XML 24 R13.htm IDEA: XBRL DOCUMENT v3.24.3
Loans and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2024
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 $6.6 million as of September 30, 2024 and $7.0 million as of December 31, 2023.

                    
 
   September 30, 2024   December 31, 2023 
(dollars in thousands)  Amount   %  of Total   Amount   %  of Total 
Commercial                
Owner occupied RE  $642,608    17.8%  $631,657    17.5%
Non-owner occupied RE   917,642    25.3%   942,529    26.2%
Construction   144,665    4.0%   150,680    4.2%
Business   521,535    14.4%   500,161    13.9%
Total commercial loans   2,226,450    61.5%   2,225,027    61.8%
Consumer                    
Real estate   1,132,371    31.3%   1,082,429    30.0%
Home equity   195,383    5.4%   183,004    5.1%
Construction   21,582    0.6%   63,348    1.7%
Other   43,770    1.2%   48,819    1.4%
Total consumer loans   1,393,106    38.5%   1,377,600    38.2%
Total gross loans, net of deferred fees   3,619,556    100.0%   3,602,627    100.0%
Less—allowance for credit losses   (40,166)        (40,682)     
Total loans, net  $3,579,390        $3,561,945      

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.

  

                         
    
   September 30, 2024 
(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  $15,557    205,224    380,526    41,301    642,608 
Non-owner occupied RE   103,329    512,610    281,197    20,506    917,642 
Construction   30,589    64,016    50,060    -    144,665 
Business   122,565    244,825    149,858    4,287    521,535 
Total commercial loans   272,040    1,026,675    861,641    66,094    2,226,450 
Consumer                         
Real estate   19,871    71,492    295,998    745,010    1,132,371 
Home equity   2,810    33,445    154,758    4,370    195,383 
Construction   4,514    2,500    11,601    2,967    21,582 
Other   7,207    32,731    3,023    809    43,770 
Total consumer loans   34,402    140,168    465,380    753,156    1,393,106 
Total gross loans, net of deferred fees  $306,442    1,166,843    1,327,021    819,250    3,619,556 
             
           December 31, 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  $17,358    177,203    395,130    41,966    631,657 
Non-owner occupied RE   68,601    517,622    331,727    24,579    942,529 
Construction   26,762    64,432    59,486    -    150,680 
Business   114,432    194,416    186,927    4,386    500,161 
Total commercial loans   227,153    953,673    973,270    70,931    2,225,027 
Consumer                         
Real estate   10,593    51,956    301,095    718,785    1,082,429 
Home equity   2,716    27,578    147,855    4,855    183,004 
Construction   -    252    39,459    23,637    63,348 
Other   11,157    33,592    3,265    805    48,819 
Total consumer loans   24,466    113,378    491,674    748,082    1,377,600 
Total gross loans, net of deferred fees  $251,619    1,067,051    1,464,944    819,013    3,602,627 

 

The following table summarizes the loans due after one year by category.

                    
             
   September 30, 2024   December 31, 2023 
    Interest Rate    Interest Rate 
(dollars in thousands)   Fixed    Floating or Adjustable    Fixed    Floating or Adjustable 
Commercial                    
Owner occupied RE  $601,086    25,965    605,199    9,100 
Non-owner occupied RE   710,377    103,936    768,048    105,880 
Construction   81,430    32,646    81,326    42,592 
Business   272,599    126,371    293,920    91,809 
Total commercial loans   1,665,492    288,918    1,748,493    249,381 
Consumer                    
Real estate   1,112,500    -    1,071,836    - 
Home equity   10,616    181,957    11,441    168,847 
Construction   17,068    -    63,348    - 
Other   8,564    27,999    11,525    26,137 
Total consumer loans   1,148,748    209,956    1,158,150    194,984 
Total gross loans, net of deferred fees  $2,814,240    498,874    2,906,643    444,365 

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, 2024.

                                             
                                     
                           September 30, 2024 
(dollars in thousands)  2024   2023   2022   2021   2020   Prior   Revolving   Revolving Converted to Term   Total 
Commercial                                    
Owner occupied RE                                             
Pass  $44,238    44,567    180,574    125,436    68,270    150,019    85    239    613,428 
Watch   488    -    3,377    1,464    8,898    11,121    -    -    25,348 
Special Mention   -    -    167    -    -    2,857    -    -    3,024 
Substandard   -    -    -    -    -    808    -    -    808 
Total Owner occupied RE   44,726    44,567    184,118    126,900    77,168    164,805    85    239    642,608 
                                              
Non-owner occupied RE                                             
Pass   32,690    74,224    312,722    157,108    100,908    195,151    344    -    873,147 
Watch   -    959    4,568    438    1,645    11,444    -    -    19,054 
Special Mention   -    -    -    7,630    -    8,938    -    -    16,568 
Substandard   -    -    969    300    -    7,604    -    -    8,873 
Total Non-owner occupied RE   32,690    75,183    318,259    165,476    102,553    223,137    344    -    917,642 
Current period gross write-offs   -    -    -    -    -    (1,029)   -    -    (1,029)
                                              
Construction                                             
Pass   18,696    30,478    76,088    19,403    -    -    -    -    144,665 
Total Construction   18,696    30,478    76,088    19,403    -    -    -    -    144,665 
                                              
Business                                             
   Pass   33,201    43,582    119,984    40,840    16,377    54,153    173,489    313    481,939 
Watch   -    142    16,665    2,020    1,442    5,434    9,398    131    35,232 
Special Mention   663    96    817    -    67    1,101    -    209    2,953 
Substandard   -    -    -    143    362    309    597    -    1,411 
Total Business   33,864    43,820    137,466    43,003    18,248    60,997    183,484    653    521,535 
Current period gross write-offs   -    -    -    -    (347)   (18)   (72)   -    (437)
Total Commercial loans   129,976    194,048    715,931    354,782    197,969    448,939    183,913    892    2,226,450 
                                              
Consumer                                             
Real estate                                             
Pass   61,766    150,755    287,584    270,022    163,332    159,210    -    -    1,092,669 
Watch   -    760    5,573    7,472    5,488    5,525    -    -    24,818 
Special Mention   -    141    2,702    1,504    988    4,816    -    -    10,151 
Substandard   213    275    334    1,215    976    1,720    -    -    4,733 
Total Real estate   61,979    151,931    296,193    280,213    170,784    171,271    -    -    1,132,371 
                                              
Home equity                                             
Pass   -     -    -    -    -    -    181,922    -    181,922 
Watch   -    -    -    -    -    -    8,628    -    8,628 
Special Mention   -    -    -    -    -    -    3,402    -    3,402 
Substandard   -    -    -    -    -    -    1,431    -    1,431 
Total Home equity   -    -    -    -    -    -    195,383    -    195,383 
Current period gross write-offs   -    -    -    -    -    -    (45)        (45)
                                              
Construction                                             
Pass   5,305    4,678    9,890    1,709    -    -    -    -    21,582 
Total Construction   5,305    4,678    9,890    1,709    -    -    -    -    21,582 
                                              
Other                                             
Pass   2,978    954    1,662    1,812    1,274    2,815    31,016    -    42,511 
Watch   161    7    16    338    -    144    57    -    723 
Special Mention   19    29    326    65    -    62    30    -    531 
Substandard   -    -    -     -    -    -    5    -    5 
Total Other   3,158    990    2,004    2,215    1,274    3,021    31,108    -    43,770 
Current period gross write-offs   -    -    -    -    -    (38)   (42)   -    (80)
Total Consumer loans   70,442    157,599    308,087    284,137    172,058    174,292    226,491    -    1,393,106 
Total loans  $200,418    351,647    1,024,018    638,919    370,027    623,231    410,404    892    3,619,556 
Total Current period gross write-offs   -    -    -    -    (347)   (1,085)   (159)   -    (1,591)

The following table presents loan balances classified by credit quality indicators by year of origination as of December 31, 2023.

                                     
   December 31, 2023 
(dollars in thousands)  2023   2022   2021   2020   2019   Prior   Revolving   Revolving Converted to Term   Total 
Commercial                                             
Owner occupied RE                                             
Pass  $42,846    180,654    138,549    64,818    59,880    110,502    85    166    597,500 
Watch   -    3,460    460    15,997    3,525    6,616    -    -    30,058 
Special Mention   -    181    -    -    -    3,057    -    -    3,238 
Substandard   -    -    -    -    -    861    -    -    861 
Total Owner occupied RE   42,846    184,295    139,009    80,815    63,405    121,036    85    166    631,657 
                                              
Non-owner occupied RE                                             
Pass   84,617    298,063    162,697    107,364    59,260    163,990    9,249    -    885,240 
Watch   1,007    3,260    9,914    533    5,545    10,630    -    -    30,889 
Special Mention   -    -    7,759    -    8,252    879    -    -    16,890 
Substandard   -    -    313    -    8,088    1,109    -    -    9,510 
Total Non-owner occupied RE   85,624    301,323    180,683    107,897    81,145    176,608    9,249    -    942,529 
Current period gross write-offs   -    (200)   -    -    -    (42)   -    -    (242)
                                              
Construction                                             
Pass   27,262    86,161    24,399    11,459    -    -    -    -    149,281 
Watch   -    1,399    -    -    -    -    -    -    1,399 
Total Construction   27,262    87,560    24,399    11,459    -    -    -    -    150,680 
                                              
Business                                             
Pass   48,705    134,999    48,557    18,868    17,292    47,708    146,745    1,431    464,305 
Watch   127    15,867    1,833    1,010    842    3,584    7,570    506    31,339 
Special Mention   241    961    98    857    184    447    150    97    3,035 
Substandard   -    -    155    -    132    1,195    -    -    1,482 
Total Business   49,073    151,827    50,643    20,735    18,450    52,934    154,465    2,034    500,161 
Current period gross write-offs   -    -    -    (28)   -    -    (15)   (22)   (65)
Total Commercial loans   204,805    725,005    394,734    220,906    163,000    350,578    163,799    2,200    2,225,027 
                                              
Consumer                                             
Real estate                                             
Pass   144,179    273,585    278,138    176,395    66,087    105,383    -    -    1,043,767 
Watch   490    5,658    8,230    3,917    2,051    3,890    -    -    24,236 
Special Mention   143    2,499    1,657    1,291    2,220    3,360    -    -    11,170 
Substandard   -    -    635    817    318    1,486    -    -    3,256 
Total Real estate   144,812    281,742    288,660    182,420    70,676    114,119    -    -    1,082,429 
                                              
Home equity                                             
Pass   -    -    -    -    -    -    171,003    -    171,003 
Watch   -    -    -    -    -    -    6,393    -    6,393 
Special Mention   -    -    -    -    -    -    4,283    -    4,283 
Substandard   -    -    -    -    -    -    1,325    -    1,325 
Total Home equity   -    -    -    -    -    -    183,004    -    183,004 
Current period gross write-offs   -    -    -    -    -    -    (438)   -    (438)
                                              
Construction                                             
Pass   14,339    39,893    9,116    -    -    -    -    -    63,348 
Total Construction   14,339    39,893    9,116    -    -    -    -    -    63,348 
                                              
Other                                             
Pass   1,278    2,551    2,361    1,457    803    2,604    36,549    -    47,603 
Watch   9    29    348    -    15    163    58    -    622 
Special Mention   33    333    -    -    23    82    41    -    512 
Substandard   -    -    75    -    -    -    7    -    82 
Total Other   1,320    2,913    2,784    1,457    841    2,849    36,655    -    48,819 
Current period gross write-offs   -    -    -    -    -    -    (16)   -    (16)
Total Consumer loans   160,471    324,548    300,560    183,877    71,517    116,968    219,659    -    1,377,600 
Total loans  $365,276    1,049,553    695,294    404,783    234,517    467,546    383,458    2,200    3,602,627 
Total Current period gross write-offs   -    (200)   -    (28)   -    (42)   (469)   (22)   (761)

The following tables present loan balances by age and payment status.

                              
     
   September 30, 2024 
(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  $163    -    -    -    642,445    642,608 
Non-owner occupied RE   -    -    -    7,904    909,738    917,642 
Construction   -    -    -    -    144,665    144,665 
Business   1,454    556    -    838    518,687    521,535 
Consumer                              
Real estate   754    239    -    2,448    1,128,930    1,132,371 
Home equity   101    -    -    393    194,889    195,383 
Construction   -    -    -    -    21,582    21,582 
Other   4    -    -    -    43,766    43,770 
    Total loans  $2,476    795    -    11,583    3,604,702    3,619,556 
Total loans over 90 days past due   -    -    -    -    -    2,073 
                         
   December 31, 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  $74    -    -    -    631,583    631,657 
Non-owner occupied RE   8,102    -    -    1,423    933,004    942,529 
Construction   -    -    -    -    150,680    150,680 
Business   567    -    -    319    499,275    500,161 
Consumer                              
Real estate   1,750    -    -    985    1,079,694    1,082,429 
Home equity   601    30    -    1,236    181,137    183,004 
Construction   -    -    -    -    63,348    63,348 
Other   25    25    -    -    48,769    48,819 
    Total loans  $11,119    55    -    3,963    3,587,490    3,602,627 
Total loans over 90 days past due   -    -    -    -    -    1,300 

As of September 30, 2024 and December 31, 2023, loans 30 days or more past due represented 0.16% and 0.37% of the Company’s total loan portfolio, respectively. Commercial loans 30 days or more past due were 0.08% and 0.27% of the Company’s total loan portfolio as of September 30, 2024 and December 31, 2023, respectively. Consumer loans 30 days or more past due were 0.08% and 0.09% of total loans as of September 30, 2024 and December 31, 2023, respectively.

The table below summarizes nonaccrual loans by major categories for the periods presented.

            
   September 30, 2024       December 31, 2023 
   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                        
Non-owner occupied RE  $5,432    2,472    7,904   $653    770    1,423 
Business   -    838    838    164    155    319 
Total commercial   5,432    3,310    8,742    817    925    1,742 
Consumer                              
Real estate   1,735    713    2,448    -    985    985 
Home equity   318    75    393    343    893    1,236 
Total consumer   2,053    788    2,841    343    1,878    2,221 
Total nonaccrual loans  $7,485    4,098    11,583   $1,160    2,803    3,963 

The Company did not recognize interest income on nonaccrual loans for the three months ended September 30, 2024 and September 30, 2023. The accrued interest reversed during the three months ended September 30, 2024 and September 30, 2023 was not material. Foregone interest income on the nonaccrual loans for the three-month period ended September 30, 2024 and September 30, 2023 was not material.

We did not recognize interest income on nonaccrual loans for the nine months ended September 30, 2024 and September 30, 2023. Accrued interest of $94,000 was reversed during the nine months ended September 30, 2024 and $35,000 was reversed during the nine months ended September 30, 2023.

The table below summarizes information regarding nonperforming assets.

Schedule of nonperforming assets        
         
(dollars in thousands)  September  30, 2024   December 31, 2023 
Nonaccrual loans  $11,583    3,963 
Other real estate owned   -    - 
Total nonperforming assets  $11,583    3,963 
Nonperforming assets as a percentage of:          
Total assets   0.28%   0.10%
Gross loans   0.32%   0.11%
Total loans over 90 days past due  $2,073    1,300 
Loans over 90 days past due and still accruing   -    - 

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 due to the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Loan modifications to borrowers experiencing financial difficulty were not material for the three and nine months ended September 30, 2024 and 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, 2024 and September 30, 2023 under the CECL methodology.

Schedule of activity related to the allowance for credit losses                                    
                 
               Three months ended September 30, 2024 
   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  $5,467    10,562    1,331    7,236    12,397    2,479    278    407    40,157 
Provision for credit losses for loans   -    -    -    -    -    -    -    -    - 
Loan charge-offs   -    -    -    (72)   -    (45)   -    (1)   (118)
Loan recoveries   -    -    -    73    -    4    -    50    127 
Net loan recoveries (charge-offs)   -    -    -    1    -    (41)   -    49    9 
Balance, end of period  $5,467    10,562    1,331    7,237    12,397    2,438    278    456    40,166 
Net recoveries to average loans (annualized)                             0.00%
Allowance for credit losses to gross loans                             1.11%
Allowance for credit losses to nonperforming loans                             346.78%

 

                                     
                 
               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 for loans   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%
                                
                                     
                 
               Nine months ended September 30, 2024 
   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  $6,118    11,167    1,594    7,385    10,647    2,600    677    494    40,682 
Provision for credit losses for loans   (651)   424    (263)   190    1,750    (244)   (399)   (57)   750 
Loan charge-offs   -    (1,029)   -    (437)   -    (45)   -    (80)   (1,591)
Loan recoveries   -    -    -    99    -    127    -    99    325 
Net loan recoveries (charge-offs)   -    (1,029)   -    (338)   -    82    -    19    (1,266)
Balance, end of period  $5,467    10,562    1,331    7,237    12,397    2,438    278    456    40,166 
Net charge-offs to average loans (annualized)                            0.05%
Allowance for credit losses to gross loans                               1.11%
Allowance for credit losses to nonperforming loans                                 346.78%

 

                                     
               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 for loans   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%

There was no provision for credit losses for the three months ended September 30, 2024. For the three months ended September 30, 2023, there was a $100,000 reversal of the provision for credit losses related to loans. In addition, the provision for credit losses was $750,000 and $2.9 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.

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.

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.

The following tables present an analysis of collateral-dependent loans of the Company as of September 30, 2024 and December 31, 2023.

                    
             
           September 30, 2024 
   Real   Business         
(dollars in thousands)  estate   assets   Other   Total 
Commercial                
Non-owner occupied RE  $7,240    -    -    7,240 
Business   461    234    -    695 
Total commercial   7,701    234    -    7,935 
Consumer                    
Real estate   1,891    -    -    1,891 
Home equity   393    -    -    393 
Total consumer   2,284    -    -    2,284 
Total  $9,985    234    -    10,219 

 

         

 December 31, 2023

 
    Real    Business           
(dollars in thousands)   estate    assets    Other    Total 
Commercial                    
Non-owner occupied RE  $720    -    -    720 
Business   164    -    -    164 
Total commercial   884    -    -    884 
Consumer                    
Real estate   166    -    -    166 
Home equity   343    -    -    343 
Total consumer   509    -    -    509 
Total  $1,393    -    -    1,393 

Allowance for Credit Losses - Unfunded Loan Commitments

The allowance for credit losses for unfunded loan commitments was $1.4 million and $1.8 million at September 30, 2024 and December 31, 2023, 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, 2024 and September 30, 2023.

          
         
  

Three months ended

September 30,

 
(dollars in thousands)  2024   2023 
Balance, beginning of period  $1,406    2,565 
Provision for (reversal of) credit losses   -    (400)
Balance, end of period  $1,406    2,165 
Unfunded Loan Commitments  $699,888    780,581 
Reserve for Unfunded Commitments to Unfunded Loan Commitments   0.20%   0.28%

 

 

         
  

Nine months ended

September 30,

 
(dollars in thousands)  2024   2023 
Balance, beginning of period  $1,831    2,780 
Provision for (reversal of) credit losses   (425)   (615)
Balance, end of period  $1,406    2,165 
Unfunded Loan Commitments  $699,888    780,581 
Reserve for Unfunded Commitments to Unfunded Loan Commitments   0.20%   0.28%