  |  | 921,440 |  |  |  | 991,483 |  |  |  | 71,296 |  |  |  | 2,194,669 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 8,646 |  |  |  | 50,898 |  |  |  | 304,890 |  |  |  | 710,245 |  |  |  | 1,074,679 |
Home equity |  |  | 1,996 |  |  |  | 24,720 |  |  |  | 149,252 |  |  |  | 4,888 |  |  |  | 180,856 |
Construction |  |  | - |  |  |  | 259 |  |  |  | 31,796 |  |  |  | 22,155 |  |  |  | 54,210 |
Other |  |  | 12,945 |  |  |  | 33,082 |  |  |  | 2,376 |  |  |  | 815 |  |  |  | 49,218 |
Total consumer loans |  |  | 23,587 |  |  |  | 108,959 |  |  |  | 488,314 |  |  |  | 738,103 |  |  |  | 1,358,963 |
Total gross loans, net of deferred fees |  | $ | 234,037 |  |  |  | 1,030,399 |  |  |  | 1,479,797 |  |  |  | 809,399 |  |  |  | 3,553,632 |
|  |  |  |  |  |  |  | December 31, 2022 |
(dollars in thousands) |  | One year or less |  |  | After one but within five years |  |  | After five but within fifteen years |  |  | After fifteen years |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | 10,574 |  |  |  | 133,017 |  |  |  | 420,881 |  |  |  | 48,429 |  |  |  | 612,901 |
Non-owner occupied RE |  |  | 44,570 |  |  |  | 419,976 |  |  |  | 371,208 |  |  |  | 26,825 |  |  |  | 862,579 |
Construction |  |  | 5,509 |  |  |  | 36,537 |  |  |  | 61,009 |  |  |  | 6,671 |  |  |  | 109,726 |
Business |  |  | 96,157 |  |  |  | 194,489 |  |  |  | 173,259 |  |  |  | 4,207 |  |  |  | 468,112 |
Total commercial loans |  |  | 156,810 |  |  |  | 784,019 |  |  |  | 1,026,357 |  |  |  | 86,132 |  |  |  | 2,053,318 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 12,137 |  |  |  | 38,948 |  |  |  | 260,005 |  |  |  | 620,188 |  |  |  | 931,278 |
Home equity |  |  | 1,336 |  |  |  | 20,933 |  |  |  | 151,696 |  |  |  | 5,335 |  |  |  | 179,300 |
Construction |  |  | 665 |  |  |  | 182 |  |  |  | 23,788 |  |  |  | 55,780 |  |  |  | 80,415 |
Other |  |  | 3,926 |  |  |  | 21,890 |  |  |  | 2,458 |  |  |  | 778 |  |  |  | 29,052 |
Total consumer loans |  |  | 18,064 |  |  |  | 81,953 |  |  |  | 437,947 |  |  |  | 682,081 |  |  |  | 1,220,045 |
Total gross loans, net of deferred fees |  | $ | 174,874 |  |  |  | 865,972 |  |  |  | 1,464,304 |  |  |  | 768,213 |  |  |  | 3,273,363 |
The following table summarizes the loans due after one year by category.
Schedule of composition of gross loans by rate type |  |  |  |  |  |  |  |  |
|  | September 30, 2023 |  |  | December 31, 2022 |
|  | Interest Rate |  |  |  |  |  | Interest Rate |
(dollars in thousands) |  | Fixed |  |  | Floating or Adjustable |  |  | Fixed |  |  | Floating or Adjustable |
CommercialCommercial [Member] |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied REOwner occupied RE [Member] |  | $ | 614,563 |  |  |  | 8,796 |  |  |  | 598,513 |  |  |  | 3,814 |
Non-owner occupied RENon-owner occupied RE [Member] |  |  | 787,479 |  |  |  | 83,524 |  |  |  | 742,763 |  |  |  | 75,246 |
ConstructionConstruction [Member] |  |  | 65,517 |  |  |  | 30,213 |  |  |  | 90,246 |  |  |  | 13,971 |
BusinessBusiness [Member] |  |  | 300,464 |  |  |  | 93,663 |  |  |  | 298,866 |  |  |  | 73,089 |
Total commercial loans |  |  | 1,768,023 |  |  |  | 216,196 |  |  |  | 1,730,388 |  |  |  | 166,120 |
ConsumerConsumer [Member] |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estateReal estate [Member] |  |  | 1,066,033 |  |  |  | - |  |  |  | 919,130 |  |  |  | 11 |
Home equityHome equity [Member] |  |  | 12,403 |  |  |  | 166,457 |  |  |  | 14,173 |  |  |  | 163,791 |
ConstructionConstruction [Member] |  |  | 54,210 |  |  |  | - |  |  |  | 79,750 |  |  |  | - |
OtherOther [Member] |  |  | 11,916 |  |  |  | 24,357 |  |  |  | 19,113 |  |  |  | 6,013 |
Total consumer loans |  |  | 1,144,562 |  |  |  | 190,814 |  |  |  | 1,032,166 |  |  |  | 169,815 |
Total gross loans, net of deferred fees |  | $ | 2,912,585 |  |  |  | 407,010 |  |  |  | 2,762,554 |  |  |  | 335,935 |
Credit Quality Indicators The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type. A description of the general characteristics of the risk grades is as follows:
| · | Pass— A pass loan ranges from minimal to average credit risk; however, still has acceptable credit risk.
| · | Watch—A watch loan exhibits above average credit risk due to minor weaknesses and warrants closer scrutiny by management.
| · | Special mention—A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.
| · | Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, which may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
| · | Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.
The following table presents loan balances classified by credit quality indicators by year of origination as of September 30, 2023.
Schedule of breakdown of outstanding loans by risk category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | September 30, 2023 |
(dollars in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Revolving |  |  | Revolving Converted to Term |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 38,310 |  |  |  | 178,722 |  |  |  | 143,057 |  |  |  | 67,509 |  |  |  | 62,216 |  |  |  | 112,528 |  |  |  | - |  |  |  | 167 |  |  |  | 602,509 |
Watch |  |  | - |  |  |  | 3,482 |  |  |  | 464 |  |  |  | 16,074 |  |  |  | 3,551 |  |  |  | 6,821 |  |  |  | - |  |  |  | - |  |  |  | 30,392 |
Special Mention |  |  | - |  |  |  | 186 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,074 |  |  |  | - |  |  |  | - |  |  |  | 3,260 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 877 |  |  |  | - |  |  |  | - |  |  |  | 877 |
Total Owner occupied RE |  |  | 38,310 |  |  |  | 182,390 |  |  |  | 143,521 |  |  |  | 83,583 |  |  |  | 65,767 |  |  |  | 123,300 |  |  |  | - |  |  |  | 167 |  |  |  | 637,038 |
Non-owner occupied RE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 79,567 |  |  |  | 302,942 |  |  |  | 169,567 |  |  |  | 109,566 |  |  |  | 59,595 |  |  |  | 173,400 |  |  |  | 257 |  |  |  | - |  |  |  | 894,894 |
Watch |  |  | 772 |  |  |  | 828 |  |  |  | 10,221 |  |  |  | - |  |  |  | 5,393 |  |  |  | 6,610 |  |  |  | - |  |  |  | - |  |  |  | 23,824 |
Special Mention |  |  | - |  |  |  | - |  |  |  | 199 |  |  |  | - |  |  |  | 8,267 |  |  |  | 878 |  |  |  | - |  |  |  | - |  |  |  | 9,344 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,073 |  |  |  | 1,614 |  |  |  | - |  |  |  | - |  |  |  | 9,687 |
Total Non-owner occupied RE |  |  | 80,339 |  |  |  | 303,770 |  |  |  | 179,987 |  |  |  | 109,566 |  |  |  | 81,328 |  |  |  | 182,502 |  |  |  | 257 |  |  |  | - |  |  |  | 937,749 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 13,921 |  |  |  | 72,528 |  |  |  | 22,179 |  |  |  | 9,897 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 118,525 |
Watch |  |  | - |  |  |  | 1,104 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,104 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Construction |  |  | 13,921 |  |  |  | 73,632 |  |  |  | 22,179 |  |  |  | 9,897 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 119,629 |
Business |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 41,808 |  |  |  | 136,635 |  |  |  | 50,098 |  |  |  | 19,637 |  |  |  | 18,214 |  |  |  | 53,775 |  |  |  | 144,671 |  |  |  | 1,099 |  |  |  | 465,937 |
Watch |  |  | 282 |  |  |  | 14,431 |  |  |  | 1,955 |  |  |  | 1,114 |  |  |  | 913 |  |  |  | 3,958 |  |  |  | 6,697 |  |  |  | - |  |  |  | 29,350 |
Special Mention |  |  | 101 |  |  |  | 977 |  |  |  | 77 |  |  |  | 793 |  |  |  | 211 |  |  |  | 234 |  |  |  | - |  |  |  | 98 |  |  |  | 2,491 |
Substandard |  |  | - |  |  |  | 490 |  |  |  | 164 |  |  |  | - |  |  |  | 153 |  |  |  | 1,199 |  |  |  | 447 |  |  |  | 22 |  |  |  | 2,475 |
Total Business |  |  | 42,191 |  |  |  | 152,533 |  |  |  | 52,294 |  |  |  | 21,544 |  |  |  | 19,491 |  |  |  | 59,166 |  |  |  | 151,815 |  |  |  | 1,219 |  |  |  | 500,253 |
Total Commercial loans |  |  | 174,761 |  |  |  | 712,325 |  |  |  | 397,981 |  |  |  | 224,590 |  |  |  | 166,586 |  |  |  | 364,968 |  |  |  | 152,072 |  |  |  | 1,386 |  |  |  | 2,194,669 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 126,174 |  |  |  | 273,593 |  |  |  | 283,538 |  |  |  | 178,459 |  |  |  | 66,468 |  |  |  | 108,094 |  |  |  | - |  |  |  | - |  |  |  | 1,036,326 |
Watch |  |  | 490 |  |  |  | 5,684 |  |  |  | 7,877 |  |  |  | 3,941 |  |  |  | 2,058 |  |  |  | 4,098 |  |  |  | - |  |  |  | - |  |  |  | 24,148 |
Special Mention |  |  | - |  |  |  | 2,319 |  |  |  | 1,663 |  |  |  | 1,301 |  |  |  | 2,407 |  |  |  | 2,799 |  |  |  | - |  |  |  | - |  |  |  | 10,489 |
Substandard |  |  | - |  |  |  | 186 |  |  |  | 637 |  |  |  | 820 |  |  |  | 323 |  |  |  | 1,750 |  |  |  | - |  |  |  | - |  |  |  | 3,716 |
Total Real estate |  |  | 126,664 |  |  |  | 281,782 |  |  |  | 293,715 |  |  |  | 184,521 |  |  |  | 71,256 |  |  |  | 116,741 |  |  |  | - |  |  |  | - |  |  |  | 1,074,679 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 168,399 |  |  |  | - |  |  |  | 168,399 |
Watch |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 6,870 |  |  |  | - |  |  |  | 6,870 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,150 |  |  |  | - |  |  |  | 4,150 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,437 |  |  |  | - |  |  |  | 1,437 |
Total Home equity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 180,856 |  |  |  | - |  |  |  | 180,856 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 9,798 |  |  |  | 35,606 |  |  |  | 8,806 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 54,210 |
Watch |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Construction |  |  | 9,798 |  |  |  | 35,606 |  |  |  | 8,806 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 54,210 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 923 |  |  |  | 2,643 |  |  |  | 2,578 |  |  |  | 1,505 |  |  |  | 846 |  |  |  | 2,726 |  |  |  | 36,718 |  |  |  | - |  |  |  | 47,939 |
Watch |  |  | 44 |  |  |  | 33 |  |  |  | 352 |  |  |  | 4 |  |  |  | 1 |  |  |  | 167 |  |  |  | 94 |  |  |  | - |  |  |  | 695 |
Special Mention |  |  | - |  |  |  | 334 |  |  |  | - |  |  |  | - |  |  |  | 27 |  |  |  | 84 |  |  |  | 51 |  |  |  | - |  |  |  | 496 |
Substandard |  |  | - |  |  |  | - |  |  |  | 80 |  |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | 88 |
Total Other |  |  | 967 |  |  |  | 3,010 |  |  |  | 3,010 |  |  |  | 1,509 |  |  |  | 875 |  |  |  | 2,977 |  |  |  | 36,870 |  |  |  | - |  |  |  | 49,218 |
Total Consumer loans |  |  | 137,429 |  |  |  | 320,398 |  |  |  | 305,531 |  |  |  | 186,030 |  |  |  | 72,131 |  |  |  | 119,718 |  |  |  | 217,726 |  |  |  | - |  |  |  | 1,358,963 |
Total loans |  | $ | 312,190 |  |  |  | 1,032,723 |  |  |  | 703,512 |  |  |  | 410,620 |  |  |  | 238,717 |  |  |  | 484,686 |  |  |  | 369,798 |  |  |  | 1,386 |  |  |  | 3,553,632 |
Current period gross write-offs |  |  | - |  |  |  | (200 | ) |  |  | - |  |  |  | (28 | ) |  |  | - |  |  |  | (10 | ) |  |  | (405 | ) |  |  | - |  |  |  | (643 | )
The following table presents loan balances classified by credit quality indicators by year of origination as of December 31, 2022.
|  | December 31, 2022 |
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Revolving |  |  | Revolving Converted to Term |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 169,083 |  |  |  | 122,654 |  |  |  | 85,867 |  |  |  | 66,299 |  |  |  | 36,718 |  |  |  | 93,915 |  |  |  | - |  |  |  | - |  |  |  | 574,536 |
Watch |  |  | 14,648 |  |  |  | 479 |  |  |  | 9,339 |  |  |  | 3,658 |  |  |  | - |  |  |  | 6,792 |  |  |  | - |  |  |  | - |  |  |  | 34,916 |
Special Mention |  |  | 200 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,960 |  |  |  | - |  |  |  | - |  |  |  | 3,160 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 289 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 289 |
Total Owner occupied RE |  |  | 183,931 |  |  |  | 123,133 |  |  |  | 95,206 |  |  |  | 69,957 |  |  |  | 37,007 |  |  |  | 103,667 |  |  |  | - |  |  |  | - |  |  |  | 612,901 |
Non-owner occupied RE |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 281,890 |  |  |  | 169,599 |  |  |  | 113,264 |  |  |  | 59,550 |  |  |  | 79,722 |  |  |  | 106,967 |  |  |  | 604 |  |  |  | 137 |  |  |  | 811,733 |
Watch |  |  | 1,061 |  |  |  | 9,491 |  |  |  | - |  |  |  | 10,683 |  |  |  | 1,408 |  |  |  | 11,660 |  |  |  | - |  |  |  | - |  |  |  | 34,303 |
Special Mention |  |  | - |  |  |  | 202 |  |  |  | - |  |  |  | 6,087 |  |  |  | - |  |  |  | 930 |  |  |  | - |  |  |  | - |  |  |  | 7,219 |
Substandard |  |  | - |  |  |  | 134 |  |  |  | - |  |  |  | 7,992 |  |  |  | 327 |  |  |  | 871 |  |  |  | - |  |  |  | - |  |  |  | 9,324 |
Total Non-owner occupied RE |  |  | 282,951 |  |  |  | 179,426 |  |  |  | 113,264 |  |  |  | 84,312 |  |  |  | 81,457 |  |  |  | 120,428 |  |  |  | 604 |  |  |  | 137 |  |  |  | 862,579 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 48,420 |  |  |  | 55,129 |  |  |  | 4,811 |  |  |  | 247 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 108,607 |
Watch |  |  | 1,119 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,119 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Construction |  |  | 49,539 |  |  |  | 55,129 |  |  |  | 4,811 |  |  |  | 247 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 109,726 |
Business |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 136,489 |  |  |  | 57,804 |  |  |  | 29,864 |  |  |  | 21,808 |  |  |  | 35,249 |  |  |  | 28,914 |  |  |  | 136,337 |  |  |  | 709 |  |  |  | 447,174 |
Watch |  |  | 3,186 |  |  |  | 2,058 |  |  |  | 1,318 |  |  |  | 1,282 |  |  |  | 179 |  |  |  | 3,074 |  |  |  | 3,783 |  |  |  | 439 |  |  |  | 15,319 |
Special Mention |  |  | 1,137 |  |  |  | 260 |  |  |  | 386 |  |  |  | 210 |  |  |  | - |  |  |  | 252 |  |  |  | 115 |  |  |  | 642 |  |  |  | 3,002 |
Substandard |  |  | 498 |  |  |  | - |  |  |  | 188 |  |  |  | 233 |  |  |  | 315 |  |  |  | 911 |  |  |  | 472 |  |  |  | - |  |  |  | 2,617 |
Total Business |  |  | 141,310 |  |  |  | 60,122 |  |  |  | 31,756 |  |  |  | 23,533 |  |  |  | 35,743 |  |  |  | 33,151 |  |  |  | 140,707 |  |  |  | 1,790 |  |  |  | 468,112 |
Total Commercial loans |  |  | 657,731 |  |  |  | 417,810 |  |  |  | 245,037 |  |  |  | 178,049 |  |  |  | 154,207 |  |  |  | 257,246 |  |  |  | 141,311 |  |  |  | 1,927 |  |  |  | 2,053,318 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 243,589 |  |  |  | 269,565 |  |  |  | 189,075 |  |  |  | 72,499 |  |  |  | 39,042 |  |  |  | 76,172 |  |  |  | - |  |  |  | - |  |  |  | 889,942 |
Watch |  |  | 6,196 |  |  |  | 8,256 |  |  |  | 3,847 |  |  |  | 2,278 |  |  |  | 494 |  |  |  | 3,671 |  |  |  | - |  |  |  | - |  |  |  | 24,742 |
Special Mention |  |  | 3,114 |  |  |  | 1,938 |  |  |  | 2,644 |  |  |  | 2,258 |  |  |  | 955 |  |  |  | 2,639 |  |  |  | - |  |  |  | - |  |  |  | 13,548 |
Substandard |  |  | - |  |  |  | 648 |  |  |  | 227 |  |  |  | 341 |  |  |  | 408 |  |  |  | 1,422 |  |  |  | - |  |  |  | - |  |  |  | 3,046 |
Total Real estate |  |  | 252,899 |  |  |  | 280,407 |  |  |  | 195,793 |  |  |  | 77,376 |  |  |  | 40,899 |  |  |  | 83,904 |  |  |  | - |  |  |  | - |  |  |  | 931,278 |
Home equity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 165,847 |  |  |  | - |  |  |  | 165,847 |
Watch |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,226 |  |  |  | - |  |  |  | 7,226 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,055 |  |  |  | - |  |  |  | 4,055 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,172 |  |  |  | - |  |  |  | 2,172 |
Total Home equity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 179,300 |  |  |  | - |  |  |  | 179,300 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 41,138 |  |  |  | 34,039 |  |  |  | 4,923 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 80,100 |
Watch |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 315 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 315 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Construction |  |  | 41,138 |  |  |  | 34,039 |  |  |  | 4,923 |  |  |  | 315 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 80,415 |
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | 3,894 |  |  |  | 3,038 |  |  |  | 1,702 |  |  |  | 1,534 |  |  |  | 341 |  |  |  | 3,015 |  |  |  | 14,465 |  |  |  | - |  |  |  | 27,989 |
Watch |  |  | 46 |  |  |  | 367 |  |  |  | 15 |  |  |  | 5 |  |  |  | 16 |  |  |  | 175 |  |  |  | 93 |  |  |  | - |  |  |  | 717 |
Special Mention |  |  | 94 |  |  |  | - |  |  |  | - |  |  |  | 44 |  |  |  | 75 |  |  |  | 23 |  |  |  | 96 |  |  |  | - |  |  |  | 332 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5 |  |  |  | - |  |  |  | - |  |  |  | 9 |  |  |  | - |  |  |  | 14 |
Total Other |  |  | 4,034 |  |  |  | 3,405 |  |  |  | 1,717 |  |  |  | 1,588 |  |  |  | 432 |  |  |  | 3,213 |  |  |  | 14,663 |  |  |  | - |  |  |  | 29,052 |
Total Consumer loans |  |  | 298,071 |  |  |  | 317,851 |  |  |  | 202,433 |  |  |  | 79,279 |  |  |  | 41,331 |  |  |  | 87,117 |  |  |  | 193,963 |  |  |  | - |  |  |  | 1,220,045 |
Total loans |  | $ | 955,802 |  |  |  | 735,661 |  |  |  | 447,470 |  |  |  | 257,328 |  |  |  | 195,538 |  |  |  | 344,363 |  |  |  | 335,274 |  |  |  | 1,927 |  |  |  | 3,273,363 |
Current period gross write-offs |  |  | - |  |  |  | (91 | ) |  |  | - |  |  |  | (23 | ) |  |  | - |  |  |  | (32 | ) |  |  | (339 | ) |  |  | - |  |  |  | (485 | )
The following tables present loan balances by age and payment status.
Schedule of loan balances by payment status |  |  |  |  |  |  |  |  |  |  |  |
|  | September 30, 2023 |
(dollars in thousands) |  | Accruing 30 -59 days past due |  |  | Accruing 60-89 days past due |  |  | Accruing 90 days or more past due |  |  | Nonaccrual loans |  |  | Accruing current |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 637,038 |  |  |  | 637,038 |
Non-owner occupied RE |  |  | 440 |  |  |  | - |  |  |  | - |  |  |  | 1,615 |  |  |  | 935,694 |  |  |  | 937,749 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 119,629 |  |  |  | 119,629 |
Business |  |  | 347 |  |  |  | 27 |  |  |  | - |  |  |  | 404 |  |  |  | 499,475 |  |  |  | 500,253 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 1,210 |  |  |  | - |  |  |  | - |  |  |  | 1,228 |  |  |  | 1,072,241 |  |  |  | 1,074,679 |
Home equity |  |  | 226 |  |  |  | 182 |  |  |  | - |  |  |  | 1,068 |  |  |  | 179,380 |  |  |  | 180,856 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 54,210 |  |  |  | 54,210 |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 49,218 |  |  |  | 49,218 |
Total loans |  | $ | 2,223 |  |  |  | 209 |  |  |  | - |  |  |  | 4,315 |  |  |  | 3,546,885 |  |  |  | 3,553,632 |
Total loans over 90 days past due |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,572 |
|  | December 31, 2022 |
(dollars in thousands) |  | Accruing 30- 59 days past due |  |  | Accruing 60-89 days past due |  |  | Accruing 90 days or more past due |  |  | Nonaccrual loans |  |  | Accruing current |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 612,901 |  |  |  | 612,901 |
Non-owner occupied RE |  |  | 119 |  |  |  | 757 |  |  |  | - |  |  |  | 247 |  |  |  | 861,456 |  |  |  | 862,579 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 109,726 |  |  |  | 109,726 |
Business |  |  | 24 |  |  |  | 1 |  |  |  | - |  |  |  | 182 |  |  |  | 467,905 |  |  |  | 468,112 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 330 |  |  |  | - |  |  |  | - |  |  |  | 1,099 |  |  |  | 929,849 |  |  |  | 931,278 |
Home equity |  |  | 50 |  |  |  | - |  |  |  | - |  |  |  | 1,099 |  |  |  | 178,151 |  |  |  | 179,300 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 80,415 |  |  |  | 80,415 |
Other |  |  | 88 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 28,964 |  |  |  | 29,052 |
Total loans |  | $ | 611 |  |  |  | 758 |  |  |  | - |  |  |  | 2,627 |  |  |  | 3,269,367 |  |  |  | 3,273,363 |
Total loans over 90 days past due |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 402 |
As of September 30, 2023 and December 31, 2022, loans 30 days or more past due represented 0.13% and 0.11% of the Company’s total loan portfolio, respectively. Commercial loans 30 days or more past due were 0.05% and 0.03% of the Company’s total loan portfolio as of September 30, 2023 and December 31, 2022, respectively. Consumer loans 30 days or more past due were 0.08% and 0.08% of total loans as of September 30, 2023 and December 31, 2022, respectively. The table below summarizes nonaccrual loans by major categories for the periods presented.
Schedule nonaccrual loans by major categories |  | September 30, 2023 |  |  |  |  |  | December 31, 2022 |
|  | Nonaccrual |  |  | Nonaccrual |  |  |  |  |  | Nonaccrual |  |  | Nonaccrual |  |  |  |
|  | loans |  |  | loans |  |  | Total |  |  | loans |  |  | loans |  |  | Total |
|  | with no |  |  | with an |  |  | nonaccrual |  |  | with no |  |  | with an |  |  | nonaccrual |
(dollars in thousands) |  | allowance |  |  | allowance |  |  | loans |  |  | allowance |  |  | allowance |  |  | loans |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-owner occupied RE |  |  | 379 |  |  |  | 1,236 |  |  |  | 1,615 |  |  |  | 114 |  |  |  | 133 |  |  |  | 247 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Business |  |  | 170 |  |  |  | 234 |  |  |  | 404 |  |  |  | - |  |  |  | 182 |  |  |  | 182 |
Total commercial |  |  | 549 |  |  |  | 1,470 |  |  |  | 2,019 |  |  |  | 114 |  |  |  | 315 |  |  |  | 429 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 227 |  |  |  | 1,001 |  |  |  | 1,228 |  |  |  | - |  |  |  | 1,099 |  |  |  | 1,099 |
Home equity |  |  | 181 |  |  |  | 887 |  |  |  | 1,068 |  |  |  | 194 |  |  |  | 905 |  |  |  | 1,099 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total consumer |  |  | 408 |  |  |  | 1,888 |  |  |  | 2,296 |  |  |  | 194 |  |  |  | 2,004 |  |  |  | 2,198 |
Total nonaccrual loans |  |  | 957 |  |  |  | 3,358 |  |  |  | 4,315 |  |  |  | 308 |  |  |  | 2,319 |  |  |  | 2,627 |
We did not recognize interest income on nonaccrual loans for the three months ended September 30, 2023 and September 30, 2022. The accrued interest reversed during the three months ended September 30, 2023 and September 30, 2022 was not material. We did not recognize interest income on nonaccrual loans for the nine months ended September 30, 2023 and September 30, 2022. Accrued interest of $35,000 was reversed during the nine months ended September 30, 2023 and $16,000 was reversed during the nine months ended September 30, 2022. The table below summarizes information regarding nonperforming assets.
Schedule of nonperforming assets, including nonaccruing TDRs |  |  |  |  |  |  |  |
(dollars in thousands) |  | September 30, 2023 |  |  | December 31, 2022 |
Nonaccrual loans |  | $ | 4,315 |  |  |  | 2,627 |
Other real estate owned |  |  | - |  |  |  | - |
Total nonperforming assets |  | $ | 4,315 |  |  |  | 2,627 |
Nonperforming assets as a percentage of: |  |  |  |  |  |  |  |
Total assets |  |  | 0.11 | % |  |  | 0.07 | %
Gross loans |  |  | 0.12 | % |  |  | 0.08 | %
Total loans over 90 days past due |  | $ | 1,572 |  |  |  | 402 |
Loans over 90 days past due and still accruing |  |  | - |  |  |  | - |
Accruing troubled debt restructurings |  |  | - |  |  |  | 4,503 |
Modifications to Borrowers Experiencing Financial Difficulty The Company adopted Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty. The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. The following table shows the amortized cost basis of the loans modified to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023, disaggregated by class of loans and type of concession granted and describes the financial effect of the modifications made to borrowers experiencing financial difficulty.
Schedule of amortized cost basis of loans |  |  | Term Extension
(dollars in thousands) | Amortized Cost Basis | % of Total Loan Type | Financial Effect
Commercial Business | $ 329 | 0.07% | Added a 1-year term to both of the loans modified. One loan was granted an extended amortization due to the inability to pay on a 3-year amortization. The other loan was given an interest only period due to the ability to pay only interest to get the loan renewed.
Neither of the two loans modified had a payment default during the period. The Company closely monitors the performance of the loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Both loans are in current payment status since the loan modification occurred in the third quarter of 2023. There have been no commitments to lend additional funds to the borrowers experiencing financial difficulty as of September 30, 2023. Allowance for Credit Losses The Company maintains an allowance for credit losses to provide for expected credit losses. Losses are charged against the allowance when management believes that the principal is uncollectable. Subsequent recoveries, if any, are credited to the allowance. Allocations of the allowance are made for specific loans and for pools of similar types of loans, although the entire allowance is available for any loan that, in management’s judgment, should be charged against the allowance. A provision for credit losses is taken based on management’s ongoing evaluation of the appropriate allowance balance. A formal evaluation of the adequacy of the credit loss allowance is conducted quarterly. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. Management believes the level of the allowance for credit losses is adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date. The allowance is increased through provision for credit losses and decreased by charge-offs, net of recoveries of amounts previously charged-off. The Company uses a lifetime probability of default and loss given default modeling approach to estimate the allowance for credit losses on loans. This method uses historical correlations between default experience and the age of loans to forecast defaults and losses, assuming that a loan in a pool shares similar risk characteristics such as loan product type, risk rating and loan age, and demonstrates similar default characteristics as other loans in that pool, as the loan progresses through its lifecycle. The Company calculates lifetime probability of default and loss given default rates based on historical loss experience, which is used to calculate expected losses based on the pool’s loss rate and the age of loans in the pool. Management believes that the Company’s historical loss experience provides the best basis for its assessment of expected credit losses to determine the allowance for credit losses. The Company uses its own internal data to measure historical credit loss experience within the pools with similar risk characteristics over an economic cycle. The probability of default and loss given default method also includes assumptions of observed migration over the lifetime of the underlying loan data. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Management also considers further adjustments to historical loss information for current conditions and reasonable and supportable forecasts that differ from the conditions that exist for the period over which historical information is evaluated as well as other changes in qualitative factors not inherently considered in the quantitative analyses. The Company generally utilizes a four-quarter forecast period in evaluating the appropriateness of the reasonable and supportable forecast scenarios which are incorporated through qualitative adjustments. There is immediate reversion to historical loss rates. The qualitative categories and the measurements used to quantify the risks within each of these categories are subjectively selected by management but measured by objective measurements period over period. The data for each measurement may be obtained from internal or external sources. The current period measurements are evaluated and assigned a factor commensurate with the current level of risk relative to past measurements over time. The resulting qualitative adjustments are applied to the relevant collectively evaluated loan pools. These adjustments are based upon quarterly trend assessments in certain economic factors such as labor, inflation, consumer sentiment and real disposable income, as well as associate retention and turnover, portfolio concentrations, and growth characteristics. The qualitative analysis increases or decreases the allowance allocation for each loan pool based on the assessment of factors described above. The following tables summarize the activity related to the allowance for credit losses for the three and nine months ended September 30, 2023 and September 30, 2022 under the CECL methodology.
Schedule of activity related to the allowance for credit losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  | Three months ended September 30, 2023 |
|  | Commercial |  |  | Consumer |  |  |  |
(dollars in thousands) |  | Owner occupied RE |  |  | Non- owner occupied RE |  |  | Construction |  |  | Business |  |  | Real Estate |  |  | Home Equity |  |  | Construction |  |  | Other |  |  | Total |
Balance, beginning of period |  | $ | 5,896 |  |  |  | 11,584 |  |  |  | 1,331 |  |  |  | 8,152 |  |  |  | 10,395 |  |  |  | 2,521 |  |  |  | 684 |  |  |  | 542 |  |  |  | 41,105 |
Provision for credit losses |  |  | 300 |  |  |  | (247 | ) |  |  | (34 | ) |  |  | (148 | ) |  |  | 191 |  |  |  | (20 | ) |  |  | (102 | ) |  |  | (40 | ) |  |  | (100 | )
Loan charge-offs |  |  | - |  |  |  | (1 | ) |  |  | - |  |  |  | (42 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (43 | )
Loan recoveries |  |  | - |  |  |  | 154 |  |  |  | - |  |  |  | 13 |  |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | 169 |
Net loan recoveries (charge-offs) |  |  | - |  |  |  | 153 |  |  |  | - |  |  |  | (29 | ) |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | 126 |
Balance, end of period |  | $ | 6,196 |  |  |  | 11,490 |  |  |  | 1,297 |  |  |  | 7,975 |  |  |  | 10,586 |  |  |  | 2,503 |  |  |  | 582 |  |  |  | 502 |  |  |  | 41,131 |
Net recoveries to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.01 | )%
Allowance for credit losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1.16 | %
Allowance for credit losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 953.25 | %
|  |  |  |  |  |  |  |  |  |  | Three months ended September 30, 2022 |
|  | Commercial |  |  | Consumer |  |  |  |
(dollars in thousands) |  | Owner occupied RE |  |  | Non- owner occupied RE |  |  | Construction |  |  | Business |  |  | Real Estate |  |  | Home Equity |  |  | Construction |  |  | Other |  |  | Total |
Balance, beginning of period |  | $ | 4,829 |  |  |  | 10,010 |  |  |  | 1,060 |  |  |  | 6,717 |  |  |  | 7,992 |  |  |  | 2,442 |  |  |  | 851 |  |  |  | 291 |  |  |  | 34,192 |
Provision for credit losses |  |  | 476 |  |  |  | (1,595 | ) |  |  | (82 | ) |  |  | 875 |  |  |  | 782 |  |  |  | 3 |  |  |  | 41 |  |  |  | 25 |  |  |  | 525 |
Loan charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Loan recoveries |  |  | - |  |  |  | 1,540 |  |  |  | - |  |  |  | 51 |  |  |  | - |  |  |  | 8 |  |  |  | - |  |  |  | 1 |  |  |  | 1,600 |
Net loan recoveries (charge-offs) |  |  | - |  |  |  | 1,540 |  |  |  | - |  |  |  | 51 |  |  |  | - |  |  |  | 8 |  |  |  | - |  |  |  | 1 |  |  |  | 1,600 |
Balance, end of period |  | $ | 5,305 |  |  |  | 9,955 |  |  |  | 978 |  |  |  | 7,643 |  |  |  | 8,774 |  |  |  | 2,453 |  |  |  | 892 |  |  |  | 317 |  |  |  | 36,317 |
Net recoveries to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.22 | )%
Allowance for credit losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1.20 | %
Allowance for credit losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,388.87 | %
|  |  |  |  |  |  |  |  |  |  | Nine months ended September 30, 2023 |
|  | Commercial |  |  | Consumer |  |  |  |
(dollars in thousands) |  | Owner occupied RE |  |  | Non- owner occupied RE |  |  | Construction |  |  | Business |  |  | Real Estate |  |  | Home Equity |  |  | Construction |  |  | Other |  |  | Total |
Balance, beginning of period |  | $ | 5,867 |  |  |  | 10,376 |  |  |  | 1,292 |  |  |  | 7,861 |  |  |  | 9,487 |  |  |  | 2,551 |  |  |  | 893 |  |  |  | 312 |  |  |  | 38,639 |
Provision for credit losses |  |  | 329 |  |  |  | 1,138 |  |  |  | 5 |  |  |  | 120 |  |  |  | 1,099 |  |  |  | 278 |  |  |  | (311 | ) |  |  | 192 |  |  |  | 2,850 |
Loan charge-offs |  |  | - |  |  |  | (209 | ) |  |  | - |  |  |  | (43 | ) |  |  | - |  |  |  | (389 | ) |  |  | - |  |  |  | (2 | ) |  |  | (643 | )
Loan recoveries |  |  | - |  |  |  | 185 |  |  |  | - |  |  |  | 37 |  |  |  | - |  |  |  | 63 |  |  |  | - |  |  |  | - |  |  |  | 285 |
Net loan recoveries (charge-offs) |  |  | - |  |  |  | (24 | ) |  |  | - |  |  |  | (6 | ) |  |  | - |  |  |  | (326 | ) |  |  | - |  |  |  | (2 | ) |  |  | (358 | )
Balance, end of period |  | $ | 6,196 |  |  |  | 11,490 |  |  |  | 1,297 |  |  |  | 7,975 |  |  |  | 10,586 |  |  |  | 2,503 |  |  |  | 582 |  |  |  | 502 |  |  |  | 41,131 |
Net charge-offs to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 0.01 | %
Allowance for credit losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1.16 | %
Allowance for credit losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 953.25 | %
|  |  |  |  |  |  |  |  |  |  | Nine months ended September 30, 2022 |
|  | Commercial |  |  | Consumer |  |  |  |
(dollars in thousands) |  | Owner occupied RE |  |  | Non- owner occupied RE |  |  | Construction |  |  | Business |  |  | Real Estate |  |  | Home Equity |  |  | Construction |  |  | Other |  |  | Total |
Balance, beginning of period |  | $ | 4,700 |  |  |  | 10,518 |  |  |  | 625 |  |  |  | 4,887 |  |  |  | 7,083 |  |  |  | 1,697 |  |  |  | 578 |  |  |  | 320 |  |  |  | 30,408 |
Adjustment for CECL |  |  | (313 | ) |  |  | 333 |  |  |  | 154 |  |  |  | 1,057 |  |  |  | (294 | ) |  |  | 438 |  |  |  | 130 |  |  |  | (5 | ) |  |  | 1,500 |
Provision for credit losses |  |  | 918 |  |  |  | (2,436 | ) |  |  | 199 |  |  |  | 1,558 |  |  |  | 1,985 |  |  |  | 575 |  |  |  | 184 |  |  |  | 92 |  |  |  | 3,075 |
Loan charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (55 | ) |  |  | - |  |  |  | (339 | ) |  |  | - |  |  |  | (91 | ) |  |  | (485 | )
Loan recoveries |  |  | - |  |  |  | 1,540 |  |  |  | - |  |  |  | 196 |  |  |  | - |  |  |  | 82 |  |  |  | - |  |  |  | 1 |  |  |  | 1,819 |
Net loan recoveries (charge-offs) |  |  | - |  |  |  | 1,540 |  |  |  | - |  |  |  | 141 |  |  |  | - |  |  |  | (257 | ) |  |  | - |  |  |  | (90 | ) |  |  | 1,334 |
Balance, end of period |  | $ | 5,305 |  |  |  | 9,955 |  |  |  | 978 |  |  |  | 7,643 |  |  |  | 8,774 |  |  |  | 2,453 |  |  |  | 892 |  |  |  | 317 |  |  |  | 36,317 |
Net recoveries to average loans (annualized) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (0.06 | )%
Allowance for credit losses to gross loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1.20 | %
Allowance for credit losses to nonperforming loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,388.87 | %
The $100,000 reversal of the provision for credit losses for the three months ended September 30, 2023 was driven by net recoveries of $126,000 for the quarter combined with lower expected loss rates. The $2.9 million provision for credit losses for the nine months ended September 30, 2023 was driven by $280.3 million in loan growth for the period. In addition to loan growth, the provision for credit losses was impacted by lower expected loss rates due to continued low charge-offs during the first nine months of 2023, while minor adjustments to an internal qualitative factor increased the qualitative component of the allowance and related provision expense. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans for designation as collateral dependent loans, as well as other loans that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. The following tables present an analysis of collateral-dependent loans of the Company as of September 30, 2023 and December 31, 2022.
Schedule of analysis of collateral-dependent loans of the company |  |  |  |  |  |  |  | September 30, 2023 |
|  | Real |  |  | Business |  |  |  |  |  |  |
(dollars in thousands) |  | estate |  |  | assets |  |  | Other |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-owner occupied RE |  |  | 908 |  |  |  | - |  |  |  | - |  |  |  | 908 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Business |  |  | 244 |  |  |  | - |  |  |  | - |  |  |  | 244 |
Total commercial |  |  | 1,152 |  |  |  | - |  |  |  | - |  |  |  | 1,152 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 386 |  |  |  | - |  |  |  | - |  |  |  | 386 |
Home equity |  |  | 182 |  |  |  | - |  |  |  | - |  |  |  | 182 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total consumer |  |  | 568 |  |  |  | - |  |  |  | - |  |  |  | 568 |
Total |  | $ | 1,720 |  |  |  | - |  |  |  | - |  |  |  | 1,720 |
|  |  |  |  |  |  |  | December 31, 2022 |
|  | Real |  |  | Business |  |  |  |  |  |  |
(dollars in thousands) |  | estate |  |  | assets |  |  | Other |  |  | Total |
Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied RE |  | $ | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-owner occupied RE |  |  | 114 |  |  |  | - |  |  |  | - |  |  |  | 114 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Business |  |  | 30 |  |  |  | - |  |  |  | - |  |  |  | 30 |
Total commercial |  |  | 144 |  |  |  | - |  |  |  | - |  |  |  | 144 |
Consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  | 207 |  |  |  | - |  |  |  | - |  |  |  | 207 |
Home equity |  |  | 194 |  |  |  | - |  |  |  | - |  |  |  | 194 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total consumer |  |  | 401 |  |  |  | - |  |  |  | - |  |  |  | 401 |
Total |  | $ | 545 |  |  |  | - |  |  |  | - |  |  |  | 545 |
Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Allowance for Credit Losses - Unfunded Loan Commitments The allowance for credit losses for unfunded loan commitments was $2.2 million and $2.8 million at September 30, 2023 and December 31, 2022, respectively, and is separately classified on the balance sheet within other liabilities. The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the three and nine months ended September 30, 2023 and September 30, 2022.
Schedule of allowance for credit losses for unfunded loan commitments |  |  |  |  |  |
|  | Three months ended |  |  | Three months ended |
(dollars in thousands) |  | September 30, 2023 |  |  | September 30, 2022 |
Balance, beginning of period |  | $ | 2,565 |  |  |  | 2,330 |
Adjustment for adoption of CECL |  |  | - |  |  |  | - |
Provision for (reversal of) credit losses |  |  | (400 | ) |  |  | 425 |
Balance, end of period |  | $ | 2,165 |  |  |  | 2,755 |
Unfunded Loan Commitments |  | $ | 780,581 |  |  |  | 840,912 |
Reserve for Unfunded Commitments to Unfunded Loan Commitments |  |  | 0.28 | % |  |  | 0.33 | %
|  | Nine months ended |  |  | Nine months ended |
(dollars in thousands) |  | September 30, 2023 |  |  | September 30, 2022 |
Balance, beginning of period |  | $ | 2,780 |  |  |  | - |
Adjustment for adoption of CECL |  |  | - |  |  |  | 2,000 |
Provision for (reversal of) credit losses |  |  | (615 | ) |  |  | 755 |
Balance, end of period |  | $ | 2,165 |  |  |  | 2,755 |
Unfunded Loan Commitments |  | $ | 780,581 |  |  |  | 840,912 |
Reserve for Unfunded Commitments to Unfunded Loan Commitments |  |  | 0.28 | % |  |  | 0.33 | %

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
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